<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-Q
---------------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JANUARY 28, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________ .
COMMISSION FILE NUMBER 0-27130
NETWORK APPLIANCE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 77-0307520
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
495 EAST JAVA DRIVE,
SUNNYVALE, CALIFORNIA 94089
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (408) 822-6000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Number of shares outstanding of the registrant's class of common stock, as of
the latest practicable date.
<TABLE>
<CAPTION>
OUTSTANDING AT
CLASS JANUARY 28, 2000
----- ----------------
<S> <C>
Common Stock............. 152,284,841
</TABLE>
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<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C>
PART I -- FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of January 28, 2000 and
April 30, 1999 2
Condensed Consolidated Statements of Income for the three and
nine-month periods ended January 28, 2000 and January 29, 1999 3
Condensed Consolidated Statements of Cash Flows for the nine-month
periods ended January 28, 2000 and January 29, 1999 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 13
PART II--OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to Vote of Securityholders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURE 16
</TABLE>
1
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PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NETWORK APPLIANCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JANUARY 28, APRIL 30,
2000 1999
----------- ---------
(UNAUDITED) **
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 231,416 $ 221,284
Short-term investments 58,636 5,800
Accounts receivable, net 99,674 57,163
Inventories 20,878 13,581
Prepaid expenses and other assets 9,653 7,384
Deferred taxes 27,171 10,134
--------- ---------
Total current assets 447,428 315,346
PROPERTY AND EQUIPMENT, NET 33,646 19,271
DEPOSITS 7,170 7,000
OTHER ASSETS 5,672 4,730
--------- ---------
$ 493,916 $ 346,347
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 21,991 $ 15,126
Income taxes payable 4,195 1,108
Accrued compensation and related benefits 24,328 15,189
Other accrued liabilities 8,769 7,633
Deferred revenue 18,465 11,474
--------- ---------
Total current liabilities 77,748 50,530
LONG-TERM OBLIGATIONS 55 93
--------- ---------
77,803 50,623
--------- ---------
SHAREHOLDERS' EQUITY:
Common stock 312,144 240,093
Retained earnings 105,268 55,954
Cumulative other comprehensive loss (1,299) (323)
--------- ---------
Total shareholders' equity 416,113 295,724
--------- ---------
$ 493,916 $ 346,347
========= =========
</TABLE>
** Derived from audited consolidated financial statements.
See accompanying notes to condensed consolidated financial statements.
2
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NETWORK APPLIANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- ---------------------------
JANUARY 28, JANUARY 29, JANUARY 28, JANUARY 29,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $ 151,290 $ 75,616 $ 379,281 $ 198,616
COST OF SALES 61,415 30,818 155,471 80,938
--------- --------- --------- ---------
Gross Margin 89,875 44,798 223,810 117,678
--------- --------- --------- ---------
OPERATING EXPENSES:
Sales and marketing 40,194 19,831 99,626 51,830
Research and development 16,424 7,815 41,106 20,618
General and administrative 5,470 2,655 13,775 7,092
--------- --------- --------- ---------
Total operating expenses 62,088 30,301 154,507 79,540
--------- --------- --------- ---------
INCOME FROM OPERATIONS 27,787 14,497 69,303 38,138
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest Income 2,860 626 7,503 1,634
Other income (expense), net 49 (84) (350) 24
--------- --------- --------- ---------
Total other income, net 2,909 542 7,153 1,658
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 30,696 15,039 76,456 39,796
PROVISION FOR INCOME TAXES 10,897 5,645 27,142 14,929
--------- --------- --------- ---------
NET INCOME $ 19,799 $ 9,394 $ 49,314 $ 24,867
========= ========= ========= =========
NET INCOME PER SHARE (1):
Basic $ 0.13 $ 0.07 $ 0.33 $ 0.18
========= ========= ========= =========
Diluted $ 0.11 $ 0.06 $ 0.29 $ 0.16
========= ========= ========= =========
Pro Forma - Basic (Note 8) $ 0.07 $ 0.03 $ 0.17 $ 0.09
========= ========= ========= =========
Pro Forma - Diluted (Note 8) $ 0.06 $ 0.03 $ 0.14 $ 0.08
========= ========= ========= =========
SHARES USED IN PER SHARE CALCULATIONS (1):
Basic 150,461 137,476 148,294 135,606
========= ========= ========= =========
Diluted 175,168 157,864 170,316 153,358
========= ========= ========= =========
Pro Forma - Basic (Note 8) 300,922 274,952 296,588 271,212
========= ========= ========= =========
Pro Forma - Diluted (Note 8) 350,336 315,728 340,632 306,716
========= ========= ========= =========
</TABLE>
(1) Share and per share amounts have been adjusted to reflect the two-for-one
stock split which was effective December 20, 1999.
See accompanying notes to condensed consolidated financial statements.
3
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NETWORK APPLIANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
---------------------------
JANUARY 28, JANUARY 29,
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 49,314 $ 24,867
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 10,732 7,091
Provision for doubtful accounts 996 873
Deferred income taxes (17,037) (4,683)
Deferred rent (38) (47)
Changes in assets and liabilities:
Accounts receivable (43,667) (17,397)
Inventories (9,623) (3,065)
Prepaid expenses and other assets (3,379) (1,069)
Accounts payable 6,865 (1,745)
Income taxes payable 41,287 11,812
Accrued compensation and related benefits 9,139 3,187
Other accrued liabilities 1,136 3,385
Deferred revenue 6,991 3,279
--------- ---------
Net cash provided by operating activities 52,716 26,488
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments (62,636) (15,230)
Redemptions of short-term investments 9,650 17,880
Purchases of property and equipment (22,472) (11,615)
Payment/refund of deposits, net (170) (7,000)
--------- ---------
Net cash used in investing activities (75,628) (15,965)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock, net 33,044 12,048
--------- ---------
Net cash provided by financing activities 33,044 12,048
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 10,132 22,571
CASH AND CASH EQUIVALENTS:
Beginning of period 221,284 37,315
--------- ---------
End of period $ 231,416 $ 59,886
========= =========
NONCASH INVESTING AND FINANCING ACTIVITIES:
Income tax benefit from employee stock transactions $ 38,200 $ 12,210
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid net of refund $ 1,517 $ 7,031
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
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NETWORK APPLIANCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements have been
prepared by Network Appliance, Inc. without audit and reflect all adjustments,
which are, in the opinion of management, necessary for a fair presentation of
our financial position and results of operations for the interim periods. The
statements have been prepared in accordance with the regulations of the
Securities and Exchange Commission (SEC). Accordingly, they do not include all
information and footnotes required by generally accepted accounting principles.
The results of operations for the three and nine-month periods ended January 28,
2000 are not necessarily indicative of the operating results to be expected for
the full fiscal year or future operating periods. The information included in
this report should be read in conjunction with the audited consolidated
financial statements and notes thereto for the fiscal year ended April 30, 1999
and the risk factors as set forth in our Annual Report on Form 10-K, including,
without limitation, risks relating to fluctuating operating results, customer
and market acceptance of new products, dependence on new products, rapid
technological change, litigation, dependence on growth in the network file
server market, expansion of international operations, product concentration,
changing product mix, competition, management of expanding operations,
dependence on high-quality components, dependence on proprietary technology,
intellectual property rights, dependence on key personnel, volatility of stock
price, shares eligible for future sale, effect of certain anti-takeover
provisions, dilution and the Year 2000 Issue. Any party interested in reviewing
these publicly available documents should contact the SEC or our Chief Financial
Officer.
2. SIGNIFICANT ACCOUNTING POLICIES
Fiscal Periods - We operate on a 52-week or 53-week year ending on the
last Friday in April. Fiscal 2000 is a 52-week year. Fiscal 1999 was a 53-week
year. The quarter ended January 28, 2000 includes 13 weeks of operating
activity, compared to 13 weeks of activity for the corresponding period of the
prior fiscal year. The nine-months ended January 28, 2000 includes 39 weeks of
activity, compared to 40 weeks of activity for the corresponding period of the
prior fiscal year.
Foreign Currency Translation - In the first quarter of fiscal 2000, we
determined that the functional currencies of certain of our foreign subsidiaries
had changed from the local currencies to the Euro. Accordingly, assets and
liabilities of such foreign subsidiaries are translated into the Euro at the
exchange rates in effect as of the balance sheet date, and results of operations
for each subsidiary are translated using average rates in effect for the period
presented. Translation adjustments have been included within shareholders'
equity as a cumulative other comprehensive loss. The effect of the change in
functional currencies did not have a material impact on our consolidated
financial position, results of operations or cash flows.
5
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NETWORK APPLIANCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
3. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
JANUARY 28, APRIL 30,
2000 1999
----------- ---------
(IN THOUSANDS)
<S> <C> <C>
Purchased components $ 7,741 $ 5,316
Work in process 4,253 1,727
Finished goods 8,884 6,538
------- -------
$20,878 $13,581
======= =======
</TABLE>
4. NET INCOME PER SHARE
The following is a reconciliation of the numerators and denominators of
the basic and diluted net income per share computations for the periods
presented:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------- -------------------------------
JANUARY 28, JANUARY 29, JANUARY 28, JANUARY 29,
2000 1999 2000 1999
------------ ------------ ------------ ------------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
NET INCOME (NUMERATOR):
Net income, basic and diluted $ 19,799 $ 9,394 $ 49,314 $ 24,867
============ ============ ============ ============
SHARES (DENOMINATOR):
Weighted average common shares outstanding 150,536 137,624 148,395 136,288
Weighted average common shares outstanding
subject to repurchase (75) (148) (101) (682)
------------ ------------ ------------ ------------
Shares used in basic computation 150,461 137,476 148,294 135,606
Weighted average common shares outstanding
subject to repurchase 75 148 101 682
Common shares issuable upon exercise of stock
options 24,632 20,240 21,921 17,070
------------ ------------ ------------ ------------
Shares used in diluted computation 175,168 157,864 170,316 153,358
============ ============ ============ ============
NET INCOME PER SHARE:
Basic $ 0.13 $ 0.07 $ 0.33 $ 0.18
============ ============ ============ ============
Diluted $ 0.11 $ 0.06 $ 0.29 $ 0.16
============ ============ ============ ============
</TABLE>
6
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NETWORK APPLIANCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
5. COMPREHENSIVE INCOME
The components of comprehensive income, net of tax, are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------- -------------------------------
JANUARY 28, JANUARY 29, JANUARY 28, JANUARY 29,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
Net income $ 19,799 $ 9,394 $ 49,314 $ 24,867
Change in cumulative translation adjustment (1,050) (105) (976) (123)
------------ ------------ ------------ ------------
Comprehensive income $ 18,749 $ 9,289 $ 48,338 $ 24,744
============ ============ ============ ============
</TABLE>
6. NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which defines derivatives,
requires that all derivatives be carried at fair value, and provides for hedging
accounting when certain conditions are met. This statement is effective for all
fiscal quarters of fiscal years beginning after June 15, 2000. Although we have
not fully assessed the implications of this new statement, we do not believe
adoption of this statement will have a material impact on our consolidated
financial position, results of operations or cash flows.
7. COMMITMENTS
In fiscal 1999, we executed agreements to acquire approximately 18 acres
of land in Sunnyvale, California and to develop 393,000 square feet of
buildings. We subsequently assigned our rights and obligations under all the
agreements for the Sunnyvale facilities to a third-party entity and entered into
three operating leases. The leases require monthly payments, which vary, based
on the London Interbank Offered Rate (LIBOR) plus a spread (7.5% at January 28,
2000). The aggregate annual minimum rent commitment under one lease, which began
in August 1999, is approximately $3.3 million. The lease payments under the
other two operating leases are expected to commence in June 2000 and will also
vary based on LIBOR plus a spread.
The operating leases mentioned above require us to maintain specified
financial covenants with which we were in compliance as of January 28, 2000.
We have commitments related to operating lease arrangements, under which
we have an option to purchase the properties for an aggregate of $190.0 million,
or arrange for the sale of the properties to a third party for at least the
option price with a contingent liability for any deficiency.
8. SUBSEQUENT EVENTS
On February 10, 2000, the Board of Directors approved a two-for-one
stock split of the Company's common stock to be distributed on or about March
22, 2000 to holders of record on March 10, 2000. Pro forma share and per-share
amounts have been presented within the Condensed Consolidated Statements of
Income to reflect the stock split.
7
<PAGE> 9
This Form 10-Q contains forward-looking statements about future results,
which are subject to risks and uncertainties, including those discussed below.
Our actual results may differ significantly from the results discussed in the
forward-looking statements. We are subject to a variety of other additional risk
factors, more fully described in our Annual Report on Form 10-K filed with the
Securities and Exchange Commission.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth certain consolidated statements of income
data as a percentage of net sales for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- --------------------------
JANUARY 28, JANUARY 29, JANUARY 28, JANUARY 29,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 40.6 40.8 41.0 40.8
------ ------ ------ ------
Gross margin 59.4 59.2 59.0 59.2
------ ------ ------ ------
Operating expenses:
Sales and marketing 26.6 26.2 26.3 26.1
Research and development 10.8 10.3 10.8 10.4
General and administrative 3.6 3.5 3.6 3.5
------ ------ ------ ------
Total operating expenses 41.0 40.0 40.7 40.0
------ ------ ------ ------
Income from operations 18.4 19.2 18.3 19.2
Total other income, net 1.9 0.7 1.9 0.8
------ ------ ------ ------
Income before income taxes 20.3 19.9 20.2 20.0
Provision for income taxes 7.2 7.5 7.2 7.5
------ ------ ------ ------
Net income 13.1% 12.4% 13.0% 12.5%
====== ====== ====== ======
</TABLE>
Net Sales -- Net sales increased by 100.1% to $151.3 million for the
three-months ended January 28, 2000, from $75.6 million for the three-months
ended January 29, 1999. Net sales increased by 91.0% to $379.3 million for the
nine-months ended January 28, 2000, from $198.6 million for the nine-months
ended January 29, 1999. Net sales growth was across all geographies, products
and markets. This increase in net sales for both the three and nine-months ended
January 28, 2000 was primarily attributable to a higher volume of units shipped,
as compared to the corresponding periods of the prior fiscal year. Factors
impacting unit growth include:
- growth in the network attached storage market and increased
market acceptance of the appliance concept;
- acceleration in deployment of our products among Internet and
enterprise related customers, particularly for E-business and
database applications;
- strong demand for our F700 filer product family utilizing
primarily fibre-channel connectivity;
- increased worldwide demand for our NetCache(TM) solutions;
- increased worldwide shipment of NetApp(R) Cluster Failover
solutions, which require another filer to take over in the event
of a hardware failure;
- increased demand for the SnapMirror(TM) software option, which
requires multiple filers to provide remote mirroring of data for
quick disaster recovery and backup at remote sites;
- expansion of our direct sales force; and
- sales to our two OEM partners.
8
<PAGE> 10
Net sales growth was also positively impacted by:
- a higher average selling price due to the introduction of new
software features: SnapMirror, SnapRestore(TM) and Cluster
Failover, supporting mission-critical applications;
- the increase in storage capacity;
- increased add-on software revenue from multi-protocol solutions;
and
- higher software subscription and service revenues to support a
growing installed base.
Overall net sales growth was partially offset by declining unit sales of
our older product family and declining average selling price of the caching
product family due primarily to competitive pricing pressure.
International net sales (including United States exports) grew by 50.0%
and 79.9% for the three and nine-month periods ended January 28, 2000, as
compared to the comparable period of the prior fiscal year. International net
sales were $46.9 million, or 31.0% of total net sales, and $109.6 million, or
28.9% of total net sales, for the three and nine-month periods ended January 28,
2000, respectively. The increase in international sales for the three and
nine-month periods ended January 28, 2000, was primarily a result of European
sales growth, due to increased headcount in the direct sales force, increased
indirect channel sales, increased shipments of filers, Cluster Failover
solutions, NetCache appliances and increased sales of add-on software licenses.
Asia Pacific net sales growth for the three and nine-month periods ended January
28, 2000, was also primarily driven by increased sales through resellers,
increased headcount in the direct sales force, increased shipments of filers,
NetCache appliances and increased sales of add-on software licenses, as compared
to the corresponding periods of the prior fiscal year.
We cannot assure you that our net sales will continue to increase in
absolute dollars or at the rate at which they have grown in recent fiscal
periods.
Gross Margin -- Gross margin increased slightly to 59.4% for the
three-months ended January 28, 2000 from 59.2% for the three-months ended
January 29, 1999. Gross margin decreased to 59.0% for the nine-months ended
January 28, 2000 from 59.2% for the nine-months ended January 29, 1999.
Gross margin was favorably impacted by:
- increased licensing of add-on software products such as:
multi-protocol, Cluster Failover, SnapMirror and SnapRestore
associated with new filers shipped;
- growth in software subscription due primarily to a larger
installed base;
- increased manufacturing efficiencies;
- the increase in product volume; and
- lower costs of key components.
Gross margin was negatively impacted by sales price reductions on
storage products due to competitive pricing pressure from other storage vendors
and increased investments in customer service personnel in areas such as
logistics and professional services.
Our gross margin has been and will continue to be affected by a variety
of factors, including:
- competition;
- product configuration;
- direct versus indirect sales;
- the mix and average selling prices of products, including
software licenses;
- new product introductions and enhancements; and
- the cost of components and manufacturing labor.
Sales and Marketing -- Sales and marketing expenses consist primarily of
salaries, commissions, advertising and promotional expenses and certain customer
service and support costs. Sales and marketing
9
<PAGE> 11
expenses increased 102.7% to $40.2 million for the three-months ended January
28, 2000 from $19.8 million for the three-months ended January 29, 1999. Sales
and marketing expenses increased 92.2% to $99.6 million for the nine-months
ended January 28, 2000 from $51.8 million for the nine-months ended January 29,
1999. These expenses were 26.6% and 26.2% of net sales for the three-months
ended January 28, 2000 and January 29, 1999, respectively, and were 26.3% and
26.1%, respectively, of net sales for the nine-month periods then ended. The
increase in absolute dollars was primarily related to the continued worldwide
expansion and increased headcount growth of our sales and customer service
organizations, and increased commission expenses. During the quarter ended
January 28, 2000, we launched an advertising campaign, which also contributed to
absolute dollar increases in sales and marketing expenses. We expect to continue
to increase our sales and marketing expenses in an effort to expand domestic and
international markets, introduce new products, establish and expand new
distribution channels and increase product and company awareness. We believe
that our continued growth and profitability is dependent in part on the
successful expansion of our international operations, and therefore, have
committed significant resources to increase international sales.
Research and Development -- Research and development expenses consist
primarily of salaries and benefits, prototype expenses, non-recurring
engineering charges and fees paid to outside consultants. Research and
development expenses increased 110.2% to $16.4 million for the three-months
ended January 28, 2000 from $7.8 million for the three-months ended January 29,
1999. These expenses represented 10.8% and 10.3% of net sales, respectively, for
the three-months ended January 28, 2000 and January 29, 1999. For the nine-month
periods, research and development expenses increased 99.4% to $41.1 million in
fiscal 2000 from $20.6 million in fiscal 1999, and represented 10.8% and 10.4%
of net sales, respectively, for those periods. Research and development expenses
increased in absolute dollars, primarily as a result of increased headcount,
ongoing support of current and future product development and enhancement
efforts, prototyping expenses and non-recurring engineering charges associated
with the development of new products and technologies. These new products
included the F700 series filers, the Cluster Failover solutions, the C700
family, new enterprise software offerings and data management tools with
SnapMirror, SnapRestore, SnapManager(TM) for Microsoft(R) Exchange and
SecureAdmin(TM). New caching product introductions included Netcache software
release 4.0 and Netcache 4.1, a streaming media appliance for Apple(R)
Quicktime(TM), Microsoft(R) Windows Media(TM) and RealNetworks(R) Real
System(TM) G2 users, delivering live broadcasting on the Internet. We believe
that our future performance will depend in large part on our ability to maintain
and enhance our current product line, develop new products that achieve market
acceptance, maintain technological competitiveness and meet an expanding range
of customer requirements. We intend to continuously expand our existing product
offerings and introduce new products and expect that such expenditures will
continue to increase in absolute dollars. For the three and nine-months ended
January 28, 2000 and January 29, 1999, no software development costs were
capitalized.
General and Administrative -- General and administrative expenses
increased 106.1% to $5.5 million for the three-months ended January 28, 2000,
from $2.7 million for the three-months ended January 29, 1999. These expenses
represented 3.6% and 3.5% of net sales for the three-months ended for such
periods. For the nine-month periods, general and administrative expenses
increased 94.2% to $13.8 million in fiscal 2000 from $7.1 million in fiscal 1999
and represented 3.6% and 3.5% of net sales for the nine-months ended for such
periods. Increases in absolute dollars were primarily due to increased
headcount, expenses associated with initiatives to implement enterprise-wide
management information systems, increases in professional services, consulting
fees and outside service fees. We believe that our general and administrative
expenses will increase in absolute dollars as we continue to build our
infrastructure.
Total Other Income, net -- Total other income, net, was $2.9 million and
$0.5 million for the three-months ended January 28, 2000 and January 29, 1999,
respectively. During the nine-months ended January 28, 2000, total other income,
net, was $7.2 million, as compared to $1.7 million in the corresponding period
of the prior year. The increase was due primarily to interest income earned on
the net proceeds from the March 1999 follow-on public offering, cash generated
from operations, and net proceeds from stock option exercises. The nine months
of fiscal 1999 included gains from foreign currency transactions as compared to
the nine months of fiscal 2000, where gains or losses from foreign transactions
have been largely mitigated primarily through our hedging program.
10
<PAGE> 12
Provision for Income Taxes -- Our effective tax rate was 35.5% for the
three and nine-month periods ended January 28, 2000 compared to 37.5% for the
three and nine-month periods ended January 29, 1999. The effective tax rates
differed from the U.S. statutory rate of 35% primarily due to state taxes
partially offset by earnings of foreign subsidiaries being taxed at lower rates.
CERTAIN RISK FACTORS
Although we have experienced significant revenue growth in recent
periods, this growth may not be indicative of our future operating results. As a
result, we believe that period-to-period comparisons of our results of operation
are not necessarily meaningful and should not be relied upon as indicators of
future performance. Many of the factors that could cause our quarterly operating
results to fluctuate significantly in the future are beyond our control and
include the following:
- the level of competition in our target product markets;
- the size, timing, and cancellation of significant orders;
- product configuration and mix;
- market acceptance of new products and product enhancements;
- new product announcements or introductions by us or our
competitors;
- deferrals of customer orders in anticipation of new products or
product enhancements;
- changes in pricing by us or our competitors;
- our ability to timely develop, introduce and market new products
and enhancements;
- supply constraints;
- technological changes in our target product markets;
- the levels of expenditure on research and development and
expansion of our sales and marketing programs;
- seasonality; and
- general economic trends.
In addition, sales for any future quarter may vary and accordingly be
inconsistent with our plans. We generally operate with limited order backlog
because our products are typically shipped shortly after orders are received. As
a result, product sales in any quarter are generally dependent on orders booked
and shipped in that quarter. Product sales are difficult to forecast because the
network file server market is rapidly evolving and our sales cycle varies
substantially from customer to customer.
We conduct business internationally. International sales (including U.S.
exports) were approximately 31.0% and 28.9% of total net sales for the three and
nine-months ended January 28, 2000, respectively. Accordingly, our future
operating results could be materially adversely affected by a variety of
factors, some of which are beyond our control, including regulatory, political
or economic conditions in a specific country or region, trade protection
measures and other regulatory requirements and government spending patterns.
Our international sales are denominated in U.S. dollars and in foreign
currencies. An increase in the value of the U.S. dollar relative to foreign
currencies could make our products more expensive and, therefore, potentially
less competitive in foreign markets. For international sales and expenditures
denominated in foreign currencies, we are subject to risks associated with
currency fluctuations. We hedge risks associated with foreign currency
transactions in order to minimize the impact of changes in foreign currency
exchange rates on earnings. We utilize forward contracts to hedge trade and
intercompany receivables and payables. All hedge contracts are marked to market
through earnings every period.
Additional risks inherent in our international business activities
generally include, among others, longer accounts receivable payment cycles,
difficulties in managing international operations and potentially adverse tax
consequences. We cannot assure you that such factors will not materially
adversely affect our future international sales and, consequently, our operating
results.
11
<PAGE> 13
Although operating results have not been materially and adversely
affected by seasonality in the past, because of the significant seasonal effects
experienced within the industry, particularly in Europe, we cannot assure you
that our future operating results will not be adversely affected by seasonality.
We believe that continued growth and profitability will require
successful expansion of our international operations and sales and therefore we
have committed significant resources to such expansion. In order to successfully
expand international sales in fiscal 2000 and subsequent periods, we must
strengthen foreign operations, hire additional personnel and recruit additional
international distributors and resellers. This will require significant
management attention and financial resources and could materially adversely
affect our operating results. To the extent that we are unable to effect these
additions in a timely manner, our growth, if any, in international sales will be
limited, and our operating results could be materially adversely affected. In
addition, we cannot assure you that we will be able to maintain or increase
international market demand for our products.
LIQUIDITY AND CAPITAL RESOURCES
As of January 28, 2000, as compared to the April 30, 1999 balances, our
cash, cash equivalents and short-term investments increased by $63.0 million to
$290.1 million. Working capital increased by $104.9 million to $369.7 million.
We generated cash from operating activities totaling $52.7 million and $26.5
million for the nine-month periods ended January 28, 2000 and January 29, 1999,
respectively. Net cash provided by operating activities for the nine-month
period ended January 28, 2000 principally related to net income of $49.3
million, increases in accounts payable, income taxes payable, accrued
compensation and related benefits, deferred revenue and other accrued
liabilities, coupled with depreciation and amortization which are non-cash
expenses, partially offset by increases in accounts receivable, inventories,
prepaid expenses and other assets and deferred income taxes.
We used $22.5 million and $11.6 million of cash during the nine-month
periods ended January 28, 2000 and January 29, 1999, respectively, for capital
expenditures. The increases were primarily attributed to upgrades of software
and computer equipment purchases and furniture and fixtures for the Sunnyvale
headquarters facility. We have used $53.0 million during the nine-month period
ended January 28, 2000 and received net proceeds of $2.7 million during the
nine-month period ended January 29, 1999, for net short-term investment
redemptions.
During the nine-month period of fiscal 2000, we received back our $2.5
million deposit in connection with the $36.0 million operating lease. In
September 1999, we executed an agreement to acquire 9.9 acres of land in
Sunnyvale, California and the accompanying 178,996 square foot building. Under
terms of the agreement, we paid $2.7 million of the $23.4 million purchase price
as a nonrefundable deposit. The agreement allows us to assign our rights and
obligations to a third-party entity should we decide to enter into an operating
lease. We intend to assign our rights and obligations to a third-party entity
and enter into an operating lease provided we can obtain satisfactory leasing
terms.
Financing activities provided $33.0 million and $12.0 million during the
nine-month periods ended January 28, 2000 and January 29, 1999, respectively.
The increase in cash provided by financing activities for the nine-months ended
January 28, 2000, compared to the corresponding period of the prior fiscal year,
was due to an increased quantity of stock options exercised at a higher average
exercise price and a greater number of employees participating in the employee
stock purchase plan.
In November 1999, we executed an agreement to acquire 27.8 acres of land
in Sunnyvale, California and the accompanying 354,266 square feet of buildings.
Under terms of the agreement, we paid $3.0 million of the $61.0 million purchase
price as a nonrefundable deposit. In December 1999, we assigned our rights and
obligations under the agreement to a third-party entity and in exchange received
back our $3.0 million deposit in January 2000. We subsequently entered into a
$62.0 million operating lease for this property. Our lease payments will vary
based on LIBOR plus a spread. The lease is for five years and can be renewed for
two five-year periods, subject to the approval of the third-party entity. At the
expiration or termination of the lease, we have the option to either purchase
the property for $62.0 million, or arrange for the sale of the property to a
third party for at least $62.0 with a contingent liability for any
12
<PAGE> 14
deficiency. If the property is not purchased or sold as described above, we will
be obligated for an additional lease payment of approximately $51.5 million. The
lease also requires us to maintain specified financial covenants with which we
were in compliance as at January 28, 2000.
Excluding the commitment related to the aforementioned 178,996 square
foot property, which we intend to assign to third parties and account for as
operating leases, we currently have no significant commitments other than
commitments under operating leases. We believe that our existing liquidity and
capital resources, including the available amounts under our $5.0 million line
of credit, are sufficient to fund our operations for at least the next twelve
months.
YEAR 2000
The Year 2000 issue refers to computer programs which use two digits
rather than four to define a given year and which therefore might read a date
using "00" as the year 1900 rather than the year 2000. As a result, many
companies' systems and software may need to be upgraded or replaced in order to
function correctly after December 31, 1999.
Over the past year, we have been testing our computer systems and
applications to evaluate Year 2000 problems, executing remediation activities to
fix non-compliant systems and monitoring and testing products and systems. To
date, we have not experienced any problems complying with the Year 2000 issue
and have not been informed of any failures of our products from customers or
Year 2000 disruptions from third party vendors.
NEW ACCOUNTING STANDARDS
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which defines derivatives, requires that
all derivatives be carried at fair value, and provides for hedging accounting
when certain conditions are met. This statement is effective for all fiscal
quarters of fiscal years beginning after June 15, 2000. Although we have not
fully assessed the implications of this new statement, we do not believe
adoption of this statement will have a material impact on our consolidated
financial position, results of operations or cash flows.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk related to fluctuations in interest rates
and in foreign currency exchange rates. We use certain derivative financial
instruments to manage these risks. We do not use derivative financial
instruments for speculative or trading purposes. All financial instruments are
used in accordance with management-approved policies.
Market Interest Risk
Short-term Investments - As of January 28, 2000, we had short-term
investments of $58.6 million. These short-term investments consist of highly
liquid investments with original maturities at the date of purchase between
three and twelve months. These investments are subject to interest rate risk and
will decrease in value if market interest rates increase. A hypothetical 10
percent increase in market interest rates from levels at January 28, 2000, would
cause the fair value of these short-term investments to decline by an immaterial
amount. Because we have the ability to hold these investments until maturity we
would not expect any significant decline in value of our investments caused by
market interest rate changes. Declines in interest rates over time will,
however, reduce our interest income.
Operating Lease Commitments - As of January 28, 2000, we have
outstanding lease commitments to a third-party entity under operating lease
agreements, which vary based on a monthly LIBOR rate plus a spread. However, a
hypothetical 10 percent decrease in interest rates would not have a material
impact on us. Increases in interest rates could, however, increase our rent
expenses associated with future lease payments. We do not currently hedge
against interest rate increases. However, our investment portfolio
13
<PAGE> 15
offers a natural hedge against interest rate risk from our operating lease
commitments in the event of a significant increase in the market interest rate.
The hypothetical changes and assumptions discussed above will be
different from what actually occurs in the future. Furthermore, such
computations do not anticipate actions that may be taken by management, should
the hypothetical market changes actually occur over time. As a result, the
effect on actual earnings in the future will differ from those described above.
Foreign Currency Exchange Rate Risk - We hedge risks associated with
foreign currency transactions in order to minimize the impact of changes in
foreign currency exchange rates on earnings. We utilize forward contracts to
hedge against the short-term impact of foreign currency fluctuations on certain
assets and liabilities denominated in foreign currencies. All hedge instruments
are marked to market through earnings every period. We believe that these
forward contracts do not subject us to undue risk due to foreign exchange
movements because gains and losses on these contracts are offset by losses and
gains on the underlying assets and liabilities.
All contracts have a maturity of less than one year and we do not defer
any gains and losses, as they are all accounted for through earnings every
period.
The following table provides information about our foreign exchange
forward contracts outstanding on January 28, 2000, (in thousands):
<TABLE>
<CAPTION>
BUY/ FOREIGN CONTRACT VALUE FAIR VALUE
CURRENCY SELL CURRENCY AMOUNT USD IN USD
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EUR Sell 10,400 10,685 10,290
EUR Buy 2,000 2,011 1,979
GBP Sell 6,500 10,223 10,638
CHF Sell 4,300 2,646 2,636
CHF Buy 1,000 614 613
</TABLE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
14
<PAGE> 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
<TABLE>
<S> <C>
10.43 Industrial Lease Agreement, dated December 20, 1999 between
TRW Inc. and the Company in connection with 1347 Crossman
Avenue in Sunnyvale, California
10.44 Industrial Lease Agreement, dated December 20, 1999 between
TRW Inc. and the Company in connection with 1350 Geneva
Drive in Sunnyvale, California
10.45 Industrial Lease Agreement, dated December 20, 1999 between
TRW Inc. and the Company in connection with 1345 Crossman
Avenue in Sunnyvale, California
10.46 Industrial Lease Agreement, dated December 20, 1999 between
TRW Inc. and the Company in connection with 1330 Geneva
Drive in Sunnyvale, California
10.47 Assignment of Agreement of Sale, dated December 20, 1999, by
and between BNP Leasing and the Company
10.48 Purchase and Sale Agreement, dated November 16, 1999, by and
between TRW Inc. and ESL Incorporated and the Company
10.49 Closing Certificate (Phase IV) and Agreement, dated December
20, 1999, by and between BNP Leasing Corporation and the
Company
10.50 Lease Agreement (Phase IV - Land), dated December 20, 1999,
by and between BNP Leasing Corporation and the Company
10.51 Lease Agreement (Phase IV - Improvements ), dated December
20, 1999, by and between BNP Leasing Corporation and the
Company
10.52 Purchase Agreement (Phase IV - Land), dated December 20,
1999, by and between BNP Leasing Corporation and the Company
10.53 Purchase Agreement (Phase IV - Improvements), dated December
20, 1999, by and between BNP Leasing Corporation and the
Company
10.54 Pledge Agreement (Phase IV - Land), dated December 20, 1999,
by and between BNP Leasing Corporation and the Company
10.55 Pledge Agreement (Phase IV - Improvements), dated December
20, 1999, by and between BNP Leasing Corporation and the
Company
10.56 Participation Agreement (Phase IV), dated December 20, 1999,
by and between BNP Leasing Corporation and Banque Nationale
De Paris
27.1 Financial Data Schedule
27.2 Restated Financial Data Schedules
27.3 Restated Financial Data Schedules
27.4 Restated Financial Data Schedules
27.5 Restated Financial Data Schedules
27.6 Restated Financial Data Schedules
</TABLE>
(b) REPORTS ON FORM 8-K
None
15
<PAGE> 17
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, as
amended, the registrant duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
NETWORK APPLIANCE, INC.
(Registrant)
/s/ JEFFRY R. ALLEN
---------------------------------------------
Jeffry R. Allen
Senior Vice President Finance and Operations,
Chief Financial Officer and Secretary
Date: February 29, 2000
16
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C>
10.43 Industrial Lease Agreement, dated December 20, 1999 between
TRW Inc. and the Company in connection with 1347 Crossman
Avenue in Sunnyvale, California
10.44 Industrial Lease Agreement, dated December 20, 1999 between
TRW Inc. and the Company in connection with 1350 Geneva
Drive in Sunnyvale, California
10.45 Industrial Lease Agreement, dated December 20, 1999 between
TRW Inc. and the Company in connection with 1345 Crossman
Avenue in Sunnyvale, California
10.46 Industrial Lease Agreement, dated December 20, 1999 between
TRW Inc. and the Company in connection with 1330 Geneva
Drive in Sunnyvale, California
10.47 Assignment of Agreement of Sale, dated December 20, 1999, by
and between BNP Leasing and the Company
10.48 Purchase and Sale Agreement, dated November 16, 1999, by and
between TRW Inc. and ESL Incorporated and the Company
10.49 Closing Certificate (Phase IV) and Agreement, dated December
20, 1999, by and between BNP Leasing Corporation and the
Company
10.50 Lease Agreement (Phase IV - Land), dated December 20, 1999,
by and between BNP Leasing Corporation and the Company
10.51 Lease Agreement (Phase IV - Improvements ), dated December
20, 1999, by and between BNP Leasing Corporation and the
Company
10.52 Purchase Agreement (Phase IV - Land), dated December 20,
1999, by and between BNP Leasing Corporation and the Company
10.53 Purchase Agreement (Phase IV - Improvements), dated December
20, 1999, by and between BNP Leasing Corporation and the
Company
10.54 Pledge Agreement (Phase IV - Land), dated December 20, 1999,
by and between BNP Leasing Corporation and the Company
10.55 Pledge Agreement (Phase IV - Improvements), dated December
20, 1999, by and between BNP Leasing Corporation and the
Company
10.56 Participation Agreement (Phase IV), dated December 20, 1999,
by and between BNP Leasing Corporation and Banque Nationale
De Paris
27.1 Financial Data Schedule
27.2 Restated Financial Data Schedules
27.3 Restated Financial Data Schedules
27.4 Restated Financial Data Schedules
27.5 Restated Financial Data Schedules
27.6 Restated Financial Data Schedules
</TABLE>
17
<PAGE> 1
EXHIBIT 10.43
INDUSTRIAL LEASE
(1347 Crossman Avenue)
Effective Date: December ___, 1999
DEFINED TERMS
Landlord: NETWORK APPLIANCE, INC., a California
corporation
Landlord's Address For Notice: 495 East Java Drive
Sunnyvale, California 94089
Attention: Mr. Thomas Bryant
Tenant: TRW INC., an Ohio corporation
Tenant's Address For Notice: TRW Inc.
12011 Sunset Hills Road
Reston, Virginia 20190
Attn: Ms. Marsha A. Klontz
And to:
TRW Electronic Systems
1330 Geneva Drive
P.O. Box 3510
Sunnyvale, California 94088-3510
Project: Certain parcels of land situated in Santa
Clara County, California consisting of
27.848 acres of land described as APN
#110-42.2.2.6.7.8, having addresses of 1345
and 1346 Crossman Avenue and 1330 and 1350
Geneva Drive in Sunnyvale, California
Building: 1347 Crossman Avenue, Sunnyvale, California
Premises: The Building, together with the Property
Property: That certain real property described in
Exhibit A hereto
Term: From the Commencement Date to June 30, 2001
Commencement Date: December ___, 1999
<PAGE> 2
Base Rent Per Month: Sixty-Nine Thousand One Hundred Forty-Three
and 75/100 Dollars ($69,143.75)
Lease Year: Shall refer to each three hundred sixty-five
(365) day period during the Term commencing
on the Commencement Date and on each
anniversary thereof.
Permitted Uses: General office purposes and no other uses
shall be permitted without the prior written
consent of Landlord.
EXHIBITS
A - Premises
B - Estoppel Certificate
The Defined Terms set forth above and the Exhibits attached
hereto are incorporated into and made a part of the following Lease. Each
reference in this Lease to any of the Defined Terms shall mean the respective
information above and shall be construed to incorporate all of the terms
provided under the particular Lease paragraph pertaining to such information. In
the event of any conflict between the Defined Terms and the provisions of the
Lease, the latter shall control.
LANDLORD (_________) AND TENANT (_________) AGREE.
initial initial
<PAGE> 3
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. PREMISES.................................................................................................1
1.1. Premises........................................................................................1
1.2. Reserved Rights.................................................................................1
1.3. As-Is...........................................................................................1
2. TERM.....................................................................................................1
3. RENT.....................................................................................................1
3.1. Base Rent.......................................................................................1
3.2. Late Charge and Interest........................................................................1
3.3. Net Lease.......................................................................................2
4. UTILITIES................................................................................................2
5. TAXES....................................................................................................2
5.1. Real Property Taxes.............................................................................2
5.2. Definition of Real Property Taxes...............................................................2
5.3. Personal Property Taxes.........................................................................3
6. INSURANCE................................................................................................3
6.1. Landlord........................................................................................3
6.2. Tenant..........................................................................................3
6.3. General.........................................................................................4
6.4. Indemnity.......................................................................................4
6.5. Exemption of Landlord from Liability............................................................5
7. REPAIRS AND MAINTENANCE..................................................................................5
7.1. Tenant..........................................................................................5
7.2. Landlord........................................................................................5
8. ALTERATIONS..............................................................................................5
8.1. Trade Fixtures; Alterations.....................................................................5
8.2. Damage; Removal.................................................................................6
8.3. Liens...........................................................................................6
9. USE......................................................................................................6
10. ENVIRONMENTAL MATTERS....................................................................................7
10.1. Hazardous Materials.............................................................................7
10.2. Indemnification.................................................................................7
11. DAMAGE AND DESTRUCTION...................................................................................8
11.1. Casualty........................................................................................8
11.2. Tenant's Fault..................................................................................9
11.3. Uninsured Casualty..............................................................................9
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C> <C>
11.4. Waiver..........................................................................................9
12. EMINENT DOMAIN...........................................................................................9
12.1. Total Condemnation..............................................................................9
12.2. Partial Condemnation............................................................................9
12.3. Award...........................................................................................9
12.4. Temporary Condemnation.........................................................................10
13. DEFAULT.................................................................................................10
13.1. Events of Defaults.............................................................................10
13.2. Remedies.......................................................................................11
13.3. Cumulative.....................................................................................12
14. ASSIGNMENT AND SUBLETTING...............................................................................12
15. ESTOPPEL, ATTORNMENT AND SUBORDINATION..................................................................13
15.1. Estoppel.......................................................................................13
15.2. Attornment.....................................................................................13
15.3. Subordination..................................................................................13
16. MISCELLANEOUS...........................................................................................14
16.1. General........................................................................................14
16.2. Signs..........................................................................................15
16.3. Waiver.........................................................................................15
16.4. Financial Statements...........................................................................15
16.5. Limitation of Liability........................................................................15
16.6. Notices........................................................................................15
16.7. Brokerage Commission...........................................................................15
16.8. Authorization..................................................................................16
16.9. Holding Over; Surrender........................................................................16
16.10. Joint and Several..............................................................................16
16.11. Covenants and Conditions.......................................................................16
16.12. Addenda........................................................................................16
</TABLE>
ii
<PAGE> 5
1. PREMISES.
1.1. Premises. Landlord hereby leases to Tenant the Premises
as shown on Exhibit A attached hereto, but excluding any other portion of the
Project.
1.2. Reserved Rights. Landlord reserves the right to enter the
Premises upon reasonable notice to Tenant (except in case of an emergency)
and/or to undertake the following: inspect the Premises and/or the performance
by Tenant of the terms and conditions hereof. Landlord acknowledges and agrees
that any such activities by Landlord on the Premises shall be subject to any
reasonable security precautions created by Tenant as a result of any classified
work performed by Tenant in the Building on behalf of the United States
Government.
1.3. As-Is. Tenant acknowledges that Tenant has owned and
occupied the Premises for an extensive period of time prior to the Commencement
Date of this Lease and, as such, is familiar with the physical condition
thereof. Tenant recognizes that Landlord would not lease the Premises except on
an "as-is" basis and that Landlord has made no representations of any kind in
connection with improvements or physical conditions on, or bearing on, the use
or condition of the Premises.
2. TERM. The Term of the Lease shall commence ("Commencement
Date") on the Commencement Date and expire on June 30, 2001. Tenant has
determined that the Premises are acceptable for Tenant's use; and acknowledges
that Landlord has made no representations or warranties in connection with the
physical condition of the Premises or Tenant's use of the same upon which Tenant
has relied directly or indirectly for any purpose.
3. RENT.
3.1 Base Rent. Tenant shall pay to Landlord, at such address
as Landlord shall from time to time designate in writing to Tenant for the
payment of Rent, the Base Rent, without notice, demand, offset or deduction, on
the first day of each calendar month. Upon the execution of this Lease, Tenant
shall pay to Landlord the first month's Base Rent. If the Term commences (or
ends) on a date other than the first (or last) day of a month, Tenant shall pay
on the Commencement Date or first day of the last month a pro rata portion of
Base Rent, prorated on a per diem basis with respect to the portion of the month
within the Term. All sums other than Base Rent which Tenant is obligated to pay
under this Lease shall be deemed to be additional rent due hereunder, whether or
not such sums are designated "additional rent." The term "Rent" means the Base
Rent and all additional rent payable hereunder.
3.2 Late Charge and Interest. The late payment of any Rent
will cause Landlord to incur additional costs, including administration and
collection costs and processing and accounting expenses and increased debt
service. If Landlord has not received any installment of Rent within five (5)
days after such amount is due, Tenant shall pay a late charge of ten percent
(10%) of the delinquent amount, which is agreed to represent a reasonable
estimate of the costs incurred by Landlord. In addition, all such delinquent
amounts shall bear interest from the date such amount was due until paid in full
at a rate per annum ("Applicable Interest Rate") equal to the greater of (a)
five percent (5%) per annum plus the then federal discount rate on advances to
member banks in effect at the Federal Reserve Bank of San Francisco on the 25th
day of the
1
<PAGE> 6
month preceding the date of this Lease or (b) ten percent (10%); provided, in no
event shall the Applicable Interest Rate exceed the maximum interest rate
permitted by law which may be charged under such circumstances. Landlord and
Tenant recognize that the damage which Landlord shall suffer as a result of
Tenant's failure to pay such amounts is difficult to ascertain and said late
charge and interest are the best estimate of the damage which Landlord shall
suffer in the event of late payment.
3.3 Net Lease. Tenant acknowledges that the Rent shall be
absolutely net and carefree to the Landlord, except as set forth herein.
Landlord shall not be responsible for any costs, charges, expenses or outlays of
any nature or kind whatsoever arising from or relating to the Premises, except
as provided for herein. Tenant shall pay all such charges, impositions, costs
and expenses of every nature and kind to Landlord's complete exoneration.
4. UTILITIES. Tenant shall pay all charges for heat, water, gas,
electricity and any other utilities used on the Premises directly to the utility
provider. Landlord shall not be liable to Tenant for interruption in or
curtailment of any utility service, nor shall any such interruption or
curtailment constitute constructive eviction or grounds for rental abatement. In
the event the Premises is not separately metered, Landlord shall have the
option, subject to Landlord's review and the terms of this Lease, to cause the
Premises to be separately metered at Tenant's cost and expense.
5. TAXES.
5.1 Real Property Taxes. Tenant shall pay any and all of the
Real Property Taxes for the Premises to the relevant taxing authority on or
before the date due. Tenant shall provide Landlord with written evidence of such
payment of taxes concomitantly with the payment thereof.
5.2 Definition of Real Property Taxes. "Real Property Taxes"
shall be the sum of the following: all real property taxes, possessory interest
taxes, business or license taxes or fees, service payments in lieu of such taxes
or fees, annual or periodic license or use fees, excises, transit charges,
housing fund assessments, open space charges, childcare fees, school fees or any
other assessments, levies, fees or charges, general and special, ordinary and
extraordinary, unforeseen as well as foreseen (including fees "in-lieu" of any
such tax or assessment) which are assessed, levied, charged, confirmed or
imposed by any public authority upon the Project (or any real property
comprising any portion thereof) or its operations, together with all taxes,
assessments or other fees imposed by any public authority upon or measured by
any Rent or other charges payable hereunder, including any gross income tax or
excise tax levied by the local governmental authority, the federal government or
any other governmental body with respect to receipt of such rental, or upon,
with respect to or by reason of the development, possession, leasing, operation,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises or any portion thereof, or upon this transaction or any document to
which Tenant is a party creating or transferring an interest in the Premises,
together with any tax imposed in substitution, partially or totally, of any tax
previously included within the aforesaid definition or any additional tax the
nature of which was previously included within the aforesaid definition,
together with the costs and expenses (including attorneys fees) of challenging
any of the foregoing or seeking the reduction in or abatement, redemption or
return of any of the foregoing,
2
<PAGE> 7
but only to the extent of any such reduction, abatement, redemption or return.
Nothing contained in this Lease shall require Tenant to pay any franchise,
corporate, estate or inheritance tax of Landlord, or any income, profits or
revenue tax or charge upon the net income of Landlord.
5.3 Personal Property Taxes. Prior to delinquency, Tenant
shall pay all taxes and assessments levied upon trade fixtures, alterations,
additions, improvements, inventories and other personal property located and/or
installed on the Property by Tenant; and Tenant shall provide Landlord copies of
receipts for payment of all such taxes and assessments. To the extent any such
taxes are not separately assessed or billed to Tenant, Tenant shall pay the
amount thereof as invoiced by Landlord.
6. INSURANCE.
6.1 Landlord. Landlord shall, at Tenant's expense, obtain and
keep in force at all times the following insurance:
6.1.1. Building. Insurance insuring the Building and the
Landlord's interest in any betterments and improvements against fire and
extended coverage (including "all risk" coverage, earthquake/volcanic action,
flood and/or surface water insurance) for the full replacement cost of the
Building, with deductibles and the form and endorsements of such coverage as is
required by any synthetic lender of Landlord with an interest in the Building at
the time, together with rental value insurance against loss of Rent in an amount
equal to the amount of Rent for a period of at least twelve (12) months
commencing on the date of loss. Tenant shall reimburse Landlord for the cost of
such insurance for such period of time that is consistent with the Term of this
Lease within ten (10) business days of receipt of request therefor, provided
such request is accompanied by related invoices therefor.
6.2 Tenant. Tenant shall, at Tenant's expense, obtain and keep
in force at all times the following insurance:
6.2.1. Commercial General Liability Insurance (Occurrence
Form). A policy of commercial general liability insurance (occurrence form)
having a combined single limit of not less than Two Million Dollars ($2,000,000)
per occurrence providing coverage for, among other things, blanket contractual
liability, premises, products/completed operations and personal and advertising
injury coverage, with deletion of the exclusion for explosion, collapse or
underground hazard, if applicable, and, if necessary, Tenant shall provide for
restoration of the aggregate limit;
6.2.2. Automobile Liability Insurance. Comprehensive
automobile liability insurance having a combined single limit of not less than
Two Million Dollars ($2,000,000) per occurrence and insuring Tenant against
liability for claims arising out of ownership, maintenance, or use of any owned,
hired or non-owned automobiles;
6.2.3. Workers' Compensation and Employer's Liability
Insurance. Workers' compensation insurance having limits not less than those
required by state statute and federal statute, if applicable, and covering all
persons employed by Tenant in the conduct of its operations on the Premises
(including the all states endorsement and, if applicable, the volunteers
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endorsement), together with employer's liability insurance coverage in the
amount of at least One Million Dollars ($1,000,000); and
6.2.4. Property Insurance. "All risk" property insurance
including boiler and machinery comprehensive form, if applicable, covering
damage to or loss of any personal property, fixtures and equipment, including
electronic data processing equipment, of Tenant (and coverage for the full
replacement cost thereof including business interruption of Tenant) ("Tenant's
Property").
6.3 General.
6.3.2. Insurance Companies. Insurance required to be
maintained by Tenant shall be written by companies licensed to do business in
the state in which the Premises are located and having a "General Policyholders
Rating" of at least A (or such higher rating as may be required by a lender
having a lien on the Premises) as set forth in the most current issue of "Best's
Insurance Guide."
6.3.2. Certificates of Insurance. Tenant shall deliver to
Landlord certificates of insurance for all insurance required to be maintained
by Tenant prior to the date of possession of the Premises. Tenant shall, at
least ten (10) days prior to expiration of the policy, furnish Landlord with
certificates of renewal or "binders" thereof. Each certificate shall expressly
provide that such policies shall not be cancelable or otherwise subject to
modification except after sixty (60) days prior written notice to the parties
named as additional insureds in this Lease (except in the case of cancellation
for nonpayment of premium in which case cancellation shall not take effect until
at least (10) days' notice has been given to Landlord). If Tenant fails to
maintain any insurance required in this Lease, Tenant shall be liable for all
losses and cost resulting from said failure.
6.3.3. Additional Insureds. Landlord and any property
management company of Landlord for the Premises shall be included as additional
insureds, to the extent that the Tenant has an obligation under Section 6.4,
under all of the policies required by Section 6.2.1. The policies required under
Section 6.2.1 shall provide for severability of interest.
6.3.4. Primary Coverage. All insurance to be maintained by
Tenant shall, except for workers' compensation and employer's liability
insurance, be primary, without right of contribution from insurance of Landlord.
The limits of insurance maintained by Tenant shall not limit Tenant's liability
under this Lease.
6.3.5. Waiver of Subrogation. Landlord and Tenant each
waives any right to recover against the other for claims for damages to its
property covered by insurance. This provision is intended to waive fully, and
for the benefit of Landlord and Tenant, any rights and/or claims which might
give rise to a right of subrogation in favor of any insurance carrier.
6.4 Indemnity. Tenant shall indemnify, defend by counsel
satisfactory to Landlord, and hold harmless Landlord from and against any and
all claims arising from (i) Tenant's use of the Premises, the conduct of
Tenant's business or any activity, work or things done, permitted or suffered by
Tenant in or about the Premises, the Building or elsewhere and (ii) any breach
or default in the performance of any obligation on Tenant's part to be performed
under the terms of
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this Lease, arising from any negligence of Tenant or any of Tenant's agents,
contractors or employees, including all costs, attorneys' fees, expenses and
liabilities incurred in the defense of any such claim or any action or
proceeding brought thereon. Tenant, as a material part of the consideration to
Landlord, hereby assumes all risk of damage to property or injury to persons in,
upon or about the Premises or the Building arising from any cause; and Tenant
hereby waives all claims in respect thereof against Landlord except to the
extent such claims are caused by Landlord's gross negligence or willful
misconduct.
6.5 Exemption of Landlord from Liability. Tenant hereby agrees
that Landlord shall not be liable for injury to Tenant's business or any loss of
income therefrom or for damage to the property of Tenant, Tenant's employees,
invitees, customers or any other person in or about the Premises or the
Building, nor shall Landlord be liable for injury to the person of Tenant,
Tenant's employees, agents or contractors, whether such damage or injury is
caused by fire, steam, electricity, gas, water or rain, or from the breakage,
leakage or other defects of sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures, or from any other cause, whether said damage
or injury results from conditions arising upon the Premises, the Building or
from other sources or places, and regardless of whether the cause of such damage
or injury or the means of repairing the same is inaccessible to Tenant. Landlord
shall not be liable for any damages arising from any act or neglect of any other
tenant, if any, of the Building.
7. REPAIRS AND MAINTENANCE.
7.1. Tenant. Tenant shall keep and maintain any and all
portions of the Premises and the Building, including structural portions
thereof, floors and floor coverings, interior plumbing, HVAC and other building
system equipment, electrical wiring, fixtures and equipment in good repair and
in a clean and safe condition, and repair and/or replace any and all of the
foregoing in a good and workmanlike manner. Without limiting the foregoing,
Tenant shall, at Tenant's sole expense, (a) immediately replace all broken glass
in the Premises with glass equal to or in excess of the specification and
quality of the original glass; and (b) repair any area damaged by Tenant,
Tenant's agents, employees, invitees and visitors, including any damage caused
by any roof penetration, whether or not such roof penetration was approved by
Landlord.
7.2. Landlord. Landlord shall have no obligation whatsoever to
maintain any portion of the Building or Premises. Tenant waives any right to
repair at the expense of Landlord under any applicable governmental laws,
ordinances, statutes, orders or regulations now or hereafter in effect
respecting the Premises.
8. ALTERATIONS.
8.1. Trade Fixtures; Alterations. Tenant may install necessary
trade fixtures, equipment and furniture in the Building, provided that such
items are installed and are removable without structural damage to the Building.
Tenant shall not make, or allow to be made, any alterations or physical
additions in, about or to the Premises that affect the structural aspects of the
Building, the Building roof or Building foundation without obtaining the prior
written consent of Landlord, which consent shall not be unreasonably withheld.
Tenant shall reimburse Landlord for all costs which Landlord may incur in
connection with granting approval to Tenant for any such alterations and
additions, including any costs or expenses which Landlord may
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incur in electing to have outside architects and engineers review said matters.
If a Notice of Completion is required for such work, Tenant shall file it and
provide Landlord with a copy. Tenant shall provide Landlord with a set of
"as-built" drawings for any such work.
8.2. Damage; Removal. Tenant assumes the risk of damage to any
of Tenant's fixtures, equipment, furniture or alterations. Tenant shall repair
all damage to the Premises and/or Building caused by the installation or removal
of such items. Upon the termination of this Lease, Tenant shall remove any or
all alterations, additions, improvements and partitions made or installed by
Tenant and restore the Premises to their condition existing prior to the
construction of any such items; provided, however, Landlord may permit, upon
written notice to Tenant (to the extent requested to do so by Tenant at the time
notice thereof is given), any such items designated by Landlord to remain on the
Premises, in which event they shall be and become the property of Landlord upon
the termination of this Lease. All such removals and restoration shall be
accomplished in a good and workmanlike manner and so as not to cause any damage
to the Premises, the Building or the Project whatsoever.
8.3. Liens. Tenant shall promptly pay and discharge all claims
for labor performed, supplies furnished and services rendered at the request of
Tenant and shall keep the Premises free of all mechanics' and materialmen's
liens in connection therewith. Tenant shall provide at least ten (10) days prior
written notice to Landlord before any labor is performed, supplies furnished or
services rendered on or at the Premises and Landlord shall have the right to
post on the Premises notices of non-responsibility. If any lien is filed,
Landlord may take such action as may be necessary to remove such lien and Tenant
shall pay Landlord such amounts expended by Landlord together with interest
thereon at the Applicable Interest Rate from the date of expenditure.
9. USE.
The Premises shall be used only for the Permitted Uses and for
no other uses and otherwise consistent with any applicable governmental laws,
ordinances, statutes, orders and regulations and any declaration of covenants,
conditions and restrictions or any supplement thereto which has been recorded in
any official or public records with respect to the Project or any portion
thereof. Tenant shall comply with all applicable governmental laws, ordinances,
and statutes applicable to the Premises or Building. Tenant shall not commit
waste, overload the floors or structure of the Building, subject the Premises or
the Project to any use which would damage the same or raise or violate any
insurance coverage, permit any unreasonable odors, smoke, dust, gas, substances,
noise or vibrations to emanate from the Premises, take any action which would
constitute a nuisance or would disturb, obstruct or endanger any other tenants,
take any action which would abrogate any warranties, or use or allow the
Premises to be used for any unlawful purpose. Tenant shall not use any parking
spaces for the Project other than the parking spaces located on the Premises.
Landlord shall not be responsible for non-compliance by any other tenant or
occupant with any of the rules or regulations or any other terms or provisions
of such tenant's or occupant's lease. Tenant shall promptly comply with the
reasonable requirements of any board of fire insurance underwriters or other
similar body now or hereafter constituted.
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10. ENVIRONMENTAL MATTERS.
10.1. Hazardous Materials. Tenant shall not cause, or allow
any of Tenant's employees, agents, customers, visitors, invitees, licensees,
contractors, assignees or subtenants (collectively, "Tenant's Parties") to cause
or permit, any Hazardous Materials to be brought upon, stored, manufactured,
generated, blended, handled, recycled, treated, disposed or used on, under or
about the Premises, the Building or the Project, except for routine office and
janitorial supplies and the Hazardous Materials listed on Schedule 1 hereto in
usual and customary quantities stored, used and disposed of in accordance with
all applicable Environmental Laws. As used herein, "Hazardous Materials" means
any chemical, substance, material, controlled substance, waste or combination
thereof which is hazardous to human health or safety or to the environment due
to its radioactivity, ignitability, corrosivity, reactivity, explosivity,
toxicity, carcinogenicity, mutagenicity or other harmful or potentially harmful
properties or effects, including, without limitation, petroleum and petroleum
products, asbestos, radon, polychlorinated biphenyls (PCBs) and all of those
chemicals, substances, materials, controlled substances, wastes or combinations
thereof which are listed, defined or regulated in any manner by any
Environmental Law based upon, directly or indirectly, such properties or
effects. As used herein, "Environmental Laws" means any and all federal, state
or local environmental, health and/or safety-related laws, regulations,
standards, ordinances, rules, codes, orders, decrees, directives, guidelines,
permits or permit conditions, currently existing which are applicable to Tenant
or the Premises. Tenant and Tenant's Parties shall comply with all Environmental
Laws and promptly notify Landlord of the presence of any Hazardous Materials,
other than as permitted above, on the Premises or any violation of any
Environmental Law. Landlord shall have the right to inspect the Premises and to
conduct tests and investigations to determine whether Tenant is in compliance
with the foregoing provisions. If such tests indicate the presence of any
environmental condition, Tenant shall reimburse Landlord for the cost of
conducting such tests. The phrase "environmental condition" shall mean any
condition relating to any Hazardous Materials, including surface water,
groundwater, drinking water supply, land, surface or subsurface strata or the
ambient air and includes air, land and water pollutants, being present at the
Property in violation of Environmental Laws or in a manner which, in the
reasonable opinion of the Landlord's environmental consultant, is substantially
likely to cause health problems for occupants of the Premises or a future
violation of Environmental Law. In the event of any such environmental
condition, Tenant shall promptly take any and all steps necessary to rectify the
same or shall, at Tenant's election, reimburse Landlord, upon demand, for the
cost to Landlord of performing rectifying work. Upon the expiration or earlier
termination of this Lease, Tenant shall remove any and all Hazardous Materials
on, under or about the Premises.
10.2. Indemnification. Tenant shall indemnify, protect, defend
(by counsel acceptable to Landlord) and hold harmless Landlord and its partners,
directors, officers, employees, shareholders, lenders, agents, contractors and
each of their respective successors and assigns (individually and collectively,
"Indemnities") from and against any and all claims, judgments, causes of action,
damages, penalties, fines, taxes, costs, liabilities, losses and expenses
arising at any time during or after the Term as a result (directly or
indirectly) of or in connection with (a) Tenant and/or Tenant's Parties' breach
of any prohibition or provision of the preceding section, or (b) the presence of
Hazardous Materials on, under or about the Premises or other properties as a
result (directly or indirectly) of Tenant's and/or Tenant's Parties' activities,
or failure to act
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when legally required to do so in connection with the Premises. This indemnity
shall include the cost of any required or necessary repair, cleanup or
detoxification, and the preparation of any closure or other required plans,
whether such action is required or necessary prior to or following the
termination of this Lease. The written consent by Landlord to the presence of
Hazardous Materials on, under or about the Premises shall not excuse Tenant from
Tenant's obligation of indemnification pursuant hereto. Tenant's obligations
pursuant to the foregoing indemnity shall survive the termination of this Lease.
11. DAMAGE AND DESTRUCTION.
11.1. Casualty. If the Building should be damaged or destroyed
by fire or other casualty, Tenant shall give immediate written notice to
Landlord. Within thirty (30) days after receipt thereof, Landlord shall notify
Tenant whether such repairs can reasonably be made: (1) within thirty (30) days;
(2) in more than thirty (30) days but in less than ninety (90) days; or (3) in
more than ninety (90) days from the date of such notice.
11.1.1. Less Than 30 Days. If the Building should be
damaged only to such extent that rebuilding or repairs can be reasonably
completed within thirty (30) days, this Lease shall not terminate and, provided
that insurance proceeds are available to fully repair the damage, Landlord shall
repair the Building, except that Landlord shall not be required to rebuild,
repair or replace any alterations, partitions, fixtures, additions and other
improvements which may have been placed in, on or about the Building by or for
the benefit of Tenant. The Rent payable hereunder shall be abated
proportionately from the date Tenant vacates the Building only to the extent
rental abatement insurance proceeds are received by Landlord and the Building
are unfit for occupancy.
11.1.2. Greater Than 30 Days. If the Building should be
damaged only to such extent that rebuilding or repairs can be reasonably
completed in more than thirty (30) days but in less than ninety (90) days, then
Landlord shall have the option of: (1) terminating the Lease effective upon the
occurrence of such damage, in which event the Rent shall be abated from the date
Tenant vacates the Building; or (2) electing to repair the Building, provided
insurance proceeds are available to fully repair the damage (except that
Landlord shall not be required to rebuild, repair or replace any part of the
alterations, partitions, fixtures, additions and other improvements which may
have been placed in, on or about the Building by or for the benefit of Tenant).
The Rent payable hereunder shall be abated proportionately from the date Tenant
vacates the Building only to the extent rental abatement insurance proceeds are
received by Landlord and the Building is unfit for occupancy.
11.1.3. Greater Than 90 Days. If the Building should be
so damaged that rebuilding or repairs cannot be completed within ninety (90)
days, either Landlord or Tenant may terminate by giving written notice within
ten (10) days after notice from Landlord regarding the time period of repair;
and this Lease and the Rent shall be abated from the date Tenant vacates the
Building. In the event that neither party elects to terminate this Lease,
Landlord shall promptly commence and diligently prosecute to completion the
repairs to the Building , provided insurance proceeds are available to fully
repair the damage (except that Landlord shall not be required to rebuild, repair
or replace any alterations, partitions, fixtures, additions and other
improvements which may have been placed in, on or about the Building by or for
the benefit of
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Tenant). During the time when Landlord is prosecuting such repairs to
completion, the Rent payable hereunder shall be abated proportionately from the
date Tenant vacates the Building only to the extent rental abatement insurance
proceeds are received by Landlord and only during the period that the Building
is unfit for occupancy.
11.2. Tenant's Fault. If any portion of the Building is
damaged resulting from the fault, negligence or breach of this Lease by Tenant
or any of Tenant's Parties, Rent shall not be diminished during the repair of
such damage and Tenant shall be liable to Landlord for the cost of the repair
caused thereby to the extent such cost is not covered by insurance proceeds.
11.3. Uninsured Casualty. In the event that any portion of the
Building is damaged and is not fully covered by insurance proceeds received by
Landlord or in the event that the holder of any indebtedness secured by the
Premises requires that the insurance proceeds be applied to such indebtedness,
then Tenant shall have the right to terminate this Lease by delivering written
notice of termination to Landlord within thirty (30) days after the date of
notice to Tenant of any such event. In the event that Tenant does not elect to
terminate this Lease, Landlord shall have the right to terminate this Lease by
delivering written notice to Tenant within thirty (30) days after such election
by Tenant or Tenant's failure to elect, as applicable, whereupon all rights and
obligations shall cease and terminate hereunder.
11.4. Waiver. With respect to any damage or destruction which
Landlord is obligated to repair or may elect to repair, Tenant waives all rights
to terminate this Lease pursuant to rights otherwise presently or hereafter
accorded by law.
12. EMINENT DOMAIN.
12.1. Total Condemnation. If all of the Premises is condemned
by eminent domain, inversely condemned or sold in lieu of condemnation for any
public or quasi-public use or purpose ("Condemned"), this Lease shall terminate
as of the date of title vesting in such proceeding and Rent shall be adjusted to
the date of termination.
12.2. Partial Condemnation. If any portion of the Premises is
Condemned and such partial condemnation renders the Premises unusable for
Tenant's business, or if a substantial portion of the Building is Condemned,
this Lease shall terminate as of the date of title vesting or order of immediate
possession in such proceeding and Rent shall be adjusted to the date of
termination. If such partial condemnation does not render the Premises unusable
for the business of Tenant or less than a substantial portion of the Building is
Condemned, Landlord shall promptly restore the Premises to the extent of any
condemnation proceeds recovered by Landlord, excluding the portion thereof lost
in such condemnation, and this Lease shall continue in full force and effect
except that after the date of such title vesting Rent shall be adjusted, as
reasonably determined by Landlord.
12.3. Award. If the Premises are wholly or partially
Condemned, Landlord shall be entitled to the entire award paid for such
condemnation, and Tenant waives any claim to any part of the award from Landlord
or the condemning authority; provided that Tenant shall have the right to
recover from the condemning authority such compensation as may be separately
awarded
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to Tenant in connection with costs in removing Tenant's merchandise, furniture,
fixtures, leasehold improvements and equipment to a new location.
12.4. Temporary Condemnation. In the event of a temporary
condemnation, this Lease shall remain in effect, Tenant shall continue to pay
Rent and Tenant shall receive any award made for such condemnation. If a
temporary condemnation remains in effect at the expiration or earlier
termination of this Lease, Tenant shall pay Landlord the reasonable cost of
performing any obligations required of Tenant with respect to the surrender of
the Premises. If a temporary condemnation is for a period which extends beyond
the Term, this Lease shall terminate as of the date of occupancy by the
condemning authority and any such award shall be distributed in accordance with
the preceding section.
13. DEFAULT.
13.1. Events of Defaults. The occurrence of any of the
following events shall, at Landlord's option, constitute an "Event of Default":
13.1.1. Vacation or abandonment of the Premises for a
period of thirty (30) consecutive days, and Tenant waives any right to notice
Tenant may have under applicable law;
13.1.2. Failure to pay Rent on the date when due, the
failure continuing for a period of five (5) days after payment is due;
13.1.3. Failure to perform Tenant's covenants hereunder
(except default in the payment of Rent); provided, if such default is
susceptible of cure and Tenant has promptly commenced the cure of such default
and is diligently prosecuting such cure to completion, then the same must remain
uncured for thirty (30) days after written notice thereof from Landlord;
13.1.4. The making of a general assignment by Tenant for
the benefit of creditors, the filing of a voluntary petition by Tenant or the
filing of an involuntary petition by any of Tenant's creditors seeking the
rehabilitation, liquidation or reorganization of Tenant under any law relating
to bankruptcy, insolvency or other relief of debtors and, in the case of an
involuntary action, the failure to remove or discharge the same within sixty
(60) days of such filing, the appointment of a receiver or other custodian to
take possession of substantially all of Tenant's assets or this leasehold,
Tenant's insolvency or inability to pay Tenant's debts or failure generally to
pay Tenant's debts when due, any court entering a decree or order directing the
winding up or liquidation of Tenant or of substantially all of Tenant's assets,
Tenant taking any action toward the dissolution or winding up of Tenant's
affairs, the cessation or suspension of Tenant's use of the Premises, or the
attachment, execution or other judicial seizure of substantially all of Tenant's
assets or this leasehold;
13.1.5. The making of any material misrepresentation or
omission by Tenant in any materials delivered by or on behalf of Tenant to
Landlord pursuant to this Lease; or
13.1.6. A default by Tenant beyond any applicable notice
and cure period pursuant to the terms of any lease entered into between Landlord
and Tenant for space in the Project.
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13.2. Remedies.
13.2.1. Termination. In the event of the occurrence of
any Event of Default, Landlord shall have the right to give a written
termination notice to Tenant and, on the date specified in such notice, this
Lease shall terminate unless on or before such date all arrears of Rent and all
other sums payable by Tenant under this Lease and all costs and expenses
incurred by or on behalf of Landlord hereunder shall have been paid by Tenant
and all other Events of Default at the time existing shall have been fully
remedied to the satisfaction of Landlord.
13.2.1.1. Repossession. Following termination,
without prejudice to other remedies Landlord may have, Landlord may (i)
peaceably re-enter the Premises upon voluntary surrender by Tenant or remove
Tenant therefrom and any other persons occupying the Premises, using such legal
proceedings as may be available; (ii) repossess the Premises or relet the
Premises or any part thereof for such term (which may be for a term extending
beyond the Term), at such rental and upon such other terms and conditions as
Landlord in Landlord's sole discretion shall determine, with the right to make
reasonable alterations and repairs to the Premises; and (iii) remove all
personal property therefrom.
13.2.1.2. Unpaid Rent. Landlord shall have all
the rights and remedies of a landlord provided by applicable law, including the
right to recover from Tenant: (a) the worth, at the time of award, of the unpaid
Rent that had been earned at the time of termination, (b) the worth, at the time
of award, of the amount by which the unpaid Rent that would have been earned
after the date of termination until the time of award exceeds the amount of loss
of rent that Tenant proves could have been reasonably avoided, (c) the worth, at
the time of award, of the amount by which the unpaid Rent for the balance of the
Term after the time of award exceeds the amount of the loss of rent that Tenant
proves could have been reasonably avoided, and (d) any other amount, and court
costs, necessary to compensate Landlord for all detriment proximately caused by
Tenant's default. The phrase "worth, at the time of award," as used in (a) and
(b) above, shall be computed at the greater of 10% per annum or 5% per annum
plus the federal discount rate on advances to member banks in effect at the
Federal Reserve Bank of San Francisco on the 25th day of the month preceding the
date of this Lease, and as used in (c) above, shall be computed by discounting
such amount at the discount rate of the Federal Reserve Bank of San Francisco at
the time of award plus 1%.
13.2.2. Continuation. Even though an Event of Default
may have occurred, this Lease shall continue in effect for so long as Landlord
does not terminate Tenant's right to possession; and Landlord may enforce all of
Landlord's rights and remedies under this Lease, including the right to recover
Rent as it becomes due, and Landlord, without terminating this Lease, may,
during the period Tenant is in default, enter the Premises and relet the same,
or any portion thereof, to third parties for Tenant's account and Tenant shall
be liable to Landlord for all costs Landlord incurs in reletting the Premises,
including, without limitation, brokers' commissions, expenses of remodeling the
Premises and like costs. Reletting may be for a period shorter or longer than
the remaining Term. Tenant shall continue to pay the Rent on the date the same
is due. No act by Landlord hereunder, including acts of maintenance,
preservation or efforts to lease the Premises or the appointment of a receiver
upon application of Landlord to protect Landlord's interest under this Lease,
shall terminate this Lease unless Landlord notifies Tenant that Landlord elects
to terminate this Lease. In the event that Landlord elects to relet the
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Premises, the rent that Landlord receives from reletting shall be applied to the
payment of, first, any indebtedness from Tenant to Landlord other than Base Rent
and Additional Rent; second, all costs, including maintenance, incurred by
Landlord in reletting; and, third, Base Rent and Tenant's Share of Increases
under this Lease. After deducting the payments referred to above, any sum
remaining from the rental Landlord receives from reletting shall be held by
Landlord and applied in payment of future Rent as Rent becomes due under this
Lease. In no event shall Tenant be entitled to any excess rent received by
Landlord. If, on the date Rent is due under this Lease, the rent received from
the reletting is less than the Rent due on that date, Tenant shall pay to
Landlord, in addition to the remaining Rent due, all costs, including
maintenance, Landlord incurred in reletting that remain after applying the rent
received from reletting as provided hereinabove. So long as this Lease is not
terminated, Landlord shall have the right to remedy any default of Tenant, to
maintain or improve the Premises, to cause a receiver to be appointed to
administer the Premises and new or existing subleases and to add to the Rent
payable hereunder all of Landlord's reasonable costs in so doing, with interest
at the Applicable Interest Rate from the date of such expenditure.
13.3. Cumulative. Each right and remedy of Landlord provided
for herein or now or hereafter existing at law, in equity, by statute or
otherwise shall be cumulative and shall not preclude Landlord from exercising
any other rights or remedies provided for in this Lease or now or hereafter
existing at law or in equity, by statute or otherwise. No payment by Tenant of a
lesser amount than the Rent nor any endorsement on any check or letter
accompanying any check or payment as Rent shall be deemed an accord and
satisfaction of full payment of Rent; and Landlord may accept such payment
without prejudice to Landlord's right to recover the balance of such Rent or to
pursue other remedies.
14. ASSIGNMENT AND SUBLETTING. Tenant shall not assign or sublet,
whether voluntarily or involuntarily or by operation of law, the Premises or any
part thereof without Landlord's prior written approval, which shall not be
unreasonably withheld. The merger of Tenant with any other entity or the
transfer of any controlling or managing ownership or beneficial interest in
Tenant shall constitute an assignment hereunder. If Tenant desires to assign
this Lease or sublet any or all of the Building, Tenant shall give Landlord
written notice forty-five (45) days prior to the anticipated effective date of
the assignment or sublease. Landlord shall then have a period of thirty (30)
days following receipt of such notice and all related documents and agreements
associated with the assignment or sublease, including without limitation, the
financial statements of any proposed assignee or subtenant, to notify Tenant in
writing that Landlord elects: (1) to permit Tenant to assign this Lease or
sublet such space, subject however to Landlord's prior written approval of the
proposed assignee or subtenant and of any related documents or agreements
associated with the assignment or sublease received by Landlord hereunder or
reasonably requested by Landlord; (2) to disapprove such proposed assignment or
subletting or (3) to terminate this Lease as of the date specified in Landlord's
notice thereof. If Landlord should fail to notify Tenant in writing of such
election, Landlord shall be deemed to have elected option (2). This Lease may
not be assigned by operation of law. Any purported assignment or subletting
contrary to the provisions hereof shall be void. If Tenant receives rent or
other consideration for any such transfer in excess of the Rent, or in case of
the sublease of a portion of the Premises, in excess of such Rent that is fairly
allocable to such portion, after appropriate adjustments to assure that all
other payments required hereunder are appropriately taken into account, Tenant
shall pay Landlord one hundred percent (100%) of the
12
<PAGE> 17
difference between each such payment of rent or other consideration and the Rent
required hereunder. Landlord may, without waiving any rights or remedies,
collect rent from the assignee, subtenant or occupant and apply the net amount
collected to the Rent herein reserved and apportion any excess rent so collected
in accordance with the terms of the preceding sentence. Tenant shall continue to
be liable as a principal and not as a guarantor or surety to the same extent as
though no assignment or subletting had been made. Landlord may consent to
subsequent assignments or subletting of this Lease or amendments or
modifications to the Lease by assignees of Tenant without notifying Tenant or
any successor of Tenant and without obtaining their consent. No permitted
transfer shall be effective until there has been delivered to Landlord a
counterpart of the transfer instrument in which the transferee agrees to be and
remain jointly and severally liable with Tenant for the payment of Rent
pertaining to the space and for the performance of all the terms and provisions
of this Lease relating thereto arising on or after the date of the transfer.
Tenant shall not do any act which shall in any way encumber the title of
Landlord in and to the Premises, the Building or the Project.
15. ESTOPPEL, ATTORNMENT AND SUBORDINATION.
15.1. Estoppel. Within ten (10) days after request by
Landlord, Tenant shall deliver an estoppel certificate duly executed (and
acknowledged if required by any lender), in the form attached hereto as Exhibit
B, to any proposed mortgagee, purchaser or Landlord. Tenant's failure to deliver
said statement in such time period shall be conclusive upon Tenant that (a) this
Lease is in full force and effect, without modification except as may be
represented by Landlord; (b) there are no uncured defaults in Landlord's
performance and Tenant has no right of offset, counterclaim or deduction against
Rent hereunder; and (c) no more than one period's Base Rent has been paid in
advance. Landlord reserves the right to substitute a different form of estoppel
certificate upon the request of any proposed mortgagee or purchaser. If any
financier should require that this Lease be amended (other than in the
description of the Premises, the Term, the Permitted Use, the Rent or as will
substantially, materially and adversely affect the rights of Tenant), Landlord
shall give written notice thereof to Tenant, which notice shall be accompanied
by a Lease supplement embodying such amendments. Tenant shall, within ten (10)
days after the receipt of Landlord's notice, execute the tendered Lease
supplement.
15.2. Attornment. In the event of a foreclosure proceeding,
the exercise of the power of sale under any mortgage or deed of trust or the
termination of a ground lease, Tenant shall, if requested, attorn to the
purchaser thereupon and recognize such purchaser as Landlord under this Lease;
provided, however, Tenant's obligation to attorn to such purchaser shall be
conditioned upon Tenant's receipt of a non-disturbance agreement.
15.3. Subordination. This Lease shall be subject and
subordinate to all ground leases and the lien of all mortgages and deeds of
trust which now or hereafter affect the Premises or the Project or Landlord's
interest therein, or on or against all such ground leases, and all amendments
thereto, all without the necessity of Tenant's executing further instruments to
effect such subordination. If requested, Tenant shall execute whatever
documentation may be required to further effect the provisions of this
paragraph.
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<PAGE> 18
16. MISCELLANEOUS.
16.1. General.
16.1.1. Entire Agreement. This Lease sets forth all the
agreements between Landlord and Tenant concerning the Premises; and there are no
agreements either oral or written other than as set forth herein.
16.1.2. Time of Essence. Time is of the essence of this
Lease.
16.1.3. Attorneys' Fees. In any action which either
party brings to enforce its rights hereunder, the unsuccessful party shall pay
all costs incurred by the prevailing party including reasonable attorneys' fees,
to be fixed by the court, and said costs and attorneys' fees shall be a part of
the judgment in said action.
16.1.4. Severable. If any provision of this Lease or the
application of any such provision shall be held by a court of competent
jurisdiction to be invalid, void or unenforceable to any extent, the remaining
provisions of this Lease and the application thereof shall remain in full force
and effect and shall not be affected, impaired or invalidated.
16.1.5. Law. This Lease shall be construed and enforced
in accordance with the laws of the state in which the Premises are located.
16.1.6. No Option. Submission of this Lease to Tenant
for examination or negotiation does not constitute an option to lease, offer to
lease or a reservation of, or option for, the Premises; and this document shall
become effective and binding only upon the execution and delivery hereof by
Landlord and Tenant.
16.1.7. Successors and Assigns. This Lease shall be
binding upon and inure to the benefit of the successors and assigns of Landlord
and, to the extent assignment is approved by Landlord, Tenant.
16.1.8. Third Party Beneficiaries. Nothing herein is
intended to create any third party benefit.
16.1.9. Memorandum of Lease. Tenant shall not record
this Lease or a short form memorandum hereof without Landlord's prior written
consent.
16.1.10. Agency, Partnership or Joint Venture. Nothing
contained herein shall be deemed or construed by the parties hereto, nor by any
third party, as creating the relationship of principal and agent or of
partnership or of joint venture by the parties hereto, it being understood and
agreed that no provision contained in this Lease or any acts of the parties
hereto shall be deemed to create any relationship other than the relationship of
landlord and tenant.
16.1.11. Merger. The voluntary or other surrender of
this Lease by Tenant or a mutual cancellation thereof or a termination by
Landlord shall not work a merger and shall, at the option of Landlord, terminate
all or any existing subtenancies or may, at the option of Landlord, operate as
an assignment to Landlord of any or all of such subtenancies.
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<PAGE> 19
16.2. Signs. All signs and graphics of every kind visible in
or from public view or corridors, or the exterior of the Building or Premises
shall be subject to Landlord's prior written approval and shall be subject to
any applicable governmental laws, ordinances, and regulations and in compliance
with Landlord's signage program. Tenant shall remove all such signs and graphics
prior to the termination of this Lease. Such installations and removals shall be
made in such manner as to avoid injury or defacement of the Premises; and Tenant
shall repair any injury or defacement, including without limitation,
discoloration caused by such installation or removal.
16.3. Waiver. No waiver of any default or breach hereunder
shall be implied from any omission to take action on account thereof,
notwithstanding any custom and practice or course of dealing, and no waiver
shall affect any default other than the default specified in the waiver and then
said waiver shall be operative only for the time and to the extent therein
stated. Waivers of any covenant shall not be construed as a waiver of any
subsequent breach of the same. No waiver by either party of any provision under
this Lease shall be effective unless in writing and signed by such party.
16.4. Financial Statements. Tenant shall provide to any
lender, purchaser or Landlord, within ten (10) days after request, a current,
accurate, certified financial statement for Tenant and Tenant's business
prepared under generally accepted accounting principles consistently applied and
such other certified financial information or tax returns as may be reasonably
required by Landlord, purchaser or any lender of either.
16.5. Limitation of Liability. The obligations of Landlord
under this Lease are not personal obligations of the individual partners,
directors, officers, shareholders, agents or employees of Landlord; and Tenant
shall look solely to the Building for satisfaction of any liability and shall
not look to other assets of Landlord nor seek recourse against the assets of the
individual partners, directors, officers, shareholders, agents or employees of
Landlord. Whenever Landlord transfers its interest, Landlord shall be
automatically released from further performance under this Lease and from all
further liabilities and expenses hereunder and the transferee of Landlord's
interest shall assume all liabilities and obligations of Landlord hereunder from
the date of such transfer.
16.6. Notices. All notices to be given hereunder shall be in
writing and mailed postage prepaid by certified or registered mail, return
receipt requested, or delivered by personal or courier delivery, or sent by
facsimile (immediately followed by one of the preceding methods), to Landlord's
Address and Tenant's Address, or to such other place as Landlord or Tenant may
designate in a written notice given to the other party. Notices shall be deemed
served upon the earlier of receipt or three (3) days after the date of mailing.
16.7. Brokerage Commission. Tenant warrants to Landlord that
Tenant's sole contact with Landlord or with the Premises in connection with this
transaction has been directly with Landlord, and that no broker or finder can
properly claim a right to a commission or a finder's fee based upon contacts
between the claimant and Tenant. Tenant and Landlord, respectively, shall each
indemnify, defend by counsel acceptable to the other, protect and hold each
other harmless from and against any loss, cost or expense, including, but not
limited to, attorneys' fees and costs, resulting from any claim for a fee or
commission by any broker or finder in connection with the Premises and this
Lease.
15
<PAGE> 20
16.8. Authorization. Tenant shall furnish to Landlord, within
ten (10) days after written request, evidence satisfactory to Landlord that the
person who executed this Lease on behalf of Tenant was duly authorized to do so.
Each individual executing this Lease on behalf of Tenant represents and warrants
that he or she is duly authorized to execute and deliver this Lease on behalf of
Tenant and that such execution is binding upon Tenant.
16.9. Holding Over; Surrender.
16.9.1. If Tenant holds over the Premises or any part
thereof after expiration or the earlier termination of the Term, such holding
over shall constitute a month-to-month tenancy, at a rent equal to the Base Rent
in effect immediately prior to such holding over plus one hundred percent (100%)
thereof. This paragraph shall not be construed as Landlord's permission for
Tenant to hold over. Acceptance of Rent by Landlord following expiration or
termination shall not constitute a renewal of this Lease. Without limiting the
foregoing, if Tenant holds over the Premises or any part thereof after
expiration or the earlier termination of the Term, Tenant shall indemnify,
defend, protect and hold Landlord harmless from any and all claims (including
claims of succeeding tenants), causes of action, expenses (including reasonable
attorneys' fees), liabilities and lawsuits resulting from such a holdover.
16.9.2. Upon the termination of this Lease or Tenant's
right to possession of the Premises, Tenant will surrender the Premises,
together with all keys, in good condition and repair, reasonable wear and tear
excepted. Conditions existing because of Tenant's failure to perform
maintenance, repairs or replacements shall not be deemed "reasonable wear and
tear."
16.10. Joint and Several. If Tenant consists of more than one
person, the obligation of all such persons shall be joint and several.
16.11. Covenants and Conditions. Each provision to be
performed by Tenant hereunder shall be deemed to be both a covenant and a
condition.
16.12. Addenda. The Addenda attached hereto, if any, and
identified with this Lease and initialed by the parties hereto are incorporated
herein by this reference as if fully set forth herein.
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<PAGE> 21
IN WITNESS WHEREOF, the parties have executed this Lease as of
the date set forth above.
"Landlord"
NETWORK APPLIANCE, INC.
a California corporation
By: ___________________________________
Its: ___________________________________
"Tenant"
TRW INC., an Ohio corporation
By: ___________________________________
Its: ___________________________________
17
<PAGE> 22
EXHIBIT A
PREMISES
1
<PAGE> 23
EXHIBIT B
ESTOPPEL CERTIFICATE
______________________
______________________
______________________
______________________
Re: Lease dated _______________, 19___ ("Lease") by and
between ________________________________ ("Landlord") and
______________________________ ("Tenant").
Gentlemen:
Reference is made to the above-described Lease in which the
undersigned is the Tenant. We understand that you are entering into a
transaction with the Landlord which relates to, among other things, this Lease;
and we hereby, as a material inducement for you to enter into such transaction
with Landlord, represent that:
1. A true and correct copy of the Lease is attached hereto as
Exhibit 1.
2. There are no modifications, amendments, supplements,
arrangements, side letters or understandings, oral or written, of any sort,
modifying, amending, altering, supplementing or changing the terms of the Lease
except as follows: .
3. The Lease is in full force and effect, and the Lease has
been duly executed and delivered by, and is a binding obligation of, the Tenant
as set forth therein.
4. The undersigned acknowledges (a) that rent on the Lease has
been paid up to and including _______________, 19___, (b) that monthly rent
during the __________ (____) years of the term of the Lease is
____________________ Dollars ($____________) per month and (c) that rent has not
been paid for any period after _______________, 19___, and shall not be paid for
a period in excess of one (1) month in advance.
5. The improvements on the Premises are free from defects in
design, materials and workmanship; and the improvements meet all governmental
requirements, including, but not limited to, zoning and environmental
requirements.
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<PAGE> 24
6. The Lease is not in default, and Landlord has performed the
obligations required to be performed by Landlord under the terms thereof through
the date hereof.
Dated: _______________, 19___
Very truly yours,
"Tenant"
_____________________________________, a
________________________________________
By: ___________________________________
Its: ___________________________________
2
<PAGE> 25
SCHEDULE 1
HAZARDOUS MATERIALS
1
<PAGE> 1
EXHIBIT 10.44
INDUSTRIAL LEASE
(1350 Geneva)
Effective Date: December ___, 1999
DEFINED TERMS
Landlord: NETWORK APPLIANCE, INC., a California
corporation
Landlord's Address For Notice: 495 East Java Drive
Sunnyvale, California 94089
Attention: Mr. Thomas Bryant
Tenant: TRW INC., an Ohio corporation
Tenant's Address For Notice: TRW Inc.
12011 Sunset Hills Road
Reston, Virginia 20190
Attn: Ms. Marsha A. Klontz
And to:
TRW Electronic Systems
1330 Geneva Drive
P.O. Box 3510
Sunnyvale, California 94088-3510
Project: Certain parcels of land situated in Santa
Clara County, California consisting of
27.848 acres of land described as APN
#110-42.2.2.6.7.8, having addresses of 1345
and 1346 Crossman Avenue and 1330 and 1350
Geneva Drive in Sunnyvale, California
Building: 1350 Geneva, Sunnyvale, California
Premises: The Building, together with the Property
Property: That certain real property described in
Exhibit A hereto
Term: From the Commencement Date to June 30, 2002
Commencement Date: December ___, 1999
<PAGE> 2
Base Rent Per Month: Ninety-Nine Thousand Eight Hundred
Thirty-Seven and 25/100 Dollars
($99,837.25)
Lease Year: Shall refer to each three hundred
sixty-five (365) day period during the Term
commencing on the Commencement Date and on
each anniversary thereof.
Permitted Uses: General office purposes and no other uses
shall be permitted without the prior
written consent of Landlord.
EXHIBITS
A - Premises
B - Estoppel Certificate
The Defined Terms set forth above and the Exhibits attached
hereto are incorporated into and made a part of the following Lease. Each
reference in this Lease to any of the Defined Terms shall mean the respective
information above and shall be construed to incorporate all of the terms
provided under the particular Lease paragraph pertaining to such information. In
the event of any conflict between the Defined Terms and the provisions of the
Lease, the latter shall control.
LANDLORD (_________) AND TENANT (_________) AGREE.
initial initial
<PAGE> 3
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. PREMISES.................................................................................................1
1.1. Premises........................................................................................1
1.2. Reserved Rights.................................................................................1
1.3. As-Is...........................................................................................1
2. TERM.....................................................................................................1
3. RENT.....................................................................................................1
3.1. Base Rent.......................................................................................1
3.2. Late Charge and Interest........................................................................1
3.3. Net Lease.......................................................................................2
4. UTILITIES................................................................................................2
5. TAXES....................................................................................................2
5.1. Real Property Taxes.............................................................................2
5.2. Definition of Real Property Taxes...............................................................2
5.3. Personal Property Taxes.........................................................................3
6. INSURANCE................................................................................................3
6.1. Landlord........................................................................................3
6.2. Tenant..........................................................................................3
6.3. General.........................................................................................4
6.4. Indemnity.......................................................................................4
6.5. Exemption of Landlord from Liability............................................................5
7. REPAIRS AND MAINTENANCE..................................................................................5
7.1. Tenant..........................................................................................5
7.2. Landlord........................................................................................5
8. ALTERATIONS..............................................................................................5
8.1. Trade Fixtures; Alterations.....................................................................5
8.2. Damage; Removal.................................................................................6
8.3. Liens...........................................................................................6
9. USE......................................................................................................6
10. ENVIRONMENTAL MATTERS....................................................................................7
10.1. Hazardous Materials.............................................................................7
10.2. Indemnification.................................................................................7
11. DAMAGE AND DESTRUCTION...................................................................................8
11.1. Casualty........................................................................................8
11.2. Tenant's Fault..................................................................................9
11.3. Uninsured Casualty..............................................................................9
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C> <C>
11.4. Waiver..........................................................................................9
12. EMINENT DOMAIN...........................................................................................9
12.1. Total Condemnation..............................................................................9
12.2. Partial Condemnation............................................................................9
12.3. Award...........................................................................................9
12.4. Temporary Condemnation.........................................................................10
13. DEFAULT.................................................................................................10
13.1. Events of Defaults.............................................................................10
13.2. Remedies.......................................................................................11
13.3. Cumulative.....................................................................................12
14. ASSIGNMENT AND SUBLETTING...............................................................................12
15. ESTOPPEL, ATTORNMENT AND SUBORDINATION..................................................................13
15.1. Estoppel.......................................................................................13
15.2. Attornment.....................................................................................13
15.3. Subordination..................................................................................13
16. MISCELLANEOUS...........................................................................................14
16.1. General........................................................................................14
16.2. Signs..........................................................................................15
16.3. Waiver.........................................................................................15
16.4. Financial Statements...........................................................................15
16.5. Limitation of Liability........................................................................15
16.6. Notices........................................................................................15
16.7. Brokerage Commission...........................................................................15
16.8. Authorization..................................................................................16
16.9. Holding Over; Surrender........................................................................16
16.10. Joint and Several..............................................................................16
16.11. Covenants and Conditions.......................................................................16
16.12. Addenda........................................................................................16
</TABLE>
ii
<PAGE> 5
1. PREMISES.
1.1. Premises. Landlord hereby leases to Tenant the Premises as shown
on Exhibit A attached hereto, but excluding any other portion of the Project.
1.2. Reserved Rights. Landlord reserves the right to enter the Premises
upon reasonable notice to Tenant (except in case of an emergency) and/or to
undertake the following: inspect the Premises and/or the performance by Tenant
of the terms and conditions hereof. Landlord acknowledges and agrees that any
such activities by Landlord on the Premises shall be subject to any reasonable
security precautions created by Tenant as a result of any classified work
performed by Tenant in the Building on behalf of the United States Government.
1.3. As-Is . Tenant acknowledges that Tenant has owned and occupied the
Premises for an extensive period of time prior to the Commencement Date of this
Lease and, as such, is familiar with the physical condition thereof. Tenant
recognizes that Landlord would not lease the Premises except on an "as-is" basis
and that Landlord has made no representations of any kind in connection with
improvements or physical conditions on, or bearing on, the use or condition of
the Premises.
2. TERM. The Term of the Lease shall commence ("Commencement Date") on the
Commencement Date and expire on June 30, 2002. Tenant has determined that the
Premises are acceptable for Tenant's use; and acknowledges that Landlord has
made no representations or warranties in connection with the physical condition
of the Premises or Tenant's use of the same upon which Tenant has relied
directly or indirectly for any purpose.
3. RENT.
3.1. Base Rent. Tenant shall pay to Landlord, at such address as
Landlord shall from time to time designate in writing to Tenant for the payment
of Rent, the Base Rent, without notice, demand, offset or deduction, on the
first day of each calendar month. Upon the execution of this Lease, Tenant shall
pay to Landlord the first month's Base Rent. If the Term commences (or ends) on
a date other than the first (or last) day of a month, Tenant shall pay on the
Commencement Date or first day of the last month a pro rata portion of Base
Rent, prorated on a per diem basis with respect to the portion of the month
within the Term. All sums other than Base Rent which Tenant is obligated to pay
under this Lease shall be deemed to be additional rent due hereunder, whether or
not such sums are designated "additional rent." The term "Rent" means the Base
Rent and all additional rent payable hereunder.
3.2. Late Charge and Interest. The late payment of any Rent will cause
Landlord to incur additional costs, including administration and collection
costs and processing and accounting expenses and increased debt service. If
Landlord has not received any installment of Rent within five (5) days after
such amount is due, Tenant shall pay a late charge of ten percent (10%) of the
delinquent amount, which is agreed to represent a reasonable estimate of the
costs incurred by Landlord. In addition, all such delinquent amounts shall bear
interest from the date such amount was due until paid in full at a rate per
annum ("Applicable Interest Rate") equal to the greater of (a) five percent (5%)
per annum plus the then federal discount rate on advances to member banks in
effect at the Federal Reserve Bank of San Francisco on the 25th day of the
1
<PAGE> 6
month preceding the date of this Lease or (b) ten percent (10%); provided, in no
event shall the Applicable Interest Rate exceed the maximum interest rate
permitted by law which may be charged under such circumstances. Landlord and
Tenant recognize that the damage which Landlord shall suffer as a result of
Tenant's failure to pay such amounts is difficult to ascertain and said late
charge and interest are the best estimate of the damage which Landlord shall
suffer in the event of late payment.
3.3. Net Lease. Tenant acknowledges that the Rent shall be absolutely
net and carefree to the Landlord, except as set forth herein. Landlord shall not
be responsible for any costs, charges, expenses or outlays of any nature or kind
whatsoever arising from or relating to the Premises, except as provided for
herein. Tenant shall pay all such charges, impositions, costs and expenses of
every nature and kind to Landlord's complete exoneration.
4. UTILITIES. Tenant shall pay all charges for heat, water, gas,
electricity and any other utilities used on the Premises directly to the utility
provider. Landlord shall not be liable to Tenant for interruption in or
curtailment of any utility service, nor shall any such interruption or
curtailment constitute constructive eviction or grounds for rental abatement. In
the event the Premises is not separately metered, Landlord shall have the
option, subject to Landlord's review and the terms of this Lease, to cause the
Premises to be separately metered at Tenant's cost and expense.
5. TAXES.
5.1. Real Property Taxes. Tenant shall pay any and all of the Real
Property Taxes for the Premises to the relevant taxing authority on or before
the date due. Tenant shall provide Landlord with written evidence of such
payment of taxes concomitantly with the payment thereof.
5.2. Definition of Real Property Taxes. "Real Property Taxes" shall be
the sum of the following: all real property taxes, possessory interest taxes,
business or license taxes or fees, service payments in lieu of such taxes or
fees, annual or periodic license or use fees, excises, transit charges, housing
fund assessments, open space charges, childcare fees, school fees or any other
assessments, levies, fees or charges, general and special, ordinary and
extraordinary, unforeseen as well as foreseen (including fees "in-lieu" of any
such tax or assessment) which are assessed, levied, charged, confirmed or
imposed by any public authority upon the Project (or any real property
comprising any portion thereof) or its operations, together with all taxes,
assessments or other fees imposed by any public authority upon or measured by
any Rent or other charges payable hereunder, including any gross income tax or
excise tax levied by the local governmental authority, the federal government or
any other governmental body with respect to receipt of such rental, or upon,
with respect to or by reason of the development, possession, leasing, operation,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises or any portion thereof, or upon this transaction or any document to
which Tenant is a party creating or transferring an interest in the Premises,
together with any tax imposed in substitution, partially or totally, of any tax
previously included within the aforesaid definition or any additional tax the
nature of which was previously included within the aforesaid definition,
together with the costs and expenses (including attorneys fees) of challenging
any of the foregoing or seeking the reduction in or abatement, redemption or
return of any of the foregoing,
2
<PAGE> 7
but only to the extent of any such reduction,
abatement, redemption or return. Nothing contained in this Lease shall require
Tenant to pay any franchise, corporate, estate or inheritance tax of Landlord,
or any income, profits or revenue tax or charge upon the net income of Landlord.
5.3. Personal Property Taxes. Prior to delinquency, Tenant shall pay
all taxes and assessments levied upon trade fixtures, alterations, additions,
improvements, inventories and other personal property located and/or installed
on the Property by Tenant; and Tenant shall provide Landlord copies of receipts
for payment of all such taxes and assessments. To the extent any such taxes are
not separately assessed or billed to Tenant, Tenant shall pay the amount thereof
as invoiced by Landlord.
6. INSURANCE.
6.1. Landlord. Landlord shall, at Tenant's expense, obtain and keep in
force at all times the following insurance:
6.1.1. Building. Insurance insuring the Building and the
Landlord's interest in any betterments and improvements against fire and
extended coverage (including "all risk" coverage, earthquake/volcanic action,
flood and/or surface water insurance) for the full replacement cost of the
Building, with deductibles and the form and endorsements of such coverage as is
required by any synthetic lender of Landlord with an interest in the Building at
the time, together with rental value insurance against loss of Rent in an amount
equal to the amount of Rent for a period of at least twelve (12) months
commencing on the date of loss. Tenant shall reimburse Landlord for the cost of
such insurance for such period of time that is consistent with the Term of this
Lease within ten (10) business days of receipt of request therefor, provided
such request is accompanied by related invoices therefor.
6.2. Tenant. Tenant shall, at Tenant's expense, obtain and keep in
force at all times the following insurance:
6.2.1. Commercial General Liability Insurance (Occurrence Form). A
policy of commercial general liability insurance (occurrence form) having a
combined single limit of not less than Two Million Dollars ($2,000,000) per
occurrence providing coverage for, among other things, blanket contractual
liability, premises, products/completed operations and personal and advertising
injury coverage, with deletion of the exclusion for explosion, collapse or
underground hazard, if applicable, and, if necessary, Tenant shall provide for
restoration of the aggregate limit;
6.2.2. Automobile Liability Insurance. Comprehensive automobile
liability insurance having a combined single limit of not less than Two Million
Dollars ($2,000,000) per occurrence and insuring Tenant against liability for
claims arising out of ownership, maintenance, or use of any owned, hired or
non-owned automobiles;
6.2.3. Workers' Compensation and Employer's Liability Insurance.
Workers' compensation insurance having limits not less than those required by
state statute and federal statute, if applicable, and covering all persons
employed by Tenant in the conduct of its operations on the Premises (including
the all states endorsement and, if applicable, the volunteers
3
<PAGE> 8
endorsement), together with employer's liability insurance coverage in the
amount of at least One Million Dollars ($1,000,000); and
6.2.4. Property Insurance. "All risk" property insurance including
boiler and machinery comprehensive form, if applicable, covering damage to or
loss of any personal property, fixtures and equipment, including electronic data
processing equipment, of Tenant (and coverage for the full replacement cost
thereof including business interruption of Tenant) ("Tenant's Property").
6.3. General.
6.3.1. Insurance Companies. Insurance required to be maintained by
Tenant shall be written by companies licensed to do business in the state in
which the Premises are located and having a "General Policyholders Rating" of at
least A (or such higher rating as may be required by a lender having a lien on
the Premises) as set forth in the most current issue of "Best's Insurance
Guide."
6.3.2. Certificates of Insurance. Tenant shall deliver to Landlord
certificates of insurance for all insurance required to be maintained by Tenant
prior to the date of possession of the Premises. Tenant shall, at least ten (10)
days prior to expiration of the policy, furnish Landlord with certificates of
renewal or "binders" thereof. Each certificate shall expressly provide that such
policies shall not be cancelable or otherwise subject to modification except
after sixty (60) days prior written notice to the parties named as additional
insureds in this Lease (except in the case of cancellation for nonpayment of
premium in which case cancellation shall not take effect until at least (10)
days' notice has been given to Landlord). If Tenant fails to maintain any
insurance required in this Lease, Tenant shall be liable for all losses and cost
resulting from said failure.
6.3.3. Additional Insureds. Landlord and any property management
company of Landlord for the Premises shall be included as additional insureds,
to the extent that the Tenant has an obligation under Section 6.4, under all of
the policies required by Section 6.2.1. The policies required under Section
6.2.1 shall provide for severability of interest.
6.3.4. Primary Coverage. All insurance to be maintained by Tenant
shall, except for workers' compensation and employer's liability insurance, be
primary, without right of contribution from insurance of Landlord. The limits of
insurance maintained by Tenant shall not limit Tenant's liability under this
Lease.
6.3.5. Waiver of Subrogation. Landlord and Tenant each waives any
right to recover against the other for claims for damages to its property
covered by insurance. This provision is intended to waive fully, and for the
benefit of Landlord and Tenant, any rights and/or claims which might give rise
to a right of subrogation in favor of any insurance carrier.
6.4. Indemnity. Tenant shall indemnify, defend by counsel satisfactory
to Landlord, and hold harmless Landlord from and against any and all claims
arising from (i) Tenant's use of the Premises, the conduct of Tenant's business
or any activity, work or things done, permitted or suffered by Tenant in or
about the Premises, the Building or elsewhere and (ii) any breach or default in
the performance of any obligation on Tenant's part to be performed under the
terms of
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this Lease, arising from any negligence of Tenant or any of Tenant's agents,
contractors or employees, including all costs, attorneys' fees, expenses and
liabilities incurred in the defense of any such claim or any action or
proceeding brought thereon. Tenant, as a material part of the consideration to
Landlord, hereby assumes all risk of damage to property or injury to persons in,
upon or about the Premises or the Building arising from any cause; and Tenant
hereby waives all claims in respect thereof against Landlord except to the
extent such claims are caused by Landlord's gross negligence or willful
misconduct.
6.5. Exemption of Landlord from Liability. Tenant hereby agrees that
Landlord shall not be liable for injury to Tenant's business or any loss of
income therefrom or for damage to the property of Tenant, Tenant's employees,
invitees, customers or any other person in or about the Premises or the
Building, nor shall Landlord be liable for injury to the person of Tenant,
Tenant's employees, agents or contractors, whether such damage or injury is
caused by fire, steam, electricity, gas, water or rain, or from the breakage,
leakage or other defects of sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures, or from any other cause, whether said damage
or injury results from conditions arising upon the Premises, the Building or
from other sources or places, and regardless of whether the cause of such damage
or injury or the means of repairing the same is inaccessible to Tenant. Landlord
shall not be liable for any damages arising from any act or neglect of any other
tenant, if any, of the Building.
7. REPAIRS AND MAINTENANCE.
7.1. Tenant. Tenant shall keep and maintain any and all portions of the
Premises and the Building, including structural portions thereof, floors and
floor coverings, interior plumbing, HVAC and other building system equipment,
electrical wiring, fixtures and equipment in good repair and in a clean and safe
condition, and repair and/or replace any and all of the foregoing in a good and
workmanlike manner. Without limiting the foregoing, Tenant shall, at Tenant's
sole expense, (a) immediately replace all broken glass in the Premises with
glass equal to or in excess of the specification and quality of the original
glass; and (b) repair any area damaged by Tenant, Tenant's agents, employees,
invitees and visitors, including any damage caused by any roof penetration,
whether or not such roof penetration was approved by Landlord.
7.2. Landlord. Landlord shall have no obligation whatsoever to maintain
any portion of the Building or Premises. Tenant waives any right to repair at
the expense of Landlord under any applicable governmental laws, ordinances,
statutes, orders or regulations now or hereafter in effect respecting the
Premises.
8. ALTERATIONS.
8.1. Trade Fixtures; Alterations. Tenant may install necessary trade
fixtures, equipment and furniture in the Building, provided that such items are
installed and are removable without structural damage to the Building. Tenant
shall not make, or allow to be made, any alterations or physical additions in,
about or to the Premises that affect the structural aspects of the Building, the
Building roof or Building foundation without obtaining the prior written consent
of Landlord, which consent shall not be unreasonably withheld. Tenant shall
reimburse Landlord for all costs which Landlord may incur in connection with
granting approval to Tenant for any such alterations and additions, including
any costs or expenses which Landlord may
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incur in electing to have outside architects and engineers review said matters.
If a Notice of Completion is required for such work, Tenant shall file it and
provide Landlord with a copy. Tenant shall provide Landlord with a set of
"as-built" drawings for any such work.
8.2. Damage; Removal. Tenant assumes the risk of damage to any of
Tenant's fixtures, equipment, furniture or alterations. Tenant shall repair all
damage to the Premises and/or Building caused by the installation or removal of
such items. Upon the termination of this Lease, Tenant shall remove any or all
alterations, additions, improvements and partitions made or installed by Tenant
and restore the Premises to their condition existing prior to the construction
of any such items; provided, however, Landlord may permit, upon written notice
to Tenant (to the extent requested to do so by Tenant at the time notice thereof
is given), any such items designated by Landlord to remain on the Premises, in
which event they shall be and become the property of Landlord upon the
termination of this Lease. All such removals and restoration shall be
accomplished in a good and workmanlike manner and so as not to cause any damage
to the Premises, the Building or the Project whatsoever.
8.3. Liens. Tenant shall promptly pay and discharge all claims for
labor performed, supplies furnished and services rendered at the request of
Tenant and shall keep the Premises free of all mechanics' and materialmen's
liens in connection therewith. Tenant shall provide at least ten (10) days prior
written notice to Landlord before any labor is performed, supplies furnished or
services rendered on or at the Premises and Landlord shall have the right to
post on the Premises notices of non-responsibility. If any lien is filed,
Landlord may take such action as may be necessary to remove such lien and Tenant
shall pay Landlord such amounts expended by Landlord together with interest
thereon at the Applicable Interest Rate from the date of expenditure.
9. USE.
The Premises shall be used only for the Permitted Uses and for no
other uses and otherwise consistent with any applicable governmental laws,
ordinances, statutes, orders and regulations and any declaration of covenants,
conditions and restrictions or any supplement thereto which has been recorded in
any official or public records with respect to the Project or any portion
thereof. Tenant shall comply with all applicable governmental laws, ordinances,
and statutes applicable to the Premises or Building. Tenant shall not commit
waste, overload the floors or structure of the Building, subject the Premises or
the Project to any use which would damage the same or raise or violate any
insurance coverage, permit any unreasonable odors, smoke, dust, gas, substances,
noise or vibrations to emanate from the Premises, take any action which would
constitute a nuisance or would disturb, obstruct or endanger any other tenants,
take any action which would abrogate any warranties, or use or allow the
Premises to be used for any unlawful purpose. Tenant shall not use any parking
spaces for the Project other than the parking spaces located on the Premises.
Landlord shall not be responsible for non-compliance by any other tenant or
occupant with any of the rules or regulations or any other terms or provisions
of such tenant's or occupant's lease. Tenant shall promptly comply with the
reasonable requirements of any board of fire insurance underwriters or other
similar body now or hereafter constituted.
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10. ENVIRONMENTAL MATTERS.
10.1. Hazardous Materials. Tenant shall not cause, or allow any of
Tenant's employees, agents, customers, visitors, invitees, licensees,
contractors, assignees or subtenants (collectively, "Tenant's Parties") to cause
or permit, any Hazardous Materials to be brought upon, stored, manufactured,
generated, blended, handled, recycled, treated, disposed or used on, under or
about the Premises, the Building or the Project, except for routine office and
janitorial supplies and the Hazardous Materials listed on Schedule 1 hereto in
usual and customary quantities stored, used and disposed of in accordance with
all applicable Environmental Laws. As used herein, "Hazardous Materials" means
any chemical, substance, material, controlled substance, waste or combination
thereof which is hazardous to human health or safety or to the environment due
to its radioactivity, ignitability, corrosivity, reactivity, explosivity,
toxicity, carcinogenicity, mutagenicity or other harmful or potentially harmful
properties or effects, including, without limitation, petroleum and petroleum
products, asbestos, radon, polychlorinated biphenyls (PCBs) and all of those
chemicals, substances, materials, controlled substances, wastes or combinations
thereof which are listed, defined or regulated in any manner by any
Environmental Law based upon, directly or indirectly, such properties or
effects. As used herein, "Environmental Laws" means any and all federal, state
or local environmental, health and/or safety-related laws, regulations,
standards, ordinances, rules, codes, orders, decrees, directives, guidelines,
permits or permit conditions, currently existing which are applicable to Tenant
or the Premises. Tenant and Tenant's Parties shall comply with all Environmental
Laws and promptly notify Landlord of the presence of any Hazardous Materials,
other than as permitted above, on the Premises or any violation of any
Environmental Law. Landlord shall have the right to inspect the Premises and to
conduct tests and investigations to determine whether Tenant is in compliance
with the foregoing provisions. If such tests indicate the presence of any
environmental condition, Tenant shall reimburse Landlord for the cost of
conducting such tests. The phrase "environmental condition" shall mean any
condition relating to any Hazardous Materials, including surface water,
groundwater, drinking water supply, land, surface or subsurface strata or the
ambient air and includes air, land and water pollutants, being present at the
Property in violation of Environmental Laws or in a manner which, in the
reasonable opinion of the Landlord's environmental consultant, is substantially
likely to cause health problems for occupants of the Premises or a future
violation of Environmental Law. In the event of any such environmental
condition, Tenant shall promptly take any and all steps necessary to rectify the
same or shall, at Tenant's election, reimburse Landlord, upon demand, for the
cost to Landlord of performing rectifying work. Upon the expiration or earlier
termination of this Lease, Tenant shall remove any and all Hazardous Materials
on, under or about the Premises.
10.2. Indemnification. Tenant shall indemnify, protect, defend (by
counsel acceptable to Landlord) and hold harmless Landlord and its partners,
directors, officers, employees, shareholders, lenders, agents, contractors and
each of their respective successors and assigns (individually and collectively,
"Indemnities") from and against any and all claims, judgments, causes of action,
damages, penalties, fines, taxes, costs, liabilities, losses and expenses
arising at any time during or after the Term as a result (directly or
indirectly) of or in connection with (a) Tenant and/or Tenant's Parties' breach
of any prohibition or provision of the preceding section, or (b) the presence of
Hazardous Materials on, under or about the Premises or other properties as a
result (directly or indirectly) of Tenant's and/or Tenant's Parties' activities,
or failure to act
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when legally required to do so in connection with the Premises. This indemnity
shall include the cost of any required or necessary repair, cleanup or
detoxification, and the preparation of any closure or other required plans,
whether such action is required or necessary prior to or following the
termination of this Lease. The written consent by Landlord to the presence of
Hazardous Materials on, under or about the Premises shall not excuse Tenant from
Tenant's obligation of indemnification pursuant hereto. Tenant's obligations
pursuant to the foregoing indemnity shall survive the termination of this Lease.
11. DAMAGE AND DESTRUCTION.
11.1. Casualty. If the Building should be damaged or destroyed by fire
or other casualty, Tenant shall give immediate written notice to Landlord.
Within thirty (30) days after receipt thereof, Landlord shall notify Tenant
whether such repairs can reasonably be made: (1) within thirty (30) days; (2) in
more than thirty (30) days but in less than ninety (90) days; or (3) in more
than ninety (90) days from the date of such notice.
11.1.1. Less Than 30 Days. If the Building should be damaged only
to such extent that rebuilding or repairs can be reasonably completed within
thirty (30) days, this Lease shall not terminate and, provided that insurance
proceeds are available to fully repair the damage, Landlord shall repair the
Building, except that Landlord shall not be required to rebuild, repair or
replace any alterations, partitions, fixtures, additions and other improvements
which may have been placed in, on or about the Building by or for the benefit of
Tenant. The Rent payable hereunder shall be abated proportionately from the date
Tenant vacates the Building only to the extent rental abatement insurance
proceeds are received by Landlord and the Building are unfit for occupancy.
11.1.2. Greater Than 30 Days. If the Building should be damaged
only to such extent that rebuilding or repairs can be reasonably completed in
more than thirty (30) days but in less than ninety (90) days, then Landlord
shall have the option of: (1) terminating the Lease effective upon the
occurrence of such damage, in which event the Rent shall be abated from the date
Tenant vacates the Building; or (2) electing to repair the Building, provided
insurance proceeds are available to fully repair the damage (except that
Landlord shall not be required to rebuild, repair or replace any part of the
alterations, partitions, fixtures, additions and other improvements which may
have been placed in, on or about the Building by or for the benefit of Tenant).
The Rent payable hereunder shall be abated proportionately from the date Tenant
vacates the Building only to the extent rental abatement insurance proceeds are
received by Landlord and the Building is unfit for occupancy.
11.1.3. Greater Than 90 Days. If the Building should be so
damaged that rebuilding or repairs cannot be completed within ninety (90) days,
either Landlord or Tenant may terminate by giving written notice within ten (10)
days after notice from Landlord regarding the time period of repair; and this
Lease and the Rent shall be abated from the date Tenant vacates the Building. In
the event that neither party elects to terminate this Lease, Landlord shall
promptly commence and diligently prosecute to completion the repairs to the
Building , provided insurance proceeds are available to fully repair the damage
(except that Landlord shall not be required to rebuild, repair or replace any
alterations, partitions, fixtures, additions and other improvements which may
have been placed in, on or about the Building by or for the benefit of
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Tenant). During the time when Landlord is prosecuting such repairs to
completion, the Rent payable hereunder shall be abated proportionately from the
date Tenant vacates the Building only to the extent rental abatement insurance
proceeds are received by Landlord and only during the period that the Building
is unfit for occupancy.
11.2. Tenant's Fault. If any portion of the Building is damaged
resulting from the fault, negligence or breach of this Lease by Tenant or any of
Tenant's Parties, Rent shall not be diminished during the repair of such damage
and Tenant shall be liable to Landlord for the cost of the repair caused thereby
to the extent such cost is not covered by insurance proceeds.
11.3. Uninsured Casualty. In the event that any portion of the Building
is damaged and is not fully covered by insurance proceeds received by Landlord
or in the event that the holder of any indebtedness secured by the Premises
requires that the insurance proceeds be applied to such indebtedness, then
Tenant shall have the right to terminate this Lease by delivering written notice
of termination to Landlord within thirty (30) days after the date of notice to
Tenant of any such event. In the event that Tenant does not elect to terminate
this Lease, Landlord shall have the right to terminate this Lease by delivering
written notice to Tenant within thirty (30) days after such election by Tenant
or Tenant's failure to elect, as applicable, whereupon all rights and
obligations shall cease and terminate hereunder.
11.4. Waiver. With respect to any damage or destruction which Landlord
is obligated to repair or may elect to repair, Tenant waives all rights to
terminate this Lease pursuant to rights otherwise presently or hereafter
accorded by law.
12. EMINENT DOMAIN.
12.1. Total Condemnation. If all of the Premises is condemned by
eminent domain, inversely condemned or sold in lieu of condemnation for any
public or quasi-public use or purpose ("Condemned"), this Lease shall terminate
as of the date of title vesting in such proceeding and Rent shall be adjusted to
the date of termination.
12.2. Partial Condemnation. If any portion of the Premises is Condemned
and such partial condemnation renders the Premises unusable for Tenant's
business, or if a substantial portion of the Building is Condemned, this Lease
shall terminate as of the date of title vesting or order of immediate possession
in such proceeding and Rent shall be adjusted to the date of termination. If
such partial condemnation does not render the Premises unusable for the business
of Tenant or less than a substantial portion of the Building is Condemned,
Landlord shall promptly restore the Premises to the extent of any condemnation
proceeds recovered by Landlord, excluding the portion thereof lost in such
condemnation, and this Lease shall continue in full force and effect except that
after the date of such title vesting Rent shall be adjusted, as reasonably
determined by Landlord.
12.3. Award. If the Premises are wholly or partially Condemned,
Landlord shall be entitled to the entire award paid for such condemnation, and
Tenant waives any claim to any part of the award from Landlord or the condemning
authority; provided that Tenant shall have the right to recover from the
condemning authority such compensation as may be separately awarded
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to Tenant in connection with costs in removing Tenant's merchandise, furniture,
fixtures, leasehold improvements and equipment to a new location.
12.4. Temporary Condemnation. In the event of a temporary condemnation,
this Lease shall remain in effect, Tenant shall continue to pay Rent and Tenant
shall receive any award made for such condemnation. If a temporary condemnation
remains in effect at the expiration or earlier termination of this Lease, Tenant
shall pay Landlord the reasonable cost of performing any obligations required of
Tenant with respect to the surrender of the Premises. If a temporary
condemnation is for a period which extends beyond the Term, this Lease shall
terminate as of the date of occupancy by the condemning authority and any such
award shall be distributed in accordance with the preceding section.
13. DEFAULT.
13.1. Events of Defaults. The occurrence of any of the following events
shall, at Landlord's option, constitute an "Event of Default":
13.1.1. Vacation or abandonment of the Premises for a period of
thirty (30) consecutive days, and Tenant waives any right to notice Tenant may
have under applicable law;
13.1.2. Failure to pay Rent on the date when due, the failure
continuing for a period of five (5) days after payment is due;
13.1.3. Failure to perform Tenant's covenants hereunder (except
default in the payment of Rent); provided, if such default is susceptible of
cure and Tenant has promptly commenced the cure of such default and is
diligently prosecuting such cure to completion, then the same must remain
uncured for thirty (30) days after written notice thereof from Landlord;
13.1.4. The making of a general assignment by Tenant for the
benefit of creditors, the filing of a voluntary petition by Tenant or the filing
of an involuntary petition by any of Tenant's creditors seeking the
rehabilitation, liquidation or reorganization of Tenant under any law relating
to bankruptcy, insolvency or other relief of debtors and, in the case of an
involuntary action, the failure to remove or discharge the same within sixty
(60) days of such filing, the appointment of a receiver or other custodian to
take possession of substantially all of Tenant's assets or this leasehold,
Tenant's insolvency or inability to pay Tenant's debts or failure generally to
pay Tenant's debts when due, any court entering a decree or order directing the
winding up or liquidation of Tenant or of substantially all of Tenant's assets,
Tenant taking any action toward the dissolution or winding up of Tenant's
affairs, the cessation or suspension of Tenant's use of the Premises, or the
attachment, execution or other judicial seizure of substantially all of Tenant's
assets or this leasehold;
13.1.5. The making of any material misrepresentation or omission
by Tenant in any materials delivered by or on behalf of Tenant to Landlord
pursuant to this Lease; or
13.1.6. A default by Tenant beyond any applicable notice and cure
period pursuant to the terms of any lease entered into between Landlord and
Tenant for space in the Project.
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13.2. Remedies.
13.2.1. Termination. In the event of the occurrence of any Event
of Default, Landlord shall have the right to give a written termination notice
to Tenant and, on the date specified in such notice, this Lease shall terminate
unless on or before such date all arrears of Rent and all other sums payable by
Tenant under this Lease and all costs and expenses incurred by or on behalf of
Landlord hereunder shall have been paid by Tenant and all other Events of
Default at the time existing shall have been fully remedied to the satisfaction
of Landlord.
13.2.1.1. Repossession. Following termination, without
prejudice to other remedies Landlord may have, Landlord may (i) peaceably
re-enter the Premises upon voluntary surrender by Tenant or remove Tenant
therefrom and any other persons occupying the Premises, using such legal
proceedings as may be available; (ii) repossess the Premises or relet the
Premises or any part thereof for such term (which may be for a term extending
beyond the Term), at such rental and upon such other terms and conditions as
Landlord in Landlord's sole discretion shall determine, with the right to make
reasonable alterations and repairs to the Premises; and (iii) remove all
personal property therefrom.
13.2.1.2. Unpaid Rent. Landlord shall have all the rights
and remedies of a landlord provided by applicable law, including the right to
recover from Tenant: (a) the worth, at the time of award, of the unpaid Rent
that had been earned at the time of termination, (b) the worth, at the time of
award, of the amount by which the unpaid Rent that would have been earned after
the date of termination until the time of award exceeds the amount of loss of
rent that Tenant proves could have been reasonably avoided, (c) the worth, at
the time of award, of the amount by which the unpaid Rent for the balance of the
Term after the time of award exceeds the amount of the loss of rent that Tenant
proves could have been reasonably avoided, and (d) any other amount, and court
costs, necessary to compensate Landlord for all detriment proximately caused by
Tenant's default. The phrase "worth, at the time of award," as used in (a) and
(b) above, shall be computed at the greater of 10% per annum or 5% per annum
plus the federal discount rate on advances to member banks in effect at the
Federal Reserve Bank of San Francisco on the 25th day of the month preceding the
date of this Lease, and as used in (c) above, shall be computed by discounting
such amount at the discount rate of the Federal Reserve Bank of San Francisco at
the time of award plus 1%.
13.2.2. Continuation. Even though an Event of Default may have
occurred, this Lease shall continue in effect for so long as Landlord does not
terminate Tenant's right to possession; and Landlord may enforce all of
Landlord's rights and remedies under this Lease, including the right to recover
Rent as it becomes due, and Landlord, without terminating this Lease, may,
during the period Tenant is in default, enter the Premises and relet the same,
or any portion thereof, to third parties for Tenant's account and Tenant shall
be liable to Landlord for all costs Landlord incurs in reletting the Premises,
including, without limitation, brokers' commissions, expenses of remodeling the
Premises and like costs. Reletting may be for a period shorter or longer than
the remaining Term. Tenant shall continue to pay the Rent on the date the same
is due. No act by Landlord hereunder, including acts of maintenance,
preservation or efforts to lease the Premises or the appointment of a receiver
upon application of Landlord to protect Landlord's interest under this Lease,
shall terminate this Lease unless Landlord notifies Tenant that Landlord elects
to terminate this Lease. In the event that Landlord elects to relet the
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Premises, the rent that Landlord receives from reletting shall be applied to the
payment of, first, any indebtedness from Tenant to Landlord other than Base Rent
and Additional Rent; second, all costs, including maintenance, incurred by
Landlord in reletting; and, third, Base Rent and Tenant's Share of Increases
under this Lease. After deducting the payments referred to above, any sum
remaining from the rental Landlord receives from reletting shall be held by
Landlord and applied in payment of future Rent as Rent becomes due under this
Lease. In no event shall Tenant be entitled to any excess rent received by
Landlord. If, on the date Rent is due under this Lease, the rent received from
the reletting is less than the Rent due on that date, Tenant shall pay to
Landlord, in addition to the remaining Rent due, all costs, including
maintenance, Landlord incurred in reletting that remain after applying the rent
received from reletting as provided hereinabove. So long as this Lease is not
terminated, Landlord shall have the right to remedy any default of Tenant, to
maintain or improve the Premises, to cause a receiver to be appointed to
administer the Premises and new or existing subleases and to add to the Rent
payable hereunder all of Landlord's reasonable costs in so doing, with interest
at the Applicable Interest Rate from the date of such expenditure.
13.3. Cumulative. Each right and remedy of Landlord provided for herein
or now or hereafter existing at law, in equity, by statute or otherwise shall be
cumulative and shall not preclude Landlord from exercising any other rights or
remedies provided for in this Lease or now or hereafter existing at law or in
equity, by statute or otherwise. No payment by Tenant of a lesser amount than
the Rent nor any endorsement on any check or letter accompanying any check or
payment as Rent shall be deemed an accord and satisfaction of full payment of
Rent; and Landlord may accept such payment without prejudice to Landlord's right
to recover the balance of such Rent or to pursue other remedies.
14. ASSIGNMENT AND SUBLETTING. Tenant shall not assign or sublet, whether
voluntarily or involuntarily or by operation of law, the Premises or any part
thereof without Landlord's prior written approval, which shall not be
unreasonably withheld. The merger of Tenant with any other entity or the
transfer of any controlling or managing ownership or beneficial interest in
Tenant shall constitute an assignment hereunder. If Tenant desires to assign
this Lease or sublet any or all of the Building, Tenant shall give Landlord
written notice forty-five (45) days prior to the anticipated effective date of
the assignment or sublease. Landlord shall then have a period of thirty (30)
days following receipt of such notice and all related documents and agreements
associated with the assignment or sublease, including without limitation, the
financial statements of any proposed assignee or subtenant, to notify Tenant in
writing that Landlord elects: (1) to permit Tenant to assign this Lease or
sublet such space, subject however to Landlord's prior written approval of the
proposed assignee or subtenant and of any related documents or agreements
associated with the assignment or sublease received by Landlord hereunder or
reasonably requested by Landlord; (2) to disapprove such proposed assignment or
subletting or (3) to terminate this Lease as of the date specified in Landlord's
notice thereof. If Landlord should fail to notify Tenant in writing of such
election, Landlord shall be deemed to have elected option (2). This Lease may
not be assigned by operation of law. Any purported assignment or subletting
contrary to the provisions hereof shall be void. If Tenant receives rent or
other consideration for any such transfer in excess of the Rent, or in case of
the sublease of a portion of the Premises, in excess of such Rent that is fairly
allocable to such portion, after appropriate adjustments to assure that all
other payments required hereunder are appropriately taken into account, Tenant
shall pay Landlord one hundred percent (100%) of the
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difference between each such payment of rent or other consideration and the Rent
required hereunder. Landlord may, without waiving any rights or remedies,
collect rent from the assignee, subtenant or occupant and apply the net amount
collected to the Rent herein reserved and apportion any excess rent so collected
in accordance with the terms of the preceding sentence. Tenant shall continue to
be liable as a principal and not as a guarantor or surety to the same extent as
though no assignment or subletting had been made. Landlord may consent to
subsequent assignments or subletting of this Lease or amendments or
modifications to the Lease by assignees of Tenant without notifying Tenant or
any successor of Tenant and without obtaining their consent. No permitted
transfer shall be effective until there has been delivered to Landlord a
counterpart of the transfer instrument in which the transferee agrees to be and
remain jointly and severally liable with Tenant for the payment of Rent
pertaining to the space and for the performance of all the terms and provisions
of this Lease relating thereto arising on or after the date of the transfer.
Tenant shall not do any act which shall in any way encumber the title of
Landlord in and to the Premises, the Building or the Project.
15. ESTOPPEL, ATTORNMENT AND SUBORDINATION.
15.1. Estoppel. Within ten (10) days after request by Landlord, Tenant
shall deliver an estoppel certificate duly executed (and acknowledged if
required by any lender), in the form attached hereto as Exhibit B, to any
proposed mortgagee, purchaser or Landlord. Tenant's failure to deliver said
statement in such time period shall be conclusive upon Tenant that (a) this
Lease is in full force and effect, without modification except as may be
represented by Landlord; (b) there are no uncured defaults in Landlord's
performance and Tenant has no right of offset, counterclaim or deduction against
Rent hereunder; and (c) no more than one period's Base Rent has been paid in
advance. Landlord reserves the right to substitute a different form of estoppel
certificate upon the request of any proposed mortgagee or purchaser. If any
financier should require that this Lease be amended (other than in the
description of the Premises, the Term, the Permitted Use, the Rent or as will
substantially, materially and adversely affect the rights of Tenant), Landlord
shall give written notice thereof to Tenant, which notice shall be accompanied
by a Lease supplement embodying such amendments. Tenant shall, within ten (10)
days after the receipt of Landlord's notice, execute the tendered Lease
supplement.
15.2. Attornment. In the event of a foreclosure proceeding, the
exercise of the power of sale under any mortgage or deed of trust or the
termination of a ground lease, Tenant shall, if requested, attorn to the
purchaser thereupon and recognize such purchaser as Landlord under this Lease;
provided, however, Tenant's obligation to attorn to such purchaser shall be
conditioned upon Tenant's receipt of a non-disturbance agreement.
15.3. Subordination. This Lease shall be subject and subordinate to all
ground leases and the lien of all mortgages and deeds of trust which now or
hereafter affect the Premises or the Project or Landlord's interest therein, or
on or against all such ground leases, and all amendments thereto, all without
the necessity of Tenant's executing further instruments to effect such
subordination. If requested, Tenant shall execute whatever documentation may be
required to further effect the provisions of this paragraph.
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<PAGE> 18
16. MISCELLANEOUS.
16.1. General.
16.1.1. Entire Agreement. This Lease sets forth all the
agreements between Landlord and Tenant concerning the Premises; and there are no
agreements either oral or written other than as set forth herein.
16.1.2. Time of Essence. Time is of the essence of this Lease.
16.1.3. Attorneys' Fees. In any action which either party brings
to enforce its rights hereunder, the unsuccessful party shall pay all costs
incurred by the prevailing party including reasonable attorneys' fees, to be
fixed by the court, and said costs and attorneys' fees shall be a part of the
judgment in said action.
16.1.4. Severable. If any provision of this Lease or the
application of any such provision shall be held by a court of competent
jurisdiction to be invalid, void or unenforceable to any extent, the remaining
provisions of this Lease and the application thereof shall remain in full force
and effect and shall not be affected, impaired or invalidated.
16.1.5. Law. This Lease shall be construed and enforced in
accordance with the laws of the state in which the Premises are located.
16.1.6. No Option. Submission of this Lease to Tenant for
examination or negotiation does not constitute an option to lease, offer to
lease or a reservation of, or option for, the Premises; and this document shall
become effective and binding only upon the execution and delivery hereof by
Landlord and Tenant.
16.1.7. Successors and Assigns. This Lease shall be binding upon
and inure to the benefit of the successors and assigns of Landlord and, to the
extent assignment is approved by Landlord, Tenant.
16.1.8. Third Party Beneficiaries. Nothing herein is intended to
create any third party benefit.
16.1.9. Memorandum of Lease. Tenant shall not record this Lease
or a short form memorandum hereof without Landlord's prior written consent.
16.1.10. Agency, Partnership or Joint Venture. Nothing contained
herein shall be deemed or construed by the parties hereto, nor by any third
party, as creating the relationship of principal and agent or of partnership or
of joint venture by the parties hereto, it being understood and agreed that no
provision contained in this Lease or any acts of the parties hereto shall be
deemed to create any relationship other than the relationship of landlord and
tenant.
16.1.11. Merger. The voluntary or other surrender of this Lease
by Tenant or a mutual cancellation thereof or a termination by Landlord shall
not work a merger and shall, at the option of Landlord, terminate all or any
existing subtenancies or may, at the option of Landlord, operate as an
assignment to Landlord of any or all of such subtenancies.
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<PAGE> 19
16.2. Signs. All signs and graphics of every kind visible in or from
public view or corridors, or the exterior of the Building or Premises shall be
subject to Landlord's prior written approval and shall be subject to any
applicable governmental laws, ordinances, and regulations and in compliance with
Landlord's signage program. Tenant shall remove all such signs and graphics
prior to the termination of this Lease. Such installations and removals shall be
made in such manner as to avoid injury or defacement of the Premises; and Tenant
shall repair any injury or defacement, including without limitation,
discoloration caused by such installation or removal.
16.3. Waiver. No waiver of any default or breach hereunder shall be
implied from any omission to take action on account thereof, notwithstanding any
custom and practice or course of dealing, and no waiver shall affect any default
other than the default specified in the waiver and then said waiver shall be
operative only for the time and to the extent therein stated. Waivers of any
covenant shall not be construed as a waiver of any subsequent breach of the
same. No waiver by either party of any provision under this Lease shall be
effective unless in writing and signed by such party.
16.4. Financial Statements. Tenant shall provide to any lender,
purchaser or Landlord, within ten (10) days after request, a current, accurate,
certified financial statement for Tenant and Tenant's business prepared under
generally accepted accounting principles consistently applied and such other
certified financial information or tax returns as may be reasonably required by
Landlord, purchaser or any lender of either.
16.5. Limitation of Liability. The obligations of Landlord under this
Lease are not personal obligations of the individual partners, directors,
officers, shareholders, agents or employees of Landlord; and Tenant shall look
solely to the Building for satisfaction of any liability and shall not look to
other assets of Landlord nor seek recourse against the assets of the individual
partners, directors, officers, shareholders, agents or employees of Landlord.
Whenever Landlord transfers its interest, Landlord shall be automatically
released from further performance under this Lease and from all further
liabilities and expenses hereunder and the transferee of Landlord's interest
shall assume all liabilities and obligations of Landlord hereunder from the date
of such transfer.
16.6. Notices. All notices to be given hereunder shall be in writing
and mailed postage prepaid by certified or registered mail, return receipt
requested, or delivered by personal or courier delivery, or sent by facsimile
(immediately followed by one of the preceding methods), to Landlord's Address
and Tenant's Address, or to such other place as Landlord or Tenant may designate
in a written notice given to the other party. Notices shall be deemed served
upon the earlier of receipt or three (3) days after the date of mailing.
16.7. Brokerage Commission. Tenant warrants to Landlord that Tenant's
sole contact with Landlord or with the Premises in connection with this
transaction has been directly with Landlord, and that no broker or finder can
properly claim a right to a commission or a finder's fee based upon contacts
between the claimant and Tenant. Tenant and Landlord, respectively, shall each
indemnify, defend by counsel acceptable to the other, protect and hold each
other harmless from and against any loss, cost or expense, including, but not
limited to, attorneys' fees and costs, resulting from any claim for a fee or
commission by any broker or finder in connection with the Premises and this
Lease.
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<PAGE> 20
16.8. Authorization. Tenant shall furnish to Landlord, within ten (10)
days after written request, evidence satisfactory to Landlord that the person
who executed this Lease on behalf of Tenant was duly authorized to do so. Each
individual executing this Lease on behalf of Tenant represents and warrants that
he or she is duly authorized to execute and deliver this Lease on behalf of
Tenant and that such execution is binding upon Tenant.
16.9. Holding Over; Surrender.
16.9.1. If Tenant holds over the Premises or any part thereof
after expiration or the earlier termination of the Term, such holding over shall
constitute a month-to-month tenancy, at a rent equal to the Base Rent in effect
immediately prior to such holding over plus one hundred percent (100%) thereof.
This paragraph shall not be construed as Landlord's permission for Tenant to
hold over. Acceptance of Rent by Landlord following expiration or termination
shall not constitute a renewal of this Lease. Without limiting the foregoing, if
Tenant holds over the Premises or any part thereof after expiration or the
earlier termination of the Term, Tenant shall indemnify, defend, protect and
hold Landlord harmless from any and all claims (including claims of succeeding
tenants), causes of action, expenses (including reasonable attorneys' fees),
liabilities and lawsuits resulting from such a holdover.
16.9.2. Upon the termination of this Lease or Tenant's right to
possession of the Premises, Tenant will surrender the Premises, together with
all keys, in good condition and repair, reasonable wear and tear excepted.
Conditions existing because of Tenant's failure to perform maintenance, repairs
or replacements shall not be deemed "reasonable wear and tear."
16.10. Joint and Several. If Tenant consists of more than one person,
the obligation of all such persons shall be joint and several.
16.11. Covenants and Conditions. Each provision to be performed by
Tenant hereunder shall be deemed to be both a covenant and a condition.
16.12. Addenda. The Addenda attached hereto, if any, and identified
with this Lease and initialed by the parties hereto are incorporated herein by
this reference as if fully set forth herein.
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<PAGE> 21
IN WITNESS WHEREOF, the parties have executed this Lease as of
the date set forth above.
"Landlord"
NETWORK APPLIANCE, INC.
a California corporation
By: ___________________________________
Its: ___________________________________
"Tenant"
TRW INC., an Ohio corporation
By: ___________________________________
Its: ___________________________________
17
<PAGE> 22
EXHIBIT A
PREMISES
1
<PAGE> 23
EXHIBIT B
ESTOPPEL CERTIFICATE
_______________________
_______________________
_______________________
_______________________
Re: Lease dated _______________, 19___ ("Lease") by and
between ________________________________ ("Landlord")
and ______________________________ ("Tenant").
Gentlemen:
Reference is made to the above-described Lease in which the
undersigned is the Tenant. We understand that you are entering into a
transaction with the Landlord which relates to, among other things, this Lease;
and we hereby, as a material inducement for you to enter into such transaction
with Landlord, represent that:
1. A true and correct copy of the Lease is attached hereto as
Exhibit 1.
2. There are no modifications, amendments, supplements,
arrangements, side letters or understandings, oral or written, of any sort,
modifying, amending, altering, supplementing or changing the terms of the Lease
except as follows: .
3. The Lease is in full force and effect, and the Lease has
been duly executed and delivered by, and is a binding obligation of, the Tenant
as set forth therein.
4. The undersigned acknowledges (a) that rent on the Lease has
been paid up to and including _______________, 19___, (b) that monthly rent
during the __________ (____) years of the term of the Lease is
____________________ Dollars ($____________) per month and (c) that rent has not
been paid for any period after _______________, 19___, and shall not be paid for
a period in excess of one (1) month in advance.
5. The improvements on the Premises are free from defects in
design, materials and workmanship; and the improvements meet all governmental
requirements, including, but not limited to, zoning and environmental
requirements.
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<PAGE> 24
6. The Lease is not in default, and Landlord has performed the
obligations required to be performed by Landlord under the terms thereof through
the date hereof.
Dated: _______________, 19___
Very truly yours,
"Tenant"
_____________________________________, a
________________________________________
By: ___________________________________
Its: ___________________________________
2
<PAGE> 25
SCHEDULE 1
HAZARDOUS MATERIALS
1
<PAGE> 1
EXHIBIT 10.45
INDUSTRIAL LEASE
(1345 Crossman Avenue)
Effective Date: December ___, 1999
DEFINED TERMS
Landlord: NETWORK APPLIANCE, INC., a California
corporation
Landlord's Address For Notice: 495 East Java Drive
Sunnyvale, California 94089
Attention: Mr. Thomas Bryant
Tenant: TRW INC., an Ohio corporation
Tenant's Address For Notice: TRW Inc.
12011 Sunset Hills Road
Reston, Virginia 20190
Attn: Ms. Marsha A. Klontz
And to:
TRW Electronic Systems
1330 Geneva Drive
P.O. Box 3510
Sunnyvale, California 94088-3510
Project: Certain parcels of land situated in Santa
Clara County, California consisting of
27.848 acres of land described as APN
#110-42.2.2.6.7.8, having addresses of 1345
and 1346 Crossman Avenue and 1330 and 1350
Geneva Drive in Sunnyvale, California
Building: 1345 Crossman Avenue, Sunnyvale, California
Premises: The Building, together with the Property
Property: That certain real property described in
Exhibit A hereto
Term: From the Commencement Date to December 31,
2000
Commencement Date: December ___, 1999
<PAGE> 2
Base Rent Per Month: One Hundred Fifteen Thousand and No/100
Dollars ($115,000.00)
Lease Year: Shall refer to each three hundred sixty-five
(365) day period during the Term commencing
on the Commencement Date and on each
anniversary thereof.
Permitted Uses: General office purposes and no other uses
shall be permitted without the prior written
consent of Landlord.
EXHIBITS
A - Premises
B - Estoppel Certificate
The Defined Terms set forth above and the Exhibits attached
hereto are incorporated into and made a part of the following Lease. Each
reference in this Lease to any of the Defined Terms shall mean the respective
information above and shall be construed to incorporate all of the terms
provided under the particular Lease paragraph pertaining to such information. In
the event of any conflict between the Defined Terms and the provisions of the
Lease, the latter shall control.
LANDLORD (_________) AND TENANT (_________) AGREE.
initial initial
<PAGE> 3
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. PREMISES.................................................................................................1
1.1. Premises........................................................................................1
1.2. Reserved Rights.................................................................................1
1.3. As-Is...........................................................................................1
2. TERM.....................................................................................................1
3. RENT.....................................................................................................1
3.1. Base Rent.......................................................................................1
3.2. Late Charge and Interest........................................................................1
3.3. Net Lease.......................................................................................2
4. UTILITIES................................................................................................2
5. TAXES....................................................................................................2
5.1. Real Property Taxes.............................................................................2
5.2. Definition of Real Property Taxes...............................................................2
5.3. Personal Property Taxes.........................................................................3
6. INSURANCE................................................................................................3
6.1. Landlord........................................................................................3
6.2. Tenant..........................................................................................3
6.3. General.........................................................................................4
6.4. Indemnity.......................................................................................4
6.5. Exemption of Landlord from Liability............................................................5
7. REPAIRS AND MAINTENANCE..................................................................................5
7.1. Tenant..........................................................................................5
7.2. Landlord........................................................................................5
8. ALTERATIONS..............................................................................................5
8.1. Trade Fixtures; Alterations.....................................................................5
8.2. Damage; Removal.................................................................................6
8.3. Liens...........................................................................................6
9. USE......................................................................................................6
10. ENVIRONMENTAL MATTERS....................................................................................7
10.1. Hazardous Materials.............................................................................7
10.2. Indemnification.................................................................................7
11. DAMAGE AND DESTRUCTION...................................................................................8
11.1. Casualty........................................................................................8
11.2. Tenant's Fault..................................................................................9
11.3. Uninsured Casualty..............................................................................9
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C> <C>
11.4. Waiver..........................................................................................9
12. EMINENT DOMAIN...........................................................................................9
12.1. Total Condemnation..............................................................................9
12.2. Partial Condemnation............................................................................9
12.3. Award...........................................................................................9
12.4. Temporary Condemnation.........................................................................10
13. DEFAULT.................................................................................................10
13.1. Events of Defaults.............................................................................10
13.2. Remedies.......................................................................................11
13.3. Cumulative.....................................................................................12
14. ASSIGNMENT AND SUBLETTING...............................................................................12
15. ESTOPPEL, ATTORNMENT AND SUBORDINATION..................................................................13
15.1. Estoppel.......................................................................................13
15.2. Attornment.....................................................................................13
15.3. Subordination..................................................................................13
16. MISCELLANEOUS...........................................................................................14
16.1. General........................................................................................14
16.2. Signs..........................................................................................15
16.3. Waiver.........................................................................................15
16.4. Financial Statements...........................................................................15
16.5. Limitation of Liability........................................................................15
16.6. Notices........................................................................................15
16.7. Brokerage Commission...........................................................................15
16.8. Authorization..................................................................................16
16.9. Holding Over; Surrender........................................................................16
16.10. Joint and Several..............................................................................16
16.11. Covenants and Conditions.......................................................................16
16.12. Addenda........................................................................................16
</TABLE>
ii
<PAGE> 5
1. PREMISES.
1.1. Premises. Landlord hereby leases to Tenant the Premises as
shown on Exhibit A attached hereto, but excluding any other portion of the
Project.
1.2. Reserved Rights. Landlord reserves the right to enter the
Premises upon reasonable notice to Tenant (except in case of an emergency)
and/or to undertake the following: inspect the Premises and/or the performance
by Tenant of the terms and conditions hereof. Landlord acknowledges and agrees
that any such activities by Landlord on the Premises shall be subject to any
reasonable security precautions created by Tenant as a result of any classified
work performed by Tenant in the Building on behalf of the United States
Government.
1.3. As-Is. Tenant acknowledges that Tenant has owned and occupied
the Premises for an extensive period of time prior to the Commencement Date of
this Lease and, as such, is familiar with the physical condition thereof. Tenant
recognizes that Landlord would not lease the Premises except on an "as-is" basis
and that Landlord has made no representations of any kind in connection with
improvements or physical conditions on, or bearing on, the use or condition of
the Premises.
2. TERM. The Term of the Lease shall commence ("Commencement Date") on the
Commencement Date and expire on December 31, 2000. Tenant has determined that
the Premises are acceptable for Tenant's use; and acknowledges that Landlord has
made no representations or warranties in connection with the physical condition
of the Premises or Tenant's use of the same upon which Tenant has relied
directly or indirectly for any purpose.
3. RENT.
3.1. Base Rent. Tenant shall pay to Landlord, at such address as
Landlord shall from time to time designate in writing to Tenant for the payment
of Rent, the Base Rent, without notice, demand, offset or deduction, on the
first day of each calendar month. Upon the execution of this Lease, Tenant shall
pay to Landlord the first month's Base Rent. If the Term commences (or ends) on
a date other than the first (or last) day of a month, Tenant shall pay on the
Commencement Date or first day of the last month a pro rata portion of Base
Rent, prorated on a per diem basis with respect to the portion of the month
within the Term. All sums other than Base Rent which Tenant is obligated to pay
under this Lease shall be deemed to be additional rent due hereunder, whether or
not such sums are designated "additional rent." The term "Rent" means the Base
Rent and all additional rent payable hereunder.
3.2. Late Charge and Interest. The late payment of any Rent will cause
Landlord to incur additional costs, including administration and collection
costs and processing and accounting expenses and increased debt service. If
Landlord has not received any installment of Rent within five (5) days after
such amount is due, Tenant shall pay a late charge of ten percent (10%) of the
delinquent amount, which is agreed to represent a reasonable estimate of the
costs incurred by Landlord. In addition, all such delinquent amounts shall bear
interest from the date such amount was due until paid in full at a rate per
annum ("Applicable Interest Rate") equal to the greater of (a) five percent (5%)
per annum plus the then federal discount rate on advances to member banks in
effect at the Federal Reserve Bank of San Francisco on the 25th day of the
1
<PAGE> 6
month preceding the date of this Lease or (b) ten percent (10%); provided, in no
event shall the Applicable Interest Rate exceed the maximum interest rate
permitted by law which may be charged under such circumstances. Landlord and
Tenant recognize that the damage which Landlord shall suffer as a result of
Tenant's failure to pay such amounts is difficult to ascertain and said late
charge and interest are the best estimate of the damage which Landlord shall
suffer in the event of late payment.
3.3. Net Lease. Tenant acknowledges that the Rent shall be absolutely
net and carefree to the Landlord, except as set forth herein. Landlord shall nit
be responsible for any costs, charges, expenses or outlays of any nature or kind
whatsoever arising from or relating to the Premises, except as provided for
herein. Tenant shall pay all such charges, impositions, costs and expenses of
every nature and kind to Landlord's complete exoneration.
4. UTILITIES. Tenant shall pay all charges for heat, water, gas,
electricity and any other utilities used on the Premises directly to the utility
provider. Landlord shall not be liable to Tenant for interruption in or
curtailment of any utility service, nor shall any such interruption or
curtailment constitute constructive eviction or grounds for rental abatement. In
the event the Premises is not separately metered, Landlord shall have the
option, subject to Landlord's review and the terms of this Lease, to cause the
Premises to be separately metered at Tenant's cost and expense.
5. TAXES.
5.1. Real Property Taxes. Tenant shall pay any and all of the Real
Property Taxes for the Premises to the relevant taxing authority on or before
the date due. Tenant shall provide Landlord with written evidence of such
payment of taxes concomitantly with the payment thereof.
5.2. Definition of Real Property Taxes. "Real Property Taxes" shall be
the sum of the following: all real property taxes, possessory interest taxes,
business or license taxes or fees, service payments in lieu of such taxes or
fees, annual or periodic license or use fees, excises, transit charges, housing
fund assessments, open space charges, childcare fees, school fees or any other
assessments, levies, fees or charges, general and special, ordinary and
extraordinary, unforeseen as well as foreseen (including fees "in-lieu" of any
such tax or assessment) which are assessed, levied, charged, confirmed or
imposed by any public authority upon the Project (or any real property
comprising any portion thereof) or its operations, together with all taxes,
assessments or other fees imposed by any public authority upon or measured by
any Rent or other charges payable hereunder, including any gross income tax or
excise tax levied by the local governmental authority, the federal government or
any other governmental body with respect to receipt of such rental, or upon,
with respect to or by reason of the development, possession, leasing, operation,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises or any portion thereof, or upon this transaction or any document to
which Tenant is a party creating or transferring an interest in the Premises,
together with any tax imposed in substitution, partially or totally, of any tax
previously included within the aforesaid definition or any additional tax the
nature of which was previously included within the aforesaid definition,
together with the costs and expenses (including attorneys fees) of challenging
any of the foregoing or seeking the reduction in or abatement, redemption or
return of any of the foregoing,
2
<PAGE> 7
but only to the extent of any such reduction, abatement, redemption or return.
Nothing contained in this Lease shall require Tenant to pay any franchise,
corporate, estate or inheritance tax of Landlord, or any income, profits or
revenue tax or charge upon the net income of Landlord.
5.3. Personal Property Taxes. Prior to delinquency, Tenant shall pay
all taxes and assessments levied upon trade fixtures, alterations, additions,
improvements, inventories and other personal property located and/or installed
on the Property by Tenant; and Tenant shall provide Landlord copies of receipts
for payment of all such taxes and assessments. To the extent any such taxes are
not separately assessed or billed to Tenant, Tenant shall pay the amount thereof
as invoiced by Landlord.
6. INSURANCE.
6.1. Landlord. Landlord shall, at Tenant's expense, obtain and keep in
force at all times the following insurance:
6.1.1. Building. Insurance insuring the Building and the
Landlord's interest in any betterments and improvements against fire and
extended coverage (including "all risk" coverage, earthquake/volcanic action,
flood and/or surface water insurance) for the full replacement cost of the
Building, with deductibles and the form and endorsements of such coverage as is
required by any synthetic lender of Landlord with an interest in the Building at
the time, together with rental value insurance against loss of Rent in an amount
equal to the amount of Rent for a period of at least twelve (12) months
commencing on the date of loss. Tenant shall reimburse Landlord for the cost of
such insurance for such period of time that is consistent with the Term of this
Lease within ten (10) business days of receipt of request therefor, provided
such request is accompanied by related invoices therefor.
6.2. Tenant. Tenant shall, at Tenant's expense, obtain and keep in
force at all times the following insurance:
6.2.1. Commercial General Liability Insurance (Occurrence Form). A
policy of commercial general liability insurance (occurrence form) having a
combined single limit of not less than Two Million Dollars ($2,000,000) per
occurrence providing coverage for, among other things, blanket contractual
liability, premises, products/completed operations and personal and advertising
injury coverage, with deletion of the exclusion for explosion, collapse or
underground hazard, if applicable, and, if necessary, Tenant shall provide for
restoration of the aggregate limit;
6.2.2. Automobile Liability Insurance. Comprehensive automobile
liability insurance having a combined single limit of not less than Two Million
Dollars ($2,000,000) per occurrence and insuring Tenant against liability for
claims arising out of ownership, maintenance, or use of any owned, hired or
non-owned automobiles;
6.2.3. Workers' Compensation and Employer's Liability Insurance.
Workers' compensation insurance having limits not less than those required by
state statute and federal statute, if applicable, and covering all persons
employed by Tenant in the conduct of its operations on the Premises (including
the all states endorsement and, if applicable, the volunteers
3
<PAGE> 8
endorsement), together with employer's liability insurance coverage in the
amount of at least One Million Dollars ($1,000,000); and
6.2.4. Property Insurance. "All risk" property insurance including
boiler and machinery comprehensive form, if applicable, covering damage to or
loss of any personal property, fixtures and equipment, including electronic data
processing equipment, of Tenant (and coverage for the full replacement cost
thereof including business interruption of Tenant) ("Tenant's Property").
6.3. General.
6.3.1. Insurance Companies. Insurance required to be maintained by
Tenant shall be written by companies licensed to do business in the state in
which the Premises are located and having a "General Policyholders Rating" of at
least A (or such higher rating as may be required by a lender having a lien on
the Premises) as set forth in the most current issue of "Best's Insurance
Guide."
6.3.2. Certificates of Insurance. Tenant shall deliver to Landlord
certificates of insurance for all insurance required to be maintained by Tenant
prior to the date of possession of the Premises. Tenant shall, at least ten (10)
days prior to expiration of the policy, furnish Landlord with certificates of
renewal or "binders" thereof. Each certificate shall expressly provide that such
policies shall not be cancelable or otherwise subject to modification except
after sixty (60) days prior written notice to the parties named as additional
insureds in this Lease (except in the case of cancellation for nonpayment of
premium in which case cancellation shall not take effect until at least (10)
days' notice has been given to Landlord). If Tenant fails to maintain any
insurance required in this Lease, Tenant shall be liable for all losses and cost
resulting from said failure.
6.3.3. Additional Insureds. Landlord and any property management
company of Landlord for the Premises shall be included as additional insureds,
to the extent that the Tenant has an obligation under Section 6.4, under all of
the policies required by Section 6.2.1. The policies required under Section
6.2.1 shall provide for severability of interest.
6.3.4. Primary Coverage. All insurance to be maintained by Tenant
shall, except for workers' compensation and employer's liability insurance, be
primary, without right of contribution from insurance of Landlord. The limits of
insurance maintained by Tenant shall not limit Tenant's liability under this
Lease.
6.3.5. Waiver of Subrogation. Landlord and Tenant each waives any
right to recover against the other for claims for damages to its property
covered by insurance. This provision is intended to waive fully, and for the
benefit of Landlord and Tenant, any rights and/or claims which might give rise
to a right of subrogation in favor of any insurance carrier.
6.4. Indemnity. Tenant shall indemnify, defend by counsel satisfactory
to Landlord, and hold harmless Landlord from and against any and all claims
arising from (i) Tenant's use of the Premises, the conduct of Tenant's business
or any activity, work or things done, permitted or suffered by Tenant in or
about the Premises, the Building or elsewhere and (ii) any breach or default in
the performance of any obligation on Tenant's part to be performed under the
terms of
4
<PAGE> 9
this Lease, arising from any negligence of Tenant or any of Tenant's agents,
contractors or employees, including all costs, attorneys' fees, expenses and
liabilities incurred in the defense of any such claim or any action or
proceeding brought thereon. Tenant, as a material part of the consideration to
Landlord, hereby assumes all risk of damage to property or injury to persons in,
upon or about the Premises or the Building arising from any cause; and Tenant
hereby waives all claims in respect thereof against Landlord except to the
extent such claims are caused by Landlord's gross negligence or willful
misconduct.
6.5. Exemption of Landlord from Liability. Tenant hereby agrees that
Landlord shall not be liable for injury to Tenant's business or any loss of
income therefrom or for damage to the property of Tenant, Tenant's employees,
invitees, customers or any other person in or about the Premises or the
Building, nor shall Landlord be liable for injury to the person of Tenant,
Tenant's employees, agents or contractors, whether such damage or injury is
caused by fire, steam, electricity, gas, water or rain, or from the breakage,
leakage or other defects of sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures, or from any other cause, whether said damage
or injury results from conditions arising upon the Premises, the Building or
from other sources or places, and regardless of whether the cause of such damage
or injury or the means of repairing the same is inaccessible to Tenant. Landlord
shall not be liable for any damages arising from any act or neglect of any other
tenant, if any, of the Building.
7. REPAIRS AND MAINTENANCE.
7.1. Tenant. Tenant shall keep and maintain any and all portions of the
Premises and the Building, including structural portions thereof, floors and
floor coverings, interior plumbing, HVAC and other building system equipment,
electrical wiring, fixtures and equipment in good repair and in a clean and safe
condition, and repair and/or replace any and all of the foregoing in a good and
workmanlike manner. Without limiting the foregoing, Tenant shall, at Tenant's
sole expense, (a) immediately replace all broken glass in the Premises with
glass equal to or in excess of the specification and quality of the original
glass; and (b) repair any area damaged by Tenant, Tenant's agents, employees,
invitees and visitors, including any damage caused by any roof penetration,
whether or not such roof penetration was approved by Landlord.
7.2. Landlord. Landlord shall have no obligation whatsoever to maintain
any portion of the Building or Premises. Tenant waives any right to repair at
the expense of Landlord under any applicable governmental laws, ordinances,
statutes, orders or regulations now or hereafter in effect respecting the
Premises.
8. ALTERATIONS.
8.1. Trade Fixtures; Alterations. Tenant may install necessary trade
fixtures, equipment and furniture in the Building, provided that such items are
installed and are removable without structural damage to the Building. Tenant
shall not make, or allow to be made, any alterations or physical additions in,
about or to the Premises that affect the structural aspects of the Building, the
Building roof or Building foundation without obtaining the prior written consent
of Landlord, which consent shall not be unreasonably withheld. Tenant shall
reimburse Landlord for all costs which Landlord may incur in connection with
granting approval to Tenant for any such alterations and additions, including
any costs or expenses which Landlord may
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incur in electing to have outside architects and engineers review said matters.
If a Notice of Completion is required for such work, Tenant shall file it and
provide Landlord with a copy. Tenant shall provide Landlord with a set of
"as-built" drawings for any such work.
8.2. Damage; Removal. Tenant assumes the risk of damage to any of
Tenant's fixtures, equipment, furniture or alterations. Tenant shall repair all
damage to the Premises and/or Building caused by the installation or removal of
such items. Upon the termination of this Lease, Tenant shall remove any or all
alterations, additions, improvements and partitions made or installed by Tenant
and restore the Premises to their condition existing prior to the construction
of any such items; provided, however, Landlord may permit, upon written notice
to Tenant (to the extent requested to do so by Tenant at the time notice thereof
is given), any such items designated by Landlord to remain on the Premises, in
which event they shall be and become the property of Landlord upon the
termination of this Lease. All such removals and restoration shall be
accomplished in a good and workmanlike manner and so as not to cause any damage
to the Premises, the Building or the Project whatsoever.
8.3. Liens. Tenant shall promptly pay and discharge all claims for
labor performed, supplies furnished and services rendered at the request of
Tenant and shall keep the Premises free of all mechanics' and materialmen's
liens in connection therewith. Tenant shall provide at least ten (10) days prior
written notice to Landlord before any labor is performed, supplies furnished or
services rendered on or at the Premises and Landlord shall have the right to
post on the Premises notices of non-responsibility. If any lien is filed,
Landlord may take such action as may be necessary to remove such lien and Tenant
shall pay Landlord such amounts expended by Landlord together with interest
thereon at the Applicable Interest Rate from the date of expenditure.
9. USE.
The Premises shall be used only for the Permitted Uses and for no
other uses and otherwise consistent with any applicable governmental laws,
ordinances, statutes, orders and regulations and any declaration of covenants,
conditions and restrictions or any supplement thereto which has been recorded in
any official or public records with respect to the Project or any portion
thereof. Tenant shall comply with all applicable governmental laws, ordinances,
and statutes applicable to the Premises or Building. Tenant shall not commit
waste, overload the floors or structure of the Building, subject the Premises or
the Project to any use which would damage the same or raise or violate any
insurance coverage, permit any unreasonable odors, smoke, dust, gas, substances,
noise or vibrations to emanate from the Premises, take any action which would
constitute a nuisance or would disturb, obstruct or endanger any other tenants,
take any action which would abrogate any warranties, or use or allow the
Premises to be used for any unlawful purpose. Tenant shall not use any parking
spaces for the Project other than the parking spaces located on the Premises.
Landlord shall not be responsible for non-compliance by any other tenant or
occupant with any of the rules or regulations or any other terms or provisions
of such tenant's or occupant's lease. Tenant shall promptly comply with the
reasonable requirements of any board of fire insurance underwriters or other
similar body now or hereafter constituted.
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10. ENVIRONMENTAL MATTERS.
10.1. Hazardous Materials. Tenant shall not cause, or allow any of
Tenant's employees, agents, customers, visitors, invitees, licensees,
contractors, assignees or subtenants (collectively, "Tenant's Parties") to cause
or permit, any Hazardous Materials to be brought upon, stored, manufactured,
generated, blended, handled, recycled, treated, disposed or used on, under or
about the Premises, the Building or the Project, except for routine office and
janitorial supplies and the Hazardous Materials listed on Schedule 1 hereto in
usual and customary quantities stored, used and disposed of in accordance with
all applicable Environmental Laws. As used herein, "Hazardous Materials" means
any chemical, substance, material, controlled substance, waste or combination
thereof which is hazardous to human health or safety or to the environment due
to its radioactivity, ignitability, corrosivity, reactivity, explosivity,
toxicity, carcinogenicity, mutagenicity or other harmful or potentially harmful
properties or effects, including, without limitation, petroleum and petroleum
products, asbestos, radon, polychlorinated biphenyls (PCBs) and all of those
chemicals, substances, materials, controlled substances, wastes or combinations
thereof which are listed, defined or regulated in any manner by any
Environmental Law based upon, directly or indirectly, such properties or
effects. As used herein, "Environmental Laws" means any and all federal, state
or local environmental, health and/or safety-related laws, regulations,
standards, ordinances, rules, codes, orders, decrees, directives, guidelines,
permits or permit conditions, currently existing which are applicable to Tenant
or the Premises. Tenant and Tenant's Parties shall comply with all Environmental
Laws and promptly notify Landlord of the presence of any Hazardous Materials,
other than as permitted above, on the Premises or any violation of any
Environmental Law. Landlord shall have the right to inspect the Premises and to
conduct tests and investigations to determine whether Tenant is in compliance
with the foregoing provisions. If such tests indicate the presence of any
environmental condition, Tenant shall reimburse Landlord for the cost of
conducting such tests. The phrase "environmental condition" shall mean any
condition relating to any Hazardous Materials, including surface water,
groundwater, drinking water supply, land, surface or subsurface strata or the
ambient air and includes air, land and water pollutants, being present at the
Property in violation of Environmental Laws or in a manner which, in the
reasonable opinion of the Landlord's environmental consultant, is substantially
likely to cause health problems for occupants of the Premises or a future
violation of Environmental Law. In the event of any such environmental
condition, Tenant shall promptly take any and all steps necessary to rectify the
same or shall, at Tenant's election, reimburse Landlord, upon demand, for the
cost to Landlord of performing rectifying work. Upon the expiration or earlier
termination of this Lease, Tenant shall remove any and all Hazardous Materials
on, under or about the Premises.
10.2. Indemnification. Tenant shall indemnify, protect, defend (by
counsel acceptable to Landlord) and hold harmless Landlord and its partners,
directors, officers, employees, shareholders, lenders, agents, contractors and
each of their respective successors and assigns (individually and collectively,
"Indemnities") from and against any and all claims, judgments, causes of action,
damages, penalties, fines, taxes, costs, liabilities, losses and expenses
arising at any time during or after the Term as a result (directly or
indirectly) of or in connection with (a) Tenant and/or Tenant's Parties' breach
of any prohibition or provision of the preceding section, or (b) the presence of
Hazardous Materials on, under or about the Premises or other properties as a
result (directly or indirectly) of Tenant's and/or Tenant's Parties' activities,
or failure to act
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when legally required to do so in connection with the Premises. This indemnity
shall include the cost of any required or necessary repair, cleanup or
detoxification, and the preparation of any closure or other required plans,
whether such action is required or necessary prior to or following the
termination of this Lease. The written consent by Landlord to the presence of
Hazardous Materials on, under or about the Premises shall not excuse Tenant from
Tenant's obligation of indemnification pursuant hereto. Tenant's obligations
pursuant to the foregoing indemnity shall survive the termination of this Lease.
11. DAMAGE AND DESTRUCTION.
11.1. Casualty. If the Building should be damaged or destroyed by fire
or other casualty, Tenant shall give immediate written notice to Landlord.
Within thirty (30) days after receipt thereof, Landlord shall notify Tenant
whether such repairs can reasonably be made: (1) within thirty (30) days; (2) in
more than thirty (30) days but in less than ninety (90) days; or (3) in more
than ninety (90) days from the date of such notice.
11.1.1. Less Than 30 Days. If the Building should be damaged only
to such extent that rebuilding or repairs can be reasonably completed within
thirty (30) days, this Lease shall not terminate and, provided that insurance
proceeds are available to fully repair the damage, Landlord shall repair the
Building, except that Landlord shall not be required to rebuild, repair or
replace any alterations, partitions, fixtures, additions and other improvements
which may have been placed in, on or about the Building by or for the benefit of
Tenant. The Rent payable hereunder shall be abated proportionately from the date
Tenant vacates the Building only to the extent rental abatement insurance
proceeds are received by Landlord and the Building are unfit for occupancy.
11.1.2. Greater Than 30 Days. If the Building should be damaged
only to such extent that rebuilding or repairs can be reasonably completed in
more than thirty (30) days but in less than ninety (90) days, then Landlord
shall have the option of: (1) terminating the Lease effective upon the
occurrence of such damage, in which event the Rent shall be abated from the date
Tenant vacates the Building; or (2) electing to repair the Building, provided
insurance proceeds are available to fully repair the damage (except that
Landlord shall not be required to rebuild, repair or replace any part of the
alterations, partitions, fixtures, additions and other improvements which may
have been placed in, on or about the Building by or for the benefit of Tenant).
The Rent payable hereunder shall be abated proportionately from the date Tenant
vacates the Building only to the extent rental abatement insurance proceeds are
received by Landlord and the Building is unfit for occupancy.
11.1.3. Greater Than 90 Days. If the Building should be so
damaged that rebuilding or repairs cannot be completed within ninety (90) days,
either Landlord or Tenant may terminate by giving written notice within ten (10)
days after notice from Landlord regarding the time period of repair; and this
Lease and the Rent shall be abated from the date Tenant vacates the Building. In
the event that neither party elects to terminate this Lease, Landlord shall
promptly commence and diligently prosecute to completion the repairs to the
Building , provided insurance proceeds are available to fully repair the damage
(except that Landlord shall not be required to rebuild, repair or replace any
alterations, partitions, fixtures, additions and other improvements which may
have been placed in, on or about the Building by or for the benefit of
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Tenant). During the time when Landlord is prosecuting such repairs to
completion, the Rent payable hereunder shall be abated proportionately from the
date Tenant vacates the Building only to the extent rental abatement insurance
proceeds are received by Landlord and only during the period that the Building
is are unfit for occupancy.
11.2. Tenant's Fault. If any portion of the Building is damaged
resulting from the fault, negligence or breach of this Lease by Tenant or any of
Tenant's Parties, Rent shall not be diminished during the repair of such damage
and Tenant shall be liable to Landlord for the cost of the repair caused thereby
to the extent such cost is not covered by insurance proceeds.
11.3. Uninsured Casualty. In the event that any portion of the Building
is damaged and is not fully covered by insurance proceeds received by Landlord
or in the event that the holder of any indebtedness secured by the Premises
requires that the insurance proceeds be applied to such indebtedness, then
Tenant shall have the right to terminate this Lease by delivering written notice
of termination to Landlord within thirty (30) days after the date of notice to
Tenant of any such event. In the event that Tenant does not elect to terminate
this Lease, Landlord shall have the right to terminate this Lease by delivering
written notice to Tenant within thirty (30) days after such election by Tenant
or Tenant's failure to elect, as applicable, whereupon all rights and
obligations shall cease and terminate hereunder.
11.4. Waiver. With respect to any damage or destruction which Landlord
is obligated to repair or may elect to repair, Tenant waives all rights to
terminate this Lease pursuant to rights otherwise presently or hereafter
accorded by law.
12. EMINENT DOMAIN.
12.1. Total Condemnation. If all of the Premises is condemned by
eminent domain, inversely condemned or sold in lieu of condemnation for any
public or quasi-public use or purpose ("Condemned"), this Lease shall terminate
as of the date of title vesting in such proceeding and Rent shall be adjusted to
the date of termination.
12.2. Partial Condemnation. If any portion of the Premises is Condemned
and such partial condemnation renders the Premises unusable for Tenant's
business, or if a substantial portion of the Building is Condemned, this Lease
shall terminate as of the date of title vesting or order of immediate possession
in such proceeding and Rent shall be adjusted to the date of termination. If
such partial condemnation does not render the Premises unusable for the business
of Tenant or less than a substantial portion of the Building is Condemned,
Landlord shall promptly restore the Premises to the extent of any condemnation
proceeds recovered by Landlord, excluding the portion thereof lost in such
condemnation, and this Lease shall continue in full force and effect except that
after the date of such title vesting Rent shall be adjusted, as reasonably
determined by Landlord.
12.3. Award. If the Premises are wholly or partially Condemned,
Landlord shall be entitled to the entire award paid for such condemnation, and
Tenant waives any claim to any part of the award from Landlord or the condemning
authority; provided that Tenant shall have the right to recover from the
condemning authority such compensation as may be separately awarded
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to Tenant in connection with costs in removing Tenant's merchandise, furniture,
fixtures, leasehold improvements and equipment to a new location.
12.4. Temporary Condemnation. In the event of a temporary condemnation,
this Lease shall remain in effect, Tenant shall continue to pay Rent and Tenant
shall receive any award made for such condemnation. If a temporary condemnation
remains in effect at the expiration or earlier termination of this Lease, Tenant
shall pay Landlord the reasonable cost of performing any obligations required of
Tenant with respect to the surrender of the Premises. If a temporary
condemnation is for a period which extends beyond the Term, this Lease shall
terminate as of the date of occupancy by the condemning authority and any such
award shall be distributed in accordance with the preceding section.
13. DEFAULT.
13.1. Events of Defaults. The occurrence of any of the following events
shall, at Landlord's option, constitute an "Event of Default":
13.1.1. Vacation or abandonment of the Premises for a period of
thirty (30) consecutive days, and Tenant waives any right to notice Tenant may
have under applicable law;
13.1.1 Vacation or abandonment of the Premises for a period of
thirty (30) consecutive days, and Tenant waives any right to notice Tenant may
have under applicable law;
13.1.2. Failure to pay Rent on the date when due, the failure
continuing for a period of five (5) days after payment is due;
13.1.3. Failure to perform Tenant's covenants hereunder (except
default in the payment of Rent); provided, if such default is susceptible of
cure and Tenant has promptly commenced the cure of such default and is
diligently prosecuting such cure to completion, then the same must remain
uncured for thirty (30) days after written notice thereof from Landlord;
13.1.4. The making of a general assignment by Tenant for the
benefit of creditors, the filing of a voluntary petition by Tenant or the filing
of an involuntary petition by any of Tenant's creditors seeking the
rehabilitation, liquidation or reorganization of Tenant under any law relating
to bankruptcy, insolvency or other relief of debtors and, in the case of an
involuntary action, the failure to remove or discharge the same within sixty
(60) days of such filing, the appointment of a receiver or other custodian to
take possession of substantially all of Tenant's assets or this leasehold,
Tenant's insolvency or inability to pay Tenant's debts or failure generally to
pay Tenant's debts when due, any court entering a decree or order directing the
winding up or liquidation of Tenant or of substantially all of Tenant's assets,
Tenant taking any action toward the dissolution or winding up of Tenant's
affairs, the cessation or suspension of Tenant's use of the Premises, or the
attachment, execution or other judicial seizure of substantially all of Tenant's
assets or this leasehold;
13.1.5. The making of any material misrepresentation or omission
by Tenant in any materials delivered by or on behalf of Tenant to Landlord
pursuant to this Lease; or
13.1.6. A default by Tenant beyond any applicable notice and cure
period pursuant to the terms of any lease entered into between Landlord and
Tenant for space in the Project.
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13.2. Remedies.
13.2.1. Termination. In the event of the occurrence of any Event
of Default, Landlord shall have the right to give a written termination notice
to Tenant and, on the date specified in such notice, this Lease shall terminate
unless on or before such date all arrears of Rent and all other sums payable by
Tenant under this Lease and all costs and expenses incurred by or on behalf of
Landlord hereunder shall have been paid by Tenant and all other Events of
Default at the time existing shall have been fully remedied to the satisfaction
of Landlord.
13.2.1.1. Repossession. Following termination, without
prejudice to other remedies Landlord may have, Landlord may (i) peaceably
re-enter the Premises upon voluntary surrender by Tenant or remove Tenant
therefrom and any other persons occupying the Premises, using such legal
proceedings as may be available; (ii) repossess the Premises or relet the
Premises or any part thereof for such term (which may be for a term extending
beyond the Term), at such rental and upon such other terms and conditions as
Landlord in Landlord's sole discretion shall determine, with the right to make
reasonable alterations and repairs to the Premises; and (iii) remove all
personal property therefrom.
13.2.1.2. Unpaid Rent. Landlord shall have all the rights
and remedies of a landlord provided by applicable law, including the right to
recover from Tenant: (a) the worth, at the time of award, of the unpaid Rent
that had been earned at the time of termination, (b) the worth, at the time of
award, of the amount by which the unpaid Rent that would have been earned after
the date of termination until the time of award exceeds the amount of loss of
rent that Tenant proves could have been reasonably avoided, (c) the worth, at
the time of award, of the amount by which the unpaid Rent for the balance of the
Term after the time of award exceeds the amount of the loss of rent that Tenant
proves could have been reasonably avoided, and (d) any other amount, and court
costs, necessary to compensate Landlord for all detriment proximately caused by
Tenant's default. The phrase "worth, at the time of award," as used in (a) and
(b) above, shall be computed at the greater of 10% per annum or 5% per annum
plus the federal discount rate on advances to member banks in effect at the
Federal Reserve Bank of San Francisco on the 25th day of the month preceding the
date of this Lease, and as used in (c) above, shall be computed by discounting
such amount at the discount rate of the Federal Reserve Bank of San Francisco at
the time of award plus 1%.
13.2.2. Continuation. Even though an Event of Default may have
occurred, this Lease shall continue in effect for so long as Landlord does not
terminate Tenant's right to possession; and Landlord may enforce all of
Landlord's rights and remedies under this Lease, including the right to recover
Rent as it becomes due, and Landlord, without terminating this Lease, may,
during the period Tenant is in default, enter the Premises and relet the same,
or any portion thereof, to third parties for Tenant's account and Tenant shall
be liable to Landlord for all costs Landlord incurs in reletting the Premises,
including, without limitation, brokers' commissions, expenses of remodeling the
Premises and like costs. Reletting may be for a period shorter or longer than
the remaining Term. Tenant shall continue to pay the Rent on the date the same
is due. No act by Landlord hereunder, including acts of maintenance,
preservation or efforts to lease the Premises or the appointment of a receiver
upon application of Landlord to protect Landlord's interest under this Lease,
shall terminate this Lease unless Landlord notifies Tenant that Landlord elects
to terminate this Lease. In the event that Landlord elects to relet the
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Premises, the rent that Landlord receives from reletting shall be applied to the
payment of, first, any indebtedness from Tenant to Landlord other than Base Rent
and Additional Rent; second, all costs, including maintenance, incurred by
Landlord in reletting; and, third, Base Rent and Tenant's Share of Increases
under this Lease. After deducting the payments referred to above, any sum
remaining from the rental Landlord receives from reletting shall be held by
Landlord and applied in payment of future Rent as Rent becomes due under this
Lease. In no event shall Tenant be entitled to any excess rent received by
Landlord. If, on the date Rent is due under this Lease, the rent received from
the reletting is less than the Rent due on that date, Tenant shall pay to
Landlord, in addition to the remaining Rent due, all costs, including
maintenance, Landlord incurred in reletting that remain after applying the rent
received from reletting as provided hereinabove. So long as this Lease is not
terminated, Landlord shall have the right to remedy any default of Tenant, to
maintain or improve the Premises, to cause a receiver to be appointed to
administer the Premises and new or existing subleases and to add to the Rent
payable hereunder all of Landlord's reasonable costs in so doing, with interest
at the Applicable Interest Rate from the date of such expenditure.
13.3. Cumulative. Each right and remedy of Landlord provided for herein
or now or hereafter existing at law, in equity, by statute or otherwise shall be
cumulative and shall not preclude Landlord from exercising any other rights or
remedies provided for in this Lease or now or hereafter existing at law or in
equity, by statute or otherwise. No payment by Tenant of a lesser amount than
the Rent nor any endorsement on any check or letter accompanying any check or
payment as Rent shall be deemed an accord and satisfaction of full payment of
Rent; and Landlord may accept such payment without prejudice to Landlord's right
to recover the balance of such Rent or to pursue other remedies.
14. ASSIGNMENT AND SUBLETTING. Tenant shall not assign or sublet, whether
voluntarily or involuntarily or by operation of law, the Premises or any part
thereof without Landlord's prior written approval, which shall not be
unreasonably withheld. The merger of Tenant with any other entity or the
transfer of any controlling or managing ownership or beneficial interest in
Tenant shall constitute an assignment hereunder. If Tenant desires to assign
this Lease or sublet any or all of the Building, Tenant shall give Landlord
written notice forty-five (45) days prior to the anticipated effective date of
the assignment or sublease. Landlord shall then have a period of thirty (30)
days following receipt of such notice and all related documents and agreements
associated with the assignment or sublease, including without limitation, the
financial statements of any proposed assignee or subtenant, to notify Tenant in
writing that Landlord elects: (1) to permit Tenant to assign this Lease or
sublet such space, subject however to Landlord's prior written approval of the
proposed assignee or subtenant and of any related documents or agreements
associated with the assignment or sublease received by Landlord hereunder or
reasonably requested by Landlord; (2) to disapprove such proposed assignment or
subletting or (3) to terminate this Lease as of the date specified in Landlord's
notice thereof. If Landlord should fail to notify Tenant in writing of such
election, Landlord shall be deemed to have elected option (2). This Lease may
not be assigned by operation of law. Any purported assignment or subletting
contrary to the provisions hereof shall be void. If Tenant receives rent or
other consideration for any such transfer in excess of the Rent, or in case of
the sublease of a portion of the Premises, in excess of such Rent that is fairly
allocable to such portion, after appropriate adjustments to assure that all
other payments required hereunder are appropriately taken into account, Tenant
shall pay Landlord one hundred percent (100%) of the
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difference between each such payment of rent or other consideration and the Rent
required hereunder. Landlord may, without waiving any rights or remedies,
collect rent from the assignee, subtenant or occupant and apply the net amount
collected to the Rent herein reserved and apportion any excess rent so collected
in accordance with the terms of the preceding sentence. Tenant shall continue to
be liable as a principal and not as a guarantor or surety to the same extent as
though no assignment or subletting had been made. Landlord may consent to
subsequent assignments or subletting of this Lease or amendments or
modifications to the Lease by assignees of Tenant without notifying Tenant or
any successor of Tenant and without obtaining their consent. No permitted
transfer shall be effective until there has been delivered to Landlord a
counterpart of the transfer instrument in which the transferee agrees to be and
remain jointly and severally liable with Tenant for the payment of Rent
pertaining to the space and for the performance of all the terms and provisions
of this Lease relating thereto arising on or after the date of the transfer.
Tenant shall not do any act which shall in any way encumber the title of
Landlord in and to the Premises, the Building or the Project.
15. ESTOPPEL, ATTORNMENT AND SUBORDINATION.
15.1. Estoppel. Within ten (10) days after request by Landlord, Tenant
shall deliver an estoppel certificate duly executed (and acknowledged if
required by any lender), in the form attached hereto as Exhibit B, to any
proposed mortgagee, purchaser or Landlord. Tenant's failure to deliver said
statement in such time period shall be conclusive upon Tenant that (a) this
Lease is in full force and effect, without modification except as may be
represented by Landlord; (b) there are no uncured defaults in Landlord's
performance and Tenant has no right of offset, counterclaim or deduction against
Rent hereunder; and (c) no more than one period's Base Rent has been paid in
advance. Landlord reserves the right to substitute a different form of estoppel
certificate upon the request of any proposed mortgagee or purchaser. If any
financier should require that this Lease be amended (other than in the
description of the Premises, the Term, the Permitted Use, the Rent or as will
substantially, materially and adversely affect the rights of Tenant), Landlord
shall give written notice thereof to Tenant, which notice shall be accompanied
by a Lease supplement embodying such amendments. Tenant shall, within ten (10)
days after the receipt of Landlord's notice, execute the tendered Lease
supplement.
15.2. Attornment. In the event of a foreclosure proceeding, the
exercise of the power of sale under any mortgage or deed of trust or the
termination of a ground lease, Tenant shall, if requested, attorn to the
purchaser thereupon and recognize such purchaser as Landlord under this Lease;
provided, however, Tenant's obligation to attorn to such purchaser shall be
conditioned upon Tenant's receipt of a non-disturbance agreement.
15.3. Subordination. This Lease shall be subject and subordinate to all
ground leases and the lien of all mortgages and deeds of trust which now or
hereafter affect the Premises or the Project or Landlord's interest therein, or
on or against all such ground leases, and all amendments thereto, all without
the necessity of Tenant's executing further instruments to effect such
subordination. If requested, Tenant shall execute whatever documentation may be
required to further effect the provisions of this paragraph.
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16. MISCELLANEOUS.
16.1. General.
16.1.1. Entire Agreement. This Lease sets forth all the
agreements between Landlord and Tenant concerning the Premises; and there are no
agreements either oral or written other than as set forth herein.
16.1.2. Time of Essence. Time is of the essence of this Lease.
16.1.3. Attorneys' Fees. In any action which either party brings
to enforce its rights hereunder, the unsuccessful party shall pay all costs
incurred by the prevailing party including reasonable attorneys' fees, to be
fixed by the court, and said costs and attorneys' fees shall be a part of the
judgment in said action.
16.1.4. Severable. If any provision of this Lease or the
application of any such provision shall be held by a court of competent
jurisdiction to be invalid, void or unenforceable to any extent, the remaining
provisions of this Lease and the application thereof shall remain in full force
and effect and shall not be affected, impaired or invalidated.
16.1.5. Law. This Lease shall be construed and enforced in
accordance with the laws of the state in which the Premises are located.
16.1.6. No Option. Submission of this Lease to Tenant for
examination or negotiation does not constitute an option to lease, offer to
lease or a reservation of, or option for, the Premises; and this document shall
become effective and binding only upon the execution and delivery hereof by
Landlord and Tenant.
16.1.7. Successors and Assigns. This Lease shall be binding upon
and inure to the benefit of the successors and assigns of Landlord and, to the
extent assignment is approved by Landlord, Tenant.
16.1.8. Third Party Beneficiaries. Nothing herein is intended to
create any third party benefit.
16.1.9. Memorandum of Lease. Tenant shall not record this Lease
or a short form memorandum hereof without Landlord's prior written consent.
16.1.10. Agency, Partnership or Joint Venture. Nothing contained
herein shall be deemed or construed by the parties hereto, nor by any third
party, as creating the relationship of principal and agent or of partnership or
of joint venture by the parties hereto, it being understood and agreed that no
provision contained in this Lease or any acts of the parties hereto shall be
deemed to create any relationship other than the relationship of landlord and
tenant.
16.1.11. Merger. The voluntary or other surrender of this Lease
by Tenant or a mutual cancellation thereof or a termination by Landlord shall
not work a merger and shall, at the option of Landlord, terminate all or any
existing subtenancies or may, at the option of Landlord, operate as an
assignment to Landlord of any or all of such subtenancies.
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16.2. Signs. All signs and graphics of every kind visible in or from
public view or corridors, or the exterior of the Building or Premises shall be
subject to Landlord's prior written approval and shall be subject to any
applicable governmental laws, ordinances, and regulations and in compliance with
Landlord's signage program. Tenant shall remove all such signs and graphics
prior to the termination of this Lease. Such installations and removals shall be
made in such manner as to avoid injury or defacement of the Premises; and Tenant
shall repair any injury or defacement, including without limitation,
discoloration caused by such installation or removal.
16.3. Waiver. No waiver of any default or breach hereunder shall be
implied from any omission to take action on account thereof, notwithstanding any
custom and practice or course of dealing, and no waiver shall affect any default
other than the default specified in the waiver and then said waiver shall be
operative only for the time and to the extent therein stated. Waivers of any
covenant shall not be construed as a waiver of any subsequent breach of the
same. No waiver by either party of any provision under this Lease shall be
effective unless in writing and signed by such party.
16.4. Financial Statements. Tenant shall provide to any lender,
purchaser or Landlord, within ten (10) days after request, a current, accurate,
certified financial statement for Tenant and Tenant's business prepared under
generally accepted accounting principles consistently applied and such other
certified financial information or tax returns as may be reasonably required by
Landlord, purchaser or any lender of either.
16.5. Limitation of Liability. The obligations of Landlord under this
Lease are not personal obligations of the individual partners, directors,
officers, shareholders, agents or employees of Landlord; and Tenant shall look
solely to the Building for satisfaction of any liability and shall not look to
other assets of Landlord nor seek recourse against the assets of the individual
partners, directors, officers, shareholders, agents or employees of Landlord.
Whenever Landlord transfers its interest, Landlord shall be automatically
released from further performance under this Lease and from all further
liabilities and expenses hereunder and the transferee of Landlord's interest
shall assume all liabilities and obligations of Landlord hereunder from the date
of such transfer.
16.6. Notices. All notices to be given hereunder shall be in writing
and mailed postage prepaid by certified or registered mail, return receipt
requested, or delivered by personal or courier delivery, or sent by facsimile
(immediately followed by one of the preceding methods), to Landlord's Address
and Tenant's Address, or to such other place as Landlord or Tenant may designate
in a written notice given to the other party. Notices shall be deemed served
upon the earlier of receipt or three (3) days after the date of mailing.
16.7. Brokerage Commission. Tenant warrants to Landlord that Tenant's
sole contact with Landlord or with the Premises in connection with this
transaction has been directly with Landlord, and that no broker or finder can
properly claim a right to a commission or a finder's fee based upon contacts
between the claimant and Tenant. Tenant and Landlord, respectively, shall each
indemnify, defend by counsel acceptable to the other, protect and hold each
other harmless from and against any loss, cost or expense, including, but not
limited to, attorneys' fees and costs, resulting from any claim for a fee or
commission by any broker or finder in connection with the Premises and this
Lease.
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16.8. Authorization. Tenant shall furnish to Landlord, within ten (10)
days after written request, evidence satisfactory to Landlord that the person
who executed this Lease on behalf of Tenant was duly authorized to do so. Each
individual executing this Lease on behalf of Tenant represents and warrants that
he or she is duly authorized to execute and deliver this Lease on behalf of
Tenant and that such execution is binding upon Tenant.
16.9. Holding Over; Surrender.
16.9.1. If Tenant holds over the Premises or any part thereof
after expiration or the earlier termination of the Term, such holding over shall
constitute a month-to-month tenancy, at a rent equal to the Base Rent in effect
immediately prior to such holding over plus one hundred percent (100%) thereof.
This paragraph shall not be construed as Landlord's permission for Tenant to
hold over. Acceptance of Rent by Landlord following expiration or termination
shall not constitute a renewal of this Lease. Without limiting the foregoing, if
Tenant holds over the Premises or any part thereof after expiration or the
earlier termination of the Term, Tenant shall indemnify, defend, protect and
hold Landlord harmless from any and all claims (including claims of succeeding
tenants), causes of action, expenses (including reasonable attorneys' fees),
liabilities and lawsuits resulting from such a holdover.
16.9.2. Upon the termination of this Lease or Tenant's right to
possession of the Premises, Tenant will surrender the Premises, together with
all keys, in good condition and repair, reasonable wear and tear excepted.
Conditions existing because of Tenant's failure to perform maintenance, repairs
or replacements shall not be deemed "reasonable wear and tear."
16.10. Joint and Several. If Tenant consists of more than one person,
the obligation of all such persons shall be joint and several.
16.11. Covenants and Conditions. Each provision to be performed by
Tenant hereunder shall be deemed to be both a covenant and a condition.
16.12. Addenda. The Addenda attached hereto, if any, and identified
with this Lease and initialed by the parties hereto are incorporated herein by
this reference as if fully set forth herein.
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<PAGE> 21
IN WITNESS WHEREOF, the parties have executed this Lease as of
the date set forth above.
"Landlord"
NETWORK APPLIANCE, INC.
a California corporation
By: ___________________________________
Its: ___________________________________
"Tenant"
TRW INC., an Ohio corporation
By: ___________________________________
Its: ___________________________________
17
<PAGE> 22
EXHIBIT A
PREMISES
1
<PAGE> 23
EXHIBIT B
ESTOPPEL CERTIFICATE
______________________
______________________
______________________
______________________
Re: Lease dated _______________, 19___ ("Lease") by and
between ________________________________ ("Landlord")
and ______________________________ ("Tenant").
Gentlemen:
Reference is made to the above-described Lease in which the
undersigned is the Tenant. We understand that you are entering into a
transaction with the Landlord which relates to, among other things, this Lease;
and we hereby, as a material inducement for you to enter into such transaction
with Landlord, represent that:
1. A true and correct copy of the Lease is attached hereto as
Exhibit 1.
2. There are no modifications, amendments, supplements,
arrangements, side letters or understandings, oral or written, of any sort,
modifying, amending, altering, supplementing or changing the terms of the Lease
except as follows: .
3. The Lease is in full force and effect, and the Lease has
been duly executed and delivered by, and is a binding obligation of, the Tenant
as set forth therein.
4. The undersigned acknowledges (a) that rent on the Lease has
been paid up to and including _______________, 19___, (b) that monthly rent
during the __________ (____) years of the term of the Lease is
____________________ Dollars ($____________) per month and (c) that rent has not
been paid for any period after _______________, 19___, and shall not be paid for
a period in excess of one (1) month in advance.
5. The improvements on the Premises are free from defects in
design, materials and workmanship; and the improvements meet all governmental
requirements, including, but not limited to, zoning and environmental
requirements.
1
<PAGE> 24
6. The Lease is not in default, and Landlord has performed the
obligations required to be performed by Landlord under the terms thereof through
the date hereof.
Dated: _______________, 19___
Very truly yours,
"Tenant"
_____________________________________, a
________________________________________
By: ___________________________________
Its: ___________________________________
2
<PAGE> 25
SCHEDULE 1
HAZARDOUS MATERIALS
1
<PAGE> 1
EXHIBIT 10.46
INDUSTRIAL LEASE
(1330 Geneva)
Effective Date: December ___, 1999
DEFINED TERMS
Landlord: NETWORK APPLIANCE, INC., a California
corporation
Landlord's Address For Notice: 495 East Java Drive
Sunnyvale, California 94089
Attention: Mr. Thomas Bryant
Tenant: TRW INC., an Ohio corporation
Tenant's Address For Notice: TRW Inc.
12011 Sunset Hills Road
Reston, Virginia 20190
Attn: Ms. Marsha A. Klontz
And to:
TRW Electronic Systems
1330 Geneva Drive
P.O. Box 3510
Sunnyvale, California 94088-3510
Project: Certain parcels of land situated in Santa
Clara County, California consisting of
27.848 acres of land described as APN
#110-42.2.2.6.7.8, having addresses of 1345
and 1346 Crossman Avenue and 1330 and 1350
Geneva Drive in Sunnyvale, California
Building: 1330 Geneva, Sunnyvale, California
Premises: The Building, together with the Property
Property: That certain real property described in
Exhibit A hereto Term: From the
Commencement Date to June 30, 2002
Commencement Date: December ___, 1999
<PAGE> 2
Base Rent Per Month: One Hundred Twenty-Three Thousand Four
Hundred Twenty-Four and 90/100 Dollars
($123,424.90)
Lease Year: Shall refer to each three hundred
sixty-five (365) day period during the Term
commencing on the Commencement Date and on
each anniversary thereof.
Permitted Uses: General office purposes and no other uses
shall be permitted without the prior
written consent of Landlord.
EXHIBITS
A - Premises
B - Estoppel Certificate
The Defined Terms set forth above and the Exhibits attached
hereto are incorporated into and made a part of the following Lease. Each
reference in this Lease to any of the Defined Terms shall mean the respective
information above and shall be construed to incorporate all of the terms
provided under the particular Lease paragraph pertaining to such information. In
the event of any conflict between the Defined Terms and the provisions of the
Lease, the latter shall control.
LANDLORD (_________) AND TENANT (_________) AGREE.
initial initial
<PAGE> 3
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. PREMISES.................................................................................................1
1.1. Premises........................................................................................1
1.2. Reserved Rights.................................................................................1
1.3. As-Is...........................................................................................1
2. TERM.....................................................................................................1
3. RENT.....................................................................................................1
3.1. Base Rent.......................................................................................1
3.2. Late Charge and Interest........................................................................1
3.3. Net Lease.......................................................................................2
4. UTILITIES................................................................................................2
5. TAXES....................................................................................................2
5.1. Real Property Taxes.............................................................................2
5.2. Definition of Real Property Taxes...............................................................2
5.3. Personal Property Taxes.........................................................................3
6. INSURANCE................................................................................................3
6.1. Landlord........................................................................................3
6.2. Tenant..........................................................................................3
6.3. General.........................................................................................4
6.4. Indemnity.......................................................................................4
6.5. Exemption of Landlord from Liability............................................................5
7. REPAIRS AND MAINTENANCE..................................................................................5
7.1. Tenant..........................................................................................5
7.2. Landlord........................................................................................5
8. ALTERATIONS..............................................................................................5
8.1. Trade Fixtures; Alterations.....................................................................5
8.2. Damage; Removal.................................................................................6
8.3. Liens...........................................................................................6
9. USE......................................................................................................6
10. ENVIRONMENTAL MATTERS....................................................................................7
10.1. Hazardous Materials.............................................................................7
10.2. Indemnification.................................................................................7
11. DAMAGE AND DESTRUCTION...................................................................................8
11.1. Casualty........................................................................................8
11.2. Tenant's Fault..................................................................................9
11.3. Uninsured Casualty..............................................................................9
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C> <C>
11.4. Waiver..........................................................................................9
12. EMINENT DOMAIN...........................................................................................9
12.1. Total Condemnation..............................................................................9
12.2. Partial Condemnation............................................................................9
12.3. Award...........................................................................................9
12.4. Temporary Condemnation.........................................................................10
13. DEFAULT.................................................................................................10
13.1. Events of Defaults.............................................................................10
13.2. Remedies.......................................................................................11
13.3. Cumulative.....................................................................................12
14. ASSIGNMENT AND SUBLETTING...............................................................................12
15. ESTOPPEL, ATTORNMENT AND SUBORDINATION..................................................................13
15.1. Estoppel.......................................................................................13
15.2. Attornment.....................................................................................13
15.3. Subordination..................................................................................13
16. MISCELLANEOUS...........................................................................................14
16.1. General........................................................................................14
16.2. Signs..........................................................................................15
16.3. Waiver.........................................................................................15
16.4. Financial Statements...........................................................................15
16.5. Limitation of Liability........................................................................15
16.6. Notices........................................................................................15
16.7. Brokerage Commission...........................................................................15
16.8. Authorization..................................................................................16
16.9. Holding Over; Surrender........................................................................16
16.10. Joint and Several..............................................................................16
16.11. Covenants and Conditions.......................................................................16
16.12. Addenda........................................................................................16
</TABLE>
ii
<PAGE> 5
1. PREMISES.
1.1. Premises. Landlord hereby leases to Tenant the Premises as shown
on Exhibit A attached hereto, but excluding any other portion of the Project.
1.2. Reserved Rights. Landlord reserves the right to enter the Premises
upon reasonable notice to Tenant (except in case of an emergency) and/or to
undertake the following: inspect the Premises and/or the performance by Tenant
of the terms and conditions hereof. Landlord acknowledges and agrees that any
such activities by Landlord on the Premises shall be subject to any reasonable
security precautions created by Tenant as a result of any classified work
performed by Tenant in the Building on behalf of the United States Government.
1.3. As-Is. Tenant acknowledges that Tenant has owned and occupied the
Premises for an extensive period of time prior to the Commencement Date of this
Lease and, as such, is familiar with the physical condition thereof. Tenant
recognizes that Landlord would not lease the Premises except on an "as-is" basis
and that Landlord has made no representations of any kind in connection with
improvements or physical conditions on, or bearing on, the use or condition of
the Premises.
2. TERM. The Term of the Lease shall commence ("Commencement Date") on the
Commencement Date and expire on June 30, 2002. Tenant has determined that the
Premises are acceptable for Tenant's use; and acknowledges that Landlord has
made no representations or warranties in connection with the physical condition
of the Premises or Tenant's use of the same upon which Tenant has relied
directly or indirectly for any purpose.
3. RENT.
3.1. Base Rent. Tenant shall pay to Landlord, at such address as
Landlord shall from time to time designate in writing to Tenant for the payment
of Rent, the Base Rent, without notice, demand, offset or deduction, on the
first day of each calendar month. Upon the execution of this Lease, Tenant shall
pay to Landlord the first month's Base Rent. If the Term commences (or ends) on
a date other than the first (or last) day of a month, Tenant shall pay on the
Commencement Date or first day of the last month a pro rata portion of Base
Rent, prorated on a per diem basis with respect to the portion of the month
within the Term. All sums other than Base Rent which Tenant is obligated to pay
under this Lease shall be deemed to be additional rent due hereunder, whether or
not such sums are designated "additional rent." The term "Rent" means the Base
Rent and all additional rent payable hereunder.
3.2. Late Charge and Interest. The late payment of any Rent will cause
Landlord to incur additional costs, including administration and collection
costs and processing and accounting expenses and increased debt service. If
Landlord has not received any installment of Rent within five (5) days after
such amount is due, Tenant shall pay a late charge of ten percent (10%) of the
delinquent amount, which is agreed to represent a reasonable estimate of the
costs incurred by Landlord. In addition, all such delinquent amounts shall bear
interest from the date such amount was due until paid in full at a rate per
annum ("Applicable Interest Rate") equal to the greater of (a) five percent (5%)
per annum plus the then federal discount rate on advances to member banks in
effect at the Federal Reserve Bank of San Francisco on the 25th day of the
1
<PAGE> 6
month preceding the date of this Lease or (b) ten percent (10%); provided, in no
event shall the Applicable Interest Rate exceed the maximum interest rate
permitted by law which may be charged under such circumstances. Landlord and
Tenant recognize that the damage which Landlord shall suffer as a result of
Tenant's failure to pay such amounts is difficult to ascertain and said late
charge and interest are the best estimate of the damage which Landlord shall
suffer in the event of late payment.
3.3. Net Lease. Tenant acknowledges that the Rent shall be absolutely
net and carefree to the Landlord, except as set forth herein. Landlord shall nit
be responsible for any costs, charges, expenses or outlays of any nature or kind
whatsoever arising from or relating to the Premises, except as provided for
herein. Tenant shall pay all such charges, impositions, costs and expenses of
every nature and kind to Landlord's complete exoneration.
4. UTILITIES. Tenant shall pay all charges for heat, water, gas,
electricity and any other utilities used on the Premises directly to the utility
provider. Landlord shall not be liable to Tenant for interruption in or
curtailment of any utility service, nor shall any such interruption or
curtailment constitute constructive eviction or grounds for rental abatement. In
the event the Premises is not separately metered, Landlord shall have the
option, subject to Landlord's review and the terms of this Lease, to cause the
Premises to be separately metered at Tenant's cost and expense.
5. TAXES.
5.1. Real Property Taxes. Tenant shall pay any and all of the Real
Property Taxes for the Premises to the relevant taxing authority on or before
the date due. Tenant shall provide Landlord with written evidence of such
payment of taxes concomitantly with the payment thereof.
5.2. Definition of Real Property Taxes. "Real Property Taxes" shall be
the sum of the following: all real property taxes, possessory interest taxes,
business or license taxes or fees, service payments in lieu of such taxes or
fees, annual or periodic license or use fees, excises, transit charges, housing
fund assessments, open space charges, childcare fees, school fees or any other
assessments, levies, fees or charges, general and special, ordinary and
extraordinary, unforeseen as well as foreseen (including fees "in-lieu" of any
such tax or assessment) which are assessed, levied, charged, confirmed or
imposed by any public authority upon the Project (or any real property
comprising any portion thereof) or its operations, together with all taxes,
assessments or other fees imposed by any public authority upon or measured by
any Rent or other charges payable hereunder, including any gross income tax or
excise tax levied by the local governmental authority, the federal government or
any other governmental body with respect to receipt of such rental, or upon,
with respect to or by reason of the development, possession, leasing, operation,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises or any portion thereof, or upon this transaction or any document to
which Tenant is a party creating or transferring an interest in the Premises,
together with any tax imposed in substitution, partially or totally, of any tax
previously included within the aforesaid definition or any additional tax the
nature of which was previously included within the aforesaid definition,
together with the costs and expenses (including attorneys fees) of challenging
any of the foregoing or seeking the reduction in or abatement, redemption or
return of any of the foregoing,
2
<PAGE> 7
but only to the extent of any such reduction, abatement, redemption or return.
Nothing contained in this Lease shall require Tenant to pay any franchise,
corporate, estate or inheritance tax of Landlord, or any income, profits or
revenue tax or charge upon the net income of Landlord.
5.3. Personal Property Taxes. Prior to delinquency, Tenant shall pay
all taxes and assessments levied upon trade fixtures, alterations, additions,
improvements, inventories and other personal property located and/or installed
on the Property by Tenant; and Tenant shall provide Landlord copies of receipts
for payment of all such taxes and assessments. To the extent any such taxes are
not separately assessed or billed to Tenant, Tenant shall pay the amount thereof
as invoiced by Landlord.
6. INSURANCE.
6.1. Landlord. Landlord shall, at Tenant's expense, obtain and keep in
force at all times the following insurance:
6.1.1. Building. Insurance insuring the Building and the
Landlord's interest in any betterments and improvements against fire and
extended coverage (including "all risk" coverage, earthquake/volcanic action,
flood and/or surface water insurance) for the full replacement cost of the
Building, with deductibles and the form and endorsements of such coverage as is
required by any synthetic lender of Landlord with an interest in the Building at
the time, together with rental value insurance against loss of Rent in an amount
equal to the amount of Rent for a period of at least twelve (12) months
commencing on the date of loss. Tenant shall reimburse Landlord for the cost of
such insurance for such period of time that is consistent with the Term of this
Lease within ten (10) business days of receipt of request therefor, provided
such request is accompanied by related invoices therefor.
6.2. Tenant. Tenant shall, at Tenant's expense, obtain and keep in
force at all times the following insurance:
6.2.1. Commercial General Liability Insurance (Occurrence Form). A
policy of commercial general liability insurance (occurrence form) having a
combined single limit of not less than Two Million Dollars ($2,000,000) per
occurrence providing coverage for, among other things, blanket contractual
liability, premises, products/completed operations and personal and advertising
injury coverage, with deletion of the exclusion for explosion, collapse or
underground hazard, if applicable, and, if necessary, Tenant shall provide for
restoration of the aggregate limit;
6.2.2. Automobile Liability Insurance. Comprehensive automobile
liability insurance having a combined single limit of not less than Two Million
Dollars ($2,000,000) per occurrence and insuring Tenant against liability for
claims arising out of ownership, maintenance, or use of any owned, hired or
non-owned automobiles;
6.2.3. Workers' Compensation and Employer's Liability Insurance.
Workers' compensation insurance having limits not less than those required by
state statute and federal statute, if applicable, and covering all persons
employed by Tenant in the conduct of its operations on the Premises (including
the all states endorsement and, if applicable, the volunteers
3
<PAGE> 8
endorsement), together with employer's liability insurance coverage in the
amount of at least One Million Dollars ($1,000,000); and
6.2.4. Property Insurance. "All risk" property insurance
including boiler and machinery comprehensive form, if applicable, covering
damage to or loss of any personal property, fixtures and equipment, including
electronic data processing equipment, of Tenant (and coverage for the full
replacement cost thereof including business interruption of Tenant) ("Tenant's
Property").
6.3. General.
6.3.1. Insurance Companies. Insurance required to be maintained by
Tenant shall be written by companies licensed to do business in the state in
which the Premises are located and having a "General Policyholders Rating" of at
least A (or such higher rating as may be required by a lender having a lien on
the Premises) as set forth in the most current issue of "Best's Insurance
Guide."
6.3.2. Certificates of Insurance. Tenant shall deliver to Landlord
certificates of insurance for all insurance required to be maintained by Tenant
prior to the date of possession of the Premises. Tenant shall, at least ten (10)
days prior to expiration of the policy, furnish Landlord with certificates of
renewal or "binders" thereof. Each certificate shall expressly provide that such
policies shall not be cancelable or otherwise subject to modification except
after sixty (60) days prior written notice to the parties named as additional
insureds in this Lease (except in the case of cancellation for nonpayment of
premium in which case cancellation shall not take effect until at least (10)
days' notice has been given to Landlord). If Tenant fails to maintain any
insurance required in this Lease, Tenant shall be liable for all losses and cost
resulting from said failure.
6.3.3. Additional Insureds. Landlord and any property management
company of Landlord for the Premises shall be included as additional insureds,
to the extent that the Tenant has an obligation under Section 6.4, under all of
the policies required by Section 6.2.1. The policies required under Section
6.2.1 shall provide for severability of interest.
6.3.4. Primary Coverage. All insurance to be maintained by Tenant
shall, except for workers' compensation and employer's liability insurance, be
primary, without right of contribution from insurance of Landlord. The limits of
insurance maintained by Tenant shall not limit Tenant's liability under this
Lease.
6.3.5. Waiver of Subrogation. Landlord and Tenant each waives any
right to recover against the other for claims for damages to its property
covered by insurance. This provision is intended to waive fully, and for the
benefit of Landlord and Tenant, any rights and/or claims which might give rise
to a right of subrogation in favor of any insurance carrier.
6.4. Indemnity. Tenant shall indemnify, defend by counsel satisfactory
to Landlord, and hold harmless Landlord from and against any and all claims
arising from (i) Tenant's use of the Premises, the conduct of Tenant's business
or any activity, work or things done, permitted or suffered by Tenant in or
about the Premises, the Building or elsewhere and (ii) any breach or default in
the performance of any obligation on Tenant's part to be performed under the
terms of
4
<PAGE> 9
this Lease, arising from any negligence of Tenant or any of Tenant's agents,
contractors or employees, including all costs, attorneys' fees, expenses and
liabilities incurred in the defense of any such claim or any action or
proceeding brought thereon. Tenant, as a material part of the consideration to
Landlord, hereby assumes all risk of damage to property or injury to persons in,
upon or about the Premises or the Building arising from any cause; and Tenant
hereby waives all claims in respect thereof against Landlord except to the
extent such claims are caused by Landlord's gross negligence or willful
misconduct.
6.5. Exemption of Landlord from Liability. Tenant hereby agrees that
Landlord shall not be liable for injury to Tenant's business or any loss of
income therefrom or for damage to the property of Tenant, Tenant's employees,
invitees, customers or any other person in or about the Premises or the
Building, nor shall Landlord be liable for injury to the person of Tenant,
Tenant's employees, agents or contractors, whether such damage or injury is
caused by fire, steam, electricity, gas, water or rain, or from the breakage,
leakage or other defects of sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures, or from any other cause, whether said damage
or injury results from conditions arising upon the Premises, the Building or
from other sources or places, and regardless of whether the cause of such damage
or injury or the means of repairing the same is inaccessible to Tenant. Landlord
shall not be liable for any damages arising from any act or neglect of any other
tenant, if any, of the Building.
7. REPAIRS AND MAINTENANCE.
7.1. Tenant. Tenant shall keep and maintain any and all portions of the
Premises and the Building, including structural portions thereof, floors and
floor coverings, interior plumbing, HVAC and other building system equipment,
electrical wiring, fixtures and equipment in good repair and in a clean and safe
condition, and repair and/or replace any and all of the foregoing in a good and
workmanlike manner. Without limiting the foregoing, Tenant shall, at Tenant's
sole expense, (a) immediately replace all broken glass in the Premises with
glass equal to or in excess of the specification and quality of the original
glass; and (b) repair any area damaged by Tenant, Tenant's agents, employees,
invitees and visitors, including any damage caused by any roof penetration,
whether or not such roof penetration was approved by Landlord.
7.2. Landlord. Landlord shall have no obligation whatsoever to maintain
any portion of the Building or Premises. Tenant waives any right to repair at
the expense of Landlord under any applicable governmental laws, ordinances,
statutes, orders or regulations now or hereafter in effect respecting the
Premises.
8. ALTERATIONS.
8.1. Trade Fixtures; Alterations. Tenant may install necessary trade
fixtures, equipment and furniture in the Building, provided that such items are
installed and are removable without structural damage to the Building. Tenant
shall not make, or allow to be made, any alterations or physical additions in,
about or to the Premises that affect the structural aspects of the Building, the
Building roof or Building foundation without obtaining the prior written consent
of Landlord, which consent shall not be unreasonably withheld. Tenant shall
reimburse Landlord for all costs which Landlord may incur in connection with
granting approval to Tenant for any such alterations and additions, including
any costs or expenses which Landlord may
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incur in electing to have outside architects and engineers review said matters.
If a Notice of Completion is required for such work, Tenant shall file it and
provide Landlord with a copy. Tenant shall provide Landlord with a set of
"as-built" drawings for any such work.
8.2. Damage; Removal. Tenant assumes the risk of damage to any of
Tenant's fixtures, equipment, furniture or alterations. Tenant shall repair all
damage to the Premises and/or Building caused by the installation or removal of
such items. Upon the termination of this Lease, Tenant shall remove any or all
alterations, additions, improvements and partitions made or installed by Tenant
and restore the Premises to their condition existing prior to the construction
of any such items; provided, however, Landlord may permit, upon written notice
to Tenant (to the extent requested to do so by Tenant at the time notice thereof
is given), any such items designated by Landlord to remain on the Premises, in
which event they shall be and become the property of Landlord upon the
termination of this Lease. All such removals and restoration shall be
accomplished in a good and workmanlike manner and so as not to cause any damage
to the Premises, the Building or the Project whatsoever.
8.3. Liens. Tenant shall promptly pay and discharge all claims for
labor performed, supplies furnished and services rendered at the request of
Tenant and shall keep the Premises free of all mechanics' and materialmen's
liens in connection therewith. Tenant shall provide at least ten (10) days prior
written notice to Landlord before any labor is performed, supplies furnished or
services rendered on or at the Premises and Landlord shall have the right to
post on the Premises notices of non-responsibility. If any lien is filed,
Landlord may take such action as may be necessary to remove such lien and Tenant
shall pay Landlord such amounts expended by Landlord together with interest
thereon at the Applicable Interest Rate from the date of expenditure.
9. USE.
The Premises shall be used only for the Permitted Uses and for no
other uses and otherwise consistent with any applicable governmental laws,
ordinances, statutes, orders and regulations and any declaration of covenants,
conditions and restrictions or any supplement thereto which has been recorded in
any official or public records with respect to the Project or any portion
thereof. Tenant shall comply with all applicable governmental laws, ordinances,
and statutes applicable to the Premises or Building. Tenant shall not commit
waste, overload the floors or structure of the Building, subject the Premises or
the Project to any use which would damage the same or raise or violate any
insurance coverage, permit any unreasonable odors, smoke, dust, gas, substances,
noise or vibrations to emanate from the Premises, take any action which would
constitute a nuisance or would disturb, obstruct or endanger any other tenants,
take any action which would abrogate any warranties, or use or allow the
Premises to be used for any unlawful purpose. Tenant shall not use any parking
spaces for the Project other than the parking spaces located on the Premises.
Landlord shall not be responsible for non-compliance by any other tenant or
occupant with any of the rules or regulations or any other terms or provisions
of such tenant's or occupant's lease. Tenant shall promptly comply with the
reasonable requirements of any board of fire insurance underwriters or other
similar body now or hereafter constituted.
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10. ENVIRONMENTAL MATTERS.
10.1. Hazardous Materials. Tenant shall not cause, or allow any of
Tenant's employees, agents, customers, visitors, invitees, licensees,
contractors, assignees or subtenants (collectively, "Tenant's Parties") to cause
or permit, any Hazardous Materials to be brought upon, stored, manufactured,
generated, blended, handled, recycled, treated, disposed or used on, under or
about the Premises, the Building or the Project, except for routine office and
janitorial supplies and the Hazardous Materials listed on Schedule 1 hereto in
usual and customary quantities stored, used and disposed of in accordance with
all applicable Environmental Laws. As used herein, "Hazardous Materials" means
any chemical, substance, material, controlled substance, waste or combination
thereof which is hazardous to human health or safety or to the environment due
to its radioactivity, ignitability, corrosivity, reactivity, explosivity,
toxicity, carcinogenicity, mutagenicity or other harmful or potentially harmful
properties or effects, including, without limitation, petroleum and petroleum
products, asbestos, radon, polychlorinated biphenyls (PCBs) and all of those
chemicals, substances, materials, controlled substances, wastes or combinations
thereof which are listed, defined or regulated in any manner by any
Environmental Law based upon, directly or indirectly, such properties or
effects. As used herein, "Environmental Laws" means any and all federal, state
or local environmental, health and/or safety-related laws, regulations,
standards, ordinances, rules, codes, orders, decrees, directives, guidelines,
permits or permit conditions, currently existing which are applicable to Tenant
or the Premises. Tenant and Tenant's Parties shall comply with all Environmental
Laws and promptly notify Landlord of the presence of any Hazardous Materials,
other than as permitted above, on the Premises or any violation of any
Environmental Law. Landlord shall have the right to inspect the Premises and to
conduct tests and investigations to determine whether Tenant is in compliance
with the foregoing provisions. If such tests indicate the presence of any
environmental condition, Tenant shall reimburse Landlord for the cost of
conducting such tests. The phrase "environmental condition" shall mean any
condition relating to any Hazardous Materials, including surface water,
groundwater, drinking water supply, land, surface or subsurface strata or the
ambient air and includes air, land and water pollutants, being present at the
Property in violation of Environmental Laws or in a manner which, in the
reasonable opinion of the Landlord's environmental consultant, is substantially
likely to cause health problems for occupants of the Premises or a future
violation of Environmental Law. In the event of any such environmental
condition, Tenant shall promptly take any and all steps necessary to rectify the
same or shall, at Tenant's election, reimburse Landlord, upon demand, for the
cost to Landlord of performing rectifying work. Upon the expiration or earlier
termination of this Lease, Tenant shall remove any and all Hazardous Materials
on, under or about the Premises.
10.2. Indemnification. Tenant shall indemnify, protect, defend (by
counsel acceptable to Landlord) and hold harmless Landlord and its partners,
directors, officers, employees, shareholders, lenders, agents, contractors and
each of their respective successors and assigns (individually and collectively,
"Indemnities") from and against any and all claims, judgments, causes of action,
damages, penalties, fines, taxes, costs, liabilities, losses and expenses
arising at any time during or after the Term as a result (directly or
indirectly) of or in connection with (a) Tenant and/or Tenant's Parties' breach
of any prohibition or provision of the preceding section, or (b) the presence of
Hazardous Materials on, under or about the Premises or other properties as a
result (directly or indirectly) of Tenant's and/or Tenant's Parties' activities,
or failure to act
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when legally required to do so in connection with the Premises. This indemnity
shall include the cost of any required or necessary repair, cleanup or
detoxification, and the preparation of any closure or other required plans,
whether such action is required or necessary prior to or following the
termination of this Lease. The written consent by Landlord to the presence of
Hazardous Materials on, under or about the Premises shall not excuse Tenant from
Tenant's obligation of indemnification pursuant hereto. Tenant's obligations
pursuant to the foregoing indemnity shall survive the termination of this Lease.
11. DAMAGE AND DESTRUCTION.
11.1. Casualty. If the Building should be damaged or destroyed by fire
or other casualty, Tenant shall give immediate written notice to Landlord.
Within thirty (30) days after receipt thereof, Landlord shall notify Tenant
whether such repairs can reasonably be made: (1) within thirty (30) days; (2) in
more than thirty (30) days but in less than ninety (90) days; or (3) in more
than ninety (90) days from the date of such notice.
11.1.1. Less Than 30 Days. If the Building should be damaged only
to such extent that rebuilding or repairs can be reasonably completed within
thirty (30) days, this Lease shall not terminate and, provided that insurance
proceeds are available to fully repair the damage, Landlord shall repair the
Building, except that Landlord shall not be required to rebuild, repair or
replace any alterations, partitions, fixtures, additions and other improvements
which may have been placed in, on or about the Building by or for the benefit of
Tenant. The Rent payable hereunder shall be abated proportionately from the date
Tenant vacates the Building only to the extent rental abatement insurance
proceeds are received by Landlord and the Building are unfit for occupancy.
11.1.2. Greater Than 30 Days. If the Building should be damaged
only to such extent that rebuilding or repairs can be reasonably completed in
more than thirty (30) days but in less than ninety (90) days, then Landlord
shall have the option of: (1) terminating the Lease effective upon the
occurrence of such damage, in which event the Rent shall be abated from the date
Tenant vacates the Building; or (2) electing to repair the Building, provided
insurance proceeds are available to fully repair the damage (except that
Landlord shall not be required to rebuild, repair or replace any part of the
alterations, partitions, fixtures, additions and other improvements which may
have been placed in, on or about the Building by or for the benefit of Tenant).
The Rent payable hereunder shall be abated proportionately from the date Tenant
vacates the Building only to the extent rental abatement insurance proceeds are
received by Landlord and the Building is unfit for occupancy.
11.1.3. Greater Than 90 Days. If the Building should be so
damaged that rebuilding or repairs cannot be completed within ninety (90) days,
either Landlord or Tenant may terminate by giving written notice within ten (10)
days after notice from Landlord regarding the time period of repair; and this
Lease and the Rent shall be abated from the date Tenant vacates the Building. In
the event that neither party elects to terminate this Lease, Landlord shall
promptly commence and diligently prosecute to completion the repairs to the
Building , provided insurance proceeds are available to fully repair the damage
(except that Landlord shall not be required to rebuild, repair or replace any
alterations, partitions, fixtures, additions and other improvements which may
have been placed in, on or about the Building by or for the benefit of
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Tenant). During the time when Landlord is prosecuting such repairs to
completion, the Rent payable hereunder shall be abated proportionately from the
date Tenant vacates the Building only to the extent rental abatement insurance
proceeds are received by Landlord and only during the period that the Building
is are unfit for occupancy.
11.2. Tenant's Fault. If any portion of the Building is damaged
resulting from the fault, negligence or breach of this Lease by Tenant or any of
Tenant's Parties, Rent shall not be diminished during the repair of such damage
and Tenant shall be liable to Landlord for the cost of the repair caused thereby
to the extent such cost is not covered by insurance proceeds.
11.3. Uninsured Casualty. In the event that any portion of the Building
is damaged and is not fully covered by insurance proceeds received by Landlord
or in the event that the holder of any indebtedness secured by the Premises
requires that the insurance proceeds be applied to such indebtedness, then
Tenant shall have the right to terminate this Lease by delivering written notice
of termination to Landlord within thirty (30) days after the date of notice to
Tenant of any such event. In the event that Tenant does not elect to terminate
this Lease, Landlord shall have the right to terminate this Lease by delivering
written notice to Tenant within thirty (30) days after such election by Tenant
or Tenant's failure to elect, as applicable, whereupon all rights and
obligations shall cease and terminate hereunder.
11.4. Waiver. With respect to any damage or destruction which Landlord
is obligated to repair or may elect to repair, Tenant waives all rights to
terminate this Lease pursuant to rights otherwise presently or hereafter
accorded by law.
12. EMINENT DOMAIN.
12.1. Total Condemnation. If all of the Premises is condemned by
eminent domain, inversely condemned or sold in lieu of condemnation for any
public or quasi-public use or purpose ("Condemned"), this Lease shall terminate
as of the date of title vesting in such proceeding and Rent shall be adjusted to
the date of termination.
12.2. Partial Condemnation. If any portion of the Premises is Condemned
and such partial condemnation renders the Premises unusable for Tenant's
business, or if a substantial portion of the Building is Condemned, this Lease
shall terminate as of the date of title vesting or order of immediate possession
in such proceeding and Rent shall be adjusted to the date of termination. If
such partial condemnation does not render the Premises unusable for the business
of Tenant or less than a substantial portion of the Building is Condemned,
Landlord shall promptly restore the Premises to the extent of any condemnation
proceeds recovered by Landlord, excluding the portion thereof lost in such
condemnation, and this Lease shall continue in full force and effect except that
after the date of such title vesting Rent shall be adjusted, as reasonably
determined by Landlord.
12.3. Award. If the Premises are wholly or partially Condemned,
Landlord shall be entitled to the entire award paid for such condemnation, and
Tenant waives any claim to any part of the award from Landlord or the condemning
authority; provided that Tenant shall have the right to recover from the
condemning authority such compensation as may be separately awarded
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to Tenant in connection with costs in removing Tenant's merchandise, furniture,
fixtures, leasehold improvements and equipment to a new location.
12.4. Temporary Condemnation. In the event of a temporary condemnation,
this Lease shall remain in effect, Tenant shall continue to pay Rent and Tenant
shall receive any award made for such condemnation. If a temporary condemnation
remains in effect at the expiration or earlier termination of this Lease, Tenant
shall pay Landlord the reasonable cost of performing any obligations required of
Tenant with respect to the surrender of the Premises. If a temporary
condemnation is for a period which extends beyond the Term, this Lease shall
terminate as of the date of occupancy by the condemning authority and any such
award shall be distributed in accordance with the preceding section.
13. DEFAULT.
13.1. Events of Defaults. The occurrence of any of the following events
shall, at Landlord's option, constitute an "Event of Default":
13.1.1. Vacation or abandonment of the Premises for a period of
thirty (30) consecutive days, and Tenant waives any right to notice Tenant may
have under applicable law;
13.1.2. Failure to pay Rent on the date when due, the failure
continuing for a period of five (5) days after payment is due;
13.1.3. Failure to perform Tenant's covenants hereunder (except
default in the payment of Rent); provided, if such default is susceptible of
cure and Tenant has promptly commenced the cure of such default and is
diligently prosecuting such cure to completion, then the same must remain
uncured for thirty (30) days after written notice thereof from Landlord;
13.1.4. The making of a general assignment by Tenant for the
benefit of creditors, the filing of a voluntary petition by Tenant or the filing
of an involuntary petition by any of Tenant's creditors seeking the
rehabilitation, liquidation or reorganization of Tenant under any law relating
to bankruptcy, insolvency or other relief of debtors and, in the case of an
involuntary action, the failure to remove or discharge the same within sixty
(60) days of such filing, the appointment of a receiver or other custodian to
take possession of substantially all of Tenant's assets or this leasehold,
Tenant's insolvency or inability to pay Tenant's debts or failure generally to
pay Tenant's debts when due, any court entering a decree or order directing the
winding up or liquidation of Tenant or of substantially all of Tenant's assets,
Tenant taking any action toward the dissolution or winding up of Tenant's
affairs, the cessation or suspension of Tenant's use of the Premises, or the
attachment, execution or other judicial seizure of substantially all of Tenant's
assets or this leasehold;
13.1.5. The making of any material misrepresentation or omission
by Tenant in any materials delivered by or on behalf of Tenant to Landlord
pursuant to this Lease; or
13.1.6. A default by Tenant beyond any applicable notice and cure
period pursuant to the terms of any lease entered into between Landlord and
Tenant for space in the Project.
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13.2. Remedies.
13.2.1. Termination. In the event of the occurrence of any Event
of Default, Landlord shall have the right to give a written termination notice
to Tenant and, on the date specified in such notice, this Lease shall terminate
unless on or before such date all arrears of Rent and all other sums payable by
Tenant under this Lease and all costs and expenses incurred by or on behalf of
Landlord hereunder shall have been paid by Tenant and all other Events of
Default at the time existing shall have been fully remedied to the satisfaction
of Landlord.
13.2.1.1. Repossession. Following termination, without
prejudice to other remedies Landlord may have, Landlord may (i) peaceably
re-enter the Premises upon voluntary surrender by Tenant or remove Tenant
therefrom and any other persons occupying the Premises, using such legal
proceedings as may be available; (ii) repossess the Premises or relet the
Premises or any part thereof for such term (which may be for a term extending
beyond the Term), at such rental and upon such other terms and conditions as
Landlord in Landlord's sole discretion shall determine, with the right to make
reasonable alterations and repairs to the Premises; and (iii) remove all
personal property therefrom.
13.2.1.2. Unpaid Rent. Landlord shall have all the rights
and remedies of a landlord provided by applicable law, including the right to
recover from Tenant: (a) the worth, at the time of award, of the unpaid Rent
that had been earned at the time of termination, (b) the worth, at the time of
award, of the amount by which the unpaid Rent that would have been earned after
the date of termination until the time of award exceeds the amount of loss of
rent that Tenant proves could have been reasonably avoided, (c) the worth, at
the time of award, of the amount by which the unpaid Rent for the balance of the
Term after the time of award exceeds the amount of the loss of rent that Tenant
proves could have been reasonably avoided, and (d) any other amount, and court
costs, necessary to compensate Landlord for all detriment proximately caused by
Tenant's default. The phrase "worth, at the time of award," as used in (a) and
(b) above, shall be computed at the greater of 10% per annum or 5% per annum
plus the federal discount rate on advances to member banks in effect at the
Federal Reserve Bank of San Francisco on the 25th day of the month preceding the
date of this Lease, and as used in (c) above, shall be computed by discounting
such amount at the discount rate of the Federal Reserve Bank of San Francisco at
the time of award plus 1%.
13.2.2. Continuation. Even though an Event of Default may have
occurred, this Lease shall continue in effect for so long as Landlord does not
terminate Tenant's right to possession; and Landlord may enforce all of
Landlord's rights and remedies under this Lease, including the right to recover
Rent as it becomes due, and Landlord, without terminating this Lease, may,
during the period Tenant is in default, enter the Premises and relet the same,
or any portion thereof, to third parties for Tenant's account and Tenant shall
be liable to Landlord for all costs Landlord incurs in reletting the Premises,
including, without limitation, brokers' commissions, expenses of remodeling the
Premises and like costs. Reletting may be for a period shorter or longer than
the remaining Term. Tenant shall continue to pay the Rent on the date the same
is due. No act by Landlord hereunder, including acts of maintenance,
preservation or efforts to lease the Premises or the appointment of a receiver
upon application of Landlord to protect Landlord's interest under this Lease,
shall terminate this Lease unless Landlord notifies Tenant that Landlord elects
to terminate this Lease. In the event that Landlord elects to relet the
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Premises, the rent that Landlord receives from reletting shall be applied to the
payment of, first, any indebtedness from Tenant to Landlord other than Base Rent
and Additional Rent; second, all costs, including maintenance, incurred by
Landlord in reletting; and, third, Base Rent and Tenant's Share of Increases
under this Lease. After deducting the payments referred to above, any sum
remaining from the rental Landlord receives from reletting shall be held by
Landlord and applied in payment of future Rent as Rent becomes due under this
Lease. In no event shall Tenant be entitled to any excess rent received by
Landlord. If, on the date Rent is due under this Lease, the rent received from
the reletting is less than the Rent due on that date, Tenant shall pay to
Landlord, in addition to the remaining Rent due, all costs, including
maintenance, Landlord incurred in reletting that remain after applying the rent
received from reletting as provided hereinabove. So long as this Lease is not
terminated, Landlord shall have the right to remedy any default of Tenant, to
maintain or improve the Premises, to cause a receiver to be appointed to
administer the Premises and new or existing subleases and to add to the Rent
payable hereunder all of Landlord's reasonable costs in so doing, with interest
at the Applicable Interest Rate from the date of such expenditure.
13.3. Cumulative. Each right and remedy of Landlord provided for herein
or now or hereafter existing at law, in equity, by statute or otherwise shall be
cumulative and shall not preclude Landlord from exercising any other rights or
remedies provided for in this Lease or now or hereafter existing at law or in
equity, by statute or otherwise. No payment by Tenant of a lesser amount than
the Rent nor any endorsement on any check or letter accompanying any check or
payment as Rent shall be deemed an accord and satisfaction of full payment of
Rent; and Landlord may accept such payment without prejudice to Landlord's right
to recover the balance of such Rent or to pursue other remedies.
14. ASSIGNMENT AND SUBLETTING. Tenant shall not assign or sublet, whether
voluntarily or involuntarily or by operation of law, the Premises or any part
thereof without Landlord's prior written approval, which shall not be
unreasonably withheld. The merger of Tenant with any other entity or the
transfer of any controlling or managing ownership or beneficial interest in
Tenant shall constitute an assignment hereunder. If Tenant desires to assign
this Lease or sublet any or all of the Building, Tenant shall give Landlord
written notice forty-five (45) days prior to the anticipated effective date of
the assignment or sublease. Landlord shall then have a period of thirty (30)
days following receipt of such notice and all related documents and agreements
associated with the assignment or sublease, including without limitation, the
financial statements of any proposed assignee or subtenant, to notify Tenant in
writing that Landlord elects: (1) to permit Tenant to assign this Lease or
sublet such space, subject however to Landlord's prior written approval of the
proposed assignee or subtenant and of any related documents or agreements
associated with the assignment or sublease received by Landlord hereunder or
reasonably requested by Landlord; (2) to disapprove such proposed assignment or
subletting or (3) to terminate this Lease as of the date specified in Landlord's
notice thereof. If Landlord should fail to notify Tenant in writing of such
election, Landlord shall be deemed to have elected option (2). This Lease may
not be assigned by operation of law. Any purported assignment or subletting
contrary to the provisions hereof shall be void. If Tenant receives rent or
other consideration for any such transfer in excess of the Rent, or in case of
the sublease of a portion of the Premises, in excess of such Rent that is fairly
allocable to such portion, after appropriate adjustments to assure that all
other payments required hereunder are appropriately taken into account, Tenant
shall pay Landlord one hundred percent (100%) of the
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difference between each such payment of rent or other consideration and the Rent
required hereunder. Landlord may, without waiving any rights or remedies,
collect rent from the assignee, subtenant or occupant and apply the net amount
collected to the Rent herein reserved and apportion any excess rent so collected
in accordance with the terms of the preceding sentence. Tenant shall continue to
be liable as a principal and not as a guarantor or surety to the same extent as
though no assignment or subletting had been made. Landlord may consent to
subsequent assignments or subletting of this Lease or amendments or
modifications to the Lease by assignees of Tenant without notifying Tenant or
any successor of Tenant and without obtaining their consent. No permitted
transfer shall be effective until there has been delivered to Landlord a
counterpart of the transfer instrument in which the transferee agrees to be and
remain jointly and severally liable with Tenant for the payment of Rent
pertaining to the space and for the performance of all the terms and provisions
of this Lease relating thereto arising on or after the date of the transfer.
Tenant shall not do any act which shall in any way encumber the title of
Landlord in and to the Premises, the Building or the Project.
15. ESTOPPEL, ATTORNMENT AND SUBORDINATION.
15.1. Estoppel. Within ten (10) days after request by Landlord, Tenant
shall deliver an estoppel certificate duly executed (and acknowledged if
required by any lender), in the form attached hereto as Exhibit B, to any
proposed mortgagee, purchaser or Landlord. Tenant's failure to deliver said
statement in such time period shall be conclusive upon Tenant that (a) this
Lease is in full force and effect, without modification except as may be
represented by Landlord; (b) there are no uncured defaults in Landlord's
performance and Tenant has no right of offset, counterclaim or deduction against
Rent hereunder; and (c) no more than one period's Base Rent has been paid in
advance. Landlord reserves the right to substitute a different form of estoppel
certificate upon the request of any proposed mortgagee or purchaser. If any
financier should require that this Lease be amended (other than in the
description of the Premises, the Term, the Permitted Use, the Rent or as will
substantially, materially and adversely affect the rights of Tenant), Landlord
shall give written notice thereof to Tenant, which notice shall be accompanied
by a Lease supplement embodying such amendments. Tenant shall, within ten (10)
days after the receipt of Landlord's notice, execute the tendered Lease
supplement.
15.2. Attornment. In the event of a foreclosure proceeding, the
exercise of the power of sale under any mortgage or deed of trust or the
termination of a ground lease, Tenant shall, if requested, attorn to the
purchaser thereupon and recognize such purchaser as Landlord under this Lease;
provided, however, Tenant's obligation to attorn to such purchaser shall be
conditioned upon Tenant's receipt of a non-disturbance agreement.
15.3. Subordination. This Lease shall be subject and subordinate to all
ground leases and the lien of all mortgages and deeds of trust which now or
hereafter affect the Premises or the Project or Landlord's interest therein, or
on or against all such ground leases, and all amendments thereto, all without
the necessity of Tenant's executing further instruments to effect such
subordination. If requested, Tenant shall execute whatever documentation may be
required to further effect the provisions of this paragraph.
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16. MISCELLANEOUS.
16.1. General.
16.1.1. Entire Agreement. This Lease sets forth all the
agreements between Landlord and Tenant concerning the Premises; and there are no
agreements either oral or written other than as set forth herein.
16.1.2. Time of Essence. Time is of the essence of this Lease.
16.1.3. Attorneys' Fees. In any action which either party brings
to enforce its rights hereunder, the unsuccessful party shall pay all costs
incurred by the prevailing party including reasonable attorneys' fees, to be
fixed by the court, and said costs and attorneys' fees shall be a part of the
judgment in said action.
16.1.4. Severable. If any provision of this Lease or the
application of any such provision shall be held by a court of competent
jurisdiction to be invalid, void or unenforceable to any extent, the remaining
provisions of this Lease and the application thereof shall remain in full force
and effect and shall not be affected, impaired or invalidated.
16.1.5. Law. This Lease shall be construed and enforced in
accordance with the laws of the state in which the Premises are located.
16.1.6. No Option. Submission of this Lease to Tenant for
examination or negotiation does not constitute an option to lease, offer to
lease or a reservation of, or option for, the Premises; and this document shall
become effective and binding only upon the execution and delivery hereof by
Landlord and Tenant.
16.1.7. Successors and Assigns. This Lease shall be binding upon
and inure to the benefit of the successors and assigns of Landlord and, to the
extent assignment is approved by Landlord, Tenant.
16.1.8. Third Party Beneficiaries. Nothing herein is intended to
create any third party benefit.
16.1.9. Memorandum of Lease. Tenant shall not record this Lease
or a short form memorandum hereof without Landlord's prior written consent.
16.1.10. Agency, Partnership or Joint Venture. Nothing contained
herein shall be deemed or construed by the parties hereto, nor by any third
party, as creating the relationship of principal and agent or of partnership or
of joint venture by the parties hereto, it being understood and agreed that no
provision contained in this Lease or any acts of the parties hereto shall be
deemed to create any relationship other than the relationship of landlord and
tenant.
16.1.11. Merger. The voluntary or other surrender of this Lease
by Tenant or a mutual cancellation thereof or a termination by Landlord shall
not work a merger and shall, at the option of Landlord, terminate all or any
existing subtenancies or may, at the option of Landlord, operate as an
assignment to Landlord of any or all of such subtenancies.
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16.2. Signs. All signs and graphics of every kind visible in or from
public view or corridors, or the exterior of the Building or Premises shall be
subject to Landlord's prior written approval and shall be subject to any
applicable governmental laws, ordinances, and regulations and in compliance with
Landlord's signage program. Tenant shall remove all such signs and graphics
prior to the termination of this Lease. Such installations and removals shall be
made in such manner as to avoid injury or defacement of the Premises; and Tenant
shall repair any injury or defacement, including without limitation,
discoloration caused by such installation or removal.
16.3. Waiver. No waiver of any default or breach hereunder shall be
implied from any omission to take action on account thereof, notwithstanding any
custom and practice or course of dealing, and no waiver shall affect any default
other than the default specified in the waiver and then said waiver shall be
operative only for the time and to the extent therein stated. Waivers of any
covenant shall not be construed as a waiver of any subsequent breach of the
same. No waiver by either party of any provision under this Lease shall be
effective unless in writing and signed by such party.
16.4. Financial Statements. Tenant shall provide to any lender,
purchaser or Landlord, within ten (10) days after request, a current, accurate,
certified financial statement for Tenant and Tenant's business prepared under
generally accepted accounting principles consistently applied and such other
certified financial information or tax returns as may be reasonably required by
Landlord, purchaser or any lender of either.
16.5. Limitation of Liability. The obligations of Landlord under this
Lease are not personal obligations of the individual partners, directors,
officers, shareholders, agents or employees of Landlord; and Tenant shall look
solely to the Building for satisfaction of any liability and shall not look to
other assets of Landlord nor seek recourse against the assets of the individual
partners, directors, officers, shareholders, agents or employees of Landlord.
Whenever Landlord transfers its interest, Landlord shall be automatically
released from further performance under this Lease and from all further
liabilities and expenses hereunder and the transferee of Landlord's interest
shall assume all liabilities and obligations of Landlord hereunder from the date
of such transfer.
16.6. Notices. All notices to be given hereunder shall be in writing
and mailed postage prepaid by certified or registered mail, return receipt
requested, or delivered by personal or courier delivery, or sent by facsimile
(immediately followed by one of the preceding methods), to Landlord's Address
and Tenant's Address, or to such other place as Landlord or Tenant may designate
in a written notice given to the other party. Notices shall be deemed served
upon the earlier of receipt or three (3) days after the date of mailing.
16.7. Brokerage Commission. Tenant warrants to Landlord that Tenant's
sole contact with Landlord or with the Premises in connection with this
transaction has been directly with Landlord, and that no broker or finder can
properly claim a right to a commission or a finder's fee based upon contacts
between the claimant and Tenant. Tenant and Landlord, respectively, shall each
indemnify, defend by counsel acceptable to the other, protect and hold each
other harmless from and against any loss, cost or expense, including, but not
limited to, attorneys' fees and costs, resulting from any claim for a fee or
commission by any broker or finder in connection with the Premises and this
Lease.
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16.8. Authorization. Tenant shall furnish to Landlord, within ten (10)
days after written request, evidence satisfactory to Landlord that the person
who executed this Lease on behalf of Tenant was duly authorized to do so. Each
individual executing this Lease on behalf of Tenant represents and warrants that
he or she is duly authorized to execute and deliver this Lease on behalf of
Tenant and that such execution is binding upon Tenant.
16.9. Holding Over; Surrender.
16.9.1. If Tenant holds over the Premises or any part thereof
after expiration or the earlier termination of the Term, such holding over shall
constitute a month-to-month tenancy, at a rent equal to the Base Rent in effect
immediately prior to such holding over plus one hundred percent (100%) thereof.
This paragraph shall not be construed as Landlord's permission for Tenant to
hold over. Acceptance of Rent by Landlord following expiration or termination
shall not constitute a renewal of this Lease. Without limiting the foregoing, if
Tenant holds over the Premises or any part thereof after expiration or the
earlier termination of the Term, Tenant shall indemnify, defend, protect and
hold Landlord harmless from any and all claims (including claims of succeeding
tenants), causes of action, expenses (including reasonable attorneys' fees),
liabilities and lawsuits resulting from such a holdover.
16.9.2. Upon the termination of this Lease or Tenant's right to
possession of the Premises, Tenant will surrender the Premises, together with
all keys, in good condition and repair, reasonable wear and tear excepted.
Conditions existing because of Tenant's failure to perform maintenance, repairs
or replacements shall not be deemed "reasonable wear and tear."
16.10. Joint and Several. If Tenant consists of more than one person,
the obligation of all such persons shall be joint and several.
16.11. Covenants and Conditions. Each provision to be performed by
Tenant hereunder shall be deemed to be both a covenant and a condition.
16.12. Addenda. The Addenda attached hereto, if any, and identified
with this Lease and initialed by the parties hereto are incorporated herein by
this reference as if fully set forth herein.
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IN WITNESS WHEREOF, the parties have executed this Lease as of
the date set forth above.
"Landlord"
NETWORK APPLIANCE, INC.
a California corporation
By: __________________________________
Its: __________________________________
"Tenant"
TRW INC., an Ohio corporation
By: __________________________________
Its: __________________________________
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EXHIBIT A
PREMISES
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EXHIBIT B
ESTOPPEL CERTIFICATE
______________________
______________________
______________________
______________________
Re: Lease dated _______________, 19___ ("Lease") by and
between ________________________________ ("Landlord")
and ______________________________ ("Tenant").
Gentlemen:
Reference is made to the above-described Lease in which the
undersigned is the Tenant. We understand that you are entering into a
transaction with the Landlord which relates to, among other things, this Lease;
and we hereby, as a material inducement for you to enter into such transaction
with Landlord, represent that:
1. A true and correct copy of the Lease is attached hereto as
Exhibit 1.
2. There are no modifications, amendments, supplements,
arrangements, side letters or understandings, oral or written, of any sort,
modifying, amending, altering, supplementing or changing the terms of the Lease
except as follows: .
3. The Lease is in full force and effect, and the Lease has
been duly executed and delivered by, and is a binding obligation of, the Tenant
as set forth therein.
4. The undersigned acknowledges (a) that rent on the Lease has
been paid up to and including _______________, 19___, (b) that monthly rent
during the __________ (____) years of the term of the Lease is
____________________ Dollars ($____________) per month and (c) that rent has not
been paid for any period after _______________, 19___, and shall not be paid for
a period in excess of one (1) month in advance.
5. The improvements on the Premises are free from defects in
design, materials and workmanship; and the improvements meet all governmental
requirements, including, but not limited to, zoning and environmental
requirements.
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6. The Lease is not in default, and Landlord has performed the
obligations required to be performed by Landlord under the terms thereof through
the date hereof.
Dated: _______________, 19___
Very truly yours,
"Tenant"
____________________________________, a
_______________________________________
By: ___________________________________
Its: ___________________________________
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SCHEDULE 1
HAZARDOUS MATERIALS
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EXHIBIT 10.47
ASSIGNMENT OF AGREEMENT OF SALE
This ASSIGNMENT OF AGREEMENT OF SALE ("Assignment") is entered into
this ___ day of December, 1999 (the "Effective Date"), by and between NETWORK
APPLIANCE, INC., a California corporation ("Assignor") and BNP LEASING
CORPORATION, a Delaware corporation ("Assignee").
RECITALS
A. TRW Inc., an Ohio corporation, and ESL Incorporated, a California
corporation (collectively, the "Seller"), as seller, and Assignor, as purchaser,
are now parties to that certain Agreement of Sale dated November 16, 1999 (the
"Agreement") for the purchase and sale of certain improved real property
commonly known as 1345 and 1347 Crossman Avenue and 1330 and 1350 Geneva Avenue
in Sunnyvale, California. The Agreement is attached hereto as Exhibit A.
B. Pursuant to the terms of the Agreement, Assignor may assign
Assignor's rights and obligations under the Agreement to a financing entity in
connection with a synthetic lease transaction without the need for Seller's
prior written consent.
C. Assignor now desires to assign the Agreement to Assignee, and
Assignee desires to accept the assignment of the Agreement and to assume
Assignor's obligations under the Agreement for the purposes of a synthetic lease
transaction.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants and promises
of the parties, the parties hereto agree as follows:
1. ASSIGNMENT. As of the Effective Date, Assignor assigns and transfers
to Assignee all of Assignor's rights, title and interest in and to the
Agreement, and Assignee hereby accepts the assignment in accordance with the
terms of this Assignment.
2. NO RELEASE. Notwithstanding anything to the contrary herein,
Assignor shall remain liable for the terms and obligations relating to the
"Purchaser" under the Agreement.
3. CHOICE OF LAW. This Assignment shall be construed and enforced in
accordance with the laws of the State of California.
4. SUCCESSORS. This Assignment shall be binding on, and inure to the
benefit of, the parties hereto, their successors in interest, and assigns.
<PAGE> 2
5. COUNTERPARTS. This Assignment may be executed in one or more
counterparts, each of which, when taken together, shall constitute one entire
agreement.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment
as of the day and year first hereinabove written.
"Assignor"
NETWORK APPLIANCE, INC.,
a California corporation
By: _________________________________
Name: _________________________________
Title: _________________________________
"Assignee"
BNP LEASING CORPORATION,
a Delaware corporation
By: __________________________________
Name: Lloyd G. Cox
Title: Vice President
<PAGE> 1
EXHIBIT 10.48
THIS AGREEMENT OF SALE (this "Agreement") is made as of this _____ day of
November 1999, by and between TRW Inc., an Ohio corporation and ESL
Incorporated, a California corporation ("Sellers") and Network Appliance Inc., a
California corporation ("Purchaser") and/or its assignee.
RECITALS:
A. Sellers are the owners of certain parcels of land situated in Santa
Clara County, California consisting of 27.848 acres of land described
as Santa Clara County, California APN #110-42.2.6.7.8 having civic
addresses of 1345 and 1347 Crossman and 1330 and 1350 Geneva,
Sunnyvale, California, ("the Property"), as more particularly shown and
labeled on Exhibit "A". The Sellers' property is divided as follows:
ESL Inc. offers approximately 8.11 acres, TRW Inc. offers approximately
19.738 acres.
B. Sellers have agreed to sell to Purchaser and Purchaser has agreed to
purchase from Sellers the Property, subject to and on the terms and
conditions hereafter set forth. The Purchaser at some time in the
future intends to demolish the buildings on the land.
NOW, THEREFORE, for and in consideration of the mutual promises of the parties
and of other good and valuable consideration, receipt and sufficiency of which
is hereby acknowledged, the parties intending to be legally bound agree as
follows:
1. INCORPORATION BY REFERENCE
The recitals hereinabove set forth together with all exhibits and
schedules attached to this Agreement are hereby incorporated by reference as if
more fully set forth in the body of this Agreement.
2. THE PROPERTY
Sellers agree to sell, and Purchaser agrees to buy, the Property. As
used in this Agreement, the term "Property" includes (i) the Land; (ii) all
easements, hereditaments, and appurtenances presently belonging to or inuring to
the benefit of or pertaining to the Land or to be created pursuant to this
Agreement; (iii) all right, title and interest of Sellers in all transferable
warranties, plans and specifications; (iv) all licenses, permits, certificates
of occupancy issued to Seller by Federal, state or local municipal authorities
relating to the use maintenance, occupancy or operation of the Property.
3. PURCHASE PRICE AND METHOD OF PAYMENT
The Purchase Price for the Property shall be Sixty Million Dollars,
($60,000,000). The Purchase Price, (plus or minus prorations) shall be paid in
the form of a wire transfer of good funds on the Date of Closing (as hereafter
defined). The Purchaser at closing shall be entitled to a credit against the
Purchase Price for the Deposit paid pursuant to Paragraph 4 of this Agreement.
The purchase price for the ESL Incorporated property will be Seventeen Million,
Four Hundred Seventy One Thousand, Two Hundred Thirty Dollars, ($17,471,230.00)
and the
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purchase price for the TRW Inc. property will be Forty Two Million, Five Hundred
Twenty Eight Thousand, Seven Hundred Seventy Dollars, ($42,528,770.00).
4. DEPOSIT
Within five (5) business days of the Effective Date of this Agreement
(as hereafter defined in Paragraph 26 (k)) Purchaser shall deliver to First
American Title - San Jose, CA. ("Escrow Agent/Title Company") a deposit in the
amount of Three Million Dollars ($3,000,000) in the form of a check which shall
be promptly deposited by Escrow Agent into a separately designated interest
bearing escrow account at a federally insured banking institution located in the
State of California. The Deposit and all interest earned thereon shall be
non-refundable except as otherwise expressly provided in this Agreement.
Interest on the Deposit shall accrue to the benefit of Purchaser or to Sellers
in the event of a forfeiture of the Deposit, pursuant to the terms of this
Agreement.
5. FEASIBILITY STUDY PERIOD
Purchaser shall have thirty (30) days after the later of: (i) the
Effective Date hereof, or (ii) the date Seller provides Purchaser with copies of
the documents described in Section 6 of this Agreement (the "Feasibility
Period") to, at its option, cause engineering and/or feasibility studies to be
conducted on said Property, in order to determine in Purchaser's sole discretion
whether the Property is suitable for its intended purpose; provided, however,
Seller and Purchaser agree that the Feasibility Period will end no later than
5:00pm on December 13, 1999. Purchaser shall have the right at its sole
discretion within said Feasibility Period to terminate this Agreement by written
notice to Sellers, and to forthwith receive a refund of its Deposit to Sellers
with accrued interest thereon and all parties shall be relieved of further
liability hereunder except for the indemnity obligations set forth below. During
said Feasibility Period, consistent with security considerations, Purchaser
and/or its agents shall have the right of access to the Property to conduct
site, structural and environmental tests and/or mechanical inspections of the
Property. Purchaser or its agents shall be entitled during normal business hours
and with at least twenty-four (24) hours of advance notification to access the
Property to insure proper inspection and completion of the feasibility studies
hereunder. Purchaser shall give Sellers at least twenty-four (24) hours of
advance notice of Purchaser's intended entry, including the name of Purchaser's
consultants, if applicable, and a description of any tests and inspections to be
performed on the Property. Sellers shall have the right to disapprove of
Purchaser's consultants and/or the methods of the proposed tests and
inspections, in which case Purchaser may propose alternative consultants and/or
testing methods or terminate this Agreement; provided, however, Seller
acknowledges that Purchaser may perform Phase II environmental testing on the
Property. Purchaser shall provide Sellers with copies of any assessments,
reports or test results obtained by Purchaser in connection with such tests and
inspections. Until Escrow closes, Purchaser shall keep confidential any
information regarding the Property contained in such reports and shall not
disclose such information to any third party (other than consultants, attorneys,
creditors, lenders, partners, members, officers, employees agents, accounts or
exchange facilities engaged to review such reports) or agreed to by the parties
hereto, except as required by law or court order. In the event this Agreement is
terminated, Purchaser shall repair any damage resulting from such inspection.
Purchaser agrees to indemnify and hold Sellers harmless from any loss, damage,
cost or expense, including reasonable attorneys fees, occasioned by any acts of
Purchaser or its agents
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while on the Property conducting any feasibility studies. The aforesaid
indemnification shall survive closing or any earlier termination of this
Agreement.
6. SELLERS' STUDIES AND EXAMINATION OF DOCUMENTS
Sellers shall deliver to Purchaser within five (5) days of the
Effective Date of this Agreement copies of all material governmental reports,
and notices, environmental reports, soil tests, building plans, surveys,
engineering reports, leases and any other documents relating to the property in
Seller's possession or under Seller's control.
At all reasonable times subsequent to ratification hereof and with
reasonable advance notice, up to and including the Closing Date, Sellers shall
(a) make available to Purchaser, its counsel, contractors, agents or employees
for examination at all reasonable times all plans, surveys, documents and other
writings with respect to the Property in Sellers' possession or control; (b)
disclose and instruct its counsel and corporate officers and/or partners to
disclose to Purchaser, its counsel and/or accountants all information pertaining
to the Property which may be requested by Purchaser in writing hereunder; (c)
afford any and all representatives of Purchaser reasonable access to the
Property upon at least twenty-four (24) hours in advance notice for the right to
conduct a complete inspection thereof, provided however, Purchaser shall not be
granted access to attorney-client privileged materials; and (d) Sellers shall
promptly give to Purchaser copies of any written notices which Sellers receive
relating to the Property.
7. LEASE-BACK AGREEMENT
Prior to the expiration of the feasibility period, Buyer agrees to
enter into a lease agreement (the "Leases") with the Sellers for the buildings.
The term of the Leases shall be
A. 1345 Crossman - From close of escrow to December 31, 2000;
B. 1330 Geneva - From close of escrow to June 30, 2002;
C. 1347 Crossman - From close of escrow to June 30, 2001;
D. 1350 Geneva - From close of escrow to June 30, 2002.
Rent for the leases shall be $1.15/SF/Mo. All operating expenses associated with
the property including but not limited to Real Estate taxes, landscape, parking
lot maintenance, janitorial, general building maintenance and insurance will be
paid for or performed by Sellers.
The lease agreement(s) will be based upon the lease attached as Exhibit
"B". Seller and Purchaser will agree on the particulars of the lease within five
(5) business days of the Effective Date.
8. TITLE
(a) As a condition to Closing, title to the Property at Closing
shall be conveyed to Purchaser by grant deed subject only to the Permitted
Exceptions (as hereinafter defined). The term "Permitted Exceptions" shall mean
(i) the lien of real estate taxes not yet due and payable; (ii) all matters
revealed in the Title Commitment obtained by Purchaser pursuant to subparagraph
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(b) hereof or of record as of such date (excluding mortgage, deeds of trust or
other monetary liens encumbering the Property) and approved in writing by
Purchaser; (iii) all matters disclosed by a survey which are approved by
Purchaser, if any; (iv) all building, zoning, and other state, county or federal
laws, codes and regulations (whether existing or proposed) affecting the
Property; and (v) any title exception created directly or indirectly by any act
or omission of Purchaser or its representatives, agents, employees or invitees.
(b) Purchaser shall promptly obtain from a reputable title insurance
company of its choice licensed to do business in the State of California (the
"Title Company") a commitment to issue an ALTA title policy covering the
Property and the improvements thereon, if any, which may state that it is
subject to any matters that are disclosed by a survey of the Property ordered by
Purchaser (the "Title Commitment"), together with true copies of all documents
evidencing matters of record shown as exceptions to title thereon. Purchaser
shall have the right to object, in its sole and absolute discretion, to any
exceptions contained in the Title Commitment by giving written notice to Sellers
and the Company prior to the expiration of the Feasibility Period stating the
matters to which Purchaser disapproves and the reasons therefore. If Purchaser
fails timely to provide such written objection, then Purchaser shall
conclusively be deemed to have disapproved all matters affecting title to the
Property and this Agreement shall terminate and the Deposit, together with all
interest thereon shall be promptly returned to Purchaser.
9. CLOSING
Provided Purchaser does not first terminate this Agreement pursuant to
the provisions hereof, and the conditions precedent to Purchaser's obligation to
close have been satisfied or waived by Purchaser, Sellers and Purchaser agree to
proceed to full and final closing on the Property on a date selected by
Purchaser and designated in writing to Sellers at least two (2) days in advance
thereof which date shall occur no later than thirty (30) days after the end of
the Feasibility Period (the "Closing Date" or "Date of Closing"). With respect
to all time periods herein contained, time shall be of the essence. In no event
shall the Closing take place after December 17,1999.
10. REPRESENTATIONS AND WARRANTIES
(a) Sellers represent and warrant to Purchaser as of the Effective
Date hereof that:
(i) Sellers are corporations duly organized, validly
existing and in good standing under the laws of the
state of their incorporation, are qualified to do
business in and are in good standing in the State of
California and have duly authorized the execution and
performance of this Agreement and the transactions
contemplated herein.
(ii) The persons executing this Agreement on behalf of
Sellers represent and warrant to Purchaser in their
individual capacities that they have the authority to
enter into this Agreement and to bind Sellers in
accordance with its terms without obtaining any
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<PAGE> 5
further approvals or consents.
(iii) Sellers have the right, power and authority to execute
this Agreement and all other instruments and documents
contemplated hereby and to perform any and all acts
necessary or desirable to consummate the transactions
contemplated hereby. The entering into this Agreement
does not, and the consummation of the acts contemplated
by this Agreement shall not, violate any agreements,
documents or instruments to which Sellers are a party
or by which it is bound, or any law, governmental order
or decree to which Sellers are subject.
(iv) There are no tenants or other parties in possession of
any part of the Property, nor are there other parties
who have a right to possession of or title to any part
of the Property, except as set forth in Exhibit "C".
(v) There are no licenses or contracts of any nature
(including broker or commission fee arrangements)
affecting or relating to the Property, except as set
forth in Exhibit "D".
(vi) There are no actions, suits pending or threatened
condemnation or similar proceeding affecting any part
of the Property.
(vii) There are no actions, suits, proceedings or claims
affecting any part of the Property, or affecting
Sellers with respect to the ownership, occupancy, use
or operation of any part of the Property, pending or
threatened in or before any court, agency, commission,
or board.
(viii) Sellers have received no written notice from
appropriate governmental authorities regarding, and
Sellers have no knowledge of, any violation of
applicable environmental, health, fire, building,
safety or planning or zoning laws or ordinances.
(ix) No petition in bankruptcy (voluntary or otherwise),
assignment for the benefit of creditors, or petition
seeking reorganization or arrangement or over action
under Federal or State bankruptcy laws is pending or
threatened against or contemplated by Sellers.
(x) Sellers have never used the Property for storage,
handling, manufacturing, discharge or disposal of
hazardous materials or for industrial purposes, except
for the storage, handling and use of reasonable
quantities of hazardous materials used in the research
and development of hardware products in compliance with
all applicable laws, nor does Sellers have actual
knowledge of a release of hazardous materials by a
third party.
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(xi) Neither Sellers or any of the parties comprising
Sellers are a "foreign person" within the meaning of
the Foreign Investment in Real Property Tax Act, as
amended "FIRPTA". Sellers are corporation(s) which
maintain offices in the State of California, and will
not disburse any proceeds due Sellers upon the Close of
Escrow to an address outside the boundaries of the
State of California, and will not use a financial
intermediary (as defined in California Revenue and
Taxation Code Section 18805(d)) for the receipt of
proceeds from this transaction. At the time of closing
the Sellers shall execute such instruments,
certifications and/or affidavits as Purchaser or its
title insurance company may deem necessary in order to
comply with FIRPTA or other tax related disclosure and
reporting requirements. Sellers' tax identification
numbers set forth on the signature page of this
Agreement are correct.
(xii) Sellers have not received any notice, and have no
actual knowledge, that the Property is in violation of
any federal, state or local ordinance, law, rule,
regulations order or requirement relating to Hazardous
Materials. For purposes of this Agreement "Hazardous
Materials" shall mean any "hazardous waste" as defined
by the Resource Conservation and Recovery Act of 1976,
as amended from time to time, and regulations
promulgated thereunder; any "hazardous substance" as
defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from
time to time, and regulations promulgated thereunder;
any substance the presence of which on the Property is
prohibited by any law similar to those set forth in
this subparagraph, including the Clean Water Act (33
U.S.C. Sections 466 et seq.), ------- the Safe Drinking
Water Act (14 U.S.C. Sections 1401-1450), the Hazardous
Materials Transportation Act (49 U.S.C. Sections 1801
et seq.), the Toxic ------- Substance Control Act (15
U.S.C. Sections 2601-1629), the California Hazardous
Waste Control Law (California Health and Safety Code
Sections 25100-25600), and the Porter-Cologne Water
Quality Control Act (California Health and Safety Code
Sections 13000 et seq.); and any toxic or hazardous
substances or ------- materials, whether products or
wastes, including, without limitation, asbestos or
PCBs. Hazardous Materials shall also include those
asbestos-containing materials defined and described in
Environmental Protection Agency Report No. 56/5085-024
(June, 1985) or any related successor report or other
applicable government regulations defining or
describing such asbestos-containing materials.
(xiii) Except as set forth in Exhibit "E", at the Closing
Date, there will
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be no outstanding contracts made by Sellers for the
construction or repair of any Improvements to the
Property that have not been fully paid for and Sellers
shall cause to be discharged all mechanics' or
materialmen's liens arising from any labor or materials
furnished to the Property at Sellers' request prior to
closing.
(xiv) Prior to the Closing Date, Sellers shall not, without
the prior written consent of Purchaser, enter into any
contract with respect to the Property that will survive
Closing.
(xv) The existing insurance policies, or equivalent
coverage, shall remain continuously in force through
the Date of Closing.
(xvi) Prior to the Closing Date, the Sellers: (i) shall not
amend or terminate any agreement affecting to or
relating to the Property without the prior written
consent of Purchaser; (ii) shall maintain all insurance
coverage carried by Sellers with respect to the
Property as of the date hereof; (iii) shall continue to
maintain the Property in substantially the same manner
in which Seller is maintaining the Property as of the
date hereof; (iv) shall not create or suffer to exist
any easements, liens, deeds of trust or other security
interests in the Property; and (v) shall pay before
delinquency all taxes and assessments levied, imposed
or assessed against the Property.
(xvii) To Sellers knowledge the Property is connected to and
serviced by adequate water, sewage disposal, gas,
electricity and telephone facilities in accordance with
all legal requirements, and to meet the requirements of
normal usage thereof. All such utilities either enter
the Property through adjoining public streets or, if
they pass through an adjoining private parcel, they do
so in accordance with valid public easements or valid
and perpetual private easements; none of the easements,
covenants or restrictions contained in any instruments
of record affecting the Property has been violated; and
the continued operation and maintenance of the Property
for the purposes for which it is currently being
operated and maintained will not constitute a violation
thereof. To the best of the Sellers' knowledge, there
are no assessments or contemplated assessments against
the Property with respect to such utility services, any
contemplated or intended public improvements or
otherwise, except as disclosed by the public records of
the county recorder's office of the county in which the
Property is located.
(xviii) To Sellers knowledge all due diligence materials and
other information which Sellers have provided to
Purchaser concerning the Property, is accurate and
complete and does not contain any
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untrue statement of material fact nor does it omit to
state any material fact necessary to make the
statements contained therein not misleading.
(xix) To Sellers knowledge the Property, and each part
thereof, is in good condition and repair and free from
any defects which impair the Sellers' use of the
Property, including without limitation, erosion,
drainage or soil problems and physical or mechanical
defects which impair the Sellers' use of the Property.
Without limitation of the foregoing, there are no
defects or deficiencies which impair the Sellers' use
of the Property in the heating, air conditioning,
plumbing and other mechanical and electrical apparatus
and appliances located on the Property, nor any defects
which impair the Sellers' use of the Property in the
roof, windows, exterior walls or structural components
of the improvements on the Property, and there are no
leaks in the roof or windows which impair the Sellers'
use of the Property.
(xx) Sellers are not in default of any of their obligations
or liabilities pertaining to the Property; nor is there
any state of facts or circumstances or condition or
event which, after notice or lapse of time or both,
would constitute or result in any such default.
Except as specifically set forth in this Agreement, Sellers disclaim
the making of any representations or warranties, express or implied, regarding
the Property or matters affecting the Property, including the physical condition
of the Property; title to or the boundaries of the Property, pest control
matters; soil condition, hazardous wastes, toxic substances or other
environmental matters; compliance with building, health, safety, land use and
zoning laws, regulations and orders; structural and other engineering
characteristics; traffic patterns; leasing status; economic performance; value
and all other information pertaining to the Property. Purchaser acknowledges and
agrees that Purchaser enters into this Agreement with the intention of making
and relying upon its own investigation and evaluation of the value of the
Property and of its physical, environmental, economic and legal condition, and
that any information and materials (including, without limitation, any pro forma
operating statements, market analyses, demographic studies and the like)
relating to the Property are provided without representation or warranty,
express or implied, to Purchaser to facilitate Purchaser's timely review, study
and evaluation of the Property and not as a substitute for Purchaser's own
investigation and evaluation of the value of the Property and of its physical,
environmental, economic and legal condition.
Purchaser acknowledges and agrees that, except to the extent, if any,
specifically provided in this Agreement, no employee of Sellers, no agents of
Sellers nor anyone acting or claiming to act on Sellers' behalf concerning the
Property is authorized or empowered to make any representations or warranties on
behalf of Sellers concerning the Property. Purchaser acknowledges and agrees
that Purchaser will rely solely upon the advice of its own accounting, tax,
legal, architectural, appraisal, engineering, environmental, property management
and other
8
<PAGE> 9
advisors.
Except for matters arising from or attributable to a material finding
known to Sellers and not disclosed to Buyer, Purchaser is purchasing the
Property in its "as is" condition on the Closing Date and will assume the risk
that adverse physical, environmental, economic or legal conditions may not have
been revealed by its inquiries and investigations. As used herein, "material"
shall mean all substantive findings that would influence or tend to influence
Buyer's decision to acquire the Property.
Notwithstanding anything to the contrary provided herein, Purchaser
shall have no right to pursue any action against Sellers pursuant to this
paragraph 10(a) as a result of any of Sellers' representations and warranties
being untrue, inaccurate or incorrect if Purchaser had actual knowledge at the
time of closing that such representation or warranty was untrue, inaccurate or
incorrect at the time of closing and Purchaser nevertheless elected to purchase
the Property and close escrow hereunder.
(b) Purchaser represents and warrants to Sellers as of the Effective
Date hereof and as of the Closing Date that:
(i) The execution and delivery of this Agreement by Purchaser
and the consummation of the transactions contemplated hereby
will not result in the breach of any terms or conditions of,
or constitute a default under any contract, agreement,
commitment, indenture, mortgage, note, bond, license or
other instrument or obligation to which Purchaser is now a
party or by which the Purchaser may be bound or affected.
(ii) Purchaser has taken all actions and steps necessary to
permit its execution hereof and at Closing will have taken
all necessary action to permit its performance of its
obligations hereunder.
(iii) This Agreement is legally binding upon and enforceable
against Purchaser in accordance with its terms.
(iv) Purchaser is a California corporation, duly organized,
validly existing and in good standing under the law of the
state of its incorporation, has qualified to do business in
and is in good standing in the State of California and has
duly authorized the execution and performance of this
Agreement and the transactions contemplated herein.
(v) The persons executing this Agreement on behalf of Purchaser
represent and warrant to Sellers in their individual
capacities that they have the authority to enter into this
Agreement and to bind Purchaser in accordance with its terms
without obtaining any further approvals or consents.
(vi) Purchaser has the right, power and authority to execute this
Agreement and all other instruments and documents
contemplated hereby and to
9
<PAGE> 10
perform any and all acts necessary or desirable to
consummate the transactions contemplated hereby. The
entering into this Agreement does not, and the consummation
of the acts contemplated by this Agreement shall not,
violate any law, governmental regulation, order or decree to
which Purchaser is subject.
11. COSTS AND PRORATIONS
(a) Utilities and real estate taxes shall be pro-rated as of the
date leases terminate. To the extent practicable Sellers shall have all utility
meters read to the date prior to termination and all applicable utilities shall
be transferred into the name of Purchaser as of that date. The parties agree
that items not susceptible to exact proration may be reprorated for a period of
ninety (90) days following the lease terminations.
(b) Sellers shall pay the costs for a CLTA Title policy, the Santa
Clara County documentary transfer tax and the escrow fees. All other costs and
charges of the escrow for the sale not otherwise provided for in this Paragraph
11(b) or elsewhere in this Agreement shall be allocated in accordance with the
closing customs for Santa Clara County, California.
12. DAMAGE, CONDEMNATION OR DESTRUCTION OF PROPERTY PENDING CLOSING
Risk of loss shall remain with Sellers until the recordation of the
deed of conveyance. Sellers shall promptly notify Purchaser of any damage or
destruction of all or any part of the Property or any condemnation or taking by
eminent domain of any portions of the Property. In the event the damage or
destruction exceeds Five Million and No/100 Dollars ($5,000,000.00). Purchaser
shall have the right to terminate this Agreement without liability on its part
and receive a refund of the Deposit, together with accrued interest thereon by
so notifying Sellers within fifteen (15) days of Sellers notification to
Purchaser of said condemnation, damages or destruction. If Purchaser elects to
proceed with Closing, Sellers shall assign to Purchaser all condemnation awards
or insurance proceeds payable to Sellers on account of such condemnation, damage
or destruction, together with any deductibles attributable thereto, and the
Purchase Price shall be equitably abated to the extent the awards and/or
proceeds together with any deductibles attributable thereto, are less than the
cost of repairing the Property incurred by Purchaser.
13. POSSESSION
Sellers agree to deliver possession of the Property to Purchaser free
of all tenancies or occupancy except for the leases provided for in Paragraph 7.
14. DELIVERIES AT CLOSING
(a) At the Closing, Sellers shall deliver the following to
Purchaser:
(i) a Grant Deed dated as of the Closing Date conveying fee
simple title to the Property to Purchaser, subject only
to the Permitted
10
<PAGE> 11
Exceptions;
(ii) to the extent available, plans and specifications for
the Property;
(iii) to the extent they are then in Sellers possession and
not posted at the Property, all Permits issued for or
with respect to the Property by governmental and
quasi-governmental authorities having jurisdiction;
(iv) an affidavit setting forth that all of the
representations and warranties made by Sellers as set
forth in Paragraph 10 (a) (i), (ii), (iii) (iv), (v),
(vi), (vii), (viii), (ix), (xi), (xii), (xiii), xvii),
(xviii), (xvix), and (xx)of this Agreement are correct
as of the Closing Date;
(v) a FIRPTA Affidavit;
(vi) a California Withholding Exemption Certificate (Form
590RE) certifying that Sellers have a permanent place of
business in California or are qualified to do business
in California;
(vii) any other documents required by this Agreement to be
delivered by Sellers.
(viii) leases based on the model in Exhibit B.
(ix) an assignment document assigning all of Seller's
interest in any intangible property.
(b) At the Closing, Purchaser shall deliver the following to
Sellers:
(i) the full Purchase Price by wire transfer as adjusted
for apportionment's, and less any amounts otherwise
properly deducted pursuant to this Agreement;
(ii) any other documents required by this Agreement to be
delivered by Purchaser including such certifications,
resolutions, affidavits or other documents as are
required to be satisfied with respect to Purchaser's
authority to purchase the Property as contemplated
under this Agreement;
(iii) leases based on the model in Exhibit B.
15. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
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<PAGE> 12
The obligation of Purchaser to purchase the Property and to perform the
other covenants and obligations to be performed by it on the Closing Date shall
be subject to the following conditions (all or any of which may be waived, in
whole or in part, by Purchaser):
(a) Sellers shall have delivered all items required under this
Agreement by Closing.
(b) The representations, warranties and covenants herein by Sellers
shall be correct, complete and fully performed on and as of the Closing Date
with the same force and effect, as though such representations, and warranties
had been made on and as of such Closing Date.
(c) On the Closing Date, no part of the Property shall previously have
been acquired, by authority of any governmental agency in the exercise of its
power of eminent domain or by private purchase in lieu thereof, nor on the
Closing Date shall there be written notice of any such imminent acquisition or
purchase of a portion of the Property which is more than de minimus.
(d) On the Closing Date, the Title Company shall be committed to issue
to Purchaser an ALTA title policy in the amount of the Purchase Price insuring
Purchaser's fee title to the Property subject only to the Permitted Exceptions.
(e) No proceeding shall be pending to change, redesignate or redefine
the zoning classification of the Property so as to restrict or prevent the
present and continued use of the Property which was not previously known to or
discoverable by Purchaser during the Feasibility Period.
(f) The Sellers shall have performed all of the covenants and
agreements herein that the Sellers are required to perform on or before the
Close of Escrow.
(g) Buyer's inspection and approval of a survey of the Property.
Upon failure of any of the conditions set forth in this Paragraph, Purchaser
may, at its option, terminate this Agreement (whereupon the Deposit and any
interest thereon will be returned to Purchaser), waive such failure or, if such
failure constitutes a breach of this Agreement, pursue such remedies as are
available to Purchaser under Paragraph 18 of this Agreement.
16. NOTICES
Any notice required or permitted to be given under this Agreement shall
be sent by hand delivery, certified mail, return receipt requested or by Emery
Air Freight, Airborne Express, Federal Express, or other reputable overnight air
courier service, in either case addressed to the parties as follows.
If to Sellers: TRW Inc.
12011 Sunset Hills Road
Reston, Virginia 20190
12
<PAGE> 13
Marsha A. Klontz, Esquire
Telephone: 703-345-7070
Fax: 703-345-7075
And to: Mr. Bill Gibbs
TRW Electromagnetic Systems
1330 Geneva Drive
P.O. Box 3510
Sunnyvale, CA 94088-3510
Telephone: (408) 743-6020
Fax: (408) 743-4259
If to Buyer: Network Appliance Inc.
c/o Thom Bryant
495 East Java Drive
Sunnyvale, CA 94089
or in each case to such other address as any party hereto may from time to time
designate to the other parties hereto by notice given pursuant to this
Paragraph.
17. BROKERAGE
Seller shall be responsible for any commission payable to its agents
and Purchaser will be responsible for any commission payable to its agents.
Sellers and Purchaser represent and warrant each to the other that such party
has had no contact or dealings regarding the Property, or any communication in
connection with the subject matter of this transaction, through any real estate
broker of other person who can claim a right to a commission or finder's fee in
connection with the sale contemplated herein, except for CPS, the Commercial
Property Services Company and WWM, Weber Wood Medinger. If any other broker or
finder makes a claim for a commission or finder's fee based upon any such
contact, dealings or communication, the party through whom the broker or finder
makes its claim shall be responsible for said commission and shall indemnify and
save harmless the other from and against all liabilities and expenses (including
without limitation, counsel fees and disbursements in defending against such
liabilities), which may accrue by reason of, on account of, or growing out of or
resulting from breach by such party of such warranty and representation. This
indemnification shall survive closing or any earlier termination of this
Agreement.
18. TERMINATION, DEFAULT AND REMEDIES
(a) If (i) any of the representations and warranties made by the
Sellers in Paragraph 10 shall be inaccurate or incorrect, (ii) the Sellers shall
fail to perform any of the material covenants or agreements to be performed by
it under this Agreement on or before the Date of Closing or (iii) the Purchaser
shall be relieved of its obligations under this Agreement by operation of
Paragraph 15 then, in any such event, the Purchaser shall have the right to
terminate this Agreement by giving written notice to the Sellers and the Escrow
Agent. The Escrow Agent
13
<PAGE> 14
shall return the Deposit together with accrued interest to the Purchaser, and
neither party shall have any further liability to the other under this
Agreement. If the Purchaser would have the right to terminate this Agreement by
reason of an event described in clauses (i) or (ii), above, the Purchaser, in
lieu of terminating this Agreement, shall have the right to pursue the remedy of
specific performance. Purchaser hereby waives any right to seek monetary damages
for any incidental or consequential damages allegedly caused by Sellers breach
of this Agreement, except for Purchaser' reasonable out-of-pocket costs
associated with the negotiation of this Agreement and the performance of
Purchaser's due diligence review of the Property. In any event, Purchaser shall
not be required to waive any rights to seek monetary damages for any breach of
this Agreement by Sellers if the remedy of specific performance is not available
or meaningful due to the actions of Sellers..
(b) IN THE EVENT THE SALE OF THE PROPERTY IS NOT CONSUMMATED
BECAUSE OF A DEFAULT UNDER THIS AGREEMENT ON THE PART OF PURCHASER, SELLERS
SHALL BE ENTITLED TO RETAIN THE DEPOSIT, TOGETHER WITH ANY INTEREST EARNED
THEREON, AS LIQUIDATED DAMAGES AS ITS SOLE REMEDY IF THIS AGREEMENT IS
TERMINATED AS A RESULT OF SUCH DEFAULT. THE PARTIES HAVE AGREED THAT SELLERS'
ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY PURCHASER, WOULD BE EXTREMELY
DIFFICULT OR IMPRACTICABLE TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS
BELOW, THE PARTIES ACKNOWLEDGE THAT THE AMOUNT OF THE DEPOSIT HAS BEEN AGREED
UPON, AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLERS' DAMAGES
AND AS SELLERS' EXCLUSIVE REMEDY AGAINST PURCHASER, AT LAW OR IN EQUITY, IN THE
EVENT THAT THIS TRANSACTION DOES NOT CLOSE DUE TO A DEFAULT UNDER THIS AGREEMENT
ON THE PART OF PURCHASER. THE FOREGOING PROVISIONS SHALL NOT, HOWEVER, LIMIT IN
ANY WAY SELLERS' ENFORCEMENT OF THE INDEMNITIES PROVIDED IN PARAGRAPHS 5 AND 17
WHICH SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT.
INITIALS: Sellers: ________________________ Purchaser: _______________________
19. OBLIGATIONS OF SELLERS PENDING CLOSING
(a) Between the Effective Date hereof and the Closing Date, Sellers
will cause the Property to be maintained in its present order and condition,
normal wear and tear excepted. Sellers' further covenants to keep in full force
and effect until Closing casualty insurance insuring the Property for its full
replacement cost. In the event of damage or destruction as set forth in
Paragraph 12 of this Agreement the provisions of Paragraph 12 will apply.
(b) Sellers shall notify Purchaser promptly, and Purchaser shall
notify Sellers promptly, if either receives notice of any occurrence prior to
the Closing Date which would make its representations, warranties or covenants
contained herein not true in any material respect.
(c) Through the Closing Date, Sellers will maintain the existing
insurance policies, or equivalent coverage, with the same limits of coverage now
carried with respect to
14
<PAGE> 15
the Property.
(d) Sellers shall not withdraw, settle or otherwise compromise any
protest or reduction proceeding affecting real estate taxes assessed against the
Property for any fiscal period in which the closing is to occur or any
subsequent fiscal period without the prior written consent of Purchaser, which
consent shall not be unreasonably withheld or delayed. Real estate tax refunds
and credits received after the Closing Date which are attributable to the fiscal
tax year during which the Closing Date occurs shall be apportioned between
Sellers and Purchaser after deducting the expenses of collection thereof, which
obligation shall survive the closing.
20. SURVIVAL
Each of the representations, warranties, covenants or other obligations
set forth in this Agreement shall survive the Closing Date but shall fully cease
and expire with respect to any claims not raised by the aggrieved party, by
written notice to the other, within eighteen (18) months after the Closing Date.
21. LAND SALES DISCLOSURE ACT
Sellers and Buyer intend that this sale of land comply with the
exemption requirements of the Interstate Land Sales Full Disclosure act, as
stated in 15 U.S.C. 1702(a)(8) and confirm that the conditions set forth in such
section are met.
22. MUTUAL COVENANTS
Absent an express statement to the contrary, wherever any consent or
approval of a party is required hereunder, such party shall not unreasonably
withhold such consent or approval.
23. REDEVELOPMENT COOPERATION
Sellers' shall provide reasonable cooperation to Purchaser in
connection with Purchaser's efforts to obtain governmental, quasi-governmental
and third-party approvals, as Purchaser may deem appropriate to enable Purchaser
to develop the Property, construct improvements thereon and operate its business
from the Property; provided, however that Purchaser shall reimburse any
reasonable cost of Sellers' cooperation, to the extent such cost has previously
been approved in writing by Purchaser.
24. CONFIDENTIALITY
Except for disclosures as may be required by law or court order, or
disclosures to the parties' creditors, lenders, partners, members, officers,
employees, agents, consultants, attorneys, accountants and exchange facilities,
or disclosures agreed to by the parties hereto in writing Sellers and Purchaser
agree that they shall keep in confidence this Agreement and each and every term
and provision hereof, including, without limitation, the Purchase Price.
25. MISCELLANEOUS PROVISIONS
15
<PAGE> 16
(a) Binding Effect. This Agreement shall, be binding upon and inure
to the benefit of the parties hereto, and their respective heirs, devisees,
personal representative, successors and assigns.
(b) Waiver, Modification. Failure by Purchaser or Sellers to insist
upon or enforce any of its rights hereto shall not constitute a waiver thereof.
(c) Assignment. This Agreement may not be assigned by either
Purchaser or Seller without the prior written consent of the other party.
Notwithstanding the foregoing , Purchaser may assign this Agreement to an entity
in connection with a synthetic lease transaction without the need for the prior
consent of the Sellers.
(d) Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California.
(e) Headings. The paragraph headings are herein used for
convenience of reference only and shall not be deemed to vary the content of
this Agreement or the covenants, agreements, representations and warranties
herein set forth or the scope of any paragraph.
(f) Counterparts. This Agreement may be executed in two or more
counterpart originals; each counterpart original shall be for all purposes
considered an original of this Agreement.
(g) Partial Invalidity. If any provision of this Agreement shall be
determined to be void by any court of competent jurisdiction, then such
determination shall not affect any other provision hereof, all of which other
provisions shall remain in full force and effect; and it is the intention of all
the parties hereto that if any provision of this Agreement capable of two
constructions, one of which would render the provision void and the other of
which would render the provision valid, then the provision shall have the
meaning which renders it valid.
(h) Time. With respect to all time periods contained in this
Agreement, it is expressly understood that time shall be of the essence.
(i) Holidays, etc. Whenever the last day for the performance of any
act required by either Sellers or Purchaser under this Agreement shall fall upon
a Saturday, Sunday, or legal holiday, the date for the performance of any such
act shall be extended to the next succeeding business day which is not a
Saturday, Sunday or legal holiday.
(j) Counsel Fees. If any action is brought by either party against
the other party including, without limitation, any action with respect to the
receipt of the Deposit as liquidated damages pursuant to Paragraph 18(b), the
prevailing party shall be entitled to recover from the other party reasonable
attorney's fees, costs and expense incurred in connection with the prosecution
or defense of such action.
(k) Effective Date. The Effective Date of this Agreement shall be
the date
16
<PAGE> 17
that a fully ratified original of this Agreement is executed and delivered to
Purchaser.
(l) No Third-Party Beneficiary Rights. Purchaser and Sellers agree
that this Agreement has been entered into solely for the benefit of Purchaser
and Sellers and no other person or entity, it being the intention of Purchaser
and Sellers that no person or entity not a party to this Agreement shall have
any right or standing to (a) bring any action against Purchaser or Sellers based
on this Agreement or (b) assume that any provision of this Agreement will be
enforced or remain unmodified or unwaived, or (c) assert that it or he is or
should be or was intended to be a beneficiary under any provision of this
Agreement.
(m) Exculpation. In the enforcement of its rights hereunder Sellers
agree not to seek or obtain a money judgment or exercise any other right or
remedy against any member, shareholder, officer, director or employee of
Purchaser or any member of Purchaser and shall look solely to the Purchaser and
the Deposit hereunder for the enforcement of all of its rights and remedies
hereunder. In the enforcement of its rights hereunder Purchaser agrees not to
seek or obtain a money judgment or exercise any other fight or remedy against
any member, shareholder, officer, director or employee of Sellers and shall look
solely to Sellers for the enforcement of all rights and remedies hereunder.
(n) Further Assurance. In addition to the obligations performed
under this Agreement by Sellers at Closing, Sellers and Purchaser shall perform,
from time to time, such other acts, and shall execute, acknowledge and/or
deliver such other instruments, documents and other materials as Purchaser or
its counsel or Escrow Agent reasonably may request in order to consummate the
transactions provided for in this Agreement and to vest title to the Property in
Purchaser.
WITNESS the following signature
SELLERS: TRW Inc.
By:
-----------------------------------
Printed Name:
-------------------------
Title:
--------------------------------
Date:
---------------------------------
Tax ID No.: 34-0575430
---------------------------
SELLERS: ESL Inc.
By:
-----------------------------------
Printed Name:
-------------------------
Title:
--------------------------------
17
<PAGE> 18
Date:
---------------------------------
Tax ID No.: 94-1566685
---------------------------
PURCHASER: Network Appliance, Inc.
By:
-----------------------------------
Printed Name:
-------------------------
Title:
--------------------------------
Date:
---------------------------------
Tax ID No.:
---------------------------
18
<PAGE> 1
EXHIBIT 10.49
================================================================================
CLOSING CERTIFICATE
(PHASE IV)
AND
AGREEMENT
BETWEEN
NETWORK APPLIANCE, INC.,
("NAI")
AND
BNP LEASING CORPORATION
("BNPLC")
DECEMBER ___, 1999
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF NAI CONCERNING THE PROPERTY.............1
(A) Condition of the Property.....................................................1
(B) Title to the Property.........................................................2
(C) Title Insurance...............................................................2
(D) Environmental Representations.................................................2
(E) Cooperation by NAI and its Affiliates.........................................2
2 OTHER REPRESENTATIONS, WARRANTIES, COVENANTS AND ACKNOWLEDGMENTS OF NAI..............3
(A) No Default or Violation of Other Agreements...................................3
(B) No Suits......................................................................3
(C) Enforceability................................................................3
(D) Solvency......................................................................3
(E) Organization..................................................................4
(F) Existence.....................................................................4
(G) Not a Foreign Person..........................................................4
(H) Investment Company Act........................................................4
(I) ERISA.........................................................................4
(J) Use of Proceeds...............................................................4
(K) Omissions.....................................................................5
(L) Y2000 Issues..................................................................5
(M) Further Assurances............................................................5
(N) No Implied Representations or Promises by BNPLC...............................5
3 LIMITED COVENANTS AND REPRESENTATIONS BY BNPLC.......................................5
(A) Cooperation of BNPLC to Facilitate Use........................................5
(B) Actions Permitted by NAI Without BNPLC's Consent..............................7
(C) Waiver of Landlord's Liens....................................................7
(D) Estoppel Letter...............................................................7
(E) Limited Representations by BNPLC Concerning Accounting Matters................8
(F) Other Limited Representations by BNPLC........................................9
(1) No Default or Violation................................................9
(2) No Suits...............................................................9
(3) Enforceability.........................................................9
(4) Organization...........................................................9
(5) Existence..............................................................9
(6) Not a Foreign Person...................................................9
(7) Bankruptcy.............................................................9
4 OBLIGATIONS OF NAI UNDER OTHER OPERATIVE DOCUMENTS NOT LIMITED BY THIS
AGREEMENT..........................................................................10
5 OBLIGATIONS OF NAI HEREUNDER NOT LIMITED BY OTHER OPERATIVE DOCUMENTS...............10
</TABLE>
-i-
<PAGE> 3
EXHIBITS AND SCHEDULES
<TABLE>
<S> <C>
Exhibit A......................................................Legal Description
Exhibit B.............................................Permitted Encumbrance List
Exhibit C..............................................Development Document List
Exhibit D.........................Standard Notice of Request for Action by BNPLC
</TABLE>
-ii-
<PAGE> 4
CLOSING CERTIFICATE AND AGREEMENT
This CLOSING CERTIFICATE AND AGREEMENT (this "AGREEMENT"), by and between
NETWORK APPLIANCE, INC., a California corporation ("NAI"), and BNP LEASING
CORPORATION, a Delaware corporation ("BNPLC"), is made and dated as of December
___, 1999 (the "EFFECTIVE DATE").
RECITALS
A. Contemporaneously with the execution of this Agreement, BNPLC and NAI
are executing a Common Definitions and Provisions Agreement (Phase IV -
Improvements) (the "IMPROVEMENTS CDPA"), and a Common Definitions and Provisions
Agreement (Phase IV - Land) (the "LAND CDPA"), each dated as of the Effective
Date, which are each incorporated into and made a part of this Agreement for all
purposes. Capitalized terms defined in the Improvements CDPA and used but not
otherwise defined herein are intended in this Agreement to have the respective
meanings ascribed to them in the Improvements CDPA. Any capitalized terms
defined in the Land CDPA and used but not otherwise defined herein or in the
Improvements CDPA are intended in this Agreement to have the respective meanings
ascribed to them in the Land CDPA. As used in this Agreement, "PROPERTY" is
intended to mean, collectively, the Property as defined in the Improvements CDPA
and the Property as defined in the Land CDPA; "IMPROVEMENT DOCUMENTS" is
intended to mean, collectively, the Operative Documents as defined in the
Improvements CDPA; "LAND DOCUMENTS" is intended to mean the Operative Documents
as defined in the Land CDPA; "OPERATIVE DOCUMENTS" is intended to mean the
Improvement Documents and the Land Documents, collectively; "IMPROVEMENTS LEASE"
is intended to mean the Lease as defined in the Improvements CDPA; "LEASES" is
intended to mean the Improvements Lease and the Lease as defined in the Land
CDPA, collectively; "PURCHASE AGREEMENTS" is intended to mean the Purchase
Agreement as defined in the Improvements CDPA and the Purchase Agreement as
defined in the Land CDPA, collectively; and "DESIGNATED SALE DATE" is intended
to mean the earlier of the Designated Sale Date as defined in the Improvements
CDPA or the Designated Sale Date as defined in the Land CDPA.
B. As a condition to its execution of other Operative Documents, BNPLC
requires the representations, warranties and covenants of NAI set out below. At
the request of NAI and to facilitate the transactions contemplated in the other
Operative Documents, BNPLC is acquiring the Land described in Exhibit A attached
hereto from Seller and any interest of Seller in any existing Improvements
thereon, subject to the Permitted Encumbrances described in Exhibit B attached
hereto and with the understanding that development and use of such Land may be
subject to or benefitted by the Development Documents described in Exhibit C
attached hereto (if any).
C. As a condition to its execution of other Operative Documents, NAI
requires the representations and covenants of BNPLC set out below.
NOW, THEREFORE, in consideration of the above recitals and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF NAI CONCERNING THE PROPERTY.
NAI represents, warrants and covenants as follows:
(A) Condition of the Property. The Land as described in Exhibit A is the
same as the land shown on the plat included as part of the survey titled
"ALTA/ACSM LAND TITLE SURVEY FOR NETWORK APPLIANCE, 1345 CROSSMAN AVENUE, 1347
CROSSMAN AVENUE, 1330 GENEVA DRIVE, AND 1350
-1-
<PAGE> 5
GENEVA DRIVE" made by Kier & Wright, Licensed Land Surveyor, dated December 2,
1999, as Job No. 97208-16, which survey was delivered to BNPLC at the request of
NAI, and except as shown on the survey there are to the best of NAI's knowledge
no easements or encroachments visible or apparent from an inspection of the
Land. No significant encroachment of building Improvements exist across the
boundaries of the Land described in Exhibit A, and no significant building
Improvements that presently exist on the Land may be disturbed by reason of the
exercise of easement or other rights created by any of the Permitted
Encumbrances. Adequate provision has been made for the Land and the Property to
be served by electric, gas, storm and sanitary sewers, sanitary water supply,
telephone and other utilities required for the use thereof. All streets, alleys
and easements necessary to serve the Land and Improvements contemplated by the
Improvements Lease have been completed and are serviceable. To the best of NAI's
knowledge, no extraordinary circumstances (including any use of the Land as a
habitat for endangered species) exists that would materially and adversely
affect the use of any Improvements for their intended purposes or other
reasonable future development of the Land. NAI is not aware of any latent or
patent material defects or deficiencies in the Property that, either
individually or in the aggregate, could materially and adversely affect the use
or occupancy of the Property or the construction or use of Improvements as
permitted by the Improvements Lease or could reasonably be anticipated to
endanger life or limb. No part of the Land is within a flood plain as designated
by any governmental authority.
(B) Title to the Property. The deed that Seller is executing in favor of
BNPLC pursuant to the Existing Contract shall vest in BNPLC good and marketable
title to the Land and Improvements, subject only to the Permitted Encumbrances,
the Development Documents and any Liens Removable by BNPLC. NAI shall not,
without the prior consent of BNPLC, create, place or authorize, or through any
act or failure to act, acquiesce in the placing of, any deed of trust, mortgage
or other Lien, whether statutory, constitutional or contractual against or
covering the Property or any part thereof (other than Permitted Encumbrances and
Liens Removable by BNPLC), regardless of whether the same are expressly or
otherwise subordinate to the Operative Documents or BNPLC's interest in the
Property.
(C) Title Insurance. Without limiting NAI's obligations under the preceding
subparagraph, contemporaneously with the execution of this Agreement NAI shall
provide to BNPLC a title insurance policy (or binder committing the applicable
title insurer to issue a title insurance policy, without the payment of further
premiums) in the amount of no less than $62,000,000, in form and substance
satisfactory to BNPLC, written by one or more title insurance companies
satisfactory to BNPLC and insuring BNPLC's fee estate in the Land and
Improvements.
(D) Environmental Representations. To the knowledge of NAI except as
otherwise disclosed in the Environmental Report: (i) no Hazardous Substances
Activity has occurred prior to the Effective Date; (ii) no owner or operator of
the Property has reported or been required to report any release of any
Hazardous Substances on or from the Property pursuant to any Environmental Law;
and (iii) no owner or operator of the Property has received from any federal,
state or local governmental authority any warning, citation, notice of violation
or other communication regarding a suspected or known release or discharge of
Hazardous Substances on or from the Property or regarding a suspected or known
violation of Environmental Laws concerning the Property. Further, NAI represents
that to its knowledge, the Environmental Report taken as a whole is not
misleading or inaccurate in any material respect.
(E) Cooperation by NAI and its Affiliates. If neither NAI nor an Applicable
Purchaser purchases the Property pursuant to the Purchase Agreements on the
Designated Sale Date, then after the Designated Sale Date:
(1) if a use of the Property by BNPLC or any removal or modification
of Improvements proposed by BNPLC would violate any Permitted Encumbrance,
Development Document or Applicable Law unless NAI or any of its Affiliates,
as an owner of adjacent property or otherwise, gave its consent or approval
thereto or agreed to join in a modification of a Permitted Encumbrance or
Development Document, then
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NAI shall, to the extent it can without violating Applicable Law, give
and cause its Affiliates to give such consent or approval or join in such
modification;
(2) to the extent, if any, that any Permitted Encumbrance, Development
Document or Applicable Law requires the consent or approval of NAI or any
of its Affiliates or of the City of Sunnyvale or any other Person to a
transfer of any interest in the Property by BNPLC or its successors or
assigns, NAI will without charge give and cause its Affiliates to give such
consent or approval and will cooperate in any way reasonably requested by
BNPLC to assist BNPLC to obtain such consent or approval from the City or
any other Person; and
(3) NAI's obligations under this subparagraph 1(E) shall be binding
upon any successor or assign of NAI with respect to the Land and other
properties encumbered by the Permitted Encumbrances or subject to the
Development Documents.
2 OTHER REPRESENTATIONS, WARRANTIES, COVENANTS AND ACKNOWLEDGMENTS OF NAI.
NAI represents, warrants, covenants and acknowledges as follows:
(A) No Default or Violation of Other Agreements. The execution, delivery
and performance by NAI of this Agreement and the other Operative Documents do
not and will not constitute a breach or default under any other material
agreement or contract to which NAI is a party or by which NAI is bound or which
affects the Property, and do not violate or contravene any law, order, decree,
rule or regulation to which NAI is subject, and such execution, delivery and
performance by NAI will not result in the creation or imposition of (or the
obligation to create or impose) any lien, charge or encumbrance on, or security
interest in, NAI's property pursuant to the provisions of any such other
material agreement.
(B) No Suits. Other than as previously disclosed in NAI's most recent 10-K
filings with the Securities and Exchange Commission (copies of which have been
delivered to BNPLC), there are no judicial or administrative actions, suits,
proceedings or investigations pending or, to NAI's knowledge, threatened that
will adversely affect the Property or the validity or enforceability or priority
of this Agreement or any other Operative Document, and NAI is not in default
with respect to any order, writ, injunction, decree or demand of any court or
other governmental or regulatory authority that could materially and adversely
affect the use, occupancy or operation of the Property for the purposes
contemplated in the Leases. No condemnation or other like proceedings are
pending or, to NAI's knowledge, threatened against the Property.
(C) Enforceability. The execution, delivery and performance of each of the
Operative Documents by NAI are duly authorized, are not in contravention of or
conflict with any term or provision of NAI's articles of incorporation or bylaws
and do not, to NAI's knowledge, conflict with any Applicable Laws or require the
consent or approval of any governmental body or other regulatory authority that
has not heretofore been obtained; provided, some consents or approvals which are
readily obtainable and which are required for NAI's performance under the
Operative Documents may not have been heretofore obtained, but NAI shall obtain
such consents or approvals as required in connection with its performance of the
Operative Documents. Each of the Operative Documents are valid, binding and
legally enforceable obligations of NAI except as such enforcement is affected by
bankruptcy, insolvency and similar laws affecting the rights of creditors,
generally, and equitable principles of general application.
(D) Solvency. NAI is not "insolvent" on the date hereof (that is, the sum
of NAI's absolute and contingent liabilities - including the obligations of NAI
under this Agreement and the other Operative Documents - does not exceed the
fair market value of NAI's assets) and has no outstanding liens, suits,
garnishments or court actions which could render NAI insolvent or bankrupt.
NAI's capital is adequate for the businesses in which NAI is engaged and intends
to be engaged. NAI has not incurred (whether hereby or otherwise), nor does NAI
intend to
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<PAGE> 7
incur or believe that it will incur, debts which will be beyond its
ability to pay as such debts mature. There has not been filed by or, to NAI's
knowledge, against NAI a petition in bankruptcy or a petition or answer seeking
an assignment for the benefit of creditors, the appointment of a receiver,
trustee, custodian or liquidator with respect to NAI or any significant portion
of NAI's property, reorganization, arrangement, rearrangement, composition,
extension, liquidation or dissolution or similar relief under the federal
Bankruptcy Code or any state law. The financial statements and all financial
data heretofore delivered to BNPLC relating to NAI are true, correct and
complete in all material respects. No material adverse change has occurred in
the financial position of NAI as reflected in NAI's financial statements
covering the most recent fiscal period for which NAI's financial statements have
been published.
(E) Organization. NAI is duly incorporated and legally existing under the
laws of the State of California. NAI has all requisite corporate power and has
procured or will procure on a timely basis all governmental certificates of
authority, licenses, permits, qualifications and similar documentation required
to fulfill its obligations under this Agreement and the other Operative
Documents. Further, NAI has the corporate power and adequate authority, rights
and franchises to own NAI's property and to carry on NAI's business as now
conducted and is duly qualified and in good standing in each state in which the
character of NAI's business makes such qualification necessary (including the
State of California) or, if it is not so qualified in a state other than
California, such failure does not have a material adverse effect on the
properties, assets, operations or businesses of NAI and its Subsidiaries, taken
as a whole.
(F) Existence. So long as any of the Operative Documents continue in force,
NAI shall continuously maintain its existence and its qualification to do
business in the State of California.
(G) Not a Foreign Person. NAI is not a "foreign person" within the meaning
of Sections 1445 and 7701 of the Code (i.e. NAI is not a non-resident alien,
foreign corporation, foreign partnership, foreign trust or foreign estate as
those terms are defined in the Code and regulations promulgated thereunder).
(H) Investment Company Act. NAI is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(I) ERISA. NAI is not and will not become an "employee benefit plan" (as
defined in Section 3(3) of ERISA) which is subject to Title I of ERISA. The
assets of NAI do not and will not in the future constitute "plan assets" of one
or more such plans within the meaning of 29 C.F.R. Section 2510.3-101. NAI is
not and will not become a "governmental plan" within the meaning of Section
3(32) of ERISA. Transactions by or with NAI are not subject to state statutes
regulating investments of and fiduciary obligations with respect to governmental
plans. Each Plan and, to the knowledge of NAI, any Multiemployer Plan, is in
compliance with, and has been administered in compliance with, the applicable
provisions of ERISA, the Code and any other applicable Federal or state law in
all respects, the failure to comply with which would have a material adverse
effect upon the properties, assets, operations or businesses of NAI and its
Subsidiaries taken as a whole. As of the date hereof no event or condition is
occurring or exists which would require a notice from NAI under subparagraph
15(c)(vi) of the Leases.
(J) Use of Proceeds. In no event shall the funds advanced to NAI pursuant
to the Operative Documents be used directly or indirectly for personal, family,
household or agricultural purposes or for the purpose, whether immediate,
incidental or ultimate, of purchasing, acquiring or carrying any "margin stock"
or any "margin securities" (as such terms are defined respectively in Regulation
U and Regulation G promulgated by the Board of Governors of the Federal Reserve
System) or to extend credit to others directly or indirectly for the purpose of
purchasing or carrying any such margin stock or margin securities. NAI
represents and warrants that NAI is not engaged principally, or as one of NAI's
important activities, in the business of extending credit to others for the
purpose of purchasing or carrying such margin stock or margin securities.
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<PAGE> 8
(K) Omissions. None of NAI's representations or warranties contained in
this Agreement or any other Operative Document or any other document,
certificate or written statement furnished to BNPLC by or on behalf of NAI
contains any untrue statement of a material fact or omits a material fact
necessary in order to make the statements contained herein or therein (when
taken in their entireties) not misleading.
(L) Y2000 Issues. As necessary to avoid any material adverse impact upon
any activity significant to the business of NAI and its Subsidiaries, taken as
whole, and as necessary to insure the full and prompt compliance with and
performance of NAI's obligations under the Operative Documents, on or before
June 30, 1999, the software and other processing capabilities of NAI and its
Subsidiaries shall have the ability to correctly interpret and manipulate all
data (in whatever form, including printed form, screen displays, financial
records, calculations and loan-related data) so as to avoid errors in processing
that may otherwise occur because of the inability of the software or other
processing capabilities to recognize accurately the year 2000 or subsequent
dates.
(M) Further Assurances. NAI shall, on request of BNPLC, (i) execute,
acknowledge, deliver and record or file such further instruments and do such
further acts as may be necessary, desirable or proper to carry out more
effectively the purposes of this Agreement or any other Operative Document and
to subject to this Agreement or any other Operative Document any property
intended by the terms hereof or thereof to be covered hereby or thereby,
including specifically, but without limitation, any renewals, additions,
substitutions, replacements or appurtenances to the Property; (ii) execute,
acknowledge, deliver, procure and record or file any document or instrument
deemed advisable by BNPLC to protect its rights in and to the Property against
the rights or interests of third persons; and (iii) provide such certificates,
documents, reports, information, affidavits and other instruments and do such
further acts as may be necessary, desirable or proper in the reasonable
determination of BNPLC to enable BNPLC to comply with the requirements or
requests of any agency or authority having jurisdiction over it.
Without limiting the forgoing, NAI shall cooperate with BNPLC as reasonably
required to allow BNPLC to induce banks not affiliated with BNPLC to become
Participants. Such cooperation will include the payment of fees ("UPFRONT
SYNDICATION FEES") as provided under the heading "Upfront Fees for the
Participants" in the letter from BNPLC to NAI dated October 20, 1999. Such
cooperation will also include the execution of one or more modification
agreements proposed by BNPLC to any of the Operative Documents, which agreements
may change the Spread, Unsecured Spread, Commitment Fee Rate or may limit NAI's
right to designate a new Collateral Percentage under Section 3.1 of the Pledge
Agreement or may otherwise modify terms and conditions of the Operative
Documents as requested by a prospective Participant; provided, however, that the
form and substance of any such modification agreements is approved by NAI (which
approval will not be unreasonably withheld); and, provided further, that NAI
will have no obligation to join with BNPLC in executing any such modification
agreement to satisfy a prospective Participant after the earlier of (1) the date
that is one hundred twenty days after the Effective Date, or (2) the date upon
which other banks not affiliated with BNPLC have become Participants with
aggregate Percentages under (and as defined in) the Participation Agreement of
no less than eighty percent (80%).
(N) No Implied Representations or Promises by BNPLC. BNPLC AND BNPLC'S
AGENTS HAVE MADE NO REPRESENTATIONS OR PROMISES WITH RESPECT TO THE PROPERTY
EXCEPT AS EXPRESSLY SET FORTH IN THE OTHER OPERATIVE DOCUMENTS, AND NO RIGHTS,
EASEMENTS OR LICENSES ARE BEING ACQUIRED BY NAI BY IMPLICATION OR OTHERWISE
EXCEPT AS EXPRESSLY SET FORTH IN THE OTHER OPERATIVE DOCUMENTS.
3 LIMITED COVENANTS AND REPRESENTATIONS BY BNPLC.
(A) Cooperation of BNPLC to Facilitate Use. So long as the Leases remain in
force and NAI remains in possession of the Property, BNPLC shall take any action
reasonably requested by NAI to facilitate the use of the Property permitted by
the Leases; provided, however, that:
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<PAGE> 9
(1) This subparagraph 3(A) shall not impose upon BNPLC the obligation
to take any action that can be taken by NAI, NAI's Affiliates or anyone
else other than BNPLC as the owner of the Property.
(2) BNPLC shall not be required by this subparagraph 3(A) to make any
payment to another Person unless BNPLC shall first have received funds from
NAI, in excess of any other amounts due from NAI under any of the Operative
Documents, sufficient to make the payment.
(3) BNPLC shall have no obligations whatsoever under this subparagraph
3(A) at any time after an Event of Default shall have occurred and be
continuing.
(4) NAI must request any action to be taken by BNPLC pursuant to this
subparagraph 3(A), and such request must be specific and in writing, if
required by BNPLC at the time the request is made. A suggested form for
such a request is attached as Exhibit D.
(5) No action may be required of BNPLC pursuant to this subparagraph
3(A) that could constitute a violation of any Applicable Laws or compromise
or constitute a waiver of BNPLC's rights under other provisions of this
Agreement or any of the other Operative Documents or that for any other
reason is reasonably objectionable to BNPLC.
The actions BNPLC shall take pursuant to this subparagraph 3(A) if
reasonably requested by NAI will include, subject to the conditions listed in
the proviso above, executing or consenting to, or exercising or assisting NAI to
exercise rights under any (I) grant of easements, licenses, rights of way, and
other rights in the nature of easements encumbering the Land or the
Improvements, (II) release or termination of easements, licenses, rights of way
or other rights in the nature of easements which are for the benefit of the Land
or Improvements or any portion thereof, (III) dedication or transfer of portions
of the Land not improved with a building, for road, highway or other public
purposes, (IV) agreements (other than with NAI or its Affiliates) for the use
and maintenance of common areas, for reciprocal rights of parking, ingress and
egress and amendments to any covenants and restrictions affecting the Land or
any portion thereof, (V) documents required to create or administer a
governmental special benefit district or assessment district for public
improvements and collection of special assessments, (VI) instruments necessary
or desirable for the exercise or enforcement of rights or performance of
obligations under any Permitted Encumbrance or any contract, permit, license,
franchise or other right included within the term "Property" (including, without
limitation, under the Development Documents), (VII) modifications of Permitted
Encumbrances or Development Documents, (VIII) [intentionally deleted], (IX)
confirmations of NAI's rights under any particular provisions of the Operative
Documents which NAI may wish to provide to a third party or (X) execution or
filing of a tract or parcel map subdividing the Land into lots or parcels or to
adjust boundary lines of the Land to facilitate construction thereon or on
adjacent land which NAI leases from BNPLC. However, the determination of whether
any such action is reasonably requested or reasonably objectionable to BNPLC may
depend in whole or in part upon the extent to which the requested action shall
result in a lien to secure payment or performance obligations against BNPLC's
interest in the Property, shall cause a decrease in the value of the Property to
less than forty-five percent (45%) of Stipulated Loss Value after any Qualified
Prepayments that may result from such action are taken into account, or shall
impose upon BNPLC any present or future obligations greater than the obligations
BNPLC is willing to accept in reliance on the indemnifications provided by NAI
under the Operative Documents.
Any Losses incurred by BNPLC because of any action taken pursuant to this
subparagraph 3(A) shall be covered by the indemnifications set forth in
subparagraph 5(c) of the Leases. Further, for purposes of such indemnification,
any action taken by BNPLC will be deemed to have been made at the request of NAI
if made pursuant to any request of counsel to or any officer of NAI (or with
their knowledge, and without their objection) in connection with the execution
or administration of the Leases or the other Operative Documents.
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<PAGE> 10
(B) Actions Permitted by NAI Without BNPLC's Consent. No refusal by BNPLC
to execute or join in the execution of any agreement, application or other
document requested by NAI pursuant to the preceding subparagraph 3(A) shall
preclude NAI from itself executing such agreement, application or other
document; provided, that in doing so NAI is not purporting to act for BNPLC and
does not thereby create or expand any obligations or restrictions that encumber
BNPLC's title to the Property. Further, subject to the other terms and
conditions of the Leases and other Operative Documents, NAI shall be entitled to
do any of the following in NAI's own name and to the exclusion of BNPLC without
any notice to or consent of BNPLC, provided, that (i) the Leases remain in
force, (ii) NAI remains in possession of the Property, (iii) no Event of Default
has occurred and is continuing, and (iv) NAI is not purporting to act for BNPLC
and does not thereby create or expand any obligations or restrictions that
encumber BNPLC's title to the Property:
(1) perform obligations arising under and exercise and enforce the
rights of NAI or the owner of the Property under the Development Documents
and Permitted Encumbrances;
(2) perform obligations arising under and exercise and enforce the
rights of NAI or the owner of the Property with respect to any other
contracts or documents (such as building permits) included within the
Personal Property;
(3) recover and retain any monetary damages or other benefit inuring
to NAI or the owner of the Property through the enforcement of any rights,
contracts or other documents included within the Personal Property
(including the Development Documents and Permitted Encumbrances); provided,
that to the extent any such monetary damages may become payable as
compensation for an adverse impact on value of the Property, the rights of
BNPLC and NAI hereunder with respect to the collection and application of
such monetary damages shall be the same as for condemnation proceeds
payable because of a taking of all or any part of the Property; and
(4) without limiting the foregoing, as tenant under the Improvements
Lease, (i) collect and retain all rents paid under the Premises Leases;
(ii) recover and retain any monetary damages or other benefit inuring to
NAI or the owner of the Real Property through the enforcement of any rights
under the Premises Leases (provided that this subsection (ii) shall not
apply to any damages or benefits that are required by the terms of the
Lease to be paid over to BNPLC); (iii) cancel or accept the surrender of
any space under any Premises Lease; and (iv) enforce any guaranties or
other collateral provided by Lessees under the Premises Leases and retain
the proceeds thereof.
(C) Waiver of Landlord's Liens. BNPLC waives any security interest,
statutory landlord's lien or other interest BNPLC may have in or against
computer equipment and other tangible personal property placed on the Land from
time to time that NAI or its Affiliates own or lease from other lessors;
provided, however, that BNPLC does not waive its interest in or rights with
respect to equipment or other property included within the "Property" as
described in Paragraph 7 of the Improvements Lease. Although computer equipment
or other tangible personal property may be "bolted down" or otherwise firmly
affixed to Improvements, it shall not by reason thereof become part of the
Improvements if it can be removed without causing structural or other material
damage to the Improvements and without rendering HVAC or other major building
systems inoperative and if it does not otherwise constitute "Property" as
provided in Paragraph 7 of the Improvements Lease.
(D) Estoppel Letter. Upon thirty days written request by NAI at any time
and from time to time prior to the Designated Sale Date, BNPLC shall provide a
statement in writing certifying that the Operative Documents are unmodified and
in full effect (or, if there have been modifications, that the Operative
Documents are in full effect as modified, and setting forth such modifications),
certifying the dates to which the rents payable by NAI under the Leases has been
paid, stating whether BNPLC is aware of any default by NAI that may exist under
the
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<PAGE> 11
Leases and confirming BNPLC's agreements concerning landlord's liens and
other matters set forth in subparagraph 3(C). It being intended that any such
statement by BNPLC may be relied upon by anyone with whom NAI may intend to
enter into an agreement for construction of the Improvements or other
significant agreements concerning the Property.
(E) Limited Representations by BNPLC Concerning Accounting Matters. BNPLC
is not expected or required to represent or warrant that the Leases or the
Purchase Agreements will qualify for any particular accounting treatment under
GAAP. However, to permit NAI to determine for itself the appropriate accounting
for the Leases and the Purchase Agreements, BNPLC does represent to NAI the
following as of the Effective Date:
(1) Equity capital invested in BNPLC is greater than three percent
(3%) of the aggregate of all lease funding amounts (including
participations) of BNPLC. Such equity capital investments constitute equity
in legal form and are reflected as shareholders' equity in the financial
statements and accounting records of BNPLC.
(2) BNPLC is one hundred percent (100%) owned by French American Bank
Corporation, which is one hundred percent (100%) owned by BNPLC's Parent.
(3) BNPLC leases properties of substantial value to more than fifteen
tenants.
(4) All parties to whom BNPLC has any material obligations known to
BNPLC are (and are expected to be) Affiliates of BNPLC's Parent,
Participants, or participants with BNPLC in other leasing deals or loans
made by BNPLC, or other tenants or borrowers in such other leasing deals or
loans.
(5) BNPLC has substantial assets in addition to the Property, assets
which BNPLC believes to have a value far in excess of the value of the
Property.
(6) Other than any Funding Advances provided from time to time by
Participants under the Participation Agreement, BNPLC expects to obtain all
Funding Advances from Banque Nationale de Paris or other Affiliates of
BNPLC, and to the extent that Banque Nationale de Paris or such other
Affiliates themselves borrow or accept bank deposits to obtain the funds
needed to provide such Funding Advances, the obligation to repay such funds
shall not be limited, by agreement or corporate structure, to payments
collected from NAI or otherwise recovered from the Property.
(7) BNPLC has not obtained residual value insurance or a residual
value guarantee from any third party to ensure the recovery of its
investment in the Property.
(8) BNPLC does not intend to take any action during the terms of the
Leases that would change, or anticipate any change in, any of the facts
listed above in this subparagraph.
NAI shall have the right to ask BNPLC questions from time to time concerning
BNPLC's financial condition, concerning matters relevant to the proper
accounting treatment of the Leases on NAI's financial statements and accounting
records (including the amount of BNPLC's equity capital as a percentage of the
aggregate of all lease funding amounts [including participations] by BNPLC) or
concerning BNPLC's ability to perform under the Leases or the Purchase
Agreements, to which questions BNPLC shall promptly respond. Such response,
however, may be limited to a statement that BNPLC will not provide requested
information; provided, however, BNPLC must notify NAI in writing if at any time
during the terms of the Leases BNPLC ceases to be 100% owned, directly or
indirectly, by Banque Nationale de Paris, or if at any time during the terms of
the Leases BNPLC believes it could not represent that the statements in clauses
(1), (5) and (7) above continue to be accurate, whether because of a
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<PAGE> 12
change in the capital structure of BNPLC, a purchase of residual value insurance
with respect to the Property or otherwise.
(F) Other Limited Representations by BNPLC. BNPLC represents that:
(1) No Default or Violation. The execution, delivery and performance
by BNPLC of this Agreement and the other Operative Documents do not and
will not constitute a breach or default under any material contract or
agreement to which BNPLC is a party or by which BNPLC is bound and do not,
to the knowledge of BNPLC, violate or contravene any law, order, decree,
rule or regulation to which BNPLC is subject. (As used in this subparagraph
3(F), "BNPLC'S KNOWLEDGE" means the present actual knowledge of Lloyd Cox,
the current officer of BNPLC having primary responsibility for the
negotiation of the Operative Documents.)
(2) No Suits. There are no judicial or administrative actions, suits,
proceedings or investigations pending or, to BNPLC's knowledge, threatened
against BNPLC that are reasonably likely to affect BNPLC's interest in the
Property or the validity, enforceability or priority of the Leases or the
Purchase Agreements, and BNPLC is not in default with respect to any order,
writ, injunction, decree or demand of any court or other governmental or
regulatory authority that could materially and adversely affect the
business or assets of BNPLC or its interest in the Property.
(3) Enforceability. The execution, delivery and performance of each of
the Operative Documents by BNPLC are duly authorized, are not in
contravention of or conflict with any term or provision of BNPLC's articles
of incorporation or bylaws and do not, to BNPLC's knowledge, require the
consent or approval of any governmental body or other regulatory authority
that has not heretofore been obtained or conflict with any Applicable Laws.
Each of the Operative Documents are valid, binding and legally enforceable
obligations of BNPLC except as such enforcement is affected by bankruptcy,
insolvency and similar laws affecting the rights of creditors, generally,
and equitable principles of general application; provided, BNPLC makes no
representation or warranty that conditions imposed by zoning ordinances or
other state or local Applicable Laws to the purchase, ownership, lease or
operation of the Property have been satisfied.
(4) Organization. BNPLC is duly incorporated and legally existing
under the laws of Delaware and is duly qualified to do business in the
State of California. BNPLC has or will obtain on a timely basis, at NAI's
expense to the extent so provided in the Leases, all requisite power and
all governmental certificates of authority, licenses, permits,
qualifications and other documentation necessary to own and lease the
Property and to perform its obligations under the Operative Documents.
(5) Existence. So long as NAI continues to have rights under the
Leases or Purchase Agreements, BNPLC shall continuously maintain its
existence and, to the extent required to comply with its obligations under
the Operative Documents, its qualification to do business in the State of
California.
(6) Not a Foreign Person. BNPLC is not a "foreign person" within the
meaning of Sections 1445 and 7701 of the Code (i.e., BNPLC is not a
non-resident alien, foreign corporation, foreign partnership, foreign trust
or foreign estate as those terms are defined in the Code and regulations
promulgated thereunder).
(7) Bankruptcy. BNPLC's capital is adequate for the businesses in
which BNPLC is engaged and intends to be engaged. BNPLC has not incurred
(whether hereby or otherwise), nor does BNPLC intend to incur or believe
that it will incur, debts which will be beyond its ability to pay as such
debts mature. There has not been filed by or, to BNPLC's knowledge, against
BNPLC a petition in bankruptcy or
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<PAGE> 13
a petition or answer seeking an assignment for the benefit of creditors,
the appointment of a receiver, trustee, custodian or liquidator with
respect to BNPLC or any significant portion of BNPLC's property,
reorganization, arrangement, rearrangement, composition, extension,
liquidation or dissolution or similar relief under the federal Bankruptcy
Code or any state law.
4 OBLIGATIONS OF NAI UNDER OTHER OPERATIVE DOCUMENTS NOT LIMITED BY THIS
AGREEMENT. Nothing contained in this Agreement shall limit, modify or otherwise
affect any of NAI's obligations under the other Operative Documents, which
obligations are intended to be separate, independent and in addition to, and not
in lieu of, those established by this Agreement.
5 OBLIGATIONS OF NAI HEREUNDER NOT LIMITED BY OTHER OPERATIVE DOCUMENTS.
Recognizing that but for this Agreement (including the representations of NAI
set forth in Paragraphs 1 and 2) BNPLC would not acquire the Property or enter
into the other Operative Documents, NAI agrees that BNPLC's rights for any
breach of this Agreement (including a breach of such representations) shall not
be limited by any provision of the other Operative Documents that would limit
NAI's liability thereunder, including any provision therein that would limit
NAI's liability in the event of a termination of the Leases or of any of NAI's
rights or obligations under the Purchase Agreements.
[The signature pages follow.]
-10-
<PAGE> 14
IN WITNESS WHEREOF, this Closing Certificate and Agreement is hereby
executed in multiple originals as of the Effective Date above set forth.
"NAI"
NETWORK APPLIANCE, INC.
By:
---------------------------------
Name (print):
--------------------
Title:
---------------------------
<PAGE> 15
[Continuation of signature pages to Closing Certificate and Agreement dated to
be effective December ___, 1999]
"BNPLC"
BNP LEASING CORPORATION
By:
---------------------------------
Lloyd G. Cox, Vice President
<PAGE> 16
EXHIBIT A
LEGAL DESCRIPTION
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
TRACT 1:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of a portion of Parcel B, as
shown upon that certain Parcel Map recorded in Book 345 of Maps, at page 20,
Santa Clara County Records", which Map was filed for record in the Office of the
Recorder of the County of Santa Clara, State of California, on November 17,
1976, in Book 383 of Maps, at page 35.
TRACT 2:
Together with an easement for vehicles parking over the following described
property:
A 7-foot strip of land for parking easement purposes over a portion of Parcel A,
as said Parcel A is shown on that certain Parcel Map filed for record on
November 10, 1974 in Book 292 of Maps, at page 41, records of said County, and
being more particularly described as follows:
Commencing at the Northeast corner of said Parcel A; thence North 75~8'27" West
500.00 feet along the Northeasterly line of said Parcel A; thence South
14~51'33" West 7.00 feet; thence parallel to Northeasterly line of said Parcel
A, South 75~08'27" East 500.00 feet to the Southeast line of said Parcel A,
North 14~51'33" East 7.00 feet to the point of beginning.
APN: 110-32-002
ARB: 110-3-65.02
TRACT 3:
Parcel 1, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-6
ARB: 110-3-x65
TRACT 4:
Parcel 2, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-7
ARB: 110-3-x65
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<PAGE> 17
TRACT 5:
Parcel 2, as shown on that certain parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on
October 7, 1998, in Book 708 of Parcel Maps, Pages 51 and 52.
APN: 110-32-12
ARB: 110-03-65.11
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<PAGE> 18
EXHIBIT B
PERMITTED ENCUMBRANCES
TRACT 1 and 2:
1. TAXES for the fiscal year 1999-2000, 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. LIMITATIONS, covenants, conditions, 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 December 23, 1971 in Book 9640, page 443, Official
Records.
Assignments and Assumption, executed by Moffett Park Associates, a
partnership to Prudential Insurance Company of America, recorded February 8,
1977 in Book C583, page 685, Official Records.
4. AGREEMENT on the terms and conditions contained therein,
For : Waiver of Construction Credits
Between : Moffett Park Associates
And : None Shown
Recorded : September 28, 1976 in Book C307, page 346, Official Records.
5. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Construction, reconstruction, operation, repair,
maintenance, replacement, relocation and enlargement of
Public Utilities
Granted to : The City of Sunnyvale, a municipal corporation
Recorded : November 16, 1976 in Book C414, page 105, Official Records
Affects : as follows:
Being a portion of Parcel B as shown on that certain Parcel Map recorded
August 28, 1974 in Book of Maps, at page 20, Santa Clara County Records; a
strip of land 10 feet in width, measured at right angles lying Northerly and
Easterly of and contiguous to the following described line; beginning at the
intersection of the Westerly line of Crossman Road, 90 feet in width, with
the Northerly line of Parcel A as shown on said Map; thence North 75~ 7' 58"
West along said Northerly line of Parcel A 450.13 feet; thence leaving said
Northerly line, North 30~ 7' 48" West 210.69 feet; thence North 75~ 8' 27"
West 391.04 feet to a point on the Easterly line of the proposed Geneva
Drive, 60 feet wide, said point being the terminus of said easement.
6. ANY RIGHTS, interests, or claims adverse to those of the vestee herein which
may exist or arise by reason of the following facts 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.
-1-
<PAGE> 19
TRACT 3:
1. TAXES for the fiscal year 1999-2000, 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,
-2-
<PAGE> 20
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.
8. ANY RIGHTS, interests, or claims adverse to those of the vestee herein which
may exist or arise by reason of the following facts 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.
(a) The fact that a chain link fence extends across the southerly
boundary of said land.
TRACT 4:
9. TAXES for the fiscal year 1999-2000, a lien not yet due or payable.
10. 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.
11. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Slope Easement
In favor of : City of Sunnyvale
Recorded : November 16, 1976 in Book C414, page 90, Official Records
Affects : Westerly 5 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.
12. EASEMENT recorded on that certain Map for the purposes stated herein and
incidents thereto
Purpose : Public utilities easement
Recorded : July 7, 1994 in Book 657 of Maps, page 9, Official Records
Affects : Westerly 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.
13. 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.
14. 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
-3-
<PAGE> 21
3604(c), contained in the document recorded February 5, 1980 in Book F122,
page 460, Official Records.
TRACT 5:
15. TAXES for the fiscal year 1999-2000, a lien not yet due or payable.
16. 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.
17. 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 : The Northeasterly and 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.
18. 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 : The Northeasterly and 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.
19. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Sidewalk and sign easement
Recorded : July 7, 1994, in Book 657 of Maps, page 9, Official Records
Affects : The Northerly 2 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.
20. 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.
21. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public utilities easement
Recorded : October 7, 1998, in Book 708 of Maps, pages 51-52, Official
Records
Affects : The Northerly 15 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.
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<PAGE> 22
EXHIBIT C
DEVELOPMENT DOCUMENTS
- -NONE-
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<PAGE> 23
EXHIBIT D
NOTICE OF REQUEST FOR ACTION BY BNPLC
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Re: Closing Certificate and Agreement dated as of December ___, 1999,
between Network Appliance, Inc. and BNP Leasing Corporation
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Closing Certificate and Agreement referenced above.
Pursuant to subparagraph 3(A) of the Closing Certificate and Agreement, NAI
requests the following of BNPLC:
[INSERT HERE A SPECIFIC DESCRIPTION OF THE ACTION REQUESTED - E.G., "PLEASE
EXECUTE THE ENCLOSED APPLICATION FOR BUILDING PERMIT REQUIRED BY THE CITY
OF SUNNYVALE IN CONNECTION WITH CONSTRUCTION OF CERTAIN IMPROVEMENTS WHICH
ARE PART OF THE INITIAL CONSTRUCTION PROJECT."]
PLEASE NOTE: SUBPARAGRAPH 3(A) OF THE CLOSING CERTIFICATE OBLIGATES BNPLC NOT TO
UNREASONABLY REFUSE TO COMPLY WITH THE FOREGOING REQUEST, SUBJECT TO TERMS AND
CONDITIONS SET FORTH IN THAT SUBPARAGRAPH. NAI HEREBY CERTIFIES TO BNPLC THAT
AFTER CAREFUL CONSIDERATION NAI BELIEVES THAT ALL SUCH TERMS AND CONDITIONS ARE
SATISFIED IN THE CASE OF THE FOREGOING REQUEST, AND NAI HEREBY RATIFIES AND
CONFIRMS ITS OBLIGATION TO INDEMNIFY BNPLC AGAINST ANY LOSSES BNPLC MAY INCUR OR
SUFFER BECAUSE OF ITS COMPLIANCE WITH SUCH REQUEST AS PROVIDED IN SUBPARAGRAPH
5(c) OF THE LEASE.
NAI respectfully requests that BNPLC respond to this notice as soon as
reasonably possible.
Executed this _____ day of ______________, 19___.
NETWORK APPLIANCE, INC.
Name:
-------------------------------
Title:
------------------------------
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<PAGE> 1
EXHIBIT 10.50
================================================================================
LEASE AGREEMENT
(PHASE IV - LAND)
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
NETWORK APPLIANCE, INC.
("NAI")
DECEMBER ___, 1999
(SUNNYVALE, CALIFORNIA)
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. TERM.................................................................................2
(a) Scheduled Term................................................................2
(b) Intentionally Deleted.........................................................2
(c) Intentionally Deleted.........................................................2
(d) Election by NAI to Terminate After Accelerating the Designated Sale Date......2
(e) Extension of the Term.........................................................3
2. USE AND CONDITION OF THE PROPERTY....................................................3
(a) Use...........................................................................3
(b) Condition of the Property.....................................................3
(c) Consideration for and Scope of Waiver.........................................4
3. RENT.................................................................................4
(a) Base Rent Generally...........................................................4
(b) Impact of Collateral Upon Formulas............................................4
(c) Calculation of and Due Dates for Base Rent....................................4
(i) Amount Payable On the Base Rent Commencement Date......................4
(ii) Determination of Payment Due Dates, Generally..........................5
(iii) Special Adjustments to Base Rent Payment Dates and Periods.............5
(iv) Base Rent Formula for Periods During Which The Collateral
Percentage is 100%.....................................................5
(v) Base Rent Formula for Periods During Which The Collateral Percentage is
Greater Than Zero and Less Than 100%...................................6
(vi) Base Rent Formula for Periods During Which The Collateral Percentage
is Zero................................................................7
(d) Additional Rent...............................................................7
(e) Intentionally Deleted.........................................................7
(f) Intentionally Deleted.........................................................7
(g) Intentionally Deleted.........................................................7
(h) Intentionally Deleted.........................................................7
(i) No Demand or Setoff...........................................................7
(j) Default Interest and Order of Application.....................................7
4. NATURE OF THIS AGREEMENT.............................................................8
(a) Net Lease Generally...........................................................8
(b) No Termination................................................................8
(c) Tax Reporting.................................................................9
(d) Characterization of this Land Lease...........................................9
5. PAYMENT OF EXECUTORY COSTS AND LOSSES RELATED TO THE PROPERTY........................9
(a) Impositions..................................................................10
(b) Increased Costs; Capital Adequacy Charges....................................10
(c) NAI's Payment of Other Losses; General Indemnification.......................11
(d) Exceptions and Qualifications to Indemnities.................................12
6. INTENTIONALLY DELETED...............................................................13
7. INTENTIONALLY DELETED...............................................................13
8. ENVIRONMENTAL.......................................................................13
(a) Environmental Covenants by NAI...............................................13
(b) Right of BNPLC to do Remedial Work Not Performed by NAI......................13
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
(c) Environmental Inspections and Reviews........................................14
(d) Communications Regarding Environmental Matters...............................14
9. INSURANCE REQUIRED AND CONDEMNATION.................................................15
(a) Liability Insurance..........................................................15
(b) Intentionally Deleted........................................................15
(c) Failure to Obtain Insurance..................................................15
(d) Condemnation.................................................................15
(e) Waiver of Subrogation........................................................15
10. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS..................................16
(a) Collection and Application of Insurance and Condemnation Proceeds Generally..16
(b) Advances of Escrowed Proceeds to NAI.........................................16
(c) Application of Escrowed Proceeds as a Qualified Prepayment...................16
(d) Special Provisions Applicable After an Event of Default......................17
(e) NAI's Obligation to Restore..................................................17
(f) Takings of All or Substantially All of the Property on or after the Base Rent
Commencement Date............................................................17
11. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF NAI CONCERNING THE PROPERTY.17
(a) Compliance with Covenants and Laws...........................................17
(b) Operation of the Property....................................................17
(c) Debts for Construction, Maintenance, Operation or Development................18
(d) Repair, Maintenance, Alterations and Additions...............................19
(e) Permitted Encumbrances and Development Documents.............................19
(f) Books and Records Concerning the Property....................................19
12. FINANCIAL COVENANTS AND OTHER COVENANTS INCORPORATED BY REFERENCE TO SCHEDULE 1.....20
13. FINANCIAL STATEMENTS AND OTHER REPORTS..............................................20
(a) Financial Statements; Required Notices; Certificates.........................20
14. ASSIGNMENT AND SUBLETTING BY NAI....................................................21
(a) BNPLC's Consent Required.....................................................21
(b) Standard for BNPLC's Consent to Assignments and Certain Other Matters........21
(c) Consent Not a Waiver.........................................................22
15. ASSIGNMENT BY BNPLC.................................................................22
(a) Restrictions on Transfers....................................................22
(b) Effect of Permitted Transfer or other Assignment by BNPLC....................22
16. BNPLC'S RIGHT OF ACCESS.............................................................22
17. EVENTS OF DEFAULT...................................................................23
18. REMEDIES............................................................................24
(a) Basic Remedies...............................................................24
(b) Notice Required So Long As the Purchase Option and NAI's Initial Remarketing Rights
and Obligations Continue Under the Purchase Agreement........................26
(c) Enforceability...............................................................26
(d) Remedies Cumulative..........................................................26
19. DEFAULT BY BNPLC....................................................................27
20. QUIET ENJOYMENT.....................................................................27
21. SURRENDER UPON TERMINATION..........................................................27
22. HOLDING OVER BY NAI.................................................................27
23. INDEPENDENT OBLIGATIONS EVIDENCED BY THE OTHER OPERATIVE DOCUMENTS..................28
</TABLE>
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<PAGE> 4
EXHIBITS AND SCHEDULES
<TABLE>
<S> <C>
Exhibit A....................................................................Legal Description
Exhibit B...............................................................Insurance Requirements
Exhibit C...........................................................LIBOR Period Election Form
Schedule 1..........................................Financial Covenants and Other Requirements
</TABLE>
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<PAGE> 5
LEASE AGREEMENT
(PHASE IV - LAND)
This LEASE AGREEMENT (PHASE IV - LAND) (this "LAND LEASE"), by and between
BNP LEASING CORPORATION, a Delaware corporation ("BNPLC"), and NETWORK
APPLIANCE, INC., a California corporation ("NAI"), is made and dated as of
DECEMBER ___, 1999, the Effective Date. ("EFFECTIVE DATE" and other capitalized
terms used and not otherwise defined in this Land Lease are intended to have the
meanings assigned to them in the Common Definitions and Provisions Agreement
(Phase IV - Land) executed by BNPLC and NAI contemporaneously with this Land
Lease. By this reference, the Common Definitions and Provisions Agreement (Phase
IV - Land) is incorporated into and made a part of this Land Lease for all
purposes.)
RECITALS
Pursuant to the Existing Contract, which covers the Land described in
Exhibit A, BNPLC is acquiring the Land and any appurtenances thereto from Seller
contemporaneously with the execution of this Land Lease.
In anticipation of BNPLC's acquisition of the Land under the Existing
Contract, BNPLC and NAI have reached agreement as to the terms and conditions
upon which BNPLC is willing to lease the Land to NAI, and by this Land Lease
BNPLC and NAI desire to evidence such agreement.
GRANTING CLAUSES
BNPLC does hereby LEASE, DEMISE and LET unto NAI for the term hereinafter
set forth all right, title and interest of BNPLC, now owned or hereafter
acquired, in and to:
(1) the Land;
(2) all easements and other rights appurtenant to the Land, whether
now owned or hereafter acquired by BNPLC; and
(3) (A) any land lying within the right-of-way of any street, open or
proposed, adjoining the Land, (B) any sidewalks and alleys adjacent to the
Land and (C) any strips and gores between the Land and any abutting land
not owned or leased by BNPLC.
BNPLC's interest in all property described in clauses (1) through (3) above are
hereinafter referred to collectively as the "REAL PROPERTY". The Real Property
does not include any Improvements (now existing or those to be constructed as
provided in the Other Lease Agreement) or BNPLC's rights appurtenant to the
Improvements, it being understood that the Other Lease Agreement constitutes a
separate lease of the Improvements and the appurtenances thereto, and only the
Improvements and the appurtenances thereto, from BNPLC to NAI.
To the extent, but only to the extent, that assignable rights or interests
in, to or under the following have been or will be acquired by BNPLC under the
Existing Contract or acquired by BNPLC pursuant to Paragraph 7 below, BNPLC also
hereby grants and assigns to NAI for the term of this Land Lease the right to
use and enjoy (and, in the case of contract rights, to enforce) such rights or
interests of BNPLC:
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<PAGE> 6
(a) the benefits, if any, conferred upon the owner of the Real
Property by the Permitted Encumbrances (including the right to receive
rents under and to otherwise enforce the Premises Leases) and Development
Documents; and
(b) any permits, licenses, franchises, certificates, and other rights
and privileges against third parties related to the Real Property.
Such rights and interests of BNPLC, whether now existing or hereafter arising,
are hereinafter collectively called the "PERSONAL PROPERTY". The Real Property
and the Personal Property are hereinafter sometimes collectively called the
"PROPERTY."
However, the leasehold estate conveyed hereby and NAI's rights hereunder
are expressly made subject and subordinate to the terms and conditions of this
Land Lease, to the Premises Leases and all other Permitted Encumbrances, and to
any other claims or encumbrances not constituting Liens Removable by BNPLC.
GENERAL TERMS AND CONDITIONS
The Property is leased by BNPLC to NAI and is accepted and is to be used
and possessed by NAI upon and subject to the following terms and conditions:
1. TERM.
(a) Scheduled Term. The term of this Land Lease (the "TERM") shall
commence on and include the Effective Date, and end on the first Business Day of
January, 2005, unless sooner terminated as expressly herein provided.
(b) Intentionally Deleted.
(c) Intentionally Deleted.
(d) Election by NAI to Terminate After Accelerating the Designated
Sale Date. NAI shall be entitled to accelerate the Designated Sale Date (and
thus accelerate the purchase of BNPLC's interest in the Property by NAI or by an
Applicable Purchaser pursuant to the Purchase Agreement) by sending a notice to
BNPLC as provided in clause (2) of the definition of "Designated Sale Date" in
the Common Definitions and Provisions Agreement (Phase IV - Land). In the event,
because of NAI's election to so accelerate the Designated Sale Date or for any
other reason, the Designated Sale Date occurs before the end of the scheduled
Term, NAI may terminate this Land Lease on or after the Designated Sale Date;
provided, however, as a condition to any such termination by NAI, NAI must have
done the following prior to the termination:
(i) purchased or caused an Applicable Purchaser to purchase the
Property pursuant to the Purchase Agreement and satisfied all of NAI's
other obligations under the Purchase Agreement;
(ii) paid to BNPLC all Base Rent and all other Rent due on or before
or accrued through the Designated Sale Date; and
(iii) paid any Breakage Costs caused by BNPLC's sale of the Property
pursuant to the Purchase Agreement.
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<PAGE> 7
(e) Extension of the Term. The Term may be extended at the option of
NAI for two successive periods of five years each; provided, however, that prior
to any such extension the following conditions must have been satisfied: (A) at
least ninety days prior to the commencement of any such extension, BNPLC and NAI
must have agreed in writing upon, and received the consent and approval of
BNPLC's Parent and all other Participants to (1) a corresponding extension not
only to the date for the expiration of the Term specified above in this Section,
but also to the date specified in clause (1) of the definition of Designated
Sale Date in the Common Definitions and Provisions Agreement (Phase IV - Land),
and (2) an adjustment to the Rent that NAI will be required to pay for the
extension, it being expected that the Rent for the extension may be different
than the Rent required for the original Term, and it being understood that the
Rent for any extension must in all events be satisfactory to both BNPLC and NAI,
each in its sole and absolute discretion; (B) no Event of Default shall have
occurred and be continuing at the time of NAI's exercise of its option to
extend; and (C) immediately prior to any such extension, this Land Lease must
remain in effect. With respect to the condition that BNPLC and NAI must have
agreed upon the Rent required for any extension of the Term, neither NAI nor
BNPLC is willing to submit itself to a risk of liability or loss of rights
hereunder for being judged unreasonable. Accordingly, both NAI and BNPLC hereby
disclaim any obligation express or implied to be reasonable in negotiating the
Rent for any such extension. Subject to the changes to the Rent payable during
any extension of the Term as provided in this Paragraph, if NAI exercises its
option to extend the Term as provided in this Paragraph, this Land Lease shall
continue in full force and effect, and the leasehold estate hereby granted to
NAI shall continue without interruption and without any loss of priority over
other interests in or claims against the Property that may be created or arise
after the date hereof and before the extension.
2. USE AND CONDITION OF THE PROPERTY.
(a) Use. Subject to the Permitted Encumbrances, the Development
Documents and the terms hereof, NAI may use and occupy the Property during the
Term, but only for the following purposes.
(i) maintaining and using Improvements on the Land for purposes
expressly permitted by and described in Paragraph 2(a) of the Other Lease
Agreement; and
(ii) other lawful purposes approved in advance and in writing by
BNPLC, which approval will not be unreasonably withheld (but NAI
acknowledges that BNPLC's withholding of such approval shall be reasonable
if BNPLC determines in good faith that (1) giving the approval may
materially increase BNPLC's risk of liability for any existing or future
environmental problem, or (2) giving the approval is likely to
substantially increase BNPLC's administrative burden of complying with or
monitoring NAI's compliance with the requirements of this Land Lease or
other Operative Documents).
Nothing in this subparagraph will prevent a tenant under a Premises
Lease executed by NAI, as Landlord, prior to or concurrently with the
Effective Date, from using the space covered thereby for purposes expressly
authorized by the terms and conditions of such Premises Lease.
(b) Condition of the Property. NAI ACKNOWLEDGES THAT IT HAS CAREFULLY
AND FULLY INSPECTED THE PROPERTY AND ACCEPTS THE PROPERTY IN ITS PRESENT STATE,
AS IS, AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE
CONDITION OF SUCH PROPERTY OR AS TO THE USE WHICH MAY BE MADE THEREOF. NAI ALSO
ACCEPTS THE PROPERTY WITHOUT ANY COVENANT, REPRESENTATION OR WARRANTY, EXPRESS
OR IMPLIED, BY BNPLC OR ITS AFFILIATES REGARDING THE TITLE THERETO OR THE RIGHTS
OF ANY PARTIES IN POSSESSION OF ANY PART THEREOF, EXCEPT AS EXPRESSLY SET FORTH
IN PARAGRAPH 20. BNPLC SHALL NOT BE RESPONSIBLE FOR ANY LATENT OR OTHER DEFECT
OR CHANGE OF CONDITION IN THE PROPERTY OR FOR ANY VIOLATIONS WITH RESPECT
THERETO OF APPLICABLE LAWS. FURTHER, THOUGH NAI MAY OBTAIN FROM THIRD PARTIES
ANY FACILITIES OR SERVICES TO WHICH NAI
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<PAGE> 8
IS ENTITLED BY REASON OF THE ASSIGNMENT AND LEASE OF PERSONAL PROPERTY SET FORTH
ON PAGE 2 OF THIS LAND LEASE, BNPLC SHALL NOT BE REQUIRED TO FURNISH TO NAI ANY
FACILITIES OR SERVICES OF ANY KIND, INCLUDING WATER, STEAM, HEAT, GAS, AIR
CONDITIONING, ELECTRICITY, LIGHT OR POWER.
(c) Consideration for and Scope of Waiver. The provisions of
subparagraph 2.(b) above have been negotiated by BNPLC and NAI after due
consideration for the Rent payable hereunder and are intended to be a complete
exclusion and negation of any representations or warranties of BNPLC or its
Affiliates, express or implied, with respect to the Property that may arise
pursuant to any law now or hereafter in effect or otherwise, except as expressly
set forth herein.
However, such exclusion of representations and warranties by BNPLC is not
intended to impair any representations or warranties made by other parties, the
benefit of which may pass to NAI during the Term because of the definition of
Personal Property and Property above.
3. RENT.
(a) Base Rent Generally. On each Base Rent Date through the end of the
Term, NAI shall pay BNPLC rent ("BASE RENT"). Each payment of Base Rent must be
received by BNPLC no later than 10:00 a.m. (Pacific time) on the date it becomes
due; if received after 10:00 a.m. (Pacific time) it will be considered for
purposes of this Land Lease as received on the next following Business Day. At
least five days prior to any Base Rent Date upon which an installment of Base
Rent shall become due, BNPLC shall notify NAI in writing of the amount of each
installment, calculated as provided below. Any failure by BNPLC to so notify
NAI, however, shall not constitute a waiver of BNPLC's right to payment, but
absent such notice NAI shall not be in default hereunder for any underpayment
resulting therefrom if NAI, in good faith, reasonably estimates the payment
required, makes a timely payment of the amount so estimated and corrects any
underpayment within three Business Days after being notified by BNPLC of the
underpayment.
(b) Impact of Collateral Upon Formulas. To ease the administrative
burden of this Land Lease and the Pledge Agreement, the formulas for calculating
Base Rent set out below in subparagraph 3.(c) reflect a reduction in the Base
Rent equal to the interest that would accrue on any Collateral provided in
accordance with the requirements of the Pledge Agreement from time to time if
the Accounts (as defined in the Pledge Agreement) bore interest at the Effective
Rate. BNPLC has agreed to such reduction to provide NAI with the economic
equivalent of interest on such Collateral, and in return NAI has agreed to the
provisions of the Pledge Agreement that excuse the actual payment of interest on
the Accounts. By incorporating such reduction of Base Rent into the formulas
below, and by providing for noninterest bearing Accounts in the Pledge
Agreement, the parties will avoid an unnecessary and cumbersome periodic
exchange of equal payments. It is not, however, the intent of BNPLC or NAI to
understate Base Rent or interest for financial reporting purposes. Accordingly,
for purposes of any financial reports that this Land Lease requires of NAI from
time to time, NAI may report Base Rent as if there had been no such reduction
and as if the Collateral from time to time provided in accordance with the
requirements of the Pledge Agreement had been maintained in Accounts bearing
interest at the Effective Rate.
(c) Calculation of and Due Dates for Base Rent. Payments of Base Rent
shall be calculated and become due as follows:
(i) Amount Payable On the Base Rent Commencement Date. The Base Rent
payable for each day (including the Effective Date) prior to but not
including the Base Rent Commencement Date shall be equal to (a) the sum of
(1) the per annum interest rate, as determined by BNPLC, at which BNPLC can
borrow funds overnight from BNPLC's Parent on that day, plus (2) the
Unsecured Spread, multiplied by
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<PAGE> 9
(b) the Initial Funding Advance, divided by (c) 360. All such Base Rent
shall become due on the Base Rent Commencment Date.
(ii) Determination of Payment Due Dates, Generally. For all Base Rent
Periods subject to a LIBOR Period Election of one month or three months,
Base Rent shall be due in one installment on the Base Rent Date upon which
the Base Rent Period ends. For Base Rent Periods subject to a LIBOR Period
Election of six months, Base Rent shall be payable in two installments,
with the first installment becoming due on the Base Rent Date that occurs
on the first Business Day of the third calendar month following the
commencement of such Base Rent Period, and with the second installment
becoming due on the Base Rent Date upon which the Base Rent Period ends.
(iii) Special Adjustments to Base Rent Payment Dates and Periods.
Notwithstanding the foregoing:
a) Any Base Rent Period that begins before, and does not
otherwise end before, a Failed Collateral Test Date shall end upon but
not include such Failed Collateral Test Date, and such Failed
Collateral Test Date shall constitute a Base Rent Date, upon which NAI
must pay all accrued, unpaid Base Rent for the Base Rent Period just
ended.
b) Consistent with clause (3) of the definition of LIBOR Period
Election in the Common Definitions and Provisions Agreement (Phase IV
- Land), each successive Base Rent Date after any such Failed
Collateral Test Date shall be the first Business Day of the first
calendar month following the calendar month which includes the
preceding Base Rent Date, so long as any Mandatory Collateral Period
shall continue.
c) In addition to Base Rent due on a Failed Collateral Test Date,
NAI must pay the Breakage Costs, if any, resulting from any early
ending of a Base Rent Period on the Failed Collateral Test Date
pursuant to the preceding clause 3.(c)(iii)a).
d) If NAI or any Applicable Purchaser purchases BNPLC's interest
in the Property pursuant to the Purchase Agreement, any accrued unpaid
Base Rent and all outstanding Additional Rent shall be due on the date
of purchase in addition to the purchase price and other sums due BNPLC
under the Purchase Agreement.
(iv) Base Rent Formula for Periods During Which The Collateral
Percentage is 100%. Each installment of Base Rent payable for any Base Rent
Period during which the Collateral Percentage is one hundred percent (100%)
shall equal:
- Stipulated Loss Value on the first day of such Base Rent Period,
times
- the Secured Spread for the period from and including the preceding
Base Rent Date to but not including the Base Rent Date upon which
the installment is due, times
- the number of days in the period from and including the preceding
Base Rent Date to but not including the Base Rent Date upon which
the installment is due, divided by
- three hundred sixty.
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<PAGE> 10
Assume, only for the purpose of illustration: that the Collateral
Percentage for a hypothetical Base Rent Period is one hundred percent
(100%); that prior to the first day of such Base Rent Period Qualified
Prepayments have been received by BNPLC, leaving a Stipulated Loss Value of
$20,000,000; that the Secured Spread is thirty basis points (30/100 of 1%);
and that such Base Rent Period contains exactly thirty days. Under such
assumptions, the Base Rent for the hypothetical Base Rent Period will
equal:
$20,000,000 x .30% x 30/360 = $5,000
(v) Base Rent Formula for Periods During Which The Collateral
Percentage is Greater Than Zero and Less Than 100%. Each installment of
Base Rent payable for any Base Rent Period during which the Collateral
Percentage is greater than zero and less than one hundred percent (100%)
shall equal:
- Stipulated Loss Value on the first day of such Base Rent Period,
times
- the sum of:
(A) the product of:
(1) the Collateral Percentage for such Base Rent Period,
times
(2) the Secured Spread for the period from and including the
preceding Base Rent Date to but not including the Base
Rent Date upon which the installment is due, plus
(B) the product of:
(1) one minus the Collateral Percentage for such Base Rent
Period, times
(2) the sum of (a) the Effective Rate with respect to such
Base Rent Period, plus (b) the Unsecured Spread for the
period from and including the preceding Base Rent Date
to but not including the Base Rent Date upon which the
installment is due, times
- the number of days in the period from and including the preceding
Base Rent Date to but not including the Base Rent Date upon which
the installment is due, divided by
- three hundred sixty.
Assume, only for the purpose of illustration: that the Collateral
Percentage for a hypothetical Base Rent Period is forty percent (40%); that
prior to the first day of such Base Rent Period Qualified Prepayments have
been received by BNPLC, leaving a Stipulated Loss Value of $20,000,000;
that the Effective Rate for the Base Rent Period is 6%; that the Secured
Spread is thirty basis points (30/100 of 1%); that upon the commencement of
such Base Rent Period the Unsecured Spread is one hundred fifty
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<PAGE> 11
basis points (150/100 of 1%); and that such Base Rent Period contains
exactly thirty days. Under such assumptions, the Base Rent for the
hypothetical Base Rent Period will equal:
$20,000,000 x {(40% x .30%) + ([1 - 40%] x [6% + 1.50%])}
x 30/360 = $77,000
(vi) Base Rent Formula for Periods During Which The Collateral
Percentage is Zero. Each installment of Base Rent payable for any Base Rent
Period during which the Collateral Percentage is zero shall equal:
- Stipulated Loss Value on the first day of such Base Rent Period,
times
- the sum of (a) the Effective Rate with respect to such Base Rent
Period, plus (b) the Unsecured Spread for the period from and
including the preceding Base Rent Date to but not including the Base
Rent Date upon which the installment is due, times
- the number of days in the period from and including the preceding
Base Rent Date to but not including the Base Rent Date upon which
the installment is due, divided by
- three hundred sixty.
Assume, only for the purpose of illustration: that the Collateral
Percentage for a hypothetical Base Rent Period is zero percent (0%); that
prior to the first day of such Base Rent Period Qualified Prepayments have
been received by BNPLC, leaving a Stipulated Loss Value of $20,000,000;
that the Effective Rate for the Base Rent Period is 6%; that the Unsecured
Spread is one hundred fifty basis points (150/100 of 1%) upon the
commencement of such Base Rent Period; and that such Base Rent Period
contains exactly thirty days. Under such assumptions, the Base Rent for the
hypothetical Base Rent Period will equal:
$20,000,000 x (6% + 1.50%) x 30/360 = $125,000
(d) Additional Rent. All amounts which NAI is required to pay to or on
behalf of BNPLC pursuant to this Land Lease, together with every charge,
premium, interest and cost set forth herein which may be added for nonpayment or
late payment thereof, shall constitute rent (all such amounts, other than Base
Rent, are herein called "ADDITIONAL RENT", and together Base Rent and Additional
Rent are herein sometimes called "RENT").
(e) Intentionally Deleted.
(f) Intentionally Deleted.
(g) Intentionally Deleted.
(h) Intentionally Deleted.
(i) No Demand or Setoff. Except as expressly provided herein, NAI
shall pay all Rent without notice or demand and without counterclaim, deduction,
setoff or defense.
(j) Default Interest and Order of Application. All Rent shall bear
interest, if not paid when first due, at the Default Rate in effect from time to
time from the date due until paid; provided, that nothing herein
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<PAGE> 12
contained will be construed as permitting the charging or collection of interest
at a rate exceeding the maximum rate permitted under Applicable Laws. BNPLC
shall be entitled to apply any amounts paid by or on behalf of NAI against any
Rent then past due in the order the same became due or in such other order as
BNPLC may elect.
4. NATURE OF THIS AGREEMENT.
(a) "Net" Lease Generally. Subject only to the exceptions listed in
subparagraph 5.(d) below, it is the intention of BNPLC and NAI that Base Rent
and other payments herein specified shall be absolutely net to BNPLC and that
NAI shall pay all costs, expenses and obligations of every kind relating to the
Property or this Land Lease which may arise or become due, including: (i) any
taxes payable by virtue of BNPLC's receipt of amounts paid to or on behalf of
BNPLC in accordance with Paragraph 5; (ii) any amount for which BNPLC is or
becomes liable with respect to the Permitted Encumbrances or the Development
Documents; and (iii) any costs incurred by BNPLC (including Attorneys' Fees)
because of BNPLC's acquisition or ownership of any interest in the Property or
because of this Land Lease or the transactions contemplated herein.
However, neither this subparagraph 4.(a) nor the indemnity in this
subparagraph 5.(c)(i) shall be construed to make NAI liable for (I) an
allocation of general overhead or internal administrative expenses of BNPLC or
any other Interested Party or (II) any duplicate payment of the same Loss to
both BNPLC and another Interested Party. (If, for example, BNPLC were required
to make a $10 fine because of a failure of the Property to comply with
Applicable Laws, and a Participant were required by the Participation Agreement
to reimburse BNPLC for 20% of the $10, NAI would not be required by this
subparagraph 4.(a) or by subparagraph 5.(c)(i) to pay both $10 to BNPLC and $2
to the Participant on account of the fine.)
(b) No Termination. Except as expressly provided in this Land Lease
itself, this Land Lease shall not terminate, nor shall NAI have any right to
terminate this Land Lease, nor shall NAI be entitled to any abatement of the
Rent, nor shall the obligations of NAI under this Land Lease be excused, for any
reason whatsoever, including any of the following: (i) any damage to or the
destruction of all or any part of the Property from whatever cause, (ii) the
taking of the Property or any portion thereof by eminent domain or otherwise for
any reason, (iii) the prohibition, limitation or restriction of NAI's use or
development of all or any portion of the Property or any interference with such
use by governmental action or otherwise, (iv) any eviction of NAI or of anyone
claiming through or under NAI, (v) any default on the part of BNPLC under this
Land Lease or under any other agreement to which BNPLC and NAI are parties, (vi)
the inadequacy in any way whatsoever of the Property (it being understood that
BNPLC has not made, does not make and will not make any representation express
or implied as to the adequacy thereof), (vii) any latent or other defect in the
Property or any change in the condition thereof or the existence with respect to
the Property of any violations of Applicable Laws, or (viii) any other cause
whether similar or dissimilar to the foregoing. It is the intention of the
parties hereto that the obligations of NAI hereunder shall be separate and
independent of the covenants and agreements of BNPLC, that Base Rent and all
other sums payable by NAI hereunder shall continue to be payable in all events
and that the obligations of NAI hereunder shall continue unaffected, unless the
requirement to pay or perform the same shall have been terminated or limited
pursuant to an express provision of this Land Lease. Without limiting the
foregoing, NAI waives to the extent permitted by Applicable Laws, except as
otherwise expressly provided herein, all rights to which NAI may now or
hereafter be entitled by law (including any such rights arising because of any
implied "warranty of suitability" or other warranty under Applicable Laws) (i)
to quit, terminate or surrender this Land Lease or the Property or any part
thereof or (ii) to any abatement, suspension, deferment or reduction of the
Rent.
However, nothing in this subparagraph 4.(b) shall be construed as a waiver
by NAI of any right NAI may have at law or in equity to the following remedies,
whether because of BNPLC's failure to remove a Lien Removable by BNPLC or
because of any other default by BNPLC under this Land Lease that continues
beyond the
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<PAGE> 13
period for cure provided in Paragraph 19: (i) the recovery of monetary damages,
(ii) injunctive relief in case of the violation, or attempted or threatened
violation, by BNPLC of any of the express covenants, agreements, conditions or
provisions of this Land Lease which are binding upon BNPLC (including the
confidentiality provisions set forth in subparagraph 16.(c) below), or (iii) a
decree compelling performance by BNPLC of any of the express covenants,
agreements, conditions or provisions of this Land Lease which are binding upon
BNPLC.
(c) Tax Reporting. BNPLC and NAI shall report this Land Lease and the
Purchase Agreement for federal income tax purposes as a conditional sale unless
prohibited from doing so by the Internal Revenue Service. If the Internal
Revenue Service shall challenge BNPLC's characterization of this Land Lease and
the Purchase Agreement as a conditional sale for federal income tax reporting
purposes, BNPLC shall notify NAI in writing of such challenge and consider in
good faith any reasonable suggestions by NAI about an appropriate response. In
any event, NAI shall (subject only to the limitations set forth in this
subparagraph) indemnify and hold harmless BNPLC from and against all
liabilities, costs, additional taxes (other than Excluded Taxes) and other
expenses that may arise or become due because of such challenge or because of
any resulting recharacterization required by the Internal Revenue Service,
including any additional taxes that may become due upon any sale under the
Purchase Agreement to the extent (if any) that such additional taxes are not
offset by tax savings resulting from additional depreciation deductions or other
tax benefits to BNPLC of the recharacterization. If BNPLC receives a written
notice of any challenge by the Internal Revenue Service that BNPLC believes will
be covered by this Paragraph, then BNPLC shall promptly furnish a copy of such
notice to NAI. The failure to so provide a copy of the notice to NAI shall not
excuse NAI from its obligations under this Paragraph; provided, that if none of
the officers of NAI and none of the employees of NAI responsible for tax matters
are aware of the challenge described in the notice and such failure by BNPLC
renders unavailable defenses that NAI might otherwise assert, or precludes
actions that NAI might otherwise take, to minimize its obligations hereunder,
then NAI shall be excused from its obligation to indemnify BNPLC against
liabilities, costs, additional taxes and other expenses, if any, which would not
have been incurred but for such failure. For example, if BNPLC fails to provide
NAI with a copy of a notice of a challenge by the Internal Revenue Service
covered by the indemnities set out in this Land Lease and NAI is not otherwise
already aware of such challenge, and if as a result of such failure BNPLC
becomes liable for penalties and interest covered by the indemnities in excess
of the penalties and interest that would have accrued if NAI had been promptly
provided with a copy of the notice, then NAI will be excused from any obligation
to BNPLC to pay the excess.
(d) Characterization of this Land Lease. For purposes of determining
the appropriate financial accounting for this Land Lease and for purposes of
determining their respective rights and remedies under state law, BNPLC and NAI
believe and intend that (i) this Land Lease constitutes a true lease, not a mere
financing arrangement, enforceable in accordance with its express terms, and the
preceding subparagraph is not intended to affect the enforcement of any other
provisions of this Land Lease or the Purchase Agreement, and (ii) the Purchase
Agreement shall constitute a separate and independent contract, enforceable in
accordance with the express terms and conditions set forth therein. In this
regard, NAI acknowledges that NAI asked BNPLC to participate in the transactions
evidenced by this Land Lease and the Purchase Agreement as a landlord and owner
of the Property, not as a lender. Although other transactions might have been
used to accomplish similar results, NAI expects to receive certain material
accounting and other advantages through the use of a lease transaction.
Accordingly, and notwithstanding the reporting for income tax purposes described
in the preceding subparagraph, NAI cannot equitably deny that this Land Lease
and the Purchase Agreement should be construed and enforced in accordance with
their respective terms, rather than as a mortgage or other security device, in
any action brought by BNPLC to enforce this Land Lease or the Purchase
Agreement.
5. PAYMENT OF EXECUTORY COSTS AND LOSSES RELATED TO THE PROPERTY.
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<PAGE> 14
(a) Impositions. Subject only to the exceptions listed in subparagraph
5.(d) below, NAI shall pay or cause to be paid prior to delinquency all ad
valorem taxes assessed against the Property and other Impositions. If requested
by BNPLC from time to time, NAI shall furnish BNPLC with receipts showing
payment of all Impositions prior to the applicable delinquency date therefor.
Notwithstanding the foregoing, NAI may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted
Imposition, and pending such contest NAI shall not be deemed in default under
any of the provisions of this Land Lease because of the Imposition if (1) NAI
diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and (2) NAI promptly causes to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all costs,
penalties and interest thereon, promptly after such judgment becomes final;
provided, however, in any event each such contest shall be concluded and the
contested Impositions must be paid by NAI prior to the earlier of (i) the date
that any criminal prosecution is instituted or overtly threatened against BNPLC
or its directors, officers or employees because of the nonpayment thereof or
(ii) the date any writ or order is issued under which any property owned or
leased by BNPLC (including the Property) may be seized or sold or any other
action is taken against BNPLC or against any property owned or leased by BNPLC
because of the nonpayment thereof, or (iii) any Designated Sale Date upon which,
for any reason, NAI or an Affiliate of NAI or any Applicable Purchaser shall not
purchase BNPLC's interest in the Property pursuant to the Purchase Agreement for
a price to BNPLC (when taken together with any additional payments made by NAI
pursuant to Paragraph 1(A)(2) of the Purchase Agreement, in the case of a
purchase by an Applicable Purchaser) equal to the Break Even Price.
(b) Increased Costs; Capital Adequacy Charges. Subject only to the
exceptions listed in subparagraph 5.(d) below:
(i) If after the Effective Date there shall be any increase in the
cost to BNPLC's Parent or any other Participant agreeing to make or making,
funding or maintaining advances to BNPLC in connection with the Property
because of any Banking Rules Change, then NAI shall from time to time, pay
to BNPLC for the account of BNPLC's Parent or such other Participant, as
the case may be, additional amounts sufficient to compensate BNPLC's Parent
or the Participant for such increased cost. An increase in costs resulting
from any imposition or increase of reserve requirements applicable to
Collateral held from time to time by BNPLC's Parent or other Participants
pursuant to the Pledge Agreement would be an increase covered by the
preceding sentence. A certificate as to the amount of such increased cost,
submitted to BNPLC and NAI by BNPLC's Parent or the other Participant,
shall be conclusive and binding upon NAI, absent clear and demonstrable
error.
(ii) BNPLC's Parent or any other Participant may demand additional
payments ("CAPITAL ADEQUACY CHARGES") if BNPLC's Parent or the other
Participant determines that any Banking Rules Change affects the amount of
capital to be maintained by it and that the amount of such capital is
increased by or based upon the existence of advances made or to be made to
BNPLC to permit BNPLC to maintain BNPLC's investment in the Property. To
the extent that BNPLC's Parent or another Participant demands Capital
Adequacy Charges as compensation for the additional capital requirements
reasonably allocable to such investment or advances, NAI shall pay to BNPLC
for the account of BNPLC's Parent or the other Participant, as the case may
be, the amount so demanded. Without limiting the foregoing, BNPLC and NAI
hereby acknowledge and agree that the provisions for calculating Base Rent
set forth herein reflect the assumption that the Pledge Agreement will
cause a zero percent (0%) risk weight to be assigned to a percentage (equal
to the Collateral Percentage) of the collective investment of BNPLC and the
Participants in the Property pursuant to 12 Code of Federal Regulations,
part 225, as from time to time supplemented or amended, or pursuant to any
other similar or successor statute or regulation applicable to BNPLC and
the
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<PAGE> 15
Participants. If and so long as such risk weight is increased the assumed
amount of zero percent (0%) because of a Banking Rules Change, Capital
Adequacy Charges may be collected to yield the same rate of return to
BNPLC, BNPLC's Parent and any other Participants (net of their costs of
maintaining required capital) that they would have enjoyed from this Land
Lease absent such increase.
(iii) Any amount required to be paid by NAI under this subparagraph
5.(b) shall be due ten days after a demand for such payment is received by
NAI.
(c) NAI's Payment of Other Losses; General Indemnification. Subject
only to the exceptions listed in subparagraph 5.(d) below:
(i) All Losses (including Environmental Losses) asserted against or
incurred or suffered by BNPLC or other Interested Parties at any time and
from time to time by reason of, in connection with or arising out of (A)
their ownership or alleged ownership of any interest in the Property or the
Rents, (B) the use and operation of the Property, (C) the negotiation,
administration or enforcement of the Operative Documents, (D) the making of
the Initial Funding Advance, (E) the Premises Leases, (F) the breach by NAI
of this Land Lease or any other document executed by NAI in connection
herewith, (G) any failure of the Property or NAI itself to comply with
Applicable Laws, (H) Permitted Encumbrances, (I) Hazardous Substance
Activities, including those occurring prior to Effective Date, (J) any
obligations under the Existing Contract related to the Property that
survive the closing thereunder, or (K) any bodily or personal injury or
death or property damage occurring in or upon or in the vicinity of the
Property through any cause whatsoever, shall be paid by NAI, and NAI shall
indemnify and defend BNPLC and other Interested Parties from and against
all such Losses.
(ii) THE INDEMNITIES AND RELEASES PROVIDED HEREIN FOR THE BENEFIT OF
BNPLC AND OTHER INTERESTED PARTIES, INCLUDING THE INDEMNITY SET FORTH IN
THE PRECEDING SUBPARAGRAPH 5.(c)(i), SHALL APPLY EVEN IF AND WHEN THE
SUBJECT MATTERS OF THE INDEMNITIES AND RELEASES ARE CAUSED BY OR ARISE OUT
OF THE NEGLIGENCE OR STRICT LIABILITY OF BNPLC OR ANOTHER INTERESTED PARTY.
FURTHER, SUCH INDEMNITIES AND RELEASES WILL APPLY EVEN IF INSURANCE
OBTAINED BY NAI OR REQUIRED OF NAI BY THIS LAND LEASE OR OTHER OPERATIVE
DOCUMENTS IS NOT ADEQUATE TO COVER LOSSES AGAINST OR FOR WHICH THE
INDEMNITIES AND RELEASES ARE PROVIDED. NAI'S LIABILITY, HOWEVER, FOR ANY
FAILURE TO OBTAIN INSURANCE REQUIRED BY THIS LAND LEASE OR OTHER OPERATIVE
DOCUMENTS WILL NOT BE LIMITED TO LOSSES AGAINST WHICH INDEMNITIES ARE
PROVIDED HEREIN, IT BEING UNDERSTOOD THAT SUCH INSURANCE IS INTENDED TO DO
MORE THAN PROVIDE A SOURCE OF PAYMENT FOR LOSSES AGAINST WHICH BNPLC AND
OTHER INTERESTED PARTIES ARE ENTITLED TO INDEMNIFICATION BY THIS LAND
LEASE.
(iii) Costs and expenses for which NAI shall be responsible pursuant
to this subparagraph 5.(c) will include appraisal fees, filing and
recording fees, inspection fees, survey fees, taxes, brokerage fees and
commissions, abstract fees, title policy fees, Uniform Commercial Code
search fees, escrow fees and Attorneys' Fees incurred by BNPLC with respect
to the Property, whether such costs and expenses are incurred at the time
of execution of this Land Lease or at any time during the Term.
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<PAGE> 16
(iv) NAI's obligations under this subparagraph 5.(c) shall survive the
termination or expiration of this Land Lease. Any amount to be paid by NAI
under this subparagraph 5.(c) shall be due ten days after a demand for such
payment is received by NAI.
(v) If an Interested Party notifies NAI of any claim or proceeding
included in, or any investigation or allegation concerning, Losses for
which NAI is responsible pursuant to this subparagraph 5.(c), NAI shall
assume on behalf of the Interested Party and conduct with due diligence and
in good faith the investigation and defense thereof and the response
thereto with counsel selected by NAI, but satisfactory to the Interested
Party; provided, that the Interested Party shall have the right to be
represented by advisory counsel of its own selection and at its own
expense; and provided further, that if any such claim, proceeding,
investigation or allegation involves both NAI and the Interested Party and
the Interested Party shall have reasonably concluded that there are legal
defenses available to it which are inconsistent with or in addition to
those available to NAI, then the Interested Party shall have the right to
select separate counsel to participate in the investigation and defense of
and response to such claim, proceeding, investigation or allegation on its
own behalf, and NAI shall pay or reimburse the Interested Party for all
Attorney's Fees incurred by the Interested Party because of the selection
of such separate counsel. If NAI fails to assume promptly (and in any event
within fifteen days after being notified of the applicable claim,
proceeding, investigation or allegation) the defense of the Interested
Party, then the Interested Party may contest (or settle, with the prior
consent of NAI, which consent will not be unreasonably withheld) the claim,
proceeding, investigation or allegation at NAI's expense using counsel
selected by the Interested Party. Moreover, if any such failure by NAI
continues for forty-five days or more after NAI is notified of any such
claim, proceeding, investigation or allegation, the Interested Party may
elect not to contest or continue contesting the same and instead, in
accordance with the written advice of counsel, settle (or pay in full) all
claims related thereto without NAI's consent and without releasing NAI from
any obligations to the Interested Party under this subparagraph 5.(c).
(d) Exceptions and Qualifications to Indemnities.
(i) BNPLC acknowledges and agrees that nothing in subparagraph 4.(a)
or the preceding subparagraphs of this Paragraph 5 shall be construed to
require NAI to pay or reimburse an Interested Party for (w) any costs or
expenses incurred by BNPLC or any transferee to accomplish any Permitted
Transfers described in clauses (2), (3), (4), (6) or (7) of the definition
thereof in the Common Definitions and Provisions Agreement (Phase IV -
Land), (x) Excluded Taxes, (y) Losses incurred or suffered by such
Interested Party that are proximately caused by (and attributed by any
applicable principles of comparative fault to) the Established Misconduct
of that Interested Party, or (z) Losses incurred or suffered by
Participants in connection with their negotiation or execution of the
Participation Agreement or Pledge Agreement (or supplements making them
parties thereto) or in connection with any due diligence they may undertake
before entering into the Participation Agreement or Pledge Agreement.
Further, without limiting BNPLC's rights (as provided in other provisions
of this Land Lease and other Operative Documents) to include the following
in the calculation of Stipulated Loss Value or the Break Even Price or
collect Base Rent, a Supplemental Payment and other amounts, the
calculation of which depends upon the Stipulated Loss Value or the Break
Even Price, BNPLC acknowledges and agrees that nothing in subparagraph
4.(a) or the preceding subparagraphs of this Paragraph 5 shall be construed
to require NAI to pay or reimburse an Interested Party for costs paid by
BNPLC with the proceeds of the Initial Funding Advance as part of the
Transaction Expenses.
Further, if an Interested Party receives a written notice of Losses that
such Interested Party believes are covered by the indemnity in subparagraph
5.(c)(i), then such Interested Party will be expected to promptly
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furnish a copy of such notice to NAI. The failure to so provide a copy of
the notice to NAI shall not excuse NAI from its obligations under
subparagraph 5.(c)(i); provided, that if NAI is unaware of the matters
described in the notice and such failure renders unavailable defenses that
NAI might otherwise assert, or precludes actions that NAI might otherwise
take, to minimize its obligations, then NAI shall be excused from its
obligation to indemnify such Interested Party (and any Affiliate of such
Interested Party) against the Losses, if any, which would not have been
incurred or suffered but for such failure. For example, if BNPLC fails to
provide NAI with a copy of a notice of an obligation covered by the
indemnity set out in subparagraph 5.(c)(i) and NAI is not otherwise already
aware of such obligation, and if as a result of such failure BNPLC becomes
liable for penalties and interest covered by the indemnity in excess of the
penalties and interest that would have accrued if NAI had been promptly
provided with a copy of the notice, then NAI will be excused from any
obligation to BNPLC (or any Affiliate of BNPLC) to pay the excess.
6. INTENTIONALLY DELETED.
7. INTENTIONALLY DELETED.
8. ENVIRONMENTAL.
(a) Environmental Covenants by NAI. NAI covenants that:
(i) NAI shall not conduct or permit others to conduct Hazardous
Substance Activities, except Permitted Hazardous Substance Use and Remedial
Work.
(ii) NAI shall not discharge or permit the discharge of anything on or
from the Property that would require any permit under applicable
Environmental Laws, other than (1) storm water runoff, (2) waste water
discharges through a publicly owned treatment works, (3) discharges that
are a necessary part of any Remedial Work, and (4) other similar discharges
consistent with the definition herein of Permitted Hazardous Substance Use,
in each case in strict compliance with Environmental Laws.
(iii) Following any discovery that Remedial Work is required by
Environmental Laws or otherwise believed by BNPLC to be reasonably
required, and to the extent not inconsistent with the other provisions of
this Land Lease, NAI shall promptly perform and diligently and continuously
pursue such Remedial Work, in each case in strict compliance with
Environmental Laws.
(iv) If requested by BNPLC in connection with any Remedial Work
required by this subparagraph, NAI shall retain independent environmental
consultants acceptable to BNPLC to evaluate any significant new information
generated during NAI's implementation of the Remedial Work and to discuss
with NAI whether such new information indicates the need for any additional
measures that NAI should take to protect the health and safety of persons
(including employees, contractors and subcontractors and their employees)
or to protect the environment. NAI shall implement any such additional
measures to the extent required with respect to the Property by
Environmental Laws or otherwise believed by BNPLC to be reasonably required
and to the extent not inconsistent with the other provisions of this Land
Lease.
(b) Right of BNPLC to do Remedial Work Not Performed by NAI. If NAI's
failure to cure any breach of the covenants set forth in subparagraph 8.(a)
continues beyond the Environmental Cure Period (as defined below), BNPLC may, in
addition to any other remedies available to it, conduct all or any part of the
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Remedial Work. To the extent that Remedial Work is done by BNPLC pursuant to the
preceding sentence (including any removal of Hazardous Substances), the cost
thereof shall be a demand obligation owing by NAI to BNPLC. As used in this
subparagraph, "ENVIRONMENTAL CURE PERIOD" means the period ending on the earlier
of: (1) one hundred eighty days after NAI is notified of the breach which must
be cured within such period, (2) the date that any writ or order is issued for
the levy or sale of any property owned by BNPLC (including the Property) because
of such breach, (3) the date that any criminal action is instituted or overtly
threatened against BNPLC or any of its directors, officers or employees because
of such breach, or (4) any Designated Sale Date upon which, for any reason, NAI
or an Affiliate of NAI or any Applicable Purchaser shall not purchase BNPLC's
interest in the Property pursuant to the Purchase Agreement for a net price to
BNPLC (when taken together with any Supplemental Payment made by NAI pursuant to
Paragraph 1(A)(2) of the Purchase Agreement, in the case of a purchase by an
Applicable Purchaser) equal to Stipulated Loss Value.
(c) Environmental Inspections and Reviews. BNPLC reserves the right to
retain environmental consultants to review any report prepared by NAI or to
conduct BNPLC's own investigation to confirm whether NAI is complying with the
requirements of this Paragraph 8. NAI grants to BNPLC and to BNPLC's agents,
employees, consultants and contractors the right to enter upon the Property at
any time to inspect the Property and to perform such tests as BNPLC deems
necessary or appropriate to review or investigate Hazardous Substances in, on,
under or about the Property or any discharge or suspected discharge of Hazardous
Substances into groundwater or surface water from the Property. NAI shall
promptly reimburse BNPLC for the fees of its environmental consultants and the
costs of any such inspections and tests.
(d) Communications Regarding Environmental Matters.
(i) NAI shall immediately advise BNPLC of (1) any discovery of any
event or circumstance which would render any of the representations of NAI
herein or in the Closing Certificate concerning environmental matters
materially inaccurate or misleading if made at the time of such discovery
and assuming that NAI was aware of all relevant facts, (2) any Remedial
Work (or change in Remedial Work) required or undertaken by NAI or its
Affiliates in response to any (A) discovery of any Hazardous Substances on,
under or about the Property other than Permitted Hazardous Substances or
(B) any claim for damages resulting from Hazardous Substance Activities,
(3) NAI's discovery of any occurrence or condition on any real property
adjoining or in the vicinity of the Property which could cause the Property
or any part thereof to be subject to any ownership, occupancy,
transferability or use restrictions under Environmental Laws, or (4) any
investigation or inquiry of any failure or alleged failure by NAI to comply
with Environmental Laws affecting the Property by any governmental
authority responsible for enforcing Environmental Laws. In such event, NAI
shall deliver to BNPLC within thirty days after BNPLC's request, a
preliminary written environmental plan setting forth a general description
of the action that NAI proposes to take with respect thereto, if any, to
bring the Property into compliance with Environmental Laws or to correct
any breach by NAI of this Paragraph 8, including any proposed Remedial
Work, the estimated cost and time of completion, the name of the contractor
and a copy of the construction contract, if any, and such additional data,
instruments, documents, agreements or other materials or information as
BNPLC may request.
(ii) NAI shall provide BNPLC with copies of all material written
communications with federal, state and local governments, or agencies
relating to the matters listed in the preceding clause (i). NAI shall also
provide BNPLC with copies of any correspondence from third Persons which
threaten litigation over any significant failure or alleged significant
failure of NAI to maintain or operate the Property in accordance with
Environmental Laws.
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<PAGE> 19
(iii) Prior to NAI's submission of a Material Environmental
Communication to any governmental or regulatory agency or third party, NAI
shall, to the extent practicable, deliver to BNPLC a draft of the proposed
submission (together with the proposed date of submission), and in good
faith assess and consider any comments of BNPLC regarding the same.
Promptly after BNPLC's request, NAI shall meet with BNPLC to discuss the
submission, shall provide any additional information requested by BNPLC and
shall provide a written explanation to BNPLC addressing the issues raised
by comments (if any) of BNPLC regarding the submission, including a
reasoned analysis supporting any decision by NAI not to modify the
submission in accordance with comments of BNPLC.
9. INSURANCE REQUIRED AND CONDEMNATION.
(a) Liability Insurance. Throughout the Term NAI shall maintain
commercial general liability insurance against claims for bodily and personal
injury, death and property damage occurring in or upon or resulting from any
occurrence in or upon the Property under one or more insurance policies that
satisfy the requirements set forth in Exhibit B. NAI shall deliver and maintain
with BNPLC for each liability insurance policy required by this Land Lease
written confirmation of the policy and the scope of the coverage provided
thereby issued by the applicable insurer or its authorized agent, which
confirmation must also satisfy the requirements set forth in Exhibit B.
(b) Intentionally Deleted.
(c) Failure to Obtain Insurance. If NAI fails to obtain any insurance
or to provide confirmation of any such insurance as required by this Land Lease,
BNPLC shall be entitled (but not required) to obtain the insurance that NAI has
failed to obtain or for which NAI has not provided the required confirmation
and, without limiting BNPLC's other remedies under the circumstances, BNPLC may
require NAI to reimburse BNPLC for the cost of such insurance and to pay
interest thereon computed at the Default Rate from the date such cost was paid
by BNPLC until the date of reimbursement by NAI.
(d) Condemnation. Immediately upon obtaining knowledge of the
institution of any proceedings for the condemnation of the Property or any
portion thereof, or any other similar governmental or quasi-governmental
proceedings arising out of injury or damage to the Property or any portion
thereof, each party shall notify the other (provided, however, BNPLC shall have
no liability for its failure to provide such notice) of the pendency of such
proceedings. NAI shall, at its expense, diligently prosecute any such
proceedings and shall consult with BNPLC, its attorneys and experts and
cooperate with them as requested in the carrying on or defense of any such
proceedings. All proceeds of condemnation awards or proceeds of sale in lieu of
condemnation with respect to the Property and all judgments, decrees and awards
for injury or damage to the Property shall be paid to BNPLC as Escrowed
Proceeds, and all such proceeds will be applied as provided in Paragraph 10.
BNPLC is hereby authorized, in the name of NAI, at any time when an Event of
Default shall have occurred and be continuing, or otherwise with NAI's prior
consent, to execute and deliver valid acquittances for, and to appeal from, any
such judgment, decree or award concerning condemnation of any of the Property.
BNPLC shall not be in any event or circumstances liable or responsible for
failure to collect, or to exercise diligence in the collection of, any such
proceeds, judgments, decrees or awards.
(e) Waiver of Subrogation. NAI, for itself and for any Person claiming
through it (including any insurance company claiming by way of subrogation),
waives any and every claim which arises or may arise in its favor against BNPLC
or any other Interested Party and the officers, directors, and employees of the
Interested Parties for any and all Losses, to the extent that NAI is compensated
by insurance or would be compensated by the insurance policies contemplated in
this Land Lease, but for any deductible or self-insured retention maintained
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<PAGE> 20
under such insurance or but for a failure of NAI to maintain the insurance as
required by this Land Lease. NAI agrees to have such insurance policies properly
endorsed so as to make them valid notwithstanding this waiver, if such
endorsement is required to prevent a loss of insurance.
10. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS.
(a) Collection and Application of Insurance and Condemnation Proceeds
Generally. This Paragraph 10 shall govern the application of proceeds received
by BNPLC or NAI during the Term from any third party (1) as compensation for any
restriction placed upon the use or development of the Property or for the
condemnation of the Property or any portion thereof, or (2) because of any
judgment, decree or award for injury or damage to the Property (e.g.,damage
resulting from a third party's release of Hazardous Materials onto the
Property); excluding, however, any funds paid to BNPLC by BNPLC's Parent, by an
Affiliate of BNPLC or by any Participant that is made to compensate BNPLC for
any Losses BNPLC may suffer or incur in connection with this Land Lease or the
Property. NAI will promptly pay over to BNPLC any insurance, condemnation or
other proceeds covered by this Paragraph 10 which NAI may receive from any
insurer, condemning authority or other third party. All proceeds covered by this
Paragraph 10, including those received by BNPLC from NAI or third parties, shall
be applied as follows:
(i) First, proceeds covered by this Paragraph 10 will be used to
reimburse BNPLC for any costs and expenses, including Attorneys' Fees, that
BNPLC incurred to collect the proceeds.
(ii) Second, the proceeds remaining after such reimbursement to BNPLC
(hereinafter, the "REMAINING PROCEEDS") will be applied, as hereinafter
more particularly provided, either as a Qualified Prepayment or to
reimburse NAI or BNPLC for the actual out-of-pocket costs of repairing or
restoring the Property. Until, however, any Remaining Proceeds received by
BNPLC are applied by BNPLC as a Qualified Prepayment or applied by BNPLC to
reimburse costs of repairs to or restoration of the Property pursuant to
this Paragraph 10, BNPLC shall hold and maintain such Remaining Proceeds as
Escrowed Proceeds in an interest bearing account, and all interest earned
on such account shall be added to and made a part of such Escrowed
Proceeds.
(b) Advances of Escrowed Proceeds to NAI. Except as otherwise provided
below in this Paragraph 10, BNPLC shall advance all Remaining Proceeds held by
it as Escrowed Proceeds to reimburse NAI for the actual out-of-pocket cost to
NAI of repairing or restoring the Property in accordance with the requirements
of this Land Lease and the other Operative Documents as the applicable repair or
restoration progresses and upon compliance by NAI with such terms, conditions
and requirements as may be reasonably imposed by BNPLC. In no event, however,
shall BNPLC be required to pay Escrowed Proceeds to NAI in excess of the actual
out-of-pocket cost to NAI of the applicable repair or restoration, as evidenced
by invoices or other documentation satisfactory to BNPLC, it being understood
that BNPLC may retain and apply any such excess as a Qualified Prepayment.
(c) Application of Escrowed Proceeds as a Qualified Prepayment.
Provided no Event of Default shall have occurred and be continuing, BNPLC shall
apply any Remaining Proceeds paid to it (or other amounts available for
application as a Qualified Prepayment) as a Qualified Prepayment on any date
that BNPLC is directed to do so by a notice from NAI; however, if such a notice
from NAI specifies an effective date for a Qualified Prepayment that is less
than five Business Days after BNPLC's actual receipt of the notice, BNPLC may
postpone the date of the Qualified Prepayment to any date not later than five
Business Days after BNPLC's receipt of the notice. In any event, except when
BNPLC is required by the preceding sentence to apply Remaining Proceeds or other
amounts as a Qualified Prepayment on a Base Rent Date, BNPLC may deduct Breakage
Costs incurred in connection with any Qualified Prepayment from the Remaining
Proceeds or other amounts available for
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application as the Qualified Prepayment, and NAI will reimburse BNPLC upon
request for any such Breakage Costs that BNPLC incurs but does not deduct.
(d) Special Provisions Applicable After an Event of Default.
Notwithstanding the foregoing, when any Event of Default shall have occurred and
be continuing, BNPLC shall be entitled to receive and collect all insurance,
condemnation or other proceeds governed by this Paragraph 10 and to apply all
Remaining Proceeds, when and to the extent deemed appropriate by BNPLC in its
sole discretion, either (A) to the reimbursement of NAI or BNPLC for the
out-of-pocket cost of repairing or restoring the Property, or (B) as Qualified
Prepayments.
(e) NAI's Obligation to Restore. Regardless of the adequacy of any
Remaining Proceeds available to NAI hereunder, and notwithstanding other
provisions of this Land Lease to the contrary, if the Property is damaged by
fire or other casualty or less than all or substantially all of the Property is
taken by condemnation, NAI must:
(i) increase the value of the Property or the remainder thereof by
restoring the same (in a manner consistent with the requirements and
limitations imposed by this Land Lease and the other Operative Documents or
otherwise acceptable to BNPLC), or decrease Stipulated Loss Value by
tendering a payment to BNPLC for application as a Qualified Prepayment, as
necessary to cause Current AS IS Market Value to be not less than sixty
percent (60%) of Stipulated Loss Value; and
(ii) restore the Property or the remainder thereof to a reasonably
safe and sightly condition.
(f) Takings of All or Substantially All of the Property on or after
the Base Rent Commencement Date. In the event of any taking of all or
substantially all of the Property on or after the Base Rent Commencement Date,
BNPLC shall be entitled to apply all Remaining Proceeds as a Qualified
Prepayment. In addition, if Stipulated Loss Value immediately prior to any such
taking exceeds the sum of the Remaining Proceeds resulting from such
condemnation, then BNPLC shall be entitled to recover the excess from NAI upon
demand as an additional Qualified Prepayment, whereupon this Land Lease shall
terminate. Any taking of so much of the Real Property as, in BNPLC's reasonable
good faith judgment, makes it impracticable to restore or improve the remainder
thereof as required by part (2) of the preceding subparagraph shall be
considered a taking of substantially all the Property for purposes of this
Paragraph 10.
11. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF NAI CONCERNING
THE PROPERTY. NAI represents, warrants and covenants as follows:
(a) Compliance with Covenants and Laws. The use of the Property
permitted by this Land Lease complies, or will comply after NAI obtains
available permits as the tenant under this Land Lease, in all material respects
with all Applicable Laws. NAI has obtained or will promptly obtain all utility,
building, health and operating permits as may be required by any governmental
authority or municipality having jurisdiction over the Property for any
construction upon or use of the Property permitted by this Land Lease.
(b) Operation of the Property. During the Term, NAI shall operate the
Property in a good and workmanlike manner and substantially in compliance with
all Applicable Laws and will pay or cause to be paid all fees or charges of any
kind in connection therewith. (If NAI does not promptly correct any failure of
the Property to comply with Applicable Laws that is the subject of a written
notice given to NAI or BNPLC by any governmental authority, then for purposes of
the preceding sentence, NAI shall be considered not to have
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<PAGE> 22
maintained the Property "substantially in accordance with Applicable Laws"
whether or not the noncompliance would be substantial in the absence of the
notice.) During the Term, NAI shall not use or occupy, or allow the use or
occupancy of, the Property in any manner which violates any Applicable Law or
which constitutes a public or private nuisance or which makes void, voidable or
cancelable any insurance then in force with respect thereto. During the Term, to
the extent that any of the following would, individually or in the aggregate,
materially and adversely affect the value of the Property or NAI's use,
occupancy or operations on the Property, NAI shall not, without BNPLC's prior
consent: (i) initiate or permit any zoning reclassification of the Property;
(ii) seek any variance under existing zoning ordinances applicable to the
Property; (iii) use or permit the use of the Property in a manner that would
result in such use becoming a nonconforming use under applicable zoning
ordinances or similar laws, rules or regulations; (iv) execute or file any
subdivision plat affecting the Property; or (v) consent to the annexation of the
Property to any municipality. If (A) a change in the zoning or other Applicable
Laws affecting the permitted use or development of the Property shall occur
after the Base Rent Commencement Date that reduces the value of the Property, or
(B) conditions or circumstances on or about the Property are discovered after
the Base Rent Commencement Date (such as the presence of an endangered species)
which substantially impede development and thereby reduce the value of the
Property, and if after any such reduction under clause (A) or (B) preceding the
Current AS IS Market Value of the Property is less than sixty percent (60%) of
Stipulated Loss Value, then NAI shall pay BNPLC upon request the amount by which
Current AS IS Market Value is less than sixty percent (60%) of Stipulated Loss
Value, for application as a Qualified Prepayment. During the Term, NAI shall not
cause or permit any drilling or exploration for, or extraction, removal or
production of, minerals from the surface or subsurface of the Property, and NAI
shall not do any act whereby the market value of the Property may reasonably be
expected to be materially lessened. During the Term, if NAI receives a written
notice or claim from any federal, state or other governmental entity that the
Property is not in compliance in any material respect with any Applicable Law,
or that any action may be taken against the owner of the Property because the
Property does not comply with Applicable Law, NAI shall promptly furnish a copy
of such notice or claim to BNPLC.
Notwithstanding the foregoing, NAI may in good faith, by appropriate
proceedings, contest the validity and applicability of any Applicable Law with
respect to the Property, and pending such contest NAI shall not be deemed in
default hereunder because of the violation of such Applicable Law, if NAI
diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and if NAI promptly causes the Property to comply with
any such Applicable Law upon a final determination by a court of competent
jurisdiction that the same is valid and applicable to the Property; provided,
however, in any event such contest shall be concluded and the violation of such
Applicable Law must be corrected by NAI and any claims asserted against BNPLC or
the Property because of such violation must be paid by NAI, all prior to the
earlier of (i) the date that any criminal prosecution is instituted or overtly
threatened against BNPLC or any of its directors, officers or employees because
of such violation, (ii) the date that any action is taken by any governmental
authority against BNPLC or any property owned by BNPLC (including the Property)
because of such violation, or (iii) a Designated Sale Date upon which, for any
reason, NAI or an Affiliate of NAI or any Applicable Purchaser shall not
purchase BNPLC's interest in the Property pursuant to the Purchase Agreement for
a price to BNPLC (when taken together with any additional payments made by NAI
pursuant to Paragraph 1(A)(2) of the Purchase Agreement, in the case of a
purchase by an Applicable Purchaser) equal to the Break Even Price.
(c) Debts for Construction, Maintenance, Operation or Development. NAI
shall cause all debts and liabilities incurred in the construction, maintenance,
operation or development of the Property, including all debts and liabilities
for labor, material and equipment and all debts and charges for utilities
servicing the Property, to be promptly paid; provided, that nothing in this
subparagraph will be construed to require NAI to remove Liens Removable by
BNPLC.
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Notwithstanding the foregoing, NAI may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted
mechanic's or materialmen's lien and pending such contest NAI shall not be
deemed in default under this subparagraph because of the contested lien if (1)
within sixty days after being asked to do so by BNPLC, NAI bonds over to BNPLC's
reasonable satisfaction all such contested liens against the Property alleged to
secure an amount in excess of $500,000 (individually or in the aggregate), (2)
NAI diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and (3) NAI promptly causes to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all costs and
interest thereon, promptly after such judgment becomes final; provided, however,
that in any event each such contest shall be concluded and the lien, interest
and costs must be paid by NAI prior to the earlier of (i) the date that any
criminal prosecution is instituted or overtly threatened against BNPLC or its
directors, officers or employees because of the nonpayment thereof, (ii) the
date that any writ or order is issued under which the Property or any other
property in which BNPLC has an interest may be seized or sold or any other
action is taken against BNPLC or any property in which BNPLC has an interest
because of the nonpayment thereof, or (iii) a Designated Sale Date upon which,
for any reason, NAI or an Affiliate of NAI or any Applicable Purchaser shall not
purchase BNPLC's interest in the Property pursuant to the Purchase Agreement for
a price to BNPLC (when taken together with any additional payments made by NAI
pursuant to Paragraph 1(A)(2) of the Purchase Agreement, in the case of a
purchase by an Applicable Purchaser) equal to the Break Even Price.
(d) Repair, Maintenance, Alterations and Additions. NAI shall keep the
Property in good order, operating condition and appearance and shall cause all
necessary repairs, renewals and replacements to be promptly made. NAI will not
allow any of the Property to be materially misused, abused or wasted. NAI shall
not, without the prior consent of BNPLC, make material new Improvements or alter
Improvements in any material respect. Without limiting the foregoing, NAI will
notify BNPLC before making any significant alterations to the Improvements.
The parties acknowledge that NAI has proposed to BNPLC that additional
Improvements be constructed on the Land in the future, and BNPLC has consented
thereto, provided that (1) no Event of Default has occurred and is continuing,
and (b) BNPLC is satisfied, in its sole discretion, that (i) the location,
configuration, architectural style, and manner and type of construction of such
additional Improvements shall not reduce the value of the Improvements taken as
a whole and will otherwise be constructed in accordance with the requirements of
this Lease, and (ii) such additional Improvements will comply with all
Applicable Laws.
(e) Permitted Encumbrances and Development Documents. NAI shall during
the Term comply with and will cause to be performed all of the covenants,
agreements and obligations imposed upon the owner of any interest in the
Property by the Permitted Encumbrances (including the Premises Leases) or the
Development Documents. Without limiting the foregoing, NAI shall cause all
amounts to be paid when due, the payment of which is secured by any Lien against
the Property created by the Permitted Encumbrances. Without the prior consent of
BNPLC, NAI shall not enter into, initiate, approve or consent to any
modification of any Permitted Encumbrance or Development Document that would
create or expand or purport to create or expand obligations or restrictions
which would encumber BNPLC's interest in the Property. (Whether BNPLC must give
any such consent requested by NAI during the Term of this Land Lease shall be
governed by subparagraph 3(A) of the Closing Certificate and Agreement.)
(f) Books and Records Concerning the Property. NAI shall keep books
and records that are accurate and complete in all material respects for the
Property and, subject to Paragraph 16.(c), will permit all such books and
records to be inspected and copied by BNPLC. This subparagraph shall not be
construed as requiring NAI to regularly maintain separate books and records
relating exclusively to the Property; provided, however, that
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<PAGE> 24
upon request, NAI shall construct or abstract from its regularly maintained
books and records information required by this subparagraph relating to the
Property.
12. FINANCIAL COVENANTS AND OTHER COVENANTS INCORPORATED BY REFERENCE TO
SCHEDULE 1. Throughout the Term of this Land Lease, NAI shall comply with the
requirements of Schedule 1 attached hereto.
13. FINANCIAL STATEMENTS AND OTHER REPORTS.
(a) Financial Statements; Required Notices; Certificates. Throughout
the Term of this Land Lease, NAI shall deliver to BNPLC and to each Participant:
(i) as soon as available and in any event within one hundred twenty
days after the end of each fiscal year of NAI, a consolidated balance sheet
of NAI and its Consolidated Subsidiaries as of the end of such fiscal year
and a consolidated income statement and statement of cash flows of NAI and
its Consolidated Subsidiaries for such fiscal year, all in reasonable
detail and all prepared in accordance with GAAP and accompanied by a report
and opinion of accountants of national standing selected by NAI, which
report and opinion shall be prepared in accordance with generally accepted
auditing standards and shall not be subject to any qualifications or
exceptions as to the scope of the audit nor to any qualification or
exception which BNPLC determines, in BNPLC's reasonable discretion, is
unacceptable;
(ii) as soon as available and in any event within sixty days after the
end of each of the first three quarters of each fiscal year of NAI, the
consolidated balance sheet of NAI and its Consolidated Subsidiaries as of
the end of such quarter and the consolidated income statement and the
consolidated statement of cash flows of NAI and its Consolidated
Subsidiaries for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter, all in reasonable detail and
all prepared in accordance with GAAP and certified by the chief financial
officer or controller of NAI (subject to year-end adjustments);
(iii) together with the financial statements furnished in accordance
with subparagraph 13.(a)(i) and 13.(a)(ii), a certificate of the chief
financial officer or controller of NAI: (i) certifying that to the
knowledge of NAI no Default or Event of Default under this Land Lease has
occurred and is continuing or, if a Default or Event of Default has
occurred and is continuing, a brief statement as to the nature thereof and
the action which is proposed to be taken with respect thereto, (ii)
certifying that the representations of NAI set forth in the Operative
Documents are true and correct in all material respects as of the date
thereof as though made on and as of the date thereof or, if not then true
and correct, a brief statement as to why such representations are no longer
true and correct, and (iii) with computations demonstrating compliance with
the financial covenants contained in Schedule 1;
(iv) within five days after the end of each calendar month, a
certificate of the chief financial officer or controller of NAI certifying
that at the end of the preceding calendar month, NAI had sufficient cash
and other assets described in Paragraph 1 of Part II of Schedule 1 to
comply with the requirements of that paragraph;
(v) promptly after the sending or filing thereof, copies of all proxy
statements, financial statements and reports which NAI sends to NAI's
stockholders, and copies of all regular, periodic and special reports, and
all registration statements (other than registration statements on Form S-8
or any form substituted
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<PAGE> 25
therefor) which NAI files with the Securities and Exchange Commission or
any governmental authority which may be substituted therefor, or with any
national securities exchange;
(vi) upon request by BNPLC, a statement in writing certifying that the
Operative Documents are unmodified and in full effect (or, if there have
been modifications, that the Operative Documents are in full effect as
modified, and setting forth such modifications) and the dates to which the
Base Rent has been paid and either stating that to the knowledge of NAI no
Default or Event of Default under this Land Lease has occurred and is
continuing or, if a Default or Event of Default under this Land Lease has
occurred and is continuing, a brief statement as to the nature thereof; it
being intended that any such statement by NAI may be relied upon by any
prospective purchaser or mortgagee of the Property and by the Participants
(vii) as soon as possible after, and in any event within ten days
after NAI becomes aware that, any of the following has occurred, with
respect to which the potential aggregate liability to NAI relating thereto
is $500,000 or more, a notice signed by a senior financial officer of NAI
setting forth details of the following and the response, if any, which NAI
or its ERISA Affiliate proposes to take with respect thereto (and a copy of
any report or notice required to be filed with or given to PBGC by NAI or
an ERISA Affiliate with respect to any of the following or the events or
conditions leading up to the following): (A) the assertion, to secure any
Unfunded Benefit Liabilities, of any Lien against the assets of NAI,
against the assets of any Plan or Multiemployer Plan or against any
interest of BNPLC or NAI in the Property, or (B) the taking of any action
by the PBGC or any other governmental authority against NAI to terminate
any Plan of NAI or any ERISA Affiliate of NAI or to cause the appointment
of a trustee or receiver to administer any such Plan; and
(viii) such other information respecting the condition or operations,
financial or otherwise, of NAI, of any of its Subsidiaries or of the
Property as BNPLC or any Participant through BNPLC may from time to time
reasonably request.
BNPLC is hereby authorized to deliver a copy of any information or certificate
delivered to it pursuant to this subparagraph 13.(a) to BNPLC's Parent, to the
Participants and to any regulatory body having jurisdiction over BNPLC or
BNPLC's Parent or any Participant that requires or requests it.
14. ASSIGNMENT AND SUBLETTING BY NAI.
(a) BNPLC's Consent Required. Without the prior consent of BNPLC, NAI
shall not assign, transfer, mortgage, pledge or hypothecate this Land Lease or
any interest of NAI hereunder and shall not sublet all or any part of the
Property, by operation of law or otherwise; provided, that this provision will
not be construed to prohibit (I) any sublease of space within Improvements
expressly permitted by the Other Lease Agreement and (II) subject to
subparagraph 14.(c) below, this provision shall not be construed to prohibit any
Premises Lease described in the Other Common Definitions and Provisions
Agreement or any transfer or sublease by a lessee thereunder which is authorized
by the Premises Lease.
(b) Standard for BNPLC's Consent to Assignments and Certain Other
Matters. Consents and approvals of BNPLC which are required by this Paragraph 14
will not be unreasonably withheld or delayed, but NAI acknowledges that BNPLC's
withholding of such consent or approval shall be reasonable if BNPLC determines
in good faith that (1) giving the approval may materially increase BNPLC's risk
of liability for any existing or future environmental problem, or (2) giving the
approval is likely to increase BNPLC's administrative burden of complying with
or monitoring NAI's compliance with the requirements of this Land Lease.
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<PAGE> 26
(c) Consent Not a Waiver. No consent by BNPLC to a sale, assignment,
transfer, mortgage, pledge or hypothecation of this Land Lease or NAI's interest
hereunder, and no assignment or subletting of the Property or any part thereof
in accordance with this Land Lease or otherwise with BNPLC's consent, shall
release NAI from liability hereunder; and any such consent shall apply only to
the specific transaction thereby authorized and shall not relieve NAI from any
requirement of obtaining the prior consent of BNPLC to any further sale,
assignment, transfer, mortgage, pledge or hypothecation of this Land Lease or
any interest of NAI hereunder.
15. ASSIGNMENT BY BNPLC.
(a) Restrictions on Transfers. Except by a Permitted Transfer, BNPLC
shall not assign, transfer, mortgage, pledge, encumber or hypothecate this Land
Lease or the other Operative Documents or any interest of BNPLC in and to the
Property during the Term without the prior consent of NAI, which consent NAI may
withhold in its sole discretion. Further, notwithstanding anything to the
contrary herein contained, if withholding taxes are imposed on the rents and
other amounts payable to BNPLC hereunder because of BNPLC's assignment of this
Land Lease to any citizen of, or any corporation or other entity formed under
the laws of, a country other than the United States, NAI shall not be required
to compensate BNPLC or any such assignee for the withholding tax. If, in breach
of this subparagraph, BNPLC transfer the Property or any part thereof by a
conveyance or that does not constitute a Permitted Transfer, with the result
that additional transfer taxes or other Impositions are assessed against the
Property or the owner thereof, BNPLC shall be required to pay such additional
transfer taxes or other Impositions.
(b) Effect of Permitted Transfer or other Assignment by BNPLC. If,
without breaching subparagraph 15.(a), BNPLC sells or otherwise transfers the
Property and assigns all of its rights under this Land Lease and the other
Operative Documents, then BNPLC shall thereby be released from any obligations
arising after such assumption under this Land Lease or the other Operative
Documents, and NAI shall look solely to each successor in interest of BNPLC for
performance of such obligations.
16. BNPLC'S RIGHT OF ACCESS.
(a) During the Term, BNPLC and BNPLC's representatives may (subject to
subparagraph 16.(c)) enter the Property at any reasonable time after five
Business Days advance written notice to NAI for the purpose of making
inspections or performing any work BNPLC is authorized to undertake by the next
subparagraph or for the purpose confirming whether NAI has complied with the
requirements of this Land Lease or the other Operative Documents.
(b) If NAI fails to perform any act or to take any action required of
it by this Land Lease or the Closing Certificate, or to pay any money which NAI
is required by this Land Lease or the Closing Certificate to pay, and if such
failure or action constitutes an Event of Default or renders BNPLC or any
director, officer, employee or Affiliate of BNPLC at risk of criminal
prosecution or renders BNPLC's interest in the Property or any part thereof at
risk of forfeiture by forced sale or otherwise, then in addition to any other
remedies specified herein or otherwise available, BNPLC may, perform or cause to
be performed such act or take such action or pay such money. Any expenses so
incurred by BNPLC, and any money so paid by BNPLC, shall be a demand obligation
owing by NAI to BNPLC. Further, BNPLC, upon making such payment, shall be
subrogated to all of the rights of the person, corporation or body politic
receiving such payment. But nothing herein shall imply any duty upon the part of
BNPLC to do any work which under any provision of this Land Lease NAI may be
required to perform, and the performance thereof by BNPLC shall not constitute a
waiver of NAI's default. BNPLC may during the progress of any such work
permitted by BNPLC hereunder on or in the Property keep and store upon the
Property all necessary materials, tools, and equipment. BNPLC shall not in any
event be liable for inconvenience, annoyance,
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<PAGE> 27
disturbance, loss of business, or other damage to NAI or the subtenants or
invitees of NAI by reason of making such repairs or the performance of any such
work on or in the Property, or on account of bringing materials, supplies and
equipment into or through the Property during the course of such work (except
for any liability in excess of the liability insurance limits established in
Exhibit B resulting from death or injury or damage to the property of third
parties caused by the Established Misconduct of BNPLC or its officers,
employees, or agents in connection therewith), and the obligations of NAI under
this Land Lease shall not thereby be excused in any manner.
(c) NAI shall have no obligation to provide proprietary information
(as defined in the next sentence) to BNPLC, except and to the extent that (1)
BNPLC reasonably determines that BNPLC cannot accomplish the purposes of BNPLC's
inspection of the Property or exercise of other rights granted pursuant to the
various express provisions of this Land Lease and the other Operative Documents
without evaluating such information. For purposes of this Land Lease
"PROPRIETARY INFORMATION" includes NAI's intellectual property, trade secrets
and other confidential information of value to NAI about, among other things,
NAI's manufacturing processes, products, marketing and corporate strategies, but
in no event will "proprietary information" include any disclosure of substances
and materials (and their chemical composition) which are or previously have been
present in, on or under the Property at the time of any inspections by BNPLC,
nor will "proprietary information" include any additional disclosures reasonably
required to permit BNPLC to determine whether the presence of such substances
and materials has constituted a violation of Environmental Laws. In addition,
under no circumstances shall NAI have any obligation to disclose to BNPLC or any
other party any proprietary information of NAI (including, without limitation,
any pending applications for patents or trademarks, any research and design and
any trade secrets) except if and to the limited extent reasonably necessary to
comply with the express provisions of this Land Lease or the other Operative
Documents.
17. EVENTS OF DEFAULT. Each of the following events shall be an "EVENT OF
DEFAULT" by NAI under this Land Lease:
(a) NAI shall fail to pay when due any installment of Rent due
hereunder and such failure shall continue for three (3) Business Days after NAI
is notified in writing thereof.
(b) NAI shall fail to cause any representation or warranty of NAI
contained herein or in the Closing Certificate that was false or misleading in
any material respect when made to be made true and not misleading (other than as
described in the other clauses of this Paragraph 17), or NAI shall fail to
comply with any term, provision or covenant of this Land Lease or the Closing
Certificate (other than as described in the other clauses of this Paragraph 17),
and in either case shall not cure such failure prior to the earlier of (A)
thirty days after written notice thereof is sent to NAI or (B) the date any writ
or order is issued for the levy or sale of any property owned by BNPLC
(including the Property) or any criminal prosecution is instituted or overtly
threatened against BNPLC or any of its directors, officers or employees because
of such failure; provided, however, that so long as no such writ or order is
issued and no such criminal prosecution is instituted or overtly threatened, the
period within which such failure may be cured by NAI shall be extended for a
further period (not to exceed an additional sixty days) as shall be necessary
for the curing thereof with diligence, if (but only if) (x) such failure is
susceptible of cure but cannot with reasonable diligence be cured within such
thirty day period, (y) NAI shall promptly have commenced to cure such failure
and shall thereafter continuously prosecute the curing thereof with reasonable
diligence and (z) the extension of the period for cure will not, in any event,
cause the period for cure to extend beyond five days prior to the expiration of
this Land Lease.
(c) NAI shall abandon the Property.
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<PAGE> 28
(d) NAI or any Subsidiary shall fail to make any payment or payments
of principal, premium or interest, of Debt of NAI described in the next sentence
when due (taking into consideration the time NAI may have to cure such failure,
if any, under the documents governing such Debt). As used in this clause
14(a)(v), "DEBT" shall include only Debt (as defined in the Common Definitions
and Provisions Agreement (Phase IV - Land)) of NAI or any of its Subsidiaries
now existing or arising in the future (a) payable to BNPLC or any Affiliate of
BNPLC, or (B) payable to any other Person and with respect to which $3,000,000
or more is actually due and payable because of acceleration or otherwise.
(e) NAI: (a) shall generally not, or be unable to, or shall admit in
writing its inability to, pay its debts as such debts become due; or (b) shall
make an assignment for the benefit of creditors, petition or apply to any
tribunal for the appointment of a custodian, receiver or trustee for it or a
substantial part of its assets; or (c) shall file any petition or application to
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or (d) shall have had any such
petition or application filed against it; or (e) by any act or omission shall
indicate its consent to, approval of or acquiescence in any such petition,
application or proceeding or order for relief or the appointment of a custodian,
receiver or trustee for all or any substantial part of its property; or (f)
shall suffer any such custodianship, receivership or trusteeship to continue
undischarged for a period of sixty days or more.
(f) One or more final judgments, decrees or orders for the payment of
money in excess of $3,000,000 in the aggregate shall be rendered against NAI and
such judgments, decrees or orders shall continue unsatisfied and in effect for a
period of thirty consecutive days without NAI's having obtained an agreement (or
after the expiration or termination of an agreement) of the Persons entitled to
enforce such judgment, decrees or orders not to enforce the same pending
negotiations with NAI concerning the satisfaction or other discharge of the
same.
(g) NAI shall breach the requirements of Paragraph 12, which by
reference to Schedule 1 establishes certain financial covenants and other
requirements.
(h) as of the effective date of this Land Lease, any of the
representations or warranties of NAI contained in subparagraphs 2(A) - (J) of
the Closing Certificate shall be false or misleading in any material respect.
(i) NAI shall fail to pay the full amount of any Supplemental Payment
required by the Purchase Agreement on the Designated Sale Date or shall fail to
provide Collateral as and when due pursuant to the Pledge Agreement Documents.
(j) NAI shall fail to comply with any term, provision or condition of
the Pledge Agreements after the expiration of any applicable notice and cure
period set forth in the Pledge Agreement.
18. REMEDIES.
(a) Basic Remedies. At any time after an Event of Default and after
BNPLC has given any notice required by subparagraph 18.(b), BNPLC shall be
entitled at BNPLC's option (and without limiting BNPLC in the exercise of any
other right or remedy BNPLC may have, and without any further demand or notice
except as expressly described in this subparagraph 18.(a)), to exercise any one
or more of the following remedies:
(i) By notice to NAI, BNPLC may terminate NAI's right to possession of
the Property. A notice given in connection with unlawful detainer
proceedings specifying a time within which to cure a
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<PAGE> 29
default shall terminate NAI's right to possession if NAI fails to cure the
default within the time specified in the notice.
(ii) Upon termination of NAI's right to possession and without further
demand or notice, BNPLC may re-enter the Property in any manner not
prohibited by Applicable Law and take possession of all improvements,
additions, alterations, equipment and fixtures thereon and remove any
persons in possession thereof. Any property on the Land may be removed and
stored in a warehouse or elsewhere at the expense and risk of and for the
account of NAI.
(iii) Upon termination of NAI's right to possession, this Land Lease
shall terminate and BNPLC may recover from NAI:
a) The worth at the time of award of the unpaid Rent which had
been earned at the time of termination;
b) The worth at the time of award of the amount by which the
unpaid Rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that NAI proves
could have been reasonably avoided;
c) The worth at the time of award of the amount by which the
unpaid Rent for the balance of the scheduled Term after the time of
award exceeds the amount of such rental loss that NAI proves could be
reasonably avoided; and
d) Any other amount necessary to compensate BNPLC for all the
detriment proximately caused by NAI's failure to perform NAI's
obligations under this Land Lease or which in the ordinary course of
things would be likely to result therefrom, including the costs and
expenses (including Attorneys' Fees, advertising costs and brokers'
commissions) of recovering possession of the Property, removing
persons or property therefrom, placing the Property in good order,
condition, and repair, preparing and altering the Property for
reletting, all other costs and expenses of reletting, and any loss
incurred by BNPLC as a result of NAI's failure to perform NAI's
obligations under the other Operative Documents.
The "WORTH AT THE TIME OF AWARD" of the amounts referred to in
subparagraph 18.(a)(iii)a) and subparagraph 18.(a)(iii)b) shall be
computed by allowing interest at the Default Rate. The "WORTH AT THE
TIME OF AWARD" of the amount referred to in subparagraph 18.(a)(iii)c)
shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco at the time of award plus
one percent (1%).
e) Such other amounts in addition to or in lieu of the foregoing
as may be permitted from time to time by applicable California law.
(iv) BNPLC shall have the remedy described in California Civil Code
Section 1951.4 (lessor may continue lease in force even after lessee's
breach and abandonment and recover rent as it becomes due, if lessee has
right to sublet or assign, subject only to reasonable limitations).
Accordingly, even if NAI has breached this Land Lease and abandoned the
Property, this Land Lease shall continue in effect for so long as BNPLC
does not terminate NAI's right to possession, and BNPLC may enforce all of
BNPLC's rights and remedies under this Land Lease, including the right to
recover the Rent as it becomes due under this Land Lease. NAI's right to
possession shall not be deemed to have been terminated by
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<PAGE> 30
BNPLC except pursuant to subparagraph 18.(a)(i) hereof. The
following shall not constitute a termination of NAI's right to
possession:
a) Acts of maintenance or preservation or efforts to relet the
Property;
b) The appointment of a receiver upon the initiative of BNPLC to
protect BNPLC's interest under this Land Lease; or
c) Reasonable withholding of consent to an assignment or
subletting, or terminating a subletting or assignment by NAI.
(b) Notice Required So Long As the Purchase Option and NAI's Initial
Remarketing Rights and Obligations Continue Under the Purchase Agreement. So
long as NAI remains in possession of the Property and there has been no
termination of the Purchase Option and NAI's Initial Remarketing Rights and
Obligations as provided Paragraph 4 of the Purchase Agreement, BNPLC's right to
exercise remedies provided in subparagraph 18.(a) will be subject to the
condition precedent that BNPLC shall have notified NAI, at a time when an Event
of Default shall have occurred and be continuing, of BNPLC's intent to exercise
remedies provided in subparagraph 18.(a) at least sixty days prior to exercising
the remedies. The condition precedent is intended to provide NAI with an
opportunity to exercise the Purchase Option or NAI's Initial Remarketing Rights
and Obligations before losing possession of the Property pursuant to
subparagraph 18.(a). The condition precedent is not, however, intended to extend
any period for curing an Event of Default. Accordingly, if an Event of Default
has occurred, and regardless of whether any Event of Default is then continuing,
BNPLC may proceed immediately to exercise remedies provided in subparagraph
18.(a) at any time after the earlier of (i) sixty days after BNPLC has given
such a notice to NAI, (ii) any date upon which NAI relinquishes possession of
the Property, or (iii) any termination of the Purchase Option and NAI's Initial
Remarketing Rights and Obligations.
(c) Enforceability. This Paragraph 18 shall be enforceable to the
maximum extent not prohibited by Applicable Law, and the unenforceability of any
provision in this Paragraph shall not render any other provision unenforceable.
(d) Remedies Cumulative. No right or remedy herein conferred upon or
reserved to BNPLC is intended to be exclusive of any other right or remedy, and
each and every such right and remedy shall be cumulative and in addition to any
other right or remedy given to BNPLC hereunder or now or hereafter existing in
favor of BNPLC under Applicable Law or in equity. In addition to other remedies
provided in this Land Lease, BNPLC shall be entitled, to the extent permitted by
Applicable Law or in equity, to injunctive relief in case of the violation, or
attempted or threatened violation, of any of the covenants, agreements,
conditions or provisions of this Land Lease, or to a decree compelling
performance of any of the other covenants, agreements, conditions or provisions
of this Land Lease to be performed by NAI, or to any other remedy allowed to
BNPLC at law or in equity. Nothing contained in this Land Lease shall limit or
prejudice the right of BNPLC to prove for and obtain in proceedings for
bankruptcy or insolvency of NAI by reason of the termination of this Land Lease,
an amount equal to the maximum allowed by any statute or rule of law in effect
at the time when, and governing the proceedings in which, the damages are to be
proved, whether or not the amount be greater, equal to, or less than the amount
of the loss or damages referred to above. Without limiting the generality of the
foregoing, nothing contained herein shall modify, limit or impair any of the
rights and remedies of BNPLC under the Purchase Documents, and BNPLC shall not
be required to give the sixty day notice described in subparagraph 18.(b) as a
condition precedent to any acceleration of the Designated Sale Date or to taking
any action to enforce the Purchase Documents.
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<PAGE> 31
19. DEFAULT BY BNPLC. If BNPLC should default in the performance of any of
its obligations under this Land Lease, BNPLC shall have the time reasonably
required, but in no event less than thirty days, to cure such default after
receipt of notice from NAI specifying such default and specifying what action
NAI believes is necessary to cure the default. If NAI prevails in any litigation
brought against BNPLC because of BNPLC's failure to cure a default within the
time required by the preceding sentence, then NAI shall be entitled to an award
against BNPLC for the monetary damages proximately caused to NAI by such
default.
Notwithstanding the foregoing, BNPLC's right to cure as provided in this
Paragraph 19 will not in any event extend the time within which BNPLC must
remove Liens Removable by BNPLC as required by Paragraph 20 beyond the
Designated Sale Date.
20. QUIET ENJOYMENT. Provided NAI pays the Base Rent and all Additional
Rent payable hereunder as and when due and payable and keeps and fulfills all of
the terms, covenants, agreements and conditions to be performed by NAI
hereunder, BNPLC shall not during the Term disturb NAI's peaceable and quiet
enjoyment of the Property; however, such enjoyment shall be subject to the
terms, provisions, covenants, agreements and conditions of this Land Lease, to
Permitted Encumbrances, to Development Documents and to any other claims not
constituting Liens Removable by BNPLC. If any Lien Removable by BNPLC is claimed
against the Property, BNPLC will remove the Lien Removable by BNPLC promptly.
Any breach by BNPLC of this Paragraph shall render BNPLC liable to NAI for any
monetary damages proximately caused thereby, but as more specifically provided
in subparagraph 4.(b) above, no such breach shall entitle NAI to terminate this
Land Lease or excuse NAI from its obligation to pay Rent.
21. SURRENDER UPON TERMINATION. Unless NAI or an Applicable Purchaser
purchases or has purchased BNPLC's entire interest in the Property pursuant to
the terms of the Purchase Agreement and BNPLC's entire interest in the
Improvements and other "Property" under (and as defined in) the Other Purchase
Agreement, NAI shall, upon the termination of NAI's right to occupancy,
surrender to BNPLC the Property, including Improvements constructed by NAI and
fixtures and furnishings included in the Property, free of all Hazardous
Substances (including Permitted Hazardous Substances) and tenancies and with all
Improvements in substantially the same condition as of the date the same were
initially completed, excepting only (i) ordinary wear and tear that occurs
between the maintenance, repairs and replacements required by other provisions
of this Land Lease or the Other Lease Agreement, and (ii) demolition,
alterations and additions which are expressly permitted by the terms of this
Land Lease or the Other Lease Agreement and which have been completed by NAI in
a good and workmanlike manner in accordance with all Applicable Laws. Any
movable furniture or movable personal property belonging to NAI or any party
claiming under NAI, if not removed at the time of such termination and if BNPLC
shall so elect, shall be deemed abandoned and become the property of BNPLC
without any payment or offset therefor. If BNPLC shall not so elect, BNPLC may
remove such property from the Property and store it at NAI's risk and expense.
22. HOLDING OVER BY NAI. Should NAI not purchase BNPLC's right, title and
interest in the Property as provided in the Purchase Agreement, but nonetheless
continue to hold the Property after the termination of this Land Lease without
BNPLC's consent, whether such termination occurs by lapse of time or otherwise,
such holding over shall constitute and be construed as a tenancy from day to day
only, at a daily Base Rent equal to: (i) Stipulated Loss Value on the day in
question, times (ii) the Default Rate for such day; divided by (iii) three
hundred and sixty; subject, however, to all of the terms, provisions, covenants
and agreements on the part of NAI hereunder. No payments of money by NAI to
BNPLC after the termination of this Land Lease shall reinstate, continue or
extend the Term of this Land Lease and no extension of this Land Lease after the
termination thereof shall be valid unless and until the same shall be reduced to
writing and signed by both BNPLC and NAI.
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<PAGE> 32
23. INDEPENDENT OBLIGATIONS EVIDENCED BY THE OTHER OPERATIVE DOCUMENTS. NAI
acknowledges and agrees that nothing contained in this Land Lease shall limit,
modify or otherwise affect any of NAI's obligations under the other Operative
Documents, which obligations are intended to be separate, independent and in
addition to, and not in lieu of, the obligations set forth herein. In the event
of any inconsistency between the express terms and provisions of the Purchase
Documents and the express terms and provisions of this Land Lease, the express
terms and provisions of the Purchase Documents shall control. In the event of
any inconsistency between the express terms and provisions of the Closing
Certificate and the express terms and provisions of this Land Lease, the express
terms and provisions of this Land Lease shall control; provided, nothing herein
will limit or impair NAI's obligations under the Closing Certificate following
any expiration of termination of this Land Lease.
[The signature pages follow.]
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<PAGE> 33
IN WITNESS WHEREOF, NAI and BNPLC have caused this Land Lease Agreement to
be executed as of December ___, 1999.
"NAI"
NETWORK APPLIANCE, INC.
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
<PAGE> 34
[Continuation of signature pages to Lease Agreement dated to be effective
December ___, 1999]
"BNPLC"
BNP LEASING CORPORATION
By:
---------------------------------
Lloyd G. Cox, Vice President
<PAGE> 35
Exhibit A
LEGAL DESCRIPTION
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
TRACT 1:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of a portion of Parcel B, as
shown upon that certain Parcel Map recorded in Book 345 of Maps, at page 20,
Santa Clara County Records", which Map was filed for record in the Office of the
Recorder of the County of Santa Clara, State of California, on November 17,
1976, in Book 383 of Maps, at page 35.
TRACT 2:
Together with an easement for vehicles parking over the following described
property:
A 7-foot strip of land for parking easement purposes over a portion of Parcel A,
as said Parcel A is shown on that certain Parcel Map filed for record on
November 10, 1974 in Book 292 of Maps, at page 41, records of said County, and
being more particularly described as follows:
Commencing at the Northeast corner of said Parcel A; thence North 75 [Degrees]
8'27" West 500.00 feet along the Northeasterly line of said Parcel A; thence
South 14 [Degrees] 51'33" West 7.00 feet; thence parallel to Northeasterly line
of said Parcel A, South 75 [Degrees] 08'27" East 500.00 feet to the Southeast
line of said Parcel A, North 14 [Degrees] 51'33" East 7.00 feet to the point of
beginning.
APN: 110-32-002
ARB: 110-3-65.02
TRACT 3:
Parcel 1, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-6
ARB: 110-3-x65
TRACT 4:
Parcel 2, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-7
ARB: 110-3-x65
<PAGE> 36
TRACT 5:
Parcel 2, as shown on that certain parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on
October 7, 1998, in Book 708 of Parcel Maps, Pages 51 and 52.
APN: 110-32-12
ARB: 110-03-65.11
Exhibit A - Page 2
<PAGE> 37
Exhibit B
INSURANCE REQUIREMENTS
I. LIABILITY INSURANCE:
A. NAI must maintain commercial general liability ("CGL") insurance on an
occurrence basis, affording immediate protection to the limit of not less than
$20,000,000 combined single limit for bodily and personal injury, death and
property damage in respect of any one occurrence. The CGL insurance must be
primary to, and shall receive no contribution from, any insurance policies or
self-insurance programs otherwise afforded to or available to the Interested
Parties, collectively or individually. Further, the CGL insurance must include
blanket contractual liability coverage which insures contractual liability under
the indemnifications set forth in this Land Lease (though such coverage or the
amount thereof shall in no way limit such indemnifications).
B. Any deductible or self-insured retention applicable to the CGL insurance
shall not exceed $500,000.
C. The forms of insurance policies (including endorsements) used to provide
the CGL insurance required by this Land Lease, and the insurance company or
companies providing the CGL insurance, must be acceptable to BNPLC. BNPLC shall
have the right from time to time and at any time to review and approve such
policy forms (including endorsements) and the insurance company or companies
providing the insurance. Without limiting the generality of the foregoing, BNPLC
may reasonably require (and unless and until NAI is otherwise notified by BNPLC,
BNPLC does require) that such insurance be provided under forms and by companies
consistent with the following:
(1) Forms: CGL Insurance must be provided on Insurance Services Office
("ISO") forms CG 0001 1093 or CG 0001 0196 or equivalent
substitute forms providing the same or greater coverage.
(2) Rating Requirements: Insurance must be provided through insurance
or reinsurance companies rated by the A.M. Best Company of
Oldwick, New Jersey as having a policyholder's rating of A or
better and a reported financial information rating of VI or
better.
(3) Required Endorsements: CGL Insurance must be endorsed to provide
or include:
(a) in any policy containing a general aggregate limit, ISO form
amendment "Aggregate Limits of Insurance Per Location" CG 2504
1185 or equivalent substitute form;
(c) a waiver of subrogation, using ISO form CG 2404 1093 or
equivalent substitute form (and under the commercial umbrella, if
any), in favor of "BNP Leasing Corporation and other Interested
Parties (as defined in the Common Definitions and Provisions
Agreement (Phase IV - Land) between Network Appliance, Inc. and
BNP Leasing Corporation dated December ___, 1999)";
(c) ISO additional insured form CG 2026 1185 or equivalent
substitute form, without modification (and under the commercial
umbrella, if any), designating as additional insureds "BNPLC and
other Interested Parties, as defined in the Common Definitions and
Provisions
<PAGE> 38
Agreement (Phase IV - Land) between Network Appliance, Inc. and
BNP Leasing Corporation dated December ___, 1999)"; and
(d) provisions entitling BNPLC to 30 days' notice from the insurer
prior to any cancellation, nonrenewal or material modification to
the CGL coverage.
(4) Other Insurance: Each policy to contain standard CGL "other
insurance" wording, unmodified in any way that would make it
excess over or contributory with the additional insured's own
commercial general liability coverage.
II. INTENTIONALLY DELETED.
III. OTHER INSURANCE RELATED REQUIREMENTS:
A. BNPLC must be notified in writing immediately by NAI of claims against
NAI that might cause a reduction below seventy-five percent (75%) of any
aggregate limit of any policy.
B. Intentionally Deleted.
C. NAI's CGL insurance must be evidenced by ACORD form 25 "Certificate of
Insurance" completed and interlineated in a manner satisfactory to BNPLC to show
compliance with the requirements of this Exhibit. Copies of endorsements to the
CGL insurance must be attached to such form.
D. Such evidence of required insurance must be delivered upon execution of
this Land Lease and new certificate or evidence of insurance must be delivered
no later than 10 days prior to expiration of existing policy.
E. NAI shall not cancel, fail to renew, or make or permit any material
reduction in any of the policies or certificates described in this Exhibit
without the prior written consent of BNPLC. The certificates (ACORD forms 25)
described in this Exhibit must contain the following express provision:
"This is to certify that the policies of insurance described herein have
been issued to the insured Network Appliance, Inc. for whom this
certificate is executed and are in force at this time. In the event of
cancellation, non-renewal, or material reduction in coverage affecting the
certificate holder, at least sixty days prior notice shall be given to the
certificate holder."
F. The limits of liability under the liability insurance required by this
Land Lease may be provided by a single policy of insurance or by a combination
of primary and umbrella policies, but in no event shall the total limits of
liability available for any one occurrence or accident be less than those
required by this Exhibit.
G. NAI shall provide copies, certified as complete and correct by an
authorized agent of the applicable insurer, of all insurance policies required
by this Exhibit within ten days after receipt of a request for such copies from
BNPLC.
Exhibit B - Page 2
<PAGE> 39
Exhibit C
NOTICE OF LIBOR PERIOD ELECTION
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: George Fung
Re: Lease Agreement (Phase IV - Improvements) and Lease Agreement (Phase IV
- - Land), both dated as of December ___, 1999, and both between Network
Appliance, Inc., as tenant, and BNP Leasing Corporation, as landlord
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the two Lease Agreements referenced above. This letter
constitutes notice to you that the LIBOR Period Election under both of the Lease
Agreements shall be:
________________ month(s),
beginning with the first Base Rent Period that commences on or after:
--------------, ----.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE NUMBER OF MONTHS
SPECIFIED ABOVE IS NOT A PERMITTED NUMBER UNDER THE DEFINITION OF "LIBOR PERIOD
ELECTION" IN THE COMMON DEFINITIONS AND PROVISIONS AGREEMENTS REFERENCED IN THE
LEASE AGREEMENTS, OR IF THE DATE SPECIFIED ABOVE CONCERNING THE COMMENCEMENT OF
THE LIBOR PERIOD ELECTION IS LESS THAN TEN BUSINESS DAYS AFTER YOUR RECEIPT OF
THIS NOTICE. HOWEVER, WE ASK THAT YOU NOTIFY US IMMEDIATELY IF FOR ANY REASON
YOU BELIEVE THIS NOTICE IS DEFECTIVE.
Executed this _____ day of ______________, 19___.
Network Appliance, Inc.
Name:
-------------------------------
Title:
------------------------------
<PAGE> 40
[cc all Participants]
Exhibit C - Page 2
<PAGE> 41
Schedule 1
FINANCIAL COVENANTS
This Schedule 1 is attached to and made a part of (a) the Lease Agreement
(Phase IV - Improvements) (the "IMPROVEMENTS LEASE") dated to be effective as of
December ___, 1999 (the "EFFECTIVE DATE"), between BNP Leasing Corporation, a
Delaware corporation ("BNPLC") and Network Appliance, Inc., a California
corporation ("NAI"), (b) the Lease Agreement (Phase IV - Land) (the "LAND LEASE"
and, together with the Improvements Lease, the "LEASES") dated to be effective
as of the Effective Date, between BNPLC and NAI, (c) the Pledge Agreement (Phase
IV - Improvements) (the "PLEDGE AGREEMENT (IMPROVEMENTS)") dated to be effective
as of the Effective Date, among BNPLC, NAI, and Banque Nationale de Paris, as a
Participant and as agent for any financial institutions that become Participants
thereunder from time to time, and (d) the Pledge Agreement (Phase IV - Land)
(collectively with the Pledge Agreement (Improvements), the "PLEDGE AGREEMENTS")
dated to be effective as of the Effective Date, among BNPLC, NAI, and Banque
Nationale de Paris, as a Participant and as agent for any financial institutions
that become Participants thereunder from time to time.
PART I - DEFINED TERMS
In this Schedule 1, capitalized terms used but not defined herein shall
have the meaning assigned to them in the Leases or the Common Definitions and
Provisions Agreements referenced in the Leases; and the following capitalized
terms shall have the following meanings:
"ADJUSTED NET INCOME" means, for any fiscal period of NAI, the aggregate
net income earned (or net losses incurred) during such period by NAI and
its Subsidiaries (determined on a consolidated basis), plus any Permitted
Non-Cash Charges deducted in determining such net income (or net loss).
"ADJUSTED EBIT" means, for any accounting period, net income (or net loss)
of NAI and its Subsidiaries (determined on a consolidated basis), plus the
amounts (if any) which, in the determination of net income (or net loss)
for such period, have been deducted for (a) interest expense, (b) income
tax expense (c) rent expense under leases of property, and (d) Permitted
Non-Cash Charges.
"COLLATERAL TEST DATES" mean the Base Rent Commencement Date and the
earlier of the following dates after each fiscal quarter of NAI that ends
after the Base Rent Commencement Date : (1) the seventh Business Day after
the release by NAI of its financial statements for the fiscal quarter; or
(2) the first Business Day of the third calendar month following the end of
the fiscal quarter.
"CONSOLIDATED TANGIBLE NET WORTH" means the excess of (1) the total assets,
other than Intangible Assets, of NAI and its Subsidiaries (determined on a
consolidated basis) over (2) the total liabilities of NAI and its
Subsidiaries (determined on a consolidated basis).
"DEBT" as used in this Exhibit shall have the meaning assigned to it in the
Common Definitions and Provisions Agreements, where "Debt" of any Person is
defined to mean (without duplication of any item): (a) indebtedness of such
Person for borrowed money; (b) indebtedness of such Person for the deferred
purchase price of property or services (except trade payables and accrued
expenses constituting current liabilities in the ordinary course of
business); (c) the face amount of any outstanding letters of credit issued
for the account of such Person; (d) obligations of such Person arising
under acceptance facilities; (e) guaranties, endorsements (other than for
collection in the ordinary course of business) and other contingent
obligations of such Person to purchase, to provide funds for payment, to
provide funds to invest in any Person, or otherwise to assure a
<PAGE> 42
creditor against loss; (f) obligations of others secured by any Lien on
property of such Person; (g) obligations of such Person as lessee under
Capital Leases; and (h) the obligations of such Person, contingent or
otherwise, under any lease of property or related documents (including a
separate purchase agreement) which provide that such Person or any of its
Affiliates must purchase or cause another Person to purchase any interest
in the leased property and thereby guarantee a minimum residual value of
the leased property to the lessor. For purposes of this definition, the
amount of the obligations described in clause (h) of the preceding sentence
with respect to any lease classified according to GAAP as an "operating
lease," shall equal the sum of (1) the present value of rentals and other
minimum lease payments required in connection with such lease [calculated
in accordance with SFAS 13 and other GAAP relevant to the determination of
the whether such lease must be accounted for as an operating lease or
capital lease], plus (2) the fair value of the property covered by the
lease; provided, however, that such amount shall not exceed the price, as
of the date a determination of Debt is required hereunder, for which the
lessee can purchase the leased property pursuant to any valid ongoing
purchase option if, upon such a purchase, the lessee shall be excused from
paying rentals or other minimum lease payments that would otherwise accrue
after the purchase.
"FIXED CHARGES" means, for any accounting period, the sum (without
duplication of any item) of the following charges or costs incurred or paid
by NAI and its Subsidiaries (determined on a consolidated basis): (a) gross
interest expense, plus (b) amortization of principal or debt discount in
respect of all Debt during such period, plus (c) rent payable under all
leases of property during such period, plus (d) taxes payable during such
period.
"INTANGIBLE ASSETS" means assets of NAI and its Subsidiaries (determined on
a consolidated basis) that are properly classified as "INTANGIBLE ASSETS"
in accordance with GAAP and, in any event, shall include goodwill, patents,
trade names, trademarks, copyrights, franchises, experimental expense,
organization expense, unamortized debt discount and expense, and deferred
charges (other than prepaid insurance, prepaid taxes and current deferred
taxes to the extent any such prepaid or deferred items are classified on
the balance sheet of NAI and its consolidated Subsidiaries as current
assets in accordance with GAAP and with the concurrence of NAI's
independent public accountants).
"MANDATORY COLLATERAL PERIOD" means any period during which,
notwithstanding any contrary designation of a Collateral Percentage by NAI
under the Pledge Agreements, the Collateral Percentage for purposes of the
Pledge Agreements shall be one hundred percent (100%), determined as set
forth in Part III of this Schedule 1.
"PERMITTED NON-CASH CHARGES" means the amounts (if any) which, in the
determination of net income (or net loss) for any relevant fiscal period,
have been deducted by NAI or its Subsidiaries for non-cash charges made to
write down goodwill or research and development costs in connection with
acquisitions permitted by this Schedule 1.
"QUICK RATIO" means the ratio of:
(A) the sum (without duplication of any item) of the following
assets of NAI and its Subsidiaries (determined on a consolidated
basis): Collateral delivered and pledged under the Pledge Agreements
in accordance with the requirements thereof (if any); plus
unencumbered cash; plus unencumbered short term cash investments; plus
other unencumbered marketable securities which are classified as short
term investments in accordance with GAAP; plus unencumbered accounts
receivable, computed net of reserves for uncollectible amounts as
determined in accordance with GAAP, to
(B) the sum (without duplication of any item) of (1) all
liabilities of NAI and its Subsidiaries (determined on a consolidated
basis) treated as current liabilities in accordance with GAAP, plus
(2)
Schedule 1 - Page 2
<PAGE> 43
other obligations included in total Debt of NAI and its Subsidiaries
(determined on a consolidated basis), the payment of which is due on
demand or will become due within one year after the date on which the
applicable determination of Quick Ratio is required hereunder.
"ROLLING FOUR QUARTER PERIOD" means a period of four consecutive fiscal
quarters of NAI, the last of which quarters ends after December 31, 1999.
PART II - FINANCIAL COVENANTS FOR LEASE AGREEMENT
NAI covenants that it shall not at any time suffer or permit:
1. Minimum Unencumbered Cash and Cash Equivalents. The sum (without duplication
of any item) of the unrestricted cash, Collateral delivered and pledged
under the Pledge Agreements in accordance with the requirements thereof (if
any), unencumbered short term cash investments and unencumbered marketable
securities classified as short term investments according to GAAP of NAI and
its Subsidiaries (determined on a consolidated basis) to be less than total
Debt of NAI and its Subsidiaries (determined on a consolidated basis).
2. Minimum Tangible Net Worth. Consolidated Tangible Net Worth to be less than
the sum of: (a) ninety percent of the Consolidated Tangible Net Worth as of
October 30, 1998; plus (b) seventy-five percent of NAI's net income
(computed without deduction for net losses in any fiscal quarter) earned in
each fiscal quarter since October 30, 1998; plus (c) one-hundred percent of
the net proceeds of sales of stock in NAI or its Subsidiaries (other than
sales to NAI or its Subsidiaries) after October 30, 1998; less (d) Permitted
Non-Cash Charges for any period after October 30, 1998.
3. Minimum Quick Ratio. The Quick Ratio to be less than 1.50 to 1.00.
4. Minimum Fixed Charge Coverage. The ratio of (a) Adjusted EBIT for any
Rolling Four Quarter Period to (b) Fixed Charges for the same Rolling Four
Quarter Period, to be less than 1.50 to 1.00.
5. Minimum Profitability. Adjusted Net Income to be less than $1.00 in more
than one fiscal quarter of any Rolling Four Quarter Period.
6. Maximum Leverage Ratio. the ratio of (a) total Debt of NAI and its
Subsidiaries (determined on a consolidated basis) at the end of any Rolling
Four Quarter Period to (b) the Adjusted EBIT for the same Four Quarter
Rolling Period, to exceed 3.00 to 1.00.
PART III - TESTS FOR MANDATORY COLLATERAL PERIODS
If, as of the end of the latest fiscal quarter of NAI ending before any
Collateral Test Date, NAI shall have both:
(A) failed to maintain a ratio of (1) the sum (without duplication of
any item) of Collateral delivered and pledged under the Pledge Agreements
in accordance with the requirements thereof (if any), unencumbered cash,
unencumbered short term cash investments and unencumbered marketable
securities classified as short term investments according to GAAP of NAI
and its Subsidiaries (determined on a consolidated basis) to (2) all Debt
of NAI and its Subsidiaries (determined on a consolidated basis), of at
least 1.5 to 1.00; and
Schedule 1 - Page 3
<PAGE> 44
(B) failed to maintain a ratio of (i) all Debt of NAI and its
Subsidiaries (determined on a consolidated basis) to (ii) Consolidated
Tangible Net Worth of NAI, of no more than 0.45 to 1.00;
such Collateral Test Date shall constitute a "FAILED COLLATERAL TEST DATE" for
purposes of the determination of Mandatory Collateral Periods. A Mandatory
Collateral Period shall commence on each Failed Collateral Test, and such
Mandatory Collateral Period shall continue until the second of any two
subsequent CONSECUTIVE Collateral Test Dates, neither of which constitutes a
Failed Collateral Test Date.
For purposes of illustration only, assume that the following dates are
consecutive Collateral Test Dates, some of which are Failed Collateral Test
Dates and some of which are not, as indicated opposite each date:
<TABLE>
<CAPTION>
Date Failed Collateral Test Date?
---- ----------------------------
<S> <C>
February 15, 2001 Yes
May 12, 2001 No
August 16, 2001 Yes
November 11, 2001 No
February 18, 2002 No
May 14, 2002 Yes
August 18, 2002 Yes
November 18, 2002 No
February 15, 2003 No
</TABLE>
Under these assumptions, the entire period from February 15, 2001 to February
18, 2002 falls within one or more Mandatory Collateral Periods. Also, the entire
period commencing May 14, 2002 and ending February 15, 2003 falls within one or
more Mandatory Collateral Periods. The period from February 18, 2002 to May 14,
2002 does not constitute Mandatory Collateral Period.
PART IV - OTHER COVENANTS
Without limiting NAI's obligations under the other provisions of the Operative
Documents, during the Term, NAI shall not, without the prior written consent of
BNPLC in each case:
A. Liens. Create, incur, assume or suffer to exist, or permit any of its
Consolidated Subsidiaries to create, incur, assume or suffer to exist, any Lien,
upon or with respect to any of its properties, now owned or hereafter acquired,
provided that the following shall be permitted except to the extent that they
would encumber any interest in the Property in violation of other provisions of
the Operative Documents:
1. Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if they are being contested in good
faith by appropriate proceedings and for which appropriate reserves are
maintained;
2. Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are
not past due for more than thirty (30) days, or which are being contested
in good faith by appropriate proceedings and for which appropriate reserves
have been established;
Schedule 1 - Page 4
<PAGE> 45
3. Liens under workmen's compensation, unemployment insurance, social
security or similar laws (other than ERISA);
4. Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), leases,
public or statutory obligations, surety, stay, appeal, indemnity,
performance or other similar bonds, or other similar obligations arising in
the ordinary course of business;
5. judgment and other similar Liens against assets other than the
Property or any part thereof in an aggregate amount not in excess of
$3,000,000 arising in connection with court proceedings; provided that the
execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith by
appropriate proceedings;
6. easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by NAI or any such Consolidated Subsidiary of
the property or assets encumbered thereby in the normal course of its
business or materially impair the value of the property subject thereto;
7. Liens securing obligations of such a Consolidated Subsidiary to NAI
or to another such Consolidated Subsidiary;
8. Liens not otherwise permitted by this subparagraph A (and not
encumbering the Property or any Collateral) incurred in connection with the
incurrence of additional Debt or asserted to secure Unfunded Benefit
Liabilities, provided that (a) the sum of the aggregate principal amount of
all outstanding obligations secured by Liens incurred pursuant to this
clause shall not at any time exceed five percent (5%) of Consolidated
Tangible Net Worth at such time; and (b) such Liens do not constitute Liens
against NAI's interest in any material Subsidiary or blanket Liens against
all or substantially all of the inventory, receivables, general intangibles
or equipment of NAI or of any material Subsidiary of NAI (for purposes of
this clause, a "material Subsidiary" means any subsidiary whose assets
represent a substantial part of the total assets of NAI and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP);
and
9. Liens incurred in connection with any renewals, extensions or refundings
of any Debt secured by Liens described in the preceding clauses of this
subparagraph A, provided that there is no increase in the aggregate principal
amount of Debt secured thereby from that which was outstanding as of the date of
such renewal, extension or refunding and no additional property is encumbered.
B. Transactions with Affiliates. Enter into or permit any Subsidiary of NAI
to enter into any material transactions (including, without limitation, the
purchase, sale or exchange of property or the rendering of any service) with any
Affiliates of NAI except on terms (1) that would not cause or result in a
Default by NAI under the financial covenants set forth in Part II of this
Schedule, and (2) that are no less favorable to NAI or the relevant Subsidiary
than those that would have been obtained in a comparable transaction on an arm's
length basis from an unrelated Person.
C. Compliance. Fail to preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; or fail to comply with the provisions of all documents
pursuant to which NAI is organized and/or which govern NAI's continued existence
and with the requirements of all laws, rules, regulations and orders of a
governmental agency applicable to NAI and/or its business.
Schedule 1 - Page 5
<PAGE> 46
D. Insurance. Fail to maintain and keep in force insurance of the types and
in amounts customarily carried in lines of business similar to that of NAI,
including but not limited to fire, extended coverage, public liability, flood,
property damage and workers' compensation, with all such insurance carried with
companies and in amounts satisfactory to BNPLC, or fail to deliver to BNPLC from
time to time at BNPLC's request schedules setting forth all insurance then in
effect.
E. Facilities. fail to keep all properties useful or necessary to NAI's
business in good repair and condition, or to from time to time make necessary
repairs, renewals and replacements thereto so that such properties shall be
fully and efficiently preserved and maintained.
F. Taxes and Other Liabilities. Fail to pay and discharge when due any and
all indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as NAI may in good faith contest
or as to which a bona fide dispute may arise, and (b) for which NAI has made
provisions, to BNPLC's satisfaction, for eventual payment thereof in the event
that NAI is obligated to make such payment.
G. Capital Expenditures. Make any additional investment in fixed assets in
any fiscal year in excess of an aggregate of twenty percent (20%) of NAI's total
assets as of the end of the prior fiscal year.
H. Merger, Consolidation, Transfer of Assets. Merge into or consolidate
with any other entity (unless NAI is the surviving entity and remains in
compliance of all provisions of the Operative Documents); or make any
substantial change in the nature of NAI's business as conducted as of the date
hereof; or sell, lease, transfer or otherwise dispose of all or a substantial or
material portion of NAI's assets except in the ordinary course of its business.
I. Loans, Advances, Investments. Make any loans or advances to or
investments in any person or entity, except (a) any of the foregoing existing as
of, and disclosed to BNPLC prior to, the date hereof, (b) loans to employees for
travel advances, relocation loans and other loans in the ordinary course of
business, (c) investments in accordance with NAI's investment policy, as in
effect from time to time, (d) existing investments in subsidiaries and joint
ventures which have been disclosed to BNPLC in writing prior to the date hereof,
and new investments in subsidiaries and joint ventures in amounts up to an
aggregated of $10,000,000.00, (e) loans to employees, officers, directors to
finance or refinance the purchase of equity securities of NAI.
J. Dividends, Distributions. Declare or pay any dividend or distribution
either in cash, stock or any other property on NAI's stock now or hereafter
outstanding, nor redeem, retire, repurchase or otherwise acquire any shares of
any class of NAI's stock now or hereafter outstanding.
Schedule 1 - Page 6
<PAGE> 47
COMMON DEFINITIONS AND PROVISIONS AGREEMENT
(PHASE IV - LAND)
BETWEEN
BNP LEASING CORPORATION
AND
NETWORK APPLIANCE, INC.
DATED AS OF DECEMBER ___, 1999
<PAGE> 48
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - LIST OF DEFINED TERMS:
ACTIVE NEGLIGENCE.............................................................1
ADDITIONAL RENT...............................................................1
ADJUSTED EBIT.................................................................1
AFFILIATE.....................................................................2
APPLICABLE LAWS...............................................................2
APPLICABLE PURCHASER..........................................................2
ATTORNEYS' FEES...............................................................2
BANKING RULES CHANGE..........................................................2
BASE RATE.....................................................................2
BASE RENT.....................................................................2
BASE RENT COMMENCEMENT DATE...................................................2
BASE RENT DATE................................................................3
BASE RENT PERIOD..............................................................3
BNPLC.........................................................................4
BNPLC'S PARENT................................................................4
BREAKAGE COSTS................................................................4
BREAK EVEN PRICE..............................................................4
BUSINESS DAY..................................................................4
CAPITAL ADEQUACY CHARGES......................................................4
CAPITAL LEASE.................................................................5
CLOSING CERTIFICATE...........................................................5
CODE..........................................................................5
COLLATERAL....................................................................5
COLLATERAL PERCENTAGE.........................................................5
COMMON DEFINITIONS AND PROVISIONS AGREEMENT (PHASE IV - LAND).................5
CURRENT AS IS MARKET VALUE....................................................5
DEBT..........................................................................6
DEFAULT.......................................................................6
DEFAULT RATE..................................................................6
DEPOSIT TAKER.................................................................7
DEPOSIT TAKER LOSSES..........................................................7
DESIGNATED SALE DATE..........................................................7
DEVELOPMENT DOCUMENTS.........................................................7
DIRECT PAYMENTS TO PARTICIPANTS...............................................7
EFFECTIVE DATE................................................................7
EFFECTIVE RATE................................................................8
ENVIRONMENTAL LAWS............................................................8
ENVIRONMENTAL CUTOFF DATE.....................................................8
ENVIRONMENTAL LOSSES..........................................................8
ENVIRONMENTAL REPORTS.........................................................9
ERISA.........................................................................9
</TABLE>
(i)
<PAGE> 49
<TABLE>
<CAPTION>
Page
<S> <C>
ERISA AFFILIATE...............................................................9
ESCROWED PROCEEDS.............................................................9
ESTABLISHED MISCONDUCT........................................................9
EUROCURRENCY LIABILITIES.....................................................10
EURODOLLAR RATE RESERVE PERCENTAGE...........................................10
EVENT OF DEFAULT.............................................................10
EXCLUDED TAXES...............................................................10
EXISTING CONTRACT............................................................10
FAILED COLLATERAL TEST DATE..................................................10
FED FUNDS RATE...............................................................10
GAAP.........................................................................11
HAZARDOUS SUBSTANCE..........................................................11
HAZARDOUS SUBSTANCE ACTIVITY.................................................11
IMPOSITIONS..................................................................11
IMPROVEMENTS.................................................................12
INITIAL FUNDING ADVANCE......................................................12
INTERESTED PARTY.............................................................12
ISSUE 97-1 NON-PERFORMANCE-RELATED SUBJECTIVE EVENT OF DEFAULT...............12
LAND.........................................................................12
LAND LEASE...................................................................13
LIBOR........................................................................13
LIBOR PERIOD ELECTION........................................................13
LIEN.........................................................................13
LIENS REMOVABLE BY BNPLC.....................................................14
LOSSES.......................................................................14
MANDATORY COLLATERAL PERIOD..................................................14
MATERIAL ENVIRONMENTAL COMMUNICATION.........................................14
MAXIMUM REMARKETING OBLIGATION...............................................14
MINIMUM EXTENDED REMARKETING PRICE...........................................15
MULTIEMPLOYER PLAN...........................................................15
NAI..........................................................................15
NAI'S EXTENDED REMARKETING PERIOD............................................15
NAI'S EXTENDED REMARKETING RIGHT.............................................15
NAI'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS.............................15
OPERATIVE DOCUMENTS..........................................................15
OTHER COMMON DEFINITIONS AND PROVISIONS AGREEMENT............................15
OTHER LEASE AGREEMENT........................................................15
OTHER PURCHASE AGREEMENT.....................................................15
PARTICIPANT..................................................................15
PARTICIPATION AGREEMENT......................................................16
PBGC.........................................................................16
PERMITTED ENCUMBRANCES.......................................................16
PERMITTED HAZARDOUS SUBSTANCE USE............................................16
PERMITTED HAZARDOUS SUBSTANCES...............................................16
</TABLE>
(ii)
<PAGE> 50
<TABLE>
Page
<S> <C>
PERMITTED TRANSFER...........................................................17
PERSON.......................................................................17
PERSONAL PROPERTY............................................................17
PLAN.........................................................................17
PLEDGE AGREEMENT.............................................................17
PREMISES LEASES..............................................................17
PRIME RATE...................................................................17
PROPERTY.....................................................................18
PURCHASE AGREEMENT...........................................................18
PURCHASE DOCUMENTS...........................................................18
PURCHASE OPTION..............................................................18
QUALIFIED AFFILIATE..........................................................18
QUALIFIED PREPAYMENTS........................................................18
REAL PROPERTY................................................................19
REMEDIAL WORK................................................................19
RENT.........................................................................19
RESIDUAL RISK PERCENTAGE.....................................................19
RESPONSIBLE FINANCIAL OFFICER................................................19
SALE CLOSING DOCUMENTS.......................................................19
SECURED SPREAD...............................................................19
SELLER.......................................................................19
STIPULATED LOSS VALUE........................................................19
SUBSIDIARY...................................................................19
SUPPLEMENTAL PAYMENT.........................................................19
TERM.........................................................................19
THIRD PARTY PRICE............................................................19
THIRD PARTY SALE NOTICE......................................................20
THIRD PARTY SALE PROPOSAL....................................................20
THIRD PARTY TARGET PRICE.....................................................20
TRANSACTION EXPENSES.........................................................20
UNFUNDED BENEFIT LIABILITIES.................................................20
UNSECURED SPREAD.............................................................20
VOLUNTARY RETENTION OF THE PROPERTY..........................................21
</TABLE>
ARTICLE II - PROVISIONS USED IN COMMON:
<TABLE>
<S> <C>
1 NOTICES..................................................................21
2 SEVERABILITY.............................................................23
3 NO MERGER................................................................23
4 NO IMPLIED WAIVER........................................................23
5 ENTIRE AND ONLY AGREEMENTS...............................................24
6 BINDING EFFECT...........................................................24
7 TIME IS OF THE ESSENCE...................................................24
8 GOVERNING LAW............................................................24
</TABLE>
(iii)
<PAGE> 51
<TABLE>
Page
<S> <C>
9 PARAGRAPH HEADINGS.......................................................24
10 NEGOTIATED DOCUMENTS.....................................................24
11 TERMS NOT EXPRESSLY DEFINED IN AN OPERATIVE DOCUMENT.....................24
12 OTHER TERMS AND REFERENCES...............................................24
13 EXECUTION IN COUNTERPARTS................................................25
14 NOT A PARTNERSHIP, ETC...................................................25
</TABLE>
(iv)
<PAGE> 52
COMMON DEFINITIONS AND PROVISIONS AGREEMENT
(PHASE IV - LAND)
This Common Definitions and Provisions Agreement (Phase IV - Land), by and
between BNP LEASING CORPORATION, a Delaware corporation ("BNPLC"), and NETWORK
APPLIANCE, INC., a California corporation ("NAI"), is dated as of December ___,
1999, the Effective Date.
RECITALS
Contemporaneously with the execution of this Common Definitions and
Provisions Agreement (Phase IV - Improvements), NAI is executing the Closing
Certificate (as defined below) in favor of BNPLC, and BNPLC and NAI are
executing the Land Lease (as defined below) and the Purchase Agreement (as
defined below), both of which concern the Property (as defined below). Each of
the Closing Certificate, the Land Lease and the Purchase Agreement (together
with this Common Definitions and Provisions Agreement (Phase IV - Land) and the
Pledge Agreement [as defined below], the "OPERATIVE DOCUMENTS") are intended to
create separate and independent obligations upon the parties thereto. However,
NAI and BNPLC intend that all of the Operative Documents share certain
consistent definitions and other miscellaneous provisions. To that end, the
parties are executing this Common Definitions and Provisions Agreement (Phase II
- - Land) and incorporating it by reference into each of the other Operative
Documents.
AGREEMENTS
ARTICLE I - LIST OF DEFINED TERMS
UNLESS A CLEAR CONTRARY INTENTION APPEARS, THE FOLLOWING TERMS SHALL HAVE
THE RESPECTIVE INDICATED MEANINGS AS USED HEREIN AND IN THE OTHER OPERATIVE
DOCUMENTS:
"ACTIVE NEGLIGENCE" of any Person (including BNPLC) means, and is limited
to, the negligent conduct on the Property (and not mere omissions) by such
Person or by others acting and authorized to act on such Person's behalf in a
manner that proximately causes actual bodily injury or property damage for which
NAI does not carry (and is not obligated by the Land Lease to carry) insurance.
"ACTIVE NEGLIGENCE" shall not include (1) any negligent failure of BNPLC to act
when the duty to act would not have been imposed but for BNPLC's status as owner
of the Land, the Improvements or any interest in any other Property or as a
party to the transactions described in the Land Lease or the other Operative
Documents or in the Other Lease Agreement or the Other Purchase Agreement, (2)
any negligent failure of any other Interested Party to act when the duty to act
would not have been imposed but for such party's contractual or other
relationship to BNPLC or participation or facilitation in any manner, directly
or indirectly, of the transactions described in the Land Lease or other
Operative Documents or in the Other Lease Agreement or Other Purchase Agreement,
or (3) the exercise in a lawful manner by BNPLC (or any party lawfully claiming
through or under BNPLC) of any right or remedy provided in or under the Land
Lease or the other Operative Documents or in the Other Lease Agreement or Other
Purchase Agreement.
"ADDITIONAL RENT" shall have the meaning assigned to it in subparagraph
3.(d) of the Land Lease.
"ADJUSTED EBIT" shall have the meaning assigned to it in Part I of Schedule
1 attached to the Land Lease and to the Pledge Agreement.
<PAGE> 53
"AFFILIATE" of any Person means any other Person controlling, controlled by
or under common control with such Person. For purposes of this definition, the
term "control" when used with respect to any Person means the power to direct
the management of policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"APPLICABLE LAWS" means any or all of the following, to the extent
applicable to NAI or the Property or the Land Lease or the other Operative
Documents: restrictive covenants; zoning ordinances and building codes; flood
disaster laws; health, safety and environmental laws and regulations; the
Americans with Disabilities Act and other laws pertaining to disabled persons;
and other laws, statutes, ordinances, rules, permits, regulations, orders,
determinations and court decisions.
"APPLICABLE PURCHASER" means any third party designated by NAI to purchase
BNPLC's interest in the Property and in any Escrowed Proceeds as provided in the
Purchase Agreement.
"ATTORNEYS' FEES" means the expenses and reasonable fees of counsel to the
parties incurring the same, excluding costs or expenses of in-house counsel
(whether or not accounted for as general overhead or administrative expenses),
but otherwise including printing, photostating, duplicating and other expenses,
air freight charges, and fees billed for law clerks, paralegals, librarians and
others not admitted to the bar but performing services under the supervision of
an attorney. Such terms shall also include all such fees and expenses incurred
with respect to appeals, arbitrations and bankruptcy proceedings, and whether or
not any manner of proceeding is brought with respect to the matter for which
such fees and expenses were incurred.
"BANKING RULES CHANGE" means either: (1) the introduction of or any change
in any law or regulation applicable to BNPLC, BNPLC's Parent or any other
Participant, or in the generally accepted interpretation by the institutional
lending community of any such law or regulation, or in the interpretation of any
such law or regulation asserted by any regulator, court or other governmental
authority (other than any change by way of imposition or increase of reserve
requirements included in the Eurodollar Rate Reserve Percentage) or (2) the
compliance by BNPLC, BNPLC's Parent or any other Participant with any new
guideline or new request from any central bank or other governmental authority
(whether or not having the force of law).
"BASE RATE" for any Base Rent Period means a rate equal to the higher of
(1) the Prime Rate in effect on the first day of such period, or (2) the rate
which is fifty basis points (50/100 of 1%) above the Fed Funds Rate for that
period.
"BASE RENT" means the rent payable by NAI pursuant to subparagraph 3.(a) of
the Land Lease.
"BASE RENT COMMENCEMENT DATE" shall mean the earlier of (1) the first
Business Day of January, 2000, or (2) the "Base Rent Commencement Date" under
and as defined in the Other Common Definitions and Provisions Agreement.
"BASE RENT DATE" means a date upon which Base Rent must be paid under the
Land Lease, all of which dates shall be the first Business Day of a calendar
month. The first Base Rent Date shall be determined as follows:
a) If a LIBOR Period Election of one month is in effect on the
Base Rent Commencement Date, then the first Business Day of the first
calendar month following the Base Rent Commencement Date shall be the
first Base Rent Date.
Common Definitions and Provisions Agreement (Phase IV - Land) - Page 2
<PAGE> 54
b) If the LIBOR Period Election in effect on the Base Rent
Commencement Date is three months or six months, then the first
Business Day of the third calendar month following the Base Rent
Commencement Date shall be the first Base Rent Date.
Each successive Base Rent Date after the first Base Rent Date shall be the first
Business Day of the first or third calendar month following the calendar month
which includes the preceding Base Rent Date, determined as follows:
(1) If a LIBOR Period Election of one month is in effect on a
Base Rent Date, then the first Business Day of the first calendar
month following such Base Rent Date shall be the next following Base
Rent Date.
(2) If a LIBOR Period Election of three months or six months is
in effect on a Base Rent Date, then the first Business Day of the
third calendar month following such Base Rent Date shall be the next
following Base Rent Date.
Thus, for example, if the Base Rent Commencement Date falls on the first
Business Day of January, 2000 and a LIBOR Period Election of two months
commences on the Base Rent Commencement Date, then the first Base Rent Date
shall be the first Business Day of March, 2000.
"BASE RENT PERIOD" means a period for which Base Rent must be paid under
the Land Lease, each of which periods shall correspond to the LIBOR Period
Election for such period. The first Base Rent Period shall begin on and include
the Base Rent Commencement Date, and each successive Base Rent Period shall
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, shall
end on but not include the first or second Base Rent Date after the Base Rent
Date upon which such period began, determined as follows:
(1) If the LIBOR Period Election for a Base Rent Period is one
month or three months, then such Base Rent Period shall end on the
first Base Rent Date after the Base Rent Date upon which such period
began.
(2) If the LIBOR Period Election for a Base Rent Period is six
months, then such Base Rent Period shall end on the second Base Rent
Date after the Base Rent Date upon which such period began.
The determination of Base Rent Periods can be illustrated by two examples:
1) If NAI makes a LIBOR Period Election of three months for a
hypothetical Base Rent Period beginning on the first Business Day in
January, 2001, then such Base Rent Period will end on but not include
the first Base Rent Date after it begins; that is, such Base Rent
Period will end on the first Business Day in April, 2001, the third
calendar month after January, 2001.
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, 2001, 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, 2001.
"BNPLC" means BNP Leasing Corporation, a Delaware corporation.
Common Definitions and Provisions Agreement (Phase IV - Land) - Page 3
<PAGE> 55
"BNPLC'S PARENT" means BNPLC's Affiliate, Banque Nationale de Paris, a bank
organized and existing under the laws of France and any successors of such bank.
"BREAKAGE COSTS" means any and all costs, losses or expenses incurred or
sustained by BNPLC's Parent (as a Participant or otherwise) or any other
Participant, for which BNPLC's Parent or the Participant shall request
reimbursement from BNPLC, because of the resulting liquidation or redeployment
of deposits or other funds:
(1) used to make or maintain the Initial Funding Advance upon
application of a Qualified Prepayment or upon any sale of the Property
pursuant to the Purchase Agreement, if such application or sale occurs
on any day other than an Advance Date or the last day of a Base Rent
Period; or
(2) used to make or maintain the Initial Funding Advance upon the
acceleration of the end of any Base Rent Period pursuant subparagraph
3.(c)(ii) of the Land Lease.
Breakage Costs will include, for example, losses attributable to any decline in
LIBOR as of the effective date of any application described in the clause (1)
preceding, as compared to LIBOR used to determine the Effective Rate then in
effect. Each determination by BNPLC's Parent or the applicable Participant of
Breakage Costs shall, in the absence of clear and demonstrable error, be
conclusive and binding upon NAI.
"BREAK EVEN PRICE" shall have the meaning assigned to it in subparagraph
1(B)(1) of the Purchase Agreement.
"BUSINESS DAY" means any day that is (1) not a Saturday, Sunday or day on
which commercial banks are generally closed or required to be closed in New York
City, New York or San Francisco, California, and (2) a day on which dealings in
deposits of dollars are transacted in the London interbank market; provided that
if such dealings are suspended indefinitely for any reason, "Business Day" shall
mean any day described in clause (1).
"CAPITAL ADEQUACY CHARGES" means any additional amounts BNPLC's Parent or
any other Participant requests BNPLC to pay as compensation for an increase in
required capital as provided in subparagraph 5.(b)(ii) of the Land Lease.
"CAPITAL LEASE" means any lease which has been or should be capitalized on
the books of the lessee in accordance with GAAP or for federal income tax
purposes.
"CLOSING CERTIFICATE" means the Closing Certificate and Agreement dated as
of December ___, 1999 executed by NAI in favor of BNPLC, as such Closing
Certificate may be extended, supplemented, amended, restated or otherwise
modified from time to time in accordance with its terms.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" shall have the meaning assigned to it in the Pledge Agreement.
"COLLATERAL PERCENTAGE" for each Base Rent Period means the Collateral
Percentage for such period determined under (and as defined in) the Pledge
Agreement; provided, however, for purposes of the Land Lease, the Collateral
Percentage for any Base Rent Period shall not exceed a fraction; the numerator
of which fraction shall equal the value (determined as provided in the Pledge
Agreement) of all Collateral (a) that is, on the first day of such period, held
by the Deposit Takers under (and as defined in) the Pledge Agreement subject to
a Qualifying
Common Definitions and Provisions Agreement (Phase IV - Land) - Page 4
<PAGE> 56
Security Interest (as defined below), (b) that is free from claims or security
interests held or asserted by any third party, and (c) that is not in excess of
Stipulated Loss Value; and the denominator of which fraction shall equal the
Stipulated Loss Value on the first day of such period. "QUALIFYING SECURITY
INTEREST" means a first priority perfected security interest under the Pledge
Agreement.
"COMMON DEFINITIONS AND PROVISIONS AGREEMENT (PHASE IV - LAND)" means this
Agreement, which is incorporated by reference into each of the other Operative
Documents.
"CURRENT AS IS MARKET VALUE" means an amount equal to the fair market value
of BNPLC's interest in the Property (or any applicable portion thereof), AS IS,
WHERE IS AND WITH ALL FAULTS on the date in question. Whenever a determination
of Current AS IS Market Value is required by the express terms of any Operative
Document, it will be determined accordance with the following procedure unless
BNPLC and NAI have otherwise agreed in writing upon a Current AS IS Market Value
at that time:
(A) BNPLC and NAI shall each, within ten days after written notice from
either to the other, select an appraiser. If either BNPLC or NAI fails
to select an appraiser within the required period, then the appraiser
who has been timely selected shall conclusively determine the fair
market value of the Property (or applicable portion thereof) in
accordance with this definition within forty-five days after his or her
selection.
(B) Upon the selection of the two appraisers as provided above, such
appraisers shall proceed to determine the fair market value of BNPLC's
interest in the Property (or applicable portion thereof) in accordance
with this clause (v). Such appraisals shall be submitted in writing no
later than forty-five days after selection of the second appraiser. If
the fair market value as determined by such appraisers is identical,
such sum shall be Current AS IS Market Value. If the fair market value
indicated by the lower appraisal differs from the fair market value
indicated by the higher appraisal by less than five percent (5%) of the
fair market value indicated by the higher appraisal, then Current AS IS
Market Value shall be the sum of the two appraisal figures divided by
two (2). If either appraiser fails to timely submit his or her
appraisal, the timely submitted appraisal shall be determinative of
Current AS IS Market Value.
(C) If the fair market value indicated by the lower appraisal differs from
the fair market value indicated by the higher appraisal by more than
five percent (5%) of the fair market value indicated by the higher
appraisal, then the two appraisers previously selected shall select a
third appraiser. The name of such appraiser shall be submitted at the
same time the written appraisals are due. Such third appraiser shall
then review the previously submitted appraisals and select the one
that, in his professional opinion, more closely reflects the fair
market value of BNPLC's interest in the Property (or applicable portion
thereof), such selection to be submitted in writing no later than ten
days after selection of the third appraiser. Such selection shall be
determinative of Current AS IS Market Value.
(D) In making any such determination of fair market value, the appraisers
shall assume that any improvements then located on the Property (or
applicable portion thereof) or under construction thereon constitute
the highest and best use, and that neither the Land Lease nor the
Purchase Agreement add any value to the Property. Each appraiser
selected hereunder shall be an independent MAI-designated appraiser
with not less than ten years' experience in commercial real estate
appraisal in Sunnyvale, California and surrounding areas.
Common Definitions and Provisions Agreement (Phase IV - Land) - Page 5
<PAGE> 57
"DEBT" of any Person means (without duplication of any item): (a)
indebtedness of such Person for borrowed money; (b) indebtedness of such Person
for the deferred purchase price of property or services (except trade payables
and accrued expenses constituting current liabilities in the ordinary course of
business); (c) the face amount of any outstanding letters of credit issued for
the account of such Person; (d) obligations of such Person arising under
acceptance facilities; (e) guaranties, endorsements (other than for collection
in the ordinary course of business) and other contingent obligations of such
Person to purchase, to provide funds for payment, to provide funds to invest in
any Person, or otherwise to assure a creditor against loss; (f) obligations of
others secured by any Lien on property of such Person; (g) obligations of such
Person as lessee under Capital Leases; and (h) the obligations of such Person,
contingent or otherwise, under any lease of property or related documents
(including a separate purchase agreement) which provide that such Person or any
of its Affiliates must purchase or cause another Person to purchase any interest
in the leased property and thereby guarantee a minimum residual value of the
leased property to the lessor. For purposes of this definition, the amount of
the obligations described in clause (h) of the preceding sentence with respect
to any lease classified according to GAAP as an "operating lease," shall equal
the sum of (1) the present value of rentals and other minimum lease payments
required in connection with such lease [calculated in accordance with SFAS 13
and other GAAP relevant to the determination of the whether such lease must be
accounted for as an operating lease or capital lease], plus (2) the fair value
of the property covered by the lease; provided, however, that such amount shall
not exceed the price, as of the date a determination of Debt is required
hereunder, for which the lessee can purchase the leased property pursuant to any
valid ongoing purchase option if, upon such a purchase, the lessee shall be
excused from paying rentals or other minimum lease payments that would otherwise
accrue after the purchase.
"DEFAULT" means any event which, with the passage of time or the giving of
notice or both, would (if not cured within any applicable cure period)
constitute an Event of Default.
"DEFAULT RATE" means, for any period prior to the Designated Sale Date, a
floating per annum rate equal to two percent (2%) above the Prime Rate, and for
any period commencing on or after the Designated Sale Date, Default Rate shall
mean a floating per annum rate equal to five percent (5%) above the Prime Rate.
However, in no event will the "Default Rate" at any time exceed the maximum
interest rate permitted by law.
"DEPOSIT TAKER" shall have the meaning assigned to it in the Pledge
Agreement.
"DEPOSIT TAKER LOSSES" shall have the meaning assigned to it in the Pledge
Agreement.
"DESIGNATED SALE DATE" means the earlier of:
(1) the first Business Day of January, 2005; or
(2) any Business Day designated as such in an irrevocable,
unconditional notice given by NAI to BNPLC; provided, that to be
effective for purposes of this definition, any such notice from NAI to
BNPLC must designate a Business Day that is more than thirty days
after the date of such notice; and provided, further, to be effective
for purposes of this definition, the notice must include an express,
unconditional, unequivocal and irrevocable acknowledgment by NAI that
because of NAI's election to accelerate the Designated Sale Date, the
Maximum Remarketing Obligation will equal the Break Even Price under
the Purchase Agreement; or
(3) [intentionally deleted]
Common Definitions and Provisions Agreement (Phase IV - Land) - Page 6
<PAGE> 58
(4) [intentionally deleted]; or
(5) any Business Day designated as such in a notice given by
BNPLC to NAI when any Event of Default has occurred and is continuing;
provided, that to be effective for purposes of this definition, any
such notice from BNPLC to NAI must designate a Business Day that is
more than thirty days after the date of such notice.
"DEVELOPMENT DOCUMENTS" means the contracts, ordinances and other documents
described in Exhibit C attached to the Closing Certificate, as the same may be
modified from time to time in accordance with the Land Lease and the Closing
Certificate, and any applications, permits or certificates concerning or
affecting the use or development of the Property that may be submitted, issued
or executed from time to time as contemplated in such contracts, ordinances and
other documents or that BNPLC may hereafter execute, approve or consent to at
the request of NAI.
"DIRECT PAYMENTS TO PARTICIPANTS" means the amounts paid or required to be
paid directly to Participants on the Designated Sale Date as provided in Section
6.2 of the Pledge Agreement at the direction of and for NAI by the collateral
agent appointed pursuant to the Pledge Agreement from all or any part of the
Collateral described therein.
"EFFECTIVE DATE" means December ___, 1999.
"EFFECTIVE RATE" means for each Base Rent Period, the per annum rate
determined by dividing (A) LIBOR for such Base Rent Period, as the case may be,
by (B) one hundred percent (100%) minus the Eurodollar Rate Reserve Percentage
for such Base Rent Period. If LIBOR or the Eurodollar Rate Reserve Percentage
changes from Base Rent Period to Base Rent Period, then the Effective Rate shall
be automatically increased or decreased as of the date of such change, as the
case may be, without prior notice to NAI. If for any reason BNPLC determines
that it is impossible or unreasonably difficult to determine the Effective Rate
with respect to a given Base Rent Period in accordance with the foregoing, then
the "EFFECTIVE RATE" for that Base Rent Period shall equal any published index
or per annum interest rate determined in good faith by BNPLC's Parent to be
comparable to LIBOR at the beginning of the first day of that period. A
comparable interest rate might be, for example, the then existing yield on short
term United States Treasury obligations (as compiled by and published in the
then most recently published United States Federal Reserve Statistical Release
H.15(519) or its successor publication), plus or minus a fixed adjustment based
on BNPLC's Parent's comparison of past eurodollar market rates to past yields on
such Treasury obligations. Any determination by BNPLC of the Effective Rate
under this definition shall, in the absence of clear and demonstrable error, be
conclusive and binding upon NAI.
"ENVIRONMENTAL LAWS" means any and all existing and future Applicable Laws
pertaining to safety, health or the environment, or to Hazardous Substances or
Hazardous Substance Activities, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended, "CERCLA"), and the
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984 (as amended, "RCRA").
"ENVIRONMENTAL CUTOFF DATE" means the later of the dates upon which (i) the
Land Lease terminates, or (ii) NAI surrenders possession and control of the
Property and ceases to have interest in the Land or Improvements or rights with
respect thereto under any of the Operative Documents.
Common Definitions and Provisions Agreement (Phase IV - Land) - Page 7
<PAGE> 59
"ENVIRONMENTAL LOSSES" means Losses suffered or incurred by BNPLC or any
other Interested Party, directly or indirectly, relating to or arising out of,
based on or as a result of any of the following: (i) any Hazardous Substance
Activity on or prior to the Environmental Cutoff Date; (ii) any violation on or
prior to the Environmental Cutoff Date of any applicable Environmental Laws
relating to the Property or to the ownership, use, occupancy or operation
thereof; (iii) any investigation, inquiry, order, hearing, action, or other
proceeding by or before any governmental or quasi-governmental agency or
authority in connection with any Hazardous Substance Activity that occurs or is
alleged to have occurred on or prior to the Environmental Cutoff Date; or (iv)
any claim, demand, cause of action or investigation, or any action or other
proceeding, whether meritorious or not, brought or asserted against any
Interested Party which directly or indirectly relates to, arises from, is based
on, or results from any of the matters described in clauses (i), (ii), or (iii)
of this definition or any allegation of any such matters. For purposes of
determining whether Losses constitute "Environmental Losses," as the term is
used in the Land Lease, any actual or alleged Hazardous Substance Activity or
violation of Environmental Laws relating to the Property will be presumed to
have occurred prior to the Environmental Cutoff Date unless NAI establishes by
clear and convincing evidence to the contrary that the relevant Hazardous
Substance Activity or violation of Environmental Laws did not occur or commence
prior to the Environmental Cutoff Date.
"ENVIRONMENTAL REPORTS" means collectively the following reports (whether
one or more), which were provided by NAI to BNPLC prior to the Effective Date:
Phase I Environmental Site Assessment for 1330-1350 Geneva and 1345-1347
Crossman Avenue, Sunnyvale, California, dated November 1999 by Romig Consulting
Engineers.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA AFFILIATE" means any Person who for purposes of Title IV of ERISA is
a member of NAI's controlled group, or under common control with NAI, within the
meaning of Section 414 of the Internal Revenue Code, and the regulations
promulgated and rulings issued thereunder.
"ESCROWED PROCEEDS" means, subject to the exclusions specified in the next
sentence, any money that is received by BNPLC from time to time during the Term
(and any interest earned thereon) from any party (1) under any property
insurance policy as a result of damage to the Property, (2) as compensation for
any restriction imposed by any governmental authority upon the use or
development of the Property or for the condemnation of the Property or any
portion thereof, (3) because of any judgment, decree or award for physical
damage to the Property or (4) as compensation under any title insurance policy
or otherwise as a result of any title defect or claimed title defect with
respect to the Property; provided, however, in determining the amount of
"Escrowed Proceeds" there shall be deducted all expenses and costs of every
type, kind and nature (including Attorneys' Fees) incurred by BNPLC to collect
such proceeds. Notwithstanding the foregoing, "Escrowed Proceeds" will not
include (A) any payment to BNPLC by a Participant or an Affiliate of BNPLC that
is made to compensate BNPLC for the Participant's or Affiliate's share of any
Losses BNPLC may incur as a result of any of the events described in the
preceding clauses (1) through (4), (B) any money or proceeds that have been
applied as a Qualified Prepayment or to pay any Breakage Costs or other costs
incurred in connection with a Qualified Prepayment, (C) any money or proceeds
that, after no less than ten days notice to NAI, BNPLC returns or pays to a
third party because of BNPLC's good faith belief that such return or payment is
required by law, (D) any money or proceeds paid by BNPLC to NAI or offset
against any amount owed by NAI, or (E) any money or proceeds used by BNPLC in
accordance with the Land Lease for repairs or the restoration of the Property or
to obtain development rights or the release of restrictions that will inure to
the benefit of future owners or occupants of the Property. Until Escrowed
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Proceeds are paid to NAI pursuant to Paragraph 10 of the Land Lease, transferred
to a purchaser under the Purchase Agreement as therein provided or applied as a
Qualified Prepayment or as otherwise described in the preceding sentence, BNPLC
shall keep the same deposited in one or more interest bearing accounts, and all
interest earned on such account shall be added to and made a part of Escrowed
Proceeds.
"ESTABLISHED MISCONDUCT" of a Person means, and is limited to: (1) if the
Person is bound by the Operative Documents or the Participation Agreement, a
breach by such Person of the express provisions of the Operative Documents or
the Participation Agreement, as applicable, that continues beyond any period for
cure provided therein, and (2) conduct of such Person or its Affiliates that has
been determined to constitute wilful misconduct or Active Negligence in or as a
necessary element of a final judgment rendered against such Person by a court
with jurisdiction to make such determination. Established Misconduct of one
Interested Party shall not be attributed to a second Interested Party unless the
second Interested Party is an Affiliate of the first. Negligence which does not
constitute Active Negligence shall not in any event constitute Established
Misconduct. For purposes of this definition, "conduct of a Person" will include
(1) the conduct of an employee of that Person, but only to the extent that the
employee is acting within the scope of his employment by that Person, as
determined in or as a necessary element of a final judgment rendered against
such Person by a court with jurisdiction to make such determination, and (2) the
conduct of an agent of that Person (such as an independent environmental
consultant engaged by that Person), but only to the extent that the agent is, as
determined in or as a necessary element of a final judgment rendered against
such Person by a court with jurisdiction to make such determination, (x) acting
within the scope of the authority granted to him by such Person, (y) not acting
with the consent or approval of or under the direction of NAI or NAI's
Affiliates, employees or agents, and (z) not acting in good faith to mitigate
Losses that such Person may suffer because of a breach or repudiation by NAI of
the Land Lease or the Purchase Documents.
"EUROCURRENCY LIABILITIES" shall have the meaning assigned to it in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR RATE RESERVE PERCENTAGE" means, for purposes of determining the
Effective Rate for any Base Rent Period, the reserve percentage applicable two
Business Days before the first day of such period under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement) for BNPLC's
Parent with respect to liabilities or deposits consisting of or including
Eurocurrency Liabilities (or with respect to any other category or liabilities
by reference to which LIBOR is determined) having a term comparable to such
period.
"EVENT OF DEFAULT" shall have the meaning assigned to it in subparagraph 17
of the Land Lease.
"EXCLUDED TAXES" means (1) all federal, state and local income taxes upon
Base Rent, any interest paid to BNPLC or any Participant pursuant to
subparagraph 3.(j) of the Land Lease, and any additional compensation claimed by
BNPLC pursuant to subparagraph 5.(b)(ii) of the Land Lease; (2) any transfer or
change of ownership taxes assessed because of BNPLC's transfer or conveyance to
any third party of any rights or interest in the Land Lease, the Purchase
Agreement or the Property (other than any such taxes assessed because of any
Permitted Transfer under clauses (1), (3), (4), (5), (6) or (7) of the
definition of Permitted Transfer in this Agreement), (3) all federal, state and
local income taxes upon any amounts paid as reimbursement for or to satisfy
Losses incurred by BNPLC or any Participant to the extent such taxes are offset
by a corresponding reduction of BNPLC's or the applicable Participant's income
taxes because of BNPLC's or such Participant's deduction of the reimbursed
Losses from its taxable income or because of any tax credits attributable
thereto. If, however, a change in Applicable Laws after the Effective Date
results in an increase in such taxes for any reason other than an increase in
the
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<PAGE> 61
applicable tax rates (e.g., a disallowance of deductions that would otherwise be
available against payments described in clause (A) of this definition), then for
purposes of the Operative Documents, the term "Excluded Taxes" will not include
the increase in such taxes attributable to the change.
"EXISTING CONTRACT" means the Agreement of Sale covering the Land between
NAI and Seller, dated November 16, 1999.
"FAILED COLLATERAL TEST DATE" means any date upon which commences a
Mandatory Collateral Period as described in Part III of Schedule 1 attached to
the Land Lease.
"FED FUNDS RATE" means, for any period, a fluctuating interest rate
(expressed as a per annum rate and rounded upwards, if necessary, to the next
1/16 of 1%) equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rates are not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by BNPLC's Parent from three Federal funds brokers of
recognized standing selected by BNPLC's Parent. All determinations of the Fed
Funds Rate by BNPLC's Parent shall, in the absence of clear and demonstrable
error, be binding and conclusive upon NAI.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, applied on a basis consistent with
those used in the preparation of the financial statements referred to in
subparagraph 13.(a) of the Land Lease (except for changes with which NAI's
independent public accountants concur).
"HAZARDOUS SUBSTANCE" means (i) any chemical, compound, material, mixture
or substance that is now or hereafter defined or listed in, regulated under, or
otherwise classified pursuant to, any Environmental Laws as a "hazardous
substance," "hazardous material," "hazardous waste," "extremely hazardous waste
or substance," "infectious waste," "toxic substance," "toxic pollutant," or any
other formulation intended to define, list or classify substances by reason of
deleterious properties, including ignitability, corrosiveness, reactivity,
carcinogenicity, toxicity or reproductive toxicity; (ii) petroleum, any fraction
of petroleum, natural gas, natural gas liquids, liquified natural gas, synthetic
gas usable for fuel (or mixtures of natural gas and such synthetic gas), and ash
produced by a resource recovery facility utilizing a municipal solid waste
stream, and drilling fluids, produced waters and other wastes associated with
the exploration, development or production of crude oil, natural gas or
geothermal resources; (iii) asbestos and any asbestos containing material; and
(v) any other material that, because of its quantity, concentration or physical
or chemical characteristics, poses a significant present or potential hazard to
human health or safety or to the environment if released into the workplace or
the environment.
"HAZARDOUS SUBSTANCE ACTIVITY" means any actual, proposed or threatened
use, storage, holding, release (including any spilling, leaking, leaching,
pumping, pouring, emitting, emptying, dumping, disposing into the environment,
and the continuing migration into or through soil, surface water, groundwater or
any body of water), discharge, deposit, placement, generation, processing,
construction, treatment, abatement, removal, disposal, disposition, handling or
transportation of any Hazardous Substance from, under, in, into or on the
Property, including the movement or migration of any Hazardous Substance from
surrounding property, surface water, groundwater or any body of water under, in,
into or onto the Property and any resulting residual Hazardous Substance
contamination in, on or under the Property. "HAZARDOUS SUBSTANCE ACTIVITY" also
means any existence of Hazardous Substances on the Property that would cause the
Property or the owner or operator thereof to be in
Common Definitions and Provisions Agreement (Phase IV - Land) - Page 10
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violation of, or that would subject the Property to any remedial obligations
under, any Environmental Laws, including CERCLA and RCRA, assuming disclosure to
the applicable governmental authorities of all relevant facts, conditions and
circumstances pertaining to the Property.
"IMPOSITIONS" means all sales, excise, ad valorem, gross receipts,
business, transfer, stamp, occupancy, rental and other taxes, levies, fees,
charges, surcharges, assessments or penalties which arise out of or are
attributable to the Land Lease or which are imposed upon BNPLC or the Property
because of the ownership, leasing, occupancy, sale or operation of the Property,
or any part thereof or interest therein, or relating to or required to be paid
by any of the Permitted Encumbrances or the Development Documents, excluding
only Excluded Taxes. "IMPOSITIONS" shall include real estate taxes imposed
because of a change of use or ownership of the Property on or prior to the date
of any sale by BNPLC pursuant to the Purchase Agreement.
"IMPROVEMENTS" means any and all (1) buildings and other real property
improvements now or hereafter erected on the Land, and (2) equipment (e.g., HVAC
systems, elevators and plumbing fixtures) attached to the buildings or other
real property improvements, the removal of which would cause structural or other
material damage to the buildings or other real property improvements or would
materially and adversely affect the value or use of the buildings or other real
property improvements.
"INITIAL FUNDING ADVANCE" means the advance made by BNPLC's Parent
(directly or through one or more of its Affiliates) to or on behalf of BNPLC on
or prior to the Effective Date to cover the cost of BNPLC's acquisition of the
Property and certain Transaction Expenses and other amounts described in this
definition. The amount of the Initial Funding Advance may be confirmed by a
separate closing certificate executed by NAI as of the Effective Date. To the
extent that BNPLC does not itself use the entire Initial Funding Advance to pay
Transaction Expenses incurred by BNPLC, the remainder thereof will be advanced
to NAI, with the understanding that NAI shall use any such amount advanced for
one or more of the following purposes: (1) the payment or reimbursement of
Transaction Expenses incurred by NAI; (2) the maintenance of the Property; or
(3) the payment of Rents next due.
"INTERESTED PARTY" means each of (1) BNPLC, its Affiliates and its
successors and assigns as to the Property or any part thereof or any interest
therein, (2) BNPLC's Parent, and (3) any other Participants and their permitted
successors and assigns under the Participation Agreement; provided, however,
none of the following shall constitute an Interested Party: (a) any Person to
whom BNPLC may transfer an interest in the Property by a conveyance that is not
a Permitted Transfer and others that cannot lawfully claim an interest in the
Property except through or under such a transfer by BNPLC, (b) NAI or any Person
that cannot lawfully claim an interest in the Property except through or under a
conveyance from NAI, or (c) any Applicable Purchaser under the Purchase
Agreement and any Person that cannot lawfully claim an interest in the Property
except through or under a conveyance from such Applicable Purchaser.
"ISSUE 97-1 NON-PERFORMANCE-RELATED SUBJECTIVE EVENT OF DEFAULT" means an
Event of Default that is unrelated to the Property or the use or maintenance
thereof and that results solely from (A) a breach by NAI of a provision in any
Operative Document, the occurrence of which breach cannot be objectively
determined, or (B) any other event described in subparagraph 17.(e) of the Land
Lease, the occurrence of which event cannot be objectively determined. For
example, an Event of Default under subparagraph 17.(e) of the Land Lease
resulting solely from a failure of NAI to "generally" pay its debts as such
debts become due (in contrast to a failure of NAI to pay Rent to BNPLC as it
becomes due under the Land Lease) would constitute an Issue 97-1
Non-performance-related Subjective Event of Default. In no event, however, will
the term "Issue 97-1 Non-performance-related Subjective Event of Default"
include an Event of Default resulting from (1) a failure of NAI to make any
payment required to BNPLC under the Operative Documents, (2) a breach by NAI of
the provisions set forth in Schedule 1
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<PAGE> 63
attached to the Land Lease (which set forth financial covenants), (3) any
failure of NAI to use, maintain and insure the Property in accordance with the
requirements of the Land Lease, or (4) any failure of NAI to pay the full amount
of any Supplemental Payment on the Designated Sale Date as required by the
Purchase Agreement. Except as provided in subparagraph 1(A)(2)(c)(i) of the
Purchase Agreement, the characterization of any Event of Default as an Issue
97-1 Non-performance-related Subjective Event of Default will not affect the
rights or remedies available to BNPLC because of the Event of Default.
"LAND" means the land covered by the land described in Exhibit A attached
to the Closing Certificate, the Land Lease and the Purchase Agreement.
"LAND LEASE" means the Lease Agreement (Phase IV - Land") dated as of
DECEMBER ___, 1999 between BNPLC, as landlord, and NAI, as tenant, pursuant to
which NAI has agreed to lease BNPLC's interest in the Property, as such Lease
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
"LIBOR" means, for purposes of determining the Effective Rate for each Base
Rent Period, the rate determined by BNPLC's Parent to be the average rate of
interest per annum (rounded upwards, if necessary, to the next 1/16 of 1%) of
the rates at which deposits of dollars are offered or available to BNPLC's
Parent in the London interbank market at approximately 11:00 a.m. (London time)
on the second Business Day preceding the first day of such period. BNPLC shall
instruct BNPLC's Parent to consider deposits, for purposes of making the
determination described in the preceding sentence, that are offered: (i) for
delivery on the first day of such Base Rent Period, as the case may be, (ii) in
an amount equal or comparable to the total (projected on the applicable date of
determination by BNPLC's Parent) Stipulated Loss Value on the first day of such
period, and (iii) for a time equal or comparable to the length of such period.
If BNPLC's Parent so chooses, it may determine LIBOR for any period by reference
to the rate reported by the British Banker's Association on Page 3750 of the
Telerate Service at approximately 11:00 a.m. (London time) on the second
Business Day preceding the first day of such period. If for any reason BNPLC's
Parent determines that it is impossible or unreasonably difficult to determine
LIBOR with respect to a given Base Rent Period in accordance with the foregoing,
or if BNPLC's Parent shall determine that it is unlawful (or any central bank or
governmental authority shall assert that it is unlawful) for BNPLC, BNPLC's
Parent or any Participant to provide or maintain the Initial Funding Advance
during any Base Rent Period for which Base Rent is computed by reference to
LIBOR, then "LIBOR" for that period shall equal the Base Rate for that period.
All determinations of LIBOR by BNPLC's Parent shall, in the absence of clear and
demonstrable error, be binding and conclusive upon NAI.
"LIBOR PERIOD ELECTION" for any Base Rent Period means a period of one
month, three months or six months as designated by NAI at least five Business
Days prior to the commencement of such Base Rent Period by a notice given to
BNPLC in the form of Exhibit C attached to the Land Lease. (For purposes of the
Land Lease a LIBOR Period Election for any Base Rent Period shall also be
considered the LIBOR Period Election in effect on the Base Rent Commencement
Date or Base Rent Date upon which such Base Rent Period begins.) Any LIBOR
Period Election so designated by NAI shall remain in effect for the entire Base
Rent Period specified in NAI's notice to BNPLC (provided such Base Rent Period
commences at least ten Business Days after BNPLC's receipt of the notice) and
for all subsequent Base Rent Periods until a new designation becomes effective
in accordance with the provisions set forth in this definition. Notwithstanding
the foregoing, however: (1) NAI shall not be entitled to designate a LIBOR
Period Election that would cause a Base Rent Period to extend beyond the end of
the scheduled Term; (2) changes in the LIBOR Period Election shall become
effective only upon the commencement of a new Base Rent Period; (3) for each
Base Rent Period that occurs within any Mandatory Collateral Period, the LIBOR
Period Election shall be one month; (4) no LIBOR Period Election designated by
NAI hereunder shall be different
Common Definitions and Provisions Agreement (Phase IV - Land) - Page 12
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than the LIBOR Period Election specified under (and as defined in) the Other
Common Definitions and Provisions Agreement; and (5) if NAI fails to make a
LIBOR Period Election consistent with the foregoing requirements for any Base
Rent Period, or if an Event of Default shall have occurred and be continuing on
the third Business Day preceding the commencement of any Base Rent Period, the
LIBOR Period Election for such Base Rent Period shall be deemed to be one month.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any agreement to sell receivables with recourse, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction). In addition, for purposes of subparagraph A.(8) of Part IV of
Schedule 1 attached to the Land Lease, "Lien" includes any Liens under ERISA
relating to Unfunded Benefit Liabilities of which NAI is required to notify
BNPLC under subparagraph 13.(a)(vii) of the Land Lease (irrespective of whether
NAI actually notifies BNPLC as required thereunder).
"LIENS REMOVABLE BY BNPLC" means, and is limited to, Liens encumbering the
Property that are asserted (1) other than as contemplated in the Operative
Documents, by BNPLC itself, (2) by third parties lawfully claiming through or
under BNPLC (which for purposes of the Land Lease shall include any judgment
liens established against the Property because of a judgment rendered against
BNPLC and shall also include any liens established against the Property to
secure past due Excluded Taxes), or (3) by third parties lawfully claiming under
a deed or other instrument duly executed by BNPLC; provided, however, Liens
Removable by BNPLC shall not include (A) any Permitted Encumbrances or
Development Documents (regardless of whether claimed through or under BNPLC),
(B) the Operative Documents or any other document executed by BNPLC with the
knowledge of (and without objection by) NAI's counsel contemporaneously with the
execution and delivery of the Operative Documents, (C) Liens which are neither
lawfully claimed through or under BNPLC (as described above) nor claimed under a
deed or other instrument duly executed by BNPLC, (D) Liens claimed by NAI or
claimed through or under a conveyance made by NAI, (E) Liens arising because of
BNPLC's compliance with Applicable Law, the Operative Documents, Permitted
Encumbrances, the Development Documents or any written request made by NAI, (F)
Liens securing the payment of property taxes or other amounts assessed against
the Property by any governmental authority, other than to secure the payment of
past due Excluded Taxes or to secure damages caused by (and attributed by any
applicable principles of comparative fault to) BNPLC's own Established
Misconduct, (G) Liens resulting from or arising in connection with any breach by
NAI of the Operative Documents; or (H) Liens resulting from or arising in
connection with any Permitted Transfer that occurs more than thirty days after
any Designated Sale Date upon which, for any reason, NAI or an Affiliate of NAI
or any Applicable Purchaser shall not purchase BNPLC's interest in the Property
pursuant to the Purchase Agreement for a cash price to BNPLC (when taken
together with any Supplemental Payment made by NAI pursuant to Paragraph 1(A)(2)
of the Purchase Agreement, in the case of a purchase by an Applicable Purchaser)
equal to the Break Even Price.
"LOSSES" means the following: any and all losses, liabilities, damages
(whether actual, consequential, punitive or otherwise denominated), demands,
claims, administrative or legal proceedings, actions, judgments, causes of
action, assessments, fines, penalties, costs and expenses (including Attorneys'
Fees and the fees of outside accountants and environmental consultants), of any
and every kind or character, foreseeable and unforeseeable, liquidated and
contingent, proximate and remote.
"MANDATORY COLLATERAL PERIOD" shall have the meaning assigned to it in Part
I of Schedule 1 attached to the Land Lease and to the Pledge Agreement.
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<PAGE> 65
"MATERIAL ENVIRONMENTAL COMMUNICATION" means a communication between NAI or
its agents and a regulatory agency or third party, which causes, or potentially
could cause (whether by implementation of or response to said communication), a
material change in the scope, duration, or nature of any Remedial Work.
"MAXIMUM REMARKETING OBLIGATION" shall have the meaning indicated in
subparagraph 1(A)(2)(c) of the Purchase Agreement.
"MINIMUM EXTENDED REMARKETING PRICE" shall have the meaning assigned to it
in subparagraph 2(B) of the Purchase Agreement.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section 3(37)
of ERISA to which contributions have been made by NAI or any ERISA Affiliate
during the preceding six years and which is covered by Title IV of ERISA.
"NAI" means Network Appliance, Inc., a California corporation.
"NAI'S EXTENDED REMARKETING PERIOD" shall have the meaning assigned to it
in subparagraph 2(A) of the Purchase Agreement.
"NAI'S EXTENDED REMARKETING RIGHT" shall have the meaning assigned to it in
subparagraph 2(A) of the Purchase Agreement.
"NAI'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS" shall have the meaning
assigned to it in subparagraph 1(A)(2) of the Purchase Agreement.
"OPERATIVE DOCUMENTS" means the Closing Certificate, the Land Lease, the
Purchase Agreement, the Pledge Agreement and this Common Definitions and
Provisions Agreement (Phase IV - Land).
"OTHER COMMON DEFINITIONS AND PROVISIONS AGREEMENT" means the Common
Definitions and Provisions Agreement (Phase IV - Improvements), dated as of the
June 16, 1999, between BNPLC and NAI, as such Common Definitions and Provisions
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
"OTHER LEASE AGREEMENT" means the Lease Agreement (Phase IV -
Improvements), dated as of June 16, 1999, between BNPLC and NAI, as such Lease
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
"OTHER PURCHASE AGREEMENT" means the Purchase Agreement (Phase IV -
Improvements), dated as of June 16, 1999, between BNPLC and NAI, as such
Purchase Agreement may be extended, supplemented, amended, restated or otherwise
modified from time to time in accordance with its terms.
"PARTICIPANT" means BNPLC's Parent and any other Person that, upon becoming
a party to the Participation Agreement and the Pledge Agreement by executing
supplements as contemplated therein, agrees from time to time to participate in
all or some of the risks and rewards to BNPLC of the Land Lease and the Purchase
Documents. As of the Effective Date, the only Participant is BNPLC's Parent, but
BNPLC may agree after the Effective Date to share in risks and rewards of the
Land Lease and the Purchase Documents with other Participants. However, no
Person other than BNPLC's Parent and its Affiliates shall qualify as a
Participant for
Common Definitions and Provisions Agreement (Phase IV - Land) - Page 14
<PAGE> 66
purposes of the Operative Documents or other agreements concerning the Property
to which NAI is a party unless such Person, during the continuance of an Event
of Default or otherwise with NAI's prior written approval (which approval will
not be unreasonably withheld), became a party to the Pledge Agreement and to the
Participation Agreement by executing supplements to those agreements as
contemplated therein.
"PARTICIPATION AGREEMENT" means the Participation Agreement between BNPLC
and BNPLC's Parent dated as of the June 16, 1999, pursuant to which BNPLC's
Parent has agreed to participate in the risks and rewards to BNPLC of the Land
Lease and the other Operative Documents, as such Participation Agreement may be
extended, supplemented, amended, restated or otherwise modified from time to
time in accordance with its terms.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED ENCUMBRANCES" means (i) the encumbrances and other matters
affecting the Property that are set forth in Exhibit B attached to the Closing
Certificate, (ii) any easement agreement or other document affecting title to
the Property executed by BNPLC at the request of or with the consent of NAI
(including the Other Lease Agreement, the Other Purchase Agreement and all
documents executed by BNPLC pursuant to the Other Purchase Agreement), (iii) the
Premises Leases, (iv) any Liens securing the payment of Impositions which are
not delinquent or claimed to be delinquent or which are being contested in
accordance with subparagraph 5.(a) of the Land Lease, and (iv) mechanics' and
materialmen's liens for amounts not past due or claimed to be past due or which
are being contested in accordance with subparagraph 11.(c) of the Land Lease.
"PERMITTED HAZARDOUS SUBSTANCE USE" means the use, generation, storage and
offsite disposal of Permitted Hazardous Substances in strict accordance with
applicable Environmental Laws and with due care given the nature of the
Hazardous Substances involved; provided, the scope and nature of such use,
generation, storage and disposal shall not:
(1) exceed that reasonably required for the operation of the
Property for the purposes expressly permitted under subparagraph 2.(a)
of the Land Lease; or
(2) include any disposal, discharge or other release of Hazardous
Substances from the Property in any manner that might allow such
substances to reach surface water or groundwater, except (i) through a
lawful and properly authorized discharge (A) to a publicly owned
treatment works or (B) with rainwater or storm water runoff in
accordance with Applicable Laws and any permits obtained by NAI that
govern such runoff; or (ii) any such disposal, discharge or other
release of Hazardous Substances for which no permits are required and
which are not otherwise regulated under applicable Environmental Laws.
Further, notwithstanding anything to the contrary herein contained, Permitted
Hazardous Substance Use shall not include any use of the Property in a manner
that requires a RCRA treatment, storage or disposal permit, including a
landfill, incinerator or other waste disposal facility.
"PERMITTED HAZARDOUS SUBSTANCES" means Hazardous Substances used and
reasonably required for the use of the Property by NAI and its permitted
subtenants and assigns for the purposes expressly permitted by subparagraph
2.(a) of the Land Lease, in either case in strict compliance with all
Environmental Laws and with due care given the nature of the Hazardous
Substances involved. Without limiting the generality of the foregoing, Permitted
Hazardous Substances shall include usual and customary office, laboratory and
janitorial products.
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<PAGE> 67
"PERMITTED TRANSFER" means any one or more of the following: (1) the
creation or conveyance by BNPLC of rights and interests in favor of any
Participant pursuant to the Participation Agreement; (2) the creation or
conveyance of rights and interests in favor of or to Banque Nationale de Paris
(through its San Francisco Branch or otherwise), as BNPLC's Parent, or any other
Qualified Affiliate of BNPLC, provided that NAI must be notified before any such
conveyance to Banque Nationale de Paris or another Qualified Affiliate of (A)
any interest in the Property or any portion thereof by an assignment or other
document which will be recorded in the real property records of San Mateo
County, California or (B) BNPLC's entire interest in the Land and the Property;
(3) any assignment or conveyance by BNPLC or its permitted successors or assigns
to any present or future Participant of any lien or security interest against
the Property (in contrast to a conveyance of BNPLC's fee estate in the Land and
Improvements) or of any interest in Rent, payments required by or under the
Purchase Documents or payments to be generated from the Property after the Term,
provided that such assignment or conveyance is made expressly subject to the
rights of NAI under the Operative Documents; (4) any agreement to exercise or
refrain from exercising rights or remedies under the Operative Documents made by
BNPLC with any present or future Participant; (5) any assignment or conveyance
by BNPLC requested by NAI or required by any Permitted Encumbrance, by the
Purchase Agreement, by the Existing Contract, by any other Development Contract
or by Applicable Laws; or (6) any assignment or conveyance after a Designated
Sale Date on which NAI shall not have purchased or caused an Applicable
Purchaser to purchase BNPLC's interest in the Property and, if applicable, after
the expiration of the thirty day cure period specified in Paragraph 4(D) of the
Purchase Agreement.
"PERSON" means an individual, a corporation, a partnership, an
unincorporated organization, an association, a joint stock company, a joint
venture, a trust, an estate, a government or agency or political subdivision
thereof or other entity, whether acting in an individual, fiduciary or other
capacity.
"PERSONAL PROPERTY" shall have the meaning assigned to it on page 2 of the
Land Lease.
"PLAN" means any employee benefit or other plan established or maintained,
or to which contributions have been made, by NAI or any ERISA Affiliate of NAI
during the preceding six years and which is covered by Title IV of ERISA, other
than a Multiemployer Plan.
"PLEDGE AGREEMENT" means the Pledge Agreement (Phase IV - Land) dated as of
the date hereof between BNPLC and NAI, pursuant to which NAI may pledge
certificates of deposit as security for NAI's obligations under the Purchase
Agreement (and for the corresponding obligations of BNPLC to the Participants
under the Participation Agreement), as such Pledge Agreement may be extended,
supplemented, amended, restated or otherwise modified from time to time in
accordance with its terms.
"PREMISES LEASES" means the four subleases of space within the
Improvements, each between NAI, as landlord, and TRW Inc., as tenant, executed
of even date herewith, and any subleases or other transfers under and permitted
by the terms of any such leases.
"PRIME RATE" means the prime interest rate or equivalent charged by BNPLC's
Parent in the United States of America as announced or published by BNPLC's
Parent from time to time, which need not be the lowest interest rate charged by
BNPLC's Parent. If for any reason BNPLC's Parent does not announce or publish a
prime rate or equivalent, the prime rate or equivalent announced or published by
either CitiBank, N.A. or any New York branch or office of Credit Commercial de
France as selected by BNPLC shall be used to compute the rate described 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.
Common Definitions and Provisions Agreement (Phase IV - Land) - Page 16
<PAGE> 68
"PROPERTY" means the Personal Property and the Real Property, collectively.
Any rights, titles and interests acquired by BNPLC under the Existing Contract,
to the extent not covered by the Land Lease and thus not encompassed within this
definition of Property, are intended to be covered by the Other Lease Agreement
and encompassed within the term "Property" as defined in the Other Common
Definitions and Provisions Agreement.
"PURCHASE AGREEMENT" means the Purchase Agreement (Phase IV - Land) dated
as of December ___, 1999 between BNPLC and NAI, as such Purchase Agreement may
be extended, supplemented, amended, restated or otherwise modified from time to
time in accordance with its terms.
"PURCHASE DOCUMENTS" means collectively (1) the Purchase Agreement, (2) the
Memorandum of Purchase Agreement executed by BNPLC and NAI as of the Effective
Date and recorded to provide notice of the Purchase Agreement; and (3) the
Pledge Agreement and all financing statements, notices, acknowledgments and
certificates of deposit executed or delivered from time to time by NAI, BNPLC or
the other parties to the Pledge Agreement pursuant to and as expressly provided
therein.
"PURCHASE OPTION" shall have the meaning assigned to it in subparagraph
1(A)(1) of the Purchase Agreement.
"QUALIFIED AFFILIATE" means any Person that is one hundred percent (100%)
owned, directly or indirectly, by Banque Nationale de Paris or any successor of
such bank; provided, that such Person can make (and has in writing made) the
same representations to NAI that BNPLC has made in Paragraphs 3(D) and 3(E) of
the Closing Certificate; and, provided, further, that such Person is not
insolvent.
"QUALIFIED PREPAYMENTS" means any payments received by BNPLC from time to
time during the Term (1) under any property insurance policy as a result of
damage to the Property, (2) as compensation for any restriction placed upon the
use or development of the Property or for the condemnation of the Property or
any portion thereof, (3) because of any judgment, decree or award for injury or
damage to the Property or (4) under any title insurance policy or otherwise as a
result of any title defect or claimed title defect with respect to the Property;
provided, however, that (x) in determining the amount of "Qualified
Prepayments", there shall be deducted all expenses and costs of every kind, type
and nature (including taxes, Breakage Costs and Attorneys' Fees) incurred by
BNPLC with respect to the collection or application of such payments, (y)
"Qualified Prepayments" shall not include any payment to BNPLC by a Participant
or an Affiliate of BNPLC that is made to compensate BNPLC for the Participant's
or Affiliate's share of any Losses BNPLC may incur as a result of any of the
events described in the preceding clauses (1) through (4) and (z) "Qualified
Prepayments" shall not include any payments received by BNPLC that BNPLC has
paid or is obligated to pay to NAI for the restoration or repair of the Property
or that BNPLC is holding as Escrowed Proceeds pursuant to Paragraph 10 of the
Land Lease or any other provision of the Land Lease. For purposes of computing
the total Qualified Prepayments (and other amounts dependent upon Qualified
Prepayments, such as Stipulated Loss Value) paid to or received by BNPLC as of
any date, payments described in the preceding clauses (1) through (4) will be
considered as Escrowed Proceeds, not Qualified Prepayments, until they are
actually applied as Qualified Prepayments by BNPLC as provided in the Paragraph
10 of the Land Lease.
"REAL PROPERTY" shall have the meaning assigned to it on page 1 of the Land
Lease.
"REMEDIAL WORK" means any investigation, monitoring, clean-up, containment,
remediation, removal, payment of response costs, or restoration work and the
preparation and implementation of any closure or other
Common Definitions and Provisions Agreement (Phase IV - Land) - Page 17
<PAGE> 69
required remedial plans that any governmental agency or political subdivision
requires or approves (or could reasonably be expected to require if it was aware
of all relevant circumstances concerning the Property), whether by judicial
order or otherwise, because of the presence of or suspected presence of
Hazardous Substances in, on, under or about the Property or because of any prior
Hazardous Substance Activity. Without limiting the generality of the foregoing,
Remedial Work also means any obligations imposed upon or undertaken by NAI
pursuant to Development Documents or any recommendations or proposals made
therein.
"RENT" means the Base Rent and all Additional Rent.
"RESIDUAL RISK PERCENTAGE" means seventeen percent (17%).
"RESPONSIBLE FINANCIAL OFFICER" means the chief financial officer, the
controller, the treasurer or the assistant treasurer of NAI.
"SALE CLOSING DOCUMENTS" shall have the meaning assigned to it in
subparagraph 1(C) of the Purchase Agreement.
"SECURED SPREAD" means thirty basis points (30/100 of 1%); provided,
however, that for purposes of calculating the Base Rent for any Mandatory
Collateral Period, the Secured Spread shall equal one-half of the Unsecured
Spread for the same period.
"SELLER" means, collectively, TRW Inc., an Ohio corporation, and ESL
Incorporated, a California corporation.
"STIPULATED LOSS VALUE" as of any date means the amount equal to the sum of
the Initial Funding Advance, minus all funds actually received by BNPLC and
applied as Qualified Prepayments on or prior to such date. Under no
circumstances will any payment of Base Rent reduce Stipulated Loss Value.
"SUBSIDIARY" means, with respect to any Person, any Affiliate of which at
least a majority of the securities or other ownership interests having ordinary
voting power then exercisable for the election of directors or other persons
performing similar functions are at the time owned directly or indirectly by
such Person.
"SUPPLEMENTAL PAYMENT" shall have the meaning assigned to it in
subparagraph 1(A)(2)(c) of the Purchase Agreement.
"TERM" shall have the meaning assigned to it in subparagraph 1.(a) of the
Land Lease.
"THIRD PARTY PRICE" shall have the meaning assigned to it in subparagraph
1(A)(2) of the Purchase Agreement.
"THIRD PARTY SALE NOTICE" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"THIRD PARTY SALE PROPOSAL" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
Common Definitions and Provisions Agreement (Phase IV - Land) - Page 18
<PAGE> 70
"THIRD PARTY TARGET PRICE" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"TRANSACTION EXPENSES" means costs incurred in connection with the
preparation and negotiation of the Operative Documents and related documents and
the consummation of the transactions contemplated therein.
"UNFUNDED BENEFIT LIABILITIES" means, with respect to any Plan or
Multiemployer Plan, the amount (if any) by which the present value of all
benefit liabilities (within the meaning of Section 4001(a)(16) of ERISA) under
the Plan or Multiemployer Plan exceeds the market value of all Plan or
Multiemployer assets allocable to such benefit liabilities, as determined on the
most recent valuation date of the Plan or Multiemployer Plan and in accordance
with the provisions of ERISA for calculating the potential liability of NAI or
any ERISA Affiliate of NAI under Title IV of ERISA.
"UNSECURED SPREAD" means, for each period beginning on and including the
Base Rent Commencement Date or a Base Rent Date and ending on but not including
the next Base Rent Date, the amount established as described below in this
definition on the date (in this definition, the "SPREAD TEST DATE") that is two
Business Days prior to such period by reference to the ratio calculated by
dividing (1) Adjusted EBIT for the then latest Rolling Four Quarters Period that
ended prior to (and for which NAI has reported earnings as necessary to compute
Adjusted EBIT) into (2) the total Debt of NAI and its Subsidiaries (determined
on a consolidated basis) as of the end of such Rolling Four Quarters Period. The
Unsecured Spread shall be established at the Level in the pricing grid below
which corresponds to such ratio; provided, that:
(a) for any period commencing on or prior to the first Business
Day of February, 2000, the Unsecured Spread will be the amount
indicated for Level III in the pricing grid below plus basis points;
(b) promptly after earnings are reported by NAI for the latest
quarter in any Rolling Four Quarters Period, NAI must notify BNPLC of
any resulting change in the Unsecured Spread under this definition,
and no reduction in the Unsecured Spread from one period to the next
will be effective for purposes of the Operative Documents unless,
prior to the Spread Test Date for the next period, NAI shall have
provided BNPLC with a written notice setting forth and certifying the
calculation under this definition that justifies the reduction; and
(c) notwithstanding anything to the contrary in this definition,
on any date when an Event of Default has occurred and is continuing,
the Unsecured Spread shall equal the Default Rate less the Effective
Rate.
<TABLE>
<CAPTION>
LEVELS RATIO OF TOTAL DEBT TO ADJUSTED EBIT UNSECURED SPREAD
------ ------------------------------------ ----------------
<S> <C> <C>
Level I less than 0.5 125.0 basis points
Level II greater than or equal to 0.5, but 137.5 basis points
less than 1.0
Level III greater than or equal to 1.0, but 150.0 basis points
less
than 1.5
</TABLE>
Common Definitions and Provisions Agreement (Phase IV - Land) - Page 19
<PAGE> 71
<TABLE>
<S> <C> <C>
Level IV greater than or equal to 1.5, but 175.0 basis points
less than 2.0
Level V greater than or equal to 2.0 200.0 basis points
</TABLE>
All determinations of the Unsecured Spread by BNPLC shall, in the absence of
clear and demonstrable error, be binding and conclusive for purposes of the Land
Lease. Further BNPLC may, but shall not be required, to rely on the
determination of the Unsecured Spread set forth in any notice delivered by NAI
as described above in clause (b) of this definition.
"VOLUNTARY RETENTION OF THE PROPERTY" means an affirmative election made by
BNPLC to keep the Property pursuant to, and under the circumstances described
in, the second sentence of subparagraph 1(A)(2)(a) of the Purchase Agreement.
ARTICLE II - RULES OF INTERPRETATION
THE FOLLOWING PROVISIONS WILL APPLY TO AND GOVERN THE INTERPRETATION OF
EACH OF THE OPERATIVE DOCUMENTS:
1 NOTICES. The provision of any Operative Document, or of any
Applicable Laws with reference to the sending, mailing or delivery of any notice
or demand under any Operative Document or with reference to the making of any
payment required under any Operative Document, shall be deemed to be complied
with when and if the following steps are taken:
(i) All Rent and other amounts required to be paid by NAI to
BNPLC shall be paid to BNPLC in immediately available funds by wire
transfer to:
Federal Reserve Bank of New York
ABA 026007689 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/ 14334000176
/Ref/ NAI Sunnyvale Synthetic Land Lease (Phase IV)
or at such other place and in such other manner as BNPLC may designate
in a notice to NAI.
(ii) All Collateral required to be paid by NAI to the Agent shall
be paid in immediately available funds by wire transfer to:
Federal Reserve Bank of New York
Common Definitions and Provisions Agreement (Phase IV - Land) - Page 20
<PAGE> 72
ABA 026007689 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/ 14334000176
/Ref/ NAI Collateral Payment
or at such other place and in such other manner as Agent may designate
in a notice to NAI.
(iii) All notices, demands, approvals, consents and other
communications to be made under any Operative Document to or by the
parties thereto must, to be effective for purpose of such Operative
Document, be in writing. Notices, demands and other communications
required or permitted under any Operative Document are to be sent to
the addresses set forth below (or in the case of communications to
Participants, at the addresses set forth in Schedule 1 to the
Participation Agreement) and shall be given by any of the following
means: (A) personal service, with proof of delivery or attempted
delivery retained; (B) electronic communication, whether by telex,
telegram or telecopying (if confirmed in writing sent by United States
first class mail, return receipt requested); or (C) registered or
certified first class mail, return receipt requested. Such addresses
may be changed by notice to the other parties given in the same manner
as provided above. Any notice or other communication sent pursuant to
clause (A) or (B) hereof shall be deemed received upon such personal
service or upon dispatch by electronic means, and, if sent pursuant to
clause (C) shall be deemed received five days following deposit in the
mail.
Address of BNPLC:
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Telecopy: (972) 788-9191
With a copy to:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Gavin Holles
Telecopy: (415) 296-8954
And for draw requests and funding notices, with a copy to:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: George Fung
Telecopy: (415) 956-4230
Common Definitions and Provisions Agreement (Phase IV - Land) - Page 21
<PAGE> 73
Address of NAI:
Network Appliance, Inc.
Attn: Leslie Paulides
2770 San Thomas Expressway
Santa Clara, CA 95051
Telecopy: (408) 367-3452
2 SEVERABILITY. If any term or provision of any Operative Document or
the application thereof shall to any extent be held by a court of competent
jurisdiction to be invalid and unenforceable, the remainder of such document, or
the application of such term or provision other than to the extent to which it
is invalid or unenforceable, shall not be affected thereby.
3 NO MERGER. There shall be no merger of the Land Lease or of the
leasehold estate created by the Land Lease with any other interest in the
Property by reason of the fact that the same person may acquire or hold,
directly or indirectly, the Land Lease or the leasehold estate created hereby
and any other interest in the Property, unless all Persons with an interest in
the Property that would be adversely affected by any such merger specifically
agree in writing that such a merger shall occur. There shall be no merger of the
Purchase Agreement or of the purchase options or obligations created by the
Purchase Agreement with any other interest in the Property by reason of the fact
that the same person may acquire or hold, directly or indirectly, the Land Lease
or the leasehold estate created hereby and any other interest in the Property,
unless all Persons with an interest in the Property that would be adversely
affected by any such merger specifically agree in writing that such a merger
shall occur.
4 NO IMPLIED WAIVER. The failure of BNPLC or NAI to insist at any time
upon the strict performance of any covenant or agreement or to exercise any
option, right, power or remedy contained in any Operative Document shall not be
construed as a waiver or a relinquishment thereof for the future. The failure of
Agent to insist at any time upon the strict performance of any covenant or
agreement or to exercise any option, right, power or remedy contained in the
Pledge Agreement shall not be construed as a waiver or a relinquishment thereof
for the future. The waiver of or redress for any breach of any Operative
Document by any party thereto shall not prevent a similar subsequent act from
constituting a violation. Any express waiver of any provision of any Operative
Document shall affect only the term or condition specified in such waiver and
only for the time and in the manner specifically stated therein. No waiver by
any party to any Operative Document of any provision therein shall be deemed to
have been made unless expressed in writing and signed by the party to be bound
by the waiver. A receipt by BNPLC of any Rent with knowledge of the breach by
NAI of any covenant or agreement contained in the Land Lease or any other
Operative Document shall not be deemed a waiver of such breach. A receipt by
Agent of any Collateral or other payment under the Pledge Agreement with
knowledge of the breach by NAI of any covenant or agreement contained in the
Pledge Agreement shall not be deemed a waiver of such breach.
5 ENTIRE AND ONLY AGREEMENTS. The Operative Documents supersede any
prior negotiations and agreements between BNPLC, Agent and NAI concerning the
Property or the Collateral, and no amendment or modification of any Operative
Document shall be binding or valid unless expressed in a writing executed by all
parties to such Operative Document.
6 BINDING EFFECT. Except to the extent, if any, expressly provided to
the contrary in any Operative Document with respect to assignments thereof, all
of the covenants, agreements, terms and conditions to
Common Definitions and Provisions Agreement (Phase IV - Land) - Page 22
<PAGE> 74
be observed and performed by the parties to the Operative Documents shall be
applicable to and binding upon their respective successors and, to the extent
assignment is permitted thereunder, their respective assigns.
7 TIME IS OF THE ESSENCE. Time is of the essence as to all obligations
of NAI and BNPLC and all notices required of NAI and BNPLC under the Operative
Documents.
8 GOVERNING LAW. Each Operative Document shall be governed by and
construed in accordance with the laws of the State of California without regard
to conflict or choice of laws (subject, however, in the case of the Pledge
Agreement to any contrary provisions of the "UCC," as defined in the Pledge
Agreement).
9 PARAGRAPH HEADINGS. The paragraph and section headings contained in
the Operative Documents are for convenience only and shall in no way enlarge or
limit the scope or meaning of the various and several provisions thereof.
10 NEGOTIATED DOCUMENTS. All the parties to each Operative Document
and their counsel have reviewed and revised or requested revisions to such
Operative Document, and the usual rule of construction that any ambiguities are
to be resolved against the drafting party shall not apply to the construction or
interpretation of any Operative Documents or any amendments thereof.
11 TERMS NOT EXPRESSLY DEFINED IN AN OPERATIVE DOCUMENT. As used in
any Operative Document, a capitalized term that is not defined therein or in
this Common Definitions and Provisions Agreement (Phase IV - Land), but is
defined in another Operative Document, shall have the meaning ascribed to it in
the other Operative Document.
12 OTHER TERMS AND REFERENCES. Words of any gender used in each
Operative Document shall be held and construed to include any other gender, and
words in the singular number shall be held to include the plural and vice versa,
unless the context otherwise requires. References in any Operative Document to
Paragraphs, subparagraphs, Sections, subsections or other subdivisions shall
refer to the corresponding Paragraphs, subparagraphs, Sections, subsections or
subdivisions of that Operative Document, unless specific reference is made to
another document or instrument. References in any Operative Document to any
Schedule or Exhibit shall refer to the corresponding Schedule or Exhibit
attached to that Operative Document, which shall be made a part thereof by such
reference. All capitalized terms used in each Operative Document which refer to
other documents shall be deemed to refer to such other documents as they may be
renewed, extended, supplemented, amended or otherwise modified from time to
time, provided such documents are not renewed, extended or modified in breach of
any provision contained in the Operative Documents or, in the case of any other
document to which BNPLC is a party or of which BNPLC is an intended beneficiary,
without the consent of BNPLC. All accounting terms used but not specifically
defined in any Operative Document shall be construed in accordance with GAAP.
The words "this [Agreement]", "herein", "hereof", "hereby", "hereunder" and
words of similar import when used in each Operative Document refer to that
Operative Document as a whole and not to any particular subdivision unless
expressly so limited. The phrases "this Paragraph", "this subparagraph", "this
Section", "this subsection" and similar phrases used in any operative document
refer only to the Paragraph, subparagraph, Section, subsection or other
subdivision described in which the phrase occurs. As used in the Operative
Documents the word "or" is not exclusive. As used in the Operative Documents,
the words "include", "including" and similar terms shall be construed as if
followed by "without limitation to".
13 EXECUTION IN COUNTERPARTS. To facilitate execution, each Operative
Document may be executed in as many identical counterparts as may be required.
It shall not be necessary that the signature of, or
Common Definitions and Provisions Agreement (Phase IV - Land) - Page 23
<PAGE> 75
on behalf of, each party, or that the signature of all persons required to bind
any party, appear on each counterpart. All counterparts, taken together, shall
collectively constitute a single instrument. It shall not be necessary in making
proof of any Operative Document to produce or account for more than a single
counterpart containing the respective signatures of, or on behalf of, each of
the parties hereto. Any signature page to any counterpart may be detached from
such counterpart without impairing the legal effect of the signatures thereon
and thereafter attached to another counterpart identical thereto except having
attached to it additional signature pages.
14 NOT A PARTNERSHIP, ETC. NOTHING IN ANY OPERATIVE DOCUMENT IS
INTENDED TO CREATE ANY PARTNERSHIP, JOINT VENTURE, OR OTHER JOINT ENTERPRISE
BETWEEN BNPLC AND NAI. NEITHER THE EXECUTION OF ANY OPERATIVE DOCUMENT NOR THE
ADMINISTRATION THEREOF OR OTHER DOCUMENTS REFERENCED HEREIN BY BNPLC, NOR ANY
OTHER RIGHT, DUTY OR OBLIGATION OF BNPLC UNDER OR PURSUANT TO ANY OPERATIVE
DOCUMENT IS INTENDED TO BE OR TO CREATE ANY FIDUCIARY OBLIGATIONS OF BNPLC TO
NAI.
[The signature pages follows.]
Common Definitions and Provisions Agreement (Phase IV - Land) - Page 24
<PAGE> 76
IN WITNESS WHEREOF, NAI and BNPLC have caused this Common Definitions and
Provisions Agreement (Phase IV - Land) to be executed as of December ___, 1999.
"NAI"
NETWORK APPLIANCE, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 77
[Continuation of signature pages to Common Definitions and Provisions Agreement
(Phase IV - Land) dated to be effective December ___, 1999]
"BNPLC"
BNP LEASING CORPORATION
By:
---------------------------------
Lloyd G. Cox, Vice President
<PAGE> 1
EXHIBIT 10.51
================================================================================
LEASE AGREEMENT
(PHASE IV - IMPROVEMENTS)
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
NETWORK APPLIANCE, INC.
("NAI")
DECEMBER ___, 1999
(SUNNYVALE, CALIFORNIA)
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. TERM.................................................................................2
(a) Scheduled Term................................................................2
(b) [Intentionally deleted.]......................................................2
(c) [Intentionally deleted.]......................................................2
(d) Election by NAI to Terminate After Accelerating the Designated Sale Date......2
(e) Extension of the Term.........................................................3
2. USE AND CONDITION OF THE PROPERTY....................................................3
(a) Use...........................................................................3
(b) Condition of the Property.....................................................4
(c) Consideration for and Scope of Waiver.........................................4
3. RENT.................................................................................4
(a) Base Rent Generally...........................................................4
(b) Impact of Collateral Upon Formulas............................................4
(c) Calculation of and Due Dates for Base Rent....................................5
(i) Amount Payable On the Base Rent Commencement Date......................5
(ii) Determination of Payment Due Dates, After the Base Rent Commencement
Date, Generally........................................................5
(iii) Special Adjustments to Base Rent Payment Dates and Periods.............5
(iv) Base Rent Formula for Periods During Which The Collateral Percentage
is 100%................................................................6
(v) Base Rent Formula for Periods During Which The Collateral Percentage
is Greater Than Zero and Less Than 100%................................6
(vi) Base Rent Formula for Periods During Which The Collateral Percentage
is Zero................................................................7
(d) Additional Rent...............................................................8
(e) Arrangement Fee...............................................................8
(f) [intentionally deleted].......................................................8
(g) Administrative Agency Fees....................................................8
(h) [Intentionally deleted.]......................................................8
(i) [Intentionally deleted.]......................................................8
(j) No Demand or Setoff...........................................................8
(k) Default Interest and Order of Application.....................................8
4. NATURE OF THIS AGREEMENT.............................................................8
(a) Net Lease Generally...........................................................8
(b) No Termination................................................................9
(c) Tax Reporting.................................................................9
(d) Characterization of this Improvements Lease..................................10
5. PAYMENT OF EXECUTORY COSTS AND LOSSES RELATED TO THE PROPERTY.......................10
(a) Impositions..................................................................10
(b) Increased Costs; Capital Adequacy Charges....................................11
(c) NAI's Payment of Other Losses; General Indemnification.......................11
(d) Exceptions and Qualifications to Indemnities.................................13
6. INTENTIONALLY DELETED...............................................................13
7. STATUS OF PROPERTY ACQUIRED WITH FUNDS PROVIDED BY BNPLC............................14
8. ENVIRONMENTAL.......................................................................14
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
(a) Environmental Covenants by NAI...............................................14
(b) Right of BNPLC to do Remedial Work Not Performed by NAI......................15
(c) Environmental Inspections and Reviews........................................15
(d) Communications Regarding Environmental Matters...............................15
9. INSURANCE REQUIRED AND CONDEMNATION.................................................16
(a) Liability Insurance..........................................................16
(b) Property Insurance...........................................................16
(c) Failure to Obtain Insurance..................................................16
(d) Condemnation.................................................................17
(e) Waiver of Subrogation........................................................17
10. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS..................................17
(a) Collection and Application of Insurance and Condemnation Proceeds Generally..17
(b) Advances of Escrowed Proceeds to NAI.........................................18
(c) Application of Escrowed Proceeds as a Qualified Prepayment...................18
(d) Special Provisions Applicable After an Event of Default......................18
(e) NAI's Obligation to Restore..................................................18
(f) Takings of All or Substantially All of the Property on or after the Base
Rent Commencement Date.......................................................18
11. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF NAI CONCERNING THE
PROPERTY............................................................................19
(a) Compliance with Covenants and Laws...........................................19
(b) Operation of the Property....................................................19
(c) Debts for Construction, Maintenance, Operation or Development................20
(d) Repair, Maintenance, Alterations and Additions...............................20
(e) Permitted Encumbrances and Development Documents.............................21
(f) Books and Records Concerning the Property....................................21
12. FINANCIAL COVENANTS AND OTHER COVENANTS INCORPORATED BY REFERENCE TO SCHEDULE 1.....21
13. FINANCIAL STATEMENTS AND OTHER REPORTS..............................................21
(ai Financial Statements; Required Notices; Certificates.........................21
14. ASSIGNMENT AND SUBLETTING BY NAI....................................................23
(a) BNPLC's Consent Required.....................................................23
(b) Standard for BNPLC's Consent to Assignments and Certain Other Matters........23
(c) Consent Not a Waiver.........................................................23
15. ASSIGNMENT BY BNPLC.................................................................23
(a) Restrictions on Transfers....................................................23
(b) Effect of Permitted Transfer or other Assignment by BNPLC....................24
16. BNPLC'S RIGHT OF ACCESS.............................................................24
17. EVENTS OF DEFAULT...................................................................25
18. REMEDIES............................................................................26
(a) Basic Remedies...............................................................26
(b) Notice Required So Long As the Purchase Option and NAI's Initial
Remarketing Rights and Obligations Continue Under the Purchase
Agreement....................................................................27
(c) Enforceability...............................................................28
(d) Remedies Cumulative..........................................................28
19. DEFAULT BY BNPLC....................................................................28
20. QUIET ENJOYMENT.....................................................................28
21. SURRENDER UPON TERMINATION..........................................................29
22. HOLDING OVER BY NAI.................................................................29
23. INDEPENDENT OBLIGATIONS EVIDENCED BY THE OTHER OPERATIVE DOCUMENTS..................29
</TABLE>
ii
<PAGE> 4
EXHIBITS AND SCHEDULES
Exhibit A......................................................Legal Description
Exhibit B.................................................Insurance Requirements
Exhibit C.............................................LIBOR Period Election Form
Schedule 1............................Financial Covenants and Other Requirements
(iii)
<PAGE> 5
LEASE AGREEMENT
(PHASE IV - IMPROVEMENTS)
This LEASE AGREEMENT (PHASE IV- IMPROVEMENTS) (this "IMPROVEMENTS
LEASE"), by and between BNP LEASING CORPORATION, a Delaware corporation
("BNPLC"), and NETWORK APPLIANCE, INC., a California corporation ("NAI"), is
made and dated as of December ___, 1999, the Effective Date. ("EFFECTIVE DATE"
and other capitalized terms used and not otherwise defined in this Improvements
Lease are intended to have the meanings assigned to them in the Common
Definitions and Provisions Agreement (Phase IV - Improvements) executed by BNPLC
and NAI contemporaneously with this Improvements Lease. By this reference, the
Common Definitions and Provisions Agreement (Phase IV - Improvements) is
incorporated into and made a part of this Improvements Lease for all purposes.)
RECITALS
Pursuant to the Existing Contract, which covers the Land described in
Exhibit A, BNPLC is acquiring the Land and the Improvements and any
appurtenances thereto from Seller contemporaneously with the execution of this
Improvements Lease.
In anticipation of BNPLC's acquisition of the Improvements under the
Existing Contract, BNPLC and NAI have reached agreement as to the terms and
conditions upon which BNPLC is willing to lease the Improvements to NAI, and by
this Improvements Lease BNPLC and NAI desire to evidence such agreement.
GRANTING CLAUSES
BNPLC does hereby LEASE, DEMISE and LET unto NAI for the term
hereinafter set forth all right, title and interest of BNPLC, now owned or
hereafter acquired, in and to:
(1) any and all Improvements; and
(2) all easements and other rights appurtenant to the
Improvements, whether now owned or hereafter acquired by BNPLC.
BNPLC's interest in all property described in clauses (1) and (2) above are
hereinafter referred to collectively as the "REAL PROPERTY". The Real Property
does not include the Land itself, it being understood that the Other Lease
Agreement will constitute a separate lease of the Land and the appurtenances
thereto, and only the Land and the appurtenances thereto, from BNPLC to NAI.
To the extent, but only to the extent, that assignable rights or
interests in, to or under the following have been or will be acquired by BNPLC
under the Existing Contract or acquired by BNPLC pursuant to Paragraph 7 below,
BNPLC also hereby grants and assigns to NAI for the term of this Improvements
Lease the right to use and enjoy (and, in the case of contract rights, to
enforce) such rights or interests of BNPLC:
(a) any goods, equipment, furnishings, furniture and other
tangible personal property of whatever nature that are located on the
Land and all renewals or replacements of or substitutions for any of the
foregoing;
<PAGE> 6
(b) the benefits, if any, conferred upon the owner of the Real
Property by the Permitted Encumbrances (including the right to receive
rents under and to otherwise enforce the Premises Leases) and
Development Documents; and
(c) any permits, licenses, franchises, certificates, and other
rights and privileges against third parties related to the Real
Property.
Such rights and interests of BNPLC, whether now existing or hereafter arising,
are hereinafter collectively called the "PERSONAL PROPERTY". The Real Property
and the Personal Property are hereinafter sometimes collectively called the
"PROPERTY."
However, the leasehold estate conveyed hereby and NAI's rights
hereunder are expressly made subject and subordinate to the terms and conditions
of this Improvements Lease, to the Premises Leases and all other Permitted
Encumbrances, and to any other claims or encumbrances not constituting Liens
Removable by BNPLC.
GENERAL TERMS AND CONDITIONS
The Property is leased by BNPLC to NAI and is accepted and is to be used
and possessed by NAI upon and subject to the following terms and conditions:
1 TERM.
(a) Scheduled Term. The term of this Improvements Lease (the
"TERM") shall commence on and include the Effective Date, and end on the first
Business Day of January, 2005, unless sooner terminated as expressly herein
provided.
(b) [Intentionally deleted.]
(c) [Intentionally deleted.]
(d) Election by NAI to Terminate After Accelerating the
Designated Sale Date. NAI shall be entitled to accelerate the Designated Sale
Date (and thus accelerate the purchase of BNPLC's interest in the Property by
NAI or by an Applicable Purchaser pursuant to the Purchase Agreement) by sending
a notice to BNPLC as provided in clause (2) of the definition of "Designated
Sale Date" in the Common Definitions and Provisions Agreement (Phase IV -
Improvements). In the event, because of NAI's election to so accelerate the
Designated Sale Date or for any other reason, the Designated Sale Date occurs
before the end of the scheduled Term, NAI may terminate this Improvements Lease
on or after the Designated Sale Date; provided, however, as a condition to any
such termination by NAI, NAI must have done the following prior to the
termination:
(i) purchased or caused an Applicable Purchaser to purchase the
Property pursuant to the Purchase Agreement and satisfied all of NAI's
other obligations under the Purchase Agreement;
(ii) paid to BNPLC all Base Rent and all other Rent due on or
before or accrued through the Designated Sale Date; and
(iii) paid any Breakage Costs caused by BNPLC's sale of the
Property pursuant to the Purchase Agreement.
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<PAGE> 7
(e) Extension of the Term. The Term may be extended at the option
of NAI for two successive periods of five years each; provided, however, that
prior to any such extension the following conditions must have been satisfied:
(A) at least ninety days prior to the commencement of any such extension, BNPLC
and NAI must have agreed in writing upon, and received the consent and approval
of BNPLC's Parent and all other Participants to (1) a corresponding extension
not only to the date for the expiration of the Term specified above in this
Section, but also to the date specified in clause (1) of the definition of
Designated Sale Date in the Common Definitions and Provisions Agreement (Phase
IV - Improvements), and (2) an adjustment to the Rent that NAI will be required
to pay for the extension, it being expected that the Rent for the extension may
be different than the Rent required for the original Term, and it being
understood that the Rent for any extension must in all events be satisfactory to
both BNPLC and NAI, each in its sole and absolute discretion; (B) no Event of
Default shall have occurred and be continuing at the time of NAI's exercise of
its option to extend; and (C) immediately prior to any such extension, this
Improvements Lease must remain in effect. With respect to the condition that
BNPLC and NAI must have agreed upon the Rent required for any extension of the
Term, neither NAI nor BNPLC is willing to submit itself to a risk of liability
or loss of rights hereunder for being judged unreasonable. Accordingly, both NAI
and BNPLC hereby disclaim any obligation express or implied to be reasonable in
negotiating the Rent for any such extension. Subject to the changes to the Rent
payable during any extension of the Term as provided in this Paragraph, if NAI
exercises its option to extend the Term as provided in this Paragraph, this
Improvements Lease shall continue in full force and effect, and the leasehold
estate hereby granted to NAI shall continue without interruption and without any
loss of priority over other interests in or claims against the Property that may
be created or arise after the date hereof and before the extension.
2 USE AND CONDITION OF THE PROPERTY.
(a) Use. Subject to the Permitted Encumbrances, the Development
Documents and the terms hereof, NAI may use and occupy the Property during the
Term, but only for the following purposes and other lawful purposes incidental
thereto:
(i) [intentionally deleted];
(ii) administrative and office space;
(iii) 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;
(iv) cafeteria and other support facilities that NAI may provide
to its employees; and
(v) other lawful purposes (including NAI's research and
development or production of products that are not of substantially the
same type and character as those regularly sold by NAI in the ordinary
course of its business as of the Effective Date) approved in advance and
in writing by BNPLC, which approval will not be unreasonably withheld
(but NAI acknowledges that BNPLC's withholding of such approval shall be
reasonable if BNPLC determines in good faith that (1) giving the
approval may materially increase BNPLC's risk of liability for any
existing or future environmental problem, or (2) giving the approval is
likely to substantially increase BNPLC's administrative burden of
complying with or monitoring NAI's compliance with the requirements of
this Improvements Lease or other Operative Documents).
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<PAGE> 8
Nothing in this subparagraph will prevent a tenant under a
Premises Lease executed by NAI, as Landlord, prior to or concurrently
with the Effective Date, from using the space covered thereby for
purposes expressly authorized by the terms and conditions of such
Premises Lease.
(b) Condition of the Property. NAI ACKNOWLEDGES THAT IT HAS
CAREFULLY AND FULLY INSPECTED THE PROPERTY AND ACCEPTS THE PROPERTY IN ITS
PRESENT STATE, AS IS, AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE CONDITION OF SUCH PROPERTY OR AS TO THE USE WHICH MAY BE MADE
THEREOF. NAI ALSO ACCEPTS THE PROPERTY WITHOUT ANY COVENANT, REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, BY BNPLC OR ITS AFFILIATES REGARDING THE TITLE
THERETO OR THE RIGHTS OF ANY PARTIES IN POSSESSION OF ANY PART THEREOF, EXCEPT
AS EXPRESSLY SET FORTH IN PARAGRAPH 20. BNPLC SHALL NOT BE RESPONSIBLE FOR ANY
LATENT OR OTHER DEFECT OR CHANGE OF CONDITION IN THE LAND OR IN IMPROVEMENTS,
FIXTURES AND PERSONAL PROPERTY FORMING A PART OF THE PROPERTY OR FOR ANY
VIOLATIONS WITH RESPECT THERETO OF APPLICABLE LAWS. FURTHER, THOUGH NAI MAY
OBTAIN FROM THIRD PARTIES ANY FACILITIES OR SERVICES TO WHICH NAI IS ENTITLED BY
REASON OF THE ASSIGNMENT AND LEASE OF PERSONAL PROPERTY SET FORTH ON PAGE 2 OF
THIS IMPROVEMENTS LEASE, BNPLC SHALL NOT BE REQUIRED TO FURNISH TO NAI ANY
FACILITIES OR SERVICES OF ANY KIND, INCLUDING WATER, STEAM, HEAT, GAS, AIR
CONDITIONING, ELECTRICITY, LIGHT OR POWER.
(c) Consideration for and Scope of Waiver. The provisions of
subparagraph 2.(b) above have been negotiated by BNPLC and NAI after due
consideration for the Rent payable hereunder and are intended to be a complete
exclusion and negation of any representations or warranties of BNPLC or its
Affiliates, express or implied, with respect to the Property that may arise
pursuant to any law now or hereafter in effect or otherwise, except as expressly
set forth herein.
However, such exclusion of representations and warranties by BNPLC is
not intended to impair any representations or warranties made by other parties,
the benefit of which may pass to NAI during the Term because of the definition
of Personal Property and Property above.
3. RENT.
(a) Base Rent Generally. On the Base Rent Commencement Date and
on each Base Rent Date through the end of the Term, NAI shall pay BNPLC rent
("BASE RENT"). Each payment of Base Rent must be received by BNPLC no later than
10:00 a.m. (Pacific time) on the date it becomes due; if received after 10:00
a.m. (Pacific time) it will be considered for purposes of this Improvements
Lease as received on the next following Business Day. At least five days prior
to any Base Rent Commencement Date or Base Rent Date upon which an installment
of Base Rent shall become due, BNPLC shall notify NAI in writing of the amount
of each installment, calculated as provided below. Any failure by BNPLC to so
notify NAI, however, shall not constitute a waiver of BNPLC's right to payment,
but absent such notice NAI shall not be in default hereunder for any
underpayment resulting therefrom if NAI, in good faith, reasonably estimates the
payment required, makes a timely payment of the amount so estimated and corrects
any underpayment within three Business Days after being notified by BNPLC of the
underpayment.
(b) Impact of Collateral Upon Formulas. To ease the
administrative burden of this Improvements Lease and the Pledge Agreement, the
formulas for calculating Base Rent set out below in subparagraph 3.(c) reflect a
reduction in the Base Rent equal to the interest that would accrue on any
Collateral provided in accordance with the requirements of the Pledge Agreement
from time to time if the Accounts (as
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<PAGE> 9
defined in the Pledge Agreement) bore interest at the Effective Rate. BNPLC has
agreed to such reduction to provide NAI with the economic equivalent of interest
on such Collateral, and in return NAI has agreed to the provisions of the Pledge
Agreement that excuse the actual payment of interest on the Accounts. By
incorporating such reduction of Base Rent into the formulas below, and by
providing for noninterest bearing Accounts in the Pledge Agreement, the parties
will avoid an unnecessary and cumbersome periodic exchange of equal payments. It
is not, however, the intent of BNPLC or NAI to understate Base Rent or interest
for financial reporting purposes. Accordingly, for purposes of any financial
reports that this Improvements Lease requires of NAI from time to time, NAI may
report Base Rent as if there had been no such reduction and as if the Collateral
from time to time provided in accordance with the requirements of the Pledge
Agreement had been maintained in Accounts bearing interest at the Effective
Rate.
(c) Calculation of and Due Dates for Base Rent. Payments of Base
Rent shall be calculated and become due as follows:
(i) Amount Payable On the Base Rent Commencement Date. The Base
Rent payable for each day (including the Effective Date) prior to but
not including the Base Rent Commencement Date shall be equal to (a) the
sum of (1) the per annum interest rate, as determined by BNPLC, at which
BNPLC can borrow funds overnight from BNPLC's Parent on that day, plus
(2) the Unsecured Spread, multiplied by (b) the Initial Funding Advance,
divided by (c) 360. All such Base Rent shall become due on the Base Rent
Commencement Date.
(ii) Determination of Payment Due Dates, After the Base Rent
Commencement Date, Generally. For all Base Rent Periods subject to a
LIBOR Period Election of one month or three months, Base Rent shall be
due in one installment on the Base Rent Date upon which the Base Rent
Period ends. For Base Rent Periods subject to a LIBOR Period Election of
six months, Base Rent shall be payable in two installments, with the
first installment becoming due on the Base Rent Date that occurs on the
first Business Day of the third calendar month following the
commencement of such Base Rent Period, and with the second installment
becoming due on the Base Rent Date upon which the Base Rent Period ends.
(iii) Special Adjustments to Base Rent Payment Dates and Periods.
Notwithstanding the foregoing:
(a) Any Base Rent Period that begins before, and does not
otherwise end before, a Failed Collateral Test Date shall end
upon but not include such Failed Collateral Test Date, and such
Failed Collateral Test Date shall constitute a Base Rent Date,
upon which NAI must pay all accrued, unpaid Base Rent for the
Base Rent Period just ended.
(b) Consistent with clause (3) of the definition of LIBOR
Period Election in the Common Definitions and Provisions
Agreement (Phase IV - Improvements), each successive Base Rent
Date after any such Failed Collateral Test Date shall be the
first Business Day of the first calendar month following the
calendar month which includes the preceding Base Rent Date, so
long as any Mandatory Collateral Period shall continue.
(c) In addition to Base Rent due on a Failed Collateral
Test Date, NAI must pay the Breakage Costs, if any, resulting
from any early ending of a Base Rent Period on the Failed
Collateral Test Date pursuant to the preceding clause
3.(c)(iii)a).
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<PAGE> 10
(d) If NAI or any Applicable Purchaser purchases BNPLC's
interest in the Property pursuant to the Purchase Agreement, any
accrued unpaid Base Rent and all outstanding Additional Rent
shall be due on the date of purchase in addition to the purchase
price and other sums due BNPLC under the Purchase Agreement.
(iv) Base Rent Formula for Periods During Which The Collateral
Percentage is 100%. Each installment of Base Rent payable for any Base
Rent Period during which the Collateral Percentage is one hundred
percent (100%) shall equal:
- Stipulated Loss Value on the first day of such Base Rent
Period, times
- the Secured Spread for the period from and including the
preceding Base Rent Date to but not including the Base
Rent Date upon which the installment is due, times
- the number of days in the period from and including the
preceding Base Rent Date to but not including the Base
Rent Date upon which the installment is due, divided by
- three hundred sixty.
Assume, only for the purpose of illustration: that the Collateral
Percentage for a hypothetical Base Rent Period is one hundred percent
(100%); that prior to the first day of such Base Rent Period Qualified
Prepayments have been received by BNPLC, leaving a Stipulated Loss Value
of $20,000,000; that the Secured Spread is thirty basis points (30/100
of 1%); and that such Base Rent Period contains exactly thirty days.
Under such assumptions, the Base Rent for the hypothetical Base Rent
Period will equal:
$20,000,000 x .30% x 30/360 = $5,000
(v) Base Rent Formula for Periods During Which The Collateral
Percentage is Greater Than Zero and Less Than 100%. Each installment of
Base Rent payable for any Base Rent Period during which the Collateral
Percentage is greater than zero and less than one hundred percent (100%)
shall equal:
- Stipulated Loss Value on the first day of such Base Rent
Period, times
- the sum of:
(A) the product of:
(1) the Collateral Percentage for such
Base Rent Period, times
(2) the Secured Spread for the period
from and including the preceding
Base Rent Date to but not including
the Base Rent Date upon which the
installment is due, plus
(B) the product of:
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<PAGE> 11
(1) one minus the Collateral Percentage
for such Base Rent Period, times
(2) the sum of (a) the Effective Rate
with respect to such Base Rent
Period, plus (b) the Unsecured
Spread for the period from and
including the preceding Base Rent
Date to but not including the Base
Rent Date upon which the installment
is due, times
- the number of days in the period from and including the
preceding Base Rent Date to but not including the Base
Rent Date upon which the installment is due, divided by
- three hundred sixty.
Assume, only for the purpose of illustration: that the Collateral
Percentage for a hypothetical Base Rent Period is forty percent (40%);
that prior to the first day of such Base Rent Period Qualified
Prepayments have been received by BNPLC, leaving a Stipulated Loss Value
of $20,000,000; that the Effective Rate for the Base Rent Period is 6%;
that the Secured Spread is thirty basis points (30/100 of 1%); that upon
the commencement of such Base Rent Period the Unsecured Spread is one
hundred fifty basis points (150/100 of 1%); and that such Base Rent
Period contains exactly thirty days. Under such assumptions, the Base
Rent for the hypothetical Base Rent Period will equal:
$20,000,000 x {(40% x .30%) + ([1 - 40%] x [6% + 1.50%])} x 30/360 = $77,000
(vi) Base Rent Formula for Periods During Which The Collateral
Percentage is Zero. Each installment of Base Rent payable for any Base
Rent Period during which the Collateral Percentage is zero shall equal:
- Stipulated Loss Value on the first day of such Base Rent
Period, times
- the sum of (a) the Effective Rate with respect to such
Base Rent Period, plus (b) the Unsecured Spread for the
period from and including the preceding Base Rent Date to
but not including the Base Rent Date upon which the
installment is due, times
- the number of days in the period from and including the
preceding Base Rent Date to but not including the Base
Rent Date upon which the installment is due, divided by
- three hundred sixty.
Assume, only for the purpose of illustration: that the Collateral
Percentage for a hypothetical Base Rent Period is zero percent (0%);
that prior to the first day of such Base Rent Period Qualified
Prepayments have been received by BNPLC, leaving a Stipulated Loss Value
of $20,000,000; that the Effective Rate for the Base Rent Period is 6%;
that the Unsecured Spread is one hundred fifty basis points (150/100 of
1%) upon the commencement of such Base Rent Period; and that such Base
Rent Period contains exactly thirty days. Under such assumptions, the
Base Rent for the hypothetical Base Rent Period will equal:
$20,000,000 x (6% + 1.50%) x 30/360 = $125,000
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<PAGE> 12
(d) Additional Rent. All amounts which NAI is required to pay to
or on behalf of BNPLC pursuant to this Improvements Lease, together with every
charge, premium, interest and cost set forth herein which may be added for
nonpayment or late payment thereof, shall constitute rent (all such amounts,
other than Base Rent, are herein called "ADDITIONAL RENT", and together Base
Rent and Additional Rent are herein sometimes called "RENT").
(e) Arrangement Fee. Upon execution and delivery of this
Improvements Lease by BNPLC, an Arrangement Fee (the "ARRANGEMENT FEE") will be
paid to BNPLC from the Initial Funding Advance (and thus be included in
Stipulated Loss Value) in the amount provided in the letter dated as of October
20, 1999 from BNPLC to NAI.
(f) [intentionally deleted].
(g) Administrative Agency Fees. Upon execution and delivery of
this Improvements Lease by BNPLC, an administrative agency fee (an
"ADMINISTRATIVE AGENCY FEE") will be paid to BNPLC from the Initial Funding
Advance (and thus be included in Stipulated Loss Value) in the amount provided
in the letter dated as of October 20, 1999 from BNPLC to NAI. Also, on each
anniversary of the date hereof, NAI shall pay to BNPLC an administrative agency
fee (also, an "ADMINISTRATIVE AGENCY FEE") in the amount set forth in the letter
agreement dated as of October 20, 1999 from BNPLC to NAI.
(h) [Intentionally deleted.]
(i) [Intentionally deleted.]
(j) No Demand or Setoff. Except as expressly provided herein, NAI
shall pay all Rent without notice or demand and without counterclaim, deduction,
setoff or defense.
(k) Default Interest and Order of Application. All Rent shall
bear interest, if not paid when first due, at the Default Rate in effect from
time to time from the date due until paid; provided, that nothing herein
contained will be construed as permitting the charging or collection of interest
at a rate exceeding the maximum rate permitted under Applicable Laws. BNPLC
shall be entitled to apply any amounts paid by or on behalf of NAI against any
Rent then past due in the order the same became due or in such other order as
BNPLC may elect.
4 NATURE OF THIS AGREEMENT.
(a) "Net" Lease Generally. Subject only to the exceptions listed
in subparagraph 5.(d) below, it is the intention of BNPLC and NAI that Base
Rent, the Arrangement Fees, the Upfront Syndication Fees, Administrative Agency
Fees, and other payments herein specified shall be absolutely net to BNPLC and
that NAI shall pay all costs, expenses and obligations of every kind relating to
the Property or this Improvements Lease which may arise or become due,
including: (i) any taxes payable by virtue of BNPLC's receipt of amounts paid to
or on behalf of BNPLC in accordance with Paragraph 5; (ii) any amount for which
BNPLC is or becomes liable with respect to the Permitted Encumbrances or the
Development Documents; and (iii) any costs incurred by BNPLC (including
Attorneys' Fees) because of BNPLC's acquisition or ownership of any interest in
the Property or because of this Improvements Lease or the transactions
contemplated herein.
However, neither this subparagraph 4.(a) nor the indemnity in this
subparagraph 5.(c)(i) shall be construed to make NAI liable for (I) an
allocation of general overhead or internal administrative expenses of BNPLC or
any
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<PAGE> 13
other Interested Party or (II) any duplicate payment of the same Loss to both
BNPLC and another Interested Party. (If, for example, BNPLC were required to
make a $10 fine because of a failure of the Property to comply with Applicable
Laws, and a Participant were required by the Participation Agreement to
reimburse BNPLC for 20% of the $10, NAI would not be required by this
subparagraph 4.(a) or by subparagraph 5.(c)(i) to pay both $10 to BNPLC and $2
to the Participant on account of the fine.)
(b) No Termination. Except as expressly provided in this
Improvements Lease itself, this Improvements Lease shall not terminate, nor
shall NAI have any right to terminate this Improvements Lease, nor shall NAI be
entitled to any abatement of the Rent, nor shall the obligations of NAI under
this Improvements Lease be excused, for any reason whatsoever, including any of
the following: (i) any damage to or the destruction of all or any part of the
Property from whatever cause, (ii) the taking of the Property or any portion
thereof by eminent domain or otherwise for any reason, (iii) the prohibition,
limitation or restriction of NAI's use or development of all or any portion of
the Property or any interference with such use by governmental action or
otherwise, (iv) any eviction of NAI or of anyone claiming through or under NAI,
(v) any default on the part of BNPLC under this Improvements Lease or under any
other agreement to which BNPLC and NAI are parties, (vi) the inadequacy in any
way whatsoever of the design, construction, assembly or installation of any
improvements, fixtures or tangible personal property included in the Property
(it being understood that BNPLC has not made, does not make and will not make
any representation express or implied as to the adequacy thereof), (vii) any
latent or other defect in the Property or any change in the condition thereof or
the existence with respect to the Property of any violations of Applicable Laws,
or (viii) any other cause whether similar or dissimilar to the foregoing. It is
the intention of the parties hereto that the obligations of NAI hereunder shall
be separate and independent of the covenants and agreements of BNPLC, that Base
Rent and all other sums payable by NAI hereunder shall continue to be payable in
all events and that the obligations of NAI hereunder shall continue unaffected,
unless the requirement to pay or perform the same shall have been terminated or
limited pursuant to an express provision of this Improvements Lease. Without
limiting the foregoing, NAI waives to the extent permitted by Applicable Laws,
except as otherwise expressly provided herein, all rights to which NAI may now
or hereafter be entitled by law (including any such rights arising because of
any implied "warranty of suitability" or other warranty under Applicable Laws)
(i) to quit, terminate or surrender this Improvements Lease or the Property or
any part thereof or (ii) to any abatement, suspension, deferment or reduction of
the Rent.
However, nothing in this subparagraph 4.(b) shall be construed as a
waiver by NAI of any right NAI may have at law or in equity to the following
remedies, whether because of BNPLC's failure to remove a Lien Removable by BNPLC
or because of any other default by BNPLC under this Improvements Lease that
continues beyond the period for cure provided in Paragraph 19: (i) the recovery
of monetary damages, (ii) injunctive relief in case of the violation, or
attempted or threatened violation, by BNPLC of any of the express covenants,
agreements, conditions or provisions of this Improvements Lease which are
binding upon BNPLC (including the confidentiality provisions set forth in
subparagraph 16.(c) below), or (iii) a decree compelling performance by BNPLC of
any of the express covenants, agreements, conditions or provisions of this
Improvements Lease which are binding upon BNPLC.
(c) Tax Reporting. BNPLC and NAI shall report this Improvements
Lease and the Purchase Agreement for federal income tax purposes as a
conditional sale unless prohibited from doing so by the Internal Revenue
Service. If the Internal Revenue Service shall challenge BNPLC's
characterization of this Improvements Lease and the Purchase Agreement as a
conditional sale for federal income tax reporting purposes, BNPLC shall notify
NAI in writing of such challenge and consider in good faith any reasonable
suggestions by NAI about an appropriate response. In any event, NAI shall
(subject only to the limitations set forth in this subparagraph) indemnify and
hold harmless BNPLC from and against all liabilities, costs, additional taxes
(other than Excluded Taxes) and other expenses that may arise or become due
because of such challenge or because of any resulting
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<PAGE> 14
recharacterization required by the Internal Revenue Service, including any
additional taxes that may become due upon any sale under the Purchase Agreement
to the extent (if any) that such additional taxes are not offset by tax savings
resulting from additional depreciation deductions or other tax benefits to BNPLC
of the recharacterization. If BNPLC receives a written notice of any challenge
by the Internal Revenue Service that BNPLC believes will be covered by this
Paragraph, then BNPLC shall promptly furnish a copy of such notice to NAI. The
failure to so provide a copy of the notice to NAI shall not excuse NAI from its
obligations under this Paragraph; provided, that if none of the officers of NAI
and none of the employees of NAI responsible for tax matters are aware of the
challenge described in the notice and such failure by BNPLC renders unavailable
defenses that NAI might otherwise assert, or precludes actions that NAI might
otherwise take, to minimize its obligations hereunder, then NAI shall be excused
from its obligation to indemnify BNPLC against liabilities, costs, additional
taxes and other expenses, if any, which would not have been incurred but for
such failure. For example, if BNPLC fails to provide NAI with a copy of a notice
of a challenge by the Internal Revenue Service covered by the indemnities set
out in this Improvements Lease and NAI is not otherwise already aware of such
challenge, and if as a result of such failure BNPLC becomes liable for penalties
and interest covered by the indemnities in excess of the penalties and interest
that would have accrued if NAI had been promptly provided with a copy of the
notice, then NAI will be excused from any obligation to BNPLC to pay the excess.
(d) Characterization of this Improvements Lease. For purposes of
determining the appropriate financial accounting for this Improvements Lease and
for purposes of determining their respective rights and remedies under state
law, BNPLC and NAI believe and intend that (i) this Improvements Lease
constitutes a true lease, not a mere financing arrangement, enforceable in
accordance with its express terms, and the preceding subparagraph is not
intended to affect the enforcement of any other provisions of this Improvements
Lease or the Purchase Agreement, and (ii) the Purchase Agreement shall
constitute a separate and independent contract, enforceable in accordance with
the express terms and conditions set forth therein. In this regard, NAI
acknowledges that NAI asked BNPLC to participate in the transactions evidenced
by this Improvements Lease and the Purchase Agreement as a landlord and owner of
the Property, not as a lender. Although other transactions might have been used
to accomplish similar results, NAI expects to receive certain material
accounting and other advantages through the use of a lease transaction.
Accordingly, and notwithstanding the reporting for income tax purposes described
in the preceding subparagraph, NAI cannot equitably deny that this Improvements
Lease and the Purchase Agreement should be construed and enforced in accordance
with their respective terms, rather than as a mortgage or other security device,
in any action brought by BNPLC to enforce this Improvements Lease or the
Purchase Agreement.
5. PAYMENT OF EXECUTORY COSTS AND LOSSES RELATED TO THE PROPERTY.
(a) Impositions. Subject only to the exceptions listed in
subparagraph 5.(d) below, NAI shall pay or cause to be paid prior to delinquency
all ad valorem taxes assessed against the Property and other Impositions. If
requested by BNPLC from time to time, NAI shall furnish BNPLC with receipts
showing payment of all Impositions prior to the applicable delinquency date
therefor.
Notwithstanding the foregoing, NAI may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted
Imposition, and pending such contest NAI shall not be deemed in default under
any of the provisions of this Improvements Lease because of the Imposition if
(1) NAI diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and (2) NAI promptly causes to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all costs,
penalties and interest thereon, promptly after such judgment becomes final;
provided, however, in any event each such contest shall be concluded and the
contested Impositions must be paid by NAI prior to the earlier of (i) the date
that any criminal prosecution is instituted or overtly threatened against BNPLC
or its directors, officers or employees because of the nonpayment
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<PAGE> 15
thereof or (ii) the date any writ or order is issued under which any property
owned or leased by BNPLC (including the Property) may be seized or sold or any
other action is taken against BNPLC or against any property owned or leased by
BNPLC because of the nonpayment thereof, or (iii) any Designated Sale Date upon
which, for any reason, NAI or an Affiliate of NAI or any Applicable Purchaser
shall not purchase BNPLC's interest in the Property pursuant to the Purchase
Agreement for a price to BNPLC (when taken together with any additional payments
made by NAI pursuant to Paragraph 1(A)(2) of the Purchase Agreement, in the case
of a purchase by an Applicable Purchaser) equal to the Break Even Price.
(b) Increased Costs; Capital Adequacy Charges. Subject only to
the exceptions listed in subparagraph 5.(d) below:
(i) If after the Effective Date there shall be any increase in
the cost to BNPLC's Parent or any other Participant agreeing to make or
making, funding or maintaining advances to BNPLC in connection with the
Property because of any Banking Rules Change, then NAI shall from time
to time, pay to BNPLC for the account of BNPLC's Parent or such other
Participant, as the case may be, additional amounts sufficient to
compensate BNPLC's Parent or the Participant for such increased cost. An
increase in costs resulting from any imposition or increase of reserve
requirements applicable to Collateral held from time to time by BNPLC's
Parent or other Participants pursuant to the Pledge Agreement would be
an increase covered by the preceding sentence. A certificate as to the
amount of such increased cost, submitted to BNPLC and NAI by BNPLC's
Parent or the other Participant, shall be conclusive and binding upon
NAI, absent clear and demonstrable error.
(ii) BNPLC's Parent or any other Participant may demand
additional payments ("CAPITAL ADEQUACY CHARGES") if BNPLC's Parent or
the other Participant determines that any Banking Rules Change affects
the amount of capital to be maintained by it and that the amount of such
capital is increased by or based upon the existence of advances made or
to be made to BNPLC to permit BNPLC to maintain BNPLC's investment in
the Property. To the extent that BNPLC's Parent or another Participant
demands Capital Adequacy Charges as compensation for the additional
capital requirements reasonably allocable to such investment or
advances, NAI shall pay to BNPLC for the account of BNPLC's Parent or
the other Participant, as the case may be, the amount so demanded.
Without limiting the foregoing, BNPLC and NAI hereby acknowledge and
agree that the provisions for calculating Base Rent set forth herein
reflect the assumption that the Pledge Agreement will cause a zero
percent (0%) risk weight to be assigned to a percentage (equal to the
Collateral Percentage) of the collective investment of BNPLC and the
Participants in the Property pursuant to 12 Code of Federal Regulations,
part 225, as from time to time supplemented or amended, or pursuant to
any other similar or successor statute or regulation applicable to BNPLC
and the Participants. If and so long as such risk weight is increased
the assumed amount of zero percent (0%) because of a Banking Rules
Change, Capital Adequacy Charges may be collected to yield the same rate
of return to BNPLC, BNPLC's Parent and any other Participants (net of
their costs of maintaining required capital) that they would have
enjoyed from this Improvements Lease absent such increase.
(iii) Any amount required to be paid by NAI under this
subparagraph 5.(b) shall be due ten days after a demand for such payment
is received by NAI.
(c) NAI's Payment of Other Losses; General Indemnification.
Subject only to the exceptions listed in subparagraph 5.(d) below:
(i) All Losses (including Environmental Losses) asserted against
or incurred or suffered by BNPLC or other Interested Parties at any time
and from time to time by reason of, in connection with or
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<PAGE> 16
arising out of (A) their ownership or alleged ownership of any interest
in the Property or the Rents, (B) the use and operation of the Property,
(C) the negotiation, administration or enforcement of the Operative
Documents, (D) the making of Funding Advances, (E) the Premises Leases;
(F) the breach by NAI of this Improvements Lease or any other document
executed by NAI in connection herewith, (G) any failure of the Property
or NAI itself to comply with Applicable Laws, (H) Permitted
Encumbrances, (I) Hazardous Substance Activities, including those
occurring prior to Effective Date, (J) any obligations under the
Existing Contract that survive the closing thereunder, or (K) any bodily
or personal injury or death or property damage occurring in or upon or
in the vicinity of the Property through any cause whatsoever, shall be
paid by NAI, and NAI shall indemnify and defend BNPLC and other
Interested Parties from and against all such Losses.
(ii) THE INDEMNITIES AND RELEASES PROVIDED HEREIN FOR THE BENEFIT
OF BNPLC AND OTHER INTERESTED PARTIES, INCLUDING THE INDEMNITY SET FORTH
IN THE PRECEDING SUBPARAGRAPH 5.(c)(i), SHALL APPLY EVEN IF AND WHEN THE
SUBJECT MATTERS OF THE INDEMNITIES AND RELEASES ARE CAUSED BY OR ARISE
OUT OF THE NEGLIGENCE OR STRICT LIABILITY OF BNPLC OR ANOTHER INTERESTED
PARTY. FURTHER, SUCH INDEMNITIES AND RELEASES WILL APPLY EVEN IF
INSURANCE OBTAINED BY NAI OR REQUIRED OF NAI BY THIS IMPROVEMENTS LEASE
OR OTHER OPERATIVE DOCUMENTS IS NOT ADEQUATE TO COVER LOSSES AGAINST OR
FOR WHICH THE INDEMNITIES AND RELEASES ARE PROVIDED. NAI'S LIABILITY,
HOWEVER, FOR ANY FAILURE TO OBTAIN INSURANCE REQUIRED BY THIS
IMPROVEMENTS LEASE OR OTHER OPERATIVE DOCUMENTS WILL NOT BE LIMITED TO
LOSSES AGAINST WHICH INDEMNITIES ARE PROVIDED HEREIN, IT BEING
UNDERSTOOD THAT SUCH INSURANCE IS INTENDED TO DO MORE THAN PROVIDE A
SOURCE OF PAYMENT FOR LOSSES AGAINST WHICH BNPLC AND OTHER INTERESTED
PARTIES ARE ENTITLED TO INDEMNIFICATION BY THIS IMPROVEMENTS LEASE.
(iii) Costs and expenses for which NAI shall be responsible
pursuant to this subparagraph 5.(c) will include appraisal fees, filing
and recording fees, inspection fees, survey fees, taxes, brokerage fees
and commissions, abstract fees, title policy fees, Uniform Commercial
Code search fees, escrow fees and Attorneys' Fees incurred by BNPLC with
respect to the Property, whether such costs and expenses are incurred at
the time of execution of this Improvements Lease or at any time during
the Term.
(iv ) NAI's obligations under this subparagraph 5.(c) shall
survive the termination or expiration of this Improvements Lease. Any
amount to be paid by NAI under this subparagraph 5.(c) shall be due ten
days after a demand for such payment is received by NAI.
(v) If an Interested Party notifies NAI of any claim or
proceeding included in, or any investigation or allegation concerning,
Losses for which NAI is responsible pursuant to this subparagraph 5.(c),
NAI shall assume on behalf of the Interested Party and conduct with due
diligence and in good faith the investigation and defense thereof and
the response thereto with counsel selected by NAI, but satisfactory to
the Interested Party; provided, that the Interested Party shall have the
right to be represented by advisory counsel of its own selection and at
its own expense; and provided further, that if any such claim,
proceeding, investigation or allegation involves both NAI and the
Interested Party and the Interested Party shall have reasonably
concluded that there are legal defenses available to it which are
inconsistent with or in addition to those available to NAI, then the
Interested Party shall have the right to select separate counsel to
participate in the investigation and defense of and response to such
claim,
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<PAGE> 17
proceeding, investigation or allegation on its own behalf, and NAI shall
pay or reimburse the Interested Party for all Attorney's Fees incurred
by the Interested Party because of the selection of such separate
counsel. If NAI fails to assume promptly (and in any event within
fifteen days after being notified of the applicable claim, proceeding,
investigation or allegation) the defense of the Interested Party, then
the Interested Party may contest (or settle, with the prior consent of
NAI, which consent will not be unreasonably withheld) the claim,
proceeding, investigation or allegation at NAI's expense using counsel
selected by the Interested Party. Moreover, if any such failure by NAI
continues for forty-five days or more after NAI is notified of any such
claim, proceeding, investigation or allegation, the Interested Party may
elect not to contest or continue contesting the same and instead, in
accordance with the written advice of counsel, settle (or pay in full)
all claims related thereto without NAI's consent and without releasing
NAI from any obligations to the Interested Party under this subparagraph
5.(c).
(d) Exceptions and Qualifications to Indemnities.
(vi) BNPLC acknowledges and agrees that nothing in subparagraph
4.(a) or the preceding subparagraphs of this Paragraph 5 shall be
construed to require NAI to pay or reimburse an Interested Party for (w)
any costs or expenses incurred by BNPLC or any transferee to accomplish
any Permitted Transfers described in clauses (2), (3), (4), (6) or (7)
of the definition thereof in the Common Definitions and Provisions
Agreement (Phase IV - Improvements), (x) Excluded Taxes, (y) Losses
incurred or suffered by such Interested Party that are proximately
caused by (and attributed by any applicable principles of comparative
fault to) the Established Misconduct of that Interested Party, or (z)
Losses incurred or suffered by Participants in connection with their
negotiation or execution of the Participation Agreement or Pledge
Agreement (or supplements making them parties thereto) or in connection
with any due diligence they may undertake before entering into the
Participation Agreement or Pledge Agreement. Further, without limiting
BNPLC's rights (as provided in other provisions of this Improvements
Lease and other Operative Documents) to include the following in the
calculation of the Stipulated Loss Value, and the Break Even Price (as
applicable) or to collect Base Rent, a Supplemental Payment and other
amounts, the calculation of which depends upon the Stipulated Loss
Value, and the Break Even Price, BNPLC acknowledges and agrees that
nothing in subparagraph 4.(a) or the preceding subparagraphs of this
Paragraph 5 shall be construed to require NAI to pay or reimburse an
Interested Party for costs paid by BNPLC with the proceeds of the
Initial Funding Advance as part of the Transaction Expenses.
Further, if an Interested Party receives a written notice of Losses that
such Interested Party believes are covered by the indemnity in
subparagraph 5.(c)(i), then such Interested Party will be expected to
promptly furnish a copy of such notice to NAI. The failure to so provide
a copy of the notice to NAI shall not excuse NAI from its obligations
under subparagraph 5.(c)(i); provided, that if NAI is unaware of the
matters described in the notice and such failure renders unavailable
defenses that NAI might otherwise assert, or precludes actions that NAI
might otherwise take, to minimize its obligations, then NAI shall be
excused from its obligation to indemnify such Interested Party (and any
Affiliate of such Interested Party) against the Losses, if any, which
would not have been incurred or suffered but for such failure. For
example, if BNPLC fails to provide NAI with a copy of a notice of an
obligation covered by the indemnity set out in subparagraph 5.(c)(i) and
NAI is not otherwise already aware of such obligation, and if as a
result of such failure BNPLC becomes liable for penalties and interest
covered by the indemnity in excess of the penalties and interest that
would have accrued if NAI had been promptly provided with a copy of the
notice, then NAI will be excused from any obligation to BNPLC (or any
Affiliate of BNPLC) to pay the excess.
6. INTENTIONALLY DELETED.
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<PAGE> 18
7. STATUS OF PROPERTY ACQUIRED WITH FUNDS PROVIDED BY BNPLC. All
Improvements constructed during the term of this Improvements Lease shall be
owned by BNPLC and shall constitute "Property" covered by this Improvements
Lease. Further, to the extent heretofore or hereafter acquired (in whole or in
part) with any portion of the Initial Funding Advance or with other funds for
which NAI has received or hereafter receives reimbursement from the Initial
Funding Advance, all furnishings, furniture, chattels, permits, licenses,
franchises, certificates and other personal property of whatever nature shall
have been acquired on behalf of BNPLC by NAI, shall be owned by BNPLC and shall
constitute "Property" covered by this Improvements Lease, as shall all renewals
or replacements of or substitutions for any such Property. NAI shall not
authorize or permit the transfer of title to the Improvements or to any other
such Property to pass through NAI or NAI's Affiliates before it is transferred
to BNPLC from contractors, suppliers, vendors or other third Persons. Nothing
herein shall constitute authorization of NAI by BNPLC to bind BNPLC to any
construction contract or other agreement with a third Person, but any
construction contract or other agreement executed by NAI for the acquisition or
construction of Improvements or other components of the Property may provide for
the transfer of title as required by the preceding sentence. Upon request of
BNPLC, but not more often than once in any period of twelve consecutive months,
NAI shall deliver to BNPLC an inventory describing all significant items of
Personal Property (and, in the case of tangible personal property, showing the
make, model, serial number and location thereof) other than Improvements, with a
certification by NAI that such inventory is true and complete and that all items
specified in the inventory are covered by this Improvements Lease free and clear
of any Lien other than the Permitted Encumbrances or Liens Removable by BNPLC.
8. ENVIRONMENTAL.
(a) Environmental Covenants by NAI. NAI covenants that:
(i) NAI shall not conduct or permit others to conduct
Hazardous Substance Activities, except Permitted Hazardous Substance Use
and Remedial Work.
(ii) NAI shall not discharge or permit the discharge of
anything on or from the Property that would require any permit under
applicable Environmental Laws, other than (1) storm water runoff, (2)
waste water discharges through a publicly owned treatment works, (3)
discharges that are a necessary part of any Remedial Work, and (4) other
similar discharges consistent with the definition herein of Permitted
Hazardous Substance Use, in each case in strict compliance with
Environmental Laws.
(iii) Following any discovery that Remedial Work is
required by Environmental Laws or otherwise believed by BNPLC to be
reasonably required, and to the extent not inconsistent with the other
provisions of this Improvements Lease, NAI shall promptly perform and
diligently and continuously pursue such Remedial Work, in each case in
strict compliance with Environmental Laws.
(iv) If requested by BNPLC in connection with any Remedial
Work required by this subparagraph, NAI shall retain independent
environmental consultants acceptable to BNPLC to evaluate any
significant new information generated during NAI's implementation of the
Remedial Work and to discuss with NAI whether such new information
indicates the need for any additional measures that NAI should take to
protect the health and safety of persons (including employees,
contractors and subcontractors and their employees) or to protect the
environment. NAI shall implement any such additional measures to the
extent required with respect to the Property by Environmental Laws or
otherwise believed by BNPLC to be reasonably required and to the extent
not inconsistent with the other provisions of this Improvements Lease.
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<PAGE> 19
(b) Right of BNPLC to do Remedial Work Not Performed by NAI. If
NAI's failure to cure any breach of the covenants set forth in subparagraph
8.(a) continues beyond the Environmental Cure Period (as defined below), BNPLC
may, in addition to any other remedies available to it, conduct all or any part
of the Remedial Work. To the extent that Remedial Work is done by BNPLC pursuant
to the preceding sentence (including any removal of Hazardous Substances), the
cost thereof shall be a demand obligation owing by NAI to BNPLC. As used in this
subparagraph, "ENVIRONMENTAL CURE PERIOD" means the period ending on the earlier
of: (1) one hundred eighty days after NAI is notified of the breach which must
be cured within such period, (2) the date that any writ or order is issued for
the levy or sale of any property owned by BNPLC (including the Property) because
of such breach, (3) the date that any criminal action is instituted or overtly
threatened against BNPLC or any of its directors, officers or employees because
of such breach, or (4) any Designated Sale Date upon which, for any reason, NAI
or an Affiliate of NAI or any Applicable Purchaser shall not purchase BNPLC's
interest in the Property pursuant to the Purchase Agreement for a net price to
BNPLC (when taken together with any Supplemental Payment made by NAI pursuant to
Paragraph 1(A)(2) of the Purchase Agreement, in the case of a purchase by an
Applicable Purchaser) equal to Stipulated Loss Value.
(c) Environmental Inspections and Reviews. BNPLC reserves the
right to retain environmental consultants to review any report prepared by NAI
or to conduct BNPLC's own investigation to confirm whether NAI is complying with
the requirements of this Paragraph 8. NAI grants to BNPLC and to BNPLC's agents,
employees, consultants and contractors the right to enter upon the Property at
any time to inspect the Property and to perform such tests as BNPLC deems
necessary or appropriate to review or investigate Hazardous Substances in, on,
under or about the Property or any discharge or suspected discharge of Hazardous
Substances into groundwater or surface water from the Property. NAI shall
promptly reimburse BNPLC for the fees of its environmental consultants and the
costs of any such inspections and tests.
(d) Communications Regarding Environmental Matters.
(i) NAI shall immediately advise BNPLC of (1) any
discovery of any event or circumstance which would render any of the
representations of NAI herein or in the Closing Certificate concerning
environmental matters materially inaccurate or misleading if made at the
time of such discovery and assuming that NAI was aware of all relevant
facts, (2) any Remedial Work (or change in Remedial Work) required or
undertaken by NAI or its Affiliates in response to any (A) discovery of
any Hazardous Substances on, under or about the Property other than
Permitted Hazardous Substances or (B) any claim for damages resulting
from Hazardous Substance Activities, (3) NAI's discovery of any
occurrence or condition on any real property adjoining or in the
vicinity of the Property which could cause the Property or any part
thereof to be subject to any ownership, occupancy, transferability or
use restrictions under Environmental Laws, or (4) any investigation or
inquiry of any failure or alleged failure by NAI to comply with
Environmental Laws affecting the Property by any governmental authority
responsible for enforcing Environmental Laws. In such event, NAI shall
deliver to BNPLC within thirty days after BNPLC's request, a preliminary
written environmental plan setting forth a general description of the
action that NAI proposes to take with respect thereto, if any, to bring
the Property into compliance with Environmental Laws or to correct any
breach by NAI of this Paragraph 8, including any proposed Remedial Work,
the estimated cost and time of completion, the name of the contractor
and a copy of the construction contract, if any, and such additional
data, instruments, documents, agreements or other materials or
information as BNPLC may request.
(ii) NAI shall provide BNPLC with copies of all material
written communications with federal, state and local governments, or
agencies relating to the matters listed in the preceding clause
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<PAGE> 20
(i). NAI shall also provide BNPLC with copies of any correspondence from
third Persons which threaten litigation over any significant failure or
alleged significant failure of NAI to maintain or operate the Property
in accordance with Environmental Laws.
(iii) Prior to NAI's submission of a Material
Environmental Communication to any governmental or regulatory agency or
third party, NAI shall, to the extent practicable, deliver to BNPLC a
draft of the proposed submission (together with the proposed date of
submission), and in good faith assess and consider any comments of BNPLC
regarding the same. Promptly after BNPLC's request, NAI shall meet with
BNPLC to discuss the submission, shall provide any additional
information requested by BNPLC and shall provide a written explanation
to BNPLC addressing the issues raised by comments (if any) of BNPLC
regarding the submission, including a reasoned analysis supporting any
decision by NAI not to modify the submission in accordance with comments
of BNPLC.
9. INSURANCE REQUIRED AND CONDEMNATION.
(a) Liability Insurance. Throughout the Term NAI shall maintain
commercial general liability insurance against claims for bodily and personal
injury, death and property damage occurring in or upon or resulting from any
occurrence in or upon the Property under one or more insurance policies that
satisfy the requirements set forth in Exhibit B. NAI shall deliver and maintain
with BNPLC for each liability insurance policy required by this Improvements
Lease written confirmation of the policy and the scope of the coverage provided
thereby issued by the applicable insurer or its authorized agent, which
confirmation must also satisfy the requirements set forth in Exhibit B.
(b) Property Insurance. Throughout the Term NAI will keep all
Improvements (including all alterations, additions and changes made to the
Improvements) insured against fire and other casualty under one or more property
insurance policies that satisfy the requirements set forth in Exhibit B. NAI
shall deliver and maintain with BNPLC for each property insurance policy
required by this Improvements Lease written confirmation of the policy and the
scope of the coverage provided thereby issued by the applicable insurer or its
authorized agent, which confirmation must also satisfy the requirements set
forth in Exhibit B. If any of the Property is destroyed or damaged by fire,
explosion, windstorm, hail or by any other casualty against which insurance
shall have been required hereunder, (i) BNPLC may, but shall not be obligated
to, make proof of loss if not made promptly by NAI after notice from BNPLC, (ii)
each insurance company concerned is hereby authorized and directed to make
payment for such loss directly to BNPLC for application as required by Paragraph
10, and (iii) BNPLC may settle, adjust or compromise any and all claims for
loss, damage or destruction under any policy or policies of insurance (provided,
that if any such claim is for less than $500,000, and if no Event of Default
shall have occurred and be continuing, NAI shall have the right to settle,
adjust or compromise the claim as NAI deems appropriate; and, provided further,
that so long as no Event of Default shall have occurred and be continuing, BNPLC
must provide NAI with at least forty-five days notice of BNPLC's intention to
settle any such claim before settling it unless NAI shall already have approved
of the settlement by BNPLC). If any casualty shall result in damage to or loss
or destruction of the Property, NAI shall give immediate notice thereof to BNPLC
and Paragraph 10 shall apply.
(c) Failure to Obtain Insurance. If NAI fails to obtain any
insurance or to provide confirmation of any such insurance as required by this
Improvements Lease, BNPLC shall be entitled (but not required) to obtain the
insurance that NAI has failed to obtain or for which NAI has not provided the
required confirmation and, without limiting BNPLC's other remedies under the
circumstances, BNPLC may require NAI to reimburse BNPLC for the cost of such
insurance and to pay interest thereon computed at the Default Rate from the date
such cost was paid by BNPLC until the date of reimbursement by NAI.
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<PAGE> 21
(d) Condemnation. Immediately upon obtaining knowledge of the
institution of any proceedings for the condemnation of the Property or any
portion thereof, or any other similar governmental or quasi-governmental
proceedings arising out of injury or damage to the Property or any portion
thereof, each party shall notify the other (provided, however, BNPLC shall have
no liability for its failure to provide such notice) of the pendency of such
proceedings. NAI shall, at its expense, diligently prosecute any such
proceedings and shall consult with BNPLC, its attorneys and experts and
cooperate with them as requested in the carrying on or defense of any such
proceedings. All proceeds of condemnation awards or proceeds of sale in lieu of
condemnation with respect to the Property and all judgments, decrees and awards
for injury or damage to the Property shall be paid to BNPLC as Escrowed
Proceeds, and all such proceeds will be applied as provided in Paragraph 10.
BNPLC is hereby authorized, in the name of NAI, at any time after an Event of
Default shall have occurred and be continuing, or otherwise with NAI's prior
consent, to execute and deliver valid acquittances for, and to appeal from, any
such judgment, decree or award concerning condemnation of any of the Property.
BNPLC shall not be in any event or circumstances liable or responsible for
failure to collect, or to exercise diligence in the collection of, any such
proceeds, judgments, decrees or awards.
(e) Waiver of Subrogation. NAI, for itself and for any Person
claiming through it (including any insurance company claiming by way of
subrogation), waives any and every claim which arises or may arise in its favor
against BNPLC or any other Interested Party and the officers, directors, and
employees of the Interested Parties for any and all Losses, to the extent that
NAI is compensated by insurance or would be compensated by the insurance
policies contemplated in this Improvements Lease, but for any deductible or
self-insured retention maintained under such insurance or but for a failure of
NAI to maintain the insurance as required by this Improvements Lease. NAI agrees
to have such insurance policies properly endorsed so as to make them valid
notwithstanding this waiver, if such endorsement is required to prevent a loss
of insurance.
10. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS.
(a) Collection and Application of Insurance and Condemnation
Proceeds Generally. This Paragraph 10 shall govern the application of proceeds
received by BNPLC or NAI during the Term from any third party (1) under any
property insurance policy as a result of damage to the Property (including
proceeds payable under any insurance policy covering the Property which is
maintained by NAI), (2) as compensation for any restriction placed upon the use
or development of the Property or for the condemnation of the Property or any
portion thereof, or (3) because of any judgment, decree or award for injury or
damage to the Property; excluding, however, any funds paid to BNPLC by BNPLC's
Parent, by an Affiliate of BNPLC or by any Participant that is made to
compensate BNPLC for any Losses BNPLC may suffer or incur in connection with
this Improvements Lease or the Property. NAI will promptly pay over to BNPLC any
insurance, condemnation or other proceeds covered by this Paragraph 10 which NAI
may receive from any insurer, condemning authority or other third party. All
proceeds covered by this Paragraph 10, including those received by BNPLC from
NAI or third parties, shall be applied as follows:
(i) First, proceeds covered by this Paragraph 10 will be
used to reimburse BNPLC for any costs and expenses, including Attorneys'
Fees, that BNPLC incurred to collect the proceeds.
(ii) Second, the proceeds remaining after such
reimbursement to BNPLC (hereinafter, the "REMAINING PROCEEDS") will be
applied, as hereinafter more particularly provided, either as a
Qualified Prepayment or to reimburse NAI or BNPLC for the actual
out-of-pocket costs of repairing or restoring the Property. Until,
however, any Remaining Proceeds received by BNPLC are applied by BNPLC
as a Qualified Prepayment or applied by BNPLC to reimburse costs of
repairs to or restoration of the Property pursuant to this Paragraph 10,
BNPLC shall hold and maintain such Remaining Proceeds as
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<PAGE> 22
Escrowed Proceeds in an interest bearing account, and all interest
earned on such account shall be added to and made a part of such
Escrowed Proceeds.
(b) Advances of Escrowed Proceeds to NAI. Except as otherwise
provided below in this Paragraph 10, BNPLC shall advance all Remaining Proceeds
held by it as Escrowed Proceeds to reimburse NAI for the actual out-of-pocket
cost to NAI of repairing or restoring the Property in accordance with the
requirements of this Improvements Lease and the other Operative Documents as the
applicable repair or restoration progresses and upon compliance by NAI with such
terms, conditions and requirements as may be reasonably imposed by BNPLC. In no
event, however, shall BNPLC be required to pay Escrowed Proceeds to NAI in
excess of the actual out-of-pocket cost to NAI of the applicable repair or
restoration, as evidenced by invoices or other documentation satisfactory to
BNPLC, it being understood that BNPLC may retain and apply any such excess as a
Qualified Prepayment.
(c) Application of Escrowed Proceeds as a Qualified Prepayment.
Provided no Event of Default shall have occurred and be continuing, BNPLC shall
apply any Remaining Proceeds paid to it (or other amounts available for
application as a Qualified Prepayment) as a Qualified Prepayment on any date
that BNPLC is directed to do so by a notice from NAI; however, if such a notice
from NAI specifies an effective date for a Qualified Prepayment that is less
than five Business Days after BNPLC's actual receipt of the notice, BNPLC may
postpone the date of the Qualified Prepayment to any date not later than five
Business Days after BNPLC's receipt of the notice. In any event, except when
BNPLC is required by the preceding sentence to apply Remaining Proceeds or other
amounts as a Qualified Prepayment on a Base Rent Date, BNPLC may deduct Breakage
Costs incurred in connection with any Qualified Prepayment from the Remaining
Proceeds or other amounts available for application as the Qualified Prepayment,
and NAI will reimburse BNPLC upon request for any such Breakage Costs that BNPLC
incurs but does not deduct.
(d) Special Provisions Applicable After an Event of Default.
Notwithstanding the foregoing, when any Event of Default shall have occurred and
be continuing, BNPLC shall be entitled to receive and collect all insurance,
condemnation or other proceeds governed by this Paragraph 10 and to apply all
Remaining Proceeds, when and to the extent deemed appropriate by BNPLC in its
sole discretion, either (A) to the reimbursement of NAI or BNPLC for the
out-of-pocket cost of repairing or restoring the Property, or (B) as Qualified
Prepayments.
(e) NAI's Obligation to Restore. Regardless of the adequacy of
any Remaining Proceeds available to NAI hereunder, and notwithstanding other
provisions of this Improvements Lease to the contrary, if the Property is
damaged by fire or other casualty or less than all or substantially all of the
Property is taken by condemnation, NAI must:
A) increase the value of the Property or the remainder thereof by
restoring or improving the same (in a manner consistent with the
requirements and limitations imposed by this Improvements Lease and the
other Operative Documents or otherwise acceptable to BNPLC), or decrease
Stipulated Loss Value by tendering a payment to BNPLC for application as
a Qualified Prepayment, as necessary to cause Current AS IS Market Value
to be not less than sixty percent (60%) of Stipulated Loss Value; and
B) restore the Property or the remainder thereof to a reasonably
safe and sightly condition.
(f) Takings of All or Substantially All of the Property on or
after the Base Rent Commencement Date. In the event of any taking of all or
substantially all of the Property on or after the Base Rent Commencement Date,
BNPLC shall be entitled to apply all Remaining Proceeds as a Qualified
Prepayment. In addition, if Stipulated Loss Value immediately prior to any such
taking exceeds the sum of the Remaining Proceeds
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resulting from such condemnation, then BNPLC shall be entitled to recover the
excess from NAI upon demand as an additional Qualified Prepayment, whereupon
this Improvements Lease shall terminate. Any taking of so much of the Real
Property as, in BNPLC's reasonable good faith judgment, makes it impracticable
to restore or improve the remainder thereof as required by part (2) of the
preceding subparagraph shall be considered a taking of substantially all the
Property for purposes of this Paragraph 10.
11. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF NAI
CONCERNING THE PROPERTY. NAI represents, warrants and covenants as follows:
(a) Compliance with Covenants and Laws. The use of the Property
permitted by this Improvements Lease complies, or will comply after NAI obtains
available permits as the tenant under this Improvements Lease, in all material
respects with all Applicable Laws. NAI has obtained or will promptly obtain all
utility, building, health and operating permits as may be required by any
governmental authority or municipality having jurisdiction over the Property for
any construction upon or use of the Property permitted by this Improvements
Lease.
(b) Operation of the Property. During the Term, NAI shall operate
the Property in a good and workmanlike manner and substantially in compliance
with all Applicable Laws and will pay or cause to be paid all fees or charges of
any kind in connection therewith. (If NAI does not promptly correct any failure
of the Property to comply with Applicable Laws that is the subject of a written
notice given to NAI or BNPLC by any governmental authority, then for purposes of
the preceding sentence, NAI shall be considered not to have maintained the
Property "substantially in accordance with Applicable Laws" whether or not the
noncompliance would be substantial in the absence of the notice.) During the
Term, NAI shall not use or occupy, or allow the use or occupancy of, the
Property in any manner which violates any Applicable Law or which constitutes a
public or private nuisance or which makes void, voidable or cancelable any
insurance then in force with respect thereto. During the Term, to the extent
that any of the following would, individually or in the aggregate, materially
and adversely affect the value of the Property or NAI's use, occupancy or
operations on the Property, NAI shall not, without BNPLC's prior consent: (i)
initiate or permit any zoning reclassification of the Property; (ii) seek any
variance under existing zoning ordinances applicable to the Property; (iii) use
or permit the use of the Property in a manner that would result in such use
becoming a nonconforming use under applicable zoning ordinances or similar laws,
rules or regulations; (iv) execute or file any subdivision plat affecting the
Property; or (v) consent to the annexation of the Property to any municipality.
If (A) a change in the zoning or other Applicable Laws affecting the permitted
use or development of the Property shall occur after the Base Rent Commencement
Date that reduces the value of the Property, or (B) conditions or circumstances
on or about the Property are discovered after the Base Rent Commencement Date
(such as the presence of an endangered species) which substantially impede
development and thereby reduce the value of the Property, and if after any such
reduction under clause (A) or (B) preceding the Current AS IS Market Value of
the Property is less than sixty percent (60%) of Stipulated Loss Value, then NAI
shall pay BNPLC upon request the amount by which Current AS IS Market Value is
less than sixty percent (60%) of Stipulated Loss Value, for application as a
Qualified Prepayment. During the Term, NAI shall not cause or permit any
drilling or exploration for, or extraction, removal or production of, minerals
from the surface or subsurface of the Property, and NAI shall not do any act
whereby the market value of the Property may reasonably be expected to be
materially lessened. During the Term, if NAI receives a written notice or claim
from any federal, state or other governmental entity that the Property is not in
compliance in any material respect with any Applicable Law, or that any action
may be taken against the owner of the Property because the Property does not
comply with Applicable Law, NAI shall promptly furnish a copy of such notice or
claim to BNPLC.
Notwithstanding the foregoing, NAI may in good faith, by appropriate
proceedings, contest the validity and applicability of any Applicable Law with
respect to the Property, and pending such contest NAI shall not be
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<PAGE> 24
deemed in default hereunder because of the violation of such Applicable Law, if
NAI diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and if NAI promptly causes the Property to comply with
any such Applicable Law upon a final determination by a court of competent
jurisdiction that the same is valid and applicable to the Property; provided,
however, in any event such contest shall be concluded and the violation of such
Applicable Law must be corrected by NAI and any claims asserted against BNPLC or
the Property because of such violation must be paid by NAI, all prior to the
earlier of (i) the date that any criminal prosecution is instituted or overtly
threatened against BNPLC or any of its directors, officers or employees because
of such violation, (ii) the date that any action is taken by any governmental
authority against BNPLC or any property owned by BNPLC (including the Property)
because of such violation, or (iii) a Designated Sale Date upon which, for any
reason, NAI or an Affiliate of NAI or any Applicable Purchaser shall not
purchase BNPLC's interest in the Property pursuant to the Purchase Agreement for
a price to BNPLC (when taken together with any additional payments made by NAI
pursuant to Paragraph 1(A)(2) of the Purchase Agreement, in the case of a
purchase by an Applicable Purchaser) equal to the Break Even Price.
(c) Debts for Construction, Maintenance, Operation or
Development. NAI shall cause all debts and liabilities incurred in the
construction, maintenance, operation or development of the Property, including
all debts and liabilities for labor, material and equipment and all debts and
charges for utilities servicing the Property, to be promptly paid; provided,
that nothing in this subparagraph will be construed to require NAI to remove
Liens Removable by BNPLC.
Notwithstanding the foregoing, NAI may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted
mechanic's or materialmen's lien and pending such contest NAI shall not be
deemed in default under this subparagraph because of the contested lien if (1)
within sixty days after being asked to do so by BNPLC, NAI bonds over to BNPLC's
reasonable satisfaction all such contested liens against the Property alleged to
secure an amount in excess of $500,000 (individually or in the aggregate), (2)
NAI diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and (3) NAI promptly causes to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all costs and
interest thereon, promptly after such judgment becomes final; provided, however,
that in any event each such contest shall be concluded and the lien, interest
and costs must be paid by NAI prior to the earlier of (i) the date that any
criminal prosecution is instituted or overtly threatened against BNPLC or its
directors, officers or employees because of the nonpayment thereof, (ii) the
date that any writ or order is issued under which the Property or any other
property in which BNPLC has an interest may be seized or sold or any other
action is taken against BNPLC or any property in which BNPLC has an interest
because of the nonpayment thereof, or (iii) a Designated Sale Date upon which,
for any reason, NAI or an Affiliate of NAI or any Applicable Purchaser shall not
purchase BNPLC's interest in the Property pursuant to the Purchase Agreement for
a price to BNPLC (when taken together with any additional payments made by NAI
pursuant to Paragraph 1(A)(2) of the Purchase Agreement, in the case of a
purchase by an Applicable Purchaser) equal to the Break Even Price.
(d) Repair, Maintenance, Alterations and Additions. NAI shall
keep the Property in good order, operating condition and appearance and shall
cause all necessary repairs, renewals and replacements to be promptly made. NAI
will not allow any of the Property to be materially misused, abused or wasted,
and NAI shall promptly replace any worn-out fixtures and Personal Property with
fixtures and Personal Property comparable to the replaced items when new. NAI
shall not, without the prior consent of BNPLC, (i) remove from the Property any
fixture or Personal Property having significant value except such as are
replaced by NAI by fixtures or Personal Property of equal suitability and value,
free and clear of any lien or security interest (and for purposes of this clause
"significant value" will mean any fixture or Personal Property that has a value
of more than $100,000 or that, when considered together with all other fixtures
and Personal Property removed and not replaced by NAI by items of equal
suitability and value, has an aggregate value of $500,000 or more) or (ii) make
material new
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<PAGE> 25
Improvements or alter Improvements in any material respect. Without limiting the
foregoing, NAI will notify BNPLC before making any significant alterations to
the Improvements.
The parties acknowledge that NAI has proposed to BNPLC that additional
Improvements be constructed on the Land in the future, and BNPLC has consented
thereto, provided that (1) no Event of Default has occurred and is continuing,
and (b) BNPLC is satisfied, in its sole discretion, that (i) the location,
configuration, architectural style, and manner and type of construction of such
additional Improvements shall not reduce the value of the Improvements taken as
a whole and will otherwise be constructed in accordance with the requirements of
this Lease, and (ii) such additional Improvements will comply with all
Applicable Laws.
(e) Permitted Encumbrances and Development Documents. NAI shall
during the Term comply with and will cause to be performed all of the covenants,
agreements and obligations imposed upon the owner of any interest in the
Property by the Permitted Encumbrances (including the Premises Leases) or the
Development Documents. Without limiting the foregoing, NAI shall cause all
amounts to be paid when due, the payment of which is secured by any Lien against
the Property created by the Permitted Encumbrances. Without the prior consent of
BNPLC, NAI shall not enter into, initiate, approve or consent to any
modification of any Permitted Encumbrance or Development Document that would
create or expand or purport to create or expand obligations or restrictions
which would encumber BNPLC's interest in the Property. (Whether BNPLC must give
any such consent requested by NAI during the Term of this Improvements Lease
shall be governed by subparagraph 3(A) of the Closing Certificate and
Agreement.)
(f) Books and Records Concerning the Property. NAI shall keep
books and records that are accurate and complete in all material respects for
the Property and, subject to Paragraph 16.(c), will permit all such books and
records (including all contracts, statements, invoices, bills and claims for
labor, materials and services supplied for the construction and operation of any
Improvements) to be inspected and copied by BNPLC. This subparagraph shall not
be construed as requiring NAI to regularly maintain separate books and records
relating exclusively to the Property; provided, however, that upon request, NAI
shall construct or abstract from its regularly maintained books and records
information required by this subparagraph relating to the Property.
12. FINANCIAL COVENANTS AND OTHER COVENANTS INCORPORATED BY REFERENCE TO
SCHEDULE 1. Throughout the Term of this Improvements Lease, NAI shall comply
with the requirements of Schedule 1 attached hereto.
13. FINANCIAL STATEMENTS AND OTHER REPORTS.
(a) Financial Statements; Required Notices; Certificates.
Throughout the Term of this Improvements Lease, NAI shall deliver to BNPLC and
to each Participant:
(i) as soon as available and in any event within one hundred
twenty days after the end of each fiscal year of NAI, a consolidated
balance sheet of NAI and its Consolidated Subsidiaries as of the end of
such fiscal year and a consolidated income statement and statement of
cash flows of NAI and its Consolidated Subsidiaries for such fiscal
year, all in reasonable detail and all prepared in accordance with GAAP
and accompanied by a report and opinion of accountants of national
standing selected by NAI, which report and opinion shall be prepared in
accordance with generally accepted auditing standards and shall not be
subject to any qualifications or exceptions as to the scope of the audit
nor to any qualification or exception which BNPLC determines, in BNPLC's
reasonable discretion, is unacceptable;
(ii) as soon as available and in any event within sixty days
after the end of each of the first three
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<PAGE> 26
quarters of each fiscal year of NAI, the consolidated balance sheet of
NAI and its Consolidated Subsidiaries as of the end of such quarter and
the consolidated income statement and the consolidated statement of cash
flows of NAI and its Consolidated Subsidiaries for the period commencing
at the end of the previous fiscal year and ending with the end of such
quarter, all in reasonable detail and all prepared in accordance with
GAAP and certified by the chief financial officer or controller of NAI
(subject to year-end adjustments);
(iii) together with the financial statements furnished in
accordance with subparagraph 13.(a)(i) and 13.(a)(ii), a certificate of
the chief financial officer or controller of NAI: (i) certifying that to
the knowledge of NAI no Default or Event of Default under this
Improvements Lease has occurred and is continuing or, if a Default or
Event of Default has occurred and is continuing, a brief statement as to
the nature thereof and the action which is proposed to be taken with
respect thereto, (ii) certifying that the representations of NAI set
forth in the Operative Documents are true and correct in all material
respects as of the date thereof as though made on and as of the date
thereof or, if not then true and correct, a brief statement as to why
such representations are no longer true and correct, and (iii) with
computations demonstrating compliance with the financial covenants
contained in Schedule 1;
(iv) within five days after the end of each calendar month, a
certificate of the chief financial officer or controller of NAI
certifying that at the end of the preceding calendar month, NAI had
sufficient cash and other assets described in Paragraph 1 of Part II of
Schedule 1 to comply with the requirements of that paragraph;
(v) promptly after the sending or filing thereof, copies of all
proxy statements, financial statements and reports which NAI sends to
NAI's stockholders, and copies of all regular, periodic and special
reports, and all registration statements (other than registration
statements on Form S-8 or any form substituted therefor) which NAI files
with the Securities and Exchange Commission or any governmental
authority which may be substituted therefor, or with any national
securities exchange;
(vi) upon request by BNPLC, a statement in writing certifying
that the Operative Documents are unmodified and in full effect (or, if
there have been modifications, that the Operative Documents are in full
effect as modified, and setting forth such modifications) and the dates
to which the Base Rent has been paid and either stating that to the
knowledge of NAI no Default or Event of Default under this Improvements
Lease has occurred and is continuing or, if a Default or Event of
Default under this Improvements Lease has occurred and is continuing, a
brief statement as to the nature thereof; it being intended that any
such statement by NAI may be relied upon by any prospective purchaser or
mortgagee of the Property and by the Participants
(vii) as soon as possible after, and in any event within ten days
after NAI becomes aware that, any of the following has occurred, with
respect to which the potential aggregate liability to NAI relating
thereto is $500,000 or more, a notice signed by a senior financial
officer of NAI setting forth details of the following and the response,
if any, which NAI or its ERISA Affiliate proposes to take with respect
thereto (and a copy of any report or notice required to be filed with or
given to PBGC by NAI or an ERISA Affiliate with respect to any of the
following or the events or conditions leading up to the following): (A)
the assertion, to secure any Unfunded Benefit Liabilities, of any Lien
against the assets of NAI, against the assets of any Plan or
Multiemployer Plan or against any interest of BNPLC or NAI in the
Property, or (B) the taking of any action by the PBGC or any other
governmental authority against NAI to terminate any Plan of NAI or any
ERISA Affiliate of NAI or to cause the appointment of a trustee or
receiver to administer any such Plan ; and
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<PAGE> 27
(viii) such other information respecting the condition or
operations, financial or otherwise, of NAI, of any of its Subsidiaries
or of the Property as BNPLC or any Participant through BNPLC may from
time to time reasonably request.
BNPLC is hereby authorized to deliver a copy of any information or certificate
delivered to it pursuant to this subparagraph 13.(a) to BNPLC's Parent, to the
Participants and to any regulatory body having jurisdiction over BNPLC or
BNPLC's Parent or any Participant that requires or requests it.
14. ASSIGNMENT AND SUBLETTING BY NAI.
(a) BNPLC's Consent Required. Without the prior consent of BNPLC,
NAI shall not assign, transfer, mortgage, pledge or hypothecate this
Improvements Lease or any interest of NAI hereunder and shall not sublet all or
any part of the Property, by operation of law or otherwise; provided, that
subject to subparagraph 14.(c) below, (I) this provision shall not be construed
to prohibit any Premises Lease described in the Common Definitions and
Provisions Agreement (Phase IV - Improvements) or any transfer or sublease by a
lessee thereunder which is authorized by the Premises Leases, and (II) so long
as no Event of Default has occurred and is continuing: (1) NAI shall be entitled
to sublet no more than forty-nine percent (49%) (computed on the basis of square
footage) of the useable space in then existing and completed building
Improvements, if any, so long as (i) any sublease by NAI is made expressly
subject and subordinate to the terms hereof, and (ii) such sublease has a term
equal to or less than the remainder of the then effective Term of this
Improvements Lease; and (2) NAI shall be entitled to assign or transfer this
Improvements Lease or any interest of NAI hereunder to an Affiliate of NAI if
both NAI and its Affiliate confirm their joint and several liability hereunder
by written notice given to BNPLC.
(b) Standard for BNPLC's Consent to Assignments and Certain Other
Matters. Consents and approvals of BNPLC which are required by this Paragraph 14
will not be unreasonably withheld or delayed, but NAI acknowledges that BNPLC's
withholding of such consent or approval shall be reasonable if BNPLC determines
in good faith that (1) giving the approval may materially increase BNPLC's risk
of liability for any existing or future environmental problem, or (2) giving the
approval is likely to increase BNPLC's administrative burden of complying with
or monitoring NAI's compliance with the requirements of this Improvements Lease.
(c) Consent Not a Waiver. No consent by BNPLC to a sale,
assignment, transfer, mortgage, pledge or hypothecation of this Improvements
Lease or NAI's interest hereunder, and no assignment or subletting of the
Property or any part thereof in accordance with this Improvements Lease or
otherwise with BNPLC's consent, shall release NAI from liability hereunder; and
any such consent shall apply only to the specific transaction thereby authorized
and shall not relieve NAI from any requirement of obtaining the prior consent of
BNPLC to any further sale, assignment, transfer, mortgage, pledge or
hypothecation of this Improvements Lease or any interest of NAI hereunder.
15. ASSIGNMENT BY BNPLC.
(a) Restrictions on Transfers. Except by a Permitted Transfer,
BNPLC shall not assign, transfer, mortgage, pledge, encumber or hypothecate this
Improvements Lease or the other Operative Documents or any interest of BNPLC in
and to the Property during the Term without the prior consent of NAI, which
consent NAI may withhold in its sole discretion. Further, notwithstanding
anything to the contrary herein contained, if withholding taxes are imposed on
the rents and other amounts payable to BNPLC hereunder because of BNPLC's
assignment of this Improvements Lease to any citizen of, or any corporation or
other entity formed under the laws of, a country other than the United States,
NAI shall not be required to compensate BNPLC or any such assignee
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<PAGE> 28
for the withholding tax. If, in breach of this subparagraph, BNPLC transfer the
Property or any part thereof by a conveyance or that does not constitute a
Permitted Transfer, with the result that additional transfer taxes or other
Impositions are assessed against the Property or the owner thereof, BNPLC shall
be required to pay such additional transfer taxes or other Impositions.
(b) Effect of Permitted Transfer or other Assignment by BNPLC.
If, without breaching subparagraph 15.(a), BNPLC sells or otherwise transfers
the Property and assigns all of its rights under this Improvements Lease and the
other Operative Documents, then BNPLC shall thereby be released from any
obligations arising after such assumption under this Improvements Lease or the
other Operative Documents, and NAI shall look solely to each successor in
interest of BNPLC for performance of such obligations.
16. BNPLC'S RIGHT OF ACCESS.
(a) During the Term, BNPLC and BNPLC's representatives may
(subject to subparagraph 16.(c)) enter the Property at any reasonable time after
five Business Days advance written notice to NAI for the purpose of making
inspections or performing any work BNPLC is authorized to undertake by the next
subparagraph or for the purpose confirming whether NAI has complied with the
requirements of this Improvements Lease or the other Operative Documents.
(b) If NAI fails to perform any act or to take any action
required of it by this Improvements Lease or the Closing Certificate, or to pay
any money which NAI is required by this Improvements Lease or the Closing
Certificate to pay, and if such failure or action constitutes an Event of
Default or renders BNPLC or any director, officer, employee or Affiliate of
BNPLC at risk of criminal prosecution or renders BNPLC's interest in the
Property or any part thereof at risk of forfeiture by forced sale or otherwise,
then in addition to any other remedies specified herein or otherwise available,
BNPLC may, perform or cause to be performed such act or take such action or pay
such money. Any expenses so incurred by BNPLC, and any money so paid by BNPLC,
shall be a demand obligation owing by NAI to BNPLC. Further, BNPLC, upon making
such payment, shall be subrogated to all of the rights of the person,
corporation or body politic receiving such payment. But nothing herein shall
imply any duty upon the part of BNPLC to do any work which under any provision
of this Improvements Lease NAI may be required to perform, and the performance
thereof by BNPLC shall not constitute a waiver of NAI's default. BNPLC may
during the progress of any such work permitted by BNPLC hereunder on or in the
Property keep and store upon the Property all necessary materials, tools, and
equipment. BNPLC shall not in any event be liable for inconvenience, annoyance,
disturbance, loss of business, or other damage to NAI or the subtenants or
invitees of NAI by reason of making such repairs or the performance of any such
work on or in the Property, or on account of bringing materials, supplies and
equipment into or through the Property during the course of such work (except
for any liability in excess of the liability insurance limits established in
Exhibit B resulting from death or injury or damage to the property of third
parties caused by the Established Misconduct of BNPLC or its officers,
employees, or agents in connection therewith), and the obligations of NAI under
this Improvements Lease shall not thereby be excused in any manner.
(c) NAI shall have no obligation to provide proprietary
information (as defined in the next sentence) to BNPLC, except and to the extent
that (1) BNPLC reasonably determines that BNPLC cannot accomplish the purposes
of BNPLC's inspection of the Property or exercise of other rights granted
pursuant to the various express provisions of this Improvements Lease and the
other Operative Documents without evaluating such information. For purposes of
this Improvements Lease "PROPRIETARY INFORMATION" includes NAI's intellectual
property, trade secrets and other confidential information of value to NAI
about, among other things, NAI's manufacturing processes, products, marketing
and corporate strategies, but in no event will "proprietary information" include
any disclosure of substances and materials (and their chemical composition)
which are or
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<PAGE> 29
previously have been present in, on or under the Property at the time of any
inspections by BNPLC, nor will "proprietary information" include any additional
disclosures reasonably required to permit BNPLC to determine whether the
presence of such substances and materials has constituted a violation of
Environmental Laws. In addition, under no circumstances shall NAI have any
obligation to disclose to BNPLC or any other party any proprietary information
of NAI (including, without limitation, any pending applications for patents or
trademarks, any research and design and any trade secrets) except if and to the
limited extent reasonably necessary to comply with the express provisions of
this Improvements Lease or the other Operative Documents.
17. EVENTS OF DEFAULT. Each of the following events shall be an "EVENT
OF DEFAULT" by NAI under this Improvements Lease:
(a) NAI shall fail to pay when due any installment of Rent due hereunder
and such failure shall continue for three (3) Business Days after NAI is
notified in writing thereof.
(b) NAI shall fail to cause any representation or warranty of NAI
contained herein or in the Closing Certificate that was false or misleading in
any material respect when made to be made true and not misleading (other than as
described in the other clauses of this Paragraph 17), or NAI shall fail to
comply with any term, provision or covenant of this Improvements Lease or the
Closing Certificate (other than as described in the other clauses of this
Paragraph 17), and in either case shall not cure such failure prior to the
earlier of (A) thirty days after written notice thereof is sent to NAI or (B)
the date any writ or order is issued for the levy or sale of any property owned
by BNPLC (including the Property) or any criminal prosecution is instituted or
overtly threatened against BNPLC or any of its directors, officers or employees
because of such failure; provided, however, that so long as no such writ or
order is issued and no such criminal prosecution is instituted or overtly
threatened, the period within which such failure may be cured by NAI shall be
extended for a further period (not to exceed an additional sixty days) as shall
be necessary for the curing thereof with diligence, if (but only if) (x) such
failure is susceptible of cure but cannot with reasonable diligence be cured
within such thirty day period, (y) NAI shall promptly have commenced to cure
such failure and shall thereafter continuously prosecute the curing thereof with
reasonable diligence and (z) the extension of the period for cure will not, in
any event, cause the period for cure to extend beyond five days prior to the
expiration of this Improvements Lease.
(c) NAI shall abandon the Property.
(d) NAI or any Subsidiary shall fail to make any payment or payments of
principal, premium or interest, of Debt of NAI described in the next sentence
when due (taking into consideration the time NAI may have to cure such failure,
if any, under the documents governing such Debt). As used in this clause
14(a)(v), "DEBT" shall include only Debt (as defined in the Common Definitions
and Provisions Agreement (Phase IV - Improvements)) of NAI or any of its
Subsidiaries now existing or arising in the future (a) payable to BNPLC or any
Affiliate of BNPLC, or (B) payable to any other Person and with respect to which
$3,000,000 or more is actually due and payable because of acceleration or
otherwise.
(e) NAI: (a) shall generally not, or be unable to, or shall admit in
writing its inability to, pay its debts as such debts become due; or (b) shall
make an assignment for the benefit of creditors, petition or apply to any
tribunal for the appointment of a custodian, receiver or trustee for it or a
substantial part of its assets; or (c) shall file any petition or application to
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or (d) shall have had any such
petition or application filed against it; or (e) by any act or omission shall
indicate its consent to, approval of or acquiescence in any such petition,
application or proceeding or order for relief or the appointment of a custodian,
receiver or trustee for all or any substantial part of its property; or (f)
shall suffer any such custodianship, receivership or trusteeship to continue
undischarged for a period of sixty days or
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more.
(f) One or more final judgments, decrees or orders for the payment of
money in excess of $3,000,000 in the aggregate shall be rendered against NAI and
such judgments, decrees or orders shall continue unsatisfied and in effect for a
period of thirty consecutive days without NAI's having obtained an agreement (or
after the expiration or termination of an agreement) of the Persons entitled to
enforce such judgment, decrees or orders not to enforce the same pending
negotiations with NAI concerning the satisfaction or other discharge of the
same.
(g) NAI shall breach the requirements of Paragraph 12, which by
reference to Schedule 1 establishes certain financial covenants and other
requirements.
(h) as of the effective date of this Improvements Lease, any of the
representations or warranties of NAI contained in subparagraphs 2(A) - (J) of
the Closing Certificate shall be false or misleading in any material respect.
(i) NAI shall fail to pay the full amount of any Supplemental Payment
required by the Purchase Agreement on the Designated Sale Date or shall fail to
provide Collateral as and when due pursuant to the Pledge Agreement Documents.
(j) NAI shall fail to comply with any term, provision or condition of
the Pledge Agreements after the expiration of any applicable notice and cure
period set forth in the Pledge Agreement.
18. REMEDIES.
(a) Basic Remedies. At any time after an Event of Default and
after BNPLC has given any notice required by subparagraph 18.(b), BNPLC shall be
entitled at BNPLC's option (and without limiting BNPLC in the exercise of any
other right or remedy BNPLC may have, and without any further demand or notice
except as expressly described in this subparagraph 18.(a)), to exercise any one
or more of the following remedies:
(i) By notice to NAI, BNPLC may terminate NAI's right to
possession of the Property. A notice given in connection with unlawful
detainer proceedings specifying a time within which to cure a default
shall terminate NAI's right to possession if NAI fails to cure the
default within the time specified in the notice.
(ii) Upon termination of NAI's right to possession and
without further demand or notice, BNPLC may re-enter the Property in any
manner not prohibited by Applicable Law and take possession of all
improvements, additions, alterations, equipment and fixtures thereon and
remove any persons in possession thereof. Any property in the
Improvements may be removed and stored in a warehouse or elsewhere at
the expense and risk of and for the account of NAI.
(iii) Upon termination of NAI's right to possession, this
Improvements Lease shall terminate and BNPLC may recover from NAI:
a) The worth at the time of award of the unpaid
Rent which had been earned at the time of termination;
b) The worth at the time of award of the amount by
which the unpaid Rent which would have been earned after
termination until the time of award exceeds the amount of
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<PAGE> 31
such rental loss that NAI proves could have been reasonably
avoided;
c) The worth at the time of award of the amount by
which the unpaid Rent for the balance of the scheduled Term after
the time of award exceeds the amount of such rental loss that NAI
proves could be reasonably avoided; and
d) Any other amount necessary to compensate BNPLC
for all the detriment proximately caused by NAI's failure to
perform NAI's obligations under this Improvements Lease or which
in the ordinary course of things would be likely to result
therefrom, including the costs and expenses (including Attorneys'
Fees, advertising costs and brokers' commissions) of recovering
possession of the Property, removing persons or property
therefrom, placing the Property in good order, condition, and
repair, preparing and altering the Property for reletting, all
other costs and expenses of reletting, and any loss incurred by
BNPLC as a result of NAI's failure to perform NAI's obligations
under the other Operative Documents.
The "WORTH AT THE TIME OF AWARD" of the amounts referred to in
subparagraph 18.(a)(iii)a) and subparagraph 18.(a)(iii)b) shall
be computed by allowing interest at the Default Rate. The "WORTH
AT THE TIME OF AWARD" of the amount referred to in subparagraph
18.(a)(iii)c) shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent (1%).
e) Such other amounts in addition to or in lieu of
the foregoing as may be permitted from time to time by applicable
California law.
(iv) BNPLC shall have the remedy described in California Civil
Code Section 1951.4 (lessor may continue lease in force even after
lessee's breach and abandonment and recover rent as it becomes due, if
lessee has right to sublet or assign, subject only to reasonable
limitations). Accordingly, even if NAI has breached this Improvements
Lease and abandoned the Property, this Improvements Lease shall continue
in effect for so long as BNPLC does not terminate NAI's right to
possession, and BNPLC may enforce all of BNPLC's rights and remedies
under this Improvements Lease, including the right to recover the Rent
as it becomes due under this Improvements Lease. NAI's right to
possession shall not be deemed to have been terminated by BNPLC except
pursuant to subparagraph 18.(a)(i) hereof. The following shall not
constitute a termination of NAI's right to possession:
a) Acts of maintenance or preservation or efforts
to relet the Property;
b) The appointment of a receiver upon the
initiative of BNPLC to protect BNPLC's interest under this
Improvements Lease; or
c) Reasonable withholding of consent to an
assignment or subletting, or terminating a subletting or
assignment by NAI.
(b) Notice Required So Long As the Purchase Option and NAI's
Initial Remarketing Rights and Obligations Continue Under the Purchase
Agreement. So long as NAI remains in possession of the Property and there has
been no termination of the Purchase Option and NAI's Initial Remarketing Rights
and Obligations as provided Paragraph 4 of the Purchase Agreement, BNPLC's right
to exercise remedies provided in subparagraph 18.(a) will be subject to the
condition precedent that BNPLC shall have notified NAI, at a time when an Event
of Default shall have occurred and be continuing, of BNPLC's intent to exercise
remedies provided in
-27-
<PAGE> 32
subparagraph 18.(a) at least sixty days prior to exercising the remedies. The
condition precedent is intended to provide NAI with an opportunity to exercise
the Purchase Option or NAI's Initial Remarketing Rights and Obligations before
losing possession of the Property pursuant to subparagraph 18.(a). The condition
precedent is not, however, intended to extend any period for curing an Event of
Default. Accordingly, if an Event of Default has occurred, and regardless of
whether any Event of Default is then continuing, BNPLC may proceed immediately
to exercise remedies provided in subparagraph 18.(a) at any time after the
earlier of (i) sixty days after BNPLC has given such a notice to NAI, (ii) any
date upon which NAI relinquishes possession of the Property, or (iii) any
termination of the Purchase Option and NAI's Initial Remarketing Rights and
Obligations.
(c) Enforceability. This Paragraph 18 shall be enforceable to the
maximum extent not prohibited by Applicable Law, and the unenforceability of any
provision in this Paragraph shall not render any other provision unenforceable.
(d) Remedies Cumulative. No right or remedy herein conferred upon
or reserved to BNPLC is intended to be exclusive of any other right or remedy,
and each and every such right and remedy shall be cumulative and in addition to
any other right or remedy given to BNPLC hereunder or now or hereafter existing
in favor of BNPLC under Applicable Law or in equity. In addition to other
remedies provided in this Improvements Lease, BNPLC shall be entitled, to the
extent permitted by Applicable Law or in equity, to injunctive relief in case of
the violation, or attempted or threatened violation, of any of the covenants,
agreements, conditions or provisions of this Improvements Lease, or to a decree
compelling performance of any of the other covenants, agreements, conditions or
provisions of this Improvements Lease to be performed by NAI, or to any other
remedy allowed to BNPLC at law or in equity. Nothing contained in this
Improvements Lease shall limit or prejudice the right of BNPLC to prove for and
obtain in proceedings for bankruptcy or insolvency of NAI by reason of the
termination of this Improvements Lease, an amount equal to the maximum allowed
by any statute or rule of law in effect at the time when, and governing the
proceedings in which, the damages are to be proved, whether or not the amount be
greater, equal to, or less than the amount of the loss or damages referred to
above. Without limiting the generality of the foregoing, nothing contained
herein shall modify, limit or impair any of the rights and remedies of BNPLC
under the Purchase Documents, and BNPLC shall not be required to give the sixty
day notice described in subparagraph 18.(b) as a condition precedent to any
acceleration of the Designated Sale Date or to taking any action to enforce the
Purchase Documents.
19. DEFAULT BY BNPLC. If BNPLC should default in the performance of any
of its obligations under this Improvements Lease, BNPLC shall have the time
reasonably required, but in no event less than thirty days, to cure such default
after receipt of notice from NAI specifying such default and specifying what
action NAI believes is necessary to cure the default. If NAI prevails in any
litigation brought against BNPLC because of BNPLC's failure to cure a default
within the time required by the preceding sentence, then NAI shall be entitled
to an award against BNPLC for the monetary damages proximately caused to NAI by
such default.
Notwithstanding the foregoing, BNPLC's right to cure as provided in this
Paragraph 19 will not in any event extend the time within which BNPLC must
remove Liens Removable by BNPLC as required by Paragraph 20 beyond the
Designated Sale Date.
20. QUIET ENJOYMENT. Provided NAI pays the Base Rent and all Additional
Rent payable hereunder as and when due and payable and keeps and fulfills all of
the terms, covenants, agreements and conditions to be performed by NAI
hereunder, BNPLC shall not during the Term disturb NAI's peaceable and quiet
enjoyment of the Property; however, such enjoyment shall be subject to the
terms, provisions, covenants, agreements and conditions of this Improvements
Lease, to Permitted Encumbrances, to Development Documents and to any other
claims not constituting Liens Removable by BNPLC. If any Lien Removable by BNPLC
is
-28-
<PAGE> 33
claimed against the Property, BNPLC will remove the Lien Removable by BNPLC
promptly. Any breach by BNPLC of this Paragraph shall render BNPLC liable to NAI
for any monetary damages proximately caused thereby, but as more specifically
provided in subparagraph 4.(b) above, no such breach shall entitle NAI to
terminate this Improvements Lease or excuse NAI from its obligation to pay Rent.
21. SURRENDER UPON TERMINATION. Unless NAI or an Applicable Purchaser
purchases or has purchased BNPLC's entire interest in the Property pursuant to
the terms of the Purchase Agreement and BNPLC's entire interest in the
Improvements and other "Property" under (and as defined in) the Other Purchase
Agreement, NAI shall, upon the termination of NAI's right to occupancy,
surrender to BNPLC the Property, including Improvements constructed by NAI and
fixtures and furnishings included in the Property, free of all Hazardous
Substances (including Permitted Hazardous Substances) and tenancies and with all
Improvements in substantially the same condition as of the date the same were
initially completed, excepting only (i) ordinary wear and tear that occurs
between the maintenance, repairs and replacements required by other provisions
of this Improvements Lease or the Other Lease Agreement, and (ii) demolition,
alterations and additions which are expressly permitted by the terms of this
Improvements Lease or the Other Lease Agreement and which have been completed by
NAI in a good and workmanlike manner in accordance with all Applicable Laws. Any
movable furniture or movable personal property belonging to NAI or any party
claiming under NAI, if not removed at the time of such termination and if BNPLC
shall so elect, shall be deemed abandoned and become the property of BNPLC
without any payment or offset therefor. If BNPLC shall not so elect, BNPLC may
remove such property from the Property and store it at NAI's risk and expense.
22. HOLDING OVER BY NAI. Should NAI not purchase BNPLC's right, title
and interest in the Property as provided in the Purchase Agreement, but
nonetheless continue to hold the Property after the termination of this
Improvements Lease without BNPLC's consent, whether such termination occurs by
lapse of time or otherwise, such holding over shall constitute and be construed
as a tenancy from day to day only, at a daily Base Rent equal to: (i) Stipulated
Loss Value on the day in question, times (ii) the Default Rate for such day;
divided by (iii) three hundred and sixty; subject, however, to all of the terms,
provisions, covenants and agreements on the part of NAI hereunder. No payments
of money by NAI to BNPLC after the termination of this Improvements Lease shall
reinstate, continue or extend the Term of this Improvements Lease and no
extension of this Improvements Lease after the termination thereof shall be
valid unless and until the same shall be reduced to writing and signed by both
BNPLC and NAI.
23. INDEPENDENT OBLIGATIONS EVIDENCED BY THE OTHER OPERATIVE DOCUMENTS.
NAI acknowledges and agrees that nothing contained in this Improvements Lease
shall limit, modify or otherwise affect any of NAI's obligations under the other
Operative Documents, which obligations are intended to be separate, independent
and in addition to, and not in lieu of, the obligations set forth herein. In the
event of any inconsistency between the express terms and provisions of the
Purchase Documents and the express terms and provisions of this Improvements
Lease, the express terms and provisions of the Purchase Documents shall control.
In the event of any inconsistency between the express terms and provisions of
the Closing Certificate and the express terms and provisions of this
Improvements Lease, the express terms and provisions of this Improvements Lease
shall control; provided, nothing herein will limit or impair NAI's obligations
under the Closing Certificate following any expiration of termination of this
Improvements Lease.
[The signature pages follow.]
-29-
<PAGE> 34
IN WITNESS WHEREOF, NAI and BNPLC have caused this Improvements Lease
Agreement to be executed as of December ___, 1999.
"NAI"
NETWORK APPLIANCE, INC.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE> 35
[Continuation of signature pages to Lease Agreement dated to be effective
December ___, 1999]
"BNPLC"
BNP LEASING CORPORATION
By:
-------------------------------------
Lloyd G. Cox, Vice President
<PAGE> 36
Exhibit A
LEGAL DESCRIPTION
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
TRACT 1:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of a portion of Parcel B, as
shown upon that certain Parcel Map recorded in Book 345 of Maps, at page 20,
Santa Clara County Records", which Map was filed for record in the Office of the
Recorder of the County of Santa Clara, State of California, on November 17,
1976, in Book 383 of Maps, at page 35.
TRACT 2:
Together with an easement for vehicles parking over the following described
property:
A 7-foot strip of land for parking easement purposes over a portion of Parcel A,
as said Parcel A is shown on that certain Parcel Map filed for record on
November 10, 1974 in Book 292 of Maps, at page 41, records of said County, and
being more particularly described as follows:
Commencing at the Northeast corner of said Parcel A; thence North 75~8'27" West
500.00 feet along the Northeasterly line of said Parcel A; thence South
14~51'33" West 7.00 feet; thence parallel to Northeasterly line of said Parcel
A, South 75~08'27" East 500.00 feet to the Southeast line of said Parcel A,
North 14~51'33" East 7.00 feet to the point of beginning.
APN: 110-32-002
ARB: 110-3-65.02
TRACT 3:
Parcel 1, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-6
ARB: 110-3-x65
TRACT 4:
Parcel 2, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-7
ARB: 110-3-x65
<PAGE> 37
TRACT 5:
Parcel 2, as shown on that certain parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on
October 7, 1998, in Book 708 of Parcel Maps, Pages 51 and 52.
APN: 110-32-12
ARB: 110-03-65.11
Exhibit A - Page 2
<PAGE> 38
Exhibit B
INSURANCE REQUIREMENTS
I. LIABILITY INSURANCE:
A. NAI must maintain commercial general liability ("CGL") insurance on an
occurrence basis, affording immediate protection to the limit of not less than
$20,000,000 combined single limit for bodily and personal injury, death and
property damage in respect of any one occurrence. The CGL insurance must be
primary to, and shall receive no contribution from, any insurance policies or
self-insurance programs otherwise afforded to or available to the Interested
Parties, collectively or individually. Further, the CGL insurance must include
blanket contractual liability coverage which insures contractual liability under
the indemnifications set forth in this Improvements Lease (though such coverage
or the amount thereof shall in no way limit such indemnifications).
B. Any deductible or self-insured retention applicable to the CGL insurance
shall not exceed $500,000.
C. The forms of insurance policies (including endorsements) used to provide
the CGL insurance required by this Improvements Lease, and the insurance company
or companies providing the CGL insurance, must be acceptable to BNPLC. BNPLC
shall have the right from time to time and at any time to review and approve
such policy forms (including endorsements) and the insurance company or
companies providing the insurance. Without limiting the generality of the
foregoing, BNPLC may reasonably require (and unless and until NAI is otherwise
notified by BNPLC, BNPLC does require) that such insurance be provided under
forms and by companies consistent with the following:
(1) Forms: CGL Insurance must be provided on Insurance Services
Office ("ISO") forms CG 0001 1093 or CG 0001 0196 or
equivalent substitute forms providing the same or greater
coverage.
(2) Rating Requirements: Insurance must be provided through
insurance or reinsurance companies rated by the A.M. Best
Company of Oldwick, New Jersey as having a policyholder's
rating of A or better and a reported financial information
rating of VI or better.
(3) Required Endorsements: CGL Insurance must be endorsed to
provide or include:
(a) in any policy containing a general aggregate limit, ISO
form amendment "Aggregate Limits of Insurance Per Location" CG
2504 1185 or equivalent substitute form;
(c) a waiver of subrogation, using ISO form CG 2404 1093 or
equivalent substitute form (and under the commercial umbrella,
if any), in favor of "BNP Leasing Corporation and other
Interested Parties (as defined in the Common Definitions and
Provisions Agreement (Phase IV - Improvements) between Network
Appliance, Inc. and BNP Leasing Corporation dated December
___, 1999)";
(c) ISO additional insured form CG 2026 1185 or equivalent
substitute form, without modification (and under the
commercial umbrella, if any), designating as additional
insureds "BNPLC and other Interested Parties, as defined in
the Common Definitions and Provisions Agreement (Phase IV -
Improvements) between Network Appliance, Inc. and BNP Leasing
<PAGE> 39
Corporation dated December ___, 1999)"; and
(d) provisions entitling BNPLC to 30 days' notice from the
insurer prior to any cancellation, nonrenewal or material
modification to the CGL coverage.
(4) Other Insurance: Each policy to contain standard CGL "other
insurance" wording, unmodified in any way that would make it
excess over or contributory with the additional insured's own
commercial general liability coverage.
II. PROPERTY INSURANCE: From and after the commencement of any construction of
Improvements on or about the Land or the delivery of any materials in
anticipation of such construction:
A. NAI must maintain property insurance in "special form" (including theft)
or against "all risks," providing the broadest available coverage for all
Improvements (as defined in the Common Provisions and Definitions Agreement) and
equipment included in the Property, on a blanket basis if multiple buildings are
involved, with no exclusions for vandalism, malicious mischief, or sprinkler
leakage, and including coverage against earthquake and all coverage perils
normally included within the definitions of extended coverage, vandalism,
malicious mischief and, if the Property is in a flood zone, flood. In addition,
boiler and machinery coverage must be maintained at all times by endorsement to
the property insurance policy or by separate policy. Also, during any period of
significant construction on any Improvements, the property insurance must
include builder's completed value risk insurance for such Improvements, with no
protective safeguard endorsement, and (without limiting the other requirements
of this Exhibit) builder's completed value risk insurance must provide the
following coverages:
(1) materials and supplies at other locations awaiting
installation;
(2) materials and supplies in transit to the worksite for
installation;
(3) loss of use or consequential loss;
(4) pollutant cleanup and removal;
(5) freezing;
(6) collapse during construction, resulting from fault, defect,
error or omission in design, plan, specification or
workmanship;
(7) construction ordinance or law;
(8) mechanical or electrical breakdown;
(9) debris removal additional limit;
(10) preservation of property;
(11) fire department service charge;
(12) additional interest on construction loan due to delays in the
completion of construction;
Exhibit B - Page 2
<PAGE> 40
(13) loss of rental income;
(14) legal/professional fees (in the amount of no less than
$1,500,000) and other soft costs as reasonably determined by
NAI, subject to BNPLC's approval.
B. The property insurance required hereby must provide coverage in the
amount no less than replacement value (exclusive of land, foundation, footings,
excavations and grading) with endorsements for contingent liability from
operation of building laws, increased cost of construction and demolition costs
which may be necessary to comply with building laws. Subject to the approval of
BNPLC, NAI will be responsible for determining the amount of property insurance
to be maintained from time to time, but NAI must maintain such coverage on an
agreed value basis to eliminate the effects of coinsurance.
C. Any deductible or self-insured retention applicable to the property
insurance shall not exceed (1) $500,000 for all coverages other than earthquake
coverage, and (2) for earthquake coverage only, five percent of the aggregate
amount of the property insurance required to satisfy this Improvements Lease,
calculated as described in the preceding paragraph.
D. The property insurance shall cover not only the value of NAI's interest
in the Improvements, but also the interest of BNPLC, with BNPLC shown as an
insured as its interests may appear.
E. The forms of insurance policies (including endorsements) used to provide
the property insurance required by this Improvements Lease, and the insurance
company or companies providing the property insurance, must be acceptable to
BNPLC. BNPLC shall have the right from time to time and at any time to review
and approve such policy forms (including endorsements) and the insurance company
or companies providing such insurance. Without limiting the generality of the
foregoing, BNPLC may reasonably require (and unless and until NAI is otherwise
notified by BNPLC, BNPLC does require) that such insurance be provided under
forms and by companies consistent with the following:
(1) Rating Requirements: Insurance to be provided through insurance
or reinsurance companies rated by the A.M. Best Company of Oldwick,
New Jersey as having (a) a policyholder's rating of A or better, (b)
a reported financial information rating of no less than X, and (c) in
the case of each insurance or reinsurance company, a reported
financial information rating which indicates an adjusted
policyholders' surplus equal to or greater than the underwriting
exposure that such company has under the insurance or reinsurance it
is providing for the Property.
(2) Required Endorsements: NAI's property insurance must be endorsed
to provide or include:
(a) a waiver of subrogation in favor of "BNPLC and other
Interested Parties, as defined in the Common
Definitions and Provisions Agreement (Phase IV -
Improvements) between Network Appliance, Inc. and BNP
Leasing Corporation dated December ___, 1999)";
(b) that NAI's insurance is primary, with any policies of
BNPLC or other Interested Parties being excess,
secondary and noncontributing;
(c) that the protection afforded to BNPLC by such
insurance shall not be reduced or impaired by acts or
omissions of NAI or any other beneficiary or insured;
and
(d) that BNPLC must be notified at least thirty days prior
to any cancellation, nonrenewal or reduction of
insurance coverage.
Exhibit B - Page 3
<PAGE> 41
III. OTHER INSURANCE RELATED REQUIREMENTS:
A. BNPLC must be notified in writing immediately by NAI of claims against
NAI that might cause a reduction below seventy-five percent (75%) of any
aggregate limit of any policy.
B. NAI's property insurance must be evidenced by ACORD form 27 "Evidence of
Property Insurance" completed and interlineated in a manner satisfactory to
BNPLC to show compliance with the requirements of this Exhibit. Copies of
endorsements to the property insurance must be attached to such form.
C. NAI's CGL insurance must be evidenced by ACORD form 25 "Certificate of
Insurance" completed and interlineated in a manner satisfactory to BNPLC to show
compliance with the requirements of this Exhibit. Copies of endorsements to the
CGL insurance must be attached to such form.
D. Such evidence of required insurance must be delivered upon execution of
this Improvements Lease and new certificate or evidence of insurance must be
delivered no later than 10 days prior to expiration of existing policy.
E. NAI shall not cancel, fail to renew, or make or permit any material
reduction in any of the policies or certificates described in this Exhibit
without the prior written consent of BNPLC. The certificates (ACORD forms 27 and
25) described in this Exhibit must contain the following express provision:
"This is to certify that the policies of insurance described herein have
been issued to the insured Network Appliance, Inc. for whom this certificate
is executed and are in force at this time. In the event of cancellation,
non-renewal, or material reduction in coverage affecting the certificate
holder, at least sixty days prior notice shall be given to the certificate
holder."
F. The limits of liability under the liability insurance required by this
Improvements Lease may be provided by a single policy of insurance or by a
combination of primary and umbrella policies, but in no event shall the total
limits of liability available for any one occurrence or accident be less than
those required by this Exhibit.
G. NAI shall provide copies, certified as complete and correct by an
authorized agent of the applicable insurer, of all insurance policies required
by this Exhibit within ten days after receipt of a request for such copies from
BNPLC.
Exhibit B - Page 4
<PAGE> 42
Exhibit C
NOTICE OF LIBOR PERIOD ELECTION
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: George Fung
Re: Lease Agreement (Phase IV - Improvements) and Lease Agreement (Phase
IV - Land), both dated as of December ___, 1999, and both between
Network Appliance, Inc., as tenant, and BNP Leasing Corporation, as
landlord
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the two Lease Agreements referenced above. This letter
constitutes notice to you that the LIBOR Period Election under both of the Lease
Agreements shall be:
________________ month(s),
beginning with the first Base Rent Period that commences on or after:
______________, ____.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE NUMBER OF MONTHS
SPECIFIED ABOVE IS NOT A PERMITTED NUMBER UNDER THE DEFINITION OF "LIBOR PERIOD
ELECTION" IN THE COMMON DEFINITIONS AND PROVISIONS AGREEMENTS REFERENCED IN THE
LEASE AGREEMENTS, OR IF THE DATE SPECIFIED ABOVE CONCERNING THE COMMENCEMENT OF
THE LIBOR PERIOD ELECTION IS LESS THAN TEN BUSINESS DAYS AFTER YOUR RECEIPT OF
THIS NOTICE. HOWEVER, WE ASK THAT YOU NOTIFY US IMMEDIATELY IF FOR ANY REASON
YOU BELIEVE THIS NOTICE IS DEFECTIVE.
Executed this _____ day of ______________, 19___.
Network Appliance, Inc.
Name:
-----------------------------------
Title:
----------------------------------
<PAGE> 43
[cc all Participants]
<PAGE> 44
Schedule 1
FINANCIAL COVENANTS
This Schedule 1 is attached to and made a part of (a) the Lease Agreement
(Phase IV - Improvements) (the "IMPROVEMENTS LEASE") dated to be effective as of
December ___, 1999 (the "EFFECTIVE DATE"), between BNP Leasing Corporation, a
Delaware corporation ("BNPLC") and Network Appliance, Inc., a California
corporation ("NAI"), (b) the Lease Agreement (Phase IV - Land) (the "LAND LEASE"
and, together with the Improvements Lease, the "LEASES") dated to be effective
as of the Effective Date, between BNPLC and NAI, (c) the Pledge Agreement (Phase
IV - Improvements) (the "PLEDGE AGREEMENT (IMPROVEMENTS)") dated to be effective
as of the Effective Date, among BNPLC, NAI, and Banque Nationale de Paris, as a
Participant and as agent for any financial institutions that become Participants
thereunder from time to time, and (d) the Pledge Agreement (Phase IV - Land)
(collectively with the Pledge Agreement (Improvements), the "PLEDGE AGREEMENTS")
dated to be effective as of the Effective Date, among BNPLC, NAI, and Banque
Nationale de Paris, as a Participant and as agent for any financial institutions
that become Participants thereunder from time to time.
PART I - DEFINED TERMS
In this Schedule 1, capitalized terms used but not defined herein shall have
the meaning assigned to them in the Leases or the Common Definitions and
Provisions Agreements referenced in the Leases; and the following capitalized
terms shall have the following meanings:
"ADJUSTED NET INCOME" means, for any fiscal period of NAI, the aggregate net
income earned (or net losses incurred) during such period by NAI and its
Subsidiaries (determined on a consolidated basis), plus any Permitted
Non-Cash Charges deducted in determining such net income (or net loss).
"ADJUSTED EBIT" means, for any accounting period, net income (or net loss)
of NAI and its Subsidiaries (determined on a consolidated basis), plus the
amounts (if any) which, in the determination of net income (or net loss) for
such period, have been deducted for (a) interest expense, (b) income tax
expense (c) rent expense under leases of property, and (d) Permitted
Non-Cash Charges.
"COLLATERAL TEST DATES" mean the Base Rent Commencement Date and the earlier
of the following dates after each fiscal quarter of NAI that ends after the
Base Rent Commencement Date : (1) the seventh Business Day after the release
by NAI of its financial statements for the fiscal quarter; or (2) the first
Business Day of the third calendar month following the end of the fiscal
quarter.
"CONSOLIDATED TANGIBLE NET WORTH" means the excess of (1) the total assets,
other than Intangible Assets, of NAI and its Subsidiaries (determined on a
consolidated basis) over (2) the total liabilities of NAI and its
Subsidiaries (determined on a consolidated basis).
"DEBT" as used in this Exhibit shall have the meaning assigned to it in the
Common Definitions and Provisions Agreements, where "Debt" of any Person is
defined to mean (without duplication of any item): (a) indebtedness of such
Person for borrowed money; (b) indebtedness of such Person for the deferred
purchase price of property or services (except trade payables and accrued
expenses constituting current liabilities in the ordinary course of
business); (c) the face amount of any outstanding letters of credit issued
for the account of such Person; (d) obligations of such Person arising under
acceptance facilities; (e) guaranties, endorsements (other than for
collection in the ordinary course of business) and other contingent
obligations of such Person to purchase, to provide funds for payment, to
provide funds to invest in any Person, or otherwise to assure a
<PAGE> 45
creditor against loss; (f) obligations of others secured by any Lien on
property of such Person; (g) obligations of such Person as lessee under
Capital Leases; and (h) the obligations of such Person, contingent or
otherwise, under any lease of property or related documents (including a
separate purchase agreement) which provide that such Person or any of its
Affiliates must purchase or cause another Person to purchase any interest in
the leased property and thereby guarantee a minimum residual value of the
leased property to the lessor. For purposes of this definition, the amount
of the obligations described in clause (h) of the preceding sentence with
respect to any lease classified according to GAAP as an "operating lease,"
shall equal the sum of (1) the present value of rentals and other minimum
lease payments required in connection with such lease [calculated in
accordance with SFAS 13 and other GAAP relevant to the determination of the
whether such lease must be accounted for as an operating lease or capital
lease], plus (2) the fair value of the property covered by the lease;
provided, however, that such amount shall not exceed the price, as of the
date a determination of Debt is required hereunder, for which the lessee can
purchase the leased property pursuant to any valid ongoing purchase option
if, upon such a purchase, the lessee shall be excused from paying rentals or
other minimum lease payments that would otherwise accrue after the purchase.
"FIXED CHARGES" means, for any accounting period, the sum (without
duplication of any item) of the following charges or costs incurred or paid
by NAI and its Subsidiaries (determined on a consolidated basis): (a) gross
interest expense, plus (b) amortization of principal or debt discount in
respect of all Debt during such period, plus (c) rent payable under all
leases of property during such period, plus (d) taxes payable during such
period.
"INTANGIBLE ASSETS" means assets of NAI and its Subsidiaries (determined on
a consolidated basis) that are properly classified as "INTANGIBLE ASSETS" in
accordance with GAAP and, in any event, shall include goodwill, patents,
trade names, trademarks, copyrights, franchises, experimental expense,
organization expense, unamortized debt discount and expense, and deferred
charges (other than prepaid insurance, prepaid taxes and current deferred
taxes to the extent any such prepaid or deferred items are classified on the
balance sheet of NAI and its consolidated Subsidiaries as current assets in
accordance with GAAP and with the concurrence of NAI's independent public
accountants).
"MANDATORY COLLATERAL PERIOD" means any period during which, notwithstanding
any contrary designation of a Collateral Percentage by NAI under the Pledge
Agreements, the Collateral Percentage for purposes of the Pledge Agreements
shall be one hundred percent (100%), determined as set forth in Part III of
this Schedule 1.
"PERMITTED NON-CASH CHARGES" means the amounts (if any) which, in the
determination of net income (or net loss) for any relevant fiscal period,
have been deducted by NAI or its Subsidiaries for non-cash charges made to
write down goodwill or research and development costs in connection with
acquisitions permitted by this Schedule 1.
"QUICK RATIO" means the ratio of:
(A) the sum (without duplication of any item) of the following
assets of NAI and its Subsidiaries (determined on a consolidated
basis): Collateral delivered and pledged under the Pledge Agreements
in accordance with the requirements thereof (if any); plus
unencumbered cash; plus unencumbered short term cash investments;
plus other unencumbered marketable securities which are classified as
short term investments in accordance with GAAP; plus unencumbered
accounts receivable, computed net of reserves for uncollectible
amounts as determined in accordance with GAAP, to
(B) the sum (without duplication of any item) of (1) all
liabilities of NAI and its Subsidiaries (determined on a consolidated
basis) treated as current liabilities in accordance with GAAP, plus
(2)
Schedule 1 - Page 2
<PAGE> 46
other obligations included in total Debt of NAI and its Subsidiaries
(determined on a consolidated basis), the payment of which is due on
demand or will become due within one year after the date on which the
applicable determination of Quick Ratio is required hereunder.
"ROLLING FOUR QUARTER PERIOD" means a period of four consecutive fiscal
quarters of NAI, the last of which quarters ends after December 31, 1999.
PART II - FINANCIAL COVENANTS FOR LEASE AGREEMENT
NAI covenants that it shall not at any time suffer or permit:
1. Minimum Unencumbered Cash and Cash Equivalents. The sum (without duplication
of any item) of the unrestricted cash, Collateral delivered and pledged
under the Pledge Agreements in accordance with the requirements thereof (if
any), unencumbered short term cash investments and unencumbered marketable
securities classified as short term investments according to GAAP of NAI and
its Subsidiaries (determined on a consolidated basis) to be less than total
Debt of NAI and its Subsidiaries (determined on a consolidated basis).
2. Minimum Tangible Net Worth. Consolidated Tangible Net Worth to be less than
the sum of: (a) ninety percent of the Consolidated Tangible Net Worth as of
October 30, 1998; plus (b) seventy-five percent of NAI's net income
(computed without deduction for net losses in any fiscal quarter) earned in
each fiscal quarter since October 30, 1998; plus (c) one-hundred percent of
the net proceeds of sales of stock in NAI or its Subsidiaries (other than
sales to NAI or its Subsidiaries) after October 30, 1998; less (d) Permitted
Non-Cash Charges for any period after October 30, 1998.
3. Minimum Quick Ratio. The Quick Ratio to be less than 1.50 to 1.00.
4. Minimum Fixed Charge Coverage. The ratio of (a) Adjusted EBIT for any
Rolling Four Quarter Period to (b) Fixed Charges for the same Rolling Four
Quarter Period, to be less than 1.50 to 1.00.
5. Minimum Profitability. Adjusted Net Income to be less than $1.00 in more
than one fiscal quarter of any Rolling Four Quarter Period.
6. Maximum Leverage Ratio. the ratio of (a) total Debt of NAI and its
Subsidiaries (determined on a consolidated basis) at the end of any Rolling
Four Quarter Period to (b) the Adjusted EBIT for the same Four Quarter
Rolling Period, to exceed 3.00 to 1.00.
PART III - TESTS FOR MANDATORY COLLATERAL PERIODS
If, as of the end of the latest fiscal quarter of NAI ending before any
Collateral Test Date, NAI shall have both:
(A) failed to maintain a ratio of (1) the sum (without duplication of
any item) of Collateral delivered and pledged under the Pledge Agreements in
accordance with the requirements thereof (if any), unencumbered cash,
unencumbered short term cash investments and unencumbered marketable
securities classified as short term investments according to GAAP of NAI and
its Subsidiaries (determined on a consolidated basis) to (2) all Debt of NAI
and its Subsidiaries (determined on a consolidated basis), of at least 1.5
to 1.00; and
Schedule 1 - Page 3
<PAGE> 47
(B) failed to maintain a ratio of (i) all Debt of NAI and its
Subsidiaries (determined on a consolidated basis) to (ii) Consolidated
Tangible Net Worth of NAI, of no more than 0.45 to 1.00;
such Collateral Test Date shall constitute a "FAILED COLLATERAL TEST DATE" for
purposes of the determination of Mandatory Collateral Periods. A Mandatory
Collateral Period shall commence on each Failed Collateral Test, and such
Mandatory Collateral Period shall continue until the second of any two
subsequent CONSECUTIVE Collateral Test Dates, neither of which constitutes a
Failed Collateral Test Date.
For purposes of illustration only, assume that the following dates are
consecutive Collateral Test Dates, some of which are Failed Collateral Test
Dates and some of which are not, as indicated opposite each date:
<TABLE>
<CAPTION>
Date Failed Collateral Test Date?
---- ----------------------------
<S> <C>
February 15, 2001 Yes
May 12, 2001 No
August 16, 2001 Yes
November 11, 2001 No
February 18, 2002 No
May 14, 2002 Yes
August 18, 2002 Yes
November 18, 2002 No
February 15, 2003 No
</TABLE>
Under these assumptions, the entire period from February 15, 2001 to February
18, 2002 falls within one or more Mandatory Collateral Periods. Also, the entire
period commencing May 14, 2002 and ending February 15, 2003 falls within one or
more Mandatory Collateral Periods. The period from February 18, 2002 to May 14,
2002 does not constitute Mandatory Collateral Period.
PART IV - OTHER COVENANTS
Without limiting NAI's obligations under the other provisions of the Operative
Documents, during the Term, NAI shall not, without the prior written consent of
BNPLC in each case:
A. Liens. Create, incur, assume or suffer to exist, or permit any of its
Consolidated Subsidiaries to create, incur, assume or suffer to exist, any Lien,
upon or with respect to any of its properties, now owned or hereafter acquired,
provided that the following shall be permitted except to the extent that they
would encumber any interest in the Property in violation of other provisions of
the Operative Documents:
1. Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if they are being contested in good
faith by appropriate proceedings and for which appropriate reserves are
maintained;
2. Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are
not past due for more than thirty (30) days, or which are being contested in
good faith by appropriate proceedings and for which appropriate reserves
have been established;
3. Liens under workmen's compensation, unemployment insurance, social
security or similar
Schedule 1 - Page 4
<PAGE> 48
laws (other than ERISA);
4. Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), leases,
public or statutory obligations, surety, stay, appeal, indemnity,
performance or other similar bonds, or other similar obligations arising in
the ordinary course of business;
5. judgment and other similar Liens against assets other than the
Property or any part thereof in an aggregate amount not in excess of
$3,000,000 arising in connection with court proceedings; provided that the
execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith by
appropriate proceedings;
6. easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by NAI or any such Consolidated Subsidiary of
the property or assets encumbered thereby in the normal course of its
business or materially impair the value of the property subject thereto;
7. Liens securing obligations of such a Consolidated Subsidiary to
NAI or to another such Consolidated Subsidiary;
8. Liens not otherwise permitted by this subparagraph A (and not
encumbering the Property or any Collateral) incurred in connection with the
incurrence of additional Debt or asserted to secure Unfunded Benefit
Liabilities, provided that (a) the sum of the aggregate principal amount of
all outstanding obligations secured by Liens incurred pursuant to this
clause shall not at any time exceed five percent (5%) of Consolidated
Tangible Net Worth at such time; and (b) such Liens do not constitute Liens
against NAI's interest in any material Subsidiary or blanket Liens against
all or substantially all of the inventory, receivables, general intangibles
or equipment of NAI or of any material Subsidiary of NAI (for purposes of
this clause, a "material Subsidiary" means any subsidiary whose assets
represent a substantial part of the total assets of NAI and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP);
and
9. Liens incurred in connection with any renewals, extensions or
refundings of any Debt secured by Liens described in the preceding clauses
of this subparagraph A, provided that there is no increase in the aggregate
principal amount of Debt secured thereby from that which was outstanding as
of the date of such renewal, extension or refunding and no additional
property is encumbered.
B. Transactions with Affiliates. Enter into or permit any Subsidiary of NAI
to enter into any material transactions (including, without limitation, the
purchase, sale or exchange of property or the rendering of any service) with any
Affiliates of NAI except on terms (1) that would not cause or result in a
Default by NAI under the financial covenants set forth in Part II of this
Schedule, and (2) that are no less favorable to NAI or the relevant Subsidiary
than those that would have been obtained in a comparable transaction on an arm's
length basis from an unrelated Person.
C. Compliance. Fail to preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; or fail to comply with the provisions of all documents
pursuant to which NAI is organized and/or which govern NAI's continued existence
and with the requirements of all laws, rules, regulations and orders of a
governmental agency applicable to NAI and/or its business.
D. Insurance. Fail to maintain and keep in force insurance of the types and
in amounts customarily carried in lines of business similar to that of NAI,
including but not limited to fire, extended coverage, public liability,
Schedule 1 - Page 5
<PAGE> 49
flood, property damage and workers' compensation, with all such insurance
carried with companies and in amounts satisfactory to BNPLC, or fail to deliver
to BNPLC from time to time at BNPLC's request schedules setting forth all
insurance then in effect.
E. Facilities. fail to keep all properties useful or necessary to NAI's
business in good repair and condition, or to from time to time make necessary
repairs, renewals and replacements thereto so that such properties shall be
fully and efficiently preserved and maintained.
F. Taxes and Other Liabilities. Fail to pay and discharge when due any and
all indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as NAI may in good faith contest
or as to which a bona fide dispute may arise, and (b) for which NAI has made
provisions, to BNPLC's satisfaction, for eventual payment thereof in the event
that NAI is obligated to make such payment.
G. Capital Expenditures. Make any additional investment in fixed assets in
any fiscal year in excess of an aggregate of twenty percent (20%) of NAI's total
assets as of the end of the prior fiscal year.
H. Merger, Consolidation, Transfer of Assets. Merge into or consolidate with
any other entity (unless NAI is the surviving entity and remains in compliance
of all provisions of the Operative Documents); or make any substantial change in
the nature of NAI's business as conducted as of the date hereof; or sell, lease,
transfer or otherwise dispose of all or a substantial or material portion of
NAI's assets except in the ordinary course of its business.
I. Loans, Advances, Investments. Make any loans or advances to or
investments in any person or entity, except (a) any of the foregoing existing as
of, and disclosed to BNPLC prior to, the date hereof, (b) loans to employees for
travel advances, relocation loans and other loans in the ordinary course of
business, (c) investments in accordance with NAI's investment policy, as in
effect from time to time, (d) existing investments in subsidiaries and joint
ventures which have been disclosed to BNPLC in writing prior to the date hereof,
and new investments in subsidiaries and joint ventures in amounts up to an
aggregated of $10,000,000.00, (e) loans to employees, officers, directors to
finance or refinance the purchase of equity securities of NAI.
J. Dividends, Distributions. Declare or pay any dividend or distribution
either in cash, stock or any other property on NAI's stock now or hereafter
outstanding, nor redeem, retire, repurchase or otherwise acquire any shares of
any class of NAI's stock now or hereafter outstanding.
Schedule 1 - Page 6
<PAGE> 50
COMMON DEFINITIONS AND PROVISIONS AGREEMENT
(PHASE IV - IMPROVEMENTS)
BETWEEN
BNP LEASING CORPORATION
AND
NETWORK APPLIANCE, INC.
DATED AS OF DECEMBER ___, 1999
<PAGE> 51
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - LIST OF DEFINED TERMS:
ACTIVE NEGLIGENCE....................................................................1
ADDITIONAL RENT......................................................................1
ADMINISTRATIVE AGENCY FEE............................................................2
ADJUSTED EBIT........................................................................2
AFFILIATE............................................................................2
APPLICABLE LAWS......................................................................2
APPLICABLE PURCHASER.................................................................2
ARRANGEMENT FEE......................................................................2
ATTORNEYS' FEES......................................................................2
BANKING RULES CHANGE.................................................................2
BASE RATE............................................................................3
BASE RENT............................................................................3
BASE RENT COMMENCEMENT DATE..........................................................3
BASE RENT DATE.......................................................................3
BASE RENT PERIOD.....................................................................3
BNPLC................................................................................4
BNPLC'S PARENT.......................................................................4
BREAKAGE COSTS.......................................................................4
BREAK EVEN PRICE.....................................................................5
BUSINESS DAY.........................................................................5
CAPITAL ADEQUACY CHARGES.............................................................5
CAPITAL LEASE........................................................................5
CLOSING CERTIFICATE..................................................................5
CODE.................................................................................5
COLLATERAL...........................................................................5
COLLATERAL PERCENTAGE................................................................5
COMMON DEFINITIONS AND PROVISIONS AGREEMENT (PHASE IV - IMPROVEMENTS)................5
CURRENT AS IS MARKET VALUE...........................................................5
DEBT.................................................................................6
DEFAULT..............................................................................7
DEFAULT RATE.........................................................................7
DEPOSIT TAKER........................................................................7
DEPOSIT TAKER LOSSES.................................................................7
DESIGNATED SALE DATE.................................................................7
DEVELOPMENT DOCUMENTS................................................................8
DIRECT PAYMENTS TO PARTICIPANTS......................................................8
EFFECTIVE DATE.......................................................................8
EFFECTIVE RATE.......................................................................8
ENVIRONMENTAL LAWS...................................................................8
ENVIRONMENTAL CUTOFF DATE............................................................8
ENVIRONMENTAL LOSSES.................................................................8
</TABLE>
(i)
<PAGE> 52
<TABLE>
<CAPTION>
Page
----
<S> <C>
ENVIRONMENTAL REPORTS................................................................9
ERISA................................................................................9
ERISA AFFILIATE......................................................................9
ESCROWED PROCEEDS....................................................................9
ESTABLISHED MISCONDUCT..............................................................10
EUROCURRENCY LIABILITIES............................................................10
EURODOLLAR RATE RESERVE PERCENTAGE..................................................10
EVENT OF DEFAULT....................................................................10
EXCLUDED TAXES......................................................................10
EXISTING CONTRACT...................................................................11
FAILED COLLATERAL TEST DATE.........................................................11
FED FUNDS RATE......................................................................11
FUNDING ADVANCES....................................................................11
GAAP................................................................................11
HAZARDOUS SUBSTANCE.................................................................11
HAZARDOUS SUBSTANCE ACTIVITY........................................................11
IMPOSITIONS.........................................................................12
IMPROVEMENTS........................................................................12
IMPROVEMENTS LEASE..................................................................12
INITIAL FUNDING ADVANCE.............................................................12
INTERESTED PARTY....................................................................12
ISSUE 97-1 NON-PERFORMANCE-RELATED SUBJECTIVE EVENT OF DEFAULT......................13
LAND................................................................................13
LIBOR...............................................................................13
LIBOR PERIOD ELECTION...............................................................13
LIEN................................................................................14
LIENS REMOVABLE BY BNPLC............................................................14
LOSSES..............................................................................15
MANDATORY COLLATERAL PERIOD.........................................................15
MATERIAL ENVIRONMENTAL COMMUNICATION................................................15
MAXIMUM REMARKETING OBLIGATION......................................................15
MINIMUM EXTENDED REMARKETING PRICE..................................................15
MULTIEMPLOYER PLAN..................................................................15
NAI.................................................................................15
NAI'S EXTENDED REMARKETING PERIOD...................................................15
NAI'S EXTENDED REMARKETING RIGHT....................................................15
NAI'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS....................................15
OPERATIVE DOCUMENTS.................................................................15
OTHER COMMON DEFINITIONS AND PROVISIONS AGREEMENT...................................16
OTHER LEASE AGREEMENT...............................................................16
OTHER PURCHASE AGREEMENT............................................................16
PARTICIPANT.........................................................................16
PARTICIPATION AGREEMENT.............................................................16
PBGC................................................................................16
</TABLE>
(ii)
<PAGE> 53
<TABLE>
<CAPTION>
Page
----
<S> <C>
PERIOD..............................................................................16
PERMITTED ENCUMBRANCES..............................................................16
PERMITTED HAZARDOUS SUBSTANCE USE...................................................17
PERMITTED HAZARDOUS SUBSTANCES......................................................17
PERMITTED TRANSFER..................................................................17
PERSON..............................................................................18
PERSONAL PROPERTY...................................................................18
PLAN................................................................................18
PLEDGE AGREEMENT....................................................................18
PREMISES LEASES.....................................................................18
PRIME RATE..........................................................................18
PROPERTY............................................................................18
PURCHASE AGREEMENT..................................................................18
PURCHASE DOCUMENTS..................................................................18
PURCHASE OPTION.....................................................................19
QUALIFIED AFFILIATE.................................................................19
QUALIFIED PREPAYMENTS...............................................................19
REAL PROPERTY.......................................................................19
REMEDIAL WORK.......................................................................19
RENT................................................................................19
RESIDUAL RISK PERCENTAGE............................................................19
RESPONSIBLE FINANCIAL OFFICER.......................................................19
SALE CLOSING DOCUMENTS..............................................................20
SECURED SPREAD......................................................................20
SELLER..............................................................................20
STIPULATED LOSS VALUE...............................................................20
SUBSIDIARY..........................................................................20
SUPPLEMENTAL PAYMENT................................................................20
TERM................................................................................20
THIRD PARTY PRICE...................................................................20
THIRD PARTY SALE NOTICE.............................................................20
THIRD PARTY SALE PROPOSAL...........................................................20
THIRD PARTY TARGET PRICE............................................................20
TRANSACTION EXPENSES................................................................20
UNFUNDED BENEFIT LIABILITIES........................................................21
UNSECURED SPREAD....................................................................21
UPFRONT SYNDICATION FEES............................................................22
VOLUNTARY RETENTION OF THE PROPERTY.................................................22
ARTICLE II - PROVISIONS USED IN COMMON:
1 NOTICES.........................................................................22
2 SEVERABILITY....................................................................24
3 NO MERGER.......................................................................24
</TABLE>
(iii)
<PAGE> 54
<TABLE>
<CAPTION>
Page
----
<S> <C>
4 NO IMPLIED WAIVER...............................................................25
5 ENTIRE AND ONLY AGREEMENTS......................................................25
6 BINDING EFFECT..................................................................25
7 TIME IS OF THE ESSENCE..........................................................25
8 GOVERNING LAW...................................................................25
9 PARAGRAPH HEADINGS..............................................................25
10 NEGOTIATED DOCUMENTS............................................................26
11 TERMS NOT EXPRESSLY DEFINED IN AN OPERATIVE DOCUMENT............................26
12 OTHER TERMS AND REFERENCES......................................................26
13 EXECUTION IN COUNTERPARTS.......................................................26
14 NOT A PARTNERSHIP, ETC..........................................................26
</TABLE>
(iv)
<PAGE> 55
COMMON DEFINITIONS AND PROVISIONS AGREEMENT
(PHASE IV - IMPROVEMENTS)
This Common Definitions and Provisions Agreement (Phase IV -
Improvements), by and between BNP LEASING CORPORATION, a Delaware corporation
("BNPLC"), and NETWORK APPLIANCE, INC., a California corporation ("NAI"), is
dated as of December ___, 1999, the Effective Date.
RECITALS
Contemporaneously with the execution of this Common Definitions and
Provisions Agreement (Phase IV - Improvements), NAI is executing the Closing
Certificate (as defined below) in favor of BNPLC, and BNPLC and NAI are
executing the Improvements Lease (as defined below), and the Purchase Agreement
(as defined below), all of which concern the Property (as defined below). Each
of the Closing Certificate, the Improvements Lease and the Purchase Agreement
(together with this Common Definitions and Provisions Agreement (Phase IV -
Improvements) and the Pledge Agreement [as defined below], the "OPERATIVE
DOCUMENTS") are intended to create separate and independent obligations upon the
parties thereto. However, NAI and BNPLC intend that all of the Operative
Documents share certain consistent definitions and other miscellaneous
provisions. To that end, the parties are executing this Common Definitions and
Provisions Agreement (Phase IV - Improvements) and incorporating it by reference
into each of the other Operative Documents.
AGREEMENTS
ARTICLE I - LIST OF DEFINED TERMS
UNLESS A CLEAR CONTRARY INTENTION APPEARS, THE FOLLOWING TERMS SHALL
HAVE THE RESPECTIVE INDICATED MEANINGS AS USED HEREIN AND IN THE OTHER OPERATIVE
DOCUMENTS:
"ACTIVE NEGLIGENCE" of any Person (including BNPLC) means, and is
limited to, the negligent conduct on the Property (and not mere omissions) by
such Person or by others acting and authorized to act on such Person's behalf in
a manner that proximately causes actual bodily injury or property damage for
which NAI does not carry (and is not obligated by the Improvements Lease to
carry) insurance. "ACTIVE NEGLIGENCE" shall not include (1) any negligent
failure of BNPLC to act when the duty to act would not have been imposed but for
BNPLC's status as owner of the Land, the Improvements or any interest in any
other Property or as a party to the transactions described in the Improvements
Lease or the other Operative Documents or in the Other Lease Agreement or the
Other Purchase Agreement, (2) any negligent failure of any other Interested
Party to act when the duty to act would not have been imposed but for such
party's contractual or other relationship to BNPLC or participation or
facilitation in any manner, directly or indirectly, of the transactions
described in the Improvements Lease or other Operative Documents or in the Other
Lease Agreement or Other Purchase Agreement, or (3) the exercise in a lawful
manner by BNPLC (or any party lawfully claiming through or under BNPLC) of any
right or remedy provided in or under the Improvements Lease or the other
Operative Documents, or in the Other Lease Agreement or Other Purchase
Agreement.
"ADDITIONAL RENT" shall have the meaning assigned to it in subparagraph
3.(d) of the Improvements Lease.
"ADMINISTRATIVE AGENCY FEE" shall have the meaning assigned to it in
subparagraph 3.(g) of the Improvements Lease.
<PAGE> 56
"ADJUSTED EBIT" shall have the meaning assigned to it in Part I of
Schedule 1 attached to the Improvements Lease and to the Pledge Agreement.
"AFFILIATE" of any Person means any other Person controlling, controlled
by or under common control with such Person. For purposes of this definition,
the term "control" when used with respect to any Person means the power to
direct the management of policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"APPLICABLE LAWS" means any or all of the following, to the extent
applicable to NAI or the Property or the Improvements Lease or the other
Operative Documents: restrictive covenants; zoning ordinances and building
codes; flood disaster laws; health, safety and environmental laws and
regulations; the Americans with Disabilities Act and other laws pertaining to
disabled persons; and other laws, statutes, ordinances, rules, permits,
regulations, orders, determinations and court decisions.
"APPLICABLE PURCHASER" means any third party designated by NAI to
purchase BNPLC's interest in the Property and in any Escrowed Proceeds as
provided in the Purchase Agreement.
"ARRANGEMENT FEE" shall have the meaning assigned to it in subparagraph
3.(e) of the Improvements Lease.
"ATTORNEYS' FEES" means the expenses and reasonable fees of counsel to
the parties incurring the same, excluding costs or expenses of in-house counsel
(whether or not accounted for as general overhead or administrative expenses),
but otherwise including printing, photostating, duplicating and other expenses,
air freight charges, and fees billed for law clerks, paralegals, librarians and
others not admitted to the bar but performing services under the supervision of
an attorney. Such terms shall also include all such fees and expenses incurred
with respect to appeals, arbitrations and bankruptcy proceedings, and whether or
not any manner of proceeding is brought with respect to the matter for which
such fees and expenses were incurred.
"BANKING RULES CHANGE" means either: (1) the introduction of or any
change in any law or regulation applicable to BNPLC, BNPLC's Parent or any other
Participant, or in the generally accepted interpretation by the institutional
lending community of any such law or regulation, or in the interpretation of any
such law or regulation asserted by any regulator, court or other governmental
authority (other than any change by way of imposition or increase of reserve
requirements included in the Eurodollar Rate Reserve Percentage) or (2) the
compliance by BNPLC, BNPLC's Parent or any other Participant with any new
guideline or new request from any central bank or other governmental authority
(whether or not having the force of law).
"BASE RATE" for any Base Rent Period means a rate equal to the higher of
(1) the Prime Rate in effect on the first day of such period, or (2) the rate
which is fifty basis points (50/100 of 1%) above the Fed Funds Rate for that
period.
"BASE RENT" means the rent payable by NAI pursuant to subparagraph 3.(a)
of the Improvements Lease.
"BASE RENT COMMENCEMENT DATE" means the first Business Day of January,
2000.
Page 2
<PAGE> 57
"BASE RENT DATE" means a date upon which Base Rent must be paid under
the Improvements Lease, all of which dates shall be the first Business Day of a
calendar month. The first Base Rent Date shall be determined as follows:
a) If a LIBOR Period Election of one month is in effect on
the Base Rent Commencement Date, then the first Business Day of
the first calendar month following the Base Rent Commencement
Date shall be the first Base Rent Date.
b) If the LIBOR Period Election in effect on the Base Rent
Commencement Date is three months or six months, then the first
Business Day of the third calendar month following the Base Rent
Commencement Date shall be the first Base Rent Date.
Each successive Base Rent Date after the first Base Rent Date shall be the first
Business Day of the first or third calendar month following the calendar month
which includes the preceding Base Rent Date, determined as follows:
(1) If a LIBOR Period Election of one month is in effect
on a Base Rent Date, then the first Business Day of the first
calendar month following such Base Rent Date shall be the next
following Base Rent Date.
(2) If a LIBOR Period Election of three months or six
months is in effect on a Base Rent Date, then the first Business
Day of the third calendar month following such Base Rent Date
shall be the next following Base Rent Date.
Thus, for example, if the Base Rent Commencement Date falls on the first
Business Day of January, 2000 and a LIBOR Period Election of two months
commences on the Base Rent Commencement Date, then the first Base Rent Date
shall be the first Business Day of March, 2000.
"BASE RENT PERIOD" means a period for which Base Rent must be paid under
the Improvements Lease, each of which periods shall correspond to the LIBOR
Period Election for such period. The first Base Rent Period shall begin on and
include the Base Rent Commencement Date, and each successive Base Rent Period
shall 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, shall
end on but not include the first or second Base Rent Date after the Base Rent
Date upon which such period began, determined as follows:
(1) If the LIBOR Period Election for a Base Rent Period is
one month or three months, then such Base Rent Period shall end
on the first Base Rent Date after the Base Rent Date upon which
such period began.
(2) If the LIBOR Period Election for a Base Rent Period is
six months, then such Base Rent Period shall end on the second
Base Rent Date after the Base Rent Date upon which such period
began.
The determination of Base Rent Periods can be illustrated by two examples:
1) If NAI makes a LIBOR Period Election of three months
for a hypothetical Base Rent Period beginning on the first
Business Day in January, 2001, then such Base Rent Period will
end
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on but not include the first Base Rent Date after it begins; that
is, such Base Rent Period will end on the first Business Day in
April, 2001, the third calendar month after January, 2001.
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, 2001, 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, 2001.
"BNPLC" means BNP Leasing Corporation, a Delaware corporation.
"BNPLC'S PARENT" means BNPLC's Affiliate, Banque Nationale de Paris, a
bank organized and existing under the laws of France and any successors of such
bank.
"BREAKAGE COSTS" means any and all costs, losses or expenses incurred or
sustained by BNPLC's Parent (as a Participant or otherwise) or any other
Participant, for which BNPLC's Parent or the Participant shall request
reimbursement from BNPLC, because of the resulting liquidation or redeployment
of deposits or other funds:
(1) used to make or maintain Funding Advances upon application of
a Qualified Prepayment or upon any sale of the Property pursuant to the
Purchase Agreement, if such application or sale occurs on any day other
than the last day of a Base Rent Period; or
(2) [intentionally deleted];
(3) used to make or maintain Funding Advances upon the
acceleration of the end of any Base Rent Period pursuant subparagraph
3.(c)(iii) of the Improvements Lease.
Breakage Costs will include, for example, losses attributable to any decline in
LIBOR as of the effective date of any application described in the clause (1)
preceding, as compared to LIBOR used to determine the Effective Rate then in
effect. Each determination by BNPLC's Parent or the applicable Participant of
Breakage Costs shall, in the absence of clear and demonstrable error, be
conclusive and binding upon NAI.
"BREAK EVEN PRICE" shall have the meaning assigned to it in subparagraph
1(B)(1) of the Purchase Agreement.
"BUSINESS DAY" means any day that is (1) not a Saturday, Sunday or day
on which commercial banks are generally closed or required to be closed in New
York City, New York or San Francisco, California, and (2) a day on which
dealings in deposits of dollars are transacted in the London interbank market;
provided that if such dealings are suspended indefinitely for any reason,
"Business Day" shall mean any day described in clause (1).
"CAPITAL ADEQUACY CHARGES" means any additional amounts BNPLC's Parent
or any other Participant requests BNPLC to pay as compensation for an increase
in required capital as provided in subparagraph 5.(b)(ii) of the Improvements
Lease.
"CAPITAL LEASE" means any lease which has been or should be capitalized
on the books of the lessee in accordance with GAAP or for federal income tax
purposes.
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"CLOSING CERTIFICATE" means the Closing Certificate and Agreement dated
as of December ___, 1999 executed by NAI in favor of BNPLC, as such Closing
Certificate may be extended, supplemented, amended, restated or otherwise
modified from time to time in accordance with its terms.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" shall have the meaning assigned to it in the Pledge
Agreement.
"COLLATERAL PERCENTAGE" for each Base Rent Period means the Collateral
Percentage for such period determined under (and as defined in) the Pledge
Agreement; provided, however, for purposes of the Improvements Lease, the
Collateral Percentage for any Base Rent Period shall not exceed a fraction; the
numerator of which fraction shall equal the value (determined as provided in the
Pledge Agreement) of all Collateral (a) that is, on the first day of such
period, held by the Deposit Takers under (and as defined in) the Pledge
Agreement subject to a Qualifying Security Interest (as defined below), (b) that
is free from claims or security interests held or asserted by any third party,
and (c) that is not in excess of Stipulated Loss Value; and the denominator of
which fraction shall equal the Stipulated Loss Value on the first day of such
period. "QUALIFYING SECURITY INTEREST" means a first priority perfected security
interest under the Pledge Agreement.
"COMMON DEFINITIONS AND PROVISIONS AGREEMENT (PHASE IV - IMPROVEMENTS)"
means this Agreement, which is incorporated by reference into each of the other
Operative Documents.
"CURRENT AS IS MARKET VALUE" means an amount equal to the fair market
value of BNPLC's interest in the Property (or any applicable portion thereof),
AS IS, WHERE IS AND WITH ALL FAULTS on the date in question. Whenever a
determination of Current AS IS Market Value is required by the express terms of
any Operative Document, it will be determined accordance with the following
procedure unless BNPLC and NAI have otherwise agreed in writing upon a Current
AS IS Market Value at that time:
(A) BNPLC and NAI shall each, within ten days after written notice
from either to the other, select an appraiser. If either BNPLC or
NAI fails to select an appraiser within the required period, then
the appraiser who has been timely selected shall conclusively
determine the fair market value of the Property (or applicable
portion thereof) in accordance with this definition within
forty-five days after his or her selection.
(B) Upon the selection of the two appraisers as provided above, such
appraisers shall proceed to determine the fair market value of
BNPLC's interest in the Property (or applicable portion thereof)
in accordance with this clause (v). Such appraisals shall be
submitted in writing no later than forty-five days after
selection of the second appraiser. If the fair market value as
determined by such appraisers is identical, such sum shall be
Current AS IS Market Value. If the fair market value indicated by
the lower appraisal differs from the fair market value indicated
by the higher appraisal by less than five percent (5%) of the
fair market value indicated by the higher appraisal, then Current
AS IS Market Value shall be the sum of the two appraisal figures
divided by two (2). If either appraiser fails to timely submit
his or her appraisal, the timely submitted appraisal shall be
determinative of Current AS IS Market Value.
(C) If the fair market value indicated by the lower appraisal differs
from the fair market value indicated by the higher appraisal by
more than five percent (5%) of the fair market value indicated by
the
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higher appraisal, then the two appraisers previously selected
shall select a third appraiser. The name of such appraiser shall
be submitted at the same time the written appraisals are due.
Such third appraiser shall then review the previously submitted
appraisals and select the one that, in his professional opinion,
more closely reflects the fair market value of BNPLC's interest
in the Property (or applicable portion thereof), such selection
to be submitted in writing no later than ten days after selection
of the third appraiser. Such selection shall be determinative of
Current AS IS Market Value.
(D) In making any such determination of fair market value, the
appraisers shall assume that any improvements then located on the
Property (or applicable portion thereof) or under construction
thereon constitute the highest and best use, and that neither the
Improvements Lease nor the Purchase Agreement add any value to
the Property. Each appraiser selected hereunder shall be an
independent MAI-designated appraiser with not less than ten
years' experience in commercial real estate appraisal in
Sunnyvale, California and surrounding areas.
"DEBT" of any Person means (without duplication of any item): (a)
indebtedness of such Person for borrowed money; (b) indebtedness of such Person
for the deferred purchase price of property or services (except trade payables
and accrued expenses constituting current liabilities in the ordinary course of
business); (c) the face amount of any outstanding letters of credit issued for
the account of such Person; (d) obligations of such Person arising under
acceptance facilities; (e) guaranties, endorsements (other than for collection
in the ordinary course of business) and other contingent obligations of such
Person to purchase, to provide funds for payment, to provide funds to invest in
any Person, or otherwise to assure a creditor against loss; (f) obligations of
others secured by any Lien on property of such Person; (g) obligations of such
Person as lessee under Capital Leases; and (h) the obligations of such Person,
contingent or otherwise, under any lease of property or related documents
(including a separate purchase agreement) which provide that such Person or any
of its Affiliates must purchase or cause another Person to purchase any interest
in the leased property and thereby guarantee a minimum residual value of the
leased property to the lessor. For purposes of this definition, the amount of
the obligations described in clause (h) of the preceding sentence with respect
to any lease classified according to GAAP as an "operating lease," shall equal
the sum of (1) the present value of rentals and other minimum lease payments
required in connection with such lease [calculated in accordance with SFAS 13
and other GAAP relevant to the determination of the whether such lease must be
accounted for as an operating lease or capital lease], plus (2) the fair value
of the property covered by the lease; provided, however, that such amount shall
not exceed the price, as of the date a determination of Debt is required
hereunder, for which the lessee can purchase the leased property pursuant to any
valid ongoing purchase option if, upon such a purchase, the lessee shall be
excused from paying rentals or other minimum lease payments that would otherwise
accrue after the purchase.
"DEFAULT" means any event which, with the passage of time or the giving
of notice or both, would (if not cured within any applicable cure period)
constitute an Event of Default.
"DEFAULT RATE" means, for any period prior to the Designated Sale Date,
a floating per annum rate equal to two percent (2%) above the Prime Rate, and
for any period commencing on or after the Designated Sale Date, Default Rate
shall mean a floating per annum rate equal to five percent (5%) above the Prime
Rate. However, in no event will the "Default Rate" at any time exceed the
maximum interest rate permitted by law.
"DEPOSIT TAKER" shall have the meaning assigned to it in the Pledge
Agreement.
"DEPOSIT TAKER LOSSES" shall have the meaning assigned to it in the
Pledge Agreement.
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"DESIGNATED SALE DATE" means the earlier of:
(1) the first Business Day of January, 2005; or
(2) any Business Day designated as such in an irrevocable,
unconditional notice given by NAI to BNPLC; provided, that to be
effective for purposes of this definition, any such notice from NAI to
BNPLC must designate a Business Day that is more than thirty days after
the date of such notice; and provided, further, to be effective for
purposes of this definition, the notice must include an express,
unconditional, unequivocal and irrevocable acknowledgment by NAI that
because of NAI's election to accelerate the Designated Sale Date, the
Maximum Remarketing Obligation will equal the Break Even Price under the
Purchase Agreement; or
(3) [intentionally deleted];
(4) the first Business Date after any termination by NAI of the
Purchase Option and NAI's Initial Remarketing Rights and Obligations as
provided in subparagraph 4(B) of the Purchase Agreement; or
(5) any Business Day designated as such in a notice given by
BNPLC to NAI when any Event of Default has occurred and is continuing;
provided, that to be effective for purposes of this definition, any such
notice from BNPLC to NAI must designate a Business Day that is more than
thirty days after the date of such notice.
"DEVELOPMENT DOCUMENTS" means the contracts, ordinances and other
documents described in Exhibit C attached to the Closing Certificate, as the
same may be modified from time to time in accordance with the Improvements Lease
and the Closing Certificate, and any applications, permits or certificates
concerning or affecting the use or development of the Property that may be
submitted, issued or executed from time to time as contemplated in such
contracts, ordinances and other documents or that BNPLC may hereafter execute,
approve or consent to at the request of NAI.
"DIRECT PAYMENTS TO PARTICIPANTS" means the amounts paid or required to
be paid directly to Participants on the Designated Sale Date as provided in
Section 6.2 of the Pledge Agreement at the direction of and for NAI by the
collateral agent appointed pursuant to the Pledge Agreement from all or any part
of the Collateral described therein.
"EFFECTIVE DATE" means December ___, 1999.
"EFFECTIVE RATE" means for each Base Rent Period, the per annum rate
determined by dividing (A) LIBOR for such Base Rent Period, as the case may be,
by (B) one hundred percent (100%) minus the Eurodollar Rate Reserve Percentage
for such Base Rent Period. If LIBOR or the Eurodollar Rate Reserve Percentage
changes from Base Rent Period to Base Rent Period, then the Effective Rate shall
be automatically increased or decreased as of the date of such change, as the
case may be, without prior notice to NAI. If for any reason BNPLC determines
that it is impossible or unreasonably difficult to determine the Effective Rate
with respect to a given Base Rent Period in accordance with the foregoing, then
the "EFFECTIVE RATE" for that Base Rent Period shall equal any published index
or per annum interest rate determined in good faith by BNPLC's Parent to be
comparable to LIBOR at the
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beginning of the first day of that period. A comparable interest rate might be,
for example, the then existing yield on short term United States Treasury
obligations (as compiled by and published in the then most recently published
United States Federal Reserve Statistical Release H.15(519) or its successor
publication), plus or minus a fixed adjustment based on BNPLC's Parent's
comparison of past eurodollar market rates to past yields on such Treasury
obligations. Any determination by BNPLC of the Effective Rate under this
definition shall, in the absence of clear and demonstrable error, be conclusive
and binding upon NAI.
"ENVIRONMENTAL LAWS" means any and all existing and future Applicable
Laws pertaining to safety, health or the environment, or to Hazardous Substances
or Hazardous Substance Activities, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended, "CERCLA"), and the
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984 (as amended, "RCRA").
"ENVIRONMENTAL CUTOFF DATE" means the later of the dates upon which (i)
the Improvements Lease terminates, or (ii) NAI surrenders possession and control
of the Property and ceases to have interest in the Land or Improvements or
rights with respect thereto under any of the Operative Documents.
"ENVIRONMENTAL LOSSES" means Losses suffered or incurred by BNPLC or any
other Interested Party, directly or indirectly, relating to or arising out of,
based on or as a result of any of the following: (i) any Hazardous Substance
Activity on or prior to the Environmental Cutoff Date; (ii) any violation on or
prior to the Environmental Cutoff Date of any applicable Environmental Laws
relating to the Property or to the ownership, use, occupancy or operation
thereof; (iii) any investigation, inquiry, order, hearing, action, or other
proceeding by or before any governmental or quasi-governmental agency or
authority in connection with any Hazardous Substance Activity that occurs or is
alleged to have occurred on or prior to the Environmental Cutoff Date; or (iv)
any claim, demand, cause of action or investigation, or any action or other
proceeding, whether meritorious or not, brought or asserted against any
Interested Party which directly or indirectly relates to, arises from, is based
on, or results from any of the matters described in clauses (i), (ii), or (iii)
of this definition or any allegation of any such matters. For purposes of
determining whether Losses constitute "Environmental Losses," as the term is
used in the Improvements Lease, any actual or alleged Hazardous Substance
Activity or violation of Environmental Laws relating to the Property will be
presumed to have occurred prior to the Environmental Cutoff Date unless NAI
establishes by clear and convincing evidence to the contrary that the relevant
Hazardous Substance Activity or violation of Environmental Laws did not occur or
commence prior to the Environmental Cutoff Date.
"ENVIRONMENTAL REPORTS" means collectively the following reports
(whether one or more), which were provided by NAI to BNPLC prior to the
Effective Date: Phase I Environmental Site Assessment for 1330-1350 Geneva and
1345-1347 Crossman Avenue, Sunnyvale, California, dated November 1999 by Romig
Consulting Engineers.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA AFFILIATE" means any Person who for purposes of Title IV of ERISA
is a member of NAI's controlled group, or under common control with NAI, within
the meaning of Section 414 of the Internal Revenue Code, and the regulations
promulgated and rulings issued thereunder.
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"ESCROWED PROCEEDS" means, subject to the exclusions specified in the
next sentence, any money that is received by BNPLC from time to time during the
Term (and any interest earned thereon) from any party (1) under any property
insurance policy as a result of damage to the Property, (2) as compensation for
any restriction imposed by any governmental authority upon the use or
development of the Property or for the condemnation of the Property or any
portion thereof, (3) because of any judgment, decree or award for physical
damage to the Property or (4) as compensation under any title insurance policy
or otherwise as a result of any title defect or claimed title defect with
respect to the Property; provided, however, in determining the amount of
"Escrowed Proceeds" there shall be deducted all expenses and costs of every
type, kind and nature (including Attorneys' Fees) incurred by BNPLC to collect
such proceeds. Notwithstanding the foregoing, "Escrowed Proceeds" will not
include (A) any payment to BNPLC by a Participant or an Affiliate of BNPLC that
is made to compensate BNPLC for the Participant's or Affiliate's share of any
Losses BNPLC may incur as a result of any of the events described in the
preceding clauses (1) through (4), (B) any money or proceeds that have been
applied as a Qualified Prepayment or to pay any Breakage Costs or other costs
incurred in connection with a Qualified Prepayment, (C) any money or proceeds
that, after no less than ten days notice to NAI, BNPLC returns or pays to a
third party because of BNPLC's good faith belief that such return or payment is
required by law, (D) any money or proceeds paid by BNPLC to NAI or offset
against any amount owed by NAI, or (E) any money or proceeds used by BNPLC in
accordance with the Improvements Lease for repairs or the restoration of the
Property or to obtain development rights or the release of restrictions that
will inure to the benefit of future owners or occupants of the Property. Until
Escrowed Proceeds are paid to NAI pursuant to Paragraph 10 of the Improvements
Lease, transferred to a purchaser under the Purchase Agreement as therein
provided or applied as a Qualified Prepayment or as otherwise described in the
preceding sentence, BNPLC shall keep the same deposited in one or more interest
bearing accounts, and all interest earned on such account shall be added to and
made a part of Escrowed Proceeds.
"ESTABLISHED MISCONDUCT" of a Person means, and is limited to: (1) if
the Person is bound by the Operative Documents or the Participation Agreement, a
breach by such Person of the express provisions of the Operative Documents or
the Participation Agreement, as applicable, that continues beyond any period for
cure provided therein, and (2) conduct of such Person or its Affiliates that has
been determined to constitute wilful misconduct or Active Negligence in or as a
necessary element of a final judgment rendered against such Person by a court
with jurisdiction to make such determination. Established Misconduct of one
Interested Party shall not be attributed to a second Interested Party unless the
second Interested Party is an Affiliate of the first. Negligence which does not
constitute Active Negligence shall not in any event constitute Established
Misconduct. For purposes of this definition, "conduct of a Person" will include
(1) the conduct of an employee of that Person, but only to the extent that the
employee is acting within the scope of his employment by that Person, as
determined in or as a necessary element of a final judgment rendered against
such Person by a court with jurisdiction to make such determination, and (2) the
conduct of an agent of that Person (such as an independent environmental
consultant engaged by that Person), but only to the extent that the agent is, as
determined in or as a necessary element of a final judgment rendered against
such Person by a court with jurisdiction to make such determination, (x) acting
within the scope of the authority granted to him by such Person, (y) not acting
with the consent or approval of or under the direction of NAI or NAI's
Affiliates, employees or agents, and (z) not acting in good faith to mitigate
Losses that such Person may suffer because of a breach or repudiation by NAI of
the Improvements Lease or the Purchase Documents.
"EUROCURRENCY LIABILITIES" shall have the meaning assigned to it in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
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"EURODOLLAR RATE RESERVE PERCENTAGE" means, for purposes of determining
the Effective Rate for any Base Rent Period, the reserve percentage applicable
two Business Days before the first day of such period under regulations issued
from time to time by the Board of Governors of the Federal Reserve System (or
any successor) for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement) for BNPLC's
Parent with respect to liabilities or deposits consisting of or including
Eurocurrency Liabilities (or with respect to any other category or liabilities
by reference to which LIBOR is determined) having a term comparable to such
period.
"EVENT OF DEFAULT" shall have the meaning assigned to it in subparagraph
17 of the Improvements Lease.
"EXCLUDED TAXES" means (1) all federal, state and local income taxes
upon Base Rent, Administrative Agency Fees, any interest paid to BNPLC or any
Participant pursuant to subparagraph 3.(k) of the Improvements Lease, and any
additional compensation claimed by BNPLC pursuant to subparagraph 5.(b)(ii) of
the Improvements Lease; (2) any transfer or change of ownership taxes assessed
because of BNPLC's transfer or conveyance to any third party of any rights or
interest in the Improvements Lease, the Purchase Agreement or the Property
(other than any such taxes assessed because of any Permitted Transfer under
clauses (1), (3), (4), (5), (6) or (7) of the definition of Permitted Transfer
in this Agreement), (3) all federal, state and local income taxes upon any
amounts paid as reimbursement for or to satisfy Losses incurred by BNPLC or any
Participant to the extent such taxes are offset by a corresponding reduction of
BNPLC's or the applicable Participant's income taxes because of BNPLC's or such
Participant's deduction of the reimbursed Losses from its taxable income or
because of any tax credits attributable thereto. If, however, a change in
Applicable Laws after the Effective Date results in an increase in such taxes
for any reason other than an increase in the applicable tax rates (e.g., a
disallowance of deductions that would otherwise be available against payments
described in clause (A) of this definition), then for purposes of the Operative
Documents, the term "Excluded Taxes" will not include the increase in such taxes
attributable to the change.
"EXISTING CONTRACT" means the Agreement of Sale covering the Land
between NAI and Seller, dated November 16, 1999.
"FAILED COLLATERAL TEST DATE" shall have the meaning indicated in Part
III of Schedule 1 attached to the Improvements Lease.
"FED FUNDS RATE" means, for any period, a fluctuating interest rate
(expressed as a per annum rate and rounded upwards, if necessary, to the next
1/16 of 1%) equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rates are not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by BNPLC's Parent from three Federal funds brokers of
recognized standing selected by BNPLC's Parent. All determinations of the Fed
Funds Rate by BNPLC's Parent shall, in the absence of clear and demonstrable
error, be binding and conclusive upon NAI.
"FUNDING ADVANCES" means (1) the Initial Funding Advance and (2) all
future advances made by BNPLC's Parent or any other Participant to or on behalf
of BNPLC to allow BNPLC to provide additional advances (if any) to NAI.
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"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
subparagraph 13.(a) of the Improvements Lease (except for changes with which
NAI's independent public accountants concur).
"HAZARDOUS SUBSTANCE" means (i) any chemical, compound, material,
mixture or substance that is now or hereafter defined or listed in, regulated
under, or otherwise classified pursuant to, any Environmental Laws as a
"hazardous substance," "hazardous material," "hazardous waste," "extremely
hazardous waste or substance," "infectious waste," "toxic substance," "toxic
pollutant," or any other formulation intended to define, list or classify
substances by reason of deleterious properties, including ignitability,
corrosiveness, reactivity, carcinogenicity, toxicity or reproductive toxicity;
(ii) petroleum, any fraction of petroleum, natural gas, natural gas liquids,
liquified natural gas, synthetic gas usable for fuel (or mixtures of natural gas
and such synthetic gas), and ash produced by a resource recovery facility
utilizing a municipal solid waste stream, and drilling fluids, produced waters
and other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources; (iii) asbestos and any asbestos
containing material; and (v) any other material that, because of its quantity,
concentration or physical or chemical characteristics, poses a significant
present or potential hazard to human health or safety or to the environment if
released into the workplace or the environment.
"HAZARDOUS SUBSTANCE ACTIVITY" means any actual, proposed or threatened
use, storage, holding, release (including any spilling, leaking, leaching,
pumping, pouring, emitting, emptying, dumping, disposing into the environment,
and the continuing migration into or through soil, surface water, groundwater or
any body of water), discharge, deposit, placement, generation, processing,
construction, treatment, abatement, removal, disposal, disposition, handling or
transportation of any Hazardous Substance from, under, in, into or on the
Property, including the movement or migration of any Hazardous Substance from
surrounding property, surface water, groundwater or any body of water under, in,
into or onto the Property and any resulting residual Hazardous Substance
contamination in, on or under the Property. "HAZARDOUS SUBSTANCE ACTIVITY" also
means any existence of Hazardous Substances on the Property that would cause the
Property or the owner or operator thereof to be in violation of, or that would
subject the Property to any remedial obligations under, any Environmental Laws,
including CERCLA and RCRA, assuming disclosure to the applicable governmental
authorities of all relevant facts, conditions and circumstances pertaining to
the Property.
"IMPOSITIONS" means all sales, excise, ad valorem, gross receipts,
business, transfer, stamp, occupancy, rental and other taxes, levies, fees,
charges, surcharges, assessments or penalties which arise out of or are
attributable to the Improvements Lease or which are imposed upon BNPLC or the
Property because of the ownership, leasing, occupancy, sale or operation of the
Property, or any part thereof or interest therein, or relating to or required to
be paid by any of the Permitted Encumbrances or the Development Documents,
excluding only Excluded Taxes. "IMPOSITIONS" shall include real estate taxes
imposed because of a change of use or ownership of the Property on or prior to
the date of any sale by BNPLC pursuant to the Purchase Agreement.
"IMPROVEMENTS" means any and all (1) buildings and other real property
improvements now or hereafter erected on the Land, and (2) equipment (e.g., HVAC
systems, elevators and plumbing fixtures) attached to the buildings or other
real property improvements, the removal of which would cause structural or other
material damage to the buildings or other real property improvements or would
materially and adversely affect the value or use of the buildings or other real
property improvements.
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"IMPROVEMENTS LEASE" means the Lease Agreement (Phase IV -
Improvements") dated as of December ___, 1999 between BNPLC, as landlord, and
NAI, as tenant, pursuant to which NAI has agreed to lease BNPLC's interest in
the Property, as such Lease Agreement may be extended, supplemented, amended,
restated or otherwise modified from time to time in accordance with its terms.
"INITIAL FUNDING ADVANCE" means the advance made by BNPLC's Parent
(directly or through one or more of its Affiliates) to or on behalf of BNPLC on
or prior to the Effective Date to cover the cost of BNPLC's acquisition of the
Property and certain Transaction Expenses and other amounts described in this
definition. The amount of the Initial Funding Advance may be confirmed by a
separate closing certificate executed by NAI as of the Effective Date. To the
extent that BNPLC does not itself use the entire Initial Funding Advance to pay
Transaction Expenses incurred by BNPLC, the remainder thereof will be advanced
to NAI, with the understanding that NAI shall use any such amount advanced for
one or more of the following purposes: (1) the payment or reimbursement of
Transaction Expenses incurred by NAI; (2) the maintenance of the Property; or
(3) the payment of Rents next due.
"INTERESTED PARTY" means each of (1) BNPLC, its Affiliates and its
successors and assigns as to the Property or any part thereof or any interest
therein, (2) BNPLC's Parent, and (3) any other Participants and their permitted
successors and assigns under the Participation Agreement; provided, however,
none of the following shall constitute an Interested Party: (a) any Person to
whom BNPLC may transfer an interest in the Property by a conveyance that is not
a Permitted Transfer and others that cannot lawfully claim an interest in the
Property except through or under such a transfer by BNPLC, (b) NAI or any Person
that cannot lawfully claim an interest in the Property except through or under a
conveyance from NAI, or (c) any Applicable Purchaser under the Purchase
Agreement and any Person that cannot lawfully claim an interest in the Property
except through or under a conveyance from such Applicable Purchaser.
"ISSUE 97-1 NON-PERFORMANCE-RELATED SUBJECTIVE EVENT OF DEFAULT" means
an Event of Default that is unrelated to the Property or the use or maintenance
thereof and that results solely from (A) a breach by NAI of a provision in any
Operative Document, the occurrence of which breach cannot be objectively
determined, or (B) any other event described in subparagraph 17.(e) of the
Improvements Lease, the occurrence of which event cannot be objectively
determined. For example, an Event of Default under subparagraph 17.(e) of the
Improvements Lease resulting solely from a failure of NAI to "generally" pay its
debts as such debts become due (in contrast to a failure of NAI to pay Rent to
BNPLC as it becomes due under the Improvements Lease) would constitute an Issue
97-1 Non-performance-related Subjective Event of Default. In no event, however,
will the term "Issue 97-1 Non-performance-related Subjective Event of Default"
include an Event of Default resulting from (1) a failure of NAI to make any
payment required to BNPLC under the Operative Documents, (2) a breach by NAI of
the provisions set forth in Schedule 1 attached to the Improvements Lease (which
set forth financial covenants), (3) any failure of NAI to use, maintain and
insure the Property in accordance with the requirements of the Improvements
Lease, or (4) any failure of NAI to pay the full amount of any Supplemental
Payment on the Designated Sale Date as required by the Purchase Agreement.
Except as provided in subparagraph 1(A)(2)(c)(i) of the Purchase Agreement, the
characterization of any Event of Default as an Issue 97-1
Non-performance-related Subjective Event of Default will not affect the rights
or remedies available to BNPLC because of the Event of Default.
"LAND" means the land covered by the land described in Exhibit A
attached to the Closing Certificate, the Improvements Lease and the Purchase
Agreement.
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"LIBOR" means, for purposes of determining the Effective Rate for each
Base Rent Period, the rate determined by BNPLC's Parent to be the average rate
of interest per annum (rounded upwards, if necessary, to the next 1/16 of 1%) of
the rates at which deposits of dollars are offered or available to BNPLC's
Parent in the London interbank market at approximately 11:00 a.m. (London time)
on the second Business Day preceding the first day of such period. BNPLC shall
instruct BNPLC's Parent to consider deposits, for purposes of making the
determination described in the preceding sentence, that are offered: (i) for
delivery on the first day of such Base Rent Period, as the case may be, (ii) in
an amount equal or comparable to the total (projected on the applicable date of
determination by BNPLC's Parent) Stipulated Loss Value on the first day of such
period, and (iii) for a time equal or comparable to the length of such period.
If BNPLC's Parent so chooses, it may determine LIBOR for any period by reference
to the rate reported by the British Banker's Association on Page 3750 of the
Telerate Service at approximately 11:00 a.m. (London time) on the second
Business Day preceding the first day of such period. If for any reason BNPLC's
Parent determines that it is impossible or unreasonably difficult to determine
LIBOR with respect to a given Base Rent Period in accordance with the foregoing,
or if BNPLC's Parent shall determine that it is unlawful (or any central bank or
governmental authority shall assert that it is unlawful) for BNPLC, BNPLC's
Parent or any Participant to provide or maintain Funding Advances during any
Base Rent Period for which Carrying Costs or Base Rent is computed by reference
to LIBOR, then "LIBOR" for that period shall equal the Base Rate for that
period. All determinations of LIBOR by BNPLC's Parent shall, in the absence of
clear and demonstrable error, be binding and conclusive upon NAI.
"LIBOR PERIOD ELECTION" for any Base Rent Period means a period of one
month, three months or six months as designated by NAI at least five Business
Days prior to the commencement of such Base Rent Period by a notice given to
BNPLC in the form of Exhibit C attached to the Improvements Lease. (For purposes
of the Improvements Lease a LIBOR Period Election for any Base Rent Period shall
also be considered the LIBOR Period Election in effect on the Base Rent
Commencement Date or Base Rent Date upon which such Base Rent Period begins.)
Any LIBOR Period Election so designated by NAI shall remain in effect for the
entire Base Rent Period specified in NAI's notice to BNPLC (provided such Base
Rent Period commences at least ten Business Days after BNPLC's receipt of the
notice) and for all subsequent Base Rent Periods until a new designation becomes
effective in accordance with the provisions set forth in this definition.
Notwithstanding the foregoing, however: (1) NAI shall not be entitled to
designate a LIBOR Period Election that would cause a Base Rent Period to extend
beyond the end of the scheduled Term; (2) changes in the LIBOR Period Election
shall become effective only upon the commencement of a new Base Rent Period; (3)
for each Base Rent Period that occurs within any Mandatory Collateral Period,
the LIBOR Period Election shall be one month; (4) no LIBOR Period Election
designated by NAI hereunder shall be different than the LIBOR Period Election
specified under (and as defined in) the Other Common Definitions and Provisions
Agreement; and (5) if NAI fails to make a LIBOR Period Election consistent with
the foregoing requirements for any Base Rent Period, or if an Event of Default
shall have occurred and be continuing on the third Business Day preceding the
commencement of any Base Rent Period, the LIBOR Period Election for such Base
Rent Period shall be deemed to be one month.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any agreement to sell receivables with recourse, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction). In addition, for purposes of subparagraph A.(8) of Part IV of
Schedule 1 attached to the Improvements Lease, "Lien" includes any Liens under
ERISA relating to Unfunded Benefit Liabilities of which NAI is required to
notify BNPLC under subparagraph 13.(a)(vii) of the Improvements Lease
(irrespective of whether NAI actually notifies BNPLC as required thereunder).
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"LIENS REMOVABLE BY BNPLC" means, and is limited to, Liens encumbering
the Property that are asserted (1) other than as contemplated in the Operative
Documents, by BNPLC itself, (2) by third parties lawfully claiming through or
under BNPLC (which for purposes of the Improvements Lease shall include any
judgment liens established against the Property because of a judgment rendered
against BNPLC and shall also include any liens established against the Property
to secure past due Excluded Taxes), or (3) by third parties lawfully claiming
under a deed or other instrument duly executed by BNPLC; provided, however,
Liens Removable by BNPLC shall not include (A) any Permitted Encumbrances or
Development Documents (regardless of whether claimed through or under BNPLC),
(B) the Operative Documents or any other document executed by BNPLC with the
knowledge of (and without objection by) NAI's counsel contemporaneously with the
execution and delivery of the Operative Documents, (C) Liens which are neither
lawfully claimed through or under BNPLC (as described above) nor claimed under a
deed or other instrument duly executed by BNPLC, (D) Liens claimed by NAI or
claimed through or under a conveyance made by NAI, (E) Liens arising because of
BNPLC's compliance with Applicable Law, the Operative Documents, Permitted
Encumbrances, the Development Documents or any written request made by NAI, (F)
Liens securing the payment of property taxes or other amounts assessed against
the Property by any governmental authority, other than to secure the payment of
past due Excluded Taxes or to secure damages caused by (and attributed by any
applicable principles of comparative fault to) BNPLC's own Established
Misconduct, (G) Liens resulting from or arising in connection with any breach by
NAI of the Operative Documents; or (H) Liens resulting from or arising in
connection with any Permitted Transfer that occurs more than thirty days after
any Designated Sale Date upon which, for any reason, NAI or an Affiliate of NAI
or any Applicable Purchaser shall not purchase BNPLC's interest in the Property
pursuant to the Purchase Agreement for a cash price to BNPLC (when taken
together with any Supplemental Payment made by NAI pursuant to Paragraph 1(A)(2)
of the Purchase Agreement, in the case of a purchase by an Applicable Purchaser)
equal to the Break Even Price.
"LOSSES" means the following: any and all losses, liabilities, damages
(whether actual, consequential, punitive or otherwise denominated), demands,
claims, administrative or legal proceedings, actions, judgments, causes of
action, assessments, fines, penalties, costs and expenses (including Attorneys'
Fees and the fees of outside accountants and environmental consultants), of any
and every kind or character, foreseeable and unforeseeable, liquidated and
contingent, proximate and remote.
"MANDATORY COLLATERAL PERIOD" shall have the meaning assigned to it in
Part I of Schedule 1 attached to the Improvements Lease and to the Pledge
Agreement.
"MATERIAL ENVIRONMENTAL COMMUNICATION" means a communication between NAI
or its agents and a regulatory agency or third party, which causes, or
potentially could cause (whether by implementation of or response to said
communication), a material change in the scope, duration, or nature of any
Remedial Work.
"MAXIMUM REMARKETING OBLIGATION" shall have the meaning indicated in
subparagraph 1(A)(2)(c) of the Purchase Agreement.
"MINIMUM EXTENDED REMARKETING PRICE" shall have the meaning assigned to
it in subparagraph 2(B) of the Purchase Agreement.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section
3(37) of ERISA to which contributions have been made by NAI or any ERISA
Affiliate during the preceding six years and which is covered by Title IV of
ERISA.
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"NAI" means Network Appliance, Inc., a California corporation.
"NAI'S EXTENDED REMARKETING PERIOD" shall have the meaning assigned to
it in subparagraph 2(A) of the Purchase Agreement.
"NAI'S EXTENDED REMARKETING RIGHT" shall have the meaning assigned to it
in subparagraph 2(A) of the Purchase Agreement.
"NAI'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS" shall have the
meaning assigned to it in subparagraph 1(A)(2) of the Purchase Agreement.
"OPERATIVE DOCUMENTS" means the Closing Certificate, the Improvements
Lease, the Purchase Agreement, the Pledge Agreement and this Common Definitions
and Provisions Agreement (Phase IV - Improvements).
"OTHER COMMON DEFINITIONS AND PROVISIONS AGREEMENT" means the Common
Definitions and Provisions Agreement (Phase IV - Land), dated as of December
___, 1999, between BNPLC and NAI, as such Common Definitions and Provisions
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
"OTHER LEASE AGREEMENT" means the Lease Agreement (Phase IV - Land),
dated as of December ___, 1999, between BNPLC and NAI, as such Lease Agreement
may be extended, supplemented, amended, restated or otherwise modified from time
to time in accordance with its terms.
"OTHER PURCHASE AGREEMENT" means the Purchase Agreement (Phase IV -
Land), dated December ___, 1999, between BNPLC and NAI, as such Purchase
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
"PARTICIPANT" means BNPLC's Parent and any other Person that, upon
becoming a party to the Participation Agreement and the Pledge Agreement by
executing supplements as contemplated therein, agrees from time to time to
participate in all or some of the risks and rewards to BNPLC of the Improvements
Lease and the Purchase Documents. As of the Effective Date, the only Participant
is BNPLC's Parent, but BNPLC may agree after the Effective Date to share in
risks and rewards of the Improvements Lease and the Purchase Documents with
other Participants. However, no Person other than BNPLC's Parent and its
Affiliates shall qualify as a Participant for purposes of the Operative
Documents or other agreements concerning the Property to which NAI is a party
unless such Person, during the continuance of an Event of Default or otherwise
with NAI's prior written approval (which approval will not be unreasonably
withheld), became a party to the Pledge Agreement and to the Participation
Agreement by executing supplements to those agreements as contemplated therein.
"PARTICIPATION AGREEMENT" means the Participation Agreement between
BNPLC and BNPLC's Parent dated as of the Effective Date, pursuant to which
BNPLC's Parent has agreed to participate in the risks and rewards to BNPLC of
the Improvements Lease and the other Operative Documents, as such Participation
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
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<PAGE> 70
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"PERIOD" means a 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 BNPLC at the request of or with the consent of NAI
(including the Other Lease Agreement, the Other Purchase Agreement and all
documents executed by BNPLC pursuant to the Other Purchase Agreement), (iii) the
Premises Leases, (iv) any Liens securing the payment of Impositions which are
not delinquent or claimed to be delinquent or which are being contested in
accordance with subparagraph 5.(a) of the Improvements Lease, and (iv)
mechanics' and materialmen's liens for amounts not past due or claimed to be
past due or which are being contested in accordance with subparagraph 11.(c) of
the Improvements Lease.
"PERMITTED HAZARDOUS SUBSTANCE USE" means the use, generation, storage
and offsite disposal of Permitted Hazardous Substances in strict accordance with
applicable Environmental Laws and with due care given the nature of the
Hazardous Substances involved; provided, the scope and nature of such use,
generation, storage and disposal shall not:
(1) exceed that reasonably required for the operation of the
Property for the purposes expressly permitted under subparagraph 2.(a)
of the Improvements Lease; or
(2) include any disposal, discharge or other release of Hazardous
Substances from the Property in any manner that might allow such
substances to reach surface water or groundwater, except (i) through a
lawful and properly authorized discharge (A) to a publicly owned
treatment works or (B) with rainwater or storm water runoff in
accordance with Applicable Laws and any permits obtained by NAI that
govern such runoff; or (ii) any such disposal, discharge or other
release of Hazardous Substances for which no permits are required and
which are not otherwise regulated under applicable Environmental Laws.
Further, notwithstanding anything to the contrary herein contained, Permitted
Hazardous Substance Use shall not include any use of the Property in a manner
that requires a RCRA treatment, storage or disposal permit, including a
landfill, incinerator or other waste disposal facility.
"PERMITTED HAZARDOUS SUBSTANCES" means Hazardous Substances used and
reasonably required for the use of the Property by NAI and its permitted
subtenants and assigns for the purposes expressly permitted by subparagraph
2.(a) of the Improvements Lease, in either case in strict compliance with all
Environmental Laws and with due care given the nature of the Hazardous
Substances involved. Without limiting the generality of the foregoing, Permitted
Hazardous Substances shall include usual and customary office, laboratory and
janitorial products.
"PERMITTED TRANSFER" means any one or more of the following: (1) the
creation or conveyance by BNPLC of rights and interests in favor of any
Participant pursuant to the Participation Agreement; (2) the creation or
conveyance of rights and interests in favor of or to Banque Nationale de Paris
(through its San Francisco Branch or otherwise), as BNPLC's Parent, or any other
Qualified Affiliate of BNPLC, provided that NAI must be notified before any such
conveyance to Banque Nationale de Paris or another Qualified Affiliate of (A)
any interest in the Property or any portion thereof by an assignment or other
document which will be recorded in the real property
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records of San Mateo County, California or (B) BNPLC's entire interest in the
Land and the Property; (3) any assignment or conveyance by BNPLC or its
permitted successors or assigns to any present or future Participant of any lien
or security interest against the Property (in contrast to a conveyance of
BNPLC's fee estate in the Land and Improvements) or of any interest in Rent,
payments required by or under the Purchase Documents or payments to be generated
from the Property after the Term, provided that such assignment or conveyance is
made expressly subject to the rights of NAI under the Operative Documents; (4)
any agreement to exercise or refrain from exercising rights or remedies under
the Operative Documents made by BNPLC with any present or future Participant;
(5) any assignment or conveyance by BNPLC requested by NAI or required by any
Permitted Encumbrance, by the Purchase Agreement, by the Existing Contract, by
any other Development Contract or by Applicable Laws; or (6) any assignment or
conveyance after a Designated Sale Date on which NAI shall not have purchased or
caused an Applicable Purchaser to purchase BNPLC's interest in the Property and,
if applicable, after the expiration of the thirty day cure period specified in
Paragraph 4(D) of the Purchase Agreement.
"PERSON" means an individual, a corporation, a partnership, an
unincorporated organization, an association, a joint stock company, a joint
venture, a trust, an estate, a government or agency or political subdivision
thereof or other entity, whether acting in an individual, fiduciary or other
capacity.
"PERSONAL PROPERTY" shall have the meaning assigned to it on page 2 of
the Improvements Lease.
"PLAN" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by NAI or any ERISA
Affiliate of NAI during the preceding six years and which is covered by Title IV
of ERISA, other than a Multiemployer Plan.
"PLEDGE AGREEMENT" means the Pledge Agreement (Phase IV - Improvements)
dated as of the date hereof between BNPLC and NAI, pursuant to which NAI may
pledge certificates of deposit as security for NAI's obligations under the
Purchase Agreement (and for the corresponding obligations of BNPLC to the
Participants under the Participation Agreement), as such Pledge Agreement may be
extended, supplemented, amended, restated or otherwise modified from time to
time in accordance with its terms.
"PREMISES LEASES" means the four subleases of space within the
Improvements, each between NAI, as landlord, and TRW Inc., as tenant, executed
of even date herewith, and any subleases or other transfers under and permitted
by the terms of any such leases.
"PRIME RATE" means the prime interest rate or equivalent charged by
BNPLC's Parent in the United States of America as announced or published by
BNPLC's Parent from time to time, which need not be the lowest interest rate
charged by BNPLC's Parent. If for any reason BNPLC's Parent does not announce or
publish a prime rate or equivalent, the prime rate or equivalent announced or
published by either CitiBank, N.A. or any New York branch or office of Credit
Commercial de France as selected by BNPLC shall be used to compute the rate
describe in the preceding sentence. The prime rate or equivalent announced or
published by such bank need not be the lowest rate charged by it. The Prime Rate
may change from time to time after the Effective Date without notice to NAI as
of the effective time of each change in rates described in this definition.
"PROPERTY" means the Personal Property and the Real Property,
collectively. The fee interest in the Land itself will not be included in the
Property. Any rights, titles and interests acquired by BNPLC under the Existing
Contract, to the extent not covered by the Improvements Lease and thus not
encompassed within this definition of
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Property, are intended to be covered by the Other Lease Agreement and
encompassed within the term "Property" as defined in the Other Common
Definitions and Provisions.
"PURCHASE AGREEMENT" means the Purchase Agreement (Phase IV -
Improvements) dated as of December _____, 1999 between BNPLC and NAI, as such
Purchase Agreement may be extended, supplemented, amended, restated or otherwise
modified from time to time in accordance with its terms.
"PURCHASE DOCUMENTS" means collectively (1) the Purchase Agreement, (2)
the Memorandum of Purchase Agreement executed by BNPLC and NAI as of the
Effective Date and recorded to provide notice of the Purchase Agreement; and (3)
the Pledge Agreement and all financing statements, notices, acknowledgments and
certificates of deposit executed or delivered from time to time by NAI, BNPLC or
the other parties to the Pledge Agreement pursuant to and as expressly provided
therein.
"PURCHASE OPTION" shall have the meaning assigned to it in subparagraph
1(A)(1) of the Purchase Agreement.
"QUALIFIED AFFILIATE" means any Person that is one hundred percent
(100%) owned, directly or indirectly, by Banque Nationale de Paris or any
successor of such bank; provided, that such Person can make (and has in writing
made) the same representations to NAI that BNPLC has made in Paragraphs 3(D) and
3(E) of the Closing Certificate; and, provided, further, that such Person is not
insolvent.
"QUALIFIED PREPAYMENTS" means any payments received by BNPLC from time
to time during the Term (1) under any property insurance policy as a result of
damage to the Property, (2) as compensation for any restriction placed upon the
use or development of the Property or for the condemnation of the Property or
any portion thereof, (3) because of any judgment, decree or award for injury or
damage to the Property or (4) under any title insurance policy or otherwise as a
result of any title defect or claimed title defect with respect to the Property;
provided, however, that (x) in determining the amount of "Qualified
Prepayments", there shall be deducted all expenses and costs of every kind, type
and nature (including taxes, Breakage Costs and Attorneys' Fees) incurred by
BNPLC with respect to the collection or application of such payments, (y)
"Qualified Prepayments" shall not include any payment to BNPLC by a Participant
or an Affiliate of BNPLC that is made to compensate BNPLC for the Participant's
or Affiliate's share of any Losses BNPLC may incur as a result of any of the
events described in the preceding clauses (1) through (4) and (z) "Qualified
Prepayments" shall not include any payments received by BNPLC that BNPLC has
paid or is obligated to pay to NAI for the restoration or repair of the Property
or that BNPLC is holding as Escrowed Proceeds pursuant to Paragraph 10 of the
Improvements Lease or any other provision of the Improvements Lease. For
purposes of computing the total Qualified Prepayments (and other amounts
dependent upon Qualified Prepayments, such as Stipulated Loss Value) paid to or
received by BNPLC as of any date, payments described in the preceding clauses
(1) through (4) will be considered as Escrowed Proceeds, not Qualified
Prepayments, until they are actually applied as Qualified Prepayments by BNPLC
as provided in the Paragraph 10 of the Improvements Lease.
"REAL PROPERTY" shall have the meaning assigned to it on page 1 of the
Improvements Lease.
"REMEDIAL WORK" means any investigation, monitoring, clean-up,
containment, remediation, removal, payment of response costs, or restoration
work and the preparation and implementation of any closure or other required
remedial plans that any governmental agency or political subdivision requires or
approves (or could reasonably be expected to require if it was aware of all
relevant circumstances concerning the Property), whether
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by judicial order or otherwise, because of the presence of or suspected
presence of Hazardous Substances in, on, under or about the Property or because
of any prior Hazardous Substance Activity. Without limiting the generality of
the foregoing, Remedial Work also means any obligations imposed upon or
undertaken by NAI pursuant to Development Documents or any recommendations or
proposals made therein.
"RENT" means the Base Rent and all Additional Rent.
"RESIDUAL RISK PERCENTAGE" means seventeen percent (17%).
"RESPONSIBLE FINANCIAL OFFICER" means the chief financial officer, the
controller, the treasurer or the assistant treasurer of NAI.
"SALE CLOSING DOCUMENTS" shall have the meaning assigned to it in
subparagraph 1(C) of the Purchase Agreement.
"SECURED SPREAD" means thirty basis points (30/100 of 1%); provided,
however, that for purposes of calculating the Base Rent for any period
commencing on a Failed Collateral Test Date and continuing through the next
Collateral Test Date (under and as defined in Schedule 1 attached to the Lease)
that does not constitute a Failed Collateral Test Date, the Secured Spread shall
equal one-half of the Unsecured Spread.
"SELLER" means, collectively, TRW Inc., an Ohio corporation, and ESL
Incorporated, a California corporation.
"STIPULATED LOSS VALUE" as of any date means the amount equal to the sum
of the Initial Funding Advance, minus all funds actually received by BNPLC and
applied as Qualified Prepayments on or prior to such date. Under no
circumstances will any payment of Base Rent, the Arrangement Fee, the Upfront
Syndication Fees, or Administrative Agency Fees reduce Stipulated Loss Value.
"SUBSIDIARY" means, with respect to any Person, any Affiliate of which
at least a majority of the securities or other ownership interests having
ordinary voting power then exercisable for the election of directors or other
persons performing similar functions are at the time owned directly or
indirectly by such Person.
"SUPPLEMENTAL PAYMENT" shall have the meaning assigned to it in
subparagraph 1(A)(2)(c) of the Purchase Agreement.
"TERM" shall have the meaning assigned to it in subparagraph 1.(a) of
the Improvements Lease.
"THIRD PARTY PRICE" shall have the meaning assigned to it in
subparagraph 1(A)(2) of the Purchase Agreement.
"THIRD PARTY SALE NOTICE" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"THIRD PARTY SALE PROPOSAL" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
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<PAGE> 74
"THIRD PARTY TARGET PRICE" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"TRANSACTION EXPENSES" means costs incurred in connection with the
preparation and negotiation of the Operative Documents and related documents and
the consummation of the transactions contemplated therein.
"UNFUNDED BENEFIT LIABILITIES" means, with respect to any Plan or
Multiemployer Plan, the amount (if any) by which the present value of all
benefit liabilities (within the meaning of Section 4001(a)(16) of ERISA) under
the Plan or Multiemployer Plan exceeds the market value of all Plan or
Multiemployer assets allocable to such benefit liabilities, as determined on the
most recent valuation date of the Plan or Multiemployer Plan and in accordance
with the provisions of ERISA for calculating the potential liability of NAI or
any ERISA Affiliate of NAI under Title IV of ERISA.
"UNSECURED SPREAD" means, for any period beginning on and including the
Base Rent Commencement Date or a Base Rent Date and ending on but not including
the next Base Rent Date, the amount established as described below in this
definition on the date (in this definition, the "SPREAD TEST DATE") that is two
Business Days prior to such period by reference to the ratio calculated by
dividing (1) Adjusted EBIT for the then latest Rolling Four Quarters Period that
ended prior to (and for which NAI has reported earnings as necessary to compute
Adjusted EBIT) into (2) the total Debt of NAI and its Subsidiaries (determined
on a consolidated basis) as of the end of such Rolling Four Quarters Period. The
Unsecured Spread shall be established at the Level in the pricing grid below
which corresponds to such ratio; provided, that:
(a) for any period commencing on or prior to the first Business
Day of February, 2000, the Unsecured Spread will be the amount indicated
for Level III in the pricing grid below plus 100 basis points;
(b) promptly after earnings are reported by NAI for the latest
quarter in any Rolling Four Quarters Period, NAI must notify BNPLC of
any resulting change in the Unsecured Spread under this definition, and
no reduction in the Unsecured Spread from one period to the next will be
effective for purposes of the Operative Documents unless, prior to the
Spread Test Date for the next period, NAI shall have provided BNPLC with
a written notice setting forth and certifying the calculation under this
definition that justifies the reduction; and
(c) notwithstanding anything to the contrary in this definition,
on any date when an Event of Default has occurred and is continuing, the
Unsecured Spread shall equal the Default Rate less the Effective Rate.
<TABLE>
<CAPTION>
====================================================================================================
LEVELS RATIO OF TOTAL DEBT TO ADJUSTED EBIT UNSECURED SPREAD
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Level I less than 0.5 125.0 basis points
- ----------------------------------------------------------------------------------------------------
Level II greater than or equal to 0.5, but 137.5 basis points
less than 1.0
- ----------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
Level III greater than or equal to 1.0, but 150.0 basis points
less than 1.5
- ----------------------------------------------------------------------------------------------------
Level IV greater than or equal to 1.5, but 175.0 basis points
less than 2.0
- ----------------------------------------------------------------------------------------------------
Level V greater than or equal to 2.0 200.0 basis points
====================================================================================================
</TABLE>
All determinations of the Unsecured Spread by BNPLC shall, in the absence of
clear and demonstrable error, be binding and conclusive for purposes of the
Improvements Lease. Further BNPLC may, but shall not be required, to rely on the
determination of the Unsecured Spread set forth in any notice delivered by NAI
as described above in clause (b) of this definition.
"UPFRONT SYNDICATION FEES" shall have the meaning assigned to it in
subparagraph 2(M) of the Closing Certificate and Agreement.
"VOLUNTARY RETENTION OF THE PROPERTY" means an affirmative election made
by BNPLC to keep the Property pursuant to, and under the circumstances described
in, the second sentence of subparagraph 1(A)(2)(a) of the Purchase Agreement.
ARTICLE II - RULES OF INTERPRETATION
THE FOLLOWING PROVISIONS WILL APPLY TO AND GOVERN THE INTERPRETATION OF
EACH OF THE OPERATIVE DOCUMENTS:
1 NOTICES. The provision of any Operative Document, or of any Applicable
Laws with reference to the sending, mailing or delivery of any notice or demand
under any Operative Document or with reference to the making of any payment
required under any Operative Document, shall be deemed to be complied with when
and if the following steps are taken:
(i) All Rent and other amounts required to be paid by NAI to
BNPLC shall be paid to BNPLC in immediately available funds by wire
transfer to:
Federal Reserve Bank of New York
ABA 026007689 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/ 14334000176
/Ref/ NAI Sunnyvale Synthetic Improvements Lease (Phase IV)
or at such other place and in such other manner as BNPLC may designate
in a notice to NAI.
Page 21
<PAGE> 76
(ii) All Collateral required to be paid by NAI to the Agent shall
be paid in immediately available funds by wire transfer to:
Federal Reserve Bank of New York
ABA 026007689 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/ 14334000176
/Ref/ NAI Collateral Payment
or at such other place and in such other manner as Agent may designate
in a notice to NAI.
(iii) [intentionally deleted];
(iv) All notices, demands, approvals, consents and other
communications to be made under any Operative Document to or by the
parties thereto must, to be effective for purpose of such Operative
Document, be in writing. Notices, demands and other communications
required or permitted under any Operative Document are to be sent to the
addresses set forth below (or in the case of communications to
Participants, at the addresses set forth in Schedule 1 to the
Participation Agreement) and shall be given by any of the following
means: (A) personal service, with proof of delivery or attempted
delivery retained; (B) electronic communication, whether by telex,
telegram or telecopying (if confirmed in writing sent by United States
first class mail, return receipt requested); or (C) registered or
certified first class mail, return receipt requested. Such addresses may
be changed by notice to the other parties given in the same manner as
provided above. Any notice or other communication sent pursuant to
clause (A) or (B) hereof shall be deemed received upon such personal
service or upon dispatch by electronic means, and, if sent pursuant to
clause (C) shall be deemed received five days following deposit in the
mail.
Address of BNPLC:
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Telecopy: (972) 788-9191
With a copy to:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Gavin Holles
Telecopy: (415) 296-8954
And for draw requests and funding notices, with
a copy to:
Banque Nationale de Paris, San Francisco
Page 22
<PAGE> 77
180 Montgomery Street
San Francisco, California 94104
Attention: George Fung
Telecopy: (415) 956-4230
Address of NAI:
Network Appliance, Inc.
Attn: Leslie Paulides
2770 San Thomas Expressway
Santa Clara, CA 95051
Telecopy: (408) 367-3452
2 SEVERABILITY. If any term or provision of any Operative
Document or the application thereof shall to any extent be held by a court of
competent jurisdiction to be invalid and unenforceable, the remainder of such
document, or the application of such term or provision other than to the extent
to which it is invalid or unenforceable, shall not be affected thereby.
3 NO MERGER. There shall be no merger of the Improvements Lease
or of the leasehold estate created by the Improvements Lease with any other
interest in the Property by reason of the fact that the same person may acquire
or hold, directly or indirectly, the Improvements Lease or the leasehold estate
created hereby and any other interest in the Property, unless all Persons with
an interest in the Property that would be adversely affected by any such merger
specifically agree in writing that such a merger shall occur. There shall be no
merger of the Purchase Agreement or of the purchase options or obligations
created by the Purchase Agreement with any other interest in the Property by
reason of the fact that the same person may acquire or hold, directly or
indirectly, the Improvements Lease or the leasehold estate created hereby and
any other interest in the Property, unless all Persons with an interest in the
Property that would be adversely affected by any such merger specifically agree
in writing that such a merger shall occur.
4 NO IMPLIED WAIVER. The failure of BNPLC or NAI to insist at any
time upon the strict performance of any covenant or agreement or to exercise any
option, right, power or remedy contained in any Operative Document shall not be
construed as a waiver or a relinquishment thereof for the future. The failure of
Agent to insist at any time upon the strict performance of any covenant or
agreement or to exercise any option, right, power or remedy contained in the
Pledge Agreement shall not be construed as a waiver or a relinquishment thereof
for the future. The waiver of or redress for any breach of any Operative
Document by any party thereto shall not prevent a similar subsequent act from
constituting a violation. Any express waiver of any provision of any Operative
Document shall affect only the term or condition specified in such waiver and
only for the time and in the manner specifically stated therein. No waiver by
any party to any Operative Document of any provision therein shall be deemed to
have been made unless expressed in writing and signed by the party to be bound
by the waiver. A receipt by BNPLC of any Rent with knowledge of the breach by
NAI of any covenant or agreement contained in the Improvements Lease or any
other Operative Document shall not be deemed a waiver of such breach. A receipt
by Agent of any Collateral or other payment under the Pledge Agreement with
knowledge of the breach by NAI of any covenant or agreement contained in the
Pledge Agreement shall not be deemed a waiver of such breach.
Page 23
<PAGE> 78
5 ENTIRE AND ONLY AGREEMENTS. The Operative Documents supersede
any prior negotiations and agreements between BNPLC, Agent and NAI concerning
the Property or the Collateral, and no amendment or modification of any
Operative Document shall be binding or valid unless expressed in a writing
executed by all parties to such Operative Document.
6 BINDING EFFECT. Except to the extent, if any, expressly
provided to the contrary in any Operative Document with respect to assignments
thereof, all of the covenants, agreements, terms and conditions to be observed
and performed by the parties to the Operative Documents shall be applicable to
and binding upon their respective successors and, to the extent assignment is
permitted thereunder, their respective assigns.
7 TIME IS OF THE ESSENCE. Time is of the essence as to all
obligations of NAI and BNPLC and all notices required of NAI and BNPLC under the
Operative Documents.
8 GOVERNING LAW. Each Operative Document shall be governed by and
construed in accordance with the laws of the State of California without regard
to conflict or choice of laws (subject, however, in the case of the Pledge
Agreement to any contrary provisions of the "UCC," as defined in the Pledge
Agreement).
9 PARAGRAPH HEADINGS. The paragraph and section headings
contained in the Operative Documents are for convenience only and shall in no
way enlarge or limit the scope or meaning of the various and several provisions
thereof.
10 NEGOTIATED DOCUMENTS. All the parties to each Operative
Document and their counsel have reviewed and revised or requested revisions to
such Operative Document, and the usual rule of construction that any ambiguities
are to be resolved against the drafting party shall not apply to the
construction or interpretation of any Operative Documents or any amendments
thereof.
11 TERMS NOT EXPRESSLY DEFINED IN AN OPERATIVE DOCUMENT. As used
in any Operative Document, a capitalized term that is not defined therein or in
this Common Definitions and Provisions Agreement (Phase IV - Improvements), but
is defined in another Operative Document, shall have the meaning ascribed to it
in the other Operative Document.
12 OTHER TERMS AND REFERENCES. Words of any gender used in each
Operative Document shall be held and construed to include any other gender, and
words in the singular number shall be held to include the plural and vice versa,
unless the context otherwise requires. References in any Operative Document to
Paragraphs, subparagraphs, Sections, subsections or other subdivisions shall
refer to the corresponding Paragraphs, subparagraphs, Sections, subsections or
subdivisions of that Operative Document, unless specific reference is made to
another document or instrument. References in any Operative Document to any
Schedule or Exhibit shall refer to the corresponding Schedule or Exhibit
attached to that Operative Document, which shall be made a part thereof by such
reference. All capitalized terms used in each Operative Document which refer to
other documents shall be deemed to refer to such other documents as they may be
renewed, extended, supplemented, amended or otherwise modified from time to
time, provided such documents are not renewed, extended or modified in breach of
any provision contained in the Operative Documents or, in the case of any other
document to which BNPLC is a party or of which BNPLC is an intended beneficiary,
without the consent of BNPLC. All accounting terms used but not specifically
defined in any Operative Document shall be construed in accordance with GAAP.
The words "this [Agreement]", "herein", "hereof", "hereby", "hereunder" and
words of similar import when used in each Operative Document refer to that
Operative Document as a whole and not to any particular
Page 24
<PAGE> 79
subdivision unless expressly so limited. The phrases "this Paragraph", "this
subparagraph", "this Section", "this subsection" and similar phrases used in any
operative document refer only to the Paragraph, subparagraph, Section,
subsection or other subdivision described in which the phrase occurs. As used in
the Operative Documents the word "or" is not exclusive. As used in the Operative
Documents, the words "include", "including" and similar terms shall be construed
as if followed by "without limitation to".
13 EXECUTION IN COUNTERPARTS. To facilitate execution, each
Operative Document may be executed in as many identical counterparts as may be
required. It shall not be necessary that the signature of, or on behalf of, each
party, or that the signature of all persons required to bind any party, appear
on each counterpart. All counterparts, taken together, shall collectively
constitute a single instrument. It shall not be necessary in making proof of any
Operative Document to produce or account for more than a single counterpart
containing the respective signatures of, or on behalf of, each of the parties
hereto. Any signature page to any counterpart may be detached from such
counterpart without impairing the legal effect of the signatures thereon and
thereafter attached to another counterpart identical thereto except having
attached to it additional signature pages.
14 NOT A PARTNERSHIP, ETC. NOTHING IN ANY OPERATIVE DOCUMENT IS
INTENDED TO CREATE ANY PARTNERSHIP, JOINT VENTURE, OR OTHER JOINT ENTERPRISE
BETWEEN BNPLC AND NAI. NEITHER THE EXECUTION OF ANY OPERATIVE DOCUMENT NOR THE
ADMINISTRATION THEREOF OR OTHER DOCUMENTS REFERENCED HEREIN BY BNPLC, NOR ANY
OTHER RIGHT, DUTY OR OBLIGATION OF BNPLC UNDER OR PURSUANT TO ANY OPERATIVE
DOCUMENT IS INTENDED TO BE OR TO CREATE ANY FIDUCIARY OBLIGATIONS OF BNPLC TO
NAI.
[The signature pages follows.]
Page 25
<PAGE> 80
IN WITNESS WHEREOF, NAI and BNPLC have caused this Common Definitions
and Provisions Agreement (Phase IV - Improvements) to be executed as of December
___, 1999.
"NAI"
NETWORK APPLIANCE, INC.
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 81
[Continuation of signature pages to Common Definitions and Provisions Agreement
(Phase IV - Improvements) dated to be effective December ___, 1999]
"BNPLC"
BNP LEASING CORPORATION
By:
-------------------------------------
Lloyd G. Cox, Vice President
<PAGE> 1
EXHIBIT 10.52
================================================================================
PURCHASE AGREEMENT
(PHASE IV - LAND)
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
NETWORK APPLIANCE, INC.
("NAI")
DECEMBER ___, 1999
(SUNNYVALE, CALIFORNIA)
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. NAI'S OPTIONS AND OBLIGATIONS ON THE DESIGNATED SALE DATE............................1
(A) Right to Purchase; Right and Obligation to Remarket...........................1
(B) Determinations Concerning Price...............................................2
(C) Designation of the Purchaser..................................................3
(D) Effect of the Purchase Option and NAI's Initial Remarketing Rights and
Obligations on Subsequent Title Encumbrances..................................4
(E) Security for the Purchase Option and NAI's Initial Remarketing Rights
and Obligations...............................................................4
(F) Delivery of Books and Records If BNPLC Retains the Property...................4
2. NAI'S RIGHTS AND OPTIONS AFTER THE DESIGNATED SALE DATE..............................4
(A) NAI's Extended Right to Remarket..............................................4
(B) Definition of Minimum Extended Remarketing Price..............................5
(C) BNPLC's Right to Sell.........................................................6
(D) NAI's Right to Excess Sales Proceeds..........................................6
(E) Permitted Transfers During NAI's Extended Remarketing Period..................6
3. TERMS OF CONVEYANCE UPON PURCHASE....................................................6
4. SURVIVAL AND TERMINATION OF THE RIGHTS AND OBLIGATIONS OF NAI AND BNPLC..............7
(A) Status of this Agreement Generally............................................7
(B) Intentionally Deleted.........................................................8
(C) Intentionally Deleted.........................................................8
(D) Automatic Termination of NAI's Rights.........................................8
(E) Termination of NAI's Extended Remarketing Rights to Permit a Sale by
BNPLC.........................................................................8
(F) Payment Only to BNPLC.........................................................8
(G) Remedies Under the Other Operative Documents..................................8
(H) Occupancy by NAI Prior to Closing of a Sale...................................8
5. SECURITY FOR NAI'S OBLIGATIONS; RETURN OF FUNDS......................................8
6. CERTAIN REMEDIES CUMULATIVE..........................................................9
7. ATTORNEYS' FEES AND LEGAL EXPENSES...................................................9
8. ESTOPPEL CERTIFICATE.................................................................9
9. SUCCESSORS AND ASSIGNS...............................................................9
10. GROUND LEASE TERM AND EARLY TERMINATION BY BNPLC.....................................2
11. NO OTHER GROUND LEASE TERMINATION....................................................2
12. GROUND LEASE RENT....................................................................3
13. USE OF GL PROPERTY...................................................................3
(A) Permitted Uses and Construction of Improvements...............................3
(B) Cooperation by Lessor and its Affiliates......................................3
(C) Title to Improvements.........................................................3
14. ASSIGNMENT AND SUBLETTING; PASS THROUGH OF BNPLC'S LIABILITY INSURANCE AND
INDEMNITY RIGHTS.....................................................................3
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR..................................4
(A) Title to the Property.........................................................4
(B) Modification of Permitted Encumbrances and Development Documents..............4
(C) Performance and Preservation of the Development Documents and Permitted
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Encumbrances for the Benefit of BNPLC................................................4
16. INSURANCE AND CONDEMNATION...........................................................5
(A) Entitlement to Insurance and Condemnation Proceeds............................5
(B) Collection of Insurance Proceeds..............................................5
(C) Collection of Condemnation Proceeds...........................................5
17. LEASEHOLD MORTGAGES..................................................................5
18. EVENTS OF DEFAULT....................................................................7
(A) Definition of Ground Lease Default............................................7
(B) Remedy........................................................................7
19. QUIET ENJOYMENT......................................................................7
20. ESTOPPEL CERTIFICATE.................................................................7
21. OPTION TO REPURCHASE.................................................................8
</TABLE>
<PAGE> 4
Exhibits and Schedules
Exhibit A......................................................Legal Description
Exhibit B...................Requirements Re: Form of Grant Deed and Ground Lease
Exhibit C............................................Bill of Sale and Assignment
Exhibit D..........................................Acknowledgment and Disclaimer
Exhibit E................................................Secretary's Certificate
Exhibit F.................................Certificate Concerning Tax Withholding
<PAGE> 5
PURCHASE AGREEMENT
(PHASE IV - LAND)
This PURCHASE AGREEMENT (PHASE IV - LAND) (this "AGREEMENT"), by and
between BNP LEASING CORPORATION, a Delaware corporation ("BNPLC"), and NETWORK
APPLIANCE, INC., a California corporation ("NAI"), is made and dated as of
December ___, 1999, the Effective Date. ("EFFECTIVE DATE" and other capitalized
terms used and not otherwise defined in this Agreement are intended to have the
meanings assigned to them in the Common Definitions and Provisions Agreement
(Phase IV - Land) executed by BNPLC and NAI contemporaneously with this
Agreement. By this reference, the Common Definitions and Provisions Agreement
(Phase IV - Land) is incorporated into and made a part of this Agreement for all
purposes.)
RECITALS
Pursuant to the Existing Contract, which covers the Land described in
Exhibit A, BNPLC is acquiring the Land and any appurtenances thereto from Seller
contemporaneously with the execution of this Agreement. Pursuant to the Lease
Agreement (Phase IV - Land) executed by BNPLC and NAI contemporaneously with
this Agreement (the "LAND LEASE"), BNPLC is leasing the Land to NAI. (All of
BNPLC's interests, including those created by the documents delivered at the
closing under the Existing Contracts, in the Land and in all other real and
personal property from time to time covered by the Land Lease and included
within the "Property" as defined therein are hereinafter collectively referred
to as the "PROPERTY". The Property does not include the Improvements, it being
understood that the Other Purchase Agreement constitutes a separate agreement
providing for the possible sale of the Improvements and the appurtenances
thereto, and only the Improvements and the appurtenances thereto, from BNPLC to
NAI or a third party designated by NAI.)
NAI and BNPLC have reached agreement upon the terms and conditions upon
which NAI will purchase or arrange for the purchase of the Property, and by this
Agreement they desire to evidence such agreement.
AGREEMENTS
1. NAI'S OPTIONS AND OBLIGATIONS ON THE DESIGNATED SALE DATE.
(A) Right to Purchase; Right and Obligation to Remarket. Whether
or not an Event of Default shall have occurred and be continuing or the Land
Lease shall have been terminated, but subject to Paragraph 4 below:
(1) NAI shall have the right (the "PURCHASE OPTION") to
purchase or cause an Affiliate of NAI to purchase the Property and
BNPLC's interest in Escrowed Proceeds, if any, on the Designated Sale
Date for a cash price equal to the Break Even Price (as defined below).
(2) If neither NAI nor an Affiliate of NAI purchases the
Property and BNPLC's interest in any Escrowed Proceeds on the Designated
Sale Date as provided in the preceding subparagraph 1(A)(1), then NAI
shall have the following rights and obligations (collectively, "NAI'S
INITIAL REMARKETING RIGHTS AND OBLIGATIONS"):
(a) First, NAI shall have the right (but not the
obligation) to cause an Applicable Purchaser who is not an
Affiliate of NAI to purchase the Property and BNPLC's interest in
any
<PAGE> 6
Escrowed Proceeds on the Designated Sale Date for a cash purchase
price (the "THIRD PARTY PRICE") determined as provided below. If,
however, the Break Even Price exceeds the sum of any Third Party
Price tendered or to be tendered to BNPLC by an Applicable
Purchaser and any Supplemental Payment paid by NAI as described
below, then BNPLC may affirmatively elect to decline such tender
from the Applicable Purchaser and to keep the Property and any
Escrowed Proceeds rather than sell to the Applicable Purchaser
pursuant to this subparagraph (a "VOLUNTARY RETENTION OF THE
PROPERTY").
(b) Second, if the Third Party Price actually paid
by an Applicable Purchaser to BNPLC on the Designated Sale Date
exceeds the Break Even Price, NAI shall be entitled to such
excess, subject, however, to BNPLC's right to offset against such
excess any and all sums that are then due from NAI to BNPLC under
the other Operative Documents.
(c) Third, if for any reason whatsoever (including
a Voluntary Retention of the Property or a decision by NAI not to
exercise its right to purchase or cause an Applicable Purchaser
to purchase from BNPLC as described above) neither NAI nor an
Applicable Purchaser pays a net cash price to BNPLC on the
Designated Sale Date equal to or in excess of the Break Even
Price in connection with a sale of the Property and BNPLC's
interest in any Escrowed Proceeds pursuant to this Agreement,
then NAI shall have the obligation to pay to BNPLC on the
Designated Sale Date a supplemental payment (the "SUPPLEMENTAL
PAYMENT") equal to the lesser of (1) the amount by which the
Break Even Price exceeds such net cash price (if any) actually
received by BNPLC on the Designated Sale Date (such excess being
hereinafter called a "DEFICIENCY") or (2) the Maximum Remarketing
Obligation. As used herein, the "MAXIMUM REMARKETING OBLIGATION"
means a dollar amount determined in accordance with the following
provisions:
1) The "MAXIMUM REMARKETING OBLIGATION" will
equal the product of (i) Stipulated Loss Value on the
Designated Sale Date, times (ii) 100% minus the Residual
Risk Percentage, provided that both of the following
conditions are satisfied:
(x) NAI shall not have elected to
accelerate the Designated Sale Date as provided in
clause (2) of the definition of Designated Sale
Date in the Common Definitions and Provisions
Agreement (Phase IV - Land).
(y) No Event of Default, other than
an Issue 97-1 Non-performance-related Subjective
Event of Default, shall occur on or be continuing
on the Designated Sale Date.
2) If either of the conditions listed in
subparagraph 1) preceding are not satisfied, the "MAXIMUM
REMARKETING OBLIGATION" will equal the Break Even Price.
If any Supplemental Payment or other amount payable to BNPLC pursuant to this
subparagraph 1(A) is not actually paid to BNPLC on the Designated Sale Date, NAI
shall pay interest on the past due amount computed at the Default Rate from the
Designated Sale Date.
(B) Determinations Concerning Price.
(1) Determination of the Break Even Price. As used herein,
"BREAK EVEN PRICE" means an amount equal, on the Designated Sale Date,
to Stipulated Loss Value, plus all out-of-pocket costs
2
<PAGE> 7
and expenses (including appraisal costs, withholding taxes (if any) not
constituting Excluded Taxes, and Attorneys' Fees) incurred by BNPLC in
connection with any sale of BNPLC's interests in the Property under this
Agreement or in connection with collecting payments due hereunder, but
less the aggregate amounts (if any) of Direct Payments to Participants
and Deposit Taker Losses.
(2) Determination of Third Party Price. The Third Party
Price required of any Applicable Purchaser purchasing from BNPLC under
subparagraph 1(A)(2)(a) will be determined as follows:
(a) NAI may give a notice (a "REMARKETING NOTICE") to
BNPLC and to each of the Participants no earlier than one hundred
twenty days before the Designated Sale Date and no later than
ninety days before the Designated Sale Date, specifying an amount
as the Third Party Price that NAI believes in good faith to
constitute reasonably equivalent value for the Property and any
Escrowed Proceeds. Once given, a Remarketing Notice shall not be
rescinded or modified without BNPLC's written consent.
(b) If BNPLC believes in good faith that the Third Party
Price specified by NAI in a Remarketing Notice does not
constitute reasonably equivalent value for the Property and any
Escrowed Proceeds, BNPLC may at any time before sixty days prior
to the Designated Sale Date respond to the Remarketing Notice
with a notice back to NAI, objecting to the Third Party Price so
specified by NAI. If BNPLC receives a Remarketing Notice, yet
does not respond with an objection as provided in the preceding
sentence, the Third Party Price suggested by NAI in the
Remarketing Notice will be the Third Party Price for purposes of
this Agreement. If, however, BNPLC does respond with an objection
as provided in this subparagraph, and if NAI and BNPLC do not
otherwise agree in writing upon a Third Party Price, then the
Third Party Price will be the lesser of (I) fair market value of
the Property, plus the amount of any Escrowed Proceeds, as
determined by a professional independent appraiser satisfactory
to BNPLC, or (II) the Break Even Price.
(c) If for any reason, including an acceleration of the
Designated Sale Date as provided in the definition thereof in the
Common Definitions and Provisions Agreement (Phase IV - Land),
NAI does not deliver a Remarketing Notice to BNPLC within the
time period specified above, then the Third Party Price will be
an amount determined in good faith by BNPLC as constituting
reasonably equivalent value for the Property and any Escrowed
Proceeds, but in no event more than the Break Even Price.
If any payment to BNPLC by an Applicable Purchaser hereunder is held to
constitute a preference or a voidable transfer under Applicable Law, or
must for any other reason be refunded by BNPLC to the Applicable
Purchaser or to another Person, and if such payment to BNPLC reduced or
had the effect of reducing a Supplemental Payment or increased or had
the effect of increasing any excess sale proceeds paid to NAI pursuant
to subparagraph 1(A)(2)(b) or pursuant to subparagraph 2(D), then NAI
shall pay to BNPLC upon demand an amount equal to the reduction of the
Supplemental Payment or to the increase of the excess sale proceeds paid
to NAI, as applicable, and this Agreement shall continue to be effective
or shall be reinstated as necessary to permit BNPLC to enforce its right
to collect such amount from NAI.
(C) Designation of the Purchaser. To give BNPLC the opportunity
before the Designated Sale Date to prepare the deed and other documents that
BNPLC must tender pursuant to Paragraph 3 (collectively, the "SALE CLOSING
DOCUMENTS"), NAI must, by a notice to BNPLC given at least seven days prior to
the Designated Sale Date, specify irrevocably, unequivocally and with
particularity the party who will purchase the Property in
3
<PAGE> 8
order to satisfy the obligations of NAI set forth in subparagraph 1(A). If for
any reason NAI fails to so specify a party who will in accordance with the terms
and conditions set forth herein purchase the Property (be it NAI itself, an
Affiliate of NAI or another Applicable Purchaser), BNPLC shall be entitled to
postpone the tender of the Sale Closing Documents until a date after the
Designated Sale Date and not more than twenty days after NAI finally does so
specify a party, but such postponement will not relieve or postpone the
obligation of NAI to make a Supplemental Payment on the Designated Sale Date as
provided in Paragraph 1(A)(2)(c).
(D) Effect of the Purchase Option and NAI's Initial Remarketing
Rights and Obligations on Subsequent Title Encumbrances. Any conveyance of the
Property to NAI or any Applicable Purchaser pursuant to this Paragraph 1(A)
shall cut off and terminate any interest in the Land or other Property claimed
by, through or under BNPLC, including any interest claimed by the Participants
and including any Liens Removable by BNPLC (such as, but not limited to, any
judgment liens established against the Property because of a judgment rendered
against BNPLC and any leasehold or other interests conveyed by BNPLC in the
ordinary course of BNPLC's business), but not including personal obligations of
NAI to BNPLC under the Land Lease or other Operative Documents (including
obligations arising under the indemnities therein). Anyone accepting or taking
any interest in the Property by or through BNPLC after the date of this
Agreement shall acquire such interest subject to the Purchase Option and NAI's
Initial Remarketing Rights and Obligations. Further, NAI and any Applicable
Purchaser shall be entitled to pay any payment required by this Agreement for
the purchase of the Property directly to BNPLC notwithstanding any prior
conveyance or assignment by BNPLC, voluntary or otherwise, of any right or
interest in this Agreement or the Property, and neither NAI nor any Applicable
Purchaser shall be responsible for the proper distribution or application of any
such payments by BNPLC; and any such payment to BNPLC shall discharge the
obligation of NAI to cause such payment to all Persons claiming an interest in
such payment. Contemporaneously with the execution of this Agreement, the
parties shall record a memorandum of this Agreement for purposes of effecting
constructive notice to all Persons of NAI's rights under this Agreement,
including its rights under this subparagraph.
(E) Security for the Purchase Option and NAI's Initial
Remarketing Rights and Obligations. To secure BNPLC's obligation to sell the
Property pursuant to this Paragraph 1(A) and to pay any damages to NAI caused by
a breach of such obligations, including any such breach caused by a rejection or
termination of this Agreement in any bankruptcy or insolvency proceeding
instituted by or against BNPLC, as debtor, BNPLC does hereby grant to NAI a lien
and security interest against all rights, title and interests of BNPLC from time
to time in and to the Land and other Property. NAI may enforce such lien and
security interest judicially after any such breach by BNPLC, but not otherwise.
Contemporaneously with the execution of this Agreement, NAI and BNPLC will
execute a memorandum of this Agreement which is in recordable form and which
specifically references the lien granted in this subparagraph, and NAI shall be
entitled to record such memorandum at any time prior to the Designated Sale
Date.
(F) Delivery of Books and Records If BNPLC Retains the Property.
Unless NAI or its Affiliate or another Applicable Purchaser purchases the
Property pursuant to Paragraph 1(A), promptly after the Designated Sale Date NAI
shall deliver to BNPLC copies of books and records of NAI which will be
necessary or useful to any future owner's or occupant's use of the Property in
the manner permitted by the Land Lease.
2. NAI'S RIGHTS AND OPTIONS AFTER THE DESIGNATED SALE DATE.
(A) NAI's Extended Right to Remarket. During the two years
following the Designated Sale Date ("NAI'S EXTENDED REMARKETING PERIOD"), NAI
shall have the right ("NAI'S EXTENDED REMARKETING RIGHT") to cause an Applicable
Purchaser who is not an Affiliate of NAI to purchase the Property for a cash
purchase price not below the lesser of (I) the Minimum Extended Remarketing
Price (as defined below), or (II) if applicable, the Third Party Target Price
(as defined below) specified in any Third Party Sale Notice (as defined
4
<PAGE> 9
below) given by BNPLC pursuant to subparagraph 2(C)(2) within the ninety days
prior to the date (the "FINAL SALE DATE") upon which BNPLC receives such
purchase price from the Applicable Purchaser. NAI's Extended Remarketing Right
shall, however, be subject to all of the following conditions:
(1) The Property and BNPLC's interest in Escrowed
Proceeds, if any, shall not have been sold on the Designated Sale Date
as provided in Paragraph 1.
(2) No Voluntary Retention of the Property shall have
occurred as described in subparagraph 1(A)(2)(a).
(3) NAI's Extended Remarketing Right shall not have been
terminated pursuant to subparagraph 4(D) below because of NAI's failure
to make any Supplemental Payment required on the Designated Sale Date.
(4) NAI's Extended Remarketing Right shall not have been
terminated by BNPLC pursuant to subparagraph 4(E) below to facilitate
BNPLC's sale of the Property to a third party in accordance with
subparagraph 2(C).
(5) At least thirty days prior to the Final Sale Date, NAI
shall have notified BNPLC of (x) the date proposed by NAI as the Final
Sale Date (which must be a Business Day), (y) the full legal name of the
Applicable Purchaser and such other information as will be required to
prepare the Sale Closing Documents, and (z) the amount of the purchase
price that the Applicable Purchaser will pay (consistent with the
minimum required pursuant to the other provisions of this subparagraph
2(A)) for the Property.
(B) Definition of Minimum Extended Remarketing Price. As used
herein, "MINIMUM EXTENDED REMARKETING PRICE" means an amount equal to the sum of
the following:
(1) the amount by which the Break Even Price computed on
the Designated Sale Date exceeds any Supplemental Payment actually paid
to BNPLC on the Designated Sale Date, together with interest on such
excess computed at the Default Rate from the period commencing on the
Designated Sale Date and ending on the Final Sale Date, plus
(2) all out-of-pocket costs and expenses (including
withholding taxes [if any], other than Excluded Taxes, and Attorneys'
Fees) incurred by BNPLC in connection with the sale to the Applicable
Purchaser, to the extent not already included in the computation of
Break Even Price, and plus
(3) the sum of all Impositions, insurance premiums and
other Losses of every kind suffered or incurred by BNPLC or any other
Interested Party with respect to the ownership, operation or maintenance
of the Property on or after the Designated Sale Date (except to the
extent already reimbursed by any lessee of the Property after the
Designated Sale Date), together with interest on such Impositions,
insurance premiums and other Losses computed at the Default Rate from
the date paid or incurred to the Final Sale Date.
If, however, Losses described in the preceding clause (3) consist of claims
against BNPLC or another Interested Party that have not been liquidated prior to
the Final Sale Date (and, thus, such Losses have yet to be fixed in amount as of
the Final Sale Date), then NAI may elect to exclude any such Losses from the
computation of the Minimum Extended Remarketing Price by providing to BNPLC, for
the benefit of BNPLC and other Interested Parties, a written agreement to
indemnify and defend BNPLC and other Interested Parties against such Losses. To
be effective hereunder for purposes of reducing the Minimum Extended Remarketing
Price (and, thus, the Break
5
<PAGE> 10
Even Price), any such written indemnity must be fully executed and delivered by
NAI on or prior to the Final Sale Date, must include provisions comparable to
subparagraphs 5(c)(ii), (iii), (iv) and (v) of the Land Lease and otherwise must
be in form and substance satisfactory to BNPLC.
(C) BNPLC's Right to Sell. After the Designated Sale Date, if the
Property has not already been sold by BNPLC pursuant to Paragraph 1 or this
Paragraph 2, BNPLC shall have the right to sell the Property or offer the
Property for sale to any third party on any terms believed to be appropriate by
BNPLC in its sole good faith business judgment; provided, however, that so long
as the conditions to NAI's Extended Remarketing Rights specified in subparagraph
2(A) continue to be satisfied:
(1) BNPLC shall not sell the Property to an Affiliate of
BNPLC on terms less favorable than those which BNPLC would require from
a prospective purchaser not an Affiliate of BNPLC;
(2) If BNPLC receives or desires to make a written
proposal (whether in the form of a "letter of intent" or other
nonbinding expression of interest or in the form of a more definitive
purchase and sale agreement) for a sale of the Property to a prospective
purchaser (a "THIRD PARTY SALE PROPOSAL"), and if on the basis of such
Third Party Sale Proposal BNPLC expects to enter into or to pursue
negotiations for a definitive purchase and sale agreement with the
prospective purchaser, then prior to executing any such definitive
agreement, BNPLC shall submit the Third Party Sale Proposal to NAI with
a notice (the "THIRD PARTY SALE NOTICE") explaining that (A) BNPLC is
then prepared to accept a price not below an amount specified in such
Third Party Sale Notice (the "THIRD PARTY TARGET PRICE") if BNPLC and
the prospective purchaser reach agreement on other terms and conditions
to be incorporated into a definitive purchase and sale agreement, and
(B) NAI's Extended Remarketing Right may be terminated pursuant to
subparagraph 4(E) of this Agreement unless NAI causes an Applicable
Purchaser to consummate a purchase of the Property pursuant to this
Paragraph 2 within ninety days after the date of such Third Party Sale
Notice.
(D) NAI's Right to Excess Sales Proceeds. If the cash price
actually paid by any third party purchasing the Property from BNPLC during NAI's
Extended Remarketing Period, including any price paid by an Applicable Purchaser
purchasing from BNPLC pursuant to this Paragraph 2, exceeds the Minimum Extended
Remarketing Price, then NAI shall be entitled to the excess; provided, that
BNPLC may offset and retain from the excess any and all sums that are then due
and unpaid from NAI to BNPLC under any of the Operative Documents.
(E) Permitted Transfers During NAI's Extended Remarketing Period.
Any "Permitted Transfer" described in clause (6) of the definition thereof in
the Common Definitions and Provisions Agreement (Phase IV - Land) to an
Affiliate of BNPLC or that covers BNPLC's entire interest in the Land will be
subject to NAI's Extended Remarketing Right if, at the time of the Permitted
Transfer, NAI's Extended Remarketing Right has not expired or been terminated as
provided herein. Any other Permitted Transfer described in clause (6) of the
definition thereof, however, will not be subject to NAI's Extended Remarketing
Right. Thus, for example, BNPLC's conveyance of a utility easement or space
lease more than thirty days after the Designated Sale Date to a Person not an
Affiliate of BNPLC shall not be subject to NAI's Extended Remarketing Right,
though following the conveyance of the lesser estate, NAI's Extended Remarketing
Right may continue to apply to BNPLC's remaining interest in the Land and any
Personal Property.
3. TERMS OF CONVEYANCE UPON PURCHASE. As necessary to consummate any
sale of the Property to NAI or an Applicable Purchaser pursuant to this
Agreement, BNPLC must, subject to any postponement permitted by subparagraph
1(C), promptly after the tender of the purchase price and any other payments to
BNPLC required pursuant to Paragraph 1 or Paragraph 2, as applicable, convey all
of BNPLC's right,
6
<PAGE> 11
title and interest in the Land and other Property to NAI or the Applicable
Purchaser, as the case may be, by BNPLC's execution, acknowledgment (where
appropriate) and delivery of the Sale Closing Documents. Such conveyance by
BNPLC will be subject only to the Permitted Encumbrances and any other
encumbrances that do not constitute Liens Removable by BNPLC. However, such
conveyance shall not include the rights of BNPLC or other Interested Parties
under the indemnities provided in the Operative Documents, including rights to
any payments then due from NAI under the indemnities or that may become due
thereafter because of any expense or liability incurred by BNPLC or another
Interested Party resulting in whole or in part from events or circumstances
occurring or alleged to have occurred before such conveyance. All costs, both
foreseen and unforeseen, of any purchase by NAI or an Applicable Purchaser
hereunder shall be the responsibility of the purchaser. The Sale Closing
Documents used to accomplish such conveyance shall consist of the following: (1)
a Corporation Grant Deed in the form attached as Exhibit B-1 or Exhibit B-2 or
Exhibit B-4, as required by Exhibit B, (2) if required by Exhibit B, a Ground
Lease in the form attached as Exhibit B-3, which NAI or the Applicable Purchase
must execute and return to BNPLC, (3) a Bill of Sale and Assignment in the form
attached as Exhibit C, (4) an Acknowledgment of Disclaimer of Representations
and Warranties, in the form attached as Exhibit D, which NAI or the Applicable
Purchaser must execute and return to BNPLC, (5) a Secretary's Certificate in the
form attached as Exhibit E, and (6) a certificate concerning tax withholding in
the form attached as Exhibit F. If for any reason BNPLC fails to tender the Sale
Closing Documents as required by this Paragraph 3, BNPLC may cure such refusal
at any time before thirty days after receipt of a demand for such cure from NAI.
4. SURVIVAL AND TERMINATION OF THE RIGHTS AND OBLIGATIONS OF NAI AND
BNPLC.
(A) Status of this Agreement Generally. Except as expressly
provided herein, this Agreement shall not terminate; nor shall NAI have any
right to terminate this Agreement; nor shall NAI be entitled to any reduction of
the Break Even Price, any Deficiency, the Maximum Remarketing Obligation, any
Supplemental Payment or the Minimum Extended Remarketing Price hereunder; nor
shall the obligations of NAI to BNPLC under Paragraph 1 be affected, by reason
of (i) any damage to or the destruction of all or any part of the Property from
whatever cause (though it is understood that NAI will receive any remaining
Escrowed Proceeds yet to be applied as provided in the Land Lease that may
result from such damage if NAI purchases the Property and the Escrowed Proceeds
as herein provided), (ii) the taking of or damage to the Property or any portion
thereof by eminent domain or otherwise for any reason (though it is understood
that NAI will receive any remaining Escrowed Proceeds yet to be applied as
provided in the Land Lease that may result from such taking or damage if NAI
purchases the Property and the Escrowed Proceeds as herein provided), (iii) the
prohibition, limitation or restriction of NAI's use of all or any portion of the
Property or any interference with such use by governmental action or otherwise,
(iv) any eviction of NAI or any party claiming under NAI by paramount title or
otherwise, (v) NAI's prior acquisition or ownership of any interest in the
Property, (vi) any default on the part of BNPLC under this Agreement, the Land
Lease or any other agreement to which BNPLC is a party, or (vii) any other
cause, whether similar or dissimilar to the foregoing, any existing or future
law to the contrary notwithstanding. It is the intention of the parties hereto
that the obligations of NAI to make payment to BNPLC hereunder shall be separate
and independent covenants and agreements from BNPLC's obligations under this
Agreement or any other agreement between BNPLC and NAI; provided, however, that
nothing in this subparagraph shall excuse BNPLC from its obligation to tender
the Sale Closing Documents in substantially the form attached hereto as exhibits
when required by Paragraph 3. Further, nothing in this subparagraph shall be
construed as a waiver by NAI of any right NAI may have at law or in equity to
the following remedies, whether because of BNPLC's failure to remove a Lien
Removable by BNPLC or because of any other default by BNPLC under this
Agreement: (i) the recovery of monetary damages, (ii) injunctive relief in case
of the violation, or attempted or threatened violation, by BNPLC of any of the
express covenants, agreements, conditions or provisions of this Agreement which
are binding upon BNPLC, or (iii) a decree compelling performance by BNPLC of any
of the express covenants, agreements, conditions or provisions of this Agreement
which are binding upon BNPLC.
7
<PAGE> 12
(B) Intentionally Deleted.
(C) Intentionally Deleted.
(D) Automatic Termination of NAI's Rights. Without limiting
BNPLC's right to enforce NAI's obligation to pay any Supplemental Payment or
other amounts required by this Agreement, the rights of NAI (to be distinguished
from the obligations of NAI) included in NAI's Initial Remarketing Rights and
Obligations, the Purchase Option and NAI's Extended Remarketing Rights shall all
terminate automatically if NAI shall fail to pay the full amount of any
Supplemental Payment required by subparagraph 1(A)(2)(c) on the Designated Sale
Date or if BNPLC shall elect a Voluntary Retention of the Property as provided
in subparagraph 1(A)(2)(a). However, notwithstanding anything in this
subparagraph to the contrary, even after a failure to pay any required
Supplemental Payment on the Designated Sale Date, NAI may nonetheless tender to
BNPLC the full Break Even Price and all amounts then due under the Operative
Documents, together with interest on the total Break Even Price computed at the
Default Rate from the Designated Sale Date to the date of tender, on any
Business Day within thirty days after the Designated Sale Date, and if presented
with such a tender within thirty days after the Designated Sale Date, BNPLC must
accept it and promptly thereafter deliver any Escrowed Proceeds and the Sale
Closing Documents listed in Paragraph 3 to NAI.
(E) Termination of NAI's Extended Remarketing Rights to Permit a
Sale by BNPLC. At any time more than ninety days after BNPLC has delivered a
Third Party Sale Notice to NAI as described in subparagraph 2(C)(2), BNPLC may
terminate NAI's Extended Remarketing Rights contemporaneously with the
consummation of a sale of the Property by BNPLC to any third party (be it the
prospective purchaser named in the Third Party Sale Notice or another third
party) at a price equal to or in excess of the Third Party Target Price
specified in the Third Party Sale Notice, so as to permit the sale of the
Property unencumbered by NAI's Extended Remarketing Rights.
(F) Payment Only to BNPLC. All amounts payable under this
Agreement by NAI and, if applicable, by an Applicable Purchaser must be paid
directly to BNPLC, and no payment to any other party shall be effective for the
purposes of this Agreement. In addition to the payments required under
subparagraph 1(A), on the Designated Sale Date NAI must pay all amounts then due
to BNPLC under the Land Lease or other Operative Documents.
(G) Remedies Under the Other Operative Documents. No repossession
of or re-entering upon the Property or exercise of any other remedies available
to BNPLC under the Land Lease or other Operative Documents shall terminate NAI's
rights or obligations hereunder, all of which shall survive BNPLC's exercise of
remedies under the other Operative Documents. NAI acknowledges that the
consideration for this Agreement is separate and independent of the
consideration for the Land Lease and the Closing Certificate, and NAI's
obligations hereunder shall not be affected or impaired by any event or
circumstance that would excuse NAI from performance of its obligations under
such other Operative Documents.
(H) Occupancy by NAI Prior to Closing of a Sale. Prior to the
closing of any sale of the Property to NAI or an Applicable Purchaser hereunder,
NAI's occupancy of the Land and its use of the Property shall continue to be
subject to the terms and conditions of the Land Lease, including the terms
setting forth NAI's obligation to pay rent, prior to any termination or
expiration of the Land Lease pursuant to its express terms and conditions.
5. SECURITY FOR NAI'S OBLIGATIONS; RETURN OF FUNDS. NAI's obligations
under this Agreement are secured by the Pledge Agreement, reference to which is
hereby made for a description of the Collateral covered thereby and the rights
and remedies provided to BNPLC thereby. Although the collateral agent
8
<PAGE> 13
appointed for BNPLC as provided in the Pledge Agreement shall be entitled to
hold all Collateral as security for the full and faithful performance by NAI of
NAI's covenants and obligations under this Agreement, the Collateral shall not
be considered an advance payment of the Break Even Price or any Supplemental
Payment or a measure of BNPLC's damages should NAI breach this Agreement. If NAI
does breach this Agreement and fails to cure the same within any time specified
herein for the cure, BNPLC may, from time to time, without prejudice to any
other remedy and without notice to NAI, require the collateral agent to
immediately apply the proceeds of any disposition of the Collateral (and any
cash included in the Collateral) to amounts then due hereunder from NAI. If by a
Permitted Transfer BNPLC conveys its interest in the Property before the
Designated Sale Date, BNPLC may also assign BNPLC's interest in the Collateral
to the transferee. BNPLC shall be entitled to return any Collateral not sold or
used to satisfy the obligations secured by the Pledge Agreement directly to NAI
notwithstanding any prior actual or attempted conveyance or assignment by NAI,
voluntary or otherwise, of any right to receive the same; neither BNPLC nor the
collateral agent named in the Pledge Agreement shall be responsible for the
proper distribution or application by NAI of any such Collateral returned to
NAI; and any such return of Collateral to NAI shall discharge any obligation of
BNPLC to deliver such Collateral to all Persons claiming an interest in the
Collateral. Further, BNPLC shall be entitled to deliver any Escrowed Proceeds it
holds on the Designated Sale Date directly to NAI or to any Applicable Purchaser
purchasing BNPLC's interest in the Property and the Escrowed Proceeds pursuant
to this Agreement notwithstanding any prior actual or attempted conveyance or
assignment by NAI, voluntary or otherwise, of any right to receive the same;
BNPLC shall not be responsible for the proper distribution or application by NAI
or any Applicable Purchaser of any such Escrowed Proceeds paid over to NAI or
the Applicable Purchaser; and any such payment of Escrowed Proceeds to NAI or an
Applicable Purchaser shall discharge any obligation of BNPLC to deliver the same
to all Persons claiming an interest therein.
6. CERTAIN REMEDIES CUMULATIVE. No right or remedy herein conferred upon
or reserved to BNPLC is intended to be exclusive of any other right or remedy
BNPLC has with respect to the Property, and each and every right and remedy
shall be cumulative and in addition to any other right or remedy given hereunder
or now or hereafter existing at law or in equity or by statute. In addition to
other remedies available under this Agreement, either party shall be entitled,
to the extent permitted by applicable law, to a decree compelling performance of
any of the other party's agreements hereunder.
7. ATTORNEYS' FEES AND LEGAL EXPENSES. If either party to this Agreement
commences any legal action or other proceeding to enforce any of the terms of
this Agreement, or because of any breach by the other party or dispute
hereunder, the party prevailing in such action or proceeding shall be entitled
to recover from the other party all Attorneys' Fees incurred in connection
therewith, whether or not such controversy, claim or dispute is prosecuted to a
final judgment. Any such Attorneys' Fees incurred by either party in enforcing a
judgment in its favor under this Agreement shall be recoverable separately from
such judgment, and the obligation for such Attorneys' Fees is intended to be
severable from other provisions of this Agreement and not to be merged into any
such judgment.
8. ESTOPPEL CERTIFICATE. Upon request by BNPLC, NAI shall execute,
acknowledge and deliver a written statement certifying that this Agreement is
unmodified and in full effect (or, if there have been modifications, that this
Agreement is in full effect as modified, and setting forth such modification)
and either stating that no default exists hereunder or specifying each such
default of which NAI has knowledge. Any such statement may be relied upon by any
Participant or prospective purchaser or assignee of BNPLC with respect to the
Property.
9. SUCCESSORS AND ASSIGNS. The terms, provisions, covenants and
conditions hereof shall be binding upon NAI and BNPLC and their respective
permitted successors and assigns and shall inure to the benefit of NAI and BNPLC
and all permitted transferees, mortgagees, successors and assignees of NAI and
BNPLC with respect to the Property; provided, that (A) the rights of BNPLC
hereunder shall not pass to NAI or any Applicable
9
<PAGE> 14
Purchaser or any subsequent owner claiming through NAI or an Applicable
Purchaser, (B) BNPLC shall not assign this Agreement or any rights hereunder
except pursuant to a Permitted Transfer, and (C) NAI shall not assign this
Agreement or any rights hereunder without the prior written consent of BNPLC.
[Signature pages follow.]
10
<PAGE> 15
IN WITNESS WHEREOF, NAI and BNPLC have caused this Agreement to be
executed as of December ___, 1999.
"NAI"
NETWORK APPLIANCE, INC.
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 16
[Continuation of signature pages to Purchase Agreement (Phase IV - Land) dated
to be effective December ___, 1999.]
"BNPLC"
BNP LEASING CORPORATION
By:
-------------------------------------
Lloyd G. Cox, Vice President
<PAGE> 17
EXHIBIT A
LEGAL DESCRIPTION
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
TRACT 1:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of a portion of Parcel B, as
shown upon that certain Parcel Map recorded in Book 345 of Maps, at page 20,
Santa Clara County Records", which Map was filed for record in the Office of the
Recorder of the County of Santa Clara, State of California, on November 17,
1976, in Book 383 of Maps, at page 35.
TRACT 2:
Together with an easement for vehicles parking over the following described
property:
A 7-foot strip of land for parking easement purposes over a portion of Parcel A,
as said Parcel A is shown on that certain Parcel Map filed for record on
November 10, 1974 in Book 292 of Maps, at page 41, records of said County, and
being more particularly described as follows:
Commencing at the Northeast corner of said Parcel A; thence North
75[degrees]8'27" West 500.00 feet along the Northeasterly line of said Parcel A;
thence South 14[degrees]51'33" West 7.00 feet; thence parallel to Northeasterly
line of said Parcel A, South 75[degrees]08'27" East 500.00 feet to the Southeast
line of said Parcel A, North 14[degrees]51'33" East 7.00 feet to the point of
beginning.
APN: 110-32-002
ARB: 110-3-65.02
TRACT 3:
Parcel 1, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-6
ARB: 110-3-x65
TRACT 4:
Parcel 2, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-7
ARB: 110-3-x65
<PAGE> 18
TRACT 5:
Parcel 2, as shown on that certain parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on
October 7, 1998, in Book 708 of Parcel Maps, Pages 51 and 52.
APN: 110-32-12
ARB: 110-03-65.11
<PAGE> 19
EXHIBIT B
REQUIREMENTS RE: FORM OF GRANT DEED AND GROUND LEASE
The form of deed to be used to convey BNPLC's interest in the Land to NAI or an
Applicable Purchaser will depend upon whether BNPLC's interest in the
Improvements has been or is being conveyed at the same time to the same party.
If BNPLC's interests in BOTH the Land and the Improvements are to be conveyed to
NAI or an Applicable Purchaser at the same time, because a sale under this
Purchase Agreement and a sale under the Other Purchase Agreement (covering the
Improvements) are being consummated at the same time and to the same party, then
the one deed in form attached as Exhibit B-1 will be used to convey both.
If, however, a sale of BNPLC's interest in the Improvements pursuant to the
Other Purchase Agreement has not been consummated before, and is not being
consummated contemporaneously with the sale of BNPLC's interest in the Land
under this Agreement, then BNPLC's interest in the Land will be conveyed by a
deed in the from attached as Exhibit B-2, and BNPLC and the grantee under such
deed shall, as a condition to BNPLC's obligation to deliver the deed, execute
and deliver a Ground Lease covering the Land in the form attached hereto as
Exhibit B-3.
Finally, BNPLC's interest in the Land will be conveyed by a deed in the from
attached as Exhibit B-4 if BNPLC's interest in the Improvements has been sold
pursuant to the Other Purchase Agreement before a sale of BNPLC's interest in
the Land under this Agreement, or if BNPLC's interest in the Improvements is
being sold contemporaneously with a sale of BNPLC's interest in the Land, but
the purchaser of the Improvements is not the same as the purchaser of the Land.
<PAGE> 20
EXHIBIT B-1
CORPORATION GRANT DEED
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NAME: [NAI or the Applicable Purchaser]
ADDRESS: ___________________
ATTN: ___________________
CITY: ___________________
STATE: ___________________
Zip: ___________________
MAIL TAX STATEMENTS TO:
NAME: [NAI or the Applicable Purchaser]
ADDRESS: ___________________
ATTN: ___________________
CITY: ___________________
STATE: ___________________
Zip: ___________________
CORPORATION GRANT DEED
(Covering Land and Improvements)
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, BNP
LEASING CORPORATION, a Delaware corporation ("Grantor"), hereby grants to [NAI
or the Applicable Purchaser] ("Grantee") all of Grantor's interest in the land
situated in Sunnyvale, California, described on Annex A attached hereto and
hereby made a part hereof and all improvements on such land, together with the
any other right, title and interest of Grantor in and to any easements,
rights-of-way, privileges and other rights appurtenant to such land or the
improvements thereon; provided, however, that this grant is subject to the
encumbrances described on Annex B (the "Permitted Encumbrances"). Grantee hereby
assumes the obligations (including any personal obligations) of Grantor, if any,
created by or under, and agrees to be bound by the terms and conditions of, the
Permitted Encumbrances to the extent that the same concern or apply to the land
or improvements conveyed by this deed.
<PAGE> 21
BNP LEASING CORPORATION
Date: As of By:
------------ ---------------------------------
Its:
Attest:
---------------------------------
Its:
[NAI or Applicable Purchaser]
Date: As of By:
------------ ---------------------------------
Its:
Attest:
---------------------------------
Its:
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, , personally appeared and , personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
persons whose names are subscribed to the within instrument and acknowledged to
me that they executed the same in their authorized capacities, and that by their
signatures on the instrument the person, or the entity upon behalf of which the
persons acted, executed the instrument.
WITNESS my hand and official seal.
Signature
----------------------------
EXHIBIT B-1 - PAGE 2
<PAGE> 22
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, , personally appeared and , personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
persons whose names are subscribed to the within instrument and acknowledged to
me that they executed the same in their authorized capacities, and that by their
signatures on the instrument the person, or the entity upon behalf of which the
persons acted, executed the instrument.
WITNESS my hand and official seal.
Signature
----------------------------
EXHIBIT B-1 - PAGE 3
<PAGE> 23
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LAND LEASE CHANGES
FROM TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPLC'S CONSENT
OR APPROVAL, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH
CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE"
WILL BE DELETED BEFORE THE DEED TO WHICH THIS DESCRIPTION IS ATTACHED IS
ACTUALLY EXECUTED AND DELIVERED.]
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
TRACT 1:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of a portion of Parcel B, as
shown upon that certain Parcel Map recorded in Book 345 of Maps, at page 20,
Santa Clara County Records", which Map was filed for record in the Office of the
Recorder of the County of Santa Clara, State of California, on November 17,
1976, in Book 383 of Maps, at page 35.
TRACT 2:
Together with an easement for vehicles parking over the following described
property:
A 7-foot strip of land for parking easement purposes over a portion of Parcel A,
as said Parcel A is shown on that certain Parcel Map filed for record on
November 10, 1974 in Book 292 of Maps, at page 41, records of said County, and
being more particularly described as follows:
Commencing at the Northeast corner of said Parcel A; thence North
75[degrees]8'27" West 500.00 feet along the Northeasterly line of said Parcel A;
thence South 14[degrees]51'33" West 7.00 feet; thence parallel to Northeasterly
line of said Parcel A, South 75[degrees]08'27" East 500.00 feet to the Southeast
line of said Parcel A, North 14[degrees]51'33" East 7.00 feet to the point of
beginning.
APN: 110-32-002
ARB: 110-3-65.02
TRACT 3:
Parcel 1, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-6
ARB: 110-3-x65
TRACT 4:
Parcel 2, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of
EXHIBIT B-1 - PAGE 4
<PAGE> 24
Santa Clara, State of California on July 7, 1994, in Book 657 of Parcel Maps,
Page 9.
APN: 110-32-7
ARB: 110-3-x65
TRACT 5:
Parcel 2, as shown on that certain parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on
October 7, 1998, in Book 708 of Parcel Maps, Pages 51 and 52.
APN: 110-32-12
ARB: 110-03-65.11
EXHIBIT B-1 - PAGE 5
<PAGE> 25
ANNEX B
PERMITTED ENCUMBRANCES
[DRAFTING NOTE: TO THE EXTENT THAT ENCUMBRANCES (OTHER THAN "LIENS REMOVABLE BY
BNPLC") ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED BELOW, SUCH ADDITIONAL
ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW AND THIS "DRAFTING NOTE" WILL BE
DELETED BEFORE THIS DEED IS ACTUALLY EXECUTED AND DELIVERED BY BNPLC. SUCH
ADDITIONAL ENCUMBRANCES WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPLC AS
"PERMITTED ENCUMBRANCES" UNDER THE LAND LEASE OR THE OTHER LEASE AGREEMENT FROM
TIME TO TIME OR BECAUSE OF NAI'S REQUEST FOR BNPLC'S CONSENT OR APPROVAL TO AN
ADJUSTMENT.]
This conveyance is subject to all encumbrances not constituting a "Lien
Removable by BNPLC" (as defined in the Common Definitions and Provisions
Agreement (Phase IV - Land) incorporated by reference into the Lease Agreement
(Phase IV - Land) referenced in the last item of the list below), including the
following matters to the extent the same are still valid and in force:
TRACT 1 and 2:
1. TAXES for the fiscal year 1999-2000, 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. LIMITATIONS, covenants, conditions, 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 December 23, 1971 in Book
9640, page 443, Official Records.
Assignments and Assumption, executed by Moffett Park Associates, a
partnership to Prudential Insurance Company of America, recorded
February 8, 1977 in Book C583, page 685, Official Records.
4. AGREEMENT on the terms and conditions contained therein,
For : Waiver of Construction Credits
Between : Moffett Park Associates
And : None Shown
Recorded : September 28, 1976 in Book C307, page 346, Official
Records.
5. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Construction, reconstruction, operation, repair,
maintenance, replacement, relocation and enlargement of
Public Utilities
Granted to : The City of Sunnyvale, a municipal corporation
Recorded : November 16, 1976 in Book C414, page 105, Official
Records
Affects : as follows:
Being a portion of Parcel B as shown on that certain Parcel Map recorded
August 28, 1974 in Book of Maps, at page 20, Santa Clara County Records;
a strip of land 10 feet in width, measured at right angles lying
Northerly and Easterly of and contiguous to the following described
line; beginning at the
EXHIBIT B-1 - PAGE 6
<PAGE> 26
intersection of the Westerly line of Crossman Road, 90 feet in width,
with the Northerly line of Parcel A as shown on said Map; thence North
75[degrees]7'58" West along said Northerly line of Parcel A 450.13 feet;
thence leaving said Northerly line, North 30[degrees]7'48" West 210.69
feet; thence North 75[degrees]8'27" West 391.04 feet to a point on the
Easterly line of the proposed Geneva Drive, 60 feet wide, said point
being the terminus of said easement.
6. ANY RIGHTS, interests, or claims adverse to those of the vestee herein
which may exist or arise by reason of the following facts 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.
TRACT 3:
1. TAXES for the fiscal year 1999-2000, 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.
EXHIBIT B-1 - PAGE 7
<PAGE> 27
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.
8. ANY RIGHTS, interests, or claims adverse to those of the vestee herein
which may exist or arise by reason of the following facts 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.
(a) The fact that a chain link fence extends across the southerly
boundary of said land.
TRACT 4:
9. TAXES for the fiscal year 1999-2000, a lien not yet due or payable.
10. 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.
11. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Slope Easement
In favor of : City of Sunnyvale
Recorded : November 16, 1976 in Book C414, page 90, Official
Records
Affects : Westerly 5 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.
12. EASEMENT recorded on that certain Map for the purposes stated herein and
incidents thereto
Purpose : Public utilities easement
Recorded : July 7, 1994 in Book 657 of Maps, page 9, Official
Records
Affects : Westerly 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.
13. 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.
EXHIBIT B-1 - PAGE 8
<PAGE> 28
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.
14. 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.
TRACT 5:
15. TAXES for the fiscal year 1999-2000, a lien not yet due or payable.
16. 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.
17. 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 : The Northeasterly and 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.
18. 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 : The Northeasterly and 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.
19. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Sidewalk and sign easement
Recorded : July 7, 1994, in Book 657 of Maps, page 9, Official
Records
Affects : The Northerly 2 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.
20. 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-1 - PAGE 9
<PAGE> 29
21. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public utilities easement
Recorded : October 7, 1998, in Book 708 of Maps, pages 51-52,
Official Records
Affects : The Northerly 15 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.
EXHIBIT B-1 - PAGE 10
<PAGE> 30
EXHIBIT B-2
CORPORATION GRANT DEED
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NAME: [NAI or the Applicable Purchaser]
ADDRESS: ___________________
ATTN: ___________________
CITY: ___________________
STATE: ___________________
Zip: ___________________
MAIL TAX STATEMENTS TO:
NAME: [NAI or the Applicable Purchaser]
ADDRESS: ___________________
ATTN: ___________________
CITY: ___________________
STATE: ___________________
Zip: ___________________
CORPORATION GRANT DEED
(Covering Land but not the Improvements On the Land)
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, BNP
LEASING CORPORATION, a Delaware corporation ("Grantor"), hereby grants to [NAI
or the Applicable Purchaser] ("Grantee") all of Grantor's interest in the land
situated in Sunnyvale, California, described on Annex A attached hereto and
hereby made a part hereof (the "Land"), together with the any other right, title
and interest of Grantor in and to any easements, rights-of-way, privileges and
other rights appurtenant to the Land; provided, however, that this grant is
subject to the encumbrances described on Annex B (the "Permitted Encumbrances")
and any reservations or qualifications set forth below. Grantee hereby assumes
the obligations (including any personal obligations) of Grantor, if any, created
by or under, and agrees to be bound by the terms and conditions of, the
Permitted Encumbrances to the extent that the same concern or apply to the Land.
Although this deed conveys Grantor's interest in the Land itself, this deed does
not convey any interest in any buildings or other improvements on the Land
(collectively, "Improvements") or any rights or easements appurtenant to
Improvements. Grantor retains and reserves all right, title and interest of
Grantor in and to Improvements and any rights and easements appurtenant to
Improvements, together with a leasehold estate in and to the Land and any rights
and easements appurtenant to the Land, which leasehold estate will permit the
construction, maintenance and use of Improvements by Grantor and Grantor's
successors and assigns on and subject to the terms and conditions set forth in
the Ground Lease dated of even date herewith, executed by Grantee, as lessor,
and Grantor, as lessee. Reference is made to such Ground Lease, all the terms
and conditions of which are incorporated into this deed as if set forth herein.
<PAGE> 31
BNP LEASING CORPORATION
Date: As of By:
------------ ---------------------------------
Its:
Attest:
---------------------------------
Its:
[NAI or Applicable Purchaser]
Date: As of By:
------------ ---------------------------------
Its:
Attest:
---------------------------------
Its:
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, _______________________ , personally
appeared ____________________ and ____________________, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the persons whose
names are subscribed to the within instrument and acknowledged to me that they
executed the same in their authorized capacities, and that by their signatures
on the instrument the person, or the entity upon behalf of which the persons
acted, executed the instrument.
WITNESS my hand and official seal.
Signature
----------------------------
EXHIBIT B-2 - PAGE 2
<PAGE> 32
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, ____________________, personally
appeared ____________________ and ____________________, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the persons whose
names are subscribed to the within instrument and acknowledged to me that they
executed the same in their authorized capacities, and that by their signatures
on the instrument the person, or the entity upon behalf of which the persons
acted, executed the instrument.
WITNESS my hand and official seal.
Signature
---------------------------
EXHIBIT B-2 - PAGE 3
<PAGE> 33
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LAND LEASE CHANGES
FROM TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPLC'S CONSENT
OR APPROVAL, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH
CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE"
WILL BE DELETED BEFORE THE DEED TO WHICH THIS DESCRIPTION IS ATTACHED IS
ACTUALLY EXECUTED AND DELIVERED.]
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
TRACT 1:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of a portion of Parcel B, as
shown upon that certain Parcel Map recorded in Book 345 of Maps, at page 20,
Santa Clara County Records", which Map was filed for record in the Office of the
Recorder of the County of Santa Clara, State of California, on November 17,
1976, in Book 383 of Maps, at page 35.
TRACT 2:
Together with an easement for vehicles parking over the following described
property:
A 7-foot strip of land for parking easement purposes over a portion of Parcel A,
as said Parcel A is shown on that certain Parcel Map filed for record on
November 10, 1974 in Book 292 of Maps, at page 41, records of said County, and
being more particularly described as follows:
Commencing at the Northeast corner of said Parcel A; thence North
75[degrees]8'27" West 500.00 feet along the Northeasterly line of said Parcel A;
thence South 14[degrees]51'33" West 7.00 feet; thence parallel to Northeasterly
line of said Parcel A, South 75[degrees]08'27" East 500.00 feet to the Southeast
line of said Parcel A, North 14[degrees]51'33" East 7.00 feet to the point of
beginning.
APN: 110-32-002
ARB: 110-3-65.02
TRACT 3:
Parcel 1, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-6
ARB: 110-3-x65
TRACT 4:
Parcel 2, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of
EXHIBIT B-2 - PAGE 4
<PAGE> 34
Santa Clara, State of California on July 7, 1994, in Book 657 of Parcel Maps,
Page 9.
APN: 110-32-7
ARB: 110-3-x65
TRACT 5:
Parcel 2, as shown on that certain parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on
October 7, 1998, in Book 708 of Parcel Maps, Pages 51 and 52.
APN: 110-32-12
ARB: 110-03-65.11
EXHIBIT B-2 - PAGE 5
<PAGE> 35
ANNEX B
PERMITTED ENCUMBRANCES
[DRAFTING NOTE: TO THE EXTENT THAT ENCUMBRANCES (OTHER THAN "LIENS REMOVABLE BY
BNPLC") ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED BELOW, SUCH ADDITIONAL
ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW AND THIS "DRAFTING NOTE" WILL BE
DELETED BEFORE THIS DEED IS ACTUALLY EXECUTED AND DELIVERED BY BNPLC. SUCH
ADDITIONAL ENCUMBRANCES WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPLC AS
"PERMITTED ENCUMBRANCES" UNDER THE LAND LEASE OR THE OTHER LEASE AGREEMENT FROM
TIME TO TIME OR BECAUSE OF NAI'S REQUEST FOR BNPLC'S CONSENT OR APPROVAL TO AN
ADJUSTMENT.]
This conveyance is subject to all encumbrances not constituting a "Lien
Removable by BNPLC" (as defined in the Common Definitions and Provisions
Agreement (Phase IV - Land) incorporated by reference into the Lease Agreement
(Phase IV - Land) referenced in the last item of the list below), including the
following matters to the extent the same are still valid and in force:
TRACT 1 and 2:
1. TAXES for the fiscal year 1999-2000, 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. LIMITATIONS, covenants, conditions, 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 December 23, 1971 in Book
9640, page 443, Official Records.
Assignments and Assumption, executed by Moffett Park Associates, a
partnership to Prudential Insurance Company of America, recorded
February 8, 1977 in Book C583, page 685, Official Records.
4. AGREEMENT on the terms and conditions contained therein,
For : Waiver of Construction Credits
Between : Moffett Park Associates
And : None Shown
Recorded : September 28, 1976 in Book C307, page 346, Official
Records.
5. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Construction, reconstruction, operation, repair,
maintenance, replacement, relocation and enlargement of
Public Utilities
Granted to : The City of Sunnyvale, a municipal corporation
Recorded : November 16, 1976 in Book C414, page 105, Official
Records
Affects : as follows:
Being a portion of Parcel B as shown on that certain Parcel Map recorded
August 28, 1974 in Book of Maps, at page 20, Santa Clara County Records;
a strip of land 10 feet in width, measured at right angles lying
Northerly and Easterly of and contiguous to the following described
line; beginning at the
EXHIBIT B-2 - PAGE 6
<PAGE> 36
intersection of the Westerly line of Crossman Road, 90 feet in width,
with the Northerly line of Parcel A as shown on said Map; thence North
75[degrees]7'58" West along said Northerly line of Parcel A 450.13 feet;
thence leaving said Northerly line, North 30[degrees]7'48" West 210.69
feet; thence North 75[degrees]8'27" West 391.04 feet to a point on the
Easterly line of the proposed Geneva Drive, 60 feet wide, said point
being the terminus of said easement.
6. ANY RIGHTS, interests, or claims adverse to those of the vestee herein
which may exist or arise by reason of the following facts 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.
TRACT 3:
22. TAXES for the fiscal year 1999-2000, a lien not yet due or payable.
23. 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.
24. 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.
25. 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.
26. 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.
EXHIBIT B-2 - PAGE 7
<PAGE> 37
27. 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.
28. 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.
29. ANY RIGHTS, interests, or claims adverse to those of the vestee herein
which may exist or arise by reason of the following facts 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.
(a) The fact that a chain link fence extends across the southerly
boundary of said land.
TRACT 4:
30. TAXES for the fiscal year 1999-2000, a lien not yet due or payable.
31. 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.
32. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Slope Easement
In favor of : City of Sunnyvale
Recorded : November 16, 1976 in Book C414, page 90, Official
Records
Affects : Westerly 5 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.
33. EASEMENT recorded on that certain Map for the purposes stated herein and
incidents thereto
Purpose : Public utilities easement
Recorded : July 7, 1994 in Book 657 of Maps, page 9, Official
Records
Affects : Westerly 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.
34. 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.
EXHIBIT B-2 - PAGE 8
<PAGE> 38
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.
35. 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.
TRACT 5:
36. TAXES for the fiscal year 1999-2000, a lien not yet due or payable.
37. 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.
38. 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 : The Northeasterly and 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.
39. 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 : The Northeasterly and 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.
40. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Sidewalk and sign easement
Recorded : July 7, 1994, in Book 657 of Maps, page 9, Official
Records
Affects : The Northerly 2 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.
41. 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-2 - PAGE 9
<PAGE> 39
42. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public utilities easement
Recorded : October 7, 1998, in Book 708 of Maps, pages 51-52,
Official Records
Affects : The Northerly 15 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.
EXHIBIT B-2 - PAGE 10
<PAGE> 40
EXHIBIT B-3
GROUND LEASE
This GROUND LEASE (this "GROUND LEASE"), by and between BNP LEASING
CORPORATION, a Delaware corporation ("BNPLC"), whose address is 12201 Merit
Drive, Suite 860,Dallas, Texas 75251, and [NAI or the Applicable Purchaser], a
___________ ("LESSOR"), whose address is ____________________. as of
____________, ____ (the "GL EFFECTIVE DATE").
RECITALS
This Ground Lease is being executed pursuant to a Purchase Agreement
(Phase IV - Land) dated as of December ___, 1999 (the "PURCHASE AGREEMENT"),
between BNP Leasing Corporation and Network Appliance, Inc., covering the land
described in Annex 1 attached hereto (the "LAND"). Incorporated by reference
into the Purchase Agreement is a Common Definitions and Provisions Agreement
(Phase IV - Land) dated as of the effective date of the Purchase Agreement (the
"CDPA"), between BNP Leasing Corporation and Network Appliance, Inc. The CDPA is
hereby incorporated into and made a part of this Ground Lease for all purposes.
Capitalized terms defined in the CDPA and used but not otherwise defined herein
are intended in this Ground Lease to have the respective meanings ascribed to
them in the CDPA. The provisions in Article II of the CDPA are intended to apply
to this Ground Lease as if set forth herein and as if this Ground Lease were one
of the "Operative Documents" as defined therein.
Lessor and BNPLC have reached agreement as to the terms and conditions
upon which Lessor is willing to lease the Land described in Annex 1 to BNPLC for
a term of approximately just less that 35 years, and by this Ground Lease Lessor
and BNPLC desire to evidence such agreement.
GRANTING CLAUSES
NOW, THEREFORE, in consideration of the rent to be paid and the
covenants and agreements to be performed by BNPLC, as hereinafter set forth,
Lessor does hereby LEASE, DEMISE and LET unto BNPLC for the term hereinafter set
forth the Land, together with:
1. all easements and rights-of-way now owned or hereafter
acquired by Lessor for use in connection with the Land or
as a means of access thereto; and
2. all right, title and interest of Lessor, now owned or
hereafter acquired, in and to (A) any land lying within
the right-of-way of any street, open or proposed,
adjoining the Land, (B) any and all sidewalks and alleys
adjacent to the Land and (C) any strips and gores between
the Land and any abutting land not owned by Lessor.
The Land and all of the property described in the preceding clauses (1) and (2)
are hereinafter referred to collectively as the "REAL PROPERTY".
To the extent, but only to the extent, that assignable rights or interests in,
to or under the following have been or will be acquired by Lessor as the owner
of any interest in the Real Property, Lessor also hereby grants and
<PAGE> 41
assigns to BNPLC for the term of this Ground Lease (and thereafter, if BNPLC
purchases the Real Property from Lessor pursuant to the Repurchase Option
described in Paragraph 12) the right to use and enjoy (and, in the case of
contract rights, to enforce) such rights or interests of Lessor:
(a) the Permitted Encumbrances; and
(b) any general intangibles, permits, licenses, franchises,
certificates, and other rights and privileges related to the Real
Property that BNPLC (rather than Lessor) would have acquired if BNPLC
had itself acquired the fee estate in the Real Property (excluding,
however, any rights and privileges of Lessor under this Ground Lease,
any rights or privileges of Lessor under the Purchase Agreement or other
Operative Documents, and [without limiting Lessor's obligations under
subparagraphs 4(B), 6(B) or 6(C)] any rights and privileges of Lessor
under the Development Documents described in Annex 3).
Such rights and interests of Lessor, whether now existing or hereafter arising,
are hereinafter collectively called the "GL PERSONAL PROPERTY". The Real
Property and the GL Personal Property are hereinafter sometimes collectively
called the "GL PROPERTY."
Provided, however, the leasehold estate conveyed hereby and BNPLC's
rights hereunder are expressly made subject and subordinate to the Permitted
Encumbrances, including those listed on Annex 2. FURTHER, IF AND SO LONG AS THE
OTHER LEASE AGREEMENT AND THE OTHER PURCHASE AGREEMENT (BOTH AS DEFINED IN THE
CDPA) REMAIN IN FORCE, THE RIGHTS AND OBLIGATIONS OF LESSOR AND BNPLC HEREUNDER
SHALL BE SUBJECT TO ANY CONTRARY PROVISIONS THEREIN. ACCORDINGLY, BNPLC'S RIGHTS
UNDER PARAGRAPH 7 BELOW SHALL BE SUBJECT TO THE PROVISIONS GOVERNING INSURANCE
AND CONDEMNATION IN THE OTHER LEASE AGREEMENT, IF AND SO LONG AS THE OTHER LEASE
AGREEMENT REMAINS IN FORCE.
GENERAL TERMS AND CONDITIONS
The GL Property is leased by Lessor to BNPLC and is accepted and is to
be used and possessed by BNPLC upon and subject to the following terms and
conditions:
10. GROUND LEASE TERM AND EARLY TERMINATION BY BNPLC. The term of this
Ground Lease (the "GROUND LEASE TERM") shall commence on and include the GL
Effective Date and end on last Business Day prior to the thirty-fifth
anniversary of the GL Effective Date. However, subject to the prior approval of
any Leasehold Mortgagee, BNPLC shall have the right to terminate this Ground
Lease by giving a notice to Lessor stating that BNPLC unequivocally elects to
terminate effective as of a date specified in such notice, which may be any date
more than thirty days after the notice and after the expiration or termination
of the Lease pursuant to its terms.
11. NO OTHER GROUND LEASE TERMINATION. Except as expressly provided
herein, this Ground Lease shall not terminate, nor shall Lessor have any right
to terminate this Ground Lease, nor shall the obligations of Lessor under this
Ground Lease be excused, for any reason whatsoever, including any of the
following: (i) any damage to or the destruction of all or any part of the GL
Property from whatever cause, (ii) the taking of the GL Property or any portion
thereof by eminent domain or otherwise for any reason, (iii) any default on the
part of BNPLC under this Ground Lease or under any other agreement to which
Lessor and BNPLC are parties, or (iv) any other cause whether similar or
dissimilar to the foregoing, any existing or future law to the contrary
notwithstanding. It is the intention of the parties hereto that the obligations
of Lessor hereunder shall be separate and independent of the covenants and
agreements of BNPLC. However, nothing in this Paragraph shall be construed as a
waiver by Lessor of any right Lessor may have at law or in equity to recover
monetary damages for
EXHIBIT B-3 - PAGE 2
<PAGE> 42
any default under this Ground Lease by BNPLC.
12. GROUND LEASE RENT. On each anniversary of the GL Effective Date,
BNPLC shall make a payment to Lessor of rent for the then preceding year
("GROUND LEASE RENT"), in currency that at the time of payment is legal tender
for public and private debts in the United States of America. Each such payment
of Ground Lease Rent shall equal the Fair Rental Value, determined as provided
in Annex 4.
13. USE OF GL PROPERTY.
(A) Permitted Uses and Construction of Improvements. Subject to
the Permitted Encumbrances and the terms hereof, BNPLC may use and occupy the GL
Property for any purpose permitted by Applicable Laws and may construct,
maintain and use any Improvements on the Land which are permitted by Applicable
Laws.
(B) Cooperation by Lessor and its Affiliates.
(1) After the expiration or any earlier termination of the Lease,
if a use of the GL Property by BNPLC or any new Improvements or any
removal or modification of Improvements proposed by BNPLC would violate
any Permitted Encumbrance, Development Document or Applicable Law unless
Lessor or any of its Affiliates, as an owner of adjacent property or
otherwise, gave its consent or approval thereto or agreed to join in a
modification of a Permitted Encumbrance or Development Document, then
Lessor shall give and cause its Affiliates to give such consent or
approval or join in such modification.
(2) To the extent, if any, that any Permitted Encumbrance,
Development Document or Applicable Law requires the consent or approval
of Lessor or any of its Affiliates or of the City of South San Francisco
or any other Person to an assignment of this Ground Lease or a transfer
of any interest in the GL Property by BNPLC or its successors or
assigns, Lessor will without charge give and cause its Affiliates to
give such consent or approval and will cooperate in any way reasonably
requested by BNPLC to assist BNPLC to obtain such consent or approval
from the City or any other Person; provided, however, the assignment or
transfer is not then prohibited by the Lease.
(3) Lessor's obligations under this subparagraph 4(B) shall be
binding upon any successor or assign of Lessor with respect to the Land
and other properties encumbered by the Permitted Encumbrances or subject
to the Development Documents, and such obligations shall survive any
sale of Lessor's interest in the GL Property to BNPLC because of BNPLC's
exercise of the Repurchase Option (as defined in Paragraph 12).
(C) Title to Improvements. Any and all Improvements of whatever
nature at any time constructed, placed or maintained upon any part of the Land
shall be and remain the property of BNPLC and BNPLC's sublessee's, assignees,
licensees and concessionaires, as their interests may appear; provided, any such
Improvements which remain on the Land when this Ground Lease expires or is
terminated shall become and thereupon be the property of Lessor, free and clear
of any Liens Removable by BNPLC. It is the intention of Lessor and BNPLC that
severance of fee title to the Land and the Improvements shall not change the
character of the Improvements as real property. BNPLC may at any time after
Lessor ceases to have possession of the GL Property as tenant under the Lease
and prior to the expiration or termination of this Ground Lease remove all or
any Improvements from the Land without the consent of Lessor and without any
obligation to Lessor or its Affiliates to provide compensation or to construct
other Improvements on or about the Land.
14. ASSIGNMENT AND SUBLETTING; PASS THROUGH OF BNPLC'S LIABILITY
INSURANCE AND INDEMNITY RIGHTS. BNPLC may sublet or assign this Ground Lease
without the consent of Lessor or any of its
EXHIBIT B-3 - PAGE 3
<PAGE> 43
Affiliates, subject only to limitations set forth in the Lease for the benefit
of Lessor so long as those limitations remain in force.
To the extent that BNPLC may from time to time after the expiration or
earlier termination of the Other Lease Agreement require any subtenant to agree
to maintain liability insurance against claims of third parties and agree to
make BNPLC an additional or named insured under such insurance, BNPLC shall also
require the subtenant to agree to make Lessor an additional or named insured.
However, BNPLC shall have no liability to Lessor for a breach by the subtenant
of any such agreements, and to the extent that BNPLC's rights as an additional
or named insured are subject to exceptions or limitations concerning BNPLC's own
acts or omissions or the acts or omissions of anyone other than the subtenant,
so too may Lessor's rights as an additional or named insured be subject to
exceptions or limitations concerning Lessor's own acts or omissions or the acts
or omissions of anyone other than the subtenant.
To the extent that BNPLC may itself from time to time after the
expiration or earlier termination of the Other Lease Agreement maintain
liability insurance against claims of third parties which may arise because of
any occurrence on or alleged to have occurred on or about the GL Property, BNPLC
shall cause Lessor to be an additional or named insured under such insurance,
provided Lessor pays or reimburses BNPLC for any additional insurance premium
required to have Lessor made an insured.
To the extent that BNPLC may from time to time after the expiration or
earlier termination of the Other Lease Agreement require any subtenant to agree
to indemnify BNPLC against Environmental Losses or other Losses concerning the
GL Property, BNPLC shall also require the subtenant to agree to indemnify
Lessor. However, BNPLC shall have no liability to Lessor for a breach by the
subtenant of any such agreement, and to the extent that BNPLC's rights as an
indemnitee of the subtenant are subject to exceptions or limitations concerning
BNPLC's own acts or omissions or the acts or omissions of anyone other than the
subtenant, so too may Lessor's rights as an indemnitee be subject to exceptions
or limitations concerning Lessor's own acts or omissions or the acts or
omissions of anyone other than the subtenant.
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR CONCERNING THE
PROPERTY. Lessor represents, warrants and covenants as follows:
(A) Title to the Property. This Ground Lease shall vest in BNPLC
good and marketable title to a leasehold estate in the Land, subject only to the
terms and conditions hereof, the Permitted Encumbrances, the Development
Documents and any Liens Removable by BNPLC. Lessor shall not, without the prior
consent of BNPLC, create, place or authorize, or through any act or failure to
act, acquiesce in the placing of, any deed of trust, mortgage or other Lien,
whether statutory, constitutional or contractual against or covering the GL
Property or any part thereof (other than Permitted Encumbrances and Liens
Removable by BNPLC), regardless of whether the same are expressly or otherwise
subordinate to the Operative Documents or BNPLC's interest in the Property.
(B) Modification of Permitted Encumbrances and Development
Documents. Without the prior consent of BNPLC, Lessor shall not enter into,
initiate, approve or consent to any modification of any Permitted Encumbrance or
Development Document that would create or expand or purport to create or expand
obligations or restrictions which would encumber the GL Property or any
improvements constructed thereon.
(C) Performance and Preservation of the Development Documents and
Permitted Encumbrances for the Benefit of BNPLC. Not only during the term of the
Other Lease Agreement, but thereafter throughout the term of this Ground Lease,
Lessor shall comply with and perform the obligations imposed by the Permitted
Encumbrances and the Development Documents upon Lessor or upon any owner of the
Land, and shall do whatever is required to preserve the rights and benefits
conferred or intended to be conferred by the Permitted Encumbrances and the
Development Documents, as necessary to facilitate the construction of the
Construction
EXHIBIT B-3 - PAGE 4
<PAGE> 44
Project on the Land as contemplated in the Other Lease Agreement and the use of
the Improvements included in the Construction Project by BNPLC and its
successors, assigns and subtenants under this Ground Lease after the expiration
or any earlier termination of the Other Lease Agreement. Further, if Lessor or
any Affiliate of Lessor now or hereafter owns, acquires or leases land (other
than the Land) that is the subject of a Permitted Encumbrance or Development
Document, then Lessor shall, and shall cause its Affiliate to, assume liability
for and indemnify BNPLC and other Interested Parties and defend and hold them
harmless from and against all Losses (including Losses caused by any decline in
the value of the Property or of the Improvements) that they would not have
incurred or suffered but for (i) a termination of such Permitted Encumbrance or
Development Document, to which Lessor or its Affiliate agreed, or which resulted
from a breach thereof by Lessor or its Affiliate, or (ii) a refusal of Lessor or
its Affiliate to agree to any waiver or modification requested by BNPLC of
restrictions upon the Property or the transfer thereof imposed by such Permitted
Encumbrance or Development Document, or (iii) anything done, authorized or
suffered by Lessor or its Affiliate in violation of such Permitted Encumbrance
or Development Document. Lessor's obligations under this subparagraph 6(C) shall
be binding upon any successor or assign of Lessor or its Affiliates with respect
to their interest in properties subject to the Development Documents and
Permitted Encumbrances.
16. INSURANCE AND CONDEMNATION.
(A) Entitlement to Insurance and Condemnation Proceeds. All
insurance and condemnation proceeds payable with respect to any damage to or
taking of the GL Property shall be payable to and become the property of BNPLC;
provided, however, Lessor shall be entitled to receive condemnation proceeds
awarded for the value of Lessor's remainder interest in the Land exclusive of
the Improvements. BNPLC is authorized to take all action necessary on behalf of
both BNPLC and Lessor (as lessor under this Ground Lease) to collect insurance
and condemnation proceeds.
(B) Collection of Insurance Proceeds. In the event any of the GL
Property is destroyed or damaged by fire, explosion, windstorm, hail or by any
other casualty against which insurance shall have been required hereunder, (i)
BNPLC may make proof of loss, (ii) each insurance company concerned is hereby
authorized and directed to make payment for such loss directly to BNPLC for
application as required by subparagraph 7(A), and (iii) BNPLC's consent must be
obtained for any settlement, adjustment or compromise of any claims for loss,
damage or destruction under any policy or policies of insurance.
(C) Collection of Condemnation Proceeds. All proceeds of
condemnation awards or proceeds of sale in lieu of condemnation with respect to
the GL Property and all judgments, decrees and awards for injury or damage to
the GL Property shall be paid to BNPLC and applied as provided in subparagraph
7(A) above. BNPLC is hereby authorized, in the name of Lessor, to execute and
deliver valid acquittances for, and to appeal from, any such judgment, decree or
award concerning condemnation of any of the GL Property. BNPLC shall not be, in
any event or circumstances, liable or responsible for failure to collect, or to
exercise diligence in the collection of, any such proceeds, judgments, decrees
or awards.
17. LEASEHOLD MORTGAGES.
(A) By Leasehold Mortgage BNPLC may encumber BNPLC's leasehold
estate in the GL Property created by this Ground Lease, as well as BNPLC's
rights and interests in buildings, fixtures, equipment and Improvements situated
on the Land and rents, issues, profits, revenues and other income to be derived
by BNPLC therefrom.
(B) Any Leasehold Mortgagee or other party, including any
corporation formed by a Leasehold Mortgagee, may become the legal owner of the
leasehold estate created by this Ground Lease, and of the Improvements,
equipment, fixtures and other property assigned as additional security pursuant
to a Leasehold
EXHIBIT B-3 - PAGE 5
<PAGE> 45
Mortgage, by foreclosure of a Leasehold Mortgage or as a result of the
assignment or conveyance in lieu of foreclosure. Further, any such Leasehold
Mortgagee or other party may itself, after becoming the legal owner and holder
of the leasehold estate created by this Ground Lease, or of any Improvements,
equipment, fixtures and other property assigned as additional security pursuant
to a Leasehold Mortgage, convey or pledge the same without the consent of
Lessor.
(C) Lessor shall serve notice of any default by BNPLC hereunder
upon any Leasehold Mortgagee. No notice of a default by BNPLC shall be deemed
effective until it is so served. Any Leasehold Mortgagee shall have the right to
correct or cure any such default within the same period of time after receipt of
such notice as is given to BNPLC under this Ground Lease to correct or cure
defaults, plus an additional period of thirty days thereafter. Lessor will
accept performance by any Leasehold Mortgagee of any covenant, condition or
agreement on BNPLC's part to be performed hereunder with the same force and
effect as though performed by BNPLC.
(D) If this Ground Lease should terminate by reason of a
disaffirmance or rejection of this Ground Lease by BNPLC or any receiver,
liquidator or trustee for the property of BNPLC, or by any governmental
authority which had taken possession of the business or property of BNPLC by
reason of the insolvency or alleged insolvency of BNPLC, then:
(1) Lessor shall give notice thereof to each Leasehold Mortgagee;
and upon request of any Leasehold Mortgagee made within sixty days after
Lessor has given such notice, Lessor shall enter into a new ground lease
of the GL Property with such Leasehold Mortgagee for the remainder of
the Ground Lease Term, at the same Ground Lease Rent and on the same
terms and conditions as contained in this Ground Lease.
(2) The estate of the Leasehold Mortgagee, as lessee under the
new lease, shall have priority equal to the estate of BNPLC hereunder.
That is, there shall be no charge, lien or burden upon the GL Property
prior to or superior to the estate granted by such new lease which was
not prior to or superior to the estate of BNPLC under this Ground Lease
as of the date immediately preceding the termination of this Ground
Lease.
(3) Notwithstanding the foregoing, if Lessor shall receive
requests to enter into a new ground lease from more than one Leasehold
Mortgagee, Lessor shall be required to enter into only one new ground
lease, and the new ground lease shall be to the requesting Leasehold
Mortgagee who holds the highest priority lien or interest in BNPLC's
leasehold estate in the Land. If the liens or security interests of two
or more such requesting Leasehold Mortgagees which shared the highest
priority just prior to the termination of this Ground Lease, the new
ground lease shall name all such Leasehold Mortgagees as co-tenants
thereunder.
(E) If BNPLC has agreed with any Leasehold Mortgagee that such
Leasehold Mortgagee's consent will be required to any modification or early
termination of this Ground Lease by BNPLC, and if Lessor has been notified of
such agreement, such consent will be required.
(F) No Leasehold Mortgagee will assume any liability under this
Ground Lease either by virtue of its Leasehold Mortgage or by any subsequent
receipt or collection of rents or profits generated from the GL Property, unless
and until the Leasehold Mortgagee acquires BNPLC's leasehold estate in the GL
Property at foreclosure or by deed in lieu of foreclosure.
(G) Although the foregoing provisions concerning Leasehold
Mortgages and Leasehold Mortgagees will be self operative, Lessor agrees to
include, in addition to the items specified in Paragraph 11,
EXHIBIT B-3 - PAGE 6
<PAGE> 46
confirmation of the foregoing in any statement provided to a
Leasehold Mortgagee or prospective Leasehold Mortgagee pursuant to Paragraph 11.
18. EVENTS OF DEFAULT.
(A) Definition of Ground Lease Default. Each of the following
events shall be deemed to be a "GROUND LEASE DEFAULT" by BNPLC under this Ground
Lease:
(1) BNPLC shall fail to pay when due any installment of Ground
Lease Rent due hereunder and such failure shall continue for sixty days
after BNPLC receives notice thereof.
(2) BNPLC shall fail to comply with any term, provision or
covenant of this Ground Lease (other than as described in the other
clauses of this subparagraph 9(A)), and shall not cure such failure
prior to the earlier of (A) ninety days after notice thereof is sent to
BNPLC, or (B) the date any writ or order is issued for the levy or sale
of any property owned by Lessor or its Affiliates (including the GL
Property) because of such failure or any criminal action is instituted
against BNPLC or any of its directors, officers or employees because of
such failure; provided, however, that so long as no such writ or order
is issued and no such criminal actions is instituted, if such failure is
susceptible of cure but cannot with reasonable diligence be cured within
such ninety day period, and if BNPLC shall promptly have commenced to
cure the same and shall thereafter prosecute the curing thereof with
reasonable diligence, the period within which such failure may be cured
shall be extended for such further period as shall be necessary for the
curing thereof with reasonable diligence.
(B) Remedy. Upon the occurrence of a Ground Lease Default which
is not cured within any applicable period expressly permitted by subparagraph
9(A), Lessor's sole and exclusive remedies shall be to sue BNPLC for the
collection of any amount due under this Ground Lease, to sue for the specific
enforcement of BNPLC's obligations hereunder, or to enjoin the continuation of
the Ground Lease Default; provided, however, no limitation of Lessor's remedies
contained herein will prevent Lessor from recovering any reasonable costs Lessor
may incur to mitigate its damages by curing a Ground Lease Default that BNPLC
has failed to cure itself (so long as the cure by Lessor is pursued in a lawful
manner and the costs Lessor seeks to recover do not exceed the actual damages to
be mitigated). Lessor may not terminate this Ground Lease or BNPLC's right to
possession under this Ground Lease. Any judgment which Lessor may obtain against
BNPLC for amounts due under this Ground Lease may be collected only through
resort of a judgement lien against BNPLC's interest in the GL Property and any
Improvements. BNPLC shall have no personal liability for the payment amounts due
under this or for the performance of any obligations of BNPLC under this Ground
Lease.
19. QUIET ENJOYMENT. Neither Lessor nor any third party lawfully
claiming any right or interest in the GL Property shall during the Ground Lease
Term disturb BNPLC's peaceable and quiet enjoyment of the GL Property; however,
such enjoyment shall be subject to the terms, provisions, covenants, agreements
and conditions of this Ground Lease and the Permitted Encumbrances, to which
this Ground Lease is subject and subordinate as herein above set forth.
20. ESTOPPEL CERTIFICATE. Lessor shall from time to time, within ten
days after receipt of request by BNPLC, deliver a statement in writing
certifying:
(A) that this Ground Lease is unmodified and in full force and
effect (or if modified that this Ground Lease as so modified is in full force
and effect);
(B) that to the knowledge of Lessor BNPLC has not previously
assigned or hypothecated its rights or interests under this Ground Lease, except
as is described in such statement with as much specificity as
EXHIBIT B-3 - PAGE 7
<PAGE> 47
Lessor 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 BNPLC is not in default under any provision of this
Ground Lease (or if in default, the nature thereof in detail) and a statement as
to any outstanding obligations on the part of Lessor or BNPLC; and
(E) such other matters as are reasonably requested by BNPLC.
Lessor's failure to deliver such statement within such time shall be conclusive
upon BNPLC (i) that this Ground Lease is in full force and effect, without
modification except as may be represented by BNPLC, (ii) that there are no
uncured defaults in BNPLC's performance hereunder.
21. OPTION TO REPURCHASE. Subject to the terms and conditions set forth
in Annex 5, BNPLC (and any assignee of BNPLC's entire interest in the GL
Property, but not any subtenant or assignee of a lesser interest) shall have the
option (the "REPURCHASE OPTION") to purchase Lessor's interest in the GL
Property. To secure BNPLC's right to recover any damages caused by a breach of
the Repurchase Option or other provisions of this Ground Lease by Lessor,
including any such breach caused by a rejection or termination of this Ground
Lease in any bankruptcy or insolvency proceeding instituted by or against
Lessor, as debtor, Lessor does hereby grant to BNPLC a lien and security
interest against the Land and against all rights, title and interests of Lessor
from time to time in and to the GL Property.
[The signature pages follow.]
EXHIBIT B-3 - PAGE 8
<PAGE> 48
IN WITNESS WHEREOF, this Ground Lease is hereby executed in multiple
originals as of the date first written above.
"Lessor"
[NAI or the Applicable Purchaser]
By:
-------------------------------------
Name:
----------------------------
Title:
----------------------------
EXHIBIT B-3 - PAGE 9
<PAGE> 49
[Continuation of signature pages to GROUND LEASE dated as of ___________, ____]
"BNPLC"
BNP LEASING CORPORATION
By:
-------------------------------------
Name:
----------------------------
Title:
----------------------------
EXHIBIT B-3 - PAGE 10
<PAGE> 50
STATE OF ___________ )
) SS
COUNTY OF _____________ )
On _____________, _____, before me, ________________________, personally
appeared ____________________________, 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 the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
Signature
-----------------------------------
EXHIBIT B-3 - PAGE 11
<PAGE> 51
STATE OF ________ )
)
COUNTY OF __________ )
On ___________, _____, before me, ________________________, personally
appeared ____________, 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 the instrument the person, or the entity
upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
Signature
-----------------------------------
EXHIBIT B-3 - PAGE 12
<PAGE> 52
ANNEX 1
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LAND LEASE CHANGES
FROM TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPLC'S CONSENT
OR APPROVAL, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH
CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE"
WILL BE DELETED BEFORE THE DEED TO WHICH THIS DESCRIPTION IS ATTACHED IS
ACTUALLY EXECUTED AND DELIVERED.]
All that certain real property situate in the City of Sunnyvale, State of
California, described as follows:
TRACT 1:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of a portion of Parcel B, as
shown upon that certain Parcel Map recorded in Book 345 of Maps, at page 20,
Santa Clara County Records", which Map was filed for record in the Office of the
Recorder of the County of Santa Clara, State of California, on November 17,
1976, in Book 383 of Maps, at page 35.
TRACT 2:
Together with an easement for vehicles parking over the following described
property:
A 7-foot strip of land for parking easement purposes over a portion of Parcel A,
as said Parcel A is shown on that certain Parcel Map filed for record on
November 10, 1974 in Book 292 of Maps, at page 41, records of said County, and
being more particularly described as follows:
Commencing at the Northeast corner of said Parcel A; thence North
75[degrees]8'27" West 500.00 feet along the Northeasterly line of said Parcel A;
thence South 14[degrees]51'33" West 7.00 feet; thence parallel to Northeasterly
line of said Parcel A, South 75[degrees]08'27" East 500.00 feet to the Southeast
line of said Parcel A, North 14[degrees]51'33" East 7.00 feet to the point of
beginning.
APN: 110-32-002
ARB: 110-3-65.02
TRACT 3:
Parcel 1, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-6
ARB: 110-3-x65
TRACT 4:
EXHIBIT B-3 - PAGE 13
<PAGE> 53
Parcel 2, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-7
ARB: 110-3-x65
TRACT 5:
Parcel 2, as shown on that certain parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on
October 7, 1998, in Book 708 of Parcel Maps, Pages 51 and 52.
APN: 110-32-12
ARB: 110-03-65.11
EXHIBIT B-3 - PAGE 14
<PAGE> 54
ANNEX 2
PERMITTED ENCUMBRANCES
The leasehold and other interests in the Land hereby conveyed by Lessor are
conveyed subject to the following matters to the extent the same are still valid
and in force:
[THE SAME LIST OF PERMITTED ENCUMBRANCES ATTACHED TO THE GRANT DEED FROM BNPLC
TO NAI OR THE APPLICABLE PURCHASER SHALL BE INSERTED HERE.]
EXHIBIT B-3 - PAGE 15
<PAGE> 55
ANNEX 3
LIST OF DEVELOPMENT DOCUMENTS
NONE
EXHIBIT B-3 - PAGE 16
<PAGE> 56
ANNEX 4
DETERMINATION OF FAIR RENTAL VALUE
Each annual payment of Ground Lease Rent will equal the Fair Rental
Value, computed as of the most recent Rental Determination Date when such
payment becomes due. As used in this Annex:
"FAIR RENTAL VALUE" means (and all appraisers and other persons
involved in the determination of the Fair Rental Value will be so
advised) the annual rent, as determined in accordance with this Annex,
that would be agreed upon between a willing tenant, under no compulsion
to lease, and a willing landlord, under no compulsion to lease, for
unimproved land comparable in size and location to the Land, exclusive
of any Improvements but assuming that there is no higher and better use
for such land than as a site for improvements of comparable size and
utility to the Improvements, at the time a determination is required
under hereunder and taking into consideration the condition of the Land,
the encumbrances affecting the title to the Land and all applicable
zoning, land use approvals and other governmental permits relating to
the Land at the time of such determination; and
"RENTAL DETERMINATION DATE" means the GL Effective Date and each
fifth anniversary of the GL Effective Date.
If Lessor and BNPLC have not agreed upon Fair Rental Value as of any
Rental Determination Date within one hundred eighty days after the such date,
then Fair Rental Value will be determined as follows:
(a) Lessor and BNPLC shall each appoint a real estate appraiser
who is familiar with rental values for properties in the vicinity of the
Land and who has not previously acted for either party. Each party will
make the appointment no later than ten days after receipt of notice from
the other party that the appraisal process described in this Annex has
been invoked. The agreement of the two appraisers as to Fair Rental
Value will be binding upon Lessor and BNPLC. If the two appraisers
cannot agree upon the Fair Rental Value within ten days following their
appointment, they shall within another ten days agree upon a third real
estate appraiser. Immediately thereafter, each of the first two
appraisers will submit his best estimate of the appropriate Fair Rental
Value (together with a written report supporting such estimate) to the
third appraiser and the third appraiser will choose between the two
estimates. The estimate of Fair Rental Value chosen by the third
appraiser as the closest to the prevailing annual fair rental value will
be binding upon Lessor and BNPLC. Notification in writing of this
estimate shall be made to Lessor and BNPLC within fifteen days following
the selection of the third appraiser.
(b) If appraisers must be selected under the procedure set out
above and either BNPLC or Lessor fails to appoint an appraiser or fails
to notify the other party of such appointment within fifteen days after
receipt of notice that the prescribed time for appointing the appraisers
has passed, then the other party's appraiser will determine the Fair
Rental Value. All appraisers selected for the appraisal process set out
in this Annex will be disinterested, reputable, qualified real estate
appraisers with the designation of MAI or equivalent and with at least 5
years experience in appraising properties comparable to the Land.
(c) If a third appraiser must be chosen under the procedure set
out above, he or she will be chosen on the basis of objectivity and
competence, not on the basis of his relationship with the other
appraisers or the parties to this Ground Lease, and the first two
appraisers will be so advised. Although the first two appraisers will be
instructed to attempt in good faith to agree upon the third appraiser,
if for any reason they cannot agree within the prescribed time, either
Lessor and BNPLC may require the first two appraisers to immediately
submit its top choice for the third appraiser to the then highest
ranking officer of the California Bar Association who will agree to help
and who has no attorney/client or other significant
EXHIBIT B-3 - PAGE 17
<PAGE> 57
relationship to either Lessor or BNPLC. Such officer will have complete
discretion to select the most objective and competent third appraiser
from between the choices of each of the first two appraisers, and will
do so within twenty days after such choices are submitted to him.
(d) Either Lessor or BNPLC may notify the appraiser selected by
the other party to demand the submission of an estimate of Fair Rental
Value or a choice of a third appraiser as required under the procedure
described above; and if the submission of such an estimate or choice is
required but the other party's appraiser fails to comply with the demand
within fifteen days after receipt of such notice, then the Fair Rental
Value or choice of the third appraiser, as the case may be, selected by
the other appraiser (i.e., the notifying party's appraiser) will be
binding upon Lessor and BNPLC.
(e) Lessor and BNPLC shall each bear the expense of the appraiser
appointed by it, and the expense of the third appraiser and of any
officer of the California Bar Association who participates in the
appraisal process described above will be shared equally by Lessor and
BNPLC.
EXHIBIT B-3 - PAGE 18
<PAGE> 58
ANNEX 5
REPURCHASE OPTION
Subject to the terms of this Annex, BNPLC shall have an option (the
"OPTION") to buy Lessor's fee interest in the GL Property at any time during the
term of this Ground Lease for a purchase price (the "OPTION PRICE") to Lessor
equal to the fair market value of the GL Property, determined as described in
the next paragraph.
For the purposes of this Annex, "fair market value" of the GL Property
means (and all appraisers and other persons involved in the determination of the
Option Price will be so advised) the price that would be agreed upon between a
willing buyer, under no compulsion to buy, and a willing seller, under no
compulsion to sell, for the Land, exclusive of any Improvements as if the Land
were unimproved, but assuming that there is no higher and better use for the
Land than as a site for the construction of improvements of comparable size and
utility to the Improvements, at the time of BNPLC's exercise of the Option and
taking into consideration the encumbrances affecting the title to the Land and
all applicable zoning, land use approvals and other governmental permits
relating to the Land at the time of the exercise of the Option.
If BNPLC exercises the Option, which BNPLC may do by notifying Lessor
that BNPLC has elected to buy Lessor's interest in the GL Property as provided
herein, then:
(a) To the extent, if any, required as a condition imposed by law
to the conveyance of the fee interest in the GL Property to BNPLC,
Lessor shall promptly at its expense do whatever is necessary to obtain
approvals of a new Parcel Map or lot line adjustments.
(b) Upon BNPLC's tender of the Option Price to Lessor, Lessor
will convey to BNPLC by general warranty deed and assignment, subject
only to the Permitted Encumbrances, good and marketable title to the fee
estate in the Land , to Lessor's interest in all other GL Property and,
to the extent still in force, to Lessor's Extended Remarketing Rights
under the Purchase Agreement.
(c) BNPLC's obligation to close the purchase shall be subject to
the following terms and conditions, all of which are for the benefit of
BNPLC: (1) BNPLC shall have been furnished with evidence satisfactory to
BNPLC that Lessor can convey title as required by the preceding
subparagraph; (2) nothing shall have occurred or been discovered after
BNPLC exercised the Option that could significantly and adversely affect
title to the GL Property or BNPLC's use thereof, (3) all of the
representations of Lessor in this Ground Lease shall continue to be true
as if made effective on the date of the closing and, with respect to any
such representations which may be limited to the knowledge of Lessor or
any of Lessor's representatives, would continue to be true on the date
of the closing if all relevant facts and circumstances were known to
Lessor and such representatives, (4) BNPLC shall find the Option Price
acceptable after it is determined as provided in this Annex, and (5)
BNPLC shall have been tendered the deed and other documents which are
described in this Annex as documents to be delivered to BNPLC at the
closing of BNPLC's purchase.
(d) Closing of the purchase will be scheduled on the first
Business Day following thirty days after the Option Price is established
in accordance with the terms and conditions of this Annex and after any
approvals described in subparagraph (a) above are obtained, and prior to
closing BNPLC's occupancy of the GL Property shall continue to be
subject to the terms and conditions of this Ground Lease, including the
terms setting forth BNPLC's obligation to pay rent. Closing shall take
place at the offices of any title insurance company reasonably selected
by BNPLC to insure title under the title insurance policy described
below.
EXHIBIT B-3 - PAGE 19
<PAGE> 59
(e) Any transfer taxes or notices or registrations required by
law in connection with the sale contemplated by this Annex will be the
responsibility of Lessor.
(f) Lessor will deliver a certificate of nonforeign status to
BNPLC at closing as needed to comply with the provisions of the Foreign
Investors Real Property Tax Act (FIRPTA) or any comparable federal,
state or local law in effect at the time.
(g) Lessor will also pay for and deliver to BNPLC at the closing
an owner's title insurance policy in the full amount of the Option
Price, issued by a title insurance company designated by BNPLC (or
written confirmation from the title company that it is then prepared to
issue such a policy), and subject only to standard printed exceptions
which the title insurance company refuses to delete or modify in a
manner acceptable to BNPLC and to Permitted Encumbrances.
(h) Lessor shall also deliver at the closing all other documents
or things reasonably required to be delivered to BNPLC or by the title
insurance company to evidence Lessor's ability to transfer the GL
Property to BNPLC.
If Lessor and BNPLC do not otherwise agree upon the amount of the Option
Price within twenty days after BNPLC exercises the Option, the Option Price
shall be determined in accordance with the following procedure:
(1) Lessor and BNPLC shall each appoint a real estate
appraiser who is familiar with properties in the vicinity of the
Land and who has not previously acted for either party. Each
party will make the appointment no later than ten days after
receipt of notice from the other party that the appraisal process
described in this Annex has been invoked. The agreement of the
two appraisers as to the Option Price will be binding upon Lessor
and BNPLC. If the two appraisers cannot agree upon the Option
Price within ten days following their appointment, they shall
within another ten days agree upon a third real estate appraiser.
Immediately thereafter, each of the first two appraisers will
submit his best estimate of the appropriate Option Price
(together with a written report supporting such estimate) to the
third appraiser and the third appraiser will choose between the
two estimates. The estimate of Option Price chosen by the third
appraiser as the closest to the prevailing fair market value will
be binding upon Lessor and BNPLC. Notification in writing of the
Option Price shall be made to Lessor and BNPLC within fifteen
days following the selection of the third appraiser.
(2) If appraisers must be selected under the procedure set
out above and either BNPLC or Lessor fails to appoint an
appraiser or fails to notify the other party of such appointment
within fifteen days after receipt of notice that the prescribed
time for appointing the appraisers has passed, then the other
party's appraiser will determine the Option Price. All appraisers
selected for the appraisal process set out in this Annex will be
disinterested, reputable, qualified real estate appraisers with
the designation of MAI or equivalent and with at least 5 years
experience in appraising properties comparable to the Land.
(3) If a third appraiser must be chosen under the
procedure set out above, he will be chosen on the basis of
objectivity and competence, not on the basis of his relationship
with the other appraisers or the parties to this Ground Lease,
and the first two appraisers will be so advised. Although the
first two appraisers will be instructed to attempt in good faith
to agree upon the third appraiser, if for any reason they cannot
agree within the prescribed time, either Lessor and BNPLC may
require the first two appraisers to immediately submit its top
choice for the third appraiser to the then highest ranking
officer of the California Bar Association who will agree to help
and who has no attorney/client or other significant relationship
to either Lessor or BNPLC. Such officer
EXHIBIT B-3 - PAGE 20
<PAGE> 60
will have complete discretion to select the most objective and
competent third appraiser from between the choices of each of the
first two appraisers, and will do so within ten days after such
choices are submitted to him.
(4) Either Lessor or BNPLC may notify the appraiser
selected by the other party to demand the submission of an
estimate of Option Price or a choice of a third appraiser as
required under the procedure described above; and if the
submission of such an estimate or choice is required but the
other party's appraiser fails to comply with the demand within
fifteen days after receipt of such notice, then the Option Price
or choice of the third appraiser, as the case may be, selected by
the other appraiser (i.e., the notifying party's appraiser) will
be binding upon Lessor and BNPLC.
(5) Lessor and BNPLC shall each bear the expense of the
appraiser appointed by it, and the expense of the third appraiser
and of any officer of the California Bar Association who
participates in the appraisal process described above will be
shared equally by Lessor and BNPLC.
EXHIBIT B-3 - PAGE 21
<PAGE> 61
EXHIBIT C
BILL OF SALE AND ASSIGNMENT
Reference is made to: (1) that certain Purchase Agreement (Phase IV -
Land) between BNP Leasing Corporation ("ASSIGNOR") and Network Appliance, Inc.,
dated as of December ___, 1999, (the "PURCHASE AGREEMENT") and (2) that certain
Lease Agreement (Phase IV - Land) between Assignor, as landlord, and Network
Appliance, Inc., as tenant, dated as of December ___, 1999 (the "LAND LEASE").
(Capitalized terms used and not otherwise defined in this document are intended
to have the meanings assigned to them in the Common Definitions and Provisions
Agreement (Phase IV - Land) incorporated by reference into both the Purchase
Agreement and Land Lease.)
As contemplated by the Purchase Agreement, Assignor hereby sells,
transfers and assigns unto [NAI OR THE APPLICABLE PURCHASER, AS THE CASE MAY
BE], a _____________ ("ASSIGNEE"), all of Assignor's right, title and interest
in and to the following property, if any, to the extent such property is
assignable:
(a) the Land Lease;
(b) any pending or future award made because of any condemnation
affecting the Property or because of any conveyance to be made in lieu thereof,
and any unpaid award for damage to the Property and any unpaid proceeds of
insurance or claim or cause of action for damage, loss or injury to the
Property; and
(c) all other property included within the definition of "Property" as
set forth in the Purchase Agreement.
Provided, however, excluded from this conveyance and reserved to Assignor are
any rights or privileges of Assignor under the following ("EXCLUDED RIGHTS"):
(1) the indemnities set forth in the Land Lease, whether such rights are
presently known or unknown, including rights of the Assignor to be indemnified
against environmental claims of third parties as provided in the Land Lease
which may not presently be known, (2) provisions in the Land Lease that
establish the right of Assignor to recover any accrued unpaid rent under the
Land Lease which may be outstanding as of the date hereof, (3) agreements
between Assignor and "BNPLC's Parent" or any "Participant," both as defined in
the Land Lease, or any modification or extension thereof, or (4) any other
instrument being delivered to Assignor contemporaneously herewith pursuant to
the Purchase Agreement. To the extent that this conveyance does include any
rights to receive future payments under the Land Lease, such rights ("INCLUDED
RIGHTS") shall be subordinate to Assignor's Excluded Rights, and Assignee hereby
waives any rights to enforce Included Rights until such time as Assignor has
received all payments to which it remains entitled by reason of Excluded Rights.
If any amount shall be paid to Assignee on account of any Included Rights at any
time before Assignor has received all payments to which it is entitled because
of Excluded Rights, such amount shall be held in trust by Assignee for the
benefit of Assignor, shall be segregated from the other funds of Assignee and
shall forthwith be paid over to Assignor to be held by Assignor as collateral
for, or then or at any time thereafter applied in whole or in part by Assignor
against, the payments due to Assignor because of Excluded Rights, whether
matured or unmatured, in such order as Assignor shall elect.
Assignor does for itself and its successors covenant and agree to
warrant and defend the title to the property assigned herein against the just
and lawful claims and demands of any person claiming under or through a Lien
Removable by BNPLC, but not otherwise.
<PAGE> 62
Assignee hereby assumes and agrees to keep, perform and fulfill
Assignor's obligations, if any, relating to any permits or contracts, under
which Assignor has rights being assigned herein.
IN WITNESS WHEREOF, the parties have executed this instrument as of
_______________, _____.
ASSIGNOR:
BNP LEASING CORPORATION a Delaware
corporation
By:
-------------------------------------
Its:
-----------------------------------
ASSIGNEE:
[NAI or the Applicable Purchaser],
a
--------------------
By:
-------------------------------------
Its:
-----------------------------------
EXHIBIT C - PAGE 2
<PAGE> 63
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, ____________________, personally
appeared ____________________ and ____________________, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the persons whose
names are subscribed to the within instrument and acknowledged to me that they
executed the same in their authorized capacities, and that by their signatures
on the instrument the person, or the entity upon behalf of which the persons
acted, executed the instrument.
WITNESS my hand and official seal.
Signature
----------------------------
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, ____________________, personally
appeared ____________________ and ____________________, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the persons whose
names are subscribed to the within instrument and acknowledged to me that they
executed the same in their authorized capacities, and that by their signatures
on the instrument the person, or the entity upon behalf of which the persons
acted, executed the instrument.
WITNESS my hand and official seal.
Signature
----------------------------
EXHIBIT C - PAGE 3
<PAGE> 64
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LAND LEASE CHANGES
FROM TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPLC'S CONSENT
OR APPROVAL, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH
CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE"
WILL BE DELETED BEFORE THE DOCUMENT TO WHICH THIS DESCRIPTION IS ATTACHED IS
ACTUALLY EXECUTED AND DELIVERED.]
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
TRACT 1:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of a portion of Parcel B, as
shown upon that certain Parcel Map recorded in Book 345 of Maps, at page 20,
Santa Clara County Records", which Map was filed for record in the Office of the
Recorder of the County of Santa Clara, State of California, on November 17,
1976, in Book 383 of Maps, at page 35.
TRACT 2:
Together with an easement for vehicles parking over the following described
property:
A 7-foot strip of land for parking easement purposes over a portion of Parcel A,
as said Parcel A is shown on that certain Parcel Map filed for record on
November 10, 1974 in Book 292 of Maps, at page 41, records of said County, and
being more particularly described as follows:
Commencing at the Northeast corner of said Parcel A; thence North 75~8'27" West
500.00 feet along the Northeasterly line of said Parcel A; thence South
14~51'33" West 7.00 feet; thence parallel to Northeasterly line of said Parcel
A, South 75~08'27" East 500.00 feet to the Southeast line of said Parcel A,
North 14~51'33" East 7.00 feet to the point of beginning.
APN: 110-32-002
ARB: 110-3-65.02
TRACT 3:
Parcel 1, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-6
ARB: 110-3-x65
TRACT 4:
Parcel 2, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of
EXHIBIT C - PAGE 4
<PAGE> 65
Santa Clara, State of California on July 7, 1994, in Book 657 of Parcel Maps,
Page 9.
APN: 110-32-7
ARB: 110-3-x65
TRACT 5:
Parcel 2, as shown on that certain parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on
October 7, 1998, in Book 708 of Parcel Maps, Pages 51 and 52.
APN: 110-32-12
ARB: 110-03-65.11
EXHIBIT C - PAGE 5
<PAGE> 66
EXHIBIT D
ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
THIS ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
(this "Certificate") is made as of ___________________, ____, by [NAI or the
Applicable Purchaser, as the case may be], a ___________________ ("GRANTEE").
Contemporaneously with the execution of this Certificate, BNP Leasing
Corporation, a Delaware corporation ("BNPLC"), is executing and delivering to
Grantee (1) a corporate grant deed and (2) a Bill of Sale and Assignment (the
foregoing documents and any other documents to be executed in connection
therewith are herein called the "CONVEYANCING DOCUMENTS" and any of the
properties, rights or other matters assigned, transferred or conveyed pursuant
thereto are herein collectively called the "SUBJECT PROPERTY").
NOTWITHSTANDING ANY PROVISION CONTAINED IN THE CONVEYANCING DOCUMENTS TO
THE CONTRARY, GRANTEE ACKNOWLEDGES THAT BNPLC MAKES NO REPRESENTATIONS OR
WARRANTIES OF ANY NATURE OR KIND, WHETHER STATUTORY, EXPRESS OR IMPLIED, WITH
RESPECT TO ENVIRONMENTAL MATTERS OR THE PHYSICAL CONDITION OF THE SUBJECT
PROPERTY, AND GRANTEE, BY ACCEPTANCE OF THE CONVEYANCING DOCUMENTS, ACCEPTS THE
SUBJECT PROPERTY "AS IS," "WHERE IS," "WITH ALL FAULTS" AND WITHOUT ANY SUCH
REPRESENTATION OR WARRANTY BY GRANTOR AS TO ENVIRONMENTAL MATTERS, THE PHYSICAL
CONDITION OF THE SUBJECT PROPERTY, COMPLIANCE WITH SUBDIVISION OR PLATTING
REQUIREMENTS OR CONSTRUCTION OF ANY IMPROVEMENTS. Without limiting the
generality of the foregoing, Grantee hereby further acknowledges and agrees that
warranties of merchantability and fitness for a particular purpose are excluded
from the transaction contemplated by the Conveyancing Documents, as are any
warranties arising from a course of dealing or usage of trade. Grantee hereby
assumes all risk and liability (and agrees that BNPLC shall not be liable for
any special, direct, indirect, consequential, or other damages) resulting or
arising from or relating to the ownership, use, condition, location,
maintenance, repair, or operation of the Subject Property, except for damages
proximately caused by (and attributed by any applicable principles of
comparative fault to) the Established Misconduct of BNPLC. As used in the
preceding sentence, "ESTABLISHED MISCONDUCT" is intended to have, and be limited
to, the meaning given to it in the Common Definitions and Provisions Agreement
(Phase IV - Land) incorporated by reference into the Purchase Agreement (Phase
IV-Land) between BNPLC and Network Appliance, Inc. dated December ___, 1999,
pursuant to which Purchase Agreement BNPLC is delivering the Conveyancing
Documents.
The provisions of this Certificate shall be binding on Grantee, its
successors and assigns and any other party claiming through Grantee. Grantee
hereby acknowledges that BNPLC is entitled to rely and is relying on this
Certificate.
EXECUTED as of ________________, ____.
[NAI or the Applicable Purchaser]
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE> 67
EXHIBIT E
SECRETARY'S CERTIFICATE
The undersigned, [Secretary or Assistant Secretary] of BNP Leasing
Corporation, a Delaware corporation (the "Corporation"), hereby certifies as
follows:
1. That he is the duly, elected, qualified and acting Secretary [or
Assistant Secretary] of the Corporation and has custody of the corporate
records, minutes and corporate seal.
2. That the following named persons have been properly designated,
elected and assigned to the office in the Corporation as indicated below; that
such persons hold such office at this time and that the specimen signature
appearing beside the name of such officer is his or her true and correct
signature.
[THE FOLLOWING BLANKS MUST BE COMPLETED WITH THE NAMES AND SIGNATURES OF THE
OFFICERS WHO WILL BE SIGNING THE DEED AND OTHER SALE CLOSING DOCUMENTS ON BEHALF
OF THE CORPORATION.]
<TABLE>
<CAPTION>
Name Title Signature
- ---- ----- ---------
<S> <C> <C>
- ------------------------ ------------------------ ------------------------
- ------------------------ ------------------------ ------------------------
</TABLE>
3. That the resolutions attached hereto and made a part hereof were duly
adopted by the Board of Directors of the Corporation in accordance with the
Corporation's Articles of Incorporation and Bylaws. Such resolutions have not
been amended, modified or rescinded and remain in full force and effect.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal
of the Corporation on this ___ day of ___________, ____.
--------------------------------------
[signature and title]
<PAGE> 68
CORPORATE RESOLUTIONS OF
BNP LEASING CORPORATION
WHEREAS, pursuant to that certain Purchase Agreement (Phase IV - Land)
(herein called the "Purchase Agreement") dated as of December ___, 1999, by and
between BNP Leasing Corporation (the "Corporation") and [NAI OR THE APPLICABLE
PURCHASER AS THE CASE MAY BE] ("Purchaser"), the Corporation agreed to sell and
Purchaser agreed to purchase or cause the Applicable Purchaser (as defined in
the Purchase Agreement) to purchase the Corporation's interest in the property
(the "Property") located in Sunnyvale, California more particularly described
therein.
NOW THEREFORE, BE IT RESOLVED, that the Board of Directors of the
Corporation, in its best business judgment, deems it in the best interest of the
Corporation and its shareholders that the Corporation convey the Property to
Purchaser or the Applicable Purchaser pursuant to and in accordance with the
terms of the Purchase Agreement.
RESOLVED FURTHER, that the proper officers of the Corporation, and each
of them, are hereby authorized and directed in the name and on behalf of the
Corporation to cause the Corporation to fulfill its obligations under the
Purchase Agreement.
RESOLVED FURTHER, that the proper officers of the Corporation, and each
of them, are hereby authorized and directed to take or cause to be taken any and
all actions and to prepare or cause to be prepared and to execute and deliver
any and all deeds and other documents, instruments and agreements that shall be
necessary, advisable or appropriate, in such officer's sole and absolute
discretion, to carry out the intent and to accomplish the purposes of the
foregoing resolutions.
EXHIBIT E - PAGE 2
<PAGE> 69
EXHIBIT F
FIRPTA STATEMENT
Section 1445 of the Internal Revenue Code of 1986, as amended, provides
that a transferee of a U.S. real property interest must withhold tax if the
transferor is a foreign person. Sections 18805, 18815 and 26131 of the
California Revenue and Taxation Code, as amended, provide that a transferee of a
California real property interest must withhold income tax if the transferor is
a nonresident seller.
To inform [NAI OR THE APPLICABLE PURCHASER] (the "Transferee") that
withholding of tax is not required upon the disposition of a California real
property interest by transferor, BNP Leasing Corporation (the "Seller"), the
undersigned hereby certifies the following on behalf of the Seller:
1. The Seller is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations);
2. The United States employer identification number for the Seller is
_____________________;
3.The office address of the Seller is ______________
_________________________ _________________.
4. The Seller is qualified to do business in California.
The Seller understands that this certification may be disclosed to the
Internal Revenue Service and/or to the California Franchise Tax Board by the
Transferee and that any false statement contained herein could be punished by
fine, imprisonment, or both.
The Seller understands that the Transferee is relying on this affidavit
in determining whether withholding is required upon said transfer.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign this document on
behalf of the Seller.
Dated: ___________, ____.
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
<PAGE> 1
EXHIBIT 10.53
================================================================================
PURCHASE AGREEMENT
(PHASE IV - IMPROVEMENTS)
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
NETWORK APPLIANCE, INC.
("NAI")
DECEMBER ___, 1999
(SUNNYVALE, CALIFORNIA)
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. NAI'S OPTIONS AND OBLIGATIONS ON THE DESIGNATED SALE DATE.................................1
(A) Right to Purchase; Right and Obligation to Remarket..................................1
(B) Determinations Concerning Price......................................................2
(C) Designation of the Purchaser.........................................................3
(D) Effect of the Purchase Option and NAI's Initial Remarketing Rights and
Obligations on Subsequent Title Encumbrances.........................................4
(E) Security for the Purchase Option and NAI's Initial Remarketing Rights and
Obligations..........................................................................4
(F) Delivery of Books and Records If BNPLC Retains the Property..........................4
2. NAI'S RIGHTS AND OPTIONS AFTER THE DESIGNATED SALE DATE...................................4
(A) NAI's Extended Right to Remarket.....................................................4
(B) Definition of Minimum Extended Remarketing Price.....................................5
(C) BNPLC's Right to Sell................................................................6
(D) NAI's Right to Excess Sales Proceeds.................................................6
(E) Permitted Transfers During NAI's Extended Remarketing Period.........................6
3. TERMS OF CONVEYANCE UPON PURCHASE 6
4. SURVIVAL AND TERMINATION OF THE RIGHTS AND OBLIGATIONS OF NAI AND BNPLC 7
(A) Status of this Agreement Generally...................................................7
(B) [Intentionally deleted.].............................................................8
(C) [Intentionally deleted.].............................................................8
(D) Automatic Termination of NAI's Rights................................................8
(E) Termination of NAI's Extended Remarketing Rights to Permit a Sale by BNPLC...........8
(F) Payment Only to BNPLC................................................................8
(G) Remedies Under the Other Operative Documents.........................................8
(H) Occupancy by NAI Prior to Closing of a Sale..........................................8
5. SECURITY FOR NAI'S OBLIGATIONS; RETURN OF FUNDS.......................................... 8
6. CERTAIN REMEDIES CUMULATIVE.............................................................. 9
7. ATTORNEYS' FEES AND LEGAL EXPENSES....................................................... 9
8. ESTOPPEL CERTIFICATE..................................................................... 9
9. SUCCESSORS AND ASSIGNS................................................................... 9
</TABLE>
<PAGE> 3
Exhibits and Schedules
Exhibit A......................................................Legal Description
Exhibit B...........................................Grant Deed Form Requirements
Exhibit C............................................Bill of Sale and Assignment
Exhibit D..........................................Acknowledgment and Disclaimer
Exhibit E................................................Secretary's Certificate
Exhibit F.................................Certificate Concerning Tax Withholding
<PAGE> 4
PURCHASE AGREEMENT
(PHASE IV - IMPROVEMENTS)
This PURCHASE AGREEMENT (PHASE IV - IMPROVEMENTS) (this "AGREEMENT"),
by and between BNP LEASING CORPORATION, a Delaware corporation ("BNPLC"), and
NETWORK APPLIANCE, INC., a California corporation ("NAI"), is made and dated as
of December ___, 1999, the Effective Date. ("EFFECTIVE DATE" and other
capitalized terms used and not otherwise defined in this Agreement are intended
to have the meanings assigned to them in the Common Definitions and Provisions
Agreement (Phase IV - Improvements) executed by BNPLC and NAI contemporaneously
with this Agreement. By this reference, the Common Definitions and Provisions
Agreement (Phase IV - Improvements) is incorporated into and made a part of this
Agreement for all purposes.)
RECITALS
Pursuant to the Existing Contract, which covers the Land described in
Exhibit A, BNPLC is acquiring the Land and any appurtenances thereto and the
existing Improvements thereon from Seller contemporaneously with the execution
of this Agreement. Pursuant to the Lease Agreement (Phase IV - Improvements)
executed by BNPLC and NAI contemporaneously with this Agreement (the
"IMPROVEMENTS LEASE"), BNPLC is leasing the Improvements to NAI. (All of BNPLC's
interests, including those created by the documents delivered at the closing
under the Existing Contracts, in the Improvements and in all other real and
personal property from time to time covered by the Improvements Lease and
included within the "Property" as defined therein are hereinafter collectively
referred to as the "PROPERTY". The Property does not include the fee estate in
the Land itself, it being understood that the Other Purchase Agreement
constitutes a separate agreement providing for the possible sale of the Land and
the appurtenances thereto, and only the Land and the appurtenances thereto, from
BNPLC to NAI or a third party designated by NAI.)
NAI and BNPLC have reached agreement upon the terms and conditions upon
which NAI will purchase or arrange for the purchase of the Property, and by this
Agreement they desire to evidence such agreement.
AGREEMENTS
1. NAI'S OPTIONS AND OBLIGATIONS ON THE DESIGNATED SALE DATE.
(A) Right to Purchase; Right and Obligation to Remarket.
Whether or not an Event of Default shall have occurred and be continuing or the
Improvements Lease shall have been terminated, but subject to Paragraph 4 below:
(1) NAI shall have the right (the "PURCHASE OPTION")
to purchase or cause an Affiliate of NAI to purchase the Property and
BNPLC's interest in Escrowed Proceeds, if any, on the Designated Sale
Date for a cash price equal to the Break Even Price (as defined below).
(2) If neither NAI nor an Affiliate of NAI purchases
the Property and BNPLC's interest in any Escrowed Proceeds on the
Designated Sale Date as provided in the preceding subparagraph 1(A)(1),
then NAI shall have the following rights and obligations (collectively,
"NAI'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS"):
<PAGE> 5
(a) First, NAI shall have the right (but not
the obligation) to cause an Applicable Purchaser who is not an
Affiliate of NAI to purchase the Property and BNPLC's interest
in any Escrowed Proceeds on the Designated Sale Date for a
cash purchase price (the "THIRD PARTY PRICE") determined as
provided below. If, however, the Break Even Price exceeds the
sum of any Third Party Price tendered or to be tendered to
BNPLC by an Applicable Purchaser and any Supplemental Payment
paid by NAI as described below, then BNPLC may affirmatively
elect to decline such tender from the Applicable Purchaser and
to keep the Property and any Escrowed Proceeds rather than
sell to the Applicable Purchaser pursuant to this subparagraph
(a "VOLUNTARY RETENTION OF THE PROPERTY").
(b) Second, if the Third Party Price
actually paid by an Applicable Purchaser to BNPLC on the
Designated Sale Date exceeds the Break Even Price, NAI shall
be entitled to such excess, subject, however, to BNPLC's right
to offset against such excess any and all sums that are then
due from NAI to BNPLC under the other Operative Documents.
(c) Third, if for any reason whatsoever
(including a Voluntary Retention of the Property or a decision
by NAI not to exercise its right to purchase or cause an
Applicable Purchaser to purchase from BNPLC as described
above) neither NAI nor an Applicable Purchaser pays a net cash
price to BNPLC on the Designated Sale Date equal to or in
excess of the Break Even Price in connection with a sale of
the Property and BNPLC's interest in any Escrowed Proceeds
pursuant to this Agreement, then NAI shall have the obligation
to pay to BNPLC on the Designated Sale Date a supplemental
payment (the "SUPPLEMENTAL PAYMENT") equal to the lesser of
(1) the amount by which the Break Even Price exceeds such net
cash price (if any) actually received by BNPLC on the
Designated Sale Date (such excess being hereinafter called a
"DEFICIENCY") or (2) the Maximum Remarketing Obligation. As
used herein, the "MAXIMUM REMARKETING OBLIGATION" means a
dollar amount determined in accordance with the following
provisions:
(1) The "MAXIMUM REMARKETING
OBLIGATION" will equal the product of (i) Stipulated
Loss Value on the Designated Sale Date, times (ii)
100% minus the Residual Risk Percentage, provided
that both of the following conditions are satisfied:
(x) NAI shall not have
elected to accelerate the Designated Sale
Date as provided in clause (2) of the
definition of Designated Sale Date in the
Common Definitions and Provisions Agreement
(Phase IV - Improvements).
(y) No Event of Default,
other than an Issue 97-1
Non-performance-related Subjective Event of
Default, shall occur on or be continuing on
the Designated Sale Date.
(2) If either of the conditions
listed in subparagraph 1) preceding are not
satisfied, the "MAXIMUM REMARKETING OBLIGATION" will
equal the Break Even Price.
If any Supplemental Payment or other amount payable to BNPLC pursuant to this
subparagraph 1(A) is not actually paid to BNPLC on the Designated Sale Date, NAI
shall pay interest on the past due amount computed at the Default Rate from the
Designated Sale Date.
(B) Determinations Concerning Price.
2
<PAGE> 6
(1) Determination of the Break Even Price. As used
herein, "BREAK EVEN PRICE" means an amount equal, on the Designated
Sale Date, to Stipulated Loss Value, plus all out-of-pocket costs and
expenses (including appraisal costs, withholding taxes (if any) not
constituting Excluded Taxes, and Attorneys' Fees) incurred by BNPLC in
connection with any sale of BNPLC's interests in the Property under
this Agreement or in connection with collecting payments due hereunder,
but less the aggregate amounts (if any) of Direct Payments to
Participants and Deposit Taker Losses.
(2) Determination of Third Party Price. The Third
Party Price required of any Applicable Purchaser purchasing from BNPLC
under subparagraph 1(A)(2)(a) will be determined as follows:
(a) NAI may give a notice (a "REMARKETING NOTICE") to
BNPLC and to each of the Participants no earlier than one
hundred twenty days before the Designated Sale Date and no
later than ninety days before the Designated Sale Date,
specifying an amount as the Third Party Price that NAI
believes in good faith to constitute reasonably equivalent
value for the Property and any Escrowed Proceeds. Once given,
a Remarketing Notice shall not be rescinded or modified
without BNPLC's written consent.
(b) If BNPLC believes in good faith that the Third
Party Price specified by NAI in a Remarketing Notice does not
constitute reasonably equivalent value for the Property and
any Escrowed Proceeds, BNPLC may at any time before sixty days
prior to the Designated Sale Date respond to the Remarketing
Notice with a notice back to NAI, objecting to the Third Party
Price so specified by NAI. If BNPLC receives a Remarketing
Notice, yet does not respond with an objection as provided in
the preceding sentence, the Third Party Price suggested by NAI
in the Remarketing Notice will be the Third Party Price for
purposes of this Agreement. If, however, BNPLC does respond
with an objection as provided in this subparagraph, and if NAI
and BNPLC do not otherwise agree in writing upon a Third Party
Price, then the Third Party Price will be the lesser of (I)
fair market value of the Property, plus the amount of any
Escrowed Proceeds, as determined by a professional independent
appraiser satisfactory to BNPLC, or (II) the Break Even Price.
(c) If for any reason, including an acceleration of
the Designated Sale Date as provided in the definition thereof
in the Common Definitions and Provisions Agreement (Phase IV -
Improvements), NAI does not deliver a Remarketing Notice to
BNPLC within the time period specified above, then the Third
Party Price will be an amount determined in good faith by
BNPLC as constituting reasonably equivalent value for the
Property and any Escrowed Proceeds, but in no event more than
the Break Even Price.
If any payment to BNPLC by an Applicable Purchaser hereunder is held to
constitute a preference or a voidable transfer under Applicable Law, or
must for any other reason be refunded by BNPLC to the Applicable
Purchaser or to another Person, and if such payment to BNPLC reduced or
had the effect of reducing a Supplemental Payment or increased or had
the effect of increasing any excess sale proceeds paid to NAI pursuant
to subparagraph 1(A)(2)(b) or pursuant to subparagraph 2(D), then NAI
shall pay to BNPLC upon demand an amount equal to the reduction of the
Supplemental Payment or to the increase of the excess sale proceeds
paid to NAI, as applicable, and this Agreement shall continue to be
effective or shall be reinstated as necessary to permit BNPLC to
enforce its right to collect such amount from NAI.
(C) Designation of the Purchaser. To give BNPLC the
opportunity before the Designated Sale Date to prepare the deed and other
documents that BNPLC must tender pursuant to Paragraph 3 (collectively, the
3
<PAGE> 7
"SALE CLOSING DOCUMENTS"), NAI must, by a notice to BNPLC given at least seven
days prior to the Designated Sale Date, specify irrevocably, unequivocally and
with particularity the party who will purchase the Property in order to satisfy
the obligations of NAI set forth in subparagraph 1(A). If for any reason NAI
fails to so specify a party who will in accordance with the terms and conditions
set forth herein purchase the Property (be it NAI itself, an Affiliate of NAI or
another Applicable Purchaser), BNPLC shall be entitled to postpone the tender of
the Sale Closing Documents until a date after the Designated Sale Date and not
more than twenty days after NAI finally does so specify a party, but such
postponement will not relieve or postpone the obligation of NAI to make a
Supplemental Payment on the Designated Sale Date as provided in Paragraph
1(A)(2)(c).
(D) Effect of the Purchase Option and NAI's Initial
Remarketing Rights and Obligations on Subsequent Title Encumbrances. Any
conveyance of the Property to NAI or any Applicable Purchaser pursuant to this
Paragraph 1(A) shall cut off and terminate any interest in the Improvements or
other Property claimed by, through or under BNPLC, including any interest
claimed by the Participants and including any Liens Removable by BNPLC (such as,
but not limited to, any judgment liens established against the Property because
of a judgment rendered against BNPLC and any leasehold or other interests
conveyed by BNPLC in the ordinary course of BNPLC's business), but not including
personal obligations of NAI to BNPLC under the Improvements Lease or other
Operative Documents (including obligations arising under the indemnities
therein). Anyone accepting or taking any interest in the Property by or through
BNPLC after the date of this Agreement shall acquire such interest subject to
the Purchase Option and NAI's Initial Remarketing Rights and Obligations.
Further, NAI and any Applicable Purchaser shall be entitled to pay any payment
required by this Agreement for the purchase of the Property directly to BNPLC
notwithstanding any prior conveyance or assignment by BNPLC, voluntary or
otherwise, of any right or interest in this Agreement or the Property, and
neither NAI nor any Applicable Purchaser shall be responsible for the proper
distribution or application of any such payments by BNPLC; and any such payment
to BNPLC shall discharge the obligation of NAI to cause such payment to all
Persons claiming an interest in such payment. Contemporaneously with the
execution of this Agreement, the parties shall record a memorandum of this
Agreement for purposes of effecting constructive notice to all Persons of NAI's
rights under this Agreement, including its rights under this subparagraph.
(E) Security for the Purchase Option and NAI's Initial
Remarketing Rights and Obligations. To secure BNPLC's obligation to sell the
Property pursuant to this Paragraph 1(A) and to pay any damages to NAI caused by
a breach of such obligations, including any such breach caused by a rejection or
termination of this Agreement in any bankruptcy or insolvency proceeding
instituted by or against BNPLC, as debtor, BNPLC does hereby grant to NAI a lien
and security interest against all rights, title and interests of BNPLC from time
to time in and to the Improvements and other Property. NAI may enforce such lien
and security interest judicially after any such breach by BNPLC, but not
otherwise. Contemporaneously with the execution of this Agreement, NAI and BNPLC
will execute a memorandum of this Agreement which is in recordable form and
which specifically references the lien granted in this subparagraph, and NAI
shall be entitled to record such memorandum at any time prior to the Designated
Sale Date.
(F) Delivery of Books and Records If BNPLC Retains the
Property. Unless NAI or its Affiliate or another Applicable Purchaser purchases
the Property pursuant to Paragraph 1(A), promptly after the Designated Sale Date
NAI shall deliver to BNPLC copies of books and records of NAI which will be
necessary or useful to any future owner's or occupant's use of the Property in
the manner permitted by the Improvements Lease.
2. NAI'S RIGHTS AND OPTIONS AFTER THE DESIGNATED SALE DATE.
(A) NAI's Extended Right to Remarket. During the two years
following the Designated Sale Date ("NAI'S EXTENDED REMARKETING PERIOD"), NAI
shall have the right ("NAI'S EXTENDED REMARKETING RIGHT") to cause an Applicable
Purchaser who is not an Affiliate of NAI to purchase the Property for a cash
4
<PAGE> 8
purchase price not below the lesser of (I) the Minimum Extended Remarketing
Price (as defined below), or (II) if applicable, the Third Party Target Price
(as defined below) specified in any Third Party Sale Notice (as defined below)
given by BNPLC pursuant to subparagraph 2(C)(2) within the ninety days prior to
the date (the "FINAL SALE DATE") upon which BNPLC receives such purchase price
from the Applicable Purchaser. NAI's Extended Remarketing Right shall, however,
be subject to all of the following conditions:
(1) The Property and BNPLC's interest in Escrowed
Proceeds, if any, shall not have been sold on the Designated Sale Date
as provided in Paragraph 1.
(2) No Voluntary Retention of the Property shall have
occurred as described in subparagraph 1(A)(2)(a).
(3) NAI's Extended Remarketing Right shall not have
been terminated pursuant to subparagraph 4(D) below because of NAI's
failure to make any Supplemental Payment required on the Designated
Sale Date.
(4) NAI's Extended Remarketing Right shall not have
been terminated by BNPLC pursuant to subparagraph 4(E) below to
facilitate BNPLC's sale of the Property to a third party in accordance
with subparagraph 2(C).
(5) At least thirty days prior to the Final Sale
Date, NAI shall have notified BNPLC of (x) the date proposed by NAI as
the Final Sale Date (which must be a Business Day), (y) the full legal
name of the Applicable Purchaser and such other information as will be
required to prepare the Sale Closing Documents, and (z) the amount of
the purchase price that the Applicable Purchaser will pay (consistent
with the minimum required pursuant to the other provisions of this
subparagraph 2(A)) for the Property.
(B) Definition of Minimum Extended Remarketing Price. As used
herein, "MINIMUM EXTENDED REMARKETING PRICE" means an amount equal to the sum of
the following:
(1) the amount by which the Break Even Price computed
on the Designated Sale Date exceeds any Supplemental Payment actually
paid to BNPLC on the Designated Sale Date, together with interest on
such excess computed at the Default Rate from the period commencing on
the Designated Sale Date and ending on the Final Sale Date, plus
(2) all out-of-pocket costs and expenses (including
withholding taxes [if any], other than Excluded Taxes, and Attorneys'
Fees) incurred by BNPLC in connection with the sale to the Applicable
Purchaser, to the extent not already included in the computation of
Break Even Price, and plus
(3) the sum of all Impositions, insurance premiums
and other Losses of every kind suffered or incurred by BNPLC or any
other Interested Party with respect to the ownership, operation or
maintenance of the Property on or after the Designated Sale Date
(except to the extent already reimbursed by any lessee of the Property
after the Designated Sale Date), together with interest on such
Impositions, insurance premiums and other Losses computed at the
Default Rate from the date paid or incurred to the Final Sale Date.
If, however, Losses described in the preceding clause (3) consist of claims
against BNPLC or another Interested Party that have not been liquidated prior to
the Final Sale Date (and, thus, such Losses have yet to be fixed in amount as of
the Final Sale Date), then NAI may elect to exclude any such Losses from the
computation of the Minimum Extended Remarketing Price by providing to BNPLC, for
the benefit of BNPLC and other Interested
5
<PAGE> 9
Parties, a written agreement to indemnify and defend BNPLC and other Interested
Parties against such Losses. To be effective hereunder for purposes of reducing
the Minimum Extended Remarketing Price (and, thus, the Break Even Price), any
such written indemnity must be fully executed and delivered by NAI on or prior
to the Final Sale Date, must include provisions comparable to subparagraphs
5(c)(ii), (iii), (iv) and (v) of the Improvements Lease and otherwise must be in
form and substance satisfactory to BNPLC.
(C) BNPLC's Right to Sell. After the Designated Sale Date, if
the Property has not already been sold by BNPLC pursuant to Paragraph 1 or this
Paragraph 2, BNPLC shall have the right to sell the Property or offer the
Property for sale to any third party on any terms believed to be appropriate by
BNPLC in its sole good faith business judgment; provided, however, that so long
as the conditions to NAI's Extended Remarketing Rights specified in subparagraph
2(A) continue to be satisfied:
(1) BNPLC shall not sell the Property to an Affiliate
of BNPLC on terms less favorable than those which BNPLC would require
from a prospective purchaser not an Affiliate of BNPLC;
(2) If BNPLC receives or desires to make a written
proposal (whether in the form of a "letter of intent" or other
nonbinding expression of interest or in the form of a more definitive
purchase and sale agreement) for a sale of the Property to a
prospective purchaser (a "THIRD PARTY SALE PROPOSAL"), and if on the
basis of such Third Party Sale Proposal BNPLC expects to enter into or
to pursue negotiations for a definitive purchase and sale agreement
with the prospective purchaser, then prior to executing any such
definitive agreement, BNPLC shall submit the Third Party Sale Proposal
to NAI with a notice (the "THIRD PARTY SALE NOTICE") explaining that
(A) BNPLC is then prepared to accept a price not below an amount
specified in such Third Party Sale Notice (the "THIRD PARTY TARGET
PRICE") if BNPLC and the prospective purchaser reach agreement on other
terms and conditions to be incorporated into a definitive purchase and
sale agreement, and (B) NAI's Extended Remarketing Right may be
terminated pursuant to subparagraph 4(E) of this Agreement unless NAI
causes an Applicable Purchaser to consummate a purchase of the Property
pursuant to this Paragraph 2 within ninety days after the date of such
Third Party Sale Notice.
(D) NAI's Right to Excess Sales Proceeds. If the cash price
actually paid by any third party purchasing the Property from BNPLC during NAI's
Extended Remarketing Period, including any price paid by an Applicable Purchaser
purchasing from BNPLC pursuant to this Paragraph 2, exceeds the Minimum Extended
Remarketing Price, then NAI shall be entitled to the excess; provided, that
BNPLC may offset and retain from the excess any and all sums that are then due
and unpaid from NAI to BNPLC under any of the Operative Documents.
(E) Permitted Transfers During NAI's Extended Remarketing
Period. Any "Permitted Transfer" described in clause (6) of the definition
thereof in the Common Definitions and Provisions Agreement (Phase IV -
Improvements) to an Affiliate of BNPLC or that covers BNPLC's entire interest in
the Improvements will be subject to NAI's Extended Remarketing Right if, at the
time of the Permitted Transfer, NAI's Extended Remarketing Right has not expired
or been terminated as provided herein. Any other Permitted Transfer described in
clause (6) of the definition thereof, however, will not be subject to NAI's
Extended Remarketing Right. Thus, for example, BNPLC's conveyance of a utility
easement or space lease more than thirty days after the Designated Sale Date to
a Person not an Affiliate of BNPLC shall not be subject to NAI's Extended
Remarketing Right, though following the conveyance of the lesser estate, NAI's
Extended Remarketing Right may continue to apply to BNPLC's remaining interest
in the Improvements and any Personal Property.
3. TERMS OF CONVEYANCE UPON PURCHASE. As necessary to consummate any
sale of the Property to NAI or an Applicable Purchaser pursuant to this
Agreement, BNPLC must, subject to any
6
<PAGE> 10
postponement permitted by subparagraph 1(C), promptly after the tender of the
purchase price and any other payments to BNPLC required pursuant to Paragraph 1
or Paragraph 2, as applicable, convey all of BNPLC's right, title and interest
in the Improvements and other Property to NAI or the Applicable Purchaser, as
the case may be, by BNPLC's execution, acknowledgment (where appropriate) and
delivery of the Sale Closing Documents. Such conveyance by BNPLC will be subject
only to the Permitted Encumbrances and any other encumbrances that do not
constitute Liens Removable by BNPLC. However, such conveyance shall not include
the rights of BNPLC or other Interested Parties under the indemnities provided
in the Operative Documents, including rights to any payments then due from NAI
under the indemnities or that may become due thereafter because of any expense
or liability incurred by BNPLC or another Interested Party resulting in whole or
in part from events or circumstances occurring or alleged to have occurred
before such conveyance. All costs, both foreseen and unforeseen, of any purchase
by NAI or an Applicable Purchaser hereunder shall be the responsibility of the
purchaser. The Sale Closing Documents used to accomplish such conveyance shall
consist of the following: (1) a Corporation Grant Deed in the form attached as
Exhibit B-1 or Exhibit B-2 or Exhibit B-3, as required by Exhibit B, (2) a Bill
of Sale and Assignment in the form attached as Exhibit C, (3) an Acknowledgment
of Disclaimer of Representations and Warranties, in the form attached as Exhibit
D, which NAI or the Applicable Purchaser must execute and return to BNPLC, (4) a
Secretary's Certificate in the form attached as Exhibit E, and (5) a certificate
concerning tax withholding in the form attached as Exhibit F. If for any reason
BNPLC fails to tender the Sale Closing Documents as required by this Paragraph
3, BNPLC may cure such refusal at any time before thirty days after receipt of a
demand for such cure from NAI.
4. SURVIVAL AND TERMINATION OF THE RIGHTS AND OBLIGATIONS OF NAI AND
BNPLC.
(A) Status of this Agreement Generally. Except as expressly
provided herein, this Agreement shall not terminate; nor shall NAI have any
right to terminate this Agreement; nor shall NAI be entitled to any reduction of
the Break Even Price, any Deficiency, the Maximum Remarketing Obligation, any
Supplemental Payment or the Minimum Extended Remarketing Price hereunder; nor
shall the obligations of NAI to BNPLC under Paragraph 1 be affected, by reason
of (i) any damage to or the destruction of all or any part of the Property from
whatever cause (though it is understood that NAI will receive any remaining
Escrowed Proceeds yet to be applied as provided in the Improvements Lease that
may result from such damage if NAI purchases the Property and the Escrowed
Proceeds as herein provided), (ii) the taking of or damage to the Property or
any portion thereof by eminent domain or otherwise for any reason (though it is
understood that NAI will receive any remaining Escrowed Proceeds yet to be
applied as provided in the Improvements Lease that may result from such taking
or damage if NAI purchases the Property and the Escrowed Proceeds as herein
provided), (iii) the prohibition, limitation or restriction of NAI's use of all
or any portion of the Property or any interference with such use by governmental
action or otherwise, (iv) any eviction of NAI or any party claiming under NAI by
paramount title or otherwise, (v) NAI's prior acquisition or ownership of any
interest in the Property, (vi) any default on the part of BNPLC under this
Agreement, the Improvements Lease or any other agreement to which BNPLC is a
party, or (vii) any other cause, whether similar or dissimilar to the foregoing,
any existing or future law to the contrary notwithstanding. It is the intention
of the parties hereto that the obligations of NAI to make payment to BNPLC
hereunder shall be separate and independent covenants and agreements from
BNPLC's obligations under this Agreement or any other agreement between BNPLC
and NAI; provided, however, that nothing in this subparagraph shall excuse BNPLC
from its obligation to tender the Sale Closing Documents in substantially the
form attached hereto as exhibits when required by Paragraph 3. Further, nothing
in this subparagraph shall be construed as a waiver by NAI of any right NAI may
have at law or in equity to the following remedies, whether because of BNPLC's
failure to remove a Lien Removable by BNPLC or because of any other default by
BNPLC under this Agreement: (i) the recovery of monetary damages, (ii)
injunctive relief in case of the violation, or attempted or threatened
violation, by BNPLC of any of the express covenants, agreements, conditions or
provisions of this Agreement which are binding upon BNPLC, or (iii) a decree
compelling performance by BNPLC of any of the express covenants, agreements,
conditions or provisions of this Agreement which are binding upon BNPLC.
7
<PAGE> 11
(B) [Intentionally deleted.]
(C) [Intentionally deleted.]
(D) Automatic Termination of NAI's Rights. Without limiting
BNPLC's right to enforce NAI's obligation to pay any Supplemental Payment or
other amounts required by this Agreement, the rights of NAI (to be distinguished
from the obligations of NAI) included in NAI's Initial Remarketing Rights and
Obligations, the Purchase Option and NAI's Extended Remarketing Rights shall all
terminate automatically if NAI shall fail to pay the full amount of any
Supplemental Payment required by subparagraph 1(A)(2)(c) on the Designated Sale
Date or if BNPLC shall elect a Voluntary Retention of the Property as provided
in subparagraph 1(A)(2)(a). However, notwithstanding anything in this
subparagraph to the contrary, even after a failure to pay any required
Supplemental Payment on the Designated Sale Date, NAI may nonetheless tender to
BNPLC the full Break Even Price and all amounts then due under the Operative
Documents, together with interest on the total Break Even Price computed at the
Default Rate from the Designated Sale Date to the date of tender, on any
Business Day within thirty days after the Designated Sale Date, and if presented
with such a tender within thirty days after the Designated Sale Date, BNPLC must
accept it and promptly thereafter deliver any Escrowed Proceeds and the Sale
Closing Documents listed in Paragraph 3 to NAI.
(E) Termination of NAI's Extended Remarketing Rights to Permit
a Sale by BNPLC. At any time more than ninety days after BNPLC has delivered a
Third Party Sale Notice to NAI as described in subparagraph 2(C)(2), BNPLC may
terminate NAI's Extended Remarketing Rights contemporaneously with the
consummation of a sale of the Property by BNPLC to any third party (be it the
prospective purchaser named in the Third Party Sale Notice or another third
party) at a price equal to or in excess of the Third Party Target Price
specified in the Third Party Sale Notice, so as to permit the sale of the
Property unencumbered by NAI's Extended Remarketing Rights.
(F) Payment Only to BNPLC. All amounts payable under this
Agreement by NAI and, if applicable, by an Applicable Purchaser must be paid
directly to BNPLC, and no payment to any other party shall be effective for the
purposes of this Agreement. In addition to the payments required under
subparagraph 1(A), on the Designated Sale Date NAI must pay all amounts then due
to BNPLC under the Improvements Lease or other Operative Documents.
(G) Remedies Under the Other Operative Documents. No
repossession of or re-entering upon the Property or exercise of any other
remedies available to BNPLC under the Improvements Lease or other Operative
Documents shall terminate NAI's rights or obligations hereunder, all of which
shall survive BNPLC's exercise of remedies under the other Operative Documents.
NAI acknowledges that the consideration for this Agreement is separate and
independent of the consideration for the Improvements Lease, and the Closing
Certificate, and NAI's obligations hereunder shall not be affected or impaired
by any event or circumstance that would excuse NAI from performance of its
obligations under such other Operative Documents.
(H) Occupancy by NAI Prior to Closing of a Sale. Prior to the
closing of any sale of the Property to NAI or an Applicable Purchaser hereunder,
NAI's occupancy of the Improvements and its use of the Property shall continue
to be subject to the terms and conditions of the Improvements Lease, including
the terms setting forth NAI's obligation to pay rent, prior to any termination
or expiration of the Improvements Lease pursuant to its express terms and
conditions.
5. SECURITY FOR NAI'S OBLIGATIONS; RETURN OF FUNDS. NAI's obligations
under this Agreement are secured by the Pledge Agreement, reference to which is
hereby made for a description of the Collateral covered thereby and the rights
and remedies provided to BNPLC thereby. Although the collateral agent
8
<PAGE> 12
appointed for BNPLC as provided in the Pledge Agreement shall be entitled to
hold all Collateral as security for the full and faithful performance by NAI of
NAI's covenants and obligations under this Agreement, the Collateral shall not
be considered an advance payment of the Break Even Price or any Supplemental
Payment or a measure of BNPLC's damages should NAI breach this Agreement. If NAI
does breach this Agreement and fails to cure the same within any time specified
herein for the cure, BNPLC may, from time to time, without prejudice to any
other remedy and without notice to NAI, require the collateral agent to
immediately apply the proceeds of any disposition of the Collateral (and any
cash included in the Collateral) to amounts then due hereunder from NAI. If by a
Permitted Transfer BNPLC conveys its interest in the Property before the
Designated Sale Date, BNPLC may also assign BNPLC's interest in the Collateral
to the transferee. BNPLC shall be entitled to return any Collateral not sold or
used to satisfy the obligations secured by the Pledge Agreement directly to NAI
notwithstanding any prior actual or attempted conveyance or assignment by NAI,
voluntary or otherwise, of any right to receive the same; neither BNPLC nor the
collateral agent named in the Pledge Agreement shall be responsible for the
proper distribution or application by NAI of any such Collateral returned to
NAI; and any such return of Collateral to NAI shall discharge any obligation of
BNPLC to deliver such Collateral to all Persons claiming an interest in the
Collateral. Further, BNPLC shall be entitled to deliver any Escrowed Proceeds it
holds on the Designated Sale Date directly to NAI or to any Applicable Purchaser
purchasing BNPLC's interest in the Property and the Escrowed Proceeds pursuant
to this Agreement notwithstanding any prior actual or attempted conveyance or
assignment by NAI, voluntary or otherwise, of any right to receive the same;
BNPLC shall not be responsible for the proper distribution or application by NAI
or any Applicable Purchaser of any such Escrowed Proceeds paid over to NAI or
the Applicable Purchaser; and any such payment of Escrowed Proceeds to NAI or an
Applicable Purchaser shall discharge any obligation of BNPLC to deliver the same
to all Persons claiming an interest therein.
6. CERTAIN REMEDIES CUMULATIVE. No right or remedy herein conferred
upon or reserved to BNPLC is intended to be exclusive of any other right or
remedy BNPLC has with respect to the Property, and each and every right and
remedy shall be cumulative and in addition to any other right or remedy given
hereunder or now or hereafter existing at law or in equity or by statute. In
addition to other remedies available under this Agreement, either party shall be
entitled, to the extent permitted by applicable law, to a decree compelling
performance of any of the other party's agreements hereunder.
7. ATTORNEYS' FEES AND LEGAL EXPENSES. If either party to this
Agreement commences any legal action or other proceeding to enforce any of the
terms of this Agreement, or because of any breach by the other party or dispute
hereunder, the party prevailing in such action or proceeding shall be entitled
to recover from the other party all Attorneys' Fees incurred in connection
therewith, whether or not such controversy, claim or dispute is prosecuted to a
final judgment. Any such Attorneys' Fees incurred by either party in enforcing a
judgment in its favor under this Agreement shall be recoverable separately from
such judgment, and the obligation for such Attorneys' Fees is intended to be
severable from other provisions of this Agreement and not to be merged into any
such judgment.
8. ESTOPPEL CERTIFICATE. Upon request by BNPLC, NAI shall execute,
acknowledge and deliver a written statement certifying that this Agreement is
unmodified and in full effect (or, if there have been modifications, that this
Agreement is in full effect as modified, and setting forth such modification)
and either stating that no default exists hereunder or specifying each such
default of which NAI has knowledge. Any such statement may be relied upon by any
Participant or prospective purchaser or assignee of BNPLC with respect to the
Property.
9. SUCCESSORS AND ASSIGNS. The terms, provisions, covenants and
conditions hereof shall be binding upon NAI and BNPLC and their respective
permitted successors and assigns and shall inure to the benefit of NAI and BNPLC
and all permitted transferees, mortgagees, successors and assignees of NAI and
BNPLC with respect to the Property; provided, that (A) the rights of BNPLC
hereunder shall not pass to NAI or any Applicable
9
<PAGE> 13
Purchaser or any subsequent owner claiming through NAI or an Applicable
Purchaser, (B) BNPLC shall not assign this Agreement or any rights hereunder
except pursuant to a Permitted Transfer, and (C) NAI shall not assign this
Agreement or any rights hereunder without the prior written consent of BNPLC.
[Signature pages follow.]
10
<PAGE> 14
IN WITNESS WHEREOF, NAI and BNPLC have caused this Agreement to be
executed as of December ___, 1999.
"NAI"
NETWORK APPLIANCE, INC.
By: ___________________________________
Name: _____________________________
Title: ____________________________
<PAGE> 15
[Continuation of signature pages to Purchase Agreement (Phase IV - Improvements)
dated to be effective December __, 1999]
"BNPLC"
BNP LEASING CORPORATION
By: ___________________________________
Lloyd G. Cox, Vice President
<PAGE> 16
EXHIBIT A
LEGAL DESCRIPTION
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
TRACT 1:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of a portion of Parcel B, as
shown upon that certain Parcel Map recorded in Book 345 of Maps, at page 20,
Santa Clara County Records", which Map was filed for record in the Office of the
Recorder of the County of Santa Clara, State of California, on November 17,
1976, in Book 383 of Maps, at page 35.
TRACT 2:
Together with an easement for vehicles parking over the following described
property:
A 7-foot strip of land for parking easement purposes over a portion of Parcel A,
as said Parcel A is shown on that certain Parcel Map filed for record on
November 10, 1974 in Book 292 of Maps, at page 41, records of said County, and
being more particularly described as follows:
Commencing at the Northeast corner of said Parcel A; thence North
75(degree)8'27" West 500.00 feet along the Northeasterly line of said Parcel A;
thence South 14(degree)51'33" West 7.00 feet; thence parallel to Northeasterly
line of said Parcel A, South 75(degree)08'27" East 500.00 feet to the Southeast
line of said Parcel A, North 14(degree)51'33" East 7.00 feet to the point of
beginning.
APN: 110-32-002
ARB: 110-3-65.02
TRACT 3:
Parcel 1, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-6
ARB: 110-3-x65
TRACT 4:
Parcel 2, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-7
ARB: 110-3-x65
<PAGE> 17
TRACT 5:
Parcel 2, as shown on that certain parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on
October 7, 1998, in Book 708 of Parcel Maps, Pages 51 and 52.
APN: 110-32-12
ARB: 110-03-65.11
<PAGE> 18
EXHIBIT B
REQUIREMENTS RE: FORM OF GRANT DEED
The form of deed to be used to convey BNPLC's interest in the Improvements to
NAI or an Applicable Purchaser will depend upon whether BNPLC's interest in the
Land has been or is being conveyed at the same time to the same party.
If BNPLC's interests in BOTH the Land and the Improvements are to be conveyed to
NAI or an Applicable Purchaser at the same time, because a sale under this
Purchase Agreement and a sale under the Other Purchase Agreement (covering the
Land) are being consummated at the same time and to the same party, then the one
deed in form attached as Exhibit B-1 will be used to convey both.
If, however, BNPLC's interest in the Land pursuant to the Other Purchase
Agreement has not been consummated before, and is not being consummated
contemporaneously with, the sale of BNPLC's interest in the Improvements under
this Agreement, then BNPLC's interest in the Improvements will be conveyed by a
deed in the form attached as Exhibit B-2.
Finally, BNPLC's interest in the Improvements will be conveyed by a deed in the
from attached as Exhibit B-3 if BNPLC's interest in the Land has been sold
pursuant to the Other Purchase Agreement before a sale of BNPLC's interest in
the Improvements under this Agreement, or BNPLC's interest in the Improvements
is being sold contemporaneously with a sale of BNPLC's interest in the Land, but
the purchaser of the Improvements is not the same as the purchaser of the Land.
<PAGE> 19
EXHIBIT B-1
CORPORATION GRANT DEED
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NAME: [NAI or the Applicable Purchaser]
ADDRESS: ____________________________
ATTN: _______________________________
CITY: _______________________________
STATE: ______________________________
Zip: ________________________________
MAIL TAX STATEMENTS TO:
NAME: [NAI or the Applicable Purchaser]
ADDRESS: ____________________________
ATTN: _______________________________
CITY: _______________________________
STATE: ______________________________
Zip: ________________________________
CORPORATION GRANT DEED
(Covering Land and Improvements)
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, BNP
LEASING CORPORATION, a Delaware corporation ("Grantor"), hereby grants to [NAI
or the Applicable Purchaser] ("Grantee") all of Grantor's interest in the land
situated in Sunnyvale, California, described on Annex A attached hereto and
hereby made a part hereof and all improvements on such land, together with the
any other right, title and interest of Grantor in and to any easements,
rights-of-way, privileges and other rights appurtenant to such land or the
improvements thereon; provided, however, that this grant is subject to the
encumbrances described on Annex B (the "Permitted Encumbrances"). Grantee hereby
assumes the obligations (including any personal obligations) of Grantor, if any,
created by or under, and agrees to be bound by the terms and conditions of, the
Permitted Encumbrances to the extent that the same concern or apply to the land
or improvements conveyed by this deed.
<PAGE> 20
BNP LEASING CORPORATION
Date: As of ____________ By: __________________________________
Its:
Attest: ______________________________
Its:
[NAI or Applicable Purchaser]
Date: As of ____________ By: __________________________________
Its:
Attest: ______________________________
Its:
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ______________________ before me, ____________, personally appeared
__________________ and __________________, personally known to me (or proved to
me on the basis of satisfactory evidence) to be the persons whose names are
subscribed to the within instrument and acknowledged to me that they executed
the same in their authorized capacities, and that by their signatures on the
instrument the person, or the entity upon behalf of which the persons acted,
executed the instrument.
WITNESS my hand and official seal.
Signature _____________________________
EXHIBIT B-1 - PAGE 2
<PAGE> 21
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On _____________________ before me, ______________, personally appeared
__________________ and __________________, personally known to me (or proved to
me on the basis of satisfactory evidence) to be the persons whose names are
subscribed to the within instrument and acknowledged to me that they executed
the same in their authorized capacities, and that by their signatures on the
instrument the person, or the entity upon behalf of which the persons acted,
executed the instrument.
WITNESS my hand and official seal.
Signature _____________________________
EXHIBIT B-1 - PAGE 3
<PAGE> 22
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LAND LEASE CHANGES
FROM TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPLC'S CONSENT
OR APPROVAL, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH
CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE"
WILL BE DELETED BEFORE THE DEED TO WHICH THIS DESCRIPTION IS ATTACHED IS
ACTUALLY EXECUTED AND DELIVERED.]
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
TRACT 1:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of a portion of Parcel B, as
shown upon that certain Parcel Map recorded in Book 345 of Maps, at page 20,
Santa Clara County Records", which Map was filed for record in the Office of the
Recorder of the County of Santa Clara, State of California, on November 17,
1976, in Book 383 of Maps, at page 35.
TRACT 2:
Together with an easement for vehicles parking over the following described
property:
A 7-foot strip of land for parking easement purposes over a portion of Parcel A,
as said Parcel A is shown on that certain Parcel Map filed for record on
November 10, 1974 in Book 292 of Maps, at page 41, records of said County, and
being more particularly described as follows:
Commencing at the Northeast corner of said Parcel A; thence North
75(degree)8'27" West 500.00 feet along the Northeasterly line of said Parcel A;
thence South 14(degree)51'33" West 7.00 feet; thence parallel to Northeasterly
line of said Parcel A, South 75(degree)08'27" East 500.00 feet to the Southeast
line of said Parcel A, North 14(degree)51'33" East 7.00 feet to the point of
beginning.
APN: 110-32-002
ARB: 110-3-65.02
TRACT 3:
Parcel 1, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-6
ARB: 110-3-x65
TRACT 4:
Parcel 2, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of
EXHIBIT B-1 - PAGE 4
<PAGE> 23
Santa Clara, State of California on July 7, 1994, in Book 657 of Parcel Maps,
Page 9.
APN: 110-32-7
ARB: 110-3-x65
TRACT 5:
Parcel 2, as shown on that certain parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on
October 7, 1998, in Book 708 of Parcel Maps, Pages 51 and 52.
APN: 110-32-12
ARB: 110-03-65.11
EXHIBIT B-1 - PAGE 5
<PAGE> 24
ANNEX B
PERMITTED ENCUMBRANCES
[DRAFTING NOTE: TO THE EXTENT THAT ENCUMBRANCES (OTHER THAN "LIENS REMOVABLE BY
BNPLC") ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED BELOW, SUCH ADDITIONAL
ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW AND THIS "DRAFTING NOTE" WILL BE
DELETED BEFORE THIS DEED IS ACTUALLY EXECUTED AND DELIVERED BY BNPLC. SUCH
ADDITIONAL ENCUMBRANCES WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPLC AS
"PERMITTED ENCUMBRANCES" UNDER THE LAND LEASE OR THE OTHER LEASE AGREEMENT FROM
TIME TO TIME OR BECAUSE OF NAI'S REQUEST FOR BNPLC'S CONSENT OR APPROVAL TO AN
ADJUSTMENT.]
This conveyance is subject to all encumbrances not constituting a "Lien
Removable by BNPLC" (as defined in the Common Definitions and Provisions
Agreement (Phase IV - Improvements) incorporated by reference into the Lease
Agreement (Phase IV - Improvements) referenced in the last item of the list
below), including the following matters to the extent the same are still valid
and in force:
TRACT 1 and 2:
1. TAXES for the fiscal year 1999-2000, 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. LIMITATIONS, covenants, conditions, 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 December 23, 1971 in Book 9640, page 443, Official
Records.
Assignments and Assumption, executed by Moffett Park Associates, a
partnership to Prudential Insurance Company of America, recorded February
8, 1977 in Book C583, page 685, Official Records.
4. AGREEMENT on the terms and conditions contained therein,
For : Waiver of Construction Credits
Between : Moffett Park Associates
And : None Shown
Recorded : September 28, 1976 in Book C307, page 346, Official Records.
5. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Construction, reconstruction, operation, repair,
maintenance, replacement, relocation and enlargement of
Public Utilities
Granted to : The City of Sunnyvale, a municipal corporation
Recorded : November 16, 1976 in Book C414, page 105, Official
Records
Affects : as follows:
Being a portion of Parcel B as shown on that certain Parcel Map recorded
August 28, 1974 in Book of Maps, at page 20, Santa Clara County Records; a
strip of land 10 feet in width, measured at right angles lying Northerly
and Easterly of and contiguous to the following described line; beginning
at the
EXHIBIT B-1 - PAGE 6
<PAGE> 25
intersection of the Westerly line of Crossman Road, 90 feet in width, with
the Northerly line of Parcel A as shown on said Map; thence North
75(degree) 7' 58" West along said Northerly line of Parcel A 450.13 feet;
thence leaving said Northerly line, North 30(degree) 7' 48" West 210.69
feet; thence North 75(degree) 8' 27" West 391.04 feet to a point on the
Easterly line of the proposed Geneva Drive, 60 feet wide, said point being
the terminus of said easement.
6. ANY RIGHTS, interests, or claims adverse to those of the vestee herein
which may exist or arise by reason of the following facts 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.
TRACT 3:
1. TAXES for the fiscal year 1999-2000, 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.
EXHIBIT B-1 - PAGE 7
<PAGE> 26
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.
8. ANY RIGHTS, interests, or claims adverse to those of the vestee herein
which may exist or arise by reason of the following facts 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.
(a) The fact that a chain link fence extends across the southerly
boundary of said land.
TRACT 4:
9. TAXES for the fiscal year 1999-2000, a lien not yet due or payable.
10. 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.
11. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Slope Easement
In favor of : City of Sunnyvale
Recorded : November 16, 1976 in Book C414, page 90, Official
Records
Affects : Westerly 5 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.
12. EASEMENT recorded on that certain Map for the purposes stated herein and
incidents thereto
Purpose : Public utilities easement
Recorded : July 7, 1994 in Book 657 of Maps, page 9, Official
Records
Affects : Westerly 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.
13. 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.
EXHIBIT B-1 - PAGE 8
<PAGE> 27
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.
14. 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.
TRACT 5:
15. TAXES for the fiscal year 1999-2000, a lien not yet due or payable.
16. 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.
17. 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 : The Northeasterly and 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.
18. 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 : The Northeasterly and 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.
19. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Sidewalk and sign easement
Recorded : July 7, 1994, in Book 657 Maps, page 9, Official
Records
Affects : The Northerly 2 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.
20. 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-1 - PAGE 9
<PAGE> 28
21. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public utilities easement
Recorded : October 7, 1998, in Book 708 of Maps, pages 51-52,
Official Records
Affects : The Northerly 15 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.
EXHIBIT B-1 - PAGE 10
<PAGE> 29
EXHIBIT B-2
CORPORATION GRANT DEED
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NAME: [NAI or the Applicable Purchaser]
ADDRESS: ____________________________
ATTN: _______________________________
CITY: _______________________________
STATE: ______________________________
Zip: ________________________________
MAIL TAX STATEMENTS TO:
NAME: [NAI or the Applicable Purchaser]
ADDRESS: ____________________________
ATTN: _______________________________
CITY: _______________________________
STATE: ______________________________
Zip: ________________________________
CORPORATION GRANT DEED
(Covering Improvements but not the Land under the Improvements)
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, BNP
LEASING CORPORATION, a Delaware corporation ("Grantor"), hereby grants to [NAI
or the Applicable Purchaser] ("Grantee") all of Grantor's interest in the
buildings and other improvements (the "Improvements") on the land situated in
Sunnyvale, California, described on Annex A attached hereto and hereby made a
part hereof (the "Land"), together with the any other right, title and interest
of Grantor in and to any easements, rights-of-way, privileges and other rights
appurtenant to the Improvements; provided, however, that this grant is subject
to the encumbrances described on Annex B (the "Permitted Encumbrances") and any
reservations or qualifications set forth below. Grantee hereby assumes the
obligations (including any personal obligations) of Grantor, if any, created by
or under, and agrees to be bound by the terms and conditions of, the Permitted
Encumbrances to the extent that the same concern or apply to the Improvements.
Although this deed conveys Grantor's interest in the Improvements, this deed
does not convey any interest in the Land under the Improvements or any rights or
easements appurtenant to Land. Grantor retains and reserves all right, title and
interest of Grantor in and to the Land and any rights and easements appurtenant
to Land. Further, this deed does not convey any right of access over or right to
use the Land, it being understood that the right of Grantee or its successors
and assigns to maintain or use the improvements conveyed hereby shall be on and
subject to the terms and conditions of any separate ground lease or deed that
Grantee may from time to time obtain from the owner of the Land. If Grantee does
not obtain a separate deed or ground lease giving Grantee the authority to
maintain the Improvements on the Land, Grantee shall remove or abandon the
Improvements promptly upon request of the owner of the Land. Nothing herein or
in the agreements pursuant to which this deed is being delivered shall be
construed as an obligation on the part of Grantor to deliver or cooperate
reasonably in obtaining for Grantee any deed or ground lease covering the Land
described on Annex A.
<PAGE> 30
BNP LEASING CORPORATION
Date: As of ____________ By: ___________________________________
Its:
Attest: _______________________________
Its:
[NAI or Applicable Purchaser]
Date: As of ____________ By: ___________________________________
Its:
Attest: _______________________________
Its:
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On _____________________ before me, _____________, personally appeared
____________ and ____________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the persons whose names are subscribed to
the within instrument and acknowledged to me that they executed the same in
their authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
Signature __________________________
EXHIBIT B-2 - PAGE 2
<PAGE> 31
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, _______________, personally appeared
____________ and ____________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the persons whose names are subscribed to
the within instrument and acknowledged to me that they executed the same in
their authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
Signature __________________________
EXHIBIT B-2 - PAGE 3
<PAGE> 32
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LAND LEASE CHANGES
FROM TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPLC'S CONSENT
OR APPROVAL, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH
CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE"
WILL BE DELETED BEFORE THE DEED TO WHICH THIS DESCRIPTION IS ATTACHED IS
ACTUALLY EXECUTED AND DELIVERED.]
Legal Description
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
TRACT 1:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of a portion of Parcel B, as
shown upon that certain Parcel Map recorded in Book 345 of Maps, at page 20,
Santa Clara County Records", which Map was filed for record in the Office of the
Recorder of the County of Santa Clara, State of California, on November 17,
1976, in Book 383 of Maps, at page 35.
TRACT 2:
Together with an easement for vehicles parking over the following described
property:
A 7-foot strip of land for parking easement purposes over a portion of Parcel A,
as said Parcel A is shown on that certain Parcel Map filed for record on
November 10, 1974 in Book 292 of Maps, at page 41, records of said County, and
being more particularly described as follows:
Commencing at the Northeast corner of said Parcel A; thence North
75(degree)8'27" West 500.00 feet along the Northeasterly line of said Parcel A;
thence South 14(degree)51'33" West 7.00 feet; thence parallel to Northeasterly
line of said Parcel A, South 75(degree)08'27" East 500.00 feet to the Southeast
line of said Parcel A, North 14(degree)51'33" East 7.00 feet to the point of
beginning.
APN: 110-32-002
ARB: 110-3-65.02
TRACT 3:
Parcel 1, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-6
ARB: 110-3-x65
TRACT 4:
EXHIBIT B-2 - PAGE 4
<PAGE> 33
Parcel 2, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-7
ARB: 110-3-x65
TRACT 5:
Parcel 2, as shown on that certain parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on
October 7, 1998, in Book 708 of Parcel Maps, Pages 51 and 52.
APN: 110-32-12
ARB: 110-03-65.11
EXHIBIT B-2 - PAGE 5
<PAGE> 34
ANNEX B
PERMITTED ENCUMBRANCES
[DRAFTING NOTE: TO THE EXTENT THAT ENCUMBRANCES (OTHER THAN "LIENS REMOVABLE BY
BNPLC") ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED BELOW, SUCH ADDITIONAL
ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW AND THIS "DRAFTING NOTE" WILL BE
DELETED BEFORE THIS DEED IS ACTUALLY EXECUTED AND DELIVERED BY BNPLC. SUCH
ADDITIONAL ENCUMBRANCES WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPLC AS
"PERMITTED ENCUMBRANCES" UNDER THE LAND LEASE OR THE OTHER LEASE AGREEMENT FROM
TIME TO TIME OR BECAUSE OF NAI'S REQUEST FOR BNPLC'S CONSENT OR APPROVAL TO AN
ADJUSTMENT.]
This conveyance is subject to all encumbrances not constituting a "Lien
Removable by BNPLC" (as defined in the Common Definitions and Provisions
Agreement (Phase IV - Improvements) incorporated by reference into the Lease
Agreement (Phase IV - Improvements referenced in the last item of the list
below), including the following matters to the extent the same are still valid
and in force:
TRACT 1 and 2:
1. TAXES for the fiscal year 1999-2000, 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. LIMITATIONS, covenants, conditions, 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 December 23, 1971 in Book 9640, page 443, Official
Records.
Assignments and Assumption, executed by Moffett Park Associates, a
partnership to Prudential Insurance Company of America, recorded February
8, 1977 in Book C583, page 685, Official Records.
4. AGREEMENT on the terms and conditions contained therein,
For : Waiver of Construction Credits
Between : Moffett Park Associates
And : None Shown
Recorded : September 28, 1976 in Book C307, page 346, Official Records.
5. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Construction, reconstruction, operation, repair, maintenance,
replacement, relocation and enlargement of Public Utilities
Granted to : The City of Sunnyvale, a municipal corporation
Recorded : November 16, 1976 in Book C414, page 105, Official Records
Affects : as follows:
Being a portion of Parcel B as shown on that certain Parcel Map recorded
August 28, 1974 in Book of Maps, at page 20, Santa Clara County Records; a
strip of land 10 feet in width, measured at right angles lying Northerly
and Easterly of and contiguous to the following described line; beginning
at the
EXHIBIT B-2 - PAGE 6
<PAGE> 35
intersection of the Westerly line of Crossman Road, 90 feet in width, with
the Northerly line of Parcel A as shown on said Map; thence North
75(degree) 7' 58" West along said Northerly line of Parcel A 450.13 feet;
thence leaving said Northerly line, North 30(degree) 7' 48" West 210.69
feet; thence North 75(degree) 8' 27" West 391.04 feet to a point on the
Easterly line of the proposed Geneva Drive, 60 feet wide, said point being
the terminus of said easement.
6. ANY RIGHTS, interests, or claims adverse to those of the vestee herein
which may exist or arise by reason of the following facts 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.
TRACT 3:
22. TAXES for the fiscal year 1999-2000, a lien not yet due or payable.
23. 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.
24. 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.
25. 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.
26. 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.
EXHIBIT B-2 - PAGE 7
<PAGE> 36
27. 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.
28. 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.
29. ANY RIGHTS, interests, or claims adverse to those of the vestee herein
which may exist or arise by reason of the following facts 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.
(a) The fact that a chain link fence extends across the
southerly boundary of said land.
TRACT 4:
30. TAXES for the fiscal year 1999-2000, a lien not yet due or payable.
31. 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.
32. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Slope Easement
In favor of : City of Sunnyvale
Recorded : November 16, 1976 in Book C414, page 90, Official
Records
Affects : Westerly 5 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.
33. EASEMENT recorded on that certain Map for the purposes stated herein and
incidents thereto
Purpose : Public utilities easement
Recorded : July 7, 1994 in Book 657 of Maps, page 9, Official
Records
Affects : Westerly 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.
34. 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.
EXHIBIT B-2 - PAGE 8
<PAGE> 37
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.
35. 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.
TRACT 5:
36. TAXES for the fiscal year 1999-2000, a lien not yet due or payable.
37. 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.
38. 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 : The Northeasterly and 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.
39. 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 : The Northeasterly and Easterly 7 feet, as shown on a
survey plat entitled ALTA/ACSM Land Title Survey for:
Network Appliance, 1345 Avenue, dated December 2, 1999,
prepared by Kier & Wright, Job No. 97208-16.
40. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Sidewalk and sign easement
Recorded : July 7, 1994, in Book 657 of Maps, page 9, Official
Records
Affects : The Northerly 2 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.
41. 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-2 - PAGE 9
<PAGE> 38
42. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public utilities easement
Recorded : October 7, 1998, in Book 708 of Maps, pages 51-52,
Official Records
Affects : The Northerly 15 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.
EXHIBIT B-2 - PAGE 10
<PAGE> 39
EXHIBIT B-3
CORPORATION GRANT DEED
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NAME: [NAI or the Applicable Purchaser]
ADDRESS: ____________________________
ATTN: _______________________________
CITY: _______________________________
STATE: ______________________________
Zip: ________________________________
MAIL TAX STATEMENTS TO:
NAME: [NAI or the Applicable Purchaser]
ADDRESS: ____________________________
ATTN: _______________________________
CITY: _______________________________
STATE: ______________________________
Zip: ________________________________
CORPORATION GRANT DEED
(Covering Improvements but not Land under the Improvements)
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, BNP
LEASING CORPORATION, a Delaware corporation ("Grantor"), hereby grants to [NAI
or the Applicable Purchaser] ("Grantee") all of Grantor's interest in the
buildings and other improvements (the "Improvements") on the land situated in
Sunnyvale, California, described on Annex A attached hereto and hereby made a
part hereof (the "Land"), together with the any other right, title and interest
of Grantor in and to any easements, rights-of-way, privileges and other rights
appurtenant to the Improvements; provided, however, that this grant is subject
to the encumbrances described on Annex B (the "Permitted Encumbrances") and any
reservations or qualifications set forth below. Grantee hereby assumes the
obligations (including any personal obligations) of Grantor, if any, created by
or under, and agrees to be bound by the terms and conditions of, the Permitted
Encumbrances to the extent that the same concern or apply to the Improvements.
Although this deed conveys Grantor's interest in the Improvements on the Land,
this deed does not convey any interest in the Land itself or any rights or
easements appurtenant to Land. Prior to or contemporaneously with the delivery
of this deed, Grantor has conveyed or is conveying the Land and appurtenant
rights and easements to another party, subject to the terms and conditions of a
Ground Lease dated ________, filed or to be filed for record in the Santa Clara
County records. Grantor is assigning it's rights as lessee under the Ground
Lease to Grantee by a separate instrument dated of even date herewith.
<PAGE> 40
BNP LEASING CORPORATION
Date: As of ____________ By: ___________________________________
Its:
Attest: _______________________________
Its:
[NAI or Applicable Purchaser]
Date: As of ____________ By: ___________________________________
Its:
Attest: _______________________________
Its:
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, _______________, personally appeared
____________ and _____________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the persons whose names are subscribed to
the within instrument and acknowledged to me that they executed the same in
their authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
Signature ___________________________
EXHIBIT B-3 - PAGE 2
<PAGE> 41
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, _______________, personally appeared
____________ and ____________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the persons whose names are subscribed to
the within instrument and acknowledged to me that they executed the same in
their authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
Signature ___________________________
EXHIBIT B-3 - PAGE 3
<PAGE> 42
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LAND LEASE CHANGES
FROM TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPLC'S CONSENT
OR APPROVAL, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH
CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE"
WILL BE DELETED BEFORE THE DEED TO WHICH THIS DESCRIPTION IS ATTACHED IS
ACTUALLY EXECUTED AND DELIVERED.]
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
TRACT 1:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of a portion of Parcel B, as
shown upon that certain Parcel Map recorded in Book 345 of Maps, at page 20,
Santa Clara County Records", which Map was filed for record in the Office of the
Recorder of the County of Santa Clara, State of California, on November 17,
1976, in Book 383 of Maps, at page 35.
TRACT 2:
Together with an easement for vehicles parking over the following described
property:
A 7-foot strip of land for parking easement purposes over a portion of Parcel A,
as said Parcel A is shown on that certain Parcel Map filed for record on
November 10, 1974 in Book 292 of Maps, at page 41, records of said County, and
being more particularly described as follows:
Commencing at the Northeast corner of said Parcel A; thence North
75[degrees]8'27" West 500.00 feet along the Northeasterly line of said Parcel A;
thence South 14[degrees]51'33" West 7.00 feet; thence parallel to Northeasterly
line of said Parcel A, South 75[degrees]08'27" East 500.00 feet to the Southeast
line of said Parcel A, North 14[degrees]51'33" East 7.00 feet to the point of
beginning.
APN: 110-32-002
ARB: 110-3-65.02
TRACT 3:
Parcel 1, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-6
ARB: 110-3-x65
TRACT 4:
Parcel 2, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
EXHIBIT B-3 - PAGE 4
<PAGE> 43
APN: 110-32-7
ARB: 110-3-x65
TRACT 5:
Parcel 2, as shown on that certain parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on
October 7, 1998, in Book 708 of Parcel Maps, Pages 51 and 52.
APN: 110-32-12
ARB: 110-03-65.11
EXHIBIT B-3 - PAGE 5
<PAGE> 44
ANNEX B
PERMITTED ENCUMBRANCES
[DRAFTING NOTE: TO THE EXTENT THAT ENCUMBRANCES (OTHER THAN "LIENS REMOVABLE BY
BNPLC") ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED BELOW, SUCH ADDITIONAL
ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW AND THIS "DRAFTING NOTE" WILL BE
DELETED BEFORE THIS DEED IS ACTUALLY EXECUTED AND DELIVERED BY BNPLC. SUCH
ADDITIONAL ENCUMBRANCES WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPLC AS
"PERMITTED ENCUMBRANCES" UNDER THE LAND LEASE OR THE OTHER LEASE AGREEMENT FROM
TIME TO TIME OR BECAUSE OF NAI'S REQUEST FOR BNPLC'S CONSENT OR APPROVAL TO AN
ADJUSTMENT.]
This conveyance is subject to all encumbrances not constituting a "Lien
Removable by BNPLC" (as defined in the Common Definitions and Provisions
Agreement (Phase IV - Improvements) incorporated by reference into the Lease
Agreement (Phase IV - Improvements) referenced in the last item of the list
below]), including the following matters to the extent the same are still valid
and in force:
TRACT 1 and 2:
1. TAXES for the fiscal year 1999-2000, 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. LIMITATIONS, covenants, conditions, 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 December 23, 1971 in Book 9640, page 443, Official
Records.
Assignments and Assumption, executed by Moffett Park Associates, a
partnership to Prudential Insurance Company of America, recorded February
8, 1977 in Book C583, page 685, Official Records.
4. AGREEMENT on the terms and conditions contained therein,
For : Waiver of Construction Credits
Between : Moffett Park Associates
And : None Shown
Recorded : September 28, 1976 in Book C307, page 346, Official Records.
5. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Construction, reconstruction, operation, repair, maintenance,
replacement, relocation and enlargement of Public Utilities
Granted to : The City of Sunnyvale, a municipal corporation
Recorded : November 16, 1976 in Book C414, page 105, Official Records
Affects : as follows:
Being a portion of Parcel B as shown on that certain Parcel Map recorded
August 28, 1974 in Book of Maps, at page 20, Santa Clara County Records; a
strip of land 10 feet in width, measured at right angles lying Northerly
and Easterly of and contiguous to the following described line; beginning
at the
EXHIBIT B-3 - PAGE 6
<PAGE> 45
intersection of the Westerly line of Crossman Road, 90 feet in width, with
the Northerly line of Parcel A as shown on said Map; thence North
75[degrees]7'58" West along said Northerly line of Parcel A 450.13 feet;
thence leaving said Northerly line, North 30[degrees]7'48" West 210.69
feet; thence North 75[degrees]8'27" West 391.04 feet to a point on the
Easterly line of the proposed Geneva Drive, 60 feet wide, said point being
the terminus of said easement.
6. ANY RIGHTS, interests, or claims adverse to those of the vestee herein
which may exist or arise by reason of the following facts 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.
TRACT 3:
43. TAXES for the fiscal year 1999-2000, a lien not yet due or payable.
44. 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.
45. 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.
46. 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.
47. 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.
EXHIBIT B-3 - PAGE 7
<PAGE> 46
48. 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.
49. 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.
50. ANY RIGHTS, interests, or claims adverse to those of the vestee herein
which may exist or arise by reason of the following facts 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.
(a) The fact that a chain link fence extends across the
southerly boundary of said land.
TRACT 4:
51. TAXES for the fiscal year 1999-2000, a lien not yet due or payable.
52. 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.
53. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Slope Easement
In favor of : City of Sunnyvale
Recorded : November 16, 1976 in Book C414, page 90, Official
Records
Affects : Westerly 5 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.
54. EASEMENT recorded on that certain Map for the purposes stated herein and
incidents thereto
Purpose : Public utilities easement
Recorded : July 7, 1994 in Book 657 of Maps, page 9, Official
Records
Affects : Westerly 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.
55. 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.
EXHIBIT B-3 - PAGE 8
<PAGE> 47
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.
56. 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.
TRACT 5:
57. TAXES for the fiscal year 1999-2000, a lien not yet due or payable.
58. 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.
59. 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 : The Northeasterly and 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.
60. 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 : The Northeasterly and 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.
61. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Sidewalk and sign easement
Recorded : July 7, 1994, in Book 657 of Maps, page 9, Official
Records
Affects : The Northerly 2 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.
62. 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-3 - PAGE 9
<PAGE> 48
63. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public utilities easement
Recorded : October 7, 1998, in Book 708 of Maps, pages 51-52,
Official Records
Affects : The Northerly 15 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.
EXHIBIT B-3 - PAGE 10
<PAGE> 49
EXHIBIT C
BILL OF SALE AND ASSIGNMENT
Reference is made to: (1) that certain Purchase Agreement (Phase IV -
Improvements) between BNP Leasing Corporation ("ASSIGNOR") and Network
Appliance, Inc., dated as of December ___, 1999, (the "PURCHASE AGREEMENT") and
(2) that certain Lease Agreement (Phase IV - Improvements) between Assignor, as
landlord, and Network Appliance, Inc., as tenant, dated as of December ___, 1999
(the "IMPROVEMENTS LEASE"). (Capitalized terms used and not otherwise defined in
this document are intended to have the meanings assigned to them in the Common
Definitions and Provisions Agreement (Phase IV - Improvements) incorporated by
reference into both the Purchase Agreement and Improvements Lease.)
As contemplated by the Purchase Agreement, Assignor hereby sells,
transfers and assigns unto [NAI OR THE APPLICABLE PURCHASER, AS THE CASE MAY
BE], a _____________ ("ASSIGNEE"), all of Assignor's right, title and interest
in and to the following property, if any, to the extent such property is
assignable:
(a) the Improvements Lease [DRAFTING NOTE: THE FOLLOWING WILL BE ADDED
ONLY IF APPLICABLE BECAUSE OF THE SIMULTANEOUS DELIVERY OF A GRANT DEED IN THE
FORM OF EXHIBIT B-3: and the Ground Lease dated _________, between _________, as
lessor, and Assignor, as lessee, filed for record on in ___________ of Santa
Clara County records (the "GROUND LEASE")];
(b) any pending or future award made because of any condemnation
affecting the Property or because of any conveyance to be made in lieu thereof,
and any unpaid award for damage to the Property and any unpaid proceeds of
insurance or claim or cause of action for damage, loss or injury to the
Property; and
(c) all other property included within the definition of "Property" as
set forth in the Purchase Agreement, including but not limited to any of the
following transferred to Assignor by the tenant pursuant to Paragraph 7 of the
Improvements Lease or otherwise acquired by Assignor, at the time of the
execution and delivery of the Improvements Lease and Purchase Agreement or
thereafter, by reason of Assignor's status as the owner of any interest in the
Property: (1) any goods, equipment, furnishings, furniture, chattels and
tangible personal property of whatever nature that are located on the Property
and all renewals or replacements of or substitutions for any of the foregoing;
(ii) the rights of Assignor, existing at the time of the execution of the
Improvements Lease and Purchase Agreement or thereafter arising, under Permitted
Encumbrances or Development Documents (both as defined in the Improvements
Lease); and (iii) any other permits, licenses, franchises, certificates, and
other rights and privileges related to the Property that Assignee would have
acquired if Assignee had itself acquired the Improvements covered by the
Improvements Lease and constructed the Improvements included in the Property.
Provided, however, excluded from this conveyance and reserved to Assignor are
any rights or privileges of Assignor under the following ("EXCLUDED RIGHTS"):
(1) the indemnities set forth in the Improvements Lease, whether such rights are
presently known or unknown, including rights of the Assignor to be indemnified
against environmental claims of third parties as provided in the Improvements
Lease which may not presently be known, (2) provisions in the Improvements Lease
that establish the right of Assignor to recover any accrued unpaid rent under
the Improvements Lease which may be outstanding as of the date hereof, (3)
agreements between Assignor and "BNPLC's Parent" or any "Participant," both as
defined in the Improvements Lease, or any modification or extension thereof, or
(4) any other instrument being delivered to Assignor contemporaneously herewith
pursuant to the Purchase Agreement. To the extent that this conveyance does
include any rights to receive future payments
<PAGE> 50
under the Improvements Lease, such rights ("INCLUDED RIGHTS") shall be
subordinate to Assignor's Excluded Rights, and Assignee hereby waives any rights
to enforce Included Rights until such time as Assignor has received all payments
to which it remains entitled by reason of Excluded Rights. If any amount shall
be paid to Assignee on account of any Included Rights at any time before
Assignor has received all payments to which it is entitled because of Excluded
Rights, such amount shall be held in trust by Assignee for the benefit of
Assignor, shall be segregated from the other funds of Assignee and shall
forthwith be paid over to Assignor to be held by Assignor as collateral for, or
then or at any time thereafter applied in whole or in part by Assignor against,
the payments due to Assignor because of Excluded Rights, whether matured or
unmatured, in such order as Assignor shall elect.
Assignor does for itself and its successors covenant and agree to
warrant and defend the title to the property assigned herein against the just
and lawful claims and demands of any person claiming under or through a Lien
Removable by BNPLC, but not otherwise.
Assignee hereby assumes and agrees to keep, perform and fulfill
Assignor's obligations, if any, relating to any permits or contracts, under
which Assignor has rights being assigned herein.
IN WITNESS WHEREOF, the parties have executed this instrument as of
_______________, _____.
ASSIGNOR:
BNP LEASING CORPORATION a Delaware
corporation
By: __________________________________
Its: _________________________________
ASSIGNEE:
[NAI or the Applicable Purchaser], a
______________________________________
By: __________________________________
Its: _________________________________
EXHIBIT C - PAGE 2
<PAGE> 51
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, _______________, personally appeared
____________ and ____________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the persons whose names are subscribed to
the within instrument and acknowledged to me that they executed the same in
their authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
Signature ______________________________
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, _______________, personally appeared
____________ and ____________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the persons whose names are subscribed to
the within instrument and acknowledged to me that they executed the same in
their authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
Signature ____________________________
EXHIBIT C - PAGE 3
<PAGE> 52
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE OTHER LEASE CHANGES
FROM TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPLC'S CONSENT
OR APPROVAL, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH
CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE"
WILL BE DELETED BEFORE THE DOCUMENT TO WHICH THIS DESCRIPTION IS ATTACHED IS
ACTUALLY EXECUTED AND DELIVERED.]
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
TRACT 1:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of a portion of Parcel B, as
shown upon that certain Parcel Map recorded in Book 345 of Maps, at page 20,
Santa Clara County Records", which Map was filed for record in the Office of the
Recorder of the County of Santa Clara, State of California, on November 17,
1976, in Book 383 of Maps, at page 35.
TRACT 2:
Together with an easement for vehicles parking over the following described
property:
A 7-foot strip of land for parking easement purposes over a portion of Parcel A,
as said Parcel A is shown on that certain Parcel Map filed for record on
November 10, 1974 in Book 292 of Maps, at page 41, records of said County, and
being more particularly described as follows:
Commencing at the Northeast corner of said Parcel A; thence North
75[degrees]8'27" West 500.00 feet along the Northeasterly line of said Parcel A;
thence South 14[degrees]51'33" West 7.00 feet; thence parallel to Northeasterly
line of said Parcel A, South 75[degrees]08'27" East 500.00 feet to the Southeast
line of said Parcel A, North 14[degrees]51'33" East 7.00 feet to the point of
beginning.
APN: 110-32-002
ARB: 110-3-65.02
TRACT 3:
Parcel 1, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-6
ARB: 110-3-x65
EXHIBIT C - PAGE 4
<PAGE> 53
TRACT 4:
Parcel 2, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-7
ARB: 110-3-x65
TRACT 5:
Parcel 2, as shown on that certain parcel Map which filed for record in the
office of the recorder of the County of Santa Clara, State of California on
October 7, 1998, in Book 708 of Parcel Maps, Pages 51 and 52.
APN: 110-32-12
ARB: 110-03-65.11
EXHIBIT C - PAGE 5
<PAGE> 54
EXHIBIT D
ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
THIS ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
(this "CERTIFICATE") is made as of ___________________, ____, by [NAI or the
Applicable Purchaser, as the case may be], a ___________________ ("GRANTEE").
Contemporaneously with the execution of this Certificate, BNP Leasing
Corporation, a Delaware corporation ("BNPLC"), is executing and delivering to
Grantee (1) a corporate grant deed and (2) a Bill of Sale and Assignment (the
foregoing documents and any other documents to be executed in connection
therewith are herein called the "CONVEYANCING DOCUMENTS" and any of the
properties, rights or other matters assigned, transferred or conveyed pursuant
thereto are herein collectively called the "SUBJECT PROPERTY").
NOTWITHSTANDING ANY PROVISION CONTAINED IN THE CONVEYANCING DOCUMENTS
TO THE CONTRARY, GRANTEE ACKNOWLEDGES THAT BNPLC MAKES NO REPRESENTATIONS OR
WARRANTIES OF ANY NATURE OR KIND, WHETHER STATUTORY, EXPRESS OR IMPLIED, WITH
RESPECT TO ENVIRONMENTAL MATTERS OR THE PHYSICAL CONDITION OF THE SUBJECT
PROPERTY, AND GRANTEE, BY ACCEPTANCE OF THE CONVEYANCING DOCUMENTS, ACCEPTS THE
SUBJECT PROPERTY "AS IS," "WHERE IS," "WITH ALL FAULTS" AND WITHOUT ANY SUCH
REPRESENTATION OR WARRANTY BY GRANTOR AS TO ENVIRONMENTAL MATTERS, THE PHYSICAL
CONDITION OF THE SUBJECT PROPERTY, COMPLIANCE WITH SUBDIVISION OR PLATTING
REQUIREMENTS OR CONSTRUCTION OF ANY IMPROVEMENTS. Without limiting the
generality of the foregoing, Grantee hereby further acknowledges and agrees that
warranties of merchantability and fitness for a particular purpose are excluded
from the transaction contemplated by the Conveyancing Documents, as are any
warranties arising from a course of dealing or usage of trade. Grantee hereby
assumes all risk and liability (and agrees that BNPLC shall not be liable for
any special, direct, indirect, consequential, or other damages) resulting or
arising from or relating to the ownership, use, condition, location,
maintenance, repair, or operation of the Subject Property, except for damages
proximately caused by (and attributed by any applicable principles of
comparative fault to) the Established Misconduct of BNPLC. As used in the
preceding sentence, "ESTABLISHED MISCONDUCT" is intended to have, and be limited
to, the meaning given to it in the Common Definitions and Provisions Agreement
(Phase IV - Improvements) incorporated by reference into the Purchase Agreement
(Phase IV- Improvements) between BNPLC and Network Appliance, Inc. dated
December ___, 1999, pursuant to which Purchase Agreement BNPLC is delivering the
Conveyancing Documents.
The provisions of this Certificate shall be binding on Grantee, its
successors and assigns and any other party claiming through Grantee. Grantee
hereby acknowledges that BNPLC is entitled to rely and is relying on this
Certificate.
EXECUTED as of ________________, ____.
[NAI or the Applicable Purchaser]
By: ___________________________________
Name: _________________________________
Title: ________________________________
<PAGE> 55
EXHIBIT E
SECRETARY'S CERTIFICATE
The undersigned, [Secretary or Assistant Secretary] of BNP Leasing
Corporation, a Delaware corporation (the "Corporation"), hereby certifies as
follows:
1. That he is the duly, elected, qualified and acting Secretary [or
Assistant Secretary] of the Corporation and has custody of the corporate
records, minutes and corporate seal.
2. That the following named persons have been properly designated,
elected and assigned to the office in the Corporation as indicated below; that
such persons hold such office at this time and that the specimen signature
appearing beside the name of such officer is his or her true and correct
signature.
[THE FOLLOWING BLANKS MUST BE COMPLETED WITH THE NAMES AND SIGNATURES OF THE
OFFICERS WHO WILL BE SIGNING THE DEED AND OTHER SALE CLOSING DOCUMENTS ON BEHALF
OF THE CORPORATION.]
Name Title Signature
___________________ __________________ _______________________
___________________ __________________ _______________________
3. That the resolutions attached hereto and made a part hereof were
duly adopted by the Board of Directors of the Corporation in accordance with the
Corporation's Articles of Incorporation and Bylaws. Such resolutions have not
been amended, modified or rescinded and remain in full force and effect.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal
of the Corporation on this ___ day of _________, ____.
______________________________________
[signature and title]
<PAGE> 56
CORPORATE RESOLUTIONS OF
BNP LEASING CORPORATION
WHEREAS, pursuant to that certain Purchase Agreement (Phase IV -
Improvements) (herein called the "Purchase Agreement") dated as of December ___,
1999, by and between BNP Leasing Corporation (the "Corporation") and [NAI OR THE
APPLICABLE PURCHASER AS THE CASE MAY BE] ("Purchaser"), the Corporation agreed
to sell and Purchaser agreed to purchase or cause the Applicable Purchaser (as
defined in the Purchase Agreement) to purchase the Corporation's interest in the
property (the "Property") located in Sunnyvale, California more particularly
described therein.
NOW THEREFORE, BE IT RESOLVED, that the Board of Directors of the
Corporation, in its best business judgment, deems it in the best interest of the
Corporation and its shareholders that the Corporation convey the Property to
Purchaser or the Applicable Purchaser pursuant to and in accordance with the
terms of the Purchase Agreement.
RESOLVED FURTHER, that the proper officers of the Corporation, and each
of them, are hereby authorized and directed in the name and on behalf of the
Corporation to cause the Corporation to fulfill its obligations under the
Purchase Agreement.
RESOLVED FURTHER, that the proper officers of the Corporation, and each
of them, are hereby authorized and directed to take or cause to be taken any and
all actions and to prepare or cause to be prepared and to execute and deliver
any and all deeds and other documents, instruments and agreements that shall be
necessary, advisable or appropriate, in such officer's sole and absolute
discretion, to carry out the intent and to accomplish the purposes of the
foregoing resolutions.
Exhibit E - Page 2
<PAGE> 57
EXHIBIT F
FIRPTA STATEMENT
Section 1445 of the Internal Revenue Code of 1986, as amended, provides
that a transferee of a U.S. real property interest must withhold tax if the
transferor is a foreign person. Sections 18805, 18815 and 26131 of the
California Revenue and Taxation Code, as amended, provide that a transferee of a
California real property interest must withhold income tax if the transferor is
a nonresident seller.
To inform [NAI OR THE APPLICABLE PURCHASER] (the "Transferee") that
withholding of tax is not required upon the disposition of a California real
property interest by transferor, BNP Leasing Corporation (the "Seller"), the
undersigned hereby certifies the following on behalf of the Seller:
1. The Seller is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the Internal
Revenue Code and Income Tax Regulations);
2. The United States employer identification number for the Seller is
_____________________;
3.The office address of the Seller is ______________
_________________________ _________________.
4. The Seller is qualified to do business in California.
The Seller understands that this certification may be disclosed to the
Internal Revenue Service and/or to the California Franchise Tax Board by the
Transferee and that any false statement contained herein could be punished by
fine, imprisonment, or both.
The Seller understands that the Transferee is relying on this affidavit
in determining whether withholding is required upon said transfer.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign this document on
behalf of the Seller.
Dated: ___________, ____.
By: ___________________________________
Name: _________________________________
Title: ________________________________
<PAGE> 1
================================================================================
PLEDGE AGREEMENT
(PHASE IV - LAND)
AMONG
BNP LEASING CORPORATION
("BNPLC")
BANQUE NATIONALE DE PARIS, AS AGENT
("AGENT")
NETWORK APPLIANCE, INC.
("NAI")
AND
PARTICIPANTS AS DESCRIBED HEREIN
DECEMBER ___, 1999
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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Page
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ARTICLE I DEFINITIONS AND INTERPRETATION...................................................1
Section 1.1 Capitalized Terms Used But Not Defined in This Agreement.................1
Section 1.2 Definitions.............................................................1
Account ......................................................................1
Account Office................................................................2
Agent ........................................................................2
BNPLC ........................................................................2
BNPLC's Corresponding Obligations to Participants.............................2
Cash Collateral...............................................................2
Certificate of Deposit........................................................2
Collateral....................................................................2
Collateral Imbalance..........................................................2
Collateral Percentage.........................................................2
Default ......................................................................2
Deposit Taker.................................................................3
Deposit Taker Losses..........................................................3
Deposit Taker's Acknowledgment and Agreement..................................3
Disqualified Deposit Taker....................................................3
Event of Default..............................................................3
Failed Collateral Test Date...................................................4
Initially Qualified Deposit Taker.............................................4
Lien .........................................................................4
Material Lease Default........................................................5
Mandatory Collateral Period...................................................5
Minimum Collateral Value......................................................5
NAI ..........................................................................5
NAI's Purchase Agreement Obligations..........................................5
Notice of Security Interest...................................................5
Other Liable Party............................................................5
Participants..................................................................5
Participation Agreement.......................................................5
Percentage....................................................................6
Qualified Pledge..............................................................6
Secured Obligations...........................................................6
Supplement....................................................................6
Transaction Documents.........................................................6
Value ........................................................................6
Section 1.3 Attachments.............................................................6
Section 1.4 Amendment of Defined Instruments........................................6
Section 1.5 References and Titles...................................................6
ARTICLE II SECURITY INTEREST...............................................................7
Section 2.1 Pledge and Grant of Security Interest...................................7
Section 2.2 Return of Collateral After the Secured Obligations are
Satisfied in Full ...............................................................7
ARTICLE III DESIGNATION OF MINIMUM COLLATERAL PERCENTAGE...................................7
Section 3.1 Determination of Minimum Collateral Percentage Generally................7
</TABLE>
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<TABLE>
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Section 3.2 Limitations on NAI's Right to Lower the Collateral Percentage...........8
Section 3.3 Mandatory Collateral Periods............................................8
ARTICLE IV PROVISIONS CONCERNING DEPOSIT TAKERS............................................8
Section 4.1 Qualification of Deposit Takers Generally...............................8
Section 4.2 Existing Deposit Takers.................................................9
Section 4.3 Replacement of Participants Proposed by NAI.............................9
Section 4.4 Mandatory Substitution for Disqualified Deposit Takers..................9
Section 4.5 Voluntary Substitution of Deposit Takers...............................10
Section 4.6 Delivery of Notice of Security Interest by NAI and Agent...............10
Section 4.7 Constructive Possession of Collateral..................................10
Section 4.8 Attempted Setoff by Deposit Takers.....................................10
Section 4.9 Deposit Taker Losses...................................................10
Section 4.10 Losses Resulting from Failure of Deposit Taker to Comply with this
Agreement....................................................................11
ARTICLE V DELIVERY AND MAINTENANCE OF CASH COLLATERAL.....................................11
Section 5.1 Delivery of Funds by NAI...............................................11
Section 5.2 Transition Account.....................................................11
Section 5.3 Allocation of Cash Collateral Among Deposit Takers.....................11
Section 5.4 Issuance and Redemption of Certificates of Deposit.....................12
Section 5.5 Status of the Accounts Under the Reserve Requirement Regulations.......12
Section 5.6 Acknowledgment by NAI that Requirements of this Agreement are
Commercially Reasonable......................................................13
ARTICLE VI WITHDRAWAL OF CASH COLLATERAL..................................................13
Section 6.1 Withdrawal of Collateral Prior to the Designated Sale Date.............13
Section 6.2 Withdrawal and Application of Cash Collateral to Reduce or Satisfy the
Secured Obligations to the Participants......................................13
Section 6.3 Withdrawal and Application of Cash Collateral to Reduce or Satisfy the
Secured Obligations to BNPLC.................................................14
Section 6.4 Withdrawal of Cash Collateral From Accounts Maintained by Disqualified
Deposit Takers...............................................................14
ARTICLE VII REPRESENTATIONS AND COVENANTS OF NAI..........................................14
Section 7.1 Representations of NAI.................................................14
Section 7.2 Covenants of NAI.......................................................15
ARTICLE VIII AUTHORIZED ACTION BY AGENT..................................................16
Section 8.1 Power of Attorney......................................................16
ARTICLE IX DEFAULT AND REMEDIES..........................................................16
Section 9.1 Remedies...............................................................16
ARTICLE X OTHER RECOURSE.................................................................17
Section 10.1 Recovery Not Limited..................................................17
ARTICLE XI PROVISIONS CONCERNING AGENT....................................................17
Section 11.1 Appointment and Authority.............................................17
Section 11.2 Exculpation, Agent's Reliance, Etc....................................18
Section 11.3 Participant's Credit Decisions........................................18
Section 11.4 Indemnity.............................................................18
Section 11.5 Agent's Rights as Participant and Deposit Taker.......................19
Section 11.6 Investments...........................................................19
Section 11.7 Benefit of Article XI.................................................19
Section 11.8 Resignation...........................................................19
ARTICLE XII MISCELLANEOUS.................................................................20
Section 12.1 Provisions Incorporated From Other Operative Documents.................20
Section 12.2 Cumulative Rights, etc................................................20
</TABLE>
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<TABLE>
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Section 12.3 Survival of Agreements................................................20
Section 12.4 Other Liable Party....................................................20
Section 12.5 Termination...........................................................20
</TABLE>
[Phase IV - Land] -iii-
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<TABLE>
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Attachment 1....................................................Form of Certificate of Deposit
Attachment 2..................................Supplement to Pledge Agreement (Phase IV - Land)
Attachment 3......................Notice of NAI's Election to Change the Collateral Percentage
Attachment 4.......................................................Notice of Security Interest
Attachment 5..........................................................Examples of Calculations
Attachment 6....................Notice of NAI's Requirement to Withdraw Excess Cash Collateral
Attachment 7....................Notice of NAI's Requirement of Direct Payments to Participants
Attachment 8....................Notice of NAI's Requirement of Direct Payments to Participants
Attachment 9.......................................Notice of NAI's Requirement of a Withdrawal
of Cash Collateral from a Disqualified Deposit Taker
Schedule 1..........................................Financial Covenants and Negative Covenants
</TABLE>
[Phase IV - Land] -iv-
<PAGE> 6
PLEDGE AGREEMENT
(PHASE IV - LAND)
This PLEDGE AGREEMENT (PHASE IV - LAND) (this "AGREEMENT") is made as of
December ___, 1999 (the "EFFECTIVE DATE"), by NETWORK APPLIANCE, INC., a
California corporation ("NAI"); BNP LEASING CORPORATION, a Delaware corporation
("BNPLC"); BANQUE NATIONALE DE PARIS ("BNPLC'S PARENT"), as a "PARTICIPANT"; and
BANQUE NATIONALE DE PARIS, acting in its capacity as agent for BNPLC and the
Participants (in such capacity, "AGENT"), is made and dated as of the Effective
Date.
RECITALS
A. NAI and BNPLC are parties to: (i) a Common Definitions and Provisions
Agreement (Phase IV - Land) dated as of the Effective Date (the "COMMON
DEFINITIONS AND PROVISIONS AGREEMENT (PHASE IV - LAND)"); and (ii) a Purchase
Agreement (Phase IV - Land) dated as of the Effective Date (the "PURCHASE
AGREEMENT"), pursuant to which NAI has agreed to make a "SUPPLEMENTAL PAYMENT"
(as defined in the Common Definitions and Provisions Agreement (Phase IV -
Land)), in consideration of the rights granted to NAI by the Purchase Agreement.
B. Pursuant to a Participation Agreement dated as of December ___, 1999
(the "PARTICIPATION AGREEMENT"), BNPLC's Parent has agreed with BNPLC to
participate in the risks and rewards to BNPLC of the Purchase Agreement and
other Operative Documents (as defined in the Common Definitions and Provisions
Agreement (Phase IV - Land)), and the parties to this Agreement anticipate that
other financial institutions may become parties to the Participation Agreement
as Participants, agreeing to participate in the risks and rewards to BNPLC of
the Purchase Agreement and other Operative Documents.
C. NAI may from time to time deliver cash collateral for its obligations
to BNPLC under the Purchase Agreement and for BNPLC's corresponding obligations
to Participants under the Participation Agreement. This Agreement sets forth the
terms and conditions governing such cash collateral.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I DEFINITIONS AND INTERPRETATION
Section 1.1 Capitalized Terms Used But Not Defined in This Agreement.
All capitalized terms used in this Agreement which are defined in Article I of
the Common Definitions and Provisions Agreement (Phase IV - Land) and not
otherwise defined herein shall have the same meanings herein as set forth in the
Common Definitions and Provisions Agreement (Phase IV - Land). All terms used in
this Agreement which are defined in the UCC and not otherwise defined herein
shall have the same meanings herein as set forth therein, except where the
context otherwise requires.
Section 1.2 Definitions. When used in this Agreement, the following
terms shall have the following respective meanings:
"ACCOUNT" shall mean any deposit account maintained by a Deposit
Taker into which Cash Collateral may be deposited at any time, excluding
the Transition Account.
[Phase IV - Land] -1-
<PAGE> 7
"ACCOUNT OFFICE" shall mean, with respect to any Account
maintained by any Deposit Taker, the office of such Deposit Taker in
California or New York at which such Account is maintained as specified
in the applicable Deposit Taker's Acknowledgment and Agreement.
"AGENT" shall have the meaning given to that term in the
introductory paragraph hereof.
"BNPLC" shall have the meaning given to that term in the
introductory paragraph hereof.
"BNPLC'S CORRESPONDING OBLIGATIONS TO PARTICIPANTS" shall mean
BNPLC's obligations under the Participation Agreement to pay
Participants their respective Percentages of (or amounts equal to their
respective Percentages of) sums "actually received by BNPLC" (as defined
in the Participation Agreement) in satisfaction of NAI's Purchase
Agreement Obligations; provided, however, any modification of the
Participation Agreement executed after the date hereof without NAI's
written consent shall not be considered for purposes of determining
BNPLC's Corresponding Obligations to Participants under this Agreement.
"CASH COLLATERAL" shall mean (i) all money of NAI which NAI has
delivered to Agent for deposit with a Deposit Taker pursuant to this
Agreement, and (ii) any additional money delivered to Agent as
Collateral pursuant to Section 4.9.
"CERTIFICATE OF DEPOSIT" shall mean a certificate of deposit
issued by a Deposit Taker as required by Section 5.4 below to evidence
an Account into which Cash Collateral has been deposited pursuant to
this Agreement. Each Certificate of Deposit shall be issued in an amount
equal to the Value of the Account which it evidences and shall otherwise
be in the form set forth as ATTACHMENT 1.
"COLLATERAL" shall have the meaning given to that term in Section 2.1
hereof.
"COLLATERAL IMBALANCE" shall mean on any date prior to the
Designated Sale Date that the Value (without duplication) of Accounts
maintained by and Certificates of Deposit issued by the Deposit Taker
for any Participant (other than a Disqualified Deposit Taker) does not
equal such Participant's Percentage, multiplied by the lesser of (1) the
Minimum Collateral Value in effect on such date, or (2) the aggregate
Value of all Collateral subject to this Agreement on such date. For
purposes of determining whether a Collateral Imbalance exists, the Value
of any Accounts maintained by a bank that is acting as Deposit Taker for
two or more Participants will be deemed to be held for them in
proportion to their respective Percentages, and the Value of any
Accounts maintained by a bank as Deposit Taker for both a Participant
and BNPLC (as in the case of BNPLC's Parent acting as Deposit Taker for
itself, as a Participant, and for BNPLC) will be deemed to be held for
the Participant only to the extent necessary to prevent or mitigate a
Collateral Imbalance and otherwise for BNPLC.
"COLLATERAL PERCENTAGE" shall mean the percentage designated by
NAI or required during a Mandatory Collateral Period pursuant to Part
III of Schedule 1.
"DEFAULT" means any Event of Default and any default, event or
condition which would, with the giving of any requisite notices and the
passage of any requisite periods of time, constitute an Event of
Default.
[Phase IV - Land] -2-
<PAGE> 8
"DEPOSIT TAKER" for BNPLC shall mean BNPLC's Parent and for each
Participant shall mean the Participant itself; provided, that each of
BNPLC and the Participants, for itself only, may from time to time
designate another Deposit Taker as provided in Sections 4.4 and 4.5
below.
"DEPOSIT TAKER LOSSES" shall mean the Value of any Cash
Collateral delivered to a Deposit Taker, but that the Deposit Taker will
not (because of the insolvency of the Deposit Taker, offsets by the
Deposit Taker in violation of the Deposit Taker's Acknowledgment and
Agreement, or otherwise) return to NAI or return to Agent for
disposition or application as provided herein or as required by
applicable law.
"DEPOSIT TAKER'S ACKNOWLEDGMENT AND AGREEMENT" shall have the
meaning given to that term in subsection 4.1.2 hereof.
"DISQUALIFIED DEPOSIT TAKER" shall mean any Deposit Taker with
whom Agent may decline to deposit Collateral pursuant to Section 4.1.
"EVENT OF DEFAULT" shall mean the occurrence of any of the
following:
(a) the failure by NAI to pay all or any part of NAI's Purchase
Agreement Obligations when due, after giving effect to any applicable
notice and grace periods expressly provided for in the Purchase
Agreement;
(b) the failure by NAI to provide funds as and when required by
Section 5.1 of this Agreement, if within seven Business Days after such
failure commences NAI does not (1) cure such failure by delivering the
funds required by Section 5.1, and (2) pay to BNPLC as additional Rent
under the Land Lease an amount equal to interest at the Default Rate (as
defined in the Land Lease) on such funds for the period from which they
were first due to the date of receipt by Agent;
(c) the failure of the pledge or security interest contemplated
herein in the Transition Account or any Account, Certificate of Deposit
or Cash Collateral to be a Qualified Pledge (regardless of the
characterization of the Transition Account or any Accounts, Certificates
of Deposit or Cash Collateral as deposit accounts, instruments or
general intangibles under the UCC), if within five Business Days after
NAI becomes aware of such failure, NAI does not (1) notify Agent, BNPLC
and the Participants of such failure, and (2) cure such failure, and (3)
to the extent required by Section 7.2.9, pay to BNPLC any additional
Base Rent that has accrued under the Land Lease because of (or that
would have accrued if BNPLC had been aware of) such failure, together
with interest at the Default Rate on any such additional Base Rent;
(d) the failure of any representation herein by NAI to be true
(other than a failure described in another clause of this definition of
Event of Default), if such failure is not cured within thirty days after
NAI receives written notice thereof from Agent;
(e) the failure of any representation made by NAI in subsection
7.1.1 to be true, if within fifteen (15) days after NAI becomes aware of
such failure, NAI does not (1) notify Agent, BNPLC and the Participants
of such failure, and (2) cure such failure, and (3) pay to BNPLC any
additional Base Rent that has accrued under the Land Lease because of
(or that would have accrued if BNPLC had been aware of) such failure,
and (4) pay to BNPLC interest at the Default Rate on any such additional
Base Rent;
[Phase IV - Land] -3-
<PAGE> 9
(f) the failure by NAI timely and properly to observe, keep or
perform any covenant, agreement, warranty or condition herein required
to be observed, kept or performed (other than a failure described in
another clause of this definition of Event of Default), if such failure
is not cured within thirty days after NAI receives written notice
thereof from Agent; and
(g) the failure by BNPLC to pay when due on or after the
Designated Sale Date any of BNPLC's Corresponding Obligations to
Participants, after giving effect to any applicable notice and grace
periods expressly provided for in the Participation Agreement.
Notwithstanding the foregoing, if ever the aggregate Value of Cash Collateral
held by Agent and the Deposit Takers EXCEEDS the Minimum Collateral Value then
in effect, a failure of the pledge or security interest contemplated herein in
SUCH EXCESS Cash Collateral to be a valid, perfected, first priority pledge or
security interest shall not constitute an Event of Default under this Agreement.
Accordingly, to provide a cure as required to avoid an Event of Default under
clauses (c) or (e) of this definition, NAI could deliver additional Cash
Collateral - the pledge of which or security interest in which created by this
Agreement is a Qualified Pledge - sufficient in amount to cause the aggregate
Value of the Cash Collateral then held by Agent and the Deposit Takers subject
to a Qualified Pledge hereunder to equal or exceed the Minimum Collateral Value.
"FAILED COLLATERAL TEST DATE" means any date upon which commences a
Mandatory Collateral Period as described in Part III of Schedule 1.
"INITIALLY QUALIFIED DEPOSIT TAKER" means (1) Banque Nationale de Paris,
acting through any branch, office or agency that can lawfully maintain an
Account as a Deposit Taker hereunder, and (2) any of the fifty largest (measured
by total assets) U.S. banks, or one of the one hundred largest (measured by
total assets) banks in the world, with debt ratings of at least (i) A- (in the
case of long term debt) and A-1 (in the case of short term debt) or the
equivalent thereof by Standard and Poor's Corporation, and (ii) A3 (in the case
of long term debt) and P-2 (in the case of short term debt) or the equivalent
thereof by Moody's Investor Service, Inc. The parties believe it improbable that
the ratings systems used by Standard and Poor's Corporation and by Moody's
Investor Service, Inc. will be discontinued or changed, but if such ratings
systems are discontinued or changed, NAI shall be entitled to select and use a
comparable ratings systems as a substitute for the S&P Rating or the Moody
Rating, as the case may be, for purposes of determining the status of any bank
as an Initially Qualified Deposit Taker.
"LIEN" shall mean, with respect to any property or assets, any right or
interest therein of a creditor to secure indebtedness of any kind which is owed
to him or any other arrangement with such creditor which provides for the
payment of such indebtedness out of such property or assets or which allows him
to have such indebtedness satisfied out of such property or assets prior to the
general creditors of any owner thereof, including any lien, mortgage, security
interest, pledge, deposit, production payment, rights of a vendor under any
title retention or conditional sale agreement or lease substantially equivalent
thereto, tax lien, mechanic's or materialman's lien, or any other charge or
encumbrance for security purposes, whether arising by law or agreement or
otherwise, but excluding any right of setoff which arises without agreement in
the ordinary course of business. "Lien" also means any filed financing
statement, any registration with an issuer of uncertificated securities, or any
other arrangement which would serve to perfect a Lien described in the preceding
sentence, regardless of whether such financing statement is filed, such
registration is made, or such arrangement is undertaken before or after such
Lien exists.
[Phase IV - Land] -4-
<PAGE> 10
"MATERIAL LEASE DEFAULT" shall mean any of the following:
(1) any "Event of Default" under and as defined in the Land
Lease, including any such Event of Default consisting of a failure of
NAI to comply with the requirements of Exhibit I attached to the Land
Lease; and
(2)(a) any failure of NAI to make any payment required by and
when first due under the Land Lease, regardless of whether any period
provided in the Land Lease for the cure of such failure by NAI shall
have expired, and (b) any other default, event or condition which would,
with the giving of any requisite notices and the passage of any
requisite periods of time, constitute an "Event of Default" under and as
defined in the Land Lease, if such other default, event or failure
involves a material noncompliance with Applicable Law. (For purposes of
this definition, "material" noncompliance with Applicable Law will
include any noncompliance, the correction of which has been requested by
a governmental authority, or because of which a threat of action against
the Property or BNPLC has been asserted by a governmental authority.)
"MANDATORY COLLATERAL PERIOD" shall mean any period, as determined in
accordance with Part III of Schedule 1, during which NAI is required to maintain
a Collateral Percentage of one hundred percent (100%) pursuant to Section 3.2.
"MINIMUM COLLATERAL VALUE" shall mean (1) as of the Designated Sale Date
or any prior date, an amount equal to the Collateral Percentage multiplied by
the Stipulated Loss Value determined as of that date in accordance with the Land
Lease; and (2) as of any date after the Designated Sale Date, an amount equal to
the Break Even Price plus any unpaid interest accrued on past due amounts
payable pursuant to Paragraph 1(a) of the Purchase Agreement.
"NAI" shall have the meaning given to that term in the introductory
paragraph hereof.
"NAI'S PURCHASE AGREEMENT OBLIGATIONS" shall mean all of NAI's
obligations under the Purchase Agreement, including (i) NAI's obligation to pay
any Supplemental Payment as required under subparagraph 1(A) of the Purchase
Agreement, and (ii) any damages incurred by BNPLC because of (A) NAI's breach of
the Purchase Agreement or (B) the rejection by NAI of the Purchase Agreement in
any bankruptcy or insolvency proceeding.
"NOTICE OF SECURITY INTEREST" shall have the meaning given to that term
in subsection 4.1.1 hereof.
"OTHER LIABLE PARTY" shall mean any Person, other than NAI, who may now
or may at any time hereafter be primarily or secondarily liable for any of the
Secured Obligations or who may now or may at any time hereafter have granted to
Agent a pledge of or security interest in any of the Collateral.
"PARTICIPANTS" shall mean BNPLC's Parent and any other financial
institutions which may hereafter become parties to (i) this Agreement by
completing, executing and delivering to NAI and Agent a Supplement, and (ii) the
Participation Agreement.
"PARTICIPATION AGREEMENT" shall have the meaning given to such term in
Recital B hereof.
[Phase IV - Land] -5-
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"PERCENTAGE" shall mean with respect to each Participant and the Deposit
Taker for such Participant, such Participant's "Percentage" under and as defined
in the Participation Agreement for purposes of computing such Participant's
right thereunder to receive payments of (or amounts equal to a percentage of)
any sales proceeds or Supplemental Payment received by BNPLC under the Purchase
Agreement. Percentages may be adjusted from time to time as provided in the
Participation Agreement or as provided in supplements thereto executed as
provided in the Participation Agreement.
"QUALIFIED PLEDGE" means a pledge or security interest that constitutes
a valid, perfected, first priority pledge or security interest.
"SECURED OBLIGATIONS" shall mean and include both NAI's Purchase
Agreement Obligations and BNPLC's Corresponding Obligations to Participants.
"SUPPLEMENT" shall mean a supplement to this Agreement in the form of
ATTACHMENT 2.
"TRANSACTION DOCUMENTS" shall mean, collectively, this Agreement, the
Land Lease, the Purchase Agreement and the Participation Agreement.
"TRANSITION ACCOUNT" shall have the meaning given it in Section 5.2.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of California from time to time, and the Uniform Commercial Code as in effect in
any other jurisdiction which governs the perfection or non-perfection of the
pledge of and security interests in the Collateral created by this Agreement.
"VALUE" shall mean with respect to any Account, Certificate of Deposit
or Cash Collateral on any date, a dollar value determined as follows (without
duplication):
(a) cash shall be valued at its face amount on such date;
(b) an Account shall be valued at the principal balance thereof
on such date;
and
(c) a Certificate of Deposit shall be valued at the face amount
thereof.
Section 1.3 Attachments. All attachments to this Agreement are a part
hereof for all purposes.
Section 1.4 Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein, references in this
Agreement to a particular agreement, instrument or document (including
references to the Land Lease, Purchase Agreement and Participation Agreement)
also refer to and include all valid renewals, extensions, amendments,
modifications, supplements or restatements of any such agreement, instrument or
document; provided that nothing contained in this Section shall be construed to
authorize any Person to execute or enter into any such renewal, extension,
amendment, modification, supplement or restatement.
Section 1.5 References and Titles. All references in this Agreement to
Attachments, Articles, Sections, subsections, and other subdivisions refer to
the Attachments, Articles, Sections, subsections and other subdivisions of this
Agreement unless expressly provided otherwise. Titles appearing at the
[Phase IV - Land] -6-
<PAGE> 12
beginning of any subdivision are for convenience only and do not constitute any
part of any such subdivision and shall be disregarded in construing the language
contained in this Agreement. The words "this Agreement", "herein", "hereof",
"hereby", "hereunder" and words of similar import refer to this Agreement as a
whole and not to any particular subdivision unless expressly so limited. The
phrases "this Article," "this Section" and "this subsection" and similar phrases
refer only to the Articles, Sections or subsections hereof in which the phrase
occurs. The word "or" is not exclusive, and the word "including" (in all of its
forms) means "including without limitation". Pronouns in masculine, feminine and
neuter gender shall be construed to include any other gender, and words in the
singular form shall be construed to include the plural and vice versa unless the
context otherwise requires.
ARTICLE II SECURITY INTEREST
Section 2.1 Pledge and Grant of Security Interest. As security for the
Secured Obligations, NAI hereby pledges and assigns to Agent (for the ratable
benefit of BNPLC and the Participants) and grants to Agent (for the ratable
benefit of BNPLC and the Participants) a continuing security interest and lien
in and against all right, title and interest of NAI in and to the following
property, whether now owned or hereafter acquired by NAI (collectively and
severally, the "COLLATERAL"):
(a) All Cash Collateral, all Accounts, the Transition Account
and all Certificates of Deposit issued from time to time and general
intangibles arising therefrom or relating thereto (however, "general
intangibles" as used in this clause shall not include any general
intangibles not related to Cash Collateral, Accounts, the Transition
Account or Certificates of Deposit issued from time to time, and thus
will not include, without limitation, any intellectual property of NAI);
and all documents, instruments and agreements evidencing the same; and
all extensions, renewals, modifications and replacements of the
foregoing; and any interest or other amounts payable in connection
therewith; and
(b) All proceeds of the foregoing (including whatever is
receivable or received when Collateral or proceeds is invested, sold,
collected, exchanged, returned, substituted or otherwise disposed of,
whether such disposition is voluntary or involuntary, including rights
to payment and return premiums and insurance proceeds under insurance
with respect to any Collateral, and all rights to payment with respect
to any cause of action affecting or relating to the Collateral).
The pledge, assignment and grant of a security interest made by NAI hereunder is
for security of the Secured Obligations only; the parties to this Agreement do
not intend that NAI's delivery of the Collateral to Agent as herein provided
will constitute an advance payment of any Secured Obligations or liquidated
damages, nor do the parties intend that the Collateral increase the dollar
amount of the Secured Obligations.
Section 2.2 Return of Collateral After the Secured Obligations are
Satisfied in Full. If any proceeds of Collateral remain after all Secured
Obligations have been paid in full, Agent will deliver or direct the Deposit
Takers to deliver such proceeds to NAI or other Persons entitled thereto by law.
ARTICLE III DESIGNATION OF MINIMUM COLLATERAL PERCENTAGE
Section 3.1 Determination of Minimum Collateral Percentage Generally.
Effective as of the date of this Agreement, and until a new Collateral
Percentage becomes effective, the Collateral Percentage is zero percent (0%).
Subject to the provisions of this Article III, NAI may from time to time
designate a new Collateral Percentage between 0% and 100% by written notice
delivered to Agent, BNPLC and the Participants in the form of ATTACHMENT 3. Any
new Collateral Percentage so designated shall not become effective, however,
until the commencement of the later of (A) the first Base Rent Period to
[Phase IV - Land] -7-
<PAGE> 13
commence on or after the first Business Day of January, 2002, or (B) the next
following Base Rent Period which is at least ten Business Days after the receipt
of such notice by Agent, BNPLC and the Participants. Further, after the first
change in the Collateral Percentage resulting from a designation by NAI of a
Collateral Percentage greater than zero percent (0%), any subsequent change
resulting from NAI's designation of a new Collateral Percentage shall not become
effective before the first Business Day of the first Base Rent Period that
commences at least ninety days after the effective date of the last preceding
change in the Collateral Period. In any event, if NAI provides more than one
notice of a change in the Collateral Percentage to be effective on a particular
Base Rent Date, then the latest such notice from NAI which satisfies the
requirements of this Section (and of Sections 3.2 and 3.3) will control. After
any Collateral Percentage becomes effective as provided in this Article, it
shall remain in effect until a different Collateral Percentage becomes effective
as provided in this Article.
Section 3.2 Limitations on NAI's Right to Lower the Collateral
Percentage. Notwithstanding the foregoing, no designation by NAI of a new
Collateral Percentage will be effective to reduce the Collateral Percentage if
the designation is given, or the reduction would otherwise become effective, on
or after the Designated Sale Date or when any of the following shall have
occurred and be continuing:
3.2.1 any Material Lease Default;
3.2.2 any Event of Default under and as defined in this
Agreement; or
3.2.3 any Default under and as defined in this Agreement -
excluding, however, any such Default limited to a failure of NAI
described in clause (c) or clause (e) of the definition of Event of
Default above, with respect to which the time for cure specified in
clause (c) or clause (e), as applicable, has not expired.
Section 3.3 Mandatory Collateral Periods. NOTWITHSTANDING ANYTHING TO
THE CONTRARY HEREIN CONTAINED, THE COLLATERAL PERCENTAGE DURING ANY MANDATORY
COLLATERAL PERIOD SHALL BE ONE HUNDRED PERCENT (100%). No later than five
Business Days prior to any Failed Collateral Test Date, NAI shall notify Agent,
BNPLC and the Participants of the conditions set forth in Part III of Schedule 1
that NAI will be unable to satisfy on the Failed Collateral Test Date.
ARTICLE IV PROVISIONS CONCERNING DEPOSIT TAKERS
Section 4.1 Qualification of Deposit Takers Generally. Agent may decline
to deposit or maintain Collateral hereunder with any Person designated as a
Deposit Taker, if such Person has failed to satisfy or no longer satisfies the
following requirements:
4.1.1 Such Person must have received from Agent and NAI a
completed, executed Notice of Security Interest in the form of
ATTACHMENT 4 (a "NOTICE OF SECURITY INTEREST") which specifically
identifies any and all Accounts in which such Person shall hold Cash
Collateral delivered to it pursuant to this Agreement and which
designates Account Offices with respect to all such Accounts in New York
or California.
4.1.2 Such Person must have executed the Acknowledgment and
Agreement at the end of such Notice of Security Interest (the "DEPOSIT
TAKER'S ACKNOWLEDGMENT AND AGREEMENT") and returned the same to Agent.
Further, such Person must have complied with the Deposit Taker's
Acknowledgment and Agreement, and the representations set forth therein
with respect to such Person must continue to be true and correct.
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<PAGE> 14
4.1.3 Such Person must be a commercial bank, organized under the
laws of the United States of America or a state thereof or under the
laws of another country which is doing business in the United States of
America; must be authorized to maintain deposit accounts for others
through Account Offices in New York or California (as specified in the
Deposit Taker's Acknowledgment and Agreement); and must be an Affiliate
of BNPLC or the Participant for whom such Person will act as Deposit
Taker or must have a combined capital, surplus and undivided profits of
at least $500,000,000.
4.1.4 Such Person must have complied with the provisions in this
Agreement applicable to Deposit Takers, including the provisions of
Section 5.4 concerning the issuance and redemption of Certificates of
Deposit.
Section 4.2 Existing Deposit Takers. BNPLC's Parent (as Deposit Taker
for itself and for BNPLC) has received a Notice of Security Agreement dated the
Effective Date and has responded to such a notice with a Deposit Taker's
Acknowledgment and Agreement dated the Effective Date, as contemplated in
subsections 4.1.1 and 4.1.2.
Section 4.3 Replacement of Participants Proposed by NAI. So long as no
Event of Default has occurred and is continuing, BNPLC shall not unreasonably
withhold its approval for a substitution under the Participation Agreement of a
new Participant proposed by NAI for any Participant, the Deposit Taker for whom
would no longer meet the requirements for an Initially Qualified Deposit Taker;
provided, however, that (A) the proposed substitution can be accomplished
without a release or breach by BNPLC of its rights and obligations under the
Participation Agreement; (B) the new Participant will agree (by executing a
Supplement and a supplement to the Participation Agreement as contemplated
therein and by other agreements as may be reasonably required by BNPLC and NAI)
to become a party to the Participation Agreement and to this Agreement, to
designate an Initially Qualified Deposit Taker as the Deposit Taker for it under
this Agreement and to accept a Percentage under the Participation Agreement
equal to the Percentage of the Participant to be replaced; (C) the new
Participant (or NAI) will provide the funds required to pay the termination fee
by Section 6.4 of the Participation Agreement to accomplish the substitution;
(D) NAI (or the new Participant) agrees in writing to indemnify and defend BNPLC
for any and all Losses incurred by BNPLC in connection with or because of the
substitution, including the cost of preparing supplements to the Participation
Agreement and this Agreement and including any cost of defending and paying any
claim asserted by the Participant to be replaced because of the substitution
(but not including any liability of BNPLC to such Participant for damages caused
by BNPLC's bad faith or gross negligence in the performance of BNPLC's
obligations under the Participation Agreement prior to the substitution); (E)
the new Participant shall be a reputable financial institution having a net
worth of no less than seven and one half percent (7.5%) of total assets and
total assets of no less than $10,000,000,000.00 (all according to then recent
audited financial statements); and (F) in no event will BNPLC be required to
approve a substitution pursuant to this Section 4.3 which will replace a
Participant that is an Affiliate of BNPLC. BNPLC shall attempt in good faith to
assist (and cause BNPLC's Parent to attempt in good faith to assist) NAI in
identifying a new Participant that NAI may propose to substitute for an existing
Participant pursuant to this Section, as NAI may reasonably request from time to
time. However, in no event shall BNPLC itself, or any of its Affiliates, be
required to take the Percentage of any Participant to be replaced.
Section 4.4 Mandatory Substitution for Disqualified Deposit Takers. If
any Deposit Taker shall cease to satisfy the requirements set forth in Section
4.1, the party for whom such Disqualified Deposit Taker has been designated as
Deposit Taker (i.e., BNPLC or the applicable Participant) shall promptly (1)
provide notice thereof to Agent and NAI, and (2) designate a substitute Deposit
Taker and cause the
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<PAGE> 15
substitute to satisfy the requirements set forth in Section 4.1. Pending the
designation of the substitute and the satisfaction by it of the requirements set
forth in Section 4.1, Agent may withdraw Collateral held by the Disqualified
Deposit Taker and deposit such Collateral with other Deposit Takers, subject to
Section 5.3 below.
Section 4.5 Voluntary Substitution of Deposit Takers. With the written
approval of Agent, which approval will not be unreasonably withheld, BNPLC or
any Participant may at any time designate for itself a new Deposit Taker (in
replacement of any prior Deposit Taker acting for it hereunder); provided, the
Person so designated has satisfied the requirements set forth in Section 4.1;
and, provided further, unless the designation of a new Deposit Taker is required
by Section 4.4 to replace a Disqualified Deposit Taker, at the time of the
replacement such Person must be an Initially Qualified Deposit Taker.
Section 4.6 Delivery of Notice of Security Interest by NAI and Agent. To
the extent required for the designation of a new Deposit Taker by BNPLC or any
Participant pursuant to Section 4.5, or to permit the substitution or
replacement of a Deposit Taker for BNPLC or any Participant as provided in
Sections 4.4 and 4.5, NAI and Agent shall promptly execute and deliver any
properly completed Notice of Security Interest requested by BNPLC or the
applicable Participant.
Section 4.7 Constructive Possession of Collateral. The possession by a
Deposit Taker of any deposit accounts, money, instruments, chattel paper or
other property constituting Collateral or evidencing Collateral shall be deemed
to be possession by Agent or a person designated by Agent, for purposes of
perfecting the security interest granted to Agent hereunder pursuant to the UCC
or other Applicable Law; and notifications to a Deposit Taker by other Persons
holding any such property, and Acknowledgments, receipts or confirmations from
any such Persons delivered to a Deposit Taker, shall be deemed notifications to,
or Acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of such Deposit Taker for the benefit of Agent
for the purposes of perfecting such security interests under Applicable Law.
Section 4.8 Attempted Setoff by Deposit Takers. By delivery of a Deposit
Taker's Acknowledgment and Agreement, each Deposit Taker shall be required to
agree not to setoff or attempt a setoff, WITHOUT IN EACH CASE FIRST OBTAINING
THE PRIOR WRITTEN AUTHORIZATION OF AGENT, Secured Obligations owed to it against
any Collateral held by it from time to time. Further, by delivery of a Deposit
Taker's Acknowledgment and Agreement, each Deposit Taker shall be required to
agree not to setoff or attempt a setoff, WITHOUT IN EACH CASE FIRST OBTAINING
THE PRIOR WRITTEN AUTHORIZATION OF BOTH NAI AND AGENT, obligations owed to it
other than Secured Obligations against any Collateral held by it from time to
time. Any Deposit Taker for BNPLC or a Participant shall not be permitted by
BNPLC or the applicable Participant, as the case may be, to violate such
agreements. However, NAI acknowledges and agrees (without limiting its right to
recover damages from a Deposit Taker that violates such agreements) that Agent
shall not be responsible for, or be deemed to have taken any action against NAI
because of, any Deposit Taker's violation of such agreements; and, neither BNPLC
nor any Participant shall be responsible for, or be deemed to have taken any
action against NAI because of, any violation of such agreements by a Deposit
Taker for another party.
Section 4.9 Deposit Taker Losses. Agent shall not be responsible for any
Deposit Taker Losses. However, Deposit Taker Losses with respect to a Deposit
Taker for a particular Participant shall reduce the amount of BNPLC's
Corresponding Obligations to Participants which are payable to such Participant
as provided in Section 2.2 of the Participation Agreement. Further, when Deposit
Taker Losses with respect to a Deposit Taker for a particular Participant are
incurred in excess of the payments of Secured Obligations that such Participant
would then have been entitled to receive under the Participation Agreement but
for such Deposit Taker Losses, such Participant must immediately pay the excess
to Agent
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<PAGE> 16
as additional Collateral hereunder, failing which NAI may recover any damages
suffered by it because of the Deposit Taker Losses from such Deposit Taker or
such Participant.
Section 4.10 Losses Resulting from Failure of Deposit Taker to Comply
with this Agreement. Any Participant, the Deposit Taker for whom has failed to
comply with the requirements of this Agreement or any Notices of Security
Interest and any Deposit Taker's Acknowledgments and Agreements (the
"RESPONSIBLE PARTICIPANT") must defend, indemnify, and hold harmless BNPLC,
Agent and the other Participants from and against any Losses resulting from such
failure. Without limiting the foregoing, if the failure of a Deposit Taker for a
Responsible Participant to comply strictly with the terms of this Agreement
(including, without limitation, the provisions of Section 5.4 concerning the
issuance and redemption of Certificates of Deposit and the requirement that any
cash deposits be held in a deposit account located in either New York or
California) causes, in whole or in part, the security interest of Agent in the
Collateral held by such Deposit Taker to be unperfected, then any and all Losses
suffered as a result of such nonperfection shall be borne solely by the
Responsible Participant and shall not be shared by BNPLC, Agent or the other
Participants.
ARTICLE V DELIVERY AND MAINTENANCE OF CASH COLLATERAL
Section 5.1 Delivery of Funds by NAI. On each Base Rent Date, NAI must
deliver to Agent, subject to the pledge and security interest created hereby,
funds as Cash Collateral then needed (if any) to cause the Value of the
Collateral to be no less than the Minimum Collateral Value. Each delivery of
funds required by the preceding sentence must be received by Agent no later than
12:00 noon (San Francisco time) on the date it is required; if received after
12:00 noon it will be considered for purposes of the Land Lease as received on
the next following Business Day. At least five Business Days prior to any Base
Rent Date upon which it is expected that NAI will be required to deliver
additional funds pursuant to this Section, NAI shall notify BNPLC, Agent and
each of the Participants thereof and of the amount NAI expects to deliver to
Agent as Cash Collateral on the applicable Base Rent Date. In addition to
required deliveries of Cash Collateral as provided in the foregoing provisions,
NAI may on any date (whether or not a Base Rent Date) deliver additional Cash
Collateral to Agent as necessary to prevent any Default from becoming an Event
of Default. Upon receipt of any funds delivered to it by NAI as Cash Collateral,
Agent shall immediately deposit the same with the Deposit Takers in accordance
with the requirements of Sections 5.3 and 5.4 below.
Section 5.2 Transition Account. Pending deposit in the Accounts or other
application as provided herein, all Cash Collateral received by Agent shall be
credited to and held by Agent in an account (the "TRANSITION ACCOUNT") styled
"NAI Collateral Account, held for the benefit of BNP Leasing Corporation and the
Participants," separate and apart from all other property and funds of NAI or
other Persons, and no other property or funds shall be deposited in the
Transition Account. The books and records of Agent shall reflect that the
Transition Account and all Cash Collateral on deposit therein are owned by NAI,
subject to a pledge and security interest in favor of Agent for the benefit of
BNPLC and Participants.
Section 5.3 Allocation of Cash Collateral Among Deposit Takers. Funds
received by Agent from NAI as Cash Collateral will be allocated for deposit
among the Deposit Takers as follows:
first, to the extent possible the funds will be allocated as required to
rectify and prevent any Collateral Imbalance; and
second, the funds will be allocated to the Deposit Taker for BNPLC,
unless the Deposit Taker for BNPLC has become a Disqualified Deposit
Taker, in which case the funds will be allocated to other Deposit Takers
who are not Disqualified Deposit Takers as Agent deems appropriate.
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<PAGE> 17
Further, if for any reason a Collateral Imbalance is determined by Agent to
exist, Agent shall, as required to rectify or mitigate the Collateral Imbalance,
promptly reallocate Collateral among Deposit Takers by withdrawing Cash
Collateral from some Accounts and redepositing it in other Accounts. (If any
party to this Agreement believes that the Value of the Accounts held by a
particular Deposit Taker causes a Collateral Imbalance to exist, that party will
promptly notify BNPLC, NAI and Agent.) Subject to the foregoing, and provided
that Agent does not thereby create or exacerbate a Collateral Imbalance, Agent
may withdraw and redeposit Cash Collateral in order to reallocate the same among
Deposit Takers from time to time as Agent deems appropriate. For purposes of
illustration only, examples of the allocations required by this Section are set
forth in ATTACHMENT 5.
Section 5.4 Issuance and Redemption of Certificates of Deposit. Upon the
receipt of any deposit of Cash Collateral from Agent, each Deposit Taker shall
issue a Certificate of Deposit evidencing the Account into which such deposit is
made and deliver such Certificate of Deposit to Agent for the benefit of BNPLC
and the Participants. Each Certificate of Deposit shall be issued in an amount
equal to the Value of the Account which it evidences and shall otherwise be in
the form set forth as ATTACHMENT 1 to this Agreement. Upon depositing any Cash
Collateral into an Account that is already evidenced by an outstanding
Certificate of Deposit, Agent will surrender the outstanding Certificate of
Deposit, and in exchange the Deposit Taker receiving the deposit will issue a
new Certificate of Deposit, evidencing the total amount of Cash Collateral in
the Account after the deposit. A Deposit Taker that has issued a Certificate of
Deposit may require the surrender of the Certificate of Deposit as a condition
to a withdrawal from the Account evidenced thereby, including any withdrawal
required or permitted by this Agreement. Upon surrender of a Certificate of
Deposit in connection with a withdrawal of less than all of the Cash Collateral
in the Account evidenced thereby, the applicable Deposit Taker will concurrently
issue a new Certificate of Deposit to Agent, evidencing the balance of the Cash
Collateral remaining on deposit in the Account after the withdrawal.
Notwithstanding the foregoing, if any Certificate of Deposit held by Agent shall
be destroyed, lost or stolen, the Deposit Taker that issued the Certificate,
upon the written request of Agent, shall issue a new Certificate of Deposit to
Agent in lieu of and in substitution for the Certificate of Deposit so
destroyed, lost or stolen. However, as applicant for the substitute Certificate
of Deposit, Agent must indemnify (at no cost to NAI) the applicable Deposit
Taker against any liability on the Certificate of Deposit destroyed, lost or
stolen, and Agent shall furnish to the Deposit Taker an affidavit of an officer
of Agent setting forth the fact of destruction, loss or theft and confirming the
status of Agent as holder of the Certificate of Deposit immediately prior to the
destruction, loss or theft. If any Certificate of Deposit held by Agent shall
become mutilated, the Deposit Taker that issued the Certificate, upon the
written request of Agent, shall issue a new Certificate of Deposit to Agent in
exchange and substitution for the mutilated Certificate of Deposit. Agent shall
hold all Certificates of Deposit for the benefit of BNPLC and the Participants,
subject to the pledge and security interest created hereby.
Section 5.5 Status of the Accounts Under the Reserve Requirement
Regulations. Deposit Takers shall be permitted to structure the Accounts as
nonpersonal time deposits under 12 C.F.R., Part II, Chapter 204 (commonly known
as "Regulation D"). Accordingly, each Deposit Taker may require at least seven
days advance notice of any withdrawal or transfer of funds from Accounts it
maintains and may limit the number of withdrawals or transfers from such
Accounts to no more than six in any calendar month, notwithstanding anything to
the contrary herein or in any deposit agreement that NAI and any Deposit Taker
may enter into with respect to any Account. As necessary to satisfy the seven
days notice requirement with respect to withdrawals by Agent when required by
NAI pursuant to the provisions below, Agent shall notify Deposit Takers promptly
after receipt of any notice from NAI described in subsection 6.1.2 or 6.2.1 or
in Section 6.3.
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<PAGE> 18
Section 5.6 Acknowledgment by NAI that Requirements of this Agreement
are Commercially Reasonable. NAI acknowledges and agrees that the requirements
set forth herein concerning receipt, deposit, withdrawal, allocation,
application and distribution of Cash Collateral by Agent, including the
requirements and time periods set forth in the next Article, are commercially
reasonable.
ARTICLE VI WITHDRAWAL OF CASH COLLATERAL
NAI may not withdraw Cash Collateral, except as follows:
Section 6.1 Withdrawal of Collateral Prior to the Designated Sale Date.
NAI may require Agent to present Certificates of Deposit for payment and
withdraw Cash Collateral from Accounts on any date prior to the Designated Sale
Date and to deliver such Cash Collateral to NAI (which delivery shall be free
and clear of all liens and security interests hereunder); provided, however,
that in each case:
6.1.1 Such withdrawal and delivery of the Cash Collateral to NAI
will not cause the Value of the remaining Collateral to be less than the
Minimum Collateral Value.
6.1.2 by a notice in the form of ATTACHMENT 6, NAI must give
Agent, BNPLC and the Participants notice of the required withdrawal at
least ten days prior to the date upon which the withdrawal is to occur.
6.1.3 No Default or Event of Default shall have occurred and be
continuing at the time NAI gives the notice required by the preceding
subsection or on the date upon which the withdrawal is required.
6.1.4 NAI must pay to Agent any and all costs incurred by Agent
in connection with the withdrawal.
6.1.5 Agent shall determine the Accounts from which to make any
withdrawal required by NAI pursuant to this Section as necessary to
prevent or mitigate any Collateral Imbalance.
Section 6.2 Withdrawal and Application of Cash Collateral to Reduce or
Satisfy the Secured Obligations to the Participants. To reduce the "Break Even
Price" or "Supplemental Payment" required under (and as defined in) the Purchase
Agreement (and, thus, to reduce the Secured Obligations), NAI may require Agent
to withdraw Cash Collateral then held by or for Agent pursuant to this Agreement
on the Designated Sale Date and to deliver the same on the Designated Sale Date
or on any date thereafter prior to an Event of Default (which delivery shall be
free and clear of all liens and security interests hereunder) directly to the
Participants in proportion to their respective rights to payment of BNPLC's
Corresponding Obligations to Participants and for application thereto or the
reduction thereof pursuant to Section 2.2 of the Participation Agreement;
provided, that:
6.2.1 by a notice in the form of ATTACHMENT 7, NAI must have
notified Agent, BNPLC and each of the Participants of the required
withdrawal and payment to Participants at least ten days prior to the
date upon which it is to occur;
6.2.2 the required withdrawal shall be made as determined by
Agent, first, from the Accounts maintained by the Deposit Takers for the
Participants, and then (to the extent necessary) from the Accounts
maintained by the Deposit Taker for BNPLC; and
6.2.3 in any event, no withdrawals or payments directly to
Participants shall be required by this Section 6.2 (or permitted over
the objection of BNPLC) in excess of those required to
[Phase IV - Land] -13-
<PAGE> 19
satisfy BNPLC's Corresponding Obligations to Participants or to reduce
such obligations to zero under the Participation Agreement.
Section 6.3 Withdrawal and Application of Cash Collateral to Reduce or
Satisfy the Secured Obligations to BNPLC. To satisfy NAI's Purchase Agreement
Obligations, NAI may require Agent to withdraw any Cash Collateral held by the
Deposit Taker for BNPLC pursuant to this Agreement on the Designated Sale Date
and to deliver the same on the Designated Sale Date or on any date thereafter
prior to an Event of Default (which delivery shall be free and clear of all
liens and security interests hereunder) directly to BNPLC as a payment on behalf
of NAI of amounts due under the Purchase Agreement; provided, that by a notice
in the form of ATTACHMENT 8, NAI must have notified Agent and BNPLC of the
required withdrawal and payment to BNPLC at least ten days prior to the date
upon which it is to occur.
Section 6.4 Withdrawal of Cash Collateral From Accounts Maintained by
Disqualified Deposit Takers. NAI may from time to time prior to the Designated
Sale Date (regardless of the existence of any Default or Event of Default)
require Agent to withdraw any or all Cash Collateral from any Account maintained
by a Disqualified Deposit Taker and deposit it, still subject to the pledge and
grant of security interest hereunder, with other Deposit Takers who are not
Disqualified Deposit Takers (in accordance with the requirements of Sections 5.3
and 5.4) on any date prior to the Designated Sale Date; provided, that by a
notice in the form of ATTACHMENT 9, NAI must have notified Agent, BNPLC and each
of the Participants of the required withdrawal at least ten days prior to the
date upon which it is to occur.
ARTICLE VII REPRESENTATIONS AND COVENANTS OF NAI
Section 7.1 Representations of NAI. NAI represents to BNPLC, Agent and
the Participants as follows:
7.1.1 NAI is the legal and beneficial owner of the Collateral
(or, in the case of after-acquired Collateral, at the time NAI acquires
rights in the Collateral, will be the legal and beneficial owner
thereof). No other Person has (or, in the case of after-acquired
Collateral, at the time NAI acquires rights therein, will have) any
right, title, claim or interest (by way of Lien, purchase option or
otherwise) in, against or to the Collateral, except for rights created
hereunder.
7.1.2 Agent has (or in the case of after-acquired Collateral, at
the time NAI acquires rights therein, will have) a valid, first
priority, perfected pledge of and security interest in the Collateral,
regardless of the characterization of the Collateral as deposit
accounts, instruments or general intangibles under the UCC, but assuming
that the representations of each Deposit Taker in its Deposit Taker's
Acknowledgment and Agreement are true.
7.1.3 NAI has delivered to Agent, together with all necessary
stock powers, endorsements, assignments and other necessary instruments
of transfer, the originals of all documents, instruments and agreements
evidencing Accounts, Certificates of Deposit or Cash Collateral.
7.1.4 NAI's chief executive office is located at the address of
NAI set forth in Article II of the Common Definitions and Provisions
Agreement (Phase IV - Land) or at another address in California
specified in a notice that NAI has given to Agent as required by Section
7.2.4.
7.1.5 To the knowledge of NAI, neither the ownership or the
intended use of the Collateral by NAI, nor the pledge of Accounts or the
grant of the security interest by NAI to Agent
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<PAGE> 20
herein, nor the exercise by Agent of its rights or remedies hereunder,
will (i) violate any provision of (a) Applicable Law, (b) the articles
or certificate of incorporation, charter or bylaws of NAI, or (c) any
agreement, judgment, license, order or permit applicable to or binding
upon NAI, or (ii) result in or require the creation of any Lien, charge
or encumbrance upon any assets or properties of NAI except as expressly
contemplated in this Agreement. Except as expressly contemplated in this
Agreement, to the knowledge of NAI no consent, approval, authorization
or order of, and no notice to or filing with any court, governmental
authority or third party is required in connection with the pledge or
grant by NAI of the security interest contemplated herein or the
exercise by Agent of its rights and remedies hereunder.
Section 7.2 Covenants of NAI. NAI hereby agrees as follows:
7.2.1 NAI, at NAI's expense, shall promptly procure, execute and
deliver to Agent all documents, instruments and agreements and perform
all acts which are necessary, or which Agent may reasonably request, to
establish, maintain, preserve, protect and perfect the Collateral, the
pledge thereof to Agent or the security interest granted to Agent
therein and the first priority of such pledge or security interest or to
enable Agent to exercise and enforce its rights and remedies hereunder
with respect to any Collateral. Without limiting the generality of the
preceding sentence, NAI shall (A) procure, execute and deliver to Agent
all stock powers, endorsements, assignments, financing statements and
other instruments of transfer requested by Agent, (B) deliver to Agent
promptly upon receipt all originals of Collateral consisting of
instruments, documents and chattel paper, (C) cause the security
interest of Agent in any Collateral consisting of securities to be
recorded or registered in the books of any financial intermediary or
clearing corporation requested by Agent, and (D) reimburse Agent upon
request for any legal opinion Agent may elect to obtain from a
nationally recognized commercial law firm authorized to practice in New
York concerning the enforceability, first priority and perfection of
Agent's security interest in any Collateral maintained in New York, if
BNPLC or any Participant should at any time elect to use a Deposit Taker
that will maintain one or more Accounts in New York.
7.2.2 NAI shall not use or consent to any use of any Collateral
in violation of any provision of the this Agreement or any other
Transaction Document or any Applicable Law.
7.2.3 NAI shall pay promptly when due all taxes and other
governmental charges, all Liens and all other charges now or hereafter
imposed upon, relating to or affecting any Collateral.
7.2.4 Without thirty days' prior written notice to Agent, NAI
shall not change NAI's name or place of business (or, if NAI has more
than one place of business, its chief executive office).
7.2.5 NAI shall appear in and defend, on behalf of Agent, any
action or proceeding which may affect NAI's title to or Agent's interest
in the Collateral.
7.2.6 Subject to the express rights of NAI under Article VI, NAI
shall not surrender or lose possession of (other than to Agent or a
Deposit Taker pursuant hereto), sell, encumber, lease, rent, option, or
otherwise dispose of or transfer any Collateral or right or interest
therein, and NAI shall keep the Collateral free of all Liens.
7.2.7 NAI will not take any action which would in any manner
impair the value or enforceability of Agent's pledge of or security
interest in any Collateral, nor will NAI fail to take any action which
is required to prevent (and which NAI knows is required to prevent) an
impairment of the value or enforceability of Agent's pledge of or
security interest in any Collateral.
[Phase IV - Land] -15-
<PAGE> 21
7.2.8 NAI shall pay (and shall indemnify and hold harmless Agent
from and against) all Losses incurred by Agent in connection with or
because of (A) the interest acquired by Agent in any Collateral pursuant
to this Agreement, or (B) the negotiation or administration of this
Agreement, whether such Losses are incurred at the time of execution of
this Agreement or at any time in the future. Costs and expenses included
in such Losses may include, without limitation, all filing and recording
fees, taxes, UCC search fees and Attorneys' Fees incurred by Agent with
respect to the Collateral.
7.2.9 Without limiting the foregoing, within five Business Days
after NAI becomes aware of any failure of the pledge or security
interest contemplated herein in the Transition Account or any Account,
Certificate of Deposit or Cash Collateral to be a valid, perfected,
first priority pledge or security interest (regardless of the
characterization of the Transition Account or any Accounts, Certificates
of Deposit or Cash Collateral as deposit accounts, instruments or
general intangibles under the UCC), NAI shall notify Agent, BNPLC and
the Participants of such failure. In addition, if the failure would not
exist but for NAI's delivery of Cash Collateral to Agent subject to
prior Liens or other claims by one or more third parties, or but for the
grant by NAI itself of any Lien or other interest in the Collateral to
one or more third parties, then, in addition to any other remedies
available to BNPLC or Agent under the circumstances, NAI must pay to
BNPLC any additional Base Rent that has accrued under the Land Lease
because of (or that would have accrued if BNPLC had been aware of) the
failure, together with interest at the Default Rate on any such
additional Base Rent.
ARTICLE VIII AUTHORIZED ACTION BY AGENT
Section 8.1 Power of Attorney. NAI hereby irrevocably appoints Agent as
NAI's attorney-in-fact for the purpose of authorizing Agent to perform (but
Agent shall not be obligated to and shall incur no liability to NAI or any third
party for failure to perform) any act which NAI is obligated by this Agreement
to perform, and to exercise, consistent with the other provisions of this
Agreement, such rights and powers as NAI might exercise with respect to the
Collateral during any period in which a Default or Event of Default has occurred
and is continuing, including the right to (a) collect by legal proceedings or
otherwise and endorse, receive and receipt for all dividends, interest,
payments, proceeds and other sums and property now or hereafter payable on or on
account of the Collateral; (b) enter into any extension, reorganization,
deposit, merger, consolidation or other agreement pertaining to, or deposit,
surrender, accept, hold or apply other property in exchange for the Collateral;
(c) insure, process, preserve and enforce the Collateral; (d) make any
compromise or settlement, and take any action it deems advisable, with respect
to the Collateral; (e) pay any indebtedness of NAI relating to the Collateral;
and (f) execute UCC financing statements and other documents, instruments and
agreements required hereunder. NAI agrees that such care as Agent gives to the
safekeeping of its own property of like kind shall constitute reasonable care of
the Collateral when in Agent's possession; provided, however, that Agent shall
not be obligated to NAI to give any notice or take any action to preserve rights
against any other Person in connection with the Secured Obligations or with
respect to the Collateral.
ARTICLE IX DEFAULT AND REMEDIES
Section 9.1 Remedies. In addition to all other rights and remedies
granted to Agent, BNPLC or the Participants by this Agreement, the Land Lease,
the Purchase Agreement, the Participation Agreement, the UCC and other
Applicable Laws, Agent may, upon the occurrence and during the continuance of
any Event of Default, exercise any one or more of the following rights and
remedies, all of which will be in furtherance of its rights as a secured party
under the UCC:
[Phase IV - Land] -16-
<PAGE> 22
(a) Agent may collect, receive, appropriate or realize upon the
Collateral or otherwise foreclose or enforce the pledge of or security
interests in any or all Collateral in any manner permitted by Applicable
Law or in this Agreement; and
(b) Agent may notify any or all Deposit Takers to pay all or any
portion of the Collateral held by such Deposit Taker(s) directly to
Agent.
Agent shall distribute the proceeds of all Collateral received by Agent after
the occurrence of an Event of Default to BNPLC and the Participants for
application to the Secured Obligations. If any proceeds of Collateral remain
after all Secured Obligations have been paid in full, Agent will deliver or
direct the Deposit Takers to deliver such proceeds to NAI or other Persons
entitled thereto. In any case where notice of any sale or disposition of any
Collateral is required, NAI hereby agrees that seven (7) Business Days notice of
such sale or disposition is reasonable.
ARTICLE X OTHER RECOURSE
Section 10.1 Recovery Not Limited. To the fullest extent permitted by
applicable law, NAI waives any right to require that Agent, BNPLC or the
Participants proceed against any other Person, exhaust any Collateral or other
security for the Secured Obligations, or to have any Other Liable Party joined
with NAI in any suit arising out of the Secured Obligations or this Agreement,
or pursue any other remedy in their power. NAI waives any and all notice of
acceptance of this Agreement. NAI further waives notice of the creation,
modification, rearrangement, renewal or extension for any period of any of the
Secured Obligations of any Other Liable Party from time to time and any defense
arising by reason of any disability or other defense of any Other Liable Party
or by reason of the cessation from any cause whatsoever of the liability of any
Other Liable Party. Until all of the Secured Obligations shall have been paid in
full, NAI shall have no right to subrogation, reimbursement, contribution or
indemnity against any Other Liable Party and NAI waives the right to enforce any
remedy which Agent, BNPLC or any Participant has or may hereafter have against
any Other Liable Party, and waives any benefit of and any right to participate
in any other security whatsoever now or hereafter held by Agent, BNPLC or any
Participant. NAI authorizes Agent, BNPLC and the Participants, without notice or
demand and without any reservation of rights against NAI and without affecting
NAI's liability hereunder or on the Secured Obligations, from time to time to
(a) take or hold any other property of any type from any other Person as
security for the Secured Obligations, and exchange, enforce, waive and release
any or all of such other property, (b) after any Event of Default, apply or
require the application of the Collateral (in accordance with this Agreement) or
such other property in any order they may determine and to direct the order or
manner of sale thereof as they may determine, (c) renew, extend for any period,
accelerate, modify, compromise, settle or release any of the obligations of any
Other Liable Party with respect to any or all of the Secured Obligations or
other security for the Secured Obligations, and (d) release or substitute any
Other Liable Party.
ARTICLE XI PROVISIONS CONCERNING AGENT
In the event of any conflict between the following and other provisions
in this Agreement, the following will control:
Section 11.1 Appointment and Authority. BNPLC and each Participant
hereby irrevocably authorizes Agent, and Agent hereby undertakes, to take all
actions and to exercise such powers under this Agreement as are specifically
delegated to Agent by the terms hereof, together with all other powers
reasonably incidental thereto. The relationship of Agent to the Participants is
only that of one commercial bank acting as collateral agent for others, and
nothing herein shall be construed to constitute Agent a
[Phase IV - Land] -17-
<PAGE> 23
trustee or other fiduciary for any Participant or anyone claiming through or
under a Participant nor to impose on Agent duties and obligations other than
those expressly provided for in this Agreement. With respect to any matters not
expressly provided for in this Agreement and any matters which this Agreement
places within the discretion of Agent, Agent shall not be required to exercise
any discretion or take any action, and it may request instructions from BNPLC
and Participants with respect to any such matter, in which case it shall be
required to act or to refrain from acting (and shall be fully protected and free
from liability to all Participants in so acting or refraining from acting) upon
the instructions of the Majority, as defined in the Participation Agreement,
including itself as a Participant and BNPLC; provided, however, that Agent shall
not be required to take any action which exposes it to a risk of personal
liability that it considers unreasonable or which is contrary to this Agreement
or the other documents referenced herein or to Applicable Law.
Section 11.2 Exculpation, Agent's Reliance, Etc. Neither Agent nor any
of its directors, officers, agents, attorneys, or employees shall be liable for
any action taken or omitted to be taken by any of them under or in connection
with this Agreement, INCLUDING THEIR NEGLIGENCE OF ANY KIND, EXCEPT THAT EACH
SHALL BE LIABLE FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. Without
limiting the generality of the foregoing, Agent (1) may treat the rights of any
Participant under its Participation Agreement as continuing until Agent receives
written notice of the assignment or transfer of those rights in accordance with
such Participation Agreement, signed by such Participant and in form
satisfactory to Agent; (2) may consult with legal counsel (including counsel for
NAI), independent public accountants and other experts selected by it and shall
not be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts, unless the
action taken or omitted constitutes misconduct; (3) makes no warranty or
representation and shall not be responsible for any statements, warranties or
representations made in or in connection with this Agreement or the other
documents referenced herein; (4) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of the Transaction Documents on the part of any party thereto, or to
inspect the property (including the books and records) of any party thereto; (5)
shall not be responsible to any Participant for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of any Transaction
Document or any instrument or document furnished in connection therewith; (6)
may rely upon the representations and warranties of NAI, Participants and
Deposit Takers in exercising its powers hereunder; and (6) shall incur no
liability under or in respect of the Transaction Documents by acting upon any
notice, consent, certificate or other instrument or writing (including any
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper Person or Persons.
Section 11.3 Participant's Credit Decisions. Each Participant
acknowledges that it has, independently and without reliance upon Agent or any
other Participant, made its own analysis of NAI and the transactions
contemplated hereby and its own independent decision to enter into the
Transaction Documents to which it is a party. Each Participant also acknowledges
that it will, independently and without reliance upon Agent or any other
Participant and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Transaction Documents.
Section 11.4 Indemnity. Each Participant agrees to indemnify Agent (to
the extent not reimbursed by NAI within ten days after demand) from and against
such Participant's Percentage of any and all Losses of any kind or nature
whatsoever which to any extent (in whole or in part) may be imposed on, incurred
by, or asserted against Agent growing out of, resulting from or in any other way
associated with any of the Collateral, the Transaction Documents and the
transactions and events (including the enforcement thereof) at any time
associated therewith or contemplated therein. THE FOREGOING INDEMNIFICATION
SHALL APPLY WHETHER OR NOT SUCH LOSSES ARE IN ANY WAY OR TO ANY
[Phase IV - Land] -18-
<PAGE> 24
EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY,
OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND
BY AGENT, PROVIDED ONLY THAT NO PARTICIPANT SHALL BE OBLIGATED UNDER THIS
SECTION TO INDEMNIFY AGENT FOR THAT PORTION, IF ANY, OF ANY LOSS WHICH IS
PROXIMATELY CAUSED BY AGENT'S OWN INDIVIDUAL GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, AS DETERMINED IN A FINAL JUDGMENT RENDERED AGAINST AGENT. Cumulative
of the foregoing, each Participant agrees to reimburse Agent promptly upon
demand for such Participant's Percentage share of any costs and expenses to be
paid to Agent by NAI hereunder to the extent that Agent is not timely reimbursed
by NAI as provided in subsection 7.2.8. As used in this Section the term "Agent"
shall refer not only to the Person designated as such in the introductory
paragraph of this Agreement, but also to each director, officer, agent,
attorney, employee, representative and Affiliate of such Person.
Section 11.5 Agent's Rights as Participant and Deposit Taker. In its
capacity as a Participant, Banque Nationale de Paris shall have the same rights
and obligations as any Participant and may exercise such rights as though it
were not Agent. In its capacity as a Deposit Taker, Banque Nationale de Paris
shall have the same rights and obligations as any Deposit Taker and may exercise
such rights as though it were not Agent. Banque Nationale de Paris and any of
its Affiliates may accept deposits from, lend money to, act as Trustee under
indentures of, and generally engage in any kind of business with NAI or its
Affiliates, all as if Banque Nationale de Paris were not designated as the Agent
hereunder and without any duty to account therefor to any other Participant.
Section 11.6 Investments. Whenever Agent in good faith determines that
it is uncertain about how to distribute any funds which it has received
hereunder, or whenever Agent in good faith determines that there is any dispute
among BNPLC and Participants about how such funds should be distributed, Agent
may choose to defer distribution of the funds which are the subject of such
uncertainty or dispute. If Agent in good faith believes that the uncertainty or
dispute will not be promptly resolved, or if Agent is otherwise required to
invest funds pending distribution, Agent shall invest such funds pending
distribution, all interest on any such investment shall be distributed upon the
distribution of such investment and in the same proportion and to the same
Persons as such investment. All moneys received by Agent for distribution to
BNPLC or Participants shall be held by Agent pending such distribution solely as
Agent hereunder, and Agent shall have no equitable title to any portion thereof.
Section 11.7 Benefit of Article XI. The provisions of this Article
(other than the following Section 11.8) are intended solely for the benefit of
Agent, BNPLC and Participants, and NAI shall not be entitled to rely on any such
provision or assert any such provision in a claim or defense against Agent,
BNPLC or any Participant. Agent, BNPLC and Participants may waive or amend such
provisions as they desire without any notice to or consent of NAI.
Section 11.8 Resignation. Agent may resign at any time by giving written
notice thereof to BNPLC, Participants and NAI. Upon any such resignation the
Majority (as defined in the Participation Agreement) shall have the right to
appoint a successor Agent, subject to NAI's consent, such consent not to be
unreasonably withheld. A successor must be appointed for any retiring Agent, and
such Agent's resignation shall become effective when such successor accepts such
appointment. If, within thirty days after the date of the retiring Agent's
resignation, no successor Agent has been appointed and has accepted such
appointment, then the retiring Agent may appoint a successor Agent, which shall
be a commercial bank organized or licensed to conduct a banking or trust
business under the laws of the United States of America or of any state thereof.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
the retiring Agent shall be discharged from its duties and obligations under
this
[Phase IV - Land] -19-
<PAGE> 25
Agreement. After any retiring Agent's resignation hereunder, the provisions of
this Article 10.1 shall continue to inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent.
ARTICLE XII MISCELLANEOUS
Section 12.1 Provisions Incorporated From Other Operative Documents.
Reference is made to the Common Definitions and Provisions Agreement (Phase IV -
Land), to the Purchase Agreement and to the Participation Agreement for a
statement of the terms thereof. Without limiting the generality of the
foregoing, the provisions of Article II of the Common Definitions and Provisions
Agreement (Phase IV - Land) are incorporated into this Agreement for all
purposes as if set forth in this Article.
Section 12.2 Cumulative Rights, etc. Except as herein expressly provided
to the contrary, the rights, powers and remedies of Agent, BNPLC and the
Participants under this Agreement shall be in addition to all rights, powers and
remedies given to them by virtue of any Applicable Law, any other Transaction
Document or any other agreement, all of which rights, powers, and remedies shall
be cumulative and may be exercised successively or concurrently without
impairing their respective rights hereunder. NAI waives any right to require
Agent, BNPLC or any Participant to proceed against any Person or to exhaust any
Collateral or to pursue any remedy in Agent's, BNPLC's or such Participant's
power.
Section 12.3 Survival of Agreements. All representations and warranties
of NAI herein, and all covenants and agreements herein shall survive the
execution and delivery of this Agreement, the execution and delivery of any
other Transaction Documents and the creation of the Secured Obligations and
continue until terminated or released as provided herein.
Section 12.4 Other Liable Party. Neither this Agreement nor the exercise
by Agent or the failure of Agent to exercise any right, power or remedy
conferred herein or by law shall be construed as relieving any Other Liable
Party from liability on the Secured Obligations or any deficiency thereon. This
Agreement shall continue irrespective of the fact that the liability of any
Other Liable Party may have ceased or irrespective of the validity or
enforceability of any other agreement evidencing or securing the Secured
Obligations to which NAI or any Other Liable Party may be a party, and
notwithstanding the reorganization, death, incapacity or bankruptcy of any Other
Liable Party, or any other event or proceeding affecting any Other Liable Party.
Section 12.5 Termination. Following the Designated Sale Date, upon
satisfaction in full of all Secured Obligations and upon written request for the
termination hereof delivered by NAI to Agent, (i) this Agreement and the pledge
and security interest created hereby shall terminate and all rights to the
Collateral shall revert to NAI and (ii) Agent will, upon NAI's request and at
NAI's expense execute and deliver to NAI such documents as NAI shall reasonably
request to evidence such termination and release.
[The signature pages follow.]
[Phase IV - Land] -20-
<PAGE> 26
IN WITNESS WHEREOF, NAI, BNPLC, Agent and the Participants whose
signatures appear below have caused this Agreement to be executed as of December
___, 1999.
"NAI"
NETWORK APPLIANCE, INC.
By:
----------------------------------
<PAGE> 27
[Continuation of signature pages to Pledge Agreement (Phase IV - Land) dated to
be effective December __, 1999.]
"BNPLC"
BNP LEASING CORPORATION
By:
----------------------------------
Lloyd G. Cox, Vice President
<PAGE> 28
[Continuation of signature pages to Pledge Agreement (Phase IV - Land) dated to
be effective December __, 1999.]
"AGENT"
BANQUE NATIONALE DE PARIS
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
"PARTICIPANT"
BANQUE NATIONALE DE PARIS
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
<PAGE> 29
ATTACHMENT 1
TO PLEDGE AGREEMENT
CERTIFICATE OF DEPOSIT
(No. _________)
[---------, -----]
[NAME OF THE ISSUING
DEPOSIT TAKER AND THE
ADDRESS OF ITS APPLICABLE
ACCOUNT OFFICE]
PAYABLE TO
THE ORDER OF: BANQUE NATIONALE DE PARIS, as Agent under the
Pledge Agreement (Phase IV - Land) dated December __,
1999, among Network Appliance, Inc., BNP Leasing
Corporation, Banque Nationale de Paris and any other
financial institutions which are from time to time
Participants under such Pledge Agreement (Phase IV - Land)
and Banque Nationale de Paris, acting in its capacity as
agent for BNPLC and the Participants
_____ Dollars in current funds, without interest, seven days after presentment
of this certificate properly endorsed.
The bank issuing this certificate acknowledges and certifies that on the
date indicated above the payee deposited the dollar amount indicated above, and
that such amount shall be payable as provided above.
- --------------------------------------------------------------------------------
Authorized Signature
<PAGE> 30
ATTACHMENT 2
TO PLEDGE AGREEMENT
SUPPLEMENT TO PLEDGE AGREEMENT
[----------, ----]
Banque Nationale de Paris
- -------------------------
- -------------------------
- -------------------------
Network Appliance, Inc.
- -------------------------
- -------------------------
- -------------------------
1. Reference is made to the Pledge Agreement (Phase IV - Land) (the
"PLEDGE AGREEMENT") dated December ___, 1999 among Network Appliance, Inc.
("NAI"), BNP Leasing Corporation ("BNPLC"), Banque Nationale de Paris and any
other financial institutions which are from time to time Participants under such
Pledge Agreement (collectively, the "PARTICIPANTS") and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the Participants (in such
capacity, "AGENT"). Unless otherwise defined herein, all capitalized terms used
in this Supplement have the respective meanings given to those terms in the
Pledge Agreement.
2. The undersigned hereby certifies to Agent and NAI that the
undersigned has become a party to the Participation Agreement by executing a
supplement as provided therein and that its Percentage thereunder is ______%.
3. The undersigned, by executing and delivering this Supplement to NAI
and Agent, hereby agrees to become a party to the Pledge Agreement and agrees to
be bound by all of the terms thereof applicable to Participants. The Deposit
Taker for the undersigned shall be _________________, until such time as another
Deposit Taker for the undersigned shall be designated in accordance with
Sections 4.4 or 4.5 of the Pledge Agreement. The undersigned certifies to Agent
and NAI that such Deposit Taker is an Initially Qualified Deposit Taker and
satisfies the requirements for a Deposit Taker set forth in Section 4.1 of the
Pledge Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Supplement as of
the day and year indicated above.
[______________________________________________________________________________]
By:
-----------------------------------------------------------------------------
Name:
-----------------------
Title:
----------------------
<PAGE> 31
ATTACHMENT 3
TO PLEDGE AGREEMENT
NOTICE OF NAI'S ELECTION TO CHANGE THE COLLATERAL PERCENTAGE
[---------, -----]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase IV - Land) (the "PLEDGE AGREEMENT")
dated December ___, 1999 among Network Appliance, Inc., BNP
Leasing Corporation, Banque Nationale de Paris and any other
financial institutions which are from time to time Participants
under such Pledge Agreement and Banque Nationale de Paris,
acting in its capacity as agent for BNPLC and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings assigned
to them in the Pledge Agreement referenced above. This letter constitutes notice
to you, as Agent under the Pledge Agreement, that pursuant to Section 3.1 of the
Pledge Agreement, NAI elects to change the Collateral Percentage to:
__________ percent (___%),
on the following Base Rent Date:
__________________, ______
NAI expects that multiplying the new Collateral Percentage specified above
against Stipulated Loss Value of:
____________________________ Dollars ($__________),
will result in an expected new Minimum Collateral Value of:
_____________________________ Dollars ($__________).
[NOTE: THE NEXT PARAGRAPH WILL BE INCLUDED ONLY IN A NOTICE OF AN INCREASE IN
THE COLLATERAL PERCENTAGE, BECAUSE OF WHICH NAI WILL BE REQUIRED TO DELIVER
ADDITIONAL CASH COLLATERAL TO SATISFY THE MINIMUM COLLATERAL VALUE REQUIREMENTS
IN SECTION 5.1 OF THE PLEDGE AGREEMENT:
Because of the increase in the Collateral Percentage which will result from this
notice and the corresponding increase in the Minimum Collateral Value, NAI will
deliver additional Cash Collateral to you as required by Section 5.1 of the
Pledge Agreement no later than 12:00 noon (San Francisco time) on the Base Rent
Date specified above, in the amount of:
<PAGE> 32
___________________________ Dollars ($__________).]
To assure you that NAI has satisfied the conditions to its right to change the
Collateral Percentage as provided in this notice, and to induce you to rely upon
this notice in discharging your responsibilities under the Pledge Agreement, NAI
certifies to you that:
1. NAI is giving this notice to you, BNPLC and the Participants at least
ten Business Days prior to the Base Rent Date specified above, and such Base
Rent Date is the commencement of a Base Rent Period.
2. No Event of Default or other event or circumstance that would,
pursuant to Section 3.2 of the Pledge Agreement, preclude NAI from designating
the new Collateral Percentage above has occurred and is continuing, and NAI does
not anticipate that on the Base Rent Date specified above there will have
occurred and be continuing any such Event of Default or other event or
circumstance.
3. No Mandatory Collateral Period shall be in effect as of the effective
date specified above.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE STATEMENTS ABOVE ARE
NOT CORRECT. HOWEVER, WE ASK THAT YOU NOTIFY NAI IMMEDIATELY IF FOR ANY REASON
YOU BELIEVE THIS NOTICE IS DEFECTIVE.
Network Appliance, Inc.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
[cc BNPLC and all Participants]
[Phase IV - Land] -2-
<PAGE> 33
ATTACHMENT 4
TO PLEDGE AGREEMENT
NOTICE OF SECURITY INTEREST
[_________, _____]
[Name of Deposit Taker]
[Address of Deposit Taker]
1. Reference is made to the Pledge Agreement (Phase IV - Land) (the "PLEDGE
AGREEMENT") dated December __, 1999 among Network Appliance, Inc. ("NAI"), BNP
Leasing Corporation ("BNPLC"), Banque Nationale de Paris and any other financial
institutions which are from time to time Participants under such Pledge
Agreement (collectively, the "PARTICIPANTS") and Banque Nationale de Paris,
acting in its capacity as agent for BNPLC and the Participants (in such
capacity, "AGENT"). Unless otherwise defined herein, all capitalized terms used
in this Notice have the respective meanings given to those terms in the Pledge
Agreement.
2. NAI has informed Agent that NAI has established with the addressee of this
Notice (the "DEPOSIT TAKER") the following non-interest bearing Account(s) to be
maintained at the following Account Office(s):
<TABLE>
<CAPTION>
Account Account Account
Type Office Number
<S> <C> <C>
Time Deposit ------------ ------------
Time Deposit ------------ ------------
Time Deposit ------------ ------------
</TABLE>
NAI has further informed Agent that NAI intends to maintain Cash Collateral in
such Account(s), and that to evidence such Account(s) and the amount of Cash
Collateral held therein from time to time, NAI has authorized the Deposit Taker
to issue Certificates of Deposit payable to the order of Agent as provided in
the Pledge Agreement.
3. NAI and Agent hereby notify Deposit Taker that, pursuant to the
Pledge Agreement, NAI has granted to Agent, for the ratable benefit of BNPLC and
the Participants as security for the Secured Obligations, a pledge of and
security interest in all Accounts and other Collateral maintained by NAI with
Deposit Taker, including the Account(s) described in Section 2 above.
4. In furtherance of such grant, NAI and Agent hereby authorize and
direct Deposit Taker to:
(a) hold all Collateral for Agent and as Agent's bailee,
separate and apart from all other property and funds of NAI and all
other Persons and to permit no other funds to be deposited or credited
to the Account(s);
<PAGE> 34
(b) make a notation in its books and records of the interest of
Agent in the Collateral and that the Account(s) and all deposits therein
or sums credited thereto are subject to a pledge and security interest
in favor of Agent;
(c) issue and redeem Certificates of Deposit evidencing the
Account(s), as directed by Agent pursuant to the Pledge Agreement;
(d) take such other steps as Agent may reasonably request to
record, maintain, validate and perfect its pledge of and security
interest in the Collateral; and
(e) upon receipt of notice from Agent that an Event of Default
has occurred, transfer and deliver to Agent or its nominee, together
with all necessary endorsements, all or such portion of the Collateral
held by Deposit Taker as Agent shall direct; provided, however, that in
connection therewith the Deposit Taker may require compliance by Agent
with the provisions in Section 5.4 of the Pledge Agreement for
redemption of any outstanding Certificates of Deposit which evidence the
Account(s).
5. NAI and Agent agree that (a) the possession by Deposit Taker of all
money, instruments, chattel paper and other property constituting Collateral
shall be deemed to be possession by Agent or a person designated by Agent, for
purposes of perfecting the security interest granted to Agent hereunder pursuant
to Section 9305, 8313 or 8213 of the UCC (as the case may be), and (b)
notifications by Deposit Taker to other Persons holding any such property, and
Acknowledgments, receipts or confirmations from such Persons delivered to
Deposit Taker, shall be deemed notifications to, or Acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Deposit Taker for the benefit of Agent for the purposes of perfecting
such security interests under applicable law.
6. As contemplated by the Pledge Agreement, please acknowledge Deposit
Taker's receipt of, and consent to, this notice and confirm the representations
and agreements set forth in the Acknowledgment and Agreement attached hereto by
executing the same and returning this letter to Agent. For your files, a copy of
this letter is enclosed which you may retain. The authorizations and directions
set forth herein may not be revoked or modified without the written consent of
Agent.
"AGENT"
BANQUE NATIONALE DE PARIS
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
[Phase IV - Land] -2-
<PAGE> 35
"NAI"
Network Appliance, Inc.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
[Phase IV - Land] -3-
<PAGE> 36
ACKNOWLEDGMENT AND AGREEMENT
OF DEPOSIT TAKER
Deposit Taker hereby acknowledges receipt of, and consents to, the above
notice, acknowledges that it will hold the Collateral for Agent and as Agent's
bailee, agrees to comply with the authorizations and directions set forth above
and represents to and agrees with NAI and Agent as follows:
(a) Deposit Taker is a commercial bank, organized under the laws
of the United States of America or a state thereof or under the laws of
another country which is doing business in the United States of America.
Deposit Taker is authorized to maintain deposit accounts for others
through the Account Offices specified in the above notice, and Deposit
Taker will not move the accounts described in the above notice to other
offices without the prior written authorization of Agent and NAI.
(b) Deposit Taker has a combined capital, surplus and undivided
profits of at least $500,000,000.
(c) The information set forth above regarding the Account(s) is
accurate. Such Account(s) is (are) currently open and Deposit Taker has
no prior notice of any other pledge, security interest, Lien, adverse
claim or interest in such Account(s).
(e) Deposit Taker shall promptly notify NAI and Agent if the
representations made by Deposit Taker above cease to be true and
correct.
(f) Deposit Taker shall not (i) allow the withdrawal of funds
from any Account by any Person other than Agent, or (ii) WITHOUT IN EACH
CASE FIRST OBTAINING THE PRIOR WRITTEN AUTHORIZATION OF AGENT, setoff or
attempt to setoff any Secured Obligations owed to Deposit Taker against
any Collateral held from time to time by Deposit Taker, or (iii) WITHOUT
IN EACH CASE FIRST OBTAINING THE PRIOR WRITTEN AUTHORIZATION OF BOTH NAI
AND AGENT, setoff or attempt to setoff any obligations owed to Deposit
Taker other than Secured Obligations, against any Collateral held from
time to time by Deposit Taker.
[___________________________________]
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
[Date]
<PAGE> 37
ATTACHMENT 5
TO PLEDGE AGREEMENT
EXAMPLES OF CALCULATIONS REQUIRED
TO AVOID A COLLATERAL IMBALANCE
The examples below are provided to illustrate the calculations required
for allocations of Cash Collateral in a manner that will avoid a Collateral
Imbalance. The examples are not intended to reflect actual numbers under this
Agreement or actual Percentages of BNPLC or any of the Participants; nor are the
examples intended to provide a formula for the allocations that would be
appropriate in every case. The examples also reflect adjustments that would be
appropriate if the Collateral Percentage were adjusted from time to time from
and after the Base Rent Commencement Date, although this Agreement provides that
such percentage is not to increase above zero until the second anniversary of
the Effective Date (expected to be well after the Base Rent Commencement Date),
except in a Mandatory Collateral Period, during which such percentage would be
100%.
EXAMPLE NO. 1
Assumptions:
1. Two Participants ("Participant A" and "Participant B") are parties to
the Participation Agreement with BNPLC. Participant A's Percentage is
50% and Participant B's Percentage is 45%, leaving BNPLC with a
Percentage of 5%.
2. On the Base Rent Commencement Date, Funding Advances (including those to
cover Carrying Costs under the Land Lease) totaled $12,000,000,
resulting in a Stipulated Loss Value of $12,000,000, allocable as
follows:
<TABLE>
<S> <C>
A. BNPLC's Parent (providing BNPLC's share) (5%) ......... $ 600,000
B. Participant A (50%) ................................... 6,000,000
C. Participant B (45%) ................................... 5,400,000
-----------
TOTAL ............................................. $12,000,000
</TABLE>
3. The Minimum Collateral Value on the Base Rent Commencement Date was
$7,200,000 (reflecting a Collateral Percentage of 60% times Stipulated
Loss Value).
4. On the Base Rent Commencement Date, NAI had delivered to Agent Cash
Collateral of $7,200,000, equal to the Minimum Collateral Value, as
required by Section 5.1 of this Agreement.
Allocation of Cash Collateral Required: To avoid a Collateral Imbalance under
these assumptions, Agent would be required to allocate the $7,200,000 to the
Deposit Takers for BNPLC and the Participants as follows:
<TABLE>
<S> <C>
A. BNPLC's Deposit Taker (5% of Minimum Collateral Value) ................... $ 360,000
B. Participant A's Deposit Taker (50% of Minimum Collateral Value) .......... 3,600,000
C. Participant B's Deposit Taker (45% of Minimum Collateral Value) ......... 3,240,000
----------
TOTAL .................................................................... $7,200,000
</TABLE>
<PAGE> 38
EXAMPLE NO. 2
Assumptions: Assume the same facts as in Example No. 1, and in addition assume
that:
1. Effective as of the first Base Rent Date, NAI increased its Collateral
Percentage from 60% to 80%, raising the Minimum Collateral Value to
$9,600,000. Because of such increase, NAI also delivered an additional
$2,400,000 as Cash Collateral to Agent on the first Base Rent Date,
bringing the total of all Cash Collateral delivered by NAI to $9,600,000
as required by Section 5.1 of this Agreement.
2. Also effective as of the first Base Rent Date, a new Participant
approved by NAI ("Participant C") became a party to this Agreement and
the Participation Agreement, taking a Percentage of 20%. Simultaneously,
Participant A and Participant B entered into supplements to the
Participation Agreement which reduced their Percentages to 40% and 35%,
respectively.
Allocation of Cash Collateral Required: To avoid a Collateral Imbalance under
these assumptions, Agent would be required to allocate the Cash Collateral as
required to leave the Deposit Takers for BNPLC and the Participants with the
following amounts:
<TABLE>
<S> <C>
A. BNPLC's Deposit Taker (5% of Minimum Collateral Value) ................... 480,000
B. Participant A's Deposit Taker (40% of Minimum Collateral Value) .......... 3,840,000
C. Participant B's Deposit Taker (35% of Minimum Collateral Value) .......... 3,360,000
D. Participant C's Deposit Taker (20% of Minimum Collateral Value) ......... 1,920,000
----------
TOTAL .................................................................... $9,600,000
</TABLE>
Thus, to prevent a Collateral Imbalance, Agent would have to allocate the
$2,400,000 of additional Cash Collateral it received on the first Base Rent Date
as follows:
<TABLE>
<S> <C>
A. BNPLC's Deposit Taker ($480,000 less $360,000 already on deposit) ................ $ 120,000
B. Participant A's Deposit Taker ($3,840,000 less $3,600,000 already on deposit) .... 240,000
C. Participant B's Deposit Taker ($3,360,000 less $3,240,000 already on deposit) .... 120,000
D. Participant C's Deposit Taker ($1,920,000 less $0 already on deposit) ........... 1,920,000
----------
TOTAL ............................................................................ $2,400,000
</TABLE>
EXAMPLE NO. 3
Assumptions: Assume the same facts as in Example No. 2, except that:
1. Instead of increasing its Collateral Percentage from 60% to 80%, NAI
increased its Collateral Percentage to 70% on the first Base Rent Date,
raising the Minimum Collateral Value to $8,400,000. Because of such
increase, NAI delivered an additional $1,200,000 as additional Cash
Collateral to Agent on the first Base Rent Date, bringing the total of
all Cash Collateral delivered by NAI to $8,400,000 as required by
Section 5.1 of this Agreement.
Allocation of Cash Collateral Required: To avoid a Collateral Imbalance under
these assumptions, Agent would be required to allocate the Cash Collateral as
required to leave the Deposit Takers for BNPLC and the Participants with the
following amounts:
[Phase IV - Land] -2-
<PAGE> 39
<TABLE>
<S> <C>
A. BNPLC's Deposit Taker (5% of Minimum Collateral Value) ................... $ 420,000
B. Participant A's Deposit Taker (40% of Minimum Collateral Value) .......... 3,360,000
C. Participant B's Deposit Taker (35% of Minimum Collateral Value) .......... 2,940,000
D. Participant C's Deposit Taker (20% of Minimum Collateral Value) ......... 1,680,000
----------
TOTAL .................................................................... $8,400,000
</TABLE>
Thus, to prevent a Collateral Imbalance, Agent would have to allocate the
$1,200,000 of additional Cash Collateral it received on the first Base Rent Date
as follows:
<TABLE>
<S> <C>
A. BNPLC's Deposit Taker ($420,000 less $360,000 already on deposit) ................ $ 60,000
B. Participant A's Deposit Taker ($3,360,000 less $3,600,000 already on deposit) .... (240,000)
C. Participant B's Deposit Taker ($2,940,000 less $3,240,000 already on deposit) .... (300,000)
D. Participant C's Deposit Taker ($1,680,000 less $0 already on deposit) ........... 1,680,000
-----------
TOTAL ............................................................................ $ 1,200,000
</TABLE>
NOTE: THE NEGATIVE AMOUNTS (IN PARENTHESIS) ABOVE REPRESENT REQUIRED WITHDRAWALS
RATHER THAN DEPOSITS. AS EXAMPLE NO. 3 ILLUSTRATES, TO AVOID A COLLATERAL
IMBALANCE AGENT MAY FROM TIME TO TIME HAVE TO WITHDRAW CASH COLLATERAL HELD BY
THE DEPOSIT TAKER FOR ONE PARTICIPANT AND DEPOSIT IT IN AN ACCOUNT MAINTAINED BY
A DEPOSIT TAKER FOR ANOTHER PARTICIPANT.
[Phase IV - Land] -3-
<PAGE> 40
ATTACHMENT 6
TO PLEDGE AGREEMENT
NOTICE OF NAI'S REQUIREMENT TO
WITHDRAW EXCESS CASH COLLATERAL
[_________, _____]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase IV - Land) dated December ___, 1999 among
Network Appliance, Inc., BNP Leasing Corporation, Banque
Nationale de Paris and any other financial institutions which are
from time to time Participants under such Pledge Agreement (Phase
IV - Land) and Banque Nationale de Paris, acting in its capacity
as agent for BNPLC and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Land) referenced above (the
"PLEDGE AGREEMENT"). This letter constitutes notice to you, as Agent under the
Pledge Agreement, that pursuant to Section 6.1 of the Pledge Agreement, NAI
requires you to withdraw from the Accounts and return to NAI the following
amount:
___________________________ Dollars ($__________)
on the following date:
__________, ____
To assure you that NAI has satisfied the conditions to its right to
require such withdrawal, and to induce you to comply with this notice, NAI
certifies to you that:
1. Your withdrawal and delivery of the amount specified above to
NAI will not cause the Value of the remaining Collateral to be less than
the Minimum Collateral Value. After giving effect to such withdrawal,
the Collateral remaining in the Accounts maintained by the Deposit
Takers will be:
____________________________ Dollars ($__________),
<PAGE> 41
and the Minimum Collateral Value on the date specified above will equal:
____________________________ Dollars ($__________).
Such Minimum Collateral Value equals the Collateral Percentage of:
__________ percent (___%),
times the Stipulated Loss Value of:
____________________________ Dollars ($__________).
2. NAI is giving this notice to you, BNPLC and the Participants
at least ten days prior to the Base Rent Date specified above.
3. No Default or Event of Default has occurred and is continuing
as of the date of this notice, and NAI does not anticipate that any
Default or Event of Default will have occurred and be continuing on the
date upon which the withdrawal is required.
4. NAI agrees that you may determine the Accounts from which to
make any withdrawal required by NAI pursuant to this Section as
necessary to prevent or mitigate any Collateral Imbalance.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE STATEMENTS
ABOVE ARE NOT CORRECT OR IF THE DATE FOR WITHDRAWAL SPECIFIED ABOVE IS
LESS THAN TEN DAYS AFTER YOUR RECEIPT OF THIS NOTICE. HOWEVER, WE ASK
THAT YOU NOTIFY NAI IMMEDIATELY IF FOR ANY REASON YOU BELIEVE THIS
NOTICE IS DEFECTIVE.
-2-
<PAGE> 42
Please remember that the express terms of Certificates of Deposit issued
pursuant to the Pledge Agreement require presentment of the Certificates of
Deposit seven days before Cash Collateral is to be withdrawn from the Accounts
they evidence. Accordingly, you must present Certificates of Deposit to Deposit
Takers seven days prior to the withdrawal of Cash Collateral required by this
notice. For your convenience, we have attached a letter as Annex 1 to this
notice that you might execute and send to Deposit Takers to advise them of your
intent to withdraw and of your presentment of Certificates of Deposit as
required in connection therewith. The attached letter also sets forth the
amounts NAI believes you must withdraw from each Account to avoid a Collateral
Imbalance.
Network Appliance, Inc.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
[cc BNPLC and all Participants]
-3-
<PAGE> 43
Annex 1
TO NAI'S NOTICE OF REQUIREMENT TO
WITHDRAW CASH EXCESS COLLATERAL
[_________, _____]
Deposit Takers on the
Attached Distribution List
Re: Pledge Agreement (Phase IV - Land) dated December __, 1999 among
Network Appliance, Inc., BNP Leasing Corporation, Banque Nationale
de Paris and any other financial institutions which are from time to
time Participants under such Pledge Agreement (Phase IV - Land) and
Banque Nationale de Paris, acting in its capacity as agent for BNPLC
and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Land) referenced above (the
"PLEDGE AGREEMENT"). This letter constitutes notice from the undersigned, as
Agent under the Pledge Agreement, that pursuant to Section 6.1 of the Pledge
Agreement, NAI requires Agent to withdraw from the Accounts and return to NAI
the amounts listed below on the following date:
__________, ____
Accordingly, on such date, the undersigned intends to withdraw the
following amounts from the following Accounts, and with this letter the
undersigned is presenting Certificates of Deposit as required in connection with
such withdrawal:
<TABLE>
Deposit Taker Account No. Amount
- ------------- ----------- ------
<S> <C> <C>
1.____________________ ______________________ $______________
2.____________________ ______________________ $______________
3.____________________ ______________________ $______________
4.____________________ ______________________ $______________
TOTAL WITHDRAWALS: $______________
</TABLE>
BANQUE NATIONALE DE PARIS, AS AGENT
Name:
---------------------------
Title:
---------------------------
[cc BNPLC and NAI]
[Phase IV - Land] -4-
<PAGE> 44
ATTACHMENT 7
TO PLEDGE AGREEMENT
NOTICE OF NAI'S REQUIREMENT OF
DIRECT PAYMENTS TO PARTICIPANTS
[_________, _____]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase IV - Land) dated December ___, 1999 among
Network Appliance, Inc., BNP Leasing Corporation, Banque Nationale
de Paris and any other financial institutions which are from time to
time Participants under such Pledge Agreement (Phase IV - Land) and
Banque Nationale de Paris, acting in its capacity as agent for BNPLC
and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Land) referenced above (the
"PLEDGE AGREEMENT"). This letter constitutes notice to you, as Agent under the
Pledge Agreement, that pursuant to Section 6.2 of the Pledge Agreement, NAI
requires you to withdraw from the Accounts and pay directly to the Participants
(in proportion to their respective Percentages) the following amount:
____________________________ Dollars ($__________)
on the following date (which, NAI acknowledges, must be the Designated Sale Date
or a date thereafter prior to an Event of Default):
__________, ____
The amount specified above equals the following percentage (equal to the
aggregate of all Participant's Percentages):
__________ percent (___%),
times the total of all Cash Collateral presently pledged under the Pledge
Agreement:
____________________________ Dollars ($__________).
<PAGE> 45
To assure you that NAI has satisfied the conditions to its right to
require such withdrawal, and to induce you to comply with this notice, NAI
certifies to you that NAI is giving this notice to you, BNPLC and the
Participants at least ten days prior to the date of required withdrawal and
payment specified above.
Please remember that the express terms of Certificates of Deposit issued
pursuant to the Pledge Agreement require presentment of the Certificates of
Deposit seven days before Cash Collateral is to be withdrawn from the Accounts
they evidence. Accordingly, you must present Certificates of Deposit to Deposit
Takers seven days prior to the withdrawal of Cash Collateral required by this
notice. For your convenience, we have attached a letter as Annex 1 to this
notice that you might execute and send to Deposit Takers to advise them of your
intent to withdraw and of your presentment of Certificates of Deposit as
required in connection therewith. The attached letter also sets forth the
amounts NAI believes you must withdraw from each Account to comply with
subsection 6.2.2 of the Pledge Agreement.
Network Appliance, Inc.
By:
----------------------------------
Name:
------------------------
Title:
------------------------
[cc BNPLC and all Participants]
[Phase IV - Land] -2-
<PAGE> 46
Annex 1
TO NAI'S NOTICE OF REQUIREMENT TO
WITHDRAW CASH COLLATERAL FOR
DIRECT PAYMENTS TO PARTICIPANTS
[_________, _____]
Deposit Takers on the
Attached Distribution List
Re: Pledge Agreement (Phase IV - Land) dated December ___, 1999 among
Network Appliance, Inc., BNP Leasing Corporation, Banque Nationale
de Paris and any other financial institutions which are from time to
time Participants under such Pledge Agreement (Phase IV - Land) and
Banque Nationale de Paris, acting in its capacity as agent for BNPLC
and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Land) referenced above (the
"PLEDGE AGREEMENT"). This letter constitutes notice from the undersigned, as
Agent under the Pledge Agreement, that pursuant to Section 6.2 of the Pledge
Agreement, NAI requires Agent to withdraw from the Accounts and pay to the
Participants (in proportion to their respective Percentages) the amounts listed
below on the following date:
__________, ____
Accordingly, on such date, the undersigned intends to withdraw the
following amounts from the following Accounts, and with this letter the
undersigned is presenting Certificates of Deposit as required in connection with
such withdrawal:
<TABLE>
Deposit Taker Account No. Amount
- ------------- ----------- ------
<S> <C> <C>
1.____________________ ______________________ $______________
2.____________________ ______________________ $______________
3.____________________ ______________________ $______________
4.____________________ ______________________ $______________
TOTAL WITHDRAWALS: $______________
</TABLE>
BANQUE NATIONALE DE PARIS, AS AGENT
Name:
---------------------------
Title:
---------------------------
[cc BNPLC and NAI]
[Phase IV - Land] -3-
<PAGE> 47
ATTACHMENT 8
TO PLEDGE AGREEMENT
NOTICE OF NAI'S REQUIREMENT OF
DIRECT PAYMENT TO BNPLC
[_________, _____]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase IV - Land) dated December __, 1999 among
Network Appliance, Inc., BNP Leasing Corporation, Banque Nationale
de Paris and any other financial institutions which are from time to
time Participants under such Pledge Agreement (Phase IV - Land) and
Banque Nationale de Paris, acting in its capacity as agent for BNPLC
and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Land) referenced above (the
"PLEDGE AGREEMENT"). This letter constitutes notice to you, as Agent under the
Pledge Agreement, that pursuant to Section 6.3 of the Pledge Agreement, NAI
requires you to withdraw from the Account maintained by the Deposit Taker for
BNPLC and pay directly to BNPLC on behalf of NAI as a payment required by the
Purchase Agreement the following amount:
____________________________ Dollars ($__________)
on the following date (which, NAI acknowledges, must be the Designated Sale Date
or a date thereafter prior to an Event of Default):
__________, ____
To assure you that NAI has satisfied the conditions to its right to
require such withdrawal, and to induce you to comply with this notice, NAI
certifies to you that NAI is giving this notice to you and BNPLC at least ten
days prior to the date of required withdrawal and payment specified above.
Please remember that the express terms of Certificates of Deposit issued
pursuant to the Pledge Agreement require presentment of the Certificates of
Deposit seven days before Cash Collateral is to be withdrawn from the Accounts
they evidence. Accordingly, you must present Certificates of Deposit to the
Deposit Taker for BNPLC seven days prior to the withdrawal of Cash Collateral
required by this notice. For your convenience, we have attached a letter as
Annex 1 to this notice that you might execute and send to the Deposit Taker for
BNPLC to advise it of your intent to withdraw and of your presentment of
Certificates of Deposit as required in connection therewith. The attached letter
also sets forth the amount NAI believes you must withdraw to comply with Section
6.3 of the Pledge Agreement.
Network Appliance, Inc.
By:
----------------------------------
Name:
------------------------
Title:
------------------------
[cc BNPLC]
<PAGE> 48
Annex 1
TO NAI'S NOTICE OF REQUIREMENT OF
DIRECT PAYMENT TO BNPLC
[_________, _____]
[Name of the Deposit Taker for BNPLC]
[Address of such Deposit Taker]
Re: Pledge Agreement (Phase IV - Land) dated December ___, 1999 among
Network Appliance, Inc., BNP Leasing Corporation, Banque Nationale
de Paris and any other financial institutions which are from time to
time Participants under such Pledge Agreement (Phase IV - Land) and
Banque Nationale de Paris, acting in its capacity as agent for BNPLC
and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Land) referenced above (the
"PLEDGE AGREEMENT"). This letter constitutes notice from the undersigned, as
Agent under the Pledge Agreement, that pursuant to Section 6.3 of the Pledge
Agreement, NAI requires Agent to withdraw from the Account maintained by you, as
Deposit Taker for BNPLC, the sum of:
____________________________ Dollars ($__________)
and pay the same to BNPLC as a payment required by the Purchase Agreement on the
following date:
__________, ____
Accordingly, on such date, the undersigned intends to withdraw such amount
from the following Account maintained by you as Deposit Taker for BNPLC, and
with this letter the undersigned is presenting Certificate(s) of Deposit as
required in connection with such withdrawal.
BANQUE NATIONALE DE PARIS, AS AGENT
Name:
---------------------------
Title:
---------------------------
[cc BNPLC and NAI]
[Phase IV - Land] -2-
<PAGE> 49
ATTACHMENT 9
TO PLEDGE AGREEMENT
NOTICE OF NAI'S REQUIREMENT OF A WITHDRAWAL
OF CASH COLLATERAL FROM
A DISQUALIFIED DEPOSIT TAKER
[_________, _____]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase IV - Land) dated December ___, 1999 among
Network Appliance, Inc., BNP Leasing Corporation, Banque Nationale
de Paris and any other financial institutions which are from time to
time Participants under such Pledge Agreement (Phase IV - Land) and
Banque Nationale de Paris, acting in its capacity as agent for BNPLC
and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Land) referenced above (the
"PLEDGE AGREEMENT"). This letter constitutes notice to you, as Agent under the
Pledge Agreement, that pursuant to Section 6.4 of the Pledge Agreement, NAI
requires you to withdraw from the following Account maintained by the following
Deposit Taker:
Deposit Taker Account No.
----------------------------- ------------------
Cash Collateral in the following amount:
____________________________ Dollars ($__________)
and to deposit such Cash Collateral with other Deposit Takers who are not
Disqualified Deposit Takers no later than ten days after the date upon which you
receive this notice.
To assure you that NAI has the right to require such withdrawal, and to
induce you to comply with this notice, NAI certifies to you that the Deposit
Taker specified above has become a Disqualified Deposit Taker because it no
longer satisfies the requirements listed in Section 4.1 of the Pledge Agreement.
Specifically, such Deposit Taker no longer satisfies the following requirements:
[NAI MUST INSERT HERE A DESCRIPTION OF WHICH REQUIREMENTS THE DEPOSIT TAKER NO
LONGER SATISFIES AND HOW NAI HAS DETERMINED THAT THE REQUIREMENTS ARE NO LONGER
SATISFIED, ALL IN SUFFICIENT DETAIL TO PERMIT THE PARTICIPANT FOR WHOM SUCH
DEPOSIT TAKER HAS BEEN
<PAGE> 50
MAINTAINING AN ACCOUNT TO RESPOND IF IT BELIEVES THAT NAI IS IN ERROR.]
Please remember that the express terms of Certificates of Deposit issued
pursuant to the Pledge Agreement require presentment of the Certificates of
Deposit seven days before Cash Collateral is to be withdrawn from the Accounts
they evidence. Accordingly, you must present Certificates of Deposit to the
Deposit Taker specified above seven days prior to the withdrawal of Cash
Collateral required by this notice. For your convenience, we have attached a
letter as Annex 1 to this notice that you might execute and send to such Deposit
Taker to advise it of your intent to withdraw and of your presentment of
Certificates of Deposit as required in connection therewith. The attached letter
also sets forth the amount NAI believes you must withdraw to comply with Section
6.4 of the Pledge Agreement.
Network Appliance, Inc.
By:
----------------------------------
Name:
------------------------
Title:
------------------------
[cc BNPLC]
[Phase IV - Land] -2-
<PAGE> 51
Annex 1
TO NAI'S NOTICE OF REQUIREMENT OF A WITHDRAWAL
OF CASH COLLATERAL FROM
A DISQUALIFIED DEPOSIT TAKER
[_________, _____]
[Name of the Deposit Taker for BNPLC]
[Address of such Deposit Taker]
Re: Pledge Agreement (Phase IV - Land) dated December __, 1999 among
Network Appliance, Inc., BNP Leasing Corporation, Banque Nationale
de Paris and any other financial institutions which are from time to
time Participants under such Pledge Agreement (Phase IV - Land) and
Banque Nationale de Paris, acting in its capacity as agent for BNPLC
and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Land) referenced above (the
"PLEDGE AGREEMENT"). This letter constitutes notice from the undersigned, as
Agent under the Pledge Agreement, that pursuant to Section 6.4 of the Pledge
Agreement, NAI has advised Agent that you are a Disqualified Deposit Taker, and
NAI requires Agent to withdraw from the Account maintained by you, as a Deposit
Taker under the Pledge Agreement, the sum of:
____________________________ Dollars ($__________)
no later than the following date:
__________, ____
Accordingly, on such date, the undersigned intends to withdraw such amount
from the Account maintained by you as Deposit Taker (Account No. __________),
and with this letter the undersigned is presenting Certificate(s) of Deposit as
required in connection with such withdrawal.
BANQUE NATIONALE DE PARIS, AS AGENT
Name:
---------------------------
Title:
---------------------------
[cc BNPLC and NAI]
[Phase IV - Land] -3-
<PAGE> 52
Schedule 1
FINANCIAL COVENANTS
This Schedule 1 is attached to and made a part of (a) the Lease Agreement
(Phase IV - Improvements) (the "IMPROVEMENTS LEASE") dated to be effective as of
December ___, 1999 (the "EFFECTIVE DATE"), between BNP Leasing Corporation, a
Delaware corporation ("BNPLC") and Network Appliance, Inc., a California
corporation ("NAI"), (b) the Lease Agreement (Phase IV - Land) (the "LAND LEASE"
and, together with the Improvements Lease, the "LEASES") dated to be effective
as of the Effective Date, between BNPLC and NAI, (c) the Pledge Agreement (Phase
IV - Improvements) (the "PLEDGE AGREEMENT (IMPROVEMENTS)") dated to be effective
as of the Effective Date, among BNPLC, NAI, and Banque Nationale de Paris, as a
Participant and as agent for any financial institutions that become Participants
thereunder from time to time, and (d) the Pledge Agreement (Phase IV - Land)
(collectively with the Pledge Agreement (Improvements), the "PLEDGE AGREEMENTS")
dated to be effective as of the Effective Date, among BNPLC, NAI, and Banque
Nationale de Paris, as a Participant and as agent for any financial institutions
that become Participants thereunder from time to time.
PART I - DEFINED TERMS
In this Schedule 1, capitalized terms used but not defined herein shall
have the meaning assigned to them in the Leases or the Common Definitions and
Provisions Agreements referenced in the Leases; and the following capitalized
terms shall have the following meanings:
"ADJUSTED NET INCOME" means, for any fiscal period of NAI, the aggregate
net income earned (or net losses incurred) during such period by NAI and
its Subsidiaries (determined on a consolidated basis), plus any Permitted
Non-Cash Charges deducted in determining such net income (or net loss).
"ADJUSTED EBIT" means, for any accounting period, net income (or net loss)
of NAI and its Subsidiaries (determined on a consolidated basis), plus the
amounts (if any) which, in the determination of net income (or net loss)
for such period, have been deducted for (a) interest expense, (b) income
tax expense (c) rent expense under leases of property, and (d) Permitted
Non-Cash Charges.
"COLLATERAL TEST DATES" mean the Base Rent Commencement Date and the
earlier of the following dates after each fiscal quarter of NAI that ends
after the Base Rent Commencement Date : (1) the seventh Business Day after
the release by NAI of its financial statements for the fiscal quarter; or
(2) the first Business Day of the third calendar month following the end
of the fiscal quarter.
"CONSOLIDATED TANGIBLE NET WORTH" means the excess of (1) the total
assets, other than Intangible Assets, of NAI and its Subsidiaries
(determined on a consolidated basis) over (2) the total liabilities of NAI
and its Subsidiaries (determined on a consolidated basis).
"DEBT" as used in this Exhibit shall have the meaning assigned to it in
the Common Definitions and Provisions Agreements, where "Debt" of any
Person is defined to mean (without duplication of any item): (a)
indebtedness of such Person for borrowed money; (b) indebtedness of such
Person for the deferred purchase price of property or services (except
trade payables and accrued expenses constituting current liabilities in
the ordinary course of business); (c) the face amount of any outstanding
letters of credit issued for the account of such Person; (d) obligations
of such
[Phase IV - Land] -4-
<PAGE> 53
Person arising under acceptance facilities; (e) guaranties, endorsements
(other than for collection in the ordinary course of business) and other
contingent obligations of such Person to purchase, to provide funds for
payment, to provide funds to invest in any Person, or otherwise to assure
a creditor against loss; (f) obligations of others secured by any Lien on
property of such Person; (g) obligations of such Person as lessee under
Capital Leases; and (h) the obligations of such Person, contingent or
otherwise, under any lease of property or related documents (including a
separate purchase agreement) which provide that such Person or any of its
Affiliates must purchase or cause another Person to purchase any interest
in the leased property and thereby guarantee a minimum residual value of
the leased property to the lessor. For purposes of this definition, the
amount of the obligations described in clause (h) of the preceding
sentence with respect to any lease classified according to GAAP as an
"operating lease," shall equal the sum of (1) the present value of rentals
and other minimum lease payments required in connection with such lease
[calculated in accordance with SFAS 13 and other GAAP relevant to the
determination of the whether such lease must be accounted for as an
operating lease or capital lease], plus (2) the fair value of the property
covered by the lease; provided, however, that such amount shall not exceed
the price, as of the date a determination of Debt is required hereunder,
for which the lessee can purchase the leased property pursuant to any
valid ongoing purchase option if, upon such a purchase, the lessee shall
be excused from paying rentals or other minimum lease payments that would
otherwise accrue after the purchase.
"FIXED CHARGES" means, for any accounting period, the sum (without
duplication of any item) of the following charges or costs incurred or
paid by NAI and its Subsidiaries (determined on a consolidated basis): (a)
gross interest expense, plus (b) amortization of principal or debt
discount in respect of all Debt during such period, plus (c) rent payable
under all leases of property during such period, plus (d) taxes payable
during such period.
"INTANGIBLE ASSETS" means assets of NAI and its Subsidiaries (determined
on a consolidated basis) that are properly classified as "INTANGIBLE
ASSETS" in accordance with GAAP and, in any event, shall include goodwill,
patents, trade names, trademarks, copyrights, franchises, experimental
expense, organization expense, unamortized debt discount and expense, and
deferred charges (other than prepaid insurance, prepaid taxes and current
deferred taxes to the extent any such prepaid or deferred items are
classified on the balance sheet of NAI and its consolidated Subsidiaries
as current assets in accordance with GAAP and with the concurrence of
NAI's independent public accountants).
"MANDATORY COLLATERAL PERIOD" means any period during which,
notwithstanding any contrary designation of a Collateral Percentage by NAI
under the Pledge Agreements, the Collateral Percentage for purposes of the
Pledge Agreements shall be one hundred percent (100%), determined as set
forth in Part III of this Schedule 1.
"PERMITTED NON-CASH CHARGES" means the amounts (if any) which, in the
determination of net income (or net loss) for any relevant fiscal period,
have been deducted by NAI or its Subsidiaries for non-cash charges made to
write down goodwill or research and development costs in connection with
acquisitions permitted by this Schedule 1.
"QUICK RATIO" means the ratio of:
(A) the sum (without duplication of any item) of the following
assets of NAI and its Subsidiaries (determined on a consolidated
basis): Collateral delivered and pledged under the Pledge Agreements
in accordance with the requirements thereof (if any); plus
[Phase IV - Land] -5-
<PAGE> 54
unencumbered cash; plus unencumbered short term cash investments;
plus other unencumbered marketable securities which are classified
as short term investments in accordance with GAAP; plus unencumbered
accounts receivable, computed net of reserves for uncollectible
amounts as determined in accordance with GAAP, to
(B) the sum (without duplication of any item) of (1) all
liabilities of NAI and its Subsidiaries (determined on a
consolidated basis) treated as current liabilities in accordance
with GAAP, plus (2) other obligations included in total Debt of NAI
and its Subsidiaries (determined on a consolidated basis), the
payment of which is due on demand or will become due within one year
after the date on which the applicable determination of Quick Ratio
is required hereunder.
"ROLLING FOUR QUARTER PERIOD" means a period of four consecutive fiscal
quarters of NAI, the last of which quarters ends after December 31, 1999.
PART II - FINANCIAL COVENANTS
NAI covenants that it shall not at any time suffer or permit:
1. Minimum Unencumbered Cash and Cash Equivalents. The sum (without
duplication of any item) of the unrestricted cash, Collateral delivered
and pledged under the Pledge Agreements in accordance with the
requirements thereof (if any), unencumbered short term cash investments
and unencumbered marketable securities classified as short term
investments according to GAAP of NAI and its Subsidiaries (determined on a
consolidated basis) to be less than total Debt of NAI and its Subsidiaries
(determined on a consolidated basis).
2. Minimum Tangible Net Worth. Consolidated Tangible Net Worth to be less
than the sum of: (a) ninety percent of the Consolidated Tangible Net Worth
as of October 30, 1998; plus (b) seventy-five percent of NAI's net income
(computed without deduction for net losses in any fiscal quarter) earned
in each fiscal quarter since October 30, 1998; plus (c) one-hundred
percent of the net proceeds of sales of stock in NAI or its Subsidiaries
(other than sales to NAI or its Subsidiaries) after October 30, 1998; less
(d) Permitted Non-Cash Charges for any period after October 30, 1998.
3. Minimum Quick Ratio. The Quick Ratio to be less than 1.50 to 1.00.
4. Minimum Fixed Charge Coverage. The ratio of (a) Adjusted EBIT for any
Rolling Four Quarter Period to (b) Fixed Charges for the same Rolling Four
Quarter Period, to be less than 1.50 to 1.00.
5. Minimum Profitability. Adjusted Net Income to be less than $1.00 in more
than one fiscal quarter of any Rolling Four Quarter Period.
6. Maximum Leverage Ratio. the ratio of (a) total Debt of NAI and its
Subsidiaries (determined on a consolidated basis) at the end of any
Rolling Four Quarter Period to (b) the Adjusted EBIT for the same Four
Quarter Rolling Period, to exceed 3.00 to 1.00.
[Phase IV - Land] -6-
<PAGE> 55
PART III - TESTS FOR MANDATORY COLLATERAL PERIODS
If, as of the end of the latest fiscal quarter of NAI ending before any
Collateral Test Date, NAI shall have both:
(A) failed to maintain a ratio of (1) the sum (without duplication
of any item) of Collateral delivered and pledged under the Pledge
Agreements in accordance with the requirements thereof (if any),
unencumbered cash, unencumbered short term cash investments and
unencumbered marketable securities classified as short term investments
according to GAAP of NAI and its Subsidiaries (determined on a
consolidated basis) to (2) all Debt of NAI and its Subsidiaries
(determined on a consolidated basis), of at least 1.5 to 1.00; and
(B) failed to maintain a ratio of (i) all Debt of NAI and its
Subsidiaries (determined on a consolidated basis) to (ii) Consolidated
Tangible Net Worth of NAI, of no more than 0.45 to 1.00;
such Collateral Test Date shall constitute a "FAILED COLLATERAL TEST DATE" for
purposes of the determination of Mandatory Collateral Periods. A Mandatory
Collateral Period shall commence on each Failed Collateral Test, and such
Mandatory Collateral Period shall continue until the second of any two
subsequent CONSECUTIVE Collateral Test Dates, neither of which constitutes a
Failed Collateral Test Date.
For purposes of illustration only, assume that the following dates are
consecutive Collateral Test Dates, some of which are Failed Collateral Test
Dates and some of which are not, as indicated opposite each date:
<TABLE>
Date Failed Collateral Test Date?
---- ----------------------------
<S> <C>
February 15, 2001 Yes
May 12, 2001 No
August 16, 2001 Yes
November 11, 2001 No
February 18, 2002 No
May 14, 2002 Yes
August 18, 2002 Yes
November 18, 2002 No
February 15, 2003 No
</TABLE>
Under these assumptions, the entire period from February 15, 2001 to February
18, 2002 falls within one or more Mandatory Collateral Periods. Also, the entire
period commencing May 14, 2002 and ending February 15, 2003 falls within one or
more Mandatory Collateral Periods. The period from February 18, 2002 to May 14,
2002 does not constitute Mandatory Collateral Period.
PART IV - OTHER COVENANTS
Without limiting NAI's obligations under the other provisions of the Operative
Documents, during the Term, NAI shall not, without the prior written consent of
BNPLC in each case:
A. Liens. Create, incur, assume or suffer to exist, or permit any of
its Consolidated Subsidiaries to create, incur, assume or suffer to exist, any
Lien, upon or with respect to any of its properties, now owned or hereafter
acquired, provided that the following shall be permitted except to the extent
that they would encumber any interest in the Property in violation of other
provisions of the
[Phase IV - Land] -7-
<PAGE> 56
Operative Documents:
1. Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if they are being contested in good
faith by appropriate proceedings and for which appropriate reserves are
maintained;
2. Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are
not past due for more than thirty (30) days, or which are being contested
in good faith by appropriate proceedings and for which appropriate
reserves have been established;
3. Liens under workmen's compensation, unemployment insurance,
social security or similar laws (other than ERISA);
4. Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money),
leases, public or statutory obligations, surety, stay, appeal, indemnity,
performance or other similar bonds, or other similar obligations arising
in the ordinary course of business;
5. judgment and other similar Liens against assets other than the
Property or any part thereof in an aggregate amount not in excess of
$3,000,000 arising in connection with court proceedings; provided that the
execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith by
appropriate proceedings;
6. easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by NAI or any such Consolidated Subsidiary
of the property or assets encumbered thereby in the normal course of its
business or materially impair the value of the property subject thereto;
7. Liens securing obligations of such a Consolidated Subsidiary to
NAI or to another such Consolidated Subsidiary;
8. Liens not otherwise permitted by this subparagraph A (and not
encumbering the Property or any Collateral) incurred in connection with
the incurrence of additional Debt or asserted to secure Unfunded Benefit
Liabilities, provided that (a) the sum of the aggregate principal amount
of all outstanding obligations secured by Liens incurred pursuant to this
clause shall not at any time exceed five percent (5%) of Consolidated
Tangible Net Worth at such time; and (b) such Liens do not constitute
Liens against NAI's interest in any material Subsidiary or blanket Liens
against all or substantially all of the inventory, receivables, general
intangibles or equipment of NAI or of any material Subsidiary of NAI (for
purposes of this clause, a "material Subsidiary" means any subsidiary
whose assets represent a substantial part of the total assets of NAI and
its Subsidiaries, determined on a consolidated basis in accordance with
GAAP); and
9. Liens incurred in connection with any renewals, extensions or
refundings of any Debt secured by Liens described in the preceding clauses
of this subparagraph A, provided that there is no increase in the
aggregate principal amount of Debt secured thereby from that which was
outstanding as of the date of such renewal, extension or refunding and no
additional property is encumbered.
[Phase IV - Land] -8-
<PAGE> 57
B. Transactions with Affiliates. Enter into or permit any Subsidiary of
NAI to enter into any material transactions (including, without limitation, the
purchase, sale or exchange of property or the rendering of any service) with any
Affiliates of NAI except on terms (1) that would not cause or result in a
Default by NAI under the financial covenants set forth in Part II of this
Schedule, and (2) that are no less favorable to NAI or the relevant Subsidiary
than those that would have been obtained in a comparable transaction on an arm's
length basis from an unrelated Person.
C. Compliance. Fail to preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; or fail to comply with the provisions of all documents
pursuant to which NAI is organized and/or which govern NAI's continued existence
and with the requirements of all laws, rules, regulations and orders of a
governmental agency applicable to NAI and/or its business.
D. Insurance. Fail to maintain and keep in force insurance of the types
and in amounts customarily carried in lines of business similar to that of NAI,
including but not limited to fire, extended coverage, public liability, flood,
property damage and workers' compensation, with all such insurance carried with
companies and in amounts satisfactory to BNPLC, or fail to deliver to BNPLC from
time to time at BNPLC's request schedules setting forth all insurance then in
effect.
E. Facilities. fail to keep all properties useful or necessary to NAI's
business in good repair and condition, or to from time to time make necessary
repairs, renewals and replacements thereto so that such properties shall be
fully and efficiently preserved and maintained.
F. Taxes and Other Liabilities. Fail to pay and discharge when due any
and all indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as NAI may in good faith contest
or as to which a bona fide dispute may arise, and (b) for which NAI has made
provisions, to BNPLC's satisfaction, for eventual payment thereof in the event
that NAI is obligated to make such payment.
G. Capital Expenditures. Make any additional investment in fixed assets
in any fiscal year in excess of an aggregate of twenty percent (20%) of NAI's
total assets as of the end of the prior fiscal year.
H. Merger, Consolidation, Transfer of Assets. Merge into or consolidate
with any other entity (unless NAI is the surviving entity and remains in
compliance of all provisions of the Operative Documents); or make any
substantial change in the nature of NAI's business as conducted as of the date
hereof; or sell, lease, transfer or otherwise dispose of all or a substantial or
material portion of NAI's assets except in the ordinary course of its business.
I. Loans, Advances, Investments. Make any loans or advances to or
investments in any person or entity, except (a) any of the foregoing existing as
of, and disclosed to BNPLC prior to, the date hereof, (b) loans to employees for
travel advances, relocation loans and other loans in the ordinary course of
business, (c) investments in accordance with NAI's investment policy, as in
effect from time to time, (d) existing investments in subsidiaries and joint
ventures which have been disclosed to BNPLC in writing prior to the date hereof,
and new investments in subsidiaries and joint ventures in amounts up to an
aggregated of $10,000,000.00, (e) loans to employees, officers, directors to
finance or refinance the purchase of equity securities of NAI.
J. Dividends, Distributions. Declare or pay any dividend or
distribution either in cash, stock
[Phase IV - Land] -9-
<PAGE> 58
or any other property on NAI's stock now or hereafter outstanding, nor redeem,
retire, repurchase or otherwise acquire any shares of any class of NAI's stock
now or hereafter outstanding.
-10-
<PAGE> 1
EXHIBIT 10.55
================================================================================
PLEDGE AGREEMENT
(PHASE IV - IMPROVEMENTS)
AMONG
BNP LEASING CORPORATION
("BNPLC")
BANQUE NATIONALE DE PARIS, AS AGENT
("AGENT")
NETWORK APPLIANCE, INC.
("NAI")
AND
PARTICIPANTS AS DESCRIBED HEREIN
DECEMBER ___, 1999
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS AND INTERPRETATION..................................................... 1
Section 1.1 Capitalized Terms Used But Not Defined in This Agreement................... 1
Section 1.2 Definitions............................................................... 1
Account......................................................................... 1
Account Office.................................................................. 2
Agent........................................................................... 2
BNPLC........................................................................... 2
BNPLC's Corresponding Obligations to Participants............................... 2
Cash Collateral................................................................. 2
Certificate of Deposit.......................................................... 2
Collateral...................................................................... 2
Collateral Imbalance............................................................ 2
Collateral Percentage........................................................... 2
Default......................................................................... 2
Deposit Taker................................................................... 3
Deposit Taker Losses............................................................ 3
Deposit Taker's Acknowledgment and Agreement.................................... 3
Disqualified Deposit Taker...................................................... 3
Event of Default................................................................ 3
Failed Collateral Test Date..................................................... 4
Initially Qualified Deposit Taker............................................... 4
Lien............................................................................ 4
Material Lease Default.......................................................... 5
Mandatory Collateral Period..................................................... 5
Minimum Collateral Value........................................................ 5
NAI............................................................................. 5
NAI's Purchase Agreement Obligations............................................ 5
Notice of Security Interest..................................................... 5
Other Liable Party.............................................................. 5
Participants.................................................................... 5
Participation Agreement......................................................... 5
Percentage...................................................................... 6
Qualified Pledge................................................................ 6
Secured Obligations............................................................. 6
Supplement...................................................................... 6
Transaction Documents........................................................... 6
Value........................................................................... 6
Section 1.3 Attachments............................................................... 6
Section 1.4 Amendment of Defined Instruments.......................................... 6
Section 1.5 References and Titles..................................................... 6
ARTICLE II SECURITY INTEREST................................................................. 7
Section 2.1 Pledge and Grant of Security Interest..................................... 7
Section 2.2 Return of Collateral After the Secured Obligations are Satisfied in Full.. 7
ARTICLE III DESIGNATION OF MINIMUM COLLATERAL PERCENTAGE..................................... 7
Section 3.1 Determination of Minimum Collateral Percentage Generally.................. 7
</TABLE>
[Phase IV - Improvements] -i-
<PAGE> 3
<TABLE>
<S> <C>
Section 3.2 Limitations on NAI's Right to Lower the Collateral Percentage............. 8
Section 3.3 Mandatory Collateral Periods.............................................. 8
ARTICLE IV PROVISIONS CONCERNING DEPOSIT TAKERS.............................................. 8
Section 4.1 Qualification of Deposit Takers Generally................................. 8
Section 4.2 Existing Deposit Takers................................................... 9
Section 4.3 Replacement of Participants Proposed by NAI............................... 9
Section 4.4 Mandatory Substitution for Disqualified Deposit Takers.................... 9
Section 4.5 Voluntary Substitution of Deposit Takers.................................. 10
Section 4.6 Delivery of Notice of Security Interest by NAI and Agent.................. 10
Section 4.7 Constructive Possession of Collateral..................................... 10
Section 4.8 Attempted Setoff by Deposit Takers........................................ 10
Section 4.9 Deposit Taker Losses...................................................... 10
Section 4.10 Losses Resulting from Failure of Deposit Taker to Comply with this
Agreement............................................................. 11
ARTICLE V DELIVERY AND MAINTENANCE OF CASH COLLATERAL........................................ 11
Section 5.1 Delivery of Funds by NAI.................................................. 11
Section 5.2 Transition Account........................................................ 11
Section 5.3 Allocation of Cash Collateral Among Deposit Takers........................ 11
Section 5.4 Issuance and Redemption of Certificates of Deposit........................ 12
Section 5.5 Status of the Accounts Under the Reserve Requirement Regulations.......... 12
Section 5.6 Acknowledgment by NAI that Requirements of this Agreement are
Commercially Reasonable............................................... 13
ARTICLE VI WITHDRAWAL OF CASH COLLATERAL..................................................... 13
Section 6.1 Withdrawal of Collateral Prior to the Designated Sale Date................ 13
Section 6.2 Withdrawal and Application of Cash Collateral to Reduce or Satisfy the
Secured Obligations to the Participants............................... 13
Section 6.3 Withdrawal and Application of Cash Collateral to Reduce or Satisfy the
Secured Obligations to BNPLC.......................................... 14
Section 6.4 Withdrawal of Cash Collateral From Accounts Maintained by Disqualified
Deposit Takers........................................................ 14
ARTICLE VII REPRESENTATIONS AND COVENANTS OF NAI............................................. 14
Section 7.1 Representations of NAI.................................................... 14
Section 7.2 Covenants of NAI.......................................................... 15
ARTICLE VIII AUTHORIZED ACTION BY AGENT..................................................... 17
Section 8.1 Power of Attorney......................................................... 17
ARTICLE IX DEFAULT AND REMEDIES............................................................. 17
Section 9.1 Remedies.................................................................. 17
ARTICLE X OTHER RECOURSE.................................................................... 18
Section 10.1 Recovery Not Limited..................................................... 18
ARTICLE XI PROVISIONS CONCERNING AGENT....................................................... 18
Section 11.1 Appointment and Authority................................................ 18
Section 11.2 Exculpation, Agent's Reliance, Etc....................................... 19
Section 11.3 Participant's Credit Decisions........................................... 19
Section 11.4 Indemnity................................................................ 20
Section 11.5 Agent's Rights as Participant and Deposit Taker.......................... 20
Section 11.6 Investments.............................................................. 20
Section 11.7 Benefit of Article XI.................................................... 20
Section 11.8 Resignation.............................................................. 20
ARTICLE XII MISCELLANEOUS.................................................................... 21
Section 12.1 Provisions Incorporated From Other Operative Documents.................... 21
Section 12.2 Cumulative Rights, etc................................................... 21
</TABLE>
[Phase IV - Improvements] -ii-
<PAGE> 4
<TABLE>
<S> <C>
Section 12.3 Survival of Agreements................................................... 21
Section 12.4 Other Liable Party....................................................... 21
Section 12.5 Termination.............................................................. 21
</TABLE>
[Phase IV - Improvements] -iii-
<PAGE> 5
Attachment 1......................................Form of Certificate of Deposit
Attachment 2............Supplement to Pledge Agreement (Phase IV - Improvements)
Attachment 3........Notice of NAI's Election to Change the Collateral Percentage
Attachment 4.........................................Notice of Security Interest
Attachment 5............................................Examples of Calculations
Attachment 6......Notice of NAI's Requirement to Withdraw Excess Cash Collateral
Attachment 7......Notice of NAI's Requirement of Direct Payments to Participants
Attachment 8.............Notice of NAI's Requirement of Direct Payments to BNPLC
Attachment 9.........................Notice of NAI's Requirement of a Withdrawal
of Cash Collateral from a Disqualified Deposit Taker
Schedule 1............................Financial Covenants and Negative Covenants
[Phase IV - Improvements] -iv-
<PAGE> 6
PLEDGE AGREEMENT
(PHASE IV - IMPROVEMENTS)
This PLEDGE AGREEMENT (PHASE IV - IMPROVEMENTS) (this "AGREEMENT") is
made as of December ___, 1999 (the "EFFECTIVE DATE"), by NETWORK APPLIANCE,
INC., a California corporation ("NAI"); BNP LEASING CORPORATION, a Delaware
corporation ("BNPLC"); BANQUE NATIONALE DE PARIS ("BNPLC'S PARENT"), as a
"PARTICIPANT"; and BANQUE NATIONALE DE PARIS, acting in its capacity as agent
for BNPLC and the Participants (in such capacity, "AGENT"), is made and dated as
of the Effective Date.
RECITALS
A. NAI and BNPLC are parties to: (i) a Common Definitions and Provisions
Agreement (Phase IV - Improvements) dated as of the Effective Date (the "COMMON
DEFINITIONS AND PROVISIONS AGREEMENT (PHASE IV - IMPROVEMENTS)"); and (ii) a
Purchase Agreement (Phase IV - Improvements) dated as of the Effective Date (the
"PURCHASE AGREEMENT"), pursuant to which NAI has agreed to make a "SUPPLEMENTAL
PAYMENT" (as defined in the Common Definitions and Provisions Agreement (Phase
IV - Improvements)), in consideration of the rights granted to NAI by the
Purchase Agreement.
B. Pursuant to a Participation Agreement dated the date hereof (the
"PARTICIPATION AGREEMENT"), BNPLC's Parent has agreed with BNPLC to participate
in the risks and rewards to BNPLC of the Purchase Agreement and other Operative
Documents (as defined in the Common Definitions and Provisions Agreement (Phase
IV - Improvements)), and the parties to this Agreement anticipate that other
financial institutions may become parties to the Participation Agreement as
Participants, agreeing to participate in the risks and rewards to BNPLC of the
Purchase Agreement and other Operative Documents.
C. NAI may from time to time deliver cash collateral for its obligations
to BNPLC under the Purchase Agreement and for BNPLC's corresponding obligations
to Participants under the Participation Agreement. This Agreement sets forth the
terms and conditions governing such cash collateral.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I DEFINITIONS AND INTERPRETATION
Section 1.1 Capitalized Terms Used But Not Defined in This Agreement.
All capitalized terms used in this Agreement which are defined in Article I of
the Common Definitions and Provisions Agreement (Phase IV - Improvements) and
not otherwise defined herein shall have the same meanings herein as set forth in
the Common Definitions and Provisions Agreement (Phase IV - Improvements). All
terms used in this Agreement which are defined in the UCC and not otherwise
defined herein shall have the same meanings herein as set forth therein, except
where the context otherwise requires.
Section 1.2 Definitions. When used in this Agreement, the following
terms shall have the following respective meanings:
"ACCOUNT" shall mean any deposit account maintained by a Deposit
Taker into which Cash Collateral may be deposited at any time, excluding
the Transition Account.
[Phase IV - Improvements] -1-
<PAGE> 7
"ACCOUNT OFFICE" shall mean, with respect to any Account
maintained by any Deposit Taker, the office of such Deposit Taker in
California or New York at which such Account is maintained as specified
in the applicable Deposit Taker's Acknowledgment and Agreement.
"AGENT" shall have the meaning given to that term in the
introductory paragraph hereof.
"BNPLC" shall have the meaning given to that term in the
introductory paragraph hereof.
"BNPLC'S CORRESPONDING OBLIGATIONS TO PARTICIPANTS" shall mean
BNPLC's obligations under the Participation Agreement to pay
Participants their respective Percentages of (or amounts equal to their
respective Percentages of) sums "actually received by BNPLC" (as defined
in the Participation Agreement) in satisfaction of NAI's Purchase
Agreement Obligations; provided, however, any modification of the
Participation Agreement executed after the date hereof without NAI's
written consent shall not be considered for purposes of determining
BNPLC's Corresponding Obligations to Participants under this Agreement.
"CASH COLLATERAL" shall mean (i) all money of NAI which NAI has
delivered to Agent for deposit with a Deposit Taker pursuant to this
Agreement, and (ii) any additional money delivered to Agent as
Collateral pursuant to Section 4.9.
"CERTIFICATE OF DEPOSIT" shall mean a certificate of deposit
issued by a Deposit Taker as required by Section 5.4 below to evidence
an Account into which Cash Collateral has been deposited pursuant to
this Agreement. Each Certificate of Deposit shall be issued in an amount
equal to the Value of the Account which it evidences and shall otherwise
be in the form set forth as ATTACHMENT 1.
"COLLATERAL" shall have the meaning given to that term in
Section 2.1 hereof.
"COLLATERAL IMBALANCE" shall mean on any date prior to the
Designated Sale Date that the Value (without duplication) of Accounts
maintained by and Certificates of Deposit issued by the Deposit Taker
for any Participant (other than a Disqualified Deposit Taker) does not
equal such Participant's Percentage, multiplied by the lesser of (1) the
Minimum Collateral Value in effect on such date, or (2) the aggregate
Value of all Collateral subject to this Agreement on such date. For
purposes of determining whether a Collateral Imbalance exists, the Value
of any Accounts maintained by a bank that is acting as Deposit Taker for
two or more Participants will be deemed to be held for them in
proportion to their respective Percentages, and the Value of any
Accounts maintained by a bank as Deposit Taker for both a Participant
and BNPLC (as in the case of BNPLC's Parent acting as Deposit Taker for
itself, as a Participant, and for BNPLC) will be deemed to be held for
the Participant only to the extent necessary to prevent or mitigate a
Collateral Imbalance and otherwise for BNPLC.
"COLLATERAL PERCENTAGE" shall mean the percentage designated by
NAI or required during a Mandatory Collateral Period pursuant to Part
III of Schedule 1.
"DEFAULT" means any Event of Default and any default, event or
condition which would, with the giving of any requisite notices and the
passage of any requisite periods of time, constitute an Event of
Default.
[Phase IV - Improvements] -2-
<PAGE> 8
"DEPOSIT TAKER" for BNPLC shall mean BNPLC's Parent and for each
Participant shall mean the Participant itself; provided, that each of
BNPLC and the Participants, for itself only, may from time to time
designate another Deposit Taker as provided in Sections 4.4 and 4.5
below.
"DEPOSIT TAKER LOSSES" shall mean the Value of any Cash
Collateral delivered to a Deposit Taker, but that the Deposit Taker will
not (because of the insolvency of the Deposit Taker, offsets by the
Deposit Taker in violation of the Deposit Taker's Acknowledgment and
Agreement, or otherwise) return to NAI or return to Agent for
disposition or application as provided herein or as required by
applicable law.
"DEPOSIT TAKER'S ACKNOWLEDGMENT AND AGREEMENT" shall have the
meaning given to that term in subsection 4.1.2 hereof.
"DISQUALIFIED DEPOSIT TAKER" shall mean any Deposit Taker with
whom Agent may decline to deposit Collateral pursuant to Section 4.1.
"EVENT OF DEFAULT" shall mean the occurrence of any of the
following:
(a) the failure by NAI to pay all or any part of NAI's
Purchase Agreement Obligations when due, after giving effect to
any applicable notice and grace periods expressly provided for
in the Purchase Agreement;
(b) the failure by NAI to provide funds as and when
required by Section 5.1 of this Agreement, if within seven
Business Days after such failure commences NAI does not (1) cure
such failure by delivering the funds required by Section 5.1,
and (2) pay to BNPLC as additional Rent under the Improvements
Lease an amount equal to interest at the Default Rate (as
defined in the Improvements Lease) on such funds for the period
from which they were first due to the date of receipt by Agent;
(c) the failure of the pledge or security interest
contemplated herein in the Transition Account or any Account,
Certificate of Deposit or Cash Collateral to be a Qualified
Pledge (regardless of the characterization of the Transition
Account or any Accounts, Certificates of Deposit or Cash
Collateral as deposit accounts, instruments or general
intangibles under the UCC), if within five Business Days after
NAI becomes aware of such failure, NAI does not (1) notify
Agent, BNPLC and the Participants of such failure, and (2) cure
such failure, and (3) to the extent required by Section 7.2.9,
pay to BNPLC any additional Base Rent that has accrued under the
Improvements Lease because of (or that would have accrued if
BNPLC had been aware of) such failure, together with interest at
the Default Rate on any such additional Base Rent;
(d) the failure of any representation herein by NAI to
be true (other than a failure described in another clause of
this definition of Event of Default), if such failure is not
cured within thirty days after NAI receives written notice
thereof from Agent;
(e) the failure of any representation made by NAI in
subsection 7.1.1 to be true, if within fifteen (15) days after
NAI becomes aware of such failure, NAI does not (1) notify
Agent, BNPLC and the Participants of such failure, and (2) cure
such failure, and (3) pay to BNPLC any additional Base Rent that
has accrued under the Improvements Lease because of (or that
would have accrued if BNPLC had been aware of) such failure, and
(4) pay to BNPLC interest at the Default Rate on any such
additional Base Rent;
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(f) the failure by NAI timely and properly to observe,
keep or perform any covenant, agreement, warranty or condition
herein required to be observed, kept or performed (other than a
failure described in another clause of this definition of Event
of Default), if such failure is not cured within thirty days
after NAI receives written notice thereof from Agent; and
(g) the failure by BNPLC to pay when due on or after the
Designated Sale Date any of BNPLC's Corresponding Obligations to
Participants, after giving effect to any applicable notice and
grace periods expressly provided for in the Participation
Agreement.
Notwithstanding the foregoing, if ever the aggregate Value of Cash
Collateral held by Agent and the Deposit Takers EXCEEDS the Minimum
Collateral Value then in effect, a failure of the pledge or security
interest contemplated herein in SUCH EXCESS Cash Collateral to be a
valid, perfected, first priority pledge or security interest shall not
constitute an Event of Default under this Agreement. Accordingly, to
provide a cure as required to avoid an Event of Default under clauses
(c) or (e) of this definition, NAI could deliver additional Cash
Collateral - the pledge of which or security interest in which created
by this Agreement is a Qualified Pledge - sufficient in amount to cause
the aggregate Value of the Cash Collateral then held by Agent and the
Deposit Takers subject to a Qualified Pledge hereunder to equal or
exceed the Minimum Collateral Value.
"FAILED COLLATERAL TEST DATE" means any date upon which commences
a Mandatory Collateral Period as described in Part III of Schedule 1.
"INITIALLY QUALIFIED DEPOSIT TAKER" means (1) Banque Nationale de
Paris, acting through any branch, office or agency that can lawfully
maintain an Account as a Deposit Taker hereunder, and (2) any of the
fifty largest (measured by total assets) U.S. banks, or one of the one
hundred largest (measured by total assets) banks in the world, with debt
ratings of at least (i) A- (in the case of long term debt) and A-1 (in
the case of short term debt) or the equivalent thereof by Standard and
Poor's Corporation, and (ii) A3 (in the case of long term debt) and P-2
(in the case of short term debt) or the equivalent thereof by Moody's
Investor Service, Inc. The parties believe it improbable that the
ratings systems used by Standard and Poor's Corporation and by Moody's
Investor Service, Inc. will be discontinued or changed, but if such
ratings systems are discontinued or changed, NAI shall be entitled to
select and use a comparable ratings systems as a substitute for the S&P
Rating or the Moody Rating, as the case may be, for purposes of
determining the status of any bank as an Initially Qualified Deposit
Taker.
"LIEN" shall mean, with respect to any property or assets, any
right or interest therein of a creditor to secure indebtedness of any
kind which is owed to him or any other arrangement with such creditor
which provides for the payment of such indebtedness out of such property
or assets or which allows him to have such indebtedness satisfied out of
such property or assets prior to the general creditors of any owner
thereof, including any lien, mortgage, security interest, pledge,
deposit, production payment, rights of a vendor under any title
retention or conditional sale agreement or lease substantially
equivalent thereto, tax lien, mechanic's or materialman's lien, or any
other charge or encumbrance for security purposes, whether arising by
law or agreement or otherwise, but excluding any right of setoff which
arises without agreement in the ordinary course of business. "Lien" also
means any filed financing statement, any registration with an issuer of
uncertificated securities, or any other arrangement which would serve to
perfect a Lien described in the preceding sentence, regardless of
whether such financing statement is filed, such registration is made, or
such arrangement is undertaken before or after such Lien exists.
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<PAGE> 10
"MATERIAL LEASE DEFAULT" shall mean any of the following:
(1) any "Event of Default" under and as defined in the
Improvements Lease, including any such Event of Default
consisting of a failure of NAI to comply with the requirements of
Exhibit I attached to the Improvements Lease; and
(2)(a) any failure of NAI to make any payment required by
and when first due under the Improvements Lease, regardless of
whether any period provided in the Improvements Lease for the
cure of such failure by NAI shall have expired, and (b) any other
default, event or condition which would, with the giving of any
requisite notices and the passage of any requisite periods of
time, constitute an "Event of Default" under and as defined in
the Improvements Lease, if such other default, event or failure
involves a material noncompliance with Applicable Law. (For
purposes of this definition, "material" noncompliance with
Applicable Law will include any noncompliance, the correction of
which has been requested by a governmental authority, or because
of which a threat of action against the Property or BNPLC has
been asserted by a governmental authority.)
"MANDATORY COLLATERAL PERIOD" shall mean any period, as
determined in accordance with Part III of Schedule 1, during which NAI
is required to maintain a Collateral Percentage of one hundred percent
(100%) pursuant to Section 3.2.
"MINIMUM COLLATERAL VALUE" shall mean (1) as of the Designated
Sale Date or any prior date, an amount equal to the Collateral
Percentage multiplied by the Stipulated Loss Value determined as of that
date in accordance with the Improvements Lease; and (2) as of any date
after the Designated Sale Date, an amount equal to the Break Even Price
plus any unpaid interest accrued on past due amounts payable pursuant to
Paragraph 1(a) of the Purchase Agreement.
"NAI" shall have the meaning given to that term in the
introductory paragraph hereof.
"NAI'S PURCHASE AGREEMENT OBLIGATIONS" shall mean all of NAI's
obligations under the Purchase Agreement, including (i) NAI's obligation
to pay any Supplemental Payment as required under subparagraph 1(A) of
the Purchase Agreement, and (ii) any damages incurred by BNPLC because
of (A) NAI's breach of the Purchase Agreement or (B) the rejection by
NAI of the Purchase Agreement in any bankruptcy or insolvency
proceeding.
"NOTICE OF SECURITY INTEREST" shall have the meaning given to
that term in subsection 4.1.1 hereof.
"OTHER LIABLE PARTY" shall mean any Person, other than NAI, who
may now or may at any time hereafter be primarily or secondarily liable
for any of the Secured Obligations or who may now or may at any time
hereafter have granted to Agent a pledge of or security interest in any
of the Collateral.
"PARTICIPANTS" shall mean BNPLC's Parent and any other financial
institutions which may hereafter become parties to (i) this Agreement by
completing, executing and delivering to NAI and Agent a Supplement, and
(ii) the Participation Agreement.
"PARTICIPATION AGREEMENT" shall have the meaning given to such
term in Recital B hereof.
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<PAGE> 11
"PERCENTAGE" shall mean with respect to each Participant and the
Deposit Taker for such Participant, such Participant's "Percentage"
under and as defined in the Participation Agreement for purposes of
computing such Participant's right thereunder to receive payments of (or
amounts equal to a percentage of) any sales proceeds or Supplemental
Payment received by BNPLC under the Purchase Agreement. Percentages may
be adjusted from time to time as provided in the Participation Agreement
or as provided in supplements thereto executed as provided in the
Participation Agreement.
"QUALIFIED PLEDGE" means a pledge or security interest that
constitutes a valid, perfected, first priority pledge or security
interest.
"SECURED OBLIGATIONS" shall mean and include both NAI's Purchase
Agreement Obligations and BNPLC's Corresponding Obligations to
Participants.
"SUPPLEMENT" shall mean a supplement to this Agreement in the
form of ATTACHMENT 2.
"TRANSACTION DOCUMENTS" shall mean, collectively, this Agreement,
the Improvements Lease, the Purchase Agreement and the Participation
Agreement.
"TRANSITION ACCOUNT" shall have the meaning given it in Section
5.2.
"UCC" shall mean the Uniform Commercial Code as in effect in the
State of California from time to time, and the Uniform Commercial Code
as in effect in any other jurisdiction which governs the perfection or
non-perfection of the pledge of and security interests in the Collateral
created by this Agreement.
"VALUE" shall mean with respect to any Account, Certificate of
Deposit or Cash Collateral on any date, a dollar value determined as
follows (without duplication):
(a) cash shall be valued at its face amount on such
date;
(b) an Account shall be valued at the principal balance
thereof on such date; and
(c) a Certificate of Deposit shall be valued at the face
amount thereof.
Section 1.3 Attachments. All attachments to this Agreement are a part
hereof for all purposes.
Section 1.4 Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein, references in this
Agreement to a particular agreement, instrument or document (including
references to the Improvements Lease, Purchase Agreement and Participation
Agreement) also refer to and include all valid renewals, extensions, amendments,
modifications, supplements or restatements of any such agreement, instrument or
document; provided that nothing contained in this Section shall be construed to
authorize any Person to execute or enter into any such renewal, extension,
amendment, modification, supplement or restatement.
Section 1.5 References and Titles. All references in this Agreement to
Attachments, Articles, Sections, subsections, and other subdivisions refer to
the Attachments, Articles, Sections, subsections and other subdivisions of this
Agreement unless expressly provided otherwise. Titles appearing at the beginning
of any subdivision are for convenience only and do not constitute any part of
any such
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<PAGE> 12
subdivision and shall be disregarded in construing the language contained in
this Agreement. The words "this Agreement", "herein", "hereof", "hereby",
"hereunder" and words of similar import refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. The phrases "this
Article," "this Section" and "this subsection" and similar phrases refer only to
the Articles, Sections or subsections hereof in which the phrase occurs. The
word "or" is not exclusive, and the word "including" (in all of its forms) means
"including without limitation". Pronouns in masculine, feminine and neuter
gender shall be construed to include any other gender, and words in the singular
form shall be construed to include the plural and vice versa unless the context
otherwise requires.
ARTICLE II SECURITY INTEREST
Section 2.1 Pledge and Grant of Security Interest. As security for the
Secured Obligations, NAI hereby pledges and assigns to Agent (for the ratable
benefit of BNPLC and the Participants) and grants to Agent (for the ratable
benefit of BNPLC and the Participants) a continuing security interest and lien
in and against all right, title and interest of NAI in and to the following
property, whether now owned or hereafter acquired by NAI (collectively and
severally, the "COLLATERAL"):
(a) All Cash Collateral, all Accounts, the Transition Account
and all Certificates of Deposit issued from time to time and general
intangibles arising therefrom or relating thereto (however, "general
intangibles" as used in this clause shall not include any general
intangibles not related to Cash Collateral, Accounts, the Transition
Account or Certificates of Deposit issued from time to time, and thus
will not include, without limitation, any intellectual property of NAI);
and all documents, instruments and agreements evidencing the same; and
all extensions, renewals, modifications and replacements of the
foregoing; and any interest or other amounts payable in connection
therewith; and
(b) All proceeds of the foregoing (including whatever is
receivable or received when Collateral or proceeds is invested, sold,
collected, exchanged, returned, substituted or otherwise disposed of,
whether such disposition is voluntary or involuntary, including rights
to payment and return premiums and insurance proceeds under insurance
with respect to any Collateral, and all rights to payment with respect
to any cause of action affecting or relating to the Collateral).
The pledge, assignment and grant of a security interest made by NAI hereunder is
for security of the Secured Obligations only; the parties to this Agreement do
not intend that NAI's delivery of the Collateral to Agent as herein provided
will constitute an advance payment of any Secured Obligations or liquidated
damages, nor do the parties intend that the Collateral increase the dollar
amount of the Secured Obligations.
Section 2.2 Return of Collateral After the Secured Obligations are
Satisfied in Full. If any proceeds of Collateral remain after all Secured
Obligations have been paid in full, Agent will deliver or direct the Deposit
Takers to deliver such proceeds to NAI or other Persons entitled thereto by law.
ARTICLE III DESIGNATION OF MINIMUM COLLATERAL PERCENTAGE
Section 3.1 Determination of Minimum Collateral Percentage Generally.
Effective as of the date of this Agreement, and until a new Collateral
Percentage becomes effective, the Collateral Percentage is zero percent (0%).
Subject to the provisions of this Article III, NAI may from time to time
designate a new Collateral Percentage between 0% and 100% by written notice
delivered to Agent, BNPLC and the Participants in the form of ATTACHMENT 3. Any
new Collateral Percentage so designated shall not become effective, however,
until the commencement of the later of (A) the first Base Rent Period to
commence on or after the first Business Day of January, 2002, or (B) the next
following Base Rent Period
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<PAGE> 13
which is at least ten Business Days after the receipt of such notice by Agent,
BNPLC and the Participants. Further, after the first change in the Collateral
Percentage resulting from a designation by NAI of a Collateral Percentage
greater than zero percent (0%), any subsequent change resulting from NAI's
designation of a new Collateral Percentage shall not become effective before the
first Business Day of the first Base Rent Period that commences at least ninety
days after the effective date of the last preceding change in the Collateral
Period. In any event, if NAI provides more than one notice of a change in the
Collateral Percentage to be effective on a particular Base Rent Date, then the
latest such notice from NAI which satisfies the requirements of this Section
(and of Sections 3.2 and 3.3) will control. After any Collateral Percentage
becomes effective as provided in this Article, it shall remain in effect until a
different Collateral Percentage becomes effective as provided in this Article.
Section 3.2 Limitations on NAI's Right to Lower the Collateral
Percentage. Notwithstanding the foregoing, no designation by NAI of a new
Collateral Percentage will be effective to reduce the Collateral Percentage if
the designation is given, or the reduction would otherwise become effective, on
or after the Designated Sale Date or when any of the following shall have
occurred and be continuing:
3.2.1 any Material Lease Default;
3.2.2 any Event of Default under and as defined in this
Agreement; or
3.2.3 any Default under and as defined in this Agreement -
excluding, however, any such Default limited to a failure of NAI
described in clause (c) or clause (e) of the definition of Event of
Default above, with respect to which the time for cure specified in
clause (c) or clause (e), as applicable, has not expired.
Section 3.3 Mandatory Collateral Periods. NOTWITHSTANDING ANYTHING TO
THE CONTRARY HEREIN CONTAINED, THE COLLATERAL PERCENTAGE DURING ANY MANDATORY
COLLATERAL PERIOD SHALL BE ONE HUNDRED PERCENT (100%). No later than five
Business Days prior to any Failed Collateral Test Date, NAI shall notify Agent,
BNPLC and the Participants of the conditions set forth in Part III of Schedule 1
that NAI will be unable to satisfy on the Failed Collateral Test Date.
ARTICLE IV PROVISIONS CONCERNING DEPOSIT TAKERS
Section 4.1 Qualification of Deposit Takers Generally. Agent may decline
to deposit or maintain Collateral hereunder with any Person designated as a
Deposit Taker, if such Person has failed to satisfy or no longer satisfies the
following requirements:
4.1.1 Such Person must have received from Agent and NAI a
completed, executed Notice of Security Interest in the form of
ATTACHMENT 4 (a "NOTICE OF SECURITY INTEREST") which specifically
identifies any and all Accounts in which such Person shall hold Cash
Collateral delivered to it pursuant to this Agreement and which
designates Account Offices with respect to all such Accounts in New York
or California.
4.1.2 Such Person must have executed the Acknowledgment and
Agreement at the end of such Notice of Security Interest (the "DEPOSIT
TAKER'S ACKNOWLEDGMENT AND AGREEMENT") and returned the same to Agent.
Further, such Person must have complied with the Deposit Taker's
Acknowledgment and Agreement, and the representations set forth therein
with respect to such Person must continue to be true and correct.
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<PAGE> 14
4.1.3 Such Person must be a commercial bank, organized under the
laws of the United States of America or a state thereof or under the
laws of another country which is doing business in the United States of
America; must be authorized to maintain deposit accounts for others
through Account Offices in New York or California (as specified in the
Deposit Taker's Acknowledgment and Agreement); and must be an Affiliate
of BNPLC or the Participant for whom such Person will act as Deposit
Taker or must have a combined capital, surplus and undivided profits of
at least $500,000,000.
4.1.4 Such Person must have complied with the provisions in this
Agreement applicable to Deposit Takers, including the provisions of
Section 5.4 concerning the issuance and redemption of Certificates of
Deposit.
Section 4.2 Existing Deposit Takers. BNPLC's Parent (as Deposit Taker
for itself and for BNPLC) has received a Notice of Security Agreement dated the
Effective Date and has responded to such a notice with a Deposit Taker's
Acknowledgment and Agreement dated the Effective Date, as contemplated in
subsections 4.1.1 and 4.1.2.
Section 4.3 Replacement of Participants Proposed by NAI. So long as no
Event of Default has occurred and is continuing, BNPLC shall not unreasonably
withhold its approval for a substitution under the Participation Agreement of a
new Participant proposed by NAI for any Participant, the Deposit Taker for whom
would no longer meet the requirements for an Initially Qualified Deposit Taker;
provided, however, that (A) the proposed substitution can be accomplished
without a release or breach by BNPLC of its rights and obligations under the
Participation Agreement; (B) the new Participant will agree (by executing a
Supplement and a supplement to the Participation Agreement as contemplated
therein and by other agreements as may be reasonably required by BNPLC and NAI)
to become a party to the Participation Agreement and to this Agreement, to
designate an Initially Qualified Deposit Taker as the Deposit Taker for it under
this Agreement and to accept a Percentage under the Participation Agreement
equal to the Percentage of the Participant to be replaced; (C) the new
Participant (or NAI) will provide the funds required to pay the termination fee
by Section 6.4 of the Participation Agreement to accomplish the substitution;
(D) NAI (or the new Participant) agrees in writing to indemnify and defend BNPLC
for any and all Losses incurred by BNPLC in connection with or because of the
substitution, including the cost of preparing supplements to the Participation
Agreement and this Agreement and including any cost of defending and paying any
claim asserted by the Participant to be replaced because of the substitution
(but not including any liability of BNPLC to such Participant for damages caused
by BNPLC's bad faith or gross negligence in the performance of BNPLC's
obligations under the Participation Agreement prior to the substitution); (E)
the new Participant shall be a reputable financial institution having a net
worth of no less than seven and one half percent (7.5%) of total assets and
total assets of no less than $10,000,000,000.00 (all according to then recent
audited financial statements); and (F) in no event will BNPLC be required to
approve a substitution pursuant to this Section 4.3 which will replace a
Participant that is an Affiliate of BNPLC. BNPLC shall attempt in good faith to
assist (and cause BNPLC's Parent to attempt in good faith to assist) NAI in
identifying a new Participant that NAI may propose to substitute for an existing
Participant pursuant to this Section, as NAI may reasonably request from time to
time. However, in no event shall BNPLC itself, or any of its Affiliates, be
required to take the Percentage of any Participant to be replaced.
Section 4.4 Mandatory Substitution for Disqualified Deposit Takers. If
any Deposit Taker shall cease to satisfy the requirements set forth in Section
4.1, the party for whom such Disqualified Deposit Taker has been designated as
Deposit Taker (i.e., BNPLC or the applicable Participant) shall promptly (1)
provide notice thereof to Agent and NAI, and (2) designate a substitute Deposit
Taker and cause the substitute to satisfy the requirements set forth in Section
4.1. Pending the designation of the substitute and
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<PAGE> 15
the satisfaction by it of the requirements set forth in Section 4.1, Agent may
withdraw Collateral held by the Disqualified Deposit Taker and deposit such
Collateral with other Deposit Takers, subject to Section 5.3 below.
Section 4.5 Voluntary Substitution of Deposit Takers. With the written
approval of Agent, which approval will not be unreasonably withheld, BNPLC or
any Participant may at any time designate for itself a new Deposit Taker (in
replacement of any prior Deposit Taker acting for it hereunder); provided, the
Person so designated has satisfied the requirements set forth in Section 4.1;
and, provided further, unless the designation of a new Deposit Taker is required
by Section 4.4 to replace a Disqualified Deposit Taker, at the time of the
replacement such Person must be an Initially Qualified Deposit Taker.
Section 4.6 Delivery of Notice of Security Interest by NAI and Agent. To
the extent required for the designation of a new Deposit Taker by BNPLC or any
Participant pursuant to Section 4.5, or to permit the substitution or
replacement of a Deposit Taker for BNPLC or any Participant as provided in
Sections 4.4 and 4.5, NAI and Agent shall promptly execute and deliver any
properly completed Notice of Security Interest requested by BNPLC or the
applicable Participant.
Section 4.7 Constructive Possession of Collateral. The possession by a
Deposit Taker of any deposit accounts, money, instruments, chattel paper or
other property constituting Collateral or evidencing Collateral shall be deemed
to be possession by Agent or a person designated by Agent, for purposes of
perfecting the security interest granted to Agent hereunder pursuant to the UCC
or other Applicable Law; and notifications to a Deposit Taker by other Persons
holding any such property, and Acknowledgments, receipts or confirmations from
any such Persons delivered to a Deposit Taker, shall be deemed notifications to,
or Acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of such Deposit Taker for the benefit of Agent
for the purposes of perfecting such security interests under Applicable Law.
Section 4.8 Attempted Setoff by Deposit Takers. By delivery of a Deposit
Taker's Acknowledgment and Agreement, each Deposit Taker shall be required to
agree not to setoff or attempt a setoff, WITHOUT IN EACH CASE FIRST OBTAINING
THE PRIOR WRITTEN AUTHORIZATION OF AGENT, Secured Obligations owed to it against
any Collateral held by it from time to time. Further, by delivery of a Deposit
Taker's Acknowledgment and Agreement, each Deposit Taker shall be required to
agree not to setoff or attempt a setoff, WITHOUT IN EACH CASE FIRST OBTAINING
THE PRIOR WRITTEN AUTHORIZATION OF BOTH NAI AND AGENT, obligations owed to it
other than Secured Obligations against any Collateral held by it from time to
time. Any Deposit Taker for BNPLC or a Participant shall not be permitted by
BNPLC or the applicable Participant, as the case may be, to violate such
agreements. However, NAI acknowledges and agrees (without limiting its right to
recover damages from a Deposit Taker that violates such agreements) that Agent
shall not be responsible for, or be deemed to have taken any action against NAI
because of, any Deposit Taker's violation of such agreements; and, neither BNPLC
nor any Participant shall be responsible for, or be deemed to have taken any
action against NAI because of, any violation of such agreements by a Deposit
Taker for another party.
Section 4.9 Deposit Taker Losses. Agent shall not be responsible for any
Deposit Taker Losses. However, Deposit Taker Losses with respect to a Deposit
Taker for a particular Participant shall reduce the amount of BNPLC's
Corresponding Obligations to Participants which are payable to such Participant
as provided in Section 2.2 of the Participation Agreement. Further, when Deposit
Taker Losses with respect to a Deposit Taker for a particular Participant are
incurred in excess of the payments of Secured Obligations that such Participant
would then have been entitled to receive under the Participation Agreement but
for such Deposit Taker Losses, such Participant must immediately pay the excess
to Agent
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<PAGE> 16
as additional Collateral hereunder, failing which NAI may recover any damages
suffered by it because of the Deposit Taker Losses from such Deposit Taker or
such Participant.
Section 4.10 Losses Resulting from Failure of Deposit Taker to Comply
with this Agreement. Any Participant, the Deposit Taker for whom has failed to
comply with the requirements of this Agreement or any Notices of Security
Interest and any Deposit Taker's Acknowledgments and Agreements (the
"RESPONSIBLE PARTICIPANT") must defend, indemnify, and hold harmless BNPLC,
Agent and the other Participants from and against any Losses resulting from such
failure. Without limiting the foregoing, if the failure of a Deposit Taker for a
Responsible Participant to comply strictly with the terms of this Agreement
(including, without limitation, the provisions of Section 5.4 concerning the
issuance and redemption of Certificates of Deposit and the requirement that any
cash deposits be held in a deposit account located in either New York or
California) causes, in whole or in part, the security interest of Agent in the
Collateral held by such Deposit Taker to be unperfected, then any and all Losses
suffered as a result of such nonperfection shall be borne solely by the
Responsible Participant and shall not be shared by BNPLC, Agent or the other
Participants.
ARTICLE V DELIVERY AND MAINTENANCE OF CASH COLLATERAL
Section 5.1 Delivery of Funds by NAI. On each Base Rent Date, NAI must
deliver to Agent, subject to the pledge and security interest created hereby,
funds as Cash Collateral then needed (if any) to cause the Value of the
Collateral to be no less than the Minimum Collateral Value. Each delivery of
funds required by the preceding sentence must be received by Agent no later than
12:00 noon (San Francisco time) on the date it is required; if received after
12:00 noon it will be considered for purposes of the Improvements Lease as
received on the next following Business Day. At least five Business Days prior
to any Base Rent Date upon which it is expected that NAI will be required to
deliver additional funds pursuant to this Section, NAI shall notify BNPLC, Agent
and each of the Participants thereof and of the amount NAI expects to deliver to
Agent as Cash Collateral on the applicable Base Rent Date. In addition to
required deliveries of Cash Collateral as provided in the foregoing provisions,
NAI may on any date (whether or not a Base Rent Date) deliver additional Cash
Collateral to Agent as necessary to prevent any Default from becoming an Event
of Default. Upon receipt of any funds delivered to it by NAI as Cash Collateral,
Agent shall immediately deposit the same with the Deposit Takers in accordance
with the requirements of Sections 5.3 and 5.4 below.
Section 5.2 Transition Account. Pending deposit in the Accounts or other
application as provided herein, all Cash Collateral received by Agent shall be
credited to and held by Agent in an account (the "TRANSITION ACCOUNT") styled
"NAI Collateral Account, held for the benefit of BNP Leasing Corporation and the
Participants," separate and apart from all other property and funds of NAI or
other Persons, and no other property or funds shall be deposited in the
Transition Account. The books and records of Agent shall reflect that the
Transition Account and all Cash Collateral on deposit therein are owned by NAI,
subject to a pledge and security interest in favor of Agent for the benefit of
BNPLC and Participants.
Section 5.3 Allocation of Cash Collateral Among Deposit Takers. Funds
received by Agent from NAI as Cash Collateral will be allocated for deposit
among the Deposit Takers as follows:
first, to the extent possible the funds will be allocated as required to
rectify and prevent any Collateral Imbalance; and
second, the funds will be allocated to the Deposit Taker for BNPLC,
unless the Deposit Taker for BNPLC has become a Disqualified Deposit
Taker, in which case the funds will be allocated to other Deposit Takers
who are not Disqualified Deposit Takers as Agent deems appropriate.
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Further, if for any reason a Collateral Imbalance is determined by Agent to
exist, Agent shall, as required to rectify or mitigate the Collateral Imbalance,
promptly reallocate Collateral among Deposit Takers by withdrawing Cash
Collateral from some Accounts and redepositing it in other Accounts. (If any
party to this Agreement believes that the Value of the Accounts held by a
particular Deposit Taker causes a Collateral Imbalance to exist, that party will
promptly notify BNPLC, NAI and Agent.) Subject to the foregoing, and provided
that Agent does not thereby create or exacerbate a Collateral Imbalance, Agent
may withdraw and redeposit Cash Collateral in order to reallocate the same among
Deposit Takers from time to time as Agent deems appropriate. For purposes of
illustration only, examples of the allocations required by this Section are set
forth in ATTACHMENT 5.
Section 5.4 Issuance and Redemption of Certificates of Deposit. Upon the
receipt of any deposit of Cash Collateral from Agent, each Deposit Taker shall
issue a Certificate of Deposit evidencing the Account into which such deposit is
made and deliver such Certificate of Deposit to Agent for the benefit of BNPLC
and the Participants. Each Certificate of Deposit shall be issued in an amount
equal to the Value of the Account which it evidences and shall otherwise be in
the form set forth as ATTACHMENT 1 to this Agreement. Upon depositing any Cash
Collateral into an Account that is already evidenced by an outstanding
Certificate of Deposit, Agent will surrender the outstanding Certificate of
Deposit, and in exchange the Deposit Taker receiving the deposit will issue a
new Certificate of Deposit, evidencing the total amount of Cash Collateral in
the Account after the deposit. A Deposit Taker that has issued a Certificate of
Deposit may require the surrender of the Certificate of Deposit as a condition
to a withdrawal from the Account evidenced thereby, including any withdrawal
required or permitted by this Agreement. Upon surrender of a Certificate of
Deposit in connection with a withdrawal of less than all of the Cash Collateral
in the Account evidenced thereby, the applicable Deposit Taker will concurrently
issue a new Certificate of Deposit to Agent, evidencing the balance of the Cash
Collateral remaining on deposit in the Account after the withdrawal.
Notwithstanding the foregoing, if any Certificate of Deposit held by Agent shall
be destroyed, lost or stolen, the Deposit Taker that issued the Certificate,
upon the written request of Agent, shall issue a new Certificate of Deposit to
Agent in lieu of and in substitution for the Certificate of Deposit so
destroyed, lost or stolen. However, as applicant for the substitute Certificate
of Deposit, Agent must indemnify (at no cost to NAI) the applicable Deposit
Taker against any liability on the Certificate of Deposit destroyed, lost or
stolen, and Agent shall furnish to the Deposit Taker an affidavit of an officer
of Agent setting forth the fact of destruction, loss or theft and confirming the
status of Agent as holder of the Certificate of Deposit immediately prior to the
destruction, loss or theft. If any Certificate of Deposit held by Agent shall
become mutilated, the Deposit Taker that issued the Certificate, upon the
written request of Agent, shall issue a new Certificate of Deposit to Agent in
exchange and substitution for the mutilated Certificate of Deposit. Agent shall
hold all Certificates of Deposit for the benefit of BNPLC and the Participants,
subject to the pledge and security interest created hereby.
Section 5.5 Status of the Accounts Under the Reserve Requirement
Regulations. Deposit Takers shall be permitted to structure the Accounts as
nonpersonal time deposits under 12 C.F.R., Part II, Chapter 204 (commonly known
as "Regulation D"). Accordingly, each Deposit Taker may require at least seven
days advance notice of any withdrawal or transfer of funds from Accounts it
maintains and may limit the number of withdrawals or transfers from such
Accounts to no more than six in any calendar month, notwithstanding anything to
the contrary herein or in any deposit agreement that NAI and any Deposit Taker
may enter into with respect to any Account. As necessary to satisfy the seven
days notice requirement with respect to withdrawals by Agent when required by
NAI pursuant to the provisions below, Agent shall notify Deposit Takers promptly
after receipt of any notice from NAI described in subsection 6.1.2 or 6.2.1 or
in Section 6.3.
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<PAGE> 18
Section 5.6 Acknowledgment by NAI that Requirements of this Agreement
are Commercially Reasonable. NAI acknowledges and agrees that the requirements
set forth herein concerning receipt, deposit, withdrawal, allocation,
application and distribution of Cash Collateral by Agent, including the
requirements and time periods set forth in the next Article, are commercially
reasonable.
ARTICLE VI WITHDRAWAL OF CASH COLLATERAL
NAI may not withdraw Cash Collateral, except as follows:
Section 6.1 Withdrawal of Collateral Prior to the Designated Sale Date.
NAI may require Agent to present Certificates of Deposit for payment and
withdraw Cash Collateral from Accounts on any date prior to the Designated Sale
Date and to deliver such Cash Collateral to NAI (which delivery shall be free
and clear of all liens and security interests hereunder); provided, however,
that in each case:
6.1.1 Such withdrawal and delivery of the Cash Collateral to NAI
will not cause the Value of the remaining Collateral to be less than the
Minimum Collateral Value.
6.1.2 by a notice in the form of ATTACHMENT 6, NAI must give
Agent, BNPLC and the Participants notice of the required withdrawal at
least ten days prior to the date upon which the withdrawal is to occur.
6.1.3 No Default or Event of Default shall have occurred and be
continuing at the time NAI gives the notice required by the preceding
subsection or on the date upon which the withdrawal is required.
6.1.4 NAI must pay to Agent any and all costs incurred by Agent
in connection with the withdrawal.
6.1.5 Agent shall determine the Accounts from which to make any
withdrawal required by NAI pursuant to this Section as necessary to
prevent or mitigate any Collateral Imbalance.
Section 6.2 Withdrawal and Application of Cash Collateral to Reduce or
Satisfy the Secured Obligations to the Participants. To reduce the "Break Even
Price" or "Supplemental Payment" required under (and as defined in) the Purchase
Agreement (and, thus, to reduce the Secured Obligations), NAI may require Agent
to withdraw Cash Collateral then held by or for Agent pursuant to this Agreement
on the Designated Sale Date and to deliver the same on the Designated Sale Date
or on any date thereafter prior to an Event of Default (which delivery shall be
free and clear of all liens and security interests hereunder) directly to the
Participants in proportion to their respective rights to payment of BNPLC's
Corresponding Obligations to Participants and for application thereto or the
reduction thereof pursuant to Section 2.2 of the Participation Agreement;
provided, that:
6.2.1 by a notice in the form of ATTACHMENT 7, NAI must have
notified Agent, BNPLC and each of the Participants of the required
withdrawal and payment to Participants at least ten days prior to the
date upon which it is to occur;
6.2.2 the required withdrawal shall be made as determined by
Agent, first, from the Accounts maintained by the Deposit Takers for the
Participants, and then (to the extent necessary) from the Accounts
maintained by the Deposit Taker for BNPLC; and
6.2.3 in any event, no withdrawals or payments directly to
Participants shall be required by this Section 6.2 (or permitted over
the objection of BNPLC) in excess of those required to
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<PAGE> 19
satisfy BNPLC's Corresponding Obligations to Participants or to reduce
such obligations to zero under the Participation Agreement.
Section 6.3 Withdrawal and Application of Cash Collateral to Reduce or
Satisfy the Secured Obligations to BNPLC. To satisfy NAI's Purchase Agreement
Obligations, NAI may require Agent to withdraw any Cash Collateral held by the
Deposit Taker for BNPLC pursuant to this Agreement on the Designated Sale Date
and to deliver the same on the Designated Sale Date or on any date thereafter
prior to an Event of Default (which delivery shall be free and clear of all
liens and security interests hereunder) directly to BNPLC as a payment on behalf
of NAI of amounts due under the Purchase Agreement; provided, that by a notice
in the form of ATTACHMENT 8, NAI must have notified Agent and BNPLC of the
required withdrawal and payment to BNPLC at least ten days prior to the date
upon which it is to occur.
Section 6.4 Withdrawal of Cash Collateral From Accounts Maintained by
Disqualified Deposit Takers. NAI may from time to time prior to the Designated
Sale Date (regardless of the existence of any Default or Event of Default)
require Agent to withdraw any or all Cash Collateral from any Account maintained
by a Disqualified Deposit Taker and deposit it, still subject to the pledge and
grant of security interest hereunder, with other Deposit Takers who are not
Disqualified Deposit Takers (in accordance with the requirements of Sections 5.3
and 5.4) on any date prior to the Designated Sale Date; provided, that by a
notice in the form of ATTACHMENT 9, NAI must have notified Agent, BNPLC and each
of the Participants of the required withdrawal at least ten days prior to the
date upon which it is to occur.
ARTICLE VII REPRESENTATIONS AND COVENANTS OF NAI
Section 7.1 Representations of NAI. NAI represents to BNPLC, Agent and
the Participants as follows:
7.1.1 NAI is the legal and beneficial owner of the Collateral
(or, in the case of after-acquired Collateral, at the time NAI acquires
rights in the Collateral, will be the legal and beneficial owner
thereof). No other Person has (or, in the case of after-acquired
Collateral, at the time NAI acquires rights therein, will have) any
right, title, claim or interest (by way of Lien, purchase option or
otherwise) in, against or to the Collateral, except for rights created
hereunder.
7.1.2 Agent has (or in the case of after-acquired Collateral, at
the time NAI acquires rights therein, will have) a valid, first
priority, perfected pledge of and security interest in the Collateral,
regardless of the characterization of the Collateral as deposit
accounts, instruments or general intangibles under the UCC, but assuming
that the representations of each Deposit Taker in its Deposit Taker's
Acknowledgment and Agreement are true.
7.1.3 NAI has delivered to Agent, together with all necessary
stock powers, endorsements, assignments and other necessary instruments
of transfer, the originals of all documents, instruments and agreements
evidencing Accounts, Certificates of Deposit or Cash Collateral.
7.1.4 NAI's chief executive office is located at the address of
NAI set forth in Article II of the Common Definitions and Provisions
Agreement (Phase IV - Improvements) or at another address in California
specified in a notice that NAI has given to Agent as required by Section
7.2.4.
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<PAGE> 20
7.1.5 To the knowledge of NAI, neither the ownership or the
intended use of the Collateral by NAI, nor the pledge of Accounts or the
grant of the security interest by NAI to Agent herein, nor the exercise
by Agent of its rights or remedies hereunder, will (i) violate any
provision of (a) Applicable Law, (b) the articles or certificate of
incorporation, charter or bylaws of NAI, or (c) any agreement, judgment,
license, order or permit applicable to or binding upon NAI, or (ii)
result in or require the creation of any Lien, charge or encumbrance
upon any assets or properties of NAI except as expressly contemplated in
this Agreement. Except as expressly contemplated in this Agreement, to
the knowledge of NAI no consent, approval, authorization or order of,
and no notice to or filing with any court, governmental authority or
third party is required in connection with the pledge or grant by NAI of
the security interest contemplated herein or the exercise by Agent of
its rights and remedies hereunder.
Section 7.2 Covenants of NAI. NAI hereby agrees as follows:
7.2.1 NAI, at NAI's expense, shall promptly procure, execute and
deliver to Agent all documents, instruments and agreements and perform
all acts which are necessary, or which Agent may reasonably request, to
establish, maintain, preserve, protect and perfect the Collateral, the
pledge thereof to Agent or the security interest granted to Agent
therein and the first priority of such pledge or security interest or to
enable Agent to exercise and enforce its rights and remedies hereunder
with respect to any Collateral. Without limiting the generality of the
preceding sentence, NAI shall (A) procure, execute and deliver to Agent
all stock powers, endorsements, assignments, financing statements and
other instruments of transfer requested by Agent, (B) deliver to Agent
promptly upon receipt all originals of Collateral consisting of
instruments, documents and chattel paper, (C) cause the security
interest of Agent in any Collateral consisting of securities to be
recorded or registered in the books of any financial intermediary or
clearing corporation requested by Agent, and (D) reimburse Agent upon
request for any legal opinion Agent may elect to obtain from a
nationally recognized commercial law firm authorized to practice in New
York concerning the enforceability, first priority and perfection of
Agent's security interest in any Collateral maintained in New York, if
BNPLC or any Participant should at any time elect to use a Deposit Taker
that will maintain one or more Accounts in New York.
7.2.2 NAI shall not use or consent to any use of any Collateral
in violation of any provision of the this Agreement or any other
Transaction Document or any Applicable Law.
7.2.3 NAI shall pay promptly when due all taxes and other
governmental charges, all Liens and all other charges now or hereafter
imposed upon, relating to or affecting any Collateral.
7.2.4 Without thirty days' prior written notice to Agent, NAI
shall not change NAI's name or place of business (or, if NAI has more
than one place of business, its chief executive office).
7.2.5 NAI shall appear in and defend, on behalf of Agent, any
action or proceeding which may affect NAI's title to or Agent's interest
in the Collateral.
7.2.6 Subject to the express rights of NAI under Article VI, NAI
shall not surrender or lose possession of (other than to Agent or a
Deposit Taker pursuant hereto), sell, encumber, lease, rent, option, or
otherwise dispose of or transfer any Collateral or right or interest
therein, and NAI shall keep the Collateral free of all Liens.
7.2.7 NAI will not take any action which would in any manner
impair the value or enforceability of Agent's pledge of or security
interest in any Collateral, nor will NAI fail to take
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<PAGE> 21
any action which is required to prevent (and which NAI knows is required
to prevent) an impairment of the value or enforceability of Agent's
pledge of or security interest in any Collateral.
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<PAGE> 22
7.2.8 NAI shall pay (and shall indemnify and hold harmless Agent
from and against) all Losses incurred by Agent in connection with or
because of (A) the interest acquired by Agent in any Collateral pursuant
to this Agreement, or (B) the negotiation or administration of this
Agreement, whether such Losses are incurred at the time of execution of
this Agreement or at any time in the future. Costs and expenses included
in such Losses may include, without limitation, all filing and recording
fees, taxes, UCC search fees and Attorneys' Fees incurred by Agent with
respect to the Collateral.
7.2.9 Without limiting the foregoing, within five Business Days
after NAI becomes aware of any failure of the pledge or security
interest contemplated herein in the Transition Account or any Account,
Certificate of Deposit or Cash Collateral to be a valid, perfected,
first priority pledge or security interest (regardless of the
characterization of the Transition Account or any Accounts, Certificates
of Deposit or Cash Collateral as deposit accounts, instruments or
general intangibles under the UCC), NAI shall notify Agent, BNPLC and
the Participants of such failure. In addition, if the failure would not
exist but for NAI's delivery of Cash Collateral to Agent subject to
prior Liens or other claims by one or more third parties, or but for the
grant by NAI itself of any Lien or other interest in the Collateral to
one or more third parties, then, in addition to any other remedies
available to BNPLC or Agent under the circumstances, NAI must pay to
BNPLC any additional Base Rent that has accrued under the Improvements
Lease because of (or that would have accrued if BNPLC had been aware of)
the failure, together with interest at the Default Rate on any such
additional Base Rent.
ARTICLE VIII AUTHORIZED ACTION BY AGENT
Section 8.1 Power of Attorney. NAI hereby irrevocably appoints Agent as
NAI's attorney-in-fact for the purpose of authorizing Agent to perform (but
Agent shall not be obligated to and shall incur no liability to NAI or any third
party for failure to perform) any act which NAI is obligated by this Agreement
to perform, and to exercise, consistent with the other provisions of this
Agreement, such rights and powers as NAI might exercise with respect to the
Collateral during any period in which a Default or Event of Default has occurred
and is continuing, including the right to (a) collect by legal proceedings or
otherwise and endorse, receive and receipt for all dividends, interest,
payments, proceeds and other sums and property now or hereafter payable on or on
account of the Collateral; (b) enter into any extension, reorganization,
deposit, merger, consolidation or other agreement pertaining to, or deposit,
surrender, accept, hold or apply other property in exchange for the Collateral;
(c) insure, process, preserve and enforce the Collateral; (d) make any
compromise or settlement, and take any action it deems advisable, with respect
to the Collateral; (e) pay any indebtedness of NAI relating to the Collateral;
and (f) execute UCC financing statements and other documents, instruments and
agreements required hereunder. NAI agrees that such care as Agent gives to the
safekeeping of its own property of like kind shall constitute reasonable care of
the Collateral when in Agent's possession; provided, however, that Agent shall
not be obligated to NAI to give any notice or take any action to preserve rights
against any other Person in connection with the Secured Obligations or with
respect to the Collateral.
ARTICLE IX DEFAULT AND REMEDIES
Section 9.1 Remedies. In addition to all other rights and remedies
granted to Agent, BNPLC or the Participants by this Agreement, the Improvements
Lease, the Purchase Agreement, the Participation Agreement, the UCC and other
Applicable Laws, Agent may, upon the occurrence and during the continuance of
any Event of Default, exercise any one or more of the following rights and
remedies, all of which will be in furtherance of its rights as a secured party
under the UCC:
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<PAGE> 23
(a) Agent may collect, receive, appropriate or realize upon the
Collateral or otherwise foreclose or enforce the pledge of or security
interests in any or all Collateral in any manner permitted by Applicable
Law or in this Agreement; and
(b) Agent may notify any or all Deposit Takers to pay all or any
portion of the Collateral held by such Deposit Taker(s) directly to
Agent.
Agent shall distribute the proceeds of all Collateral received by Agent after
the occurrence of an Event of Default to BNPLC and the Participants for
application to the Secured Obligations. If any proceeds of Collateral remain
after all Secured Obligations have been paid in full, Agent will deliver or
direct the Deposit Takers to deliver such proceeds to NAI or other Persons
entitled thereto. In any case where notice of any sale or disposition of any
Collateral is required, NAI hereby agrees that seven (7) Business Days notice of
such sale or disposition is reasonable.
ARTICLE X OTHER RECOURSE
Section 10.1 Recovery Not Limited. To the fullest extent permitted by
applicable law, NAI waives any right to require that Agent, BNPLC or the
Participants proceed against any other Person, exhaust any Collateral or other
security for the Secured Obligations, or to have any Other Liable Party joined
with NAI in any suit arising out of the Secured Obligations or this Agreement,
or pursue any other remedy in their power. NAI waives any and all notice of
acceptance of this Agreement. NAI further waives notice of the creation,
modification, rearrangement, renewal or extension for any period of any of the
Secured Obligations of any Other Liable Party from time to time and any defense
arising by reason of any disability or other defense of any Other Liable Party
or by reason of the cessation from any cause whatsoever of the liability of any
Other Liable Party. Until all of the Secured Obligations shall have been paid in
full, NAI shall have no right to subrogation, reimbursement, contribution or
indemnity against any Other Liable Party and NAI waives the right to enforce any
remedy which Agent, BNPLC or any Participant has or may hereafter have against
any Other Liable Party, and waives any benefit of and any right to participate
in any other security whatsoever now or hereafter held by Agent, BNPLC or any
Participant. NAI authorizes Agent, BNPLC and the Participants, without notice or
demand and without any reservation of rights against NAI and without affecting
NAI's liability hereunder or on the Secured Obligations, from time to time to
(a) take or hold any other property of any type from any other Person as
security for the Secured Obligations, and exchange, enforce, waive and release
any or all of such other property, (b) after any Event of Default, apply or
require the application of the Collateral (in accordance with this Agreement) or
such other property in any order they may determine and to direct the order or
manner of sale thereof as they may determine, (c) renew, extend for any period,
accelerate, modify, compromise, settle or release any of the obligations of any
Other Liable Party with respect to any or all of the Secured Obligations or
other security for the Secured Obligations, and (d) release or substitute any
Other Liable Party.
ARTICLE XI PROVISIONS CONCERNING AGENT
In the event of any conflict between the following and other provisions
in this Agreement, the following will control:
Section 11.1 Appointment and Authority. BNPLC and each Participant
hereby irrevocably authorizes Agent, and Agent hereby undertakes, to take all
actions and to exercise such powers under this Agreement as are specifically
delegated to Agent by the terms hereof, together with all other powers
reasonably incidental thereto. The relationship of Agent to the Participants is
only that of one commercial bank acting as collateral agent for others, and
nothing herein shall be construed to constitute Agent a
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<PAGE> 24
trustee or other fiduciary for any Participant or anyone claiming through or
under a Participant nor to impose on Agent duties and obligations other than
those expressly provided for in this Agreement. With respect to any matters not
expressly provided for in this Agreement and any matters which this Agreement
places within the discretion of Agent, Agent shall not be required to exercise
any discretion or take any action, and it may request instructions from BNPLC
and Participants with respect to any such matter, in which case it shall be
required to act or to refrain from acting (and shall be fully protected and free
from liability to all Participants in so acting or refraining from acting) upon
the instructions of the Majority, as defined in the Participation Agreement,
including itself as a Participant and BNPLC; provided, however, that Agent shall
not be required to take any action which exposes it to a risk of personal
liability that it considers unreasonable or which is contrary to this Agreement
or the other documents referenced herein or to Applicable Law.
Section 11.2 Exculpation, Agent's Reliance, Etc. Neither Agent nor any
of its directors, officers, agents, attorneys, or employees shall be liable for
any action taken or omitted to be taken by any of them under or in connection
with this Agreement, INCLUDING THEIR NEGLIGENCE OF ANY KIND, EXCEPT THAT EACH
SHALL BE LIABLE FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. Without
limiting the generality of the foregoing, Agent (1) may treat the rights of any
Participant under its Participation Agreement as continuing until Agent receives
written notice of the assignment or transfer of those rights in accordance with
such Participation Agreement, signed by such Participant and in form
satisfactory to Agent; (2) may consult with legal counsel (including counsel for
NAI), independent public accountants and other experts selected by it and shall
not be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts, unless the
action taken or omitted constitutes misconduct; (3) makes no warranty or
representation and shall not be responsible for any statements, warranties or
representations made in or in connection with this Agreement or the other
documents referenced herein; (4) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of the Transaction Documents on the part of any party thereto, or to
inspect the property (including the books and records) of any party thereto; (5)
shall not be responsible to any Participant for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of any Transaction
Document or any instrument or document furnished in connection therewith; (6)
may rely upon the representations and warranties of NAI, Participants and
Deposit Takers in exercising its powers hereunder; and (6) shall incur no
liability under or in respect of the Transaction Documents by acting upon any
notice, consent, certificate or other instrument or writing (including any
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper Person or Persons.
Section 11.3 Participant's Credit Decisions. Each Participant
acknowledges that it has, independently and without reliance upon Agent or any
other Participant, made its own analysis of NAI and the transactions
contemplated hereby and its own independent decision to enter into the
Transaction Documents to which it is a party. Each Participant also acknowledges
that it will, independently and without reliance upon Agent or any other
Participant and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Transaction Documents.
Section 11.4 Indemnity. Each Participant agrees to indemnify Agent (to
the extent not reimbursed by NAI within ten days after demand) from and against
such Participant's Percentage of any and all Losses of any kind or nature
whatsoever which to any extent (in whole or in part) may be imposed on, incurred
by, or asserted against Agent growing out of, resulting from or in any other way
associated with any of the Collateral, the Transaction Documents and the
transactions and events (including the enforcement thereof) at any time
associated therewith or contemplated therein. THE FOREGOING INDEMNIFICATION
SHALL APPLY WHETHER OR NOT SUCH LOSSES ARE IN ANY WAY OR TO ANY
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<PAGE> 25
EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY,
OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND
BY AGENT, PROVIDED ONLY THAT NO PARTICIPANT SHALL BE OBLIGATED UNDER THIS
SECTION TO INDEMNIFY AGENT FOR THAT PORTION, IF ANY, OF ANY LOSS WHICH IS
PROXIMATELY CAUSED BY AGENT'S OWN INDIVIDUAL GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, AS DETERMINED IN A FINAL JUDGMENT RENDERED AGAINST AGENT. Cumulative
of the foregoing, each Participant agrees to reimburse Agent promptly upon
demand for such Participant's Percentage share of any costs and expenses to be
paid to Agent by NAI hereunder to the extent that Agent is not timely reimbursed
by NAI as provided in subsection 7.2.8. As used in this Section the term "Agent"
shall refer not only to the Person designated as such in the introductory
paragraph of this Agreement, but also to each director, officer, agent,
attorney, employee, representative and Affiliate of such Person.
Section 11.5 Agent's Rights as Participant and Deposit Taker. In its
capacity as a Participant, Banque Nationale de Paris shall have the same rights
and obligations as any Participant and may exercise such rights as though it
were not Agent. In its capacity as a Deposit Taker, Banque Nationale de Paris
shall have the same rights and obligations as any Deposit Taker and may exercise
such rights as though it were not Agent. Banque Nationale de Paris and any of
its Affiliates may accept deposits from, lend money to, act as Trustee under
indentures of, and generally engage in any kind of business with NAI or its
Affiliates, all as if Banque Nationale de Paris were not designated as the Agent
hereunder and without any duty to account therefor to any other Participant.
Section 11.6 Investments. Whenever Agent in good faith determines that
it is uncertain about how to distribute any funds which it has received
hereunder, or whenever Agent in good faith determines that there is any dispute
among BNPLC and Participants about how such funds should be distributed, Agent
may choose to defer distribution of the funds which are the subject of such
uncertainty or dispute. If Agent in good faith believes that the uncertainty or
dispute will not be promptly resolved, or if Agent is otherwise required to
invest funds pending distribution, Agent shall invest such funds pending
distribution, all interest on any such investment shall be distributed upon the
distribution of such investment and in the same proportion and to the same
Persons as such investment. All moneys received by Agent for distribution to
BNPLC or Participants shall be held by Agent pending such distribution solely as
Agent hereunder, and Agent shall have no equitable title to any portion thereof.
Section 11.7 Benefit of Article XI. The provisions of this Article
(other than the following Section 11.8) are intended solely for the benefit of
Agent, BNPLC and Participants, and NAI shall not be entitled to rely on any such
provision or assert any such provision in a claim or defense against Agent,
BNPLC or any Participant. Agent, BNPLC and Participants may waive or amend such
provisions as they desire without any notice to or consent of NAI.
Section 11.8 Resignation. Agent may resign at any time by giving written
notice thereof to BNPLC, Participants and NAI. Upon any such resignation the
Majority (as defined in the Participation Agreement) shall have the right to
appoint a successor Agent, subject to NAI's consent, such consent not to be
unreasonably withheld. A successor must be appointed for any retiring Agent, and
such Agent's resignation shall become effective when such successor accepts such
appointment. If, within thirty days after the date of the retiring Agent's
resignation, no successor Agent has been appointed and has accepted such
appointment, then the retiring Agent may appoint a successor Agent, which shall
be a commercial bank organized or licensed to conduct a banking or trust
business under the laws of the United States of America or of any state thereof.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
the retiring Agent shall be discharged from its duties and obligations under
this
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<PAGE> 26
Agreement. After any retiring Agent's resignation hereunder, the provisions
of this Article 10.1 shall continue to inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent.
ARTICLE XII MISCELLANEOUS
Section 12.1 Provisions Incorporated From Other Operative Documents.
Reference is made to the Common Definitions and Provisions Agreement (Phase IV -
Improvements), to the Purchase Agreement and to the Participation Agreement for
a statement of the terms thereof. Without limiting the generality of the
foregoing, the provisions of Article II of the Common Definitions and Provisions
Agreement (Phase IV - Improvements) are incorporated into this Agreement for all
purposes as if set forth in this Article.
Section 12.2 Cumulative Rights, etc. Except as herein expressly provided
to the contrary, the rights, powers and remedies of Agent, BNPLC and the
Participants under this Agreement shall be in addition to all rights, powers and
remedies given to them by virtue of any Applicable Law, any other Transaction
Document or any other agreement, all of which rights, powers, and remedies shall
be cumulative and may be exercised successively or concurrently without
impairing their respective rights hereunder. NAI waives any right to require
Agent, BNPLC or any Participant to proceed against any Person or to exhaust any
Collateral or to pursue any remedy in Agent's, BNPLC's or such Participant's
power.
Section 12.3 Survival of Agreements. All representations and warranties
of NAI herein, and all covenants and agreements herein shall survive the
execution and delivery of this Agreement, the execution and delivery of any
other Transaction Documents and the creation of the Secured Obligations and
continue until terminated or released as provided herein.
Section 12.4 Other Liable Party. Neither this Agreement nor the exercise
by Agent or the failure of Agent to exercise any right, power or remedy
conferred herein or by law shall be construed as relieving any Other Liable
Party from liability on the Secured Obligations or any deficiency thereon. This
Agreement shall continue irrespective of the fact that the liability of any
Other Liable Party may have ceased or irrespective of the validity or
enforceability of any other agreement evidencing or securing the Secured
Obligations to which NAI or any Other Liable Party may be a party, and
notwithstanding the reorganization, death, incapacity or bankruptcy of any Other
Liable Party, or any other event or proceeding affecting any Other Liable Party.
Section 12.5 Termination. Following the Designated Sale Date, upon
satisfaction in full of all Secured Obligations and upon written request for the
termination hereof delivered by NAI to Agent, (i) this Agreement and the pledge
and security interest created hereby shall terminate and all rights to the
Collateral shall revert to NAI and (ii) Agent will, upon NAI's request and at
NAI's expense execute and deliver to NAI such documents as NAI shall reasonably
request to evidence such termination and release.
[The signature pages follow.]
[Phase IV - Improvements] -21-
<PAGE> 27
IN WITNESS WHEREOF, NAI, BNPLC, Agent and the Participants whose
signatures appear below have caused this Agreement to be executed as of December
___, 1999.
"NAI"
NETWORK APPLIANCE, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
<PAGE> 28
[Continuation of signature pages to Pledge Agreement (Phase IV - Improvements)
dated to be effective December ___, 1999]
"BNPLC"
BNP LEASING CORPORATION
By:
-------------------------------------
Lloyd G. Cox, Vice President
<PAGE> 29
[Continuation of signature pages to Pledge Agreement (Phase IV - Improvements)
dated to be effective December ___, 1999]
"AGENT"
BANQUE NATIONALE DE PARIS
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
"PARTICIPANT"
BANQUE NATIONALE DE PARIS
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE> 30
ATTACHMENT 1
TO PLEDGE AGREEMENT
CERTIFICATE OF DEPOSIT
(No. _________)
[_________, _____]
[NAME OF THE ISSUING
DEPOSIT TAKER AND THE
ADDRESS OF ITS APPLICABLE
ACCOUNT OFFICE]
PAYABLE TO
THE ORDER OF: BANQUE NATIONALE DE PARIS, as Agent under the Pledge Agreement
(Phase IV - Improvements) dated December ____, 1999, among
Network Appliance, Inc., BNP Leasing Corporation, Banque
Nationale de Paris and any other financial institutions which
are from time to time Participants under such Pledge Agreement
(Phase IV - Improvements) and Banque Nationale de Paris, acting
in its capacity as agent for BNPLC and the Participants
__________________Dollars in current funds, without interest, seven days after
presentment of this certificate properly endorsed.
The bank issuing this certificate acknowledges and certifies that on the
date indicated above the payee deposited the dollar amount indicated above, and
that such amount shall be payable as provided above.
________________________________________________
Authorized Signature
<PAGE> 31
ATTACHMENT 2
TO PLEDGE AGREEMENT
SUPPLEMENT TO PLEDGE AGREEMENT
[__________, ____]
Banque Nationale de Paris
_________________________
_________________________
_________________________
Network Appliance, Inc.
_________________________
_________________________
_________________________
1. Reference is made to the Pledge Agreement (Phase IV - Improvements)
(the "PLEDGE AGREEMENT") dated December ____, 1999 among Network Appliance, Inc.
("NAI"), BNP Leasing Corporation ("BNPLC"), Banque Nationale de Paris and any
other financial institutions which are from time to time Participants under such
Pledge Agreement (collectively, the "PARTICIPANTS") and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the Participants (in such
capacity, "AGENT"). Unless otherwise defined herein, all capitalized terms used
in this Supplement have the respective meanings given to those terms in the
Pledge Agreement.
2. The undersigned hereby certifies to Agent and NAI that the
undersigned has become a party to the Participation Agreement by executing a
supplement as provided therein and that its Percentage thereunder is ______%.
3. The undersigned, by executing and delivering this Supplement to NAI
and Agent, hereby agrees to become a party to the Pledge Agreement and agrees to
be bound by all of the terms thereof applicable to Participants. The Deposit
Taker for the undersigned shall be _________________, until such time as another
Deposit Taker for the undersigned shall be designated in accordance with
Sections 4.4 or 4.5 of the Pledge Agreement. The undersigned certifies to Agent
and NAI that such Deposit Taker is an Initially Qualified Deposit Taker and
satisfies the requirements for a Deposit Taker set forth in Section 4.1 of the
Pledge Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Supplement as of
the day and year indicated above.
[ ]
--------------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
<PAGE> 32
ATTACHMENT 3
TO PLEDGE AGREEMENT
NOTICE OF NAI'S ELECTION TO CHANGE THE COLLATERAL PERCENTAGE
[_________, _____]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase IV - Improvements) (the "PLEDGE
AGREEMENT") dated December ____, 1999 among Network Appliance,
Inc., BNP Leasing Corporation, Banque Nationale de Paris and any
other financial institutions which are from time to time
Participants under such Pledge Agreement and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the
Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement referenced above. This letter
constitutes notice to you, as Agent under the Pledge Agreement, that pursuant to
Section 3.1 of the Pledge Agreement, NAI elects to change the Collateral
Percentage to:
__________ percent (___%),
on the following Base Rent Date:
__________, ____
NAI expects that multiplying the new Collateral Percentage specified above
against Stipulated Loss Value of:
____________________________ Dollars ($__________),
will result in an expected new Minimum Collateral Value of:
____________________________ Dollars ($__________).
[NOTE: THE NEXT PARAGRAPH WILL BE INCLUDED ONLY IN A NOTICE OF AN INCREASE IN
THE COLLATERAL PERCENTAGE, BECAUSE OF WHICH NAI WILL BE REQUIRED TO DELIVER
ADDITIONAL CASH COLLATERAL TO SATISFY THE MINIMUM COLLATERAL VALUE REQUIREMENTS
IN SECTION 5.1 OF THE PLEDGE AGREEMENT:
Because of the increase in the Collateral Percentage which will result from
this notice and the corresponding increase in the Minimum Collateral Value, NAI
will deliver additional Cash Collateral to you as required by Section 5.1 of the
Pledge Agreement no later than 12:00 noon (San Francisco time) on the Base Rent
Date specified above, in the amount of:
<PAGE> 33
____________________________ Dollars ($__________).]
To assure you that NAI has satisfied the conditions to its right to change the
Collateral Percentage as provided in this notice, and to induce you to rely upon
this notice in discharging your responsibilities under the Pledge Agreement, NAI
certifies to you that:
1. NAI is giving this notice to you, BNPLC and the Participants at least
ten Business Days prior to the Base Rent Date specified above, and such Base
Rent Date is the commencement of a Base Rent Period.
2. No Event of Default or other event or circumstance that would,
pursuant to Section 3.2 of the Pledge Agreement, preclude NAI from designating
the new Collateral Percentage above has occurred and is continuing, and NAI
does not anticipate that on the Base Rent Date specified above there will have
occurred and be continuing any such Event of Default or other event or
circumstance.
3. No Mandatory Collateral Period shall be in effect as of the effective
date specified above.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE STATEMENTS ABOVE ARE
NOT CORRECT. HOWEVER, WE ASK THAT YOU NOTIFY NAI IMMEDIATELY IF FOR ANY REASON
YOU BELIEVE THIS NOTICE IS DEFECTIVE.
Network Appliance, Inc.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
[cc BNPLC and all Participants]
[Phase IV - Improvements] -2-
<PAGE> 34
ATTACHMENT 4
TO PLEDGE AGREEMENT
NOTICE OF SECURITY INTEREST
[_________, _____]
[Name of Deposit Taker]
[Address of Deposit Taker]
1. Reference is made to the Pledge Agreement (Phase IV - Improvements) (the
"PLEDGE AGREEMENT") dated December ____, 1999 among Network Appliance, Inc.
("NAI"), BNP Leasing Corporation ("BNPLC"), Banque Nationale de Paris and any
other financial institutions which are from time to time Participants under such
Pledge Agreement (collectively, the "PARTICIPANTS") and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the Participants (in such
capacity, "AGENT"). Unless otherwise defined herein, all capitalized terms used
in this Notice have the respective meanings given to those terms in the Pledge
Agreement.
2. NAI has informed Agent that NAI has established with the addressee of this
Notice (the "DEPOSIT TAKER") the following non-interest bearing Account(s) to be
maintained at the following Account Office(s):
<TABLE>
<CAPTION>
Account Account Account
Type Office Number
------- ------- -------
<S> <C> <C>
Time Deposit __________ __________
Time Deposit __________ __________
Time Deposit __________ __________
</TABLE>
NAI has further informed Agent that NAI intends to maintain Cash Collateral in
such Account(s), and that to evidence such Account(s) and the amount of Cash
Collateral held therein from time to time, NAI has authorized the Deposit Taker
to issue Certificates of Deposit payable to the order of Agent as provided in
the Pledge Agreement.
3. NAI and Agent hereby notify Deposit Taker that, pursuant to the
Pledge Agreement, NAI has granted to Agent, for the ratable benefit of BNPLC and
the Participants as security for the Secured Obligations, a pledge of and
security interest in all Accounts and other Collateral maintained by NAI with
Deposit Taker, including the Account(s) described in Section 2 above.
4. In furtherance of such grant, NAI and Agent hereby authorize and
direct Deposit Taker to:
(a) hold all Collateral for Agent and as Agent's bailee, separate
and apart from all other property and funds of NAI and all other Persons
and to permit no other funds to be deposited or credited to the
Account(s);
<PAGE> 35
(b) make a notation in its books and records of the interest of
Agent in the Collateral and that the Account(s) and all deposits therein
or sums credited thereto are subject to a pledge and security interest
in favor of Agent;
(c) issue and redeem Certificates of Deposit evidencing the
Account(s), as directed by Agent pursuant to the Pledge Agreement;
(d) take such other steps as Agent may reasonably request to
record, maintain, validate and perfect its pledge of and security
interest in the Collateral; and
(e) upon receipt of notice from Agent that an Event of Default
has occurred, transfer and deliver to Agent or its nominee, together
with all necessary endorsements, all or such portion of the Collateral
held by Deposit Taker as Agent shall direct; provided, however, that in
connection therewith the Deposit Taker may require compliance by Agent
with the provisions in Section 5.4 of the Pledge Agreement for
redemption of any outstanding Certificates of Deposit which evidence the
Account(s).
5. NAI and Agent agree that (a) the possession by Deposit Taker of all
money, instruments, chattel paper and other property constituting Collateral
shall be deemed to be possession by Agent or a person designated by Agent, for
purposes of perfecting the security interest granted to Agent hereunder pursuant
to Section 9305, 8313 or 8213 of the UCC (as the case may be), and (b)
notifications by Deposit Taker to other Persons holding any such property, and
Acknowledgments, receipts or confirmations from such Persons delivered to
Deposit Taker, shall be deemed notifications to, or Acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Deposit Taker for the benefit of Agent for the purposes of perfecting
such security interests under applicable law.
6. As contemplated by the Pledge Agreement, please acknowledge Deposit
Taker's receipt of, and consent to, this notice and confirm the representations
and agreements set forth in the Acknowledgment and Agreement attached hereto by
executing the same and returning this letter to Agent. For your files, a copy of
this letter is enclosed which you may retain. The authorizations and directions
set forth herein may not be revoked or modified without the written consent of
Agent.
"AGENT"
BANQUE NATIONALE DE PARIS
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
"NAI"
Network Appliance, Inc.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
[Phase IV - Improvements] -2-
<PAGE> 36
ACKNOWLEDGMENT AND AGREEMENT
OF DEPOSIT TAKER
Deposit Taker hereby acknowledges receipt of, and consents to, the above
notice, acknowledges that it will hold the Collateral for Agent and as Agent's
bailee, agrees to comply with the authorizations and directions set forth above
and represents to and agrees with NAI and Agent as follows:
(a) Deposit Taker is a commercial bank, organized under the laws
of the United States of America or a state thereof or under the laws of
another country which is doing business in the United States of America.
Deposit Taker is authorized to maintain deposit accounts for others
through the Account Offices specified in the above notice, and Deposit
Taker will not move the accounts described in the above notice to other
offices without the prior written authorization of Agent and NAI.
(b) Deposit Taker has a combined capital, surplus and undivided
profits of at least $500,000,000.
(c) The information set forth above regarding the Account(s) is
accurate. Such Account(s) is (are) currently open and Deposit Taker has
no prior notice of any other pledge, security interest, Lien, adverse
claim or interest in such Account(s).
(e) Deposit Taker shall promptly notify NAI and Agent if the
representations made by Deposit Taker above cease to be true and
correct.
(f) Deposit Taker shall not (i) allow the withdrawal of funds
from any Account by any Person other than Agent, or (ii) WITHOUT IN EACH
CASE FIRST OBTAINING THE PRIOR WRITTEN AUTHORIZATION OF AGENT, setoff or
attempt to setoff any Secured Obligations owed to Deposit Taker against
any Collateral held from time to time by Deposit Taker, or (iii) WITHOUT
IN EACH CASE FIRST OBTAINING THE PRIOR WRITTEN AUTHORIZATION OF BOTH NAI
AND AGENT, setoff or attempt to setoff any obligations owed to Deposit
Taker other than Secured Obligations, against any Collateral held from
time to time by Deposit Taker.
[ ]
---------------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
[Date]
<PAGE> 37
ATTACHMENT 5
TO PLEDGE AGREEMENT
EXAMPLES OF CALCULATIONS REQUIRED
TO AVOID A COLLATERAL IMBALANCE
The examples below are provided to illustrate the calculations required
for allocations of Cash Collateral in a manner that will avoid a Collateral
Imbalance. The examples are not intended to reflect actual numbers under this
Agreement or actual Percentages of BNPLC or any of the Participants; nor are the
examples intended to provide a formula for the allocations that would be
appropriate in every case. The examples also reflect adjustments that would be
appropriate if the Collateral Percentage were adjusted from time to time from
and after the Base Rent Commencement Date, although this Agreement provides that
such percentage is not to increase above zero until the second anniversary of
the Effective Date (expected to be well after the Base Rent Commencement Date),
except in a Mandatory Collateral Period, during which such percentage would be
100%.
EXAMPLE NO. 1
Assumptions:
1. Two Participants ("Participant A" and "Participant B") are parties to
the Participation Agreement with BNPLC. Participant A's Percentage is
50% and Participant B's Percentage is 45%, leaving BNPLC with a
Percentage of 5%.
2. On the Base Rent Commencement Date, Funding Advances (including those to
cover Carrying Costs under the Improvements Lease) totaled $12,000,000,
resulting in a Stipulated Loss Value of $12,000,000, allocable as
follows:
<TABLE>
<S> <C> <C>
A. BNPLC's Parent (providing BNPLC's share) (5%) ......... $ 600,000
B. Participant A (50%) ................................... 6,000,000
C. Participant B (45%) ................................... 5,400,000
-----------
TOTAL ................................................. $12,000,000
</TABLE>
3. The Minimum Collateral Value on the Base Rent Commencement Date was
$7,200,000 (reflecting a Collateral Percentage of 60% times Stipulated
Loss Value).
4. On the Base Rent Commencement Date, NAI had delivered to Agent Cash
Collateral of $7,200,000, equal to the Minimum Collateral Value, as
required by Section 5.1 of this Agreement.
Allocation of Cash Collateral Required: To avoid a Collateral Imbalance under
these assumptions, Agent would be required to allocate the $7,200,000 to the
Deposit Takers for BNPLC and the Participants as follows:
<TABLE>
<S> <C>
A BNPLC's Deposit Taker (5% of Minimum Collateral Value) ........... $ 360,000
B Participant A's Deposit Taker (50% of Minimum Collateral Value) .. 3,600,000
C Participant B's Deposit Taker (45% of Minimum Collateral Value) .. 3,240,000
----------
TOTAL .............................................................. $7,200,000
</TABLE>
EXAMPLE NO. 2
<PAGE> 38
Assumptions: Assume the same facts as in Example No. 1, and in addition assume
that:
1. Effective as of the first Base Rent Date, NAI increased its Collateral
Percentage from 60% to 80%, raising the Minimum Collateral Value to
$9,600,000. Because of such increase, NAI also delivered an additional
$2,400,000 as Cash Collateral to Agent on the first Base Rent Date,
bringing the total of all Cash Collateral delivered by NAI to $9,600,000
as required by Section 5.1 of this Agreement.
2. Also effective as of the first Base Rent Date, a new Participant
approved by NAI ("Participant C") became a party to this Agreement and
the Participation Agreement, taking a Percentage of 20%. Simultaneously,
Participant A and Participant B entered into supplements to the
Participation Agreement which reduced their Percentages to 40% and 35%,
respectively.
Allocation of Cash Collateral Required: To avoid a Collateral Imbalance under
these assumptions, Agent would be required to allocate the Cash Collateral as
required to leave the Deposit Takers for BNPLC and the Participants with the
following amounts:
<TABLE>
<S> <C>
A. BNPLC's Deposit Taker (5% of Minimum Collateral Value) ................ $ 480,000
B. Participant A's Deposit Taker (40% of Minimum Collateral Value) ....... 3,840,000
C. Participant B's Deposit Taker (35% of Minimum Collateral Value) ....... 3,360,000
D. Participant C's Deposit Taker (20% of Minimum Collateral Value) ...... 1,920,000
----------
TOTAL .............................................................. $9,600,000
</TABLE>
Thus, to prevent a Collateral Imbalance, Agent would have to allocate the
$2,400,000 of additional Cash Collateral it received on the first Base Rent Date
as follows:
<TABLE>
<S> <C>
A. BNPLC's Deposit Taker ($480,000 less $360,000 already on deposit) ................. $ 120,000
B. Participant A's Deposit Taker ($3,840,000 less $3,600,000 already on deposit) ..... 240,000
C. Participant B's Deposit Taker ($3,360,000 less $3,240,000 already on deposit) ..... 120,000
D. Participant C's Deposit Taker ($1,920,000 less $0 already on deposit) ............ 1,920,000
----------
TOTAL .......................................................................... $2,400,000
</TABLE>
EXAMPLE NO. 3
Assumptions: Assume the same facts as in Example No. 2, except that:
1. Instead of increasing its Collateral Percentage from 60% to 80%, NAI
increased its Collateral Percentage to 70% on the first Base Rent Date,
raising the Minimum Collateral Value to $8,400,000. Because of such
increase, NAI delivered an additional $1,200,000 as additional Cash
Collateral to Agent on the first Base Rent Date, bringing the total of
all Cash Collateral delivered by NAI to $8,400,000 as required by
Section 5.1 of this Agreement.
Allocation of Cash Collateral Required: To avoid a Collateral Imbalance under
these assumptions, Agent would be required to allocate the Cash Collateral as
required to leave the Deposit Takers for BNPLC and the Participants with the
following amounts:
[Phase IV - Improvements] -2-
<PAGE> 39
<TABLE>
<S> <C>
A. BNPLC's Deposit Taker (5% of Minimum Collateral Value) ................ $ 420,000
B. Participant A's Deposit Taker (40% of Minimum Collateral Value) ....... 3,360,000
C. Participant B's Deposit Taker (35% of Minimum Collateral Value) ....... 2,940,000
D. Participant C's Deposit Taker (20% of Minimum Collateral Value) ...... 1,680,000
----------
TOTAL .............................................................. $8,400,000
</TABLE>
Thus, to prevent a Collateral Imbalance, Agent would have to allocate the
$1,200,000 of additional Cash Collateral it received on the first Base Rent Date
as follows:
<TABLE>
<S> <C>
A. BNPLC's Deposit Taker ($420,000 less $360,000 already on deposit) ................... $ 60,000
B. Participant A's Deposit Taker ($3,360,000 less $3,600,000 already on deposit) ....... (240,000)
C. Participant B's Deposit Taker ($2,940,000 less $3,240,000 already on deposit) ....... (300,000)
D. Participant C's Deposit Taker ($1,680,000 less $0 already on deposit) .............. 1,680,000
-----------
TOTAL ........................................................................... $ 1,200,000
</TABLE>
NOTE: THE NEGATIVE AMOUNTS (IN PARENTHESIS) ABOVE REPRESENT REQUIRED WITHDRAWALS
RATHER THAN DEPOSITS. AS EXAMPLE NO. 3 ILLUSTRATES, TO AVOID A COLLATERAL
IMBALANCE AGENT MAY FROM TIME TO TIME HAVE TO WITHDRAW CASH COLLATERAL HELD BY
THE DEPOSIT TAKER FOR ONE PARTICIPANT AND DEPOSIT IT IN AN ACCOUNT MAINTAINED BY
A DEPOSIT TAKER FOR ANOTHER PARTICIPANT.
[Phase IV - Improvements] -3-
<PAGE> 40
ATTACHMENT 6
TO PLEDGE AGREEMENT
NOTICE OF NAI'S REQUIREMENT TO
WITHDRAW EXCESS CASH COLLATERAL
[_________, _____]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase IV - Improvements) dated December __,
1999 among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial institutions
which are from time to time Participants under such Pledge
Agreement (Phase IV - Improvements) and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the
Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice to you, as Agent
under the Pledge Agreement, that pursuant to Section 6.1 of the Pledge
Agreement, NAI requires you to withdraw from the Accounts and return to NAI the
following amount:
____________________________ Dollars ($__________)
on the following date:
__________, ____
To assure you that NAI has satisfied the conditions to its right to
require such withdrawal, and to induce you to comply with this notice, NAI
certifies to you that:
1. Your withdrawal and delivery of the amount specified above to
NAI will not cause the Value of the remaining Collateral to be less than
the Minimum Collateral Value. After giving effect to such withdrawal,
the Collateral remaining in the Accounts maintained by the Deposit
Takers will be:
____________________________ Dollars ($__________),
<PAGE> 41
and the Minimum Collateral Value on the date specified above will equal:
____________________________ Dollars ($__________).
Such Minimum Collateral Value equals the Collateral Percentage of:
__________ percent (___%),
times the Stipulated Loss Value of:
____________________________ Dollars ($__________).
2. NAI is giving this notice to you, BNPLC and the Participants
at least ten days prior to the Base Rent Date specified above.
3. No Default or Event of Default has occurred and is continuing
as of the date of this notice, and NAI does not anticipate that any
Default or Event of Default will have occurred and be continuing on the
date upon which the withdrawal is required.
4. NAI agrees that you may determine the Accounts from which to
make any withdrawal required by NAI pursuant to this Section as
necessary to prevent or mitigate any Collateral Imbalance.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE STATEMENTS
ABOVE ARE NOT CORRECT OR IF THE DATE FOR WITHDRAWAL SPECIFIED ABOVE IS
LESS THAN TEN DAYS AFTER YOUR RECEIPT OF THIS NOTICE. HOWEVER, WE ASK
THAT YOU NOTIFY NAI IMMEDIATELY IF FOR ANY REASON YOU BELIEVE THIS
NOTICE IS DEFECTIVE.
[Phase IV - Improvements] -2-
<PAGE> 42
Please remember that the express terms of Certificates of Deposit issued
pursuant to the Pledge Agreement require presentment of the Certificates of
Deposit seven days before Cash Collateral is to be withdrawn from the Accounts
they evidence. Accordingly, you must present Certificates of Deposit to Deposit
Takers seven days prior to the withdrawal of Cash Collateral required by this
notice. For your convenience, we have attached a letter as Annex 1 to this
notice that you might execute and send to Deposit Takers to advise them of your
intent to withdraw and of your presentment of Certificates of Deposit as
required in connection therewith. The attached letter also sets forth the
amounts NAI believes you must withdraw from each Account to avoid a Collateral
Imbalance.
Network Appliance, Inc.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
[cc BNPLC and all Participants]
[Phase IV - Improvements] -3-
<PAGE> 43
Annex 1
TO NAI'S NOTICE OF REQUIREMENT TO
WITHDRAW CASH EXCESS COLLATERAL
[_________, _____]
Deposit Takers on the
Attached Distribution List
Re: Pledge Agreement (Phase IV - Improvements) dated December ____,
1999 among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial institutions
which are from time to time Participants under such Pledge
Agreement (Phase IV - Improvements) and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the
Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice from the
undersigned, as Agent under the Pledge Agreement, that pursuant to Section 6.1
of the Pledge Agreement, NAI requires Agent to withdraw from the Accounts and
return to NAI the amounts listed below on the following date:
__________, ____
Accordingly, on such date, the undersigned intends to withdraw the
following amounts from the following Accounts, and with this letter the
undersigned is presenting Certificates of Deposit as required in connection with
such withdrawal:
<TABLE>
<CAPTION>
Deposit Taker Account No. Amount
------------- ----------- ------
<S> <C> <C>
1.
____________________ ______________________ $_____________
2.
____________________ ______________________ $_____________
3.
____________________ ______________________ $_____________
4.
____________________ ______________________ $_____________
TOTAL WITHDRAWALS: $_____________
</TABLE>
BANQUE NATIONALE DE PARIS, AS AGENT
Name:
-----------------------------------
Title:
----------------------------------
[cc BNPLC and NAI]
[Phase IV - Improvements] -4-
<PAGE> 44
ATTACHMENT 7
TO PLEDGE AGREEMENT
NOTICE OF NAI'S REQUIREMENT OF
DIRECT PAYMENTS TO PARTICIPANTS
[_________, _____]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase IV - Improvements) dated December ____,
1999 among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial institutions
which are from time to time Participants under such Pledge
Agreement (Phase IV - Improvements) and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the
Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice to you, as Agent
under the Pledge Agreement, that pursuant to Section 6.2 of the Pledge
Agreement, NAI requires you to withdraw from the Accounts and pay directly to
the Participants (in proportion to their respective Percentages) the following
amount:
____________________________ Dollars ($__________)
on the following date (which, NAI acknowledges, must be the Designated Sale Date
or a date thereafter prior to an Event of Default):
__________, ____
The amount specified above equals the following percentage (equal to the
aggregate of all Participant's Percentages):
__________ percent (___%),
times the total of all Cash Collateral presently pledged under the Pledge
Agreement:
____________________________ Dollars ($__________).
<PAGE> 45
To assure you that NAI has satisfied the conditions to its right to
require such withdrawal, and to induce you to comply with this notice, NAI
certifies to you that NAI is giving this notice to you, BNPLC and the
Participants at least ten days prior to the date of required withdrawal and
payment specified above.
Please remember that the express terms of Certificates of Deposit issued
pursuant to the Pledge Agreement require presentment of the Certificates of
Deposit seven days before Cash Collateral is to be withdrawn from the Accounts
they evidence. Accordingly, you must present Certificates of Deposit to Deposit
Takers seven days prior to the withdrawal of Cash Collateral required by this
notice. For your convenience, we have attached a letter as Annex 1 to this
notice that you might execute and send to Deposit Takers to advise them of your
intent to withdraw and of your presentment of Certificates of Deposit as
required in connection therewith. The attached letter also sets forth the
amounts NAI believes you must withdraw from each Account to comply with
subsection 6.2.2 of the Pledge Agreement.
Network Appliance, Inc.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
[cc BNPLC and all Participants]
[Phase IV - Improvements] -2-
<PAGE> 46
Annex 1
TO NAI'S NOTICE OF REQUIREMENT TO
WITHDRAW CASH COLLATERAL FOR
DIRECT PAYMENTS TO PARTICIPANTS
[_________, _____]
Deposit Takers on the
Attached Distribution List
Re: Pledge Agreement (Phase IV - Improvements) dated December ____,
1999 among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial institutions
which are from time to time Participants under such Pledge
Agreement (Phase IV - Improvements) and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the
Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice from the
undersigned, as Agent under the Pledge Agreement, that pursuant to Section 6.2
of the Pledge Agreement, NAI requires Agent to withdraw from the Accounts and
pay to the Participants (in proportion to their respective Percentages) the
amounts listed below on the following date:
__________, ____
Accordingly, on such date, the undersigned intends to withdraw the
following amounts from the following Accounts, and with this letter the
undersigned is presenting Certificates of Deposit as required in connection with
such withdrawal:
<TABLE>
<CAPTION>
Deposit Taker Account No. Amount
------------- ----------- ------
<S> <C> <C>
1.
____________________ ______________________ $_____________
2.
____________________ ______________________ $_____________
3.
____________________ ______________________ $_____________
4.
____________________ ______________________ $_____________
TOTAL WITHDRAWALS: $_____________
</TABLE>
BANQUE NATIONALE DE PARIS, AS AGENT
Name:
-----------------------------------
Title:
----------------------------------
[cc BNPLC and NAI]
[Phase IV - Improvements] -3-
<PAGE> 47
ATTACHMENT 8
TO PLEDGE AGREEMENT
NOTICE OF NAI'S REQUIREMENT OF
DIRECT PAYMENT TO BNPLC
[_________, _____]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase IV - Improvements) dated December ____,
1999 among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial institutions
which are from time to time Participants under such Pledge
Agreement (Phase IV - Improvements) and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the
Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice to you, as Agent
under the Pledge Agreement, that pursuant to Section 6.3 of the Pledge
Agreement, NAI requires you to withdraw from the Account maintained by the
Deposit Taker for BNPLC and pay directly to BNPLC on behalf of NAI as a payment
required by the Purchase Agreement the following amount:
____________________________ Dollars ($__________)
on the following date (which, NAI acknowledges, must be the Designated Sale Date
or a date thereafter prior to an Event of Default):
__________, ____
To assure you that NAI has satisfied the conditions to its right to
require such withdrawal, and to induce you to comply with this notice, NAI
certifies to you that NAI is giving this notice to you and BNPLC at least ten
days prior to the date of required withdrawal and payment specified above.
Please remember that the express terms of Certificates of Deposit issued
pursuant to the Pledge Agreement require presentment of the Certificates of
Deposit seven days before Cash Collateral is to be withdrawn from the Accounts
they evidence. Accordingly, you must present Certificates of Deposit to the
Deposit Taker for BNPLC seven days prior to the withdrawal of Cash Collateral
required by this notice. For your convenience, we have attached a letter as
Annex 1 to this notice that you might execute and send to the Deposit Taker for
BNPLC to advise it of your intent to withdraw and of your presentment of
Certificates of Deposit as required in connection therewith. The attached letter
also sets forth the amount NAI believes you must withdraw to comply with Section
6.3 of the Pledge Agreement.
Network Appliance, Inc.
By:
-------------------------
Name:
----------------
Title:
---------------
[cc BNPLC]
<PAGE> 48
Annex 1
TO NAI'S NOTICE OF REQUIREMENT OF
DIRECT PAYMENT TO BNPLC
[_________, _____]
[Name of the Deposit Taker for BNPLC]
[Address of such Deposit Taker]
Re: Pledge Agreement (Phase IV - Improvements) dated December ____,
1999 among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial institutions
which are from time to time Participants under such Pledge
Agreement (Phase IV - Improvements) and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the
Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice from the
undersigned, as Agent under the Pledge Agreement, that pursuant to Section 6.3
of the Pledge Agreement, NAI requires Agent to withdraw from the Account
maintained by you, as Deposit Taker for BNPLC, the sum of:
____________________________ Dollars ($__________)
and pay the same to BNPLC as a payment required by the Purchase Agreement on the
following date:
__________, ____
Accordingly, on such date, the undersigned intends to withdraw such
amount from the following Account maintained by you as Deposit Taker for BNPLC,
and with this letter the undersigned is presenting Certificate(s) of Deposit as
required in connection with such withdrawal.
BANQUE NATIONALE DE PARIS, AS AGENT
Name:
-----------------------------------
Title:
----------------------------------
[cc BNPLC and NAI]
[Phase IV - Improvements] -2-
<PAGE> 49
ATTACHMENT 9
TO PLEDGE AGREEMENT
NOTICE OF NAI'S REQUIREMENT OF A WITHDRAWAL
OF CASH COLLATERAL FROM
A DISQUALIFIED DEPOSIT TAKER
[_________, _____]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase IV - Improvements) dated December ____,
1999 among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial institutions
which are from time to time Participants under such Pledge
Agreement (Phase IV - Improvements) and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the
Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice to you, as Agent
under the Pledge Agreement, that pursuant to Section 6.4 of the Pledge
Agreement, NAI requires you to withdraw from the following Account maintained by
the following Deposit Taker:
Deposit Taker Account No.
------------- -----------
Cash Collateral in the following amount:
____________________________ Dollars ($__________)
and to deposit such Cash Collateral with other Deposit Takers who are not
Disqualified Deposit Takers no later than ten days after the date upon which you
receive this notice.
To assure you that NAI has the right to require such withdrawal, and to
induce you to comply with this notice, NAI certifies to you that the Deposit
Taker specified above has become a Disqualified Deposit Taker because it no
longer satisfies the requirements listed in Section 4.1 of the Pledge Agreement.
Specifically, such Deposit Taker no longer satisfies the following requirements:
[NAI MUST INSERT HERE A DESCRIPTION OF WHICH REQUIREMENTS THE DEPOSIT TAKER NO
LONGER SATISFIES AND HOW NAI HAS DETERMINED THAT THE REQUIREMENTS ARE NO LONGER
SATISFIED, ALL IN SUFFICIENT DETAIL TO
<PAGE> 50
PERMIT THE PARTICIPANT FOR WHOM SUCH DEPOSIT TAKER HAS BEEN MAINTAINING AN
ACCOUNT TO RESPOND IF IT BELIEVES THAT NAI IS IN ERROR.]
Please remember that the express terms of Certificates of Deposit issued
pursuant to the Pledge Agreement require presentment of the Certificates of
Deposit seven days before Cash Collateral is to be withdrawn from the Accounts
they evidence. Accordingly, you must present Certificates of Deposit to the
Deposit Taker specified above seven days prior to the withdrawal of Cash
Collateral required by this notice. For your convenience, we have attached a
letter as Annex 1 to this notice that you might execute and send to such Deposit
Taker to advise it of your intent to withdraw and of your presentment of
Certificates of Deposit as required in connection therewith. The attached letter
also sets forth the amount NAI believes you must withdraw to comply with Section
6.4 of the Pledge Agreement.
Network Appliance, Inc.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
[cc BNPLC]
[Phase IV - Improvements] -2-
<PAGE> 51
Annex 1
TO NAI'S NOTICE OF REQUIREMENT OF A WITHDRAWAL
OF CASH COLLATERAL FROM
A DISQUALIFIED DEPOSIT TAKER
[_________, _____]
[Name of the Deposit Taker for BNPLC]
[Address of such Deposit Taker]
Re: Pledge Agreement (Phase IV - Improvements) dated December ____,
1999 among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial institutions
which are from time to time Participants under such Pledge
Agreement (Phase IV - Improvements) and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the
Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice from the
undersigned, as Agent under the Pledge Agreement, that pursuant to Section 6.4
of the Pledge Agreement, NAI has advised Agent that you are a Disqualified
Deposit Taker, and NAI requires Agent to withdraw from the Account maintained by
you, as a Deposit Taker under the Pledge Agreement, the sum of:
____________________________ Dollars ($__________)
no later than the following date:
__________, ____
Accordingly, on such date, the undersigned intends to withdraw such
amount from the Account maintained by you as Deposit Taker (Account No.
__________), and with this letter the undersigned is presenting Certificate(s)
of Deposit as required in connection with such withdrawal.
BANQUE NATIONALE DE PARIS, AS AGENT
Name:
-----------------------------------
Title:
----------------------------------
[cc BNPLC and NAI]
[Phase IV - Improvements] -3-
<PAGE> 52
Schedule 1
Financial Covenants and Negative Covenants
This Schedule 1 is attached to and made a part of (a) the Lease
Agreement (Phase IV - Improvements) (the "IMPROVEMENTS LEASE") dated to be
effective as of December ___, 1999 (the "EFFECTIVE DATE"), between BNP Leasing
Corporation, a Delaware corporation ("BNPLC") and Network Appliance, Inc., a
California corporation ("NAI"), (b) the Lease Agreement (Phase IV - Land) (the
"LAND LEASE" and, together with the Improvements Lease, the "LEASES") dated to
be effective as of the Effective Date, between BNPLC and NAI, (c) the Pledge
Agreement (Phase IV - Improvements) (the "PLEDGE AGREEMENT (IMPROVEMENTS)")
dated to be effective as of the Effective Date, among BNPLC, NAI, and Banque
Nationale de Paris, as a Participant and as agent for any financial institutions
that become Participants thereunder from time to time, and (d) the Pledge
Agreement (Phase IV - Land) (collectively with the Pledge Agreement
(Improvements), the "PLEDGE AGREEMENTS") dated to be effective as of the
Effective Date, among BNPLC, NAI, and Banque Nationale de Paris, as a
Participant and as agent for any financial institutions that become Participants
thereunder from time to time.
PART I - DEFINED TERMS
In this Schedule 1, capitalized terms used but not defined herein shall
have the meaning assigned to them in the Leases or the Common Definitions and
Provisions Agreements referenced in the Leases; and the following capitalized
terms shall have the following meanings:
"ADJUSTED NET INCOME" means, for any fiscal period of NAI, the aggregate
net income earned (or net losses incurred) during such period by NAI and
its Subsidiaries (determined on a consolidated basis), plus any
Permitted Non-Cash Charges deducted in determining such net income (or
net loss).
"ADJUSTED EBIT" means, for any accounting period, net income (or net
loss) of NAI and its Subsidiaries (determined on a consolidated basis),
plus the amounts (if any) which, in the determination of net income (or
net loss) for such period, have been deducted for (a) interest expense,
(b) income tax expense (c) rent expense under leases of property, and
(d) Permitted Non-Cash Charges.
"COLLATERAL TEST DATES" mean the Base Rent Commencement Date and the
earlier of the following dates after each fiscal quarter of NAI that
ends after the Base Rent Commencement Date : (1) the seventh Business
Day after the release by NAI of its financial statements for the fiscal
quarter; or (2) the first Business Day of the third calendar month
following the end of the fiscal quarter.
"CONSOLIDATED TANGIBLE NET WORTH" means the excess of (1) the total
assets, other than Intangible Assets, of NAI and its Subsidiaries
(determined on a consolidated basis) over (2) the total liabilities of
NAI and its Subsidiaries (determined on a consolidated basis).
"DEBT" as used in this Exhibit shall have the meaning assigned to it in
the Common Definitions and Provisions Agreements, where "Debt" of any
Person is defined to mean (without duplication of any item): (a)
indebtedness of such Person for borrowed money; (b) indebtedness of such
Person for the deferred purchase price of property or services (except
trade payables and accrued expenses constituting current liabilities in
the ordinary course of business); (c) the face amount of any outstanding
letters of credit issued for the account of such Person; (d) obligations
of such
[Phase IV - Improvements] -4-
<PAGE> 53
Person arising under acceptance facilities; (e) guaranties, endorsements
(other than for collection in the ordinary course of business) and other
contingent obligations of such Person to purchase, to provide funds for
payment, to provide funds to invest in any Person, or otherwise to
assure a creditor against loss; (f) obligations of others secured by any
Lien on property of such Person; (g) obligations of such Person as
lessee under Capital Leases; and (h) the obligations of such Person,
contingent or otherwise, under any lease of property or related
documents (including a separate purchase agreement) which provide that
such Person or any of its Affiliates must purchase or cause another
Person to purchase any interest in the leased property and thereby
guarantee a minimum residual value of the leased property to the lessor.
For purposes of this definition, the amount of the obligations described
in clause (h) of the preceding sentence with respect to any lease
classified according to GAAP as an "operating lease," shall equal the
sum of (1) the present value of rentals and other minimum lease payments
required in connection with such lease [calculated in accordance with
SFAS 13 and other GAAP relevant to the determination of the whether such
lease must be accounted for as an operating lease or capital lease],
plus (2) the fair value of the property covered by the lease; provided,
however, that such amount shall not exceed the price, as of the date a
determination of Debt is required hereunder, for which the lessee can
purchase the leased property pursuant to any valid ongoing purchase
option if, upon such a purchase, the lessee shall be excused from paying
rentals or other minimum lease payments that would otherwise accrue
after the purchase.
"FIXED CHARGES" means, for any accounting period, the sum (without
duplication of any item) of the following charges or costs incurred or
paid by NAI and its Subsidiaries (determined on a consolidated basis):
(a) gross interest expense, plus (b) amortization of principal or debt
discount in respect of all Debt during such period, plus (c) rent
payable under all leases of property during such period, plus (d) taxes
payable during such period.
"INTANGIBLE ASSETS" means assets of NAI and its Subsidiaries (determined
on a consolidated basis) that are properly classified as "INTANGIBLE
ASSETS" in accordance with GAAP and, in any event, shall include
goodwill, patents, trade names, trademarks, copyrights, franchises,
experimental expense, organization expense, unamortized debt discount
and expense, and deferred charges (other than prepaid insurance, prepaid
taxes and current deferred taxes to the extent any such prepaid or
deferred items are classified on the balance sheet of NAI and its
consolidated Subsidiaries as current assets in accordance with GAAP and
with the concurrence of NAI's independent public accountants).
"MANDATORY COLLATERAL PERIOD" means any period during which,
notwithstanding any contrary designation of a Collateral Percentage by
NAI under the Pledge Agreements, the Collateral Percentage for purposes
of the Pledge Agreements shall be one hundred percent (100%), determined
as set forth in Part III of this Schedule 1.
"PERMITTED NON-CASH CHARGES" means the amounts (if any) which, in the
determination of net income (or net loss) for any relevant fiscal
period, have been deducted by NAI or its Subsidiaries for non-cash
charges made to write down goodwill or research and development costs in
connection with acquisitions permitted by this Schedule 1.
"QUICK RATIO" means the ratio of:
(A) the sum (without duplication of any item) of the
following assets of NAI and its Subsidiaries (determined on a
consolidated basis): Collateral delivered and pledged under the
Pledge Agreements in accordance with the requirements thereof
(if any); plus
[Phase IV - Improvements] -5-
<PAGE> 54
unencumbered cash; plus unencumbered short term cash
investments; plus other unencumbered marketable securities which
are classified as short term investments in accordance with
GAAP; plus unencumbered accounts receivable, computed net of
reserves for uncollectible amounts as determined in accordance
with GAAP, to
(B) the sum (without duplication of any item) of (1) all
liabilities of NAI and its Subsidiaries (determined on a
consolidated basis) treated as current liabilities in accordance
with GAAP, plus (2) other obligations included in total Debt of
NAI and its Subsidiaries (determined on a consolidated basis),
the payment of which is due on demand or will become due within
one year after the date on which the applicable determination of
Quick Ratio is required hereunder.
"ROLLING FOUR QUARTER PERIOD" means a period of four consecutive fiscal
quarters of NAI, the last of which quarters ends after December 31,
1999.
PART II - FINANCIAL COVENANTS
NAI covenants that it shall not at any time suffer or permit:
1. Minimum Unencumbered Cash and Cash Equivalents. The sum (without
duplication of any item) of the unrestricted cash, Collateral delivered
and pledged under the Pledge Agreements in accordance with the
requirements thereof (if any), unencumbered short term cash investments
and unencumbered marketable securities classified as short term
investments according to GAAP of NAI and its Subsidiaries (determined on
a consolidated basis) to be less than total Debt of NAI and its
Subsidiaries (determined on a consolidated basis).
2. Minimum Tangible Net Worth. Consolidated Tangible Net Worth to be less
than the sum of: (a) ninety percent of the Consolidated Tangible Net
Worth as of October 30, 1998; plus (b) seventy-five percent of NAI's net
income (computed without deduction for net losses in any fiscal quarter)
earned in each fiscal quarter since October 30, 1998; plus (c)
one-hundred percent of the net proceeds of sales of stock in NAI or its
Subsidiaries (other than sales to NAI or its Subsidiaries) after October
30, 1998; less (d) Permitted Non-Cash Charges for any period after
October 30, 1998.
3. Minimum Quick Ratio. The Quick Ratio to be less than 1.50 to 1.00.
4. Minimum Fixed Charge Coverage. The ratio of (a) Adjusted EBIT for any
Rolling Four Quarter Period to (b) Fixed Charges for the same Rolling
Four Quarter Period, to be less than 1.50 to 1.00.
5. Minimum Profitability. Adjusted Net Income to be less than $1.00 in more
than one fiscal quarter of any Rolling Four Quarter Period.
6. Maximum Leverage Ratio. the ratio of (a) total Debt of NAI and its
Subsidiaries (determined on a consolidated basis) at the end of any
Rolling Four Quarter Period to (b) the Adjusted EBIT for the same Four
Quarter Rolling Period, to exceed 3.00 to 1.00.
[Phase IV - Improvements] -6-
<PAGE> 55
PART III - TESTS FOR MANDATORY COLLATERAL PERIODS
If, as of the end of the latest fiscal quarter of NAI ending before any
Collateral Test Date, NAI shall have both:
(A) failed to maintain a ratio of (1) the sum (without
duplication of any item) of Collateral delivered and pledged under the
Pledge Agreements in accordance with the requirements thereof (if any),
unencumbered cash, unencumbered short term cash investments and
unencumbered marketable securities classified as short term investments
according to GAAP of NAI and its Subsidiaries (determined on a
consolidated basis) to (2) all Debt of NAI and its Subsidiaries
(determined on a consolidated basis), of at least 1.5 to 1.00; and
(B) failed to maintain a ratio of (i) all Debt of NAI and its
Subsidiaries (determined on a consolidated basis) to (ii) Consolidated
Tangible Net Worth of NAI, of no more than 0.45 to 1.00;
such Collateral Test Date shall constitute a "FAILED COLLATERAL TEST DATE" for
purposes of the determination of Mandatory Collateral Periods. A Mandatory
Collateral Period shall commence on each Failed Collateral Test, and such
Mandatory Collateral Period shall continue until the second of any two
subsequent CONSECUTIVE Collateral Test Dates, neither of which constitutes a
Failed Collateral Test Date.
For purposes of illustration only, assume that the following dates are
consecutive Collateral Test Dates, some of which are Failed Collateral Test
Dates and some of which are not, as indicated opposite each date:
<TABLE>
<CAPTION>
Date Failed Collateral Test Date?
---- ----------------------------
<S> <C>
February 15, 2001 Yes
May 12, 2001 No
August 16, 2001 Yes
November 11, 2001 No
February 18, 2002 No
May 14, 2002 Yes
August 18, 2002 Yes
November 18, 2002 No
February 15, 2003 No
</TABLE>
Under these assumptions, the entire period from February 15, 2001 to February
18, 2002 falls within one or more Mandatory Collateral Periods. Also, the entire
period commencing May 14, 2002 and ending February 15, 2003 falls within one or
more Mandatory Collateral Periods. The period from February 18, 2002 to May 14,
2002 does not constitute Mandatory Collateral Period.
PART IV - OTHER COVENANTS
Without limiting NAI's obligations under the other provisions of the Operative
Documents, during the Term, NAI shall not, without the prior written consent of
BNPLC in each case:
A. Liens. Create, incur, assume or suffer to exist, or permit any of its
Consolidated Subsidiaries to create, incur, assume or suffer to exist, any Lien,
upon or with respect to any of its properties, now owned or hereafter acquired,
provided that the following shall be permitted except to the extent that they
would encumber any interest in the Property in violation of other provisions of
the
[Phase IV - Improvements] -7-
<PAGE> 56
Operative Documents:
1. Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if they are being contested in good
faith by appropriate proceedings and for which appropriate reserves are
maintained;
2. Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which
are not past due for more than thirty (30) days, or which are being
contested in good faith by appropriate proceedings and for which
appropriate reserves have been established;
3. Liens under workmen's compensation, unemployment insurance,
social security or similar laws (other than ERISA);
4. Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money),
leases, public or statutory obligations, surety, stay, appeal,
indemnity, performance or other similar bonds, or other similar
obligations arising in the ordinary course of business;
5. judgment and other similar Liens against assets other than
the Property or any part thereof in an aggregate amount not in excess of
$3,000,000 arising in connection with court proceedings; provided that
the execution or other enforcement of such Liens is effectively stayed
and the claims secured thereby are being actively contested in good
faith by appropriate proceedings;
6. easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with
the occupation, use and enjoyment by NAI or any such Consolidated
Subsidiary of the property or assets encumbered thereby in the normal
course of its business or materially impair the value of the property
subject thereto;
7. Liens securing obligations of such a Consolidated Subsidiary
to NAI or to another such Consolidated Subsidiary;
8. Liens not otherwise permitted by this subparagraph A (and not
encumbering the Property or any Collateral) incurred in connection with
the incurrence of additional Debt or asserted to secure Unfunded Benefit
Liabilities, provided that (a) the sum of the aggregate principal amount
of all outstanding obligations secured by Liens incurred pursuant to
this clause shall not at any time exceed five percent (5%) of
Consolidated Tangible Net Worth at such time; and (b) such Liens do not
constitute Liens against NAI's interest in any material Subsidiary or
blanket Liens against all or substantially all of the inventory,
receivables, general intangibles or equipment of NAI or of any material
Subsidiary of NAI (for purposes of this clause, a "material Subsidiary"
means any subsidiary whose assets represent a substantial part of the
total assets of NAI and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP); and
9. Liens incurred in connection with any renewals, extensions or
refundings of any Debt secured by Liens described in the preceding
clauses of this subparagraph A, provided that there is no increase in
the aggregate principal amount of Debt secured thereby from that which
was outstanding as of the date of such renewal, extension or refunding
and no additional property is encumbered.
[Phase IV - Improvements] -8-
<PAGE> 57
B. Transactions with Affiliates. Enter into or permit any Subsidiary of
NAI to enter into any material transactions (including, without limitation, the
purchase, sale or exchange of property or the rendering of any service) with any
Affiliates of NAI except on terms (1) that would not cause or result in a
Default by NAI under the financial covenants set forth in Part II of this
Schedule, and (2) that are no less favorable to NAI or the relevant Subsidiary
than those that would have been obtained in a comparable transaction on an arm's
length basis from an unrelated Person.
C. Compliance. Fail to preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; or fail to comply with the provisions of all documents
pursuant to which NAI is organized and/or which govern NAI's continued existence
and with the requirements of all laws, rules, regulations and orders of a
governmental agency applicable to NAI and/or its business.
D. Insurance. Fail to maintain and keep in force insurance of the types
and in amounts customarily carried in lines of business similar to that of NAI,
including but not limited to fire, extended coverage, public liability, flood,
property damage and workers' compensation, with all such insurance carried with
companies and in amounts satisfactory to BNPLC, or fail to deliver to BNPLC from
time to time at BNPLC's request schedules setting forth all insurance then in
effect.
E. Facilities. fail to keep all properties useful or necessary to NAI's
business in good repair and condition, or to from time to time make necessary
repairs, renewals and replacements thereto so that such properties shall be
fully and efficiently preserved and maintained.
F. Taxes and Other Liabilities. Fail to pay and discharge when due any
and all indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as NAI may in good faith contest
or as to which a bona fide dispute may arise, and (b) for which NAI has made
provisions, to BNPLC's satisfaction, for eventual payment thereof in the event
that NAI is obligated to make such payment.
G. Capital Expenditures. Make any additional investment in fixed assets
in any fiscal year in excess of an aggregate of twenty percent (20%) of NAI's
total assets as of the end of the prior fiscal year.
H. Merger, Consolidation, Transfer of Assets. Merge into or consolidate
with any other entity (unless NAI is the surviving entity and remains in
compliance of all provisions of the Operative Documents); or make any
substantial change in the nature of NAI's business as conducted as of the date
hereof; or sell, lease, transfer or otherwise dispose of all or a substantial or
material portion of NAI's assets except in the ordinary course of its business.
I. Loans, Advances, Investments. Make any loans or advances to or
investments in any person or entity, except (a) any of the foregoing existing as
of, and disclosed to BNPLC prior to, the date hereof, (b) loans to employees for
travel advances, relocation loans and other loans in the ordinary course of
business, (c) investments in accordance with NAI's investment policy, as in
effect from time to time, (d) existing investments in subsidiaries and joint
ventures which have been disclosed to BNPLC in writing prior to the date hereof,
and new investments in subsidiaries and joint ventures in amounts up to an
aggregated of $10,000,000.00, (e) loans to employees, officers, directors to
finance or refinance the purchase of equity securities of NAI.
J. Dividends, Distributions. Declare or pay any dividend or distribution
either in cash, stock
[Phase IV - Improvements] -9-
<PAGE> 58
or any other property on NAI's stock now or hereafter outstanding, nor redeem,
retire, repurchase or otherwise acquire any shares of any class of NAI's stock
now or hereafter outstanding.
[Phase IV - Improvements] -10-
<PAGE> 1
EXHIBIT 10.56
================================================================================
$62,000,000
PARTICIPATION AGREEMENT
PHASE IV
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
BANQUE NATIONALE DE PARIS,
(A "PARTICIPANT")
EFFECTIVE AS OF DECEMBER ___, 1999
(NETWORK APPLIANCE, INC. - PHASE IV)
(SUNNYVALE, SANTA CLARA COUNTY, CALIFORNIA PROPERTY)
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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Page
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RECITALS.....................................................................................1
AGREEMENTS...................................................................................1
1.0 DEFINITIONS..........................................................................1
1.1. Bank Specific Charges.........................................................1
1.2. Common Definitions and Provisions Agreements..................................2
1.3. Critical Event................................................................2
1.4. Deposit Taker.................................................................2
1.5. Deposit Taker Losses..........................................................2
1.6. Direct Payments...............................................................2
1.7. Distributable Payment.........................................................2
1.8. Late Payment Rate.............................................................2
1.9. Leases........................................................................2
1.10. Majority......................................................................2
1.11. Net Cash Flow.................................................................2
1.12. Net Sales Proceeds............................................................2
1.13. Operative Documents...........................................................3
1.14. Participants..................................................................3
1.15. Participation Agreement Supplement............................................3
1.16. Participation Amount..........................................................3
1.17. Percentage....................................................................4
1.18. Pledge Agreements.............................................................4
1.19. Property......................................................................4
1.20. Protective Advances...........................................................4
1.21. Purchase Agreements...........................................................4
2.0 PAYMENTS FROM BNPLC TO EACH PARTICIPANT..............................................4
2.1. Payments Computed by Reference to Net Cash Flow and Net Sales Proceeds.......4
2.2. Payments Computed by Reference to Bank Specific Charges.......................4
2.3. [Intentionally deleted].......................................................4
2.4. [Intentionally deleted].......................................................4
2.5. Timing; Manner of Payment.....................................................4
2.6. Meaning of Actually Received..................................................5
3.0 PAYMENTS FROM THE PARTICIPANTS TO BNPLC..............................................5
3.1. Initial Funding Advance.......................................................5
3.2. [Intentionally deleted].......................................................5
3.3. Protective Advances...........................................................5
3.3.1. General................................................................5
3.3.2. Exceptions.............................................................6
3.4. Method of Payment.............................................................6
4.0 OTHER ADJUSTMENTS, DEDUCTIONS AND INVESTMENTS........................................6
4.1. [Intentionally deleted].......................................................6
4.2. Setoff........................................................................6
4.3. [Intentionally deleted].......................................................6
4.4. Sharing of Payments...........................................................6
</TABLE>
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<TABLE>
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4.5. Withholding Taxes.............................................................7
4.6. Order of Application..........................................................7
4.7. Investments Pending Dispute Resolution; Overnight Investments.................7
5.0 NATURE OF THIS AGREEMENT.............................................................8
5.1. No Conveyance.................................................................8
5.2. Not a Partnership, Etc........................................................8
6.0 AMENDMENTS; WAIVERS; EXERCISE OF RIGHTS AND REMEDIES AGAINST NAI.....................9
6.1. Limitations...................................................................9
6.2. General......................................................................11
6.3. Conflicts and Purchase Agreements Defaults...................................11
6.4. Refusal to Give Consents; Failure to Fund; Failure of a Deposit Taker to
Satisfy Minimum Ratings......................................................11
7.0 REQUIRED REPAYMENTS.................................................................12
8.0 NAI INFORMATION; INDEPENDENT ANALYSIS...............................................12
9.0 PERFORMANCE THROUGH REPRESENTATIVES.................................................12
10.0 DUTY OF CARE........................................................................12
11.0 REPRESENTATIONS BY EACH PARTICIPANT.................................................13
11.1. Nature of this Agreement.....................................................13
11.2. No Default or Violation......................................................13
11.3. No Suits.....................................................................13
11.4. Organization.................................................................13
11.5. Enforceability...............................................................13
11.6. No Funding With Plan Assets..................................................13
12.0 REPRESENTATIONS BY BNPLC............................................................14
12.1. No Default or Violation......................................................14
12.2. No Suits.....................................................................14
12.3. Organization.................................................................14
12.4. Enforceability...............................................................14
12.5. Liens Removable by BNPLC.....................................................14
12.6. BNPLC's Status as a Subsidiary of a Bank Holding Company.....................14
13.0 ASSIGNMENTS.........................................................................14
13.1. By the Participants Generally................................................14
13.2. By BNPLC.....................................................................15
13.3. Execution of Participation Agreement Supplements.............................15
13.4. Regulation A.................................................................15
13.5. Costs........................................................................15
14.0 GOVERNING LAW; SUBMISSION TO PROCESS; WAIVER OF JURY TRIAL..........................15
15.0 TERMINATION.........................................................................16
16.0 MISCELLANEOUS.......................................................................16
16.1. Reliance by Others...........................................................16
16.2. Waivers, Etc.................................................................16
16.3. Severability.................................................................16
16.4. Notices......................................................................16
16.5. Construction.................................................................17
16.6. Headings.....................................................................17
16.7. Entire Agreement.............................................................17
16.8. Further Assurances...........................................................17
16.9. Impairment of Operative Documents............................................17
16.10. Books and Records............................................................18
16.11. Definition of Knowledge......................................................18
</TABLE>
ii
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<TABLE>
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16.12. Attorneys' Fees..............................................................18
</TABLE>
iii
<PAGE> 5
Exhibits and Schedules
<TABLE>
<S> <C>
Schedule 1.................................................Names and Addresses of Participants
Exhibit A..............................................Participation Agreement Supplement Form
</TABLE>
iv
<PAGE> 6
PARTICIPATION AGREEMENT
This Agreement (this "AGREEMENT") is made as of December ___, 1999, by and
between BNP LEASING CORPORATION ("BNPLC"), a Delaware corporation, and the
Participants (as defined below).
RECITALS:
A. BNPLC and Network Appliance, Inc. ("NAI") have entered into the
following agreements, each dated as of December ___, 1999, relating to the
Improvements: a Lease Agreement (Phase IV - Improvements) (the "PHASE IV
IMPROVEMENTS LEASE"); a Purchase Agreement (Phase IV - Improvements) (the "PHASE
IV IMPROVEMENTS PURCHASE AGREEMENT"); a Common Definitions and Provisions
Agreement (Phase IV - Improvements) (the "PHASE IV IMPROVEMENTS CDPA"); and a
Closing Certificate and Agreement (the "CLOSING CERTIFICATE"). Also, BNPLC, NAI,
the Participants and Banque Nationale de Paris, in its capacity as agent for
BNPLC and the Participants (in such capacity, "AGENT") have entered into a
Pledge Agreement (Phase IV - Improvements) dated as of December ___, 1999 (the
"PHASE IV IMPROVEMENTS PLEDGE AGREEMENT").
B. BNPLC and NAI have also entered into the following agreements, each
dated as of December ___, 1999, relating to the Land: a Lease Agreement (Phase
IV - Land) (the "PHASE IV LAND LEASE"); a Purchase Agreement (Phase IV - Land)
(the "PHASE IV LAND PURCHASE Agreement"); a Common Definitions and Provisions
Agreement (Phase IV - Land) (the "PHASE IV LAND CDPA"); and the Closing
Certificate. Also, BNPLC, NAI, the Participants and Agent have entered into a
Pledge Agreement (Phase IV - Land) dated as of December ___, 1999 (the "PHASE IV
LAND PLEDGE AGREEMENT").
C. By this Agreement, the parties desire to evidence the Participants'
agreement to participate with BNPLC in certain of the risks and rewards to BNPLC
of the aforementioned agreements, which participation is to be accomplished
through the exchange of promises to make payments computed by reference to the
sums paid or received by BNPLC from time to time with respect to the
aforementioned agreements, all as more particularly provided below.
AGREEMENTS
NOW, THEREFORE, BNPLC and the Participants hereby agree as follows:
1.0 DEFINITIONS. As used herein, capitalized terms defined above shall have the
meanings assigned to them above; capitalized terms that are defined in one, but
not both, of the Phase IV Improvements CDPA and the Phase IV Land CDPA and that
are used but not defined herein shall have the respective meanings assigned to
them in the Phase IV Improvements CDPA or Phase IV Land CDPA, as applicable;
capitalized terms that are defined in both of the Phase IV Improvements CDPA and
the Phase IV Land CDPA and that are and used but not defined herein shall have
the respective meanings assigned to them in the Phase IV Improvements CDPA and
the Phase IV Land CDPA (provided, if the meaning assigned to any such
capitalized term in the Phase IV Improvements CDPA is different than the meaning
assigned to it in the Phase IV Land CDPA, the term will be construed broadly for
purposes of this Agreement to include anything that would fall within one or
both of the definitions of the term in the Phase IV Improvements CDPA and the
Phase IV Land CDPA); and, the following capitalized terms shall have the
following meanings:
1.1. "BANK SPECIFIC CHARGES" means payments made to BNPLC by or on behalf
of NAI for the account of a Participant or any other Interested Party under
subparagraph 5(c)(i) or 5(c)(ii) of the Leases or
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<PAGE> 7
as Upfront Syndication Fees. Bank Specific Charges include, for example,
payments made to compensate a Participant for an increase in costs related to
advances made by the Participant hereunder and attributable to a Banking Rules
Change after the Effective Date.
1.2. "COMMON DEFINITIONS AND PROVISIONS AGREEMENTS" means the Phase IV
Improvements CDPA and the Phase IV Land CDPA.
1.3. "CRITICAL EVENT" means any of the following:
1.3.1. any failure by NAI to purchase BNPLC's interest in the Property
or to cause an Applicable Purchaser to purchase BNPLC's interest in the
Property when required under the Purchase Agreements; or
1.3.2. any failure by NAI to pay Base Rent which continues for 10
days.
1.4. "DEPOSIT TAKER" shall have the meaning assigned to it in the Pledge
Agreements.
1.5. "DEPOSIT TAKER LOSSES" shall have the meaning assigned to it in the
Pledge Agreements.
1.6. "DIRECT PAYMENTS", like the phrase "Direct Payments to Participants"
under the Purchase Agreements, means the amounts paid or required to be paid
directly to Participants on the Designated Sale Date as provided in Section 6.2
of the Pledge Agreements at the direction of and for NAI by Agent from all or
any part of the Collateral described therein.
1.7. "DISTRIBUTABLE PAYMENT" means any payment ACTUALLY RECEIVED by BNPLC
under the Leases or other Operative Documents as (or in satisfaction of NAI's
obligations for) any of the following or interest on past due amounts thereof:
Base Rent; Qualified Prepayments; Bank Specific Charges; a Supplemental Payment;
or Net Sales Proceeds.
1.8. "LATE PAYMENT RATE" means (a) for each day (other than as set forth in
clause (b) of this sentence) the Fed Funds Rate or (b) for the purpose of
computing interest on past due payments for each day following the fifth day
after such payments first became due, a rate of two percent (2%) per annum in
excess of the Prime Rate then in effect; provided, the Late Payment Rate shall
not, notwithstanding anything to the contrary herein contained, exceed the
maximum rate of interest permitted by applicable law.
1.9. "LEASES" means the Phase IV Improvements Lease and the Phase IV Land
Lease.
1.10. "MAJORITY" means, at the time any determination thereof is required,
any of the Participants and BNPLC, the aggregate Percentages of which equal or
exceed sixty-seven percent (67%) of the Percentages of BNPLC and of all the
Participants then entitled to vote under Section 6.1.
1.11. "NET CASH FLOW" means payments made to BNPLC under the Leases or
other Operative Documents as (or in satisfaction of NAI's obligations for) Base
Rent, Qualified Prepayments, any Supplemental Payment or any interest on past
due Base Rent, Qualified Prepayments or a Supplemental Payment.
1.12. "NET SALES PROCEEDS" means payments made to BNPLC under the Purchase
Agreements as (or in satisfaction of NAI's or an Applicable Purchaser's
obligations for) the purchase price for BNPLC's interest in Property or in
Escrowed Proceeds; but less and excluding (x) any such payments applied by
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<PAGE> 8
BNPLC to pay, or received by BNPLC as reimbursement for, bona fide costs of a
sale under the Purchase Agreements, and (y) any excess sales proceeds received
from an Applicable Purchaser that BNPLC is required by Paragraph 1(A)(2)(b) or
2(D) of the Purchase Agreements to pay over to NAI. Further, if BNPLC does not
sell the Property to NAI or an Applicable Purchaser pursuant to the Purchase
Agreements, then "NET SALES PROCEEDS" shall also include the excess, if any, of:
1.12.1. all rents and sales, condemnation and insurance proceeds
ACTUALLY RECEIVED by BNPLC (other than sales proceeds paid or to be paid by
BNPLC to NAI pursuant to Paragraph 2(D) of the Purchase Agreements) from
any sale or lease after the Designated Sale Date of any interest in, or
because of any subsequent taking or damage to, the Property; over
1.12.2. the sum of (i) all costs of collecting the rents and proceeds
described in the preceding clause 1.12.1, plus (ii) all ad valorem taxes,
insurance premiums and other Losses of every kind suffered or incurred by
BNPLC with respect to the ownership, operation or maintenance of the
Property.
However, for purposes of computing any excess described in the preceding
sentence, costs described in clause 1.12.2 shall not include BNPLC's general
overhead costs or any Protective Advances for which the Participants have
already paid BNPLC their respective Percentages thereof as required by Section
3.3.
1.13. "OPERATIVE DOCUMENTS" means all of Operative Documents under and as
defined in the Phase IV Improvements CDPA and Operative Documents under and as
defined in the Phase IV Land CDPA. The term Operative Documents includes the
Phase IV Improvements Lease, the Phase IV Improvements Purchase Agreement, the
Phase IV Improvements Pledge Agreement, the Phase IV Improvements CDPA, the
Closing Certificate, the Phase IV Land Lease, the Phase IV Land Purchase
Agreement, the Phase IV Land Pledge Agreement, and the Phase IV Land CDPA.
1.14. "PARTICIPANTS" means Banque Nationale de Paris and any other
financial institutions which may hereafter become parties to (i) this Agreement
(by joining with BNPLC in completing and executing a Participation Agreement
Supplement) and (ii) the Pledge Agreements, in each case pursuant to a Permitted
Transfer.
1.15. "PARTICIPATION AGREEMENT SUPPLEMENT" means a Participation Agreement
Supplement in substantially the form attached hereto as Exhibit A, completed and
executed by BNPLC and a Participant, adding the Participant as a party to this
Agreement, changing a Participant's Percentage or removing a Participant as a
party to this Agreement.
1.16. "PARTICIPATION AMOUNT" of BNPLC or any Participant means the
outstanding balance from time to time of the total investment made by BNPLC
under the Operative Documents or by the applicable Participant hereunder. The
Participation Amount of BNPLC and each Participant will be comparable to its
share of the outstanding principal balance that would be due from NAI from time
to time if BNPLC had made a loan (and the Participants had participated in the
loan) to NAI for NAI's acquisition of the Land and the Improvements as provided
in the Operative Documents, instead of BNPLC's having acquired the Property
itself and having leased the same to NAI as provided in the Operative Documents.
Absent a failure by any Participant to make a payment required by Section 3.2 or
some other unexpected contingency, it is expected that (a) the Participation
Amounts of BNPLC and the Participants will always be in proportion to their
respective Percentages set forth in SCHEDULE 1, and (b) the total Participation
Amounts of BNPLC and all Participants during the Term of the Leases shall equal
the Stipulated Loss Value computed from time to time under the Leases.
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<PAGE> 9
1.17. "PERCENTAGE" of each Participant means, subject to change as provided
in Section 4.1 and to change by a Participation Agreement Supplement, the
percentage designated as the Participant's "Percentage" in SCHEDULE 1.
"PERCENTAGE" of BNPLC means a percentage that, at the time a determination of
such Percentage is required hereunder, is equal to 100% less the sum of the
Percentages of all the Participants.
1.18. "PLEDGE AGREEMENTS" means the Phase IV Improvements Pledge Agreement
and the Phase IV Land Pledge Agreement.
1.19. "PROPERTY" means all real and personal property covered from time to
time by the Phase IV Improvements Lease and the Phase IV Land Lease.
1.20. "PROTECTIVE ADVANCES" shall mean any payments (including payments to
attorneys, accountants, experts and other advisors) made by or on behalf of
BNPLC at any time or from time to time because of, arising out of or related to,
in whole or in part: (1) the Property or the protection, preservation, operation
or ownership thereof; (2) any of the Operative Documents or the transactions
contemplated therein; or (3) BNPLC's status as a party to any of the Operative
Documents or anything done by BNPLC to enforce the obligations of NAI under the
Operative Documents (whether done upon BNPLC's own initiative or upon the
direction of the Majority). Protective Advances will include any and all
payments made by or on behalf of BNPLC for which NAI is obligated to indemnify
or reimburse BNPLC by Paragraph 5(c) of the Leases.
1.21. "PURCHASE AGREEMENTS" means the Phase IV Improvements Purchase
Agreement and, from and the Phase IV Land Purchase Agreement.
2.0 PAYMENTS FROM BNPLC TO EACH PARTICIPANT.
2.1. Payments Computed by Reference to Net Cash Flow and Net Sales
Proceeds. Upon the ACTUAL RECEIPT of any Net Cash Flow, Net Sales Proceeds or
interest thereon, BNPLC will pay each Participant an amount equal to such
Participant's Percentage times such Net Cash Flow, Net Sales Proceeds or
interest, as the case may be.
2.2. Payments Computed by Reference to Bank Specific Charges. If BNPLC
ACTUALLY RECEIVES any Bank Specific Charges (or interest thereon) for the
account of a particular Participant, then BNPLC promises to promptly make a
payment to such Participant equal to such Bank Specific Charges (or interest
thereon). If requested by any Participant, BNPLC shall make a demand upon NAI
for payment of any Bank Specific Charges due for the account of such
Participant.
2.3. [Intentionally deleted]
2.4. [Intentionally deleted]
2.5. Timing; Manner of Payment. Each payment required of BNPLC by this
Article 2 shall be made prior to 12:00 noon, San Francisco time, on the same day
that BNPLC actually receives the corresponding Distributable Payment (in good
funds), if BNPLC's receipt of the corresponding Distributable Payment occurs
prior to 12:00 noon, San Francisco time; if, however, BNPLC's receipt of the
Distributable Payment (in good funds) occurs on any day after 12:00 noon, San
Francisco time, the payments required from BNPLC to the Participants shall not
be due until 12:00 noon, San Francisco time, on the next Business Day. All
payments from BNPLC to the Participants shall be by transfer of federal funds
pursuant to the wiring instructions set forth in SCHEDULE 1. Each payment owing
to a Participant by BNPLC shall bear interest from the date it is due until it
is paid by BNPLC at the Late Payment Rate
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<PAGE> 10
calculated on the basis of a 360-day year. Any payment by BNPLC to a Participant
after the time of day specified herein for such payment shall be deemed not paid
until the next following Business Day for purposes of this Agreement.
2.6. Meaning of Actually Received. As used herein with respect to payments,
"actually received" and words of like effect shall include not only payments
made directly from NAI or any Applicable Purchaser, but also amounts paid by
others on NAI's behalf, amounts realized by way of setoff, amounts realized upon
the disposition of collateral under the Pledge Agreement and any other documents
that may be given from time to time to secure NAI's obligations under Leases or
Purchase Agreements (net of the costs of disposition and further net of any
amounts that must be returned to NAI or any third party having an interest in
such collateral), and the fair market value of any property or services accepted
in lieu of a cash payment (though it is understood that nothing herein contained
shall require BNPLC to accept property or services in lieu of a cash payment
required by the Operative Documents and that BNPLC will not agree to accept
property or services in lieu of any cash Distributable Payment without the
Participants' prior written consent). Such phrase shall not, however, include
amounts received by BNPLC from any of the Participants or from any affiliate of
BNPLC unless the context otherwise indicates. In the event of any reduction in
Net Sales Proceeds "actually received" by BNPLC (as described in the preceding
sentences) because of a reduction in the Break Even Price attributable to any
Direct Payments or Deposit Taker Losses, BNPLC will be deemed for purposes of
this Agreement to have received additional Net Sales Proceeds from NAI equal to
such reduction. In such event, however, BNPLC will be entitled to a credit
against the payments that would otherwise be required to any Participant
hereunder equal to the aggregate amount, if any, of (1) Direct Payments which
are ACTUALLY RECEIVED by such Participant, and (2) Deposit Taker Losses with
respect to any Deposit Taker for such Participant.
3.0 PAYMENTS FROM THE PARTICIPANTS TO BNPLC.
3.1. Initial Funding Advance. Each of the original Participants joining in
the execution of this Agreement promises to pay to BNPLC an initial payment as
set forth below such Participant's name on SCHEDULE 1, equal to the
Participant's Percentage times the sum of the Initial Funding Advances under and
as defined in the Leases. BNPLC shall have no obligation hereunder to any of the
original Participants that fails to pay such initial payment. Such initial
payment shall be due no later than 12:00 noon, San Francisco time, on the date
hereof.
3.2. [Intentionally deleted].
3.3. Protective Advances.
3.3.1. General. If NAI fails to pay or reimburse any Protective
Advance to BNPLC within ten days after BNPLC makes a demand or request
therefor, BNPLC may notify the Participants of such failure. Promptly after
receipt of any such notice, each Participant shall pay to BNPLC an amount
equal to such Participant's Percentage times the Protective Advance
described in the notice, EVEN IF THE PROTECTIVE ADVANCE WOULD NOT HAVE BEEN
PAID BUT FOR ANY ACTUAL OR ALLEGED NEGLIGENCE OF BNPLC OR ITS AFFILIATES OR
REPRESENTATIVES AND EVEN IF THE PROTECTIVE ADVANCE WOULD NOT HAVE BEEN PAID
BUT FOR ANY ENVIRONMENTAL LOSSES OR OTHER MATTERS OR CIRCUMSTANCES FOR
WHICH BNPLC MAY BE STRICTLY LIABLE. After any Participant has paid its
respective Percentage times the Protective Advance to BNPLC, BNPLC shall be
obligated to pay to such Participant an amount equal to its Adjusted
Percentage (as defined below) times any subsequent Excess Reimbursement (as
defined below) or interest thereon ACTUALLY RECEIVED by BNPLC from NAI for
the Protective Advance. As used in this Agreement the "ADJUSTED
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<PAGE> 11
PERCENTAGE" of any Participant shall equal (i) such Participant's
Percentage, divided by (ii) the sum of BNPLC's Percentage and the
Percentages of all Participants who have paid BNPLC their respective shares
of the Protective Advance at issue. As used in this Agreement, the term
"EXCESS REIMBURSEMENT" shall mean, for the Protective Advance at issue,
amounts reimbursed or paid by NAI to or on behalf of BNPLC on account of
such Protective Advance in excess of (i) such Protective Advance, times
(ii) the Percentages of any Participants that have not paid BNPLC their
respective Percentages of such Protective Advance.
3.3.2. Exceptions. Notwithstanding the foregoing, no Participant shall
be required to make any payment pursuant to this Section 3.3 related to a
Protective Advance that (1) consists of a payment of Excluded Taxes, or (2)
is paid only because of a transfer or assignment by BNPLC of its right to
receive Distributable Payments or its rights and interests in and to the
Property, the Operative Documents or this Agreement to BNPLC's Affiliates.
Further, nothing in this Section 3.3 shall be construed to require a
payment by a Participant for that portion or percentage, if any, of a
Protective Advance required only because of (and attributed by any
applicable principles of comparative fault to): (a) conduct of BNPLC or a
Representative of BNPLC that has been determined to constitute gross
negligence or wilful misconduct in or as a necessary element of a final
judgment rendered against BNPLC or such Representative by a court with
jurisdiction to make such determination; (b) any representation made by
BNPLC in the Operative Documents that is false in any material respect and
that BNPLC knew was false at the time of BNPLC's execution of the Operative
Documents; or (c) Liens Removable by BNPLC. As used in this Agreement,
"gross negligence" of BNPLC shall not include any negligent failure of
BNPLC to act when the duty to act would not have been imposed but for
BNPLC's status as owner of the Property or as a party to the Operative
Documents.
3.4. Method of Payment. All payments made by the Participants to BNPLC
shall be made by transfer of federal funds to BNPLC pursuant to the wiring
instructions for BNPLC set forth on SCHEDULE 1. Each payment owing to BNPLC by
any Participant shall be payable to BNPLC on the date specified herein or, if
not specified, on demand and shall bear interest from the date due until the
date paid by the Participant at the Late Payment Rate calculated on the basis of
a 360-day year. Any payment by a Participant to BNPLC after the time of day
specified herein for such payment shall be deemed not paid until the next
following Business Day for purposes of this Agreement.
4.0 OTHER ADJUSTMENTS, DEDUCTIONS AND INVESTMENTS.
4.1. [Intentionally deleted]
4.2. Setoff. In the event that one party to this Agreement has failed to
pay to a second party hereto any amount when due hereunder, the second party may
deduct such amount and interest thereon at the Late Payment Rate from any
payments due from it under this Agreement to the first party. Without
limitation, BNPLC may setoff amounts owed to it by any Defaulting Participant
against any termination fee payable to such Defaulting Participant pursuant to
Section 6.4 below if BNPLC shall elect to reduce such Defaulting Participant's
Percentage to zero as provided in Section 6.4.
4.3. [Intentionally deleted]
4.4. Sharing of Payments. Each Participant agrees that if for any reason it
shall obtain a payment made by or for NAI that reduces any Distributable
Payment, and if such payment will cause such Participant to receive more than it
would have received had such payment been made instead to BNPLC and generated
the payments by BNPLC contemplated in this Agreement, then (1) such Participant
shall promptly purchase interests in the rights of other parties to this
Agreement as necessary to cause BNPLC
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<PAGE> 12
and all Participants to share payments as they otherwise would have done under
this Agreement, and (2) such other adjustments shall be made from time to time
as shall be equitable to ensure that BNPLC and all Participants share all
payments of (or that operate to reduce) Distributable Payments as they otherwise
would have done under this Agreement. If, however, the payment received by the
purchasing Participant or any part thereof is later recovered from the
purchasing Participant, the purchase provided for in this Section shall be
rescinded, and the price paid by the purchasing Participant to other parties
shall be repaid by them to the purchasing Participant to the extent of such
recovery. Also, if the purchasing Participant is required by court order to pay
interest on the payment so recovered, then amounts repaid to the purchasing
Participant by the other parties will be repaid with interest, computed in the
same manner as the interest required by the court order. Nothing in this Section
shall in any way affect the right of BNPLC or any Participant to obtain payment
(whether by exercise of rights of banker's lien, set-off or counterclaim or
otherwise) of indebtedness or obligations other than those established by this
Agreement or any of the Operative Documents.
4.5. Withholding Taxes. BNPLC may deduct any United States withholding tax
required on payments to a Participant hereunder from such payments, and the
Participant shall reimburse BNPLC for any such taxes BNPLC is required to pay
and that BNPLC has not deducted. If BNPLC is uncertain whether United States
withholding tax is required, BNPLC may, after notice to the applicable
Participant, deduct the withholding tax except during any period when BNPLC is
excused from such withholding because of the Participant's delivery to BNPLC of
(i) a statement in duplicate conforming to the requirements of United States
Treasury Regulation Section 1.1441-5(b) or (ii) two duly completed copies of
Internal Revenue Service Form W-8BEN or any successor form thereto ("FORM
W-8BEN") relating to the Participant and claiming complete exemption from
withholding tax on all amounts to be received by the Participant pursuant to
this Agreement or (iii) a valid United States Internal Revenue Service Form
W-8EC1 or any successor form thereto ("FORM W-8EC1") relating to the Participant
and claiming complete exemption from withholding tax on all amounts to be
received by the Participant pursuant to this Agreement. Any Participant shall,
if requested by BNPLC, deliver to BNPLC subsequent statements with respect to
such Treasury Regulation or two additional copies of Form W-8BEN or Form W-8EC1,
or the applicable replacement forms, on or before the date that any prior such
delivered statements or forms expire or become obsolete. If any such statement
or form delivered by a Participant to BNPLC becomes invalid or inapplicable as
to such Participant, such Participant shall promptly inform BNPLC. The
obligations of each Participant pursuant to this Section 4.5 shall survive the
termination of this Agreement.
4.6. Order of Application. For purposes of this Agreement, BNPLC shall be
entitled, but not required, to apply any payments received from NAI under the
Operative Documents to satisfy (1) NAI's obligation to pay or reimburse
Protective Advances (and interest thereon), if any, and (2) costs incurred by
BNPLC because of any sale under the Purchase Agreements, before applying such
payments to satisfy NAI's other obligations, regardless of how NAI may have
designated such payments.
4.7. Investments Pending Dispute Resolution; Overnight Investments.
Whenever BNPLC in good faith determines that it does not have all information
needed to determine how payments to the Participants must be made on account of
any Distributable Payments, or whenever BNPLC in good faith determines that
there is any dispute among the Participants about payments which must be made on
account of Distributable Payments, BNPLC may choose to defer the payments to
Participants which are the subject of such missing information or dispute.
However, to minimize any such deferral, BNPLC shall attempt diligently to obtain
any missing information needed to determine how payments to the Participants
must be made. Also, pending any such deferral, or if BNPLC is otherwise required
to invest funds pending distribution to the Participants, BNPLC shall endeavor
to invest the payments at issue. In addition, if BNPLC receives any
Distributable Payment after 12:00 noon, San Francisco time, on any day and will
not make payments to Participants in connection therewith until the next
Business Day pursuant to Section 2.5,
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then BNPLC shall endeavor to invest such payments overnight; provided that BNPLC
shall have no liability to the Participants if BNPLC is unable to make such
investments. Investments by BNPLC shall be in the overnight federal funds market
pending distribution, and the interest earned on each dollar of principal so
invested shall be paid to the Person entitled to receive such dollar of
principal when the principal is paid to such Person.
5.0 NATURE OF THIS AGREEMENT.
5.1. No Conveyance. THIS AGREEMENT IS INTENDED TO CREATE CONTRACTUAL RIGHTS
IN FAVOR OF EACH PARTICIPANT TO RECEIVE PAYMENTS FROM BNPLC, BUT IT IS NOT
INTENDED TO CONVEY OR ASSIGN TO THE PARTICIPANTS ANY INTEREST IN THE PROPERTY OR
IN THE OPERATIVE DOCUMENTS OR IN THE PAYMENTS TO BE MADE TO BNPLC THEREUNDER. IN
NO EVENT SHALL ANY PARTICIPANT EXERCISE OR ATTEMPT TO EXERCISE ANY RIGHT OR
REMEDY OF BNPLC UNDER THE OPERATIVE DOCUMENTS. NOTHING IN THIS AGREEMENT SHALL
BE CONSTRUED TO GRANT TO THE PARTICIPANTS ANY RIGHT TO ENFORCE NAI'S OBLIGATIONS
UNDER THE OPERATIVE DOCUMENTS OR TO COLLECT DIRECTLY FROM NAI ANY PAYMENTS DUE
FROM NAI THEREUNDER. ALTHOUGH BNPLC'S OBLIGATIONS FOR PAYMENTS TO THE
PARTICIPANTS HEREUNDER SHALL BE COMPUTED BY REFERENCE TO FUNDS ACTUALLY RECEIVED
AS DISTRIBUTABLE PAYMENTS, THIS AGREEMENT SHALL NOT BE CONSTRUED AS AN
ASSIGNMENT OF DISTRIBUTABLE PAYMENTS THEMSELVES OR ANY INTEREST THEREIN, IT
BEING UNDERSTOOD THAT (WITHOUT LIMITING OR EXPANDING THE DOLLAR AMOUNT OF SUCH
OBLIGATIONS) BNPLC MAY SATISFY SUCH OBLIGATIONS FROM OTHER FUNDS AVAILABLE TO
IT, THEREBY RESERVING DISTRIBUTABLE PAYMENTS FOR PAYMENT TO OTHER CREDITORS OR
FOR OTHER PURPOSES, AS BNPLC SHALL DETERMINE IN ITS SOLE DISCRETION.
5.2. Not a Partnership, Etc. NEITHER THE EXECUTION OF THIS AGREEMENT, NOR
THE SHARING OF RISKS AND REWARDS UNDER THE OPERATIVE DOCUMENTS, NOR ANY
AGREEMENT TO SHARE IN PROFITS OR LOSSES ARISING AS A RESULT OF THE TRANSACTIONS
CONTEMPLATED THEREBY, IS INTENDED TO BE OR TO CREATE, AND THE FOREGOING SHALL BE
CONSTRUED NOT TO BE OR TO CREATE ANY PARTNERSHIP, JOINT VENTURE, OR OTHER JOINT
ENTERPRISE BETWEEN BNPLC AND ANY PARTICIPANT. NEITHER THE EXECUTION OF THIS
AGREEMENT NOR THE MANAGEMENT AND ADMINISTRATION OF THE OPERATIVE DOCUMENTS AND
THE RELATED DOCUMENTS BY BNPLC, NOR ANY OTHER RIGHT, DUTY OR OBLIGATION OF BNPLC
UNDER OR PURSUANT TO THIS AGREEMENT IS INTENDED TO BE OR TO CREATE ANY FIDUCIARY
RELATIONSHIP BETWEEN BNPLC AND ANY PARTICIPANT.
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<PAGE> 14
6.0 AMENDMENTS; WAIVERS; EXERCISE OF RIGHTS AND REMEDIES AGAINST NAI.
6.1. Limitations. Subject to Section 6.3, but notwithstanding anything else
to the contrary in this Agreement:
6.1.1. BNPLC shall not:
6.1.1.1. without the prior written consent of the Participants,
execute any waiver, modification or amendment of the Operative
Documents that would: (1) increase the amounts the Participants may be
required to pay to BNPLC hereunder; or (2) reduce or postpone (or
reasonably be expected to reduce or postpone) any payments that any
Participant would, but for such modification or amendment, be expected
to receive from BNPLC hereunder (including any extension of the Term
of the Leases); (3) excuse or diminish NAI's obligations to provide
Collateral under the Pledge Agreements during any "Mandatory
Collateral Period" (as described in Part III of Schedule 1 attached to
the Leases); or (4) except as otherwise expressly permitted by the
Operative Documents, release BNPLC's interest in all or a substantial
part of the Property or release any security interest in Collateral
pledged under the Pledge Agreements; or
6.1.1.2. without the prior written consent of a Majority, execute
any other waiver, modification or amendment of the Operative
Documents, except a waiver, modification or amendment that NAI
requests pursuant to express provisions of the Operative Documents and
that BNPLC believes in good faith it must execute to satisfy the
requirements of the Operative Documents; or
6.1.1.3. over the written objection of a Majority, affirmatively
elect a Voluntary Retention of the Property pursuant to subparagraph
1(A)(2)(a) of the Purchase Agreements.
However, this subsection 6.1.1 shall not limit BNPLC's right to forebear
from exercising rights against NAI to the extent BNPLC shall determine in
good faith that such forbearance is appropriate and is permitted by the
following subsections in this Section 6.1. Upon the direction of the
Majority, BNPLC shall execute any waiver, modification or amendment of the
Operative Documents requested by NAI; provided, that: (A) the waiver,
modification or amendment is not prohibited by the forgoing provisions of
this Agreement, (B) the waiver, modification or amendment does not (1)
increase the amount BNPLC may be required to pay to NAI or anyone else, or
(2) reduce or postpone (and cannot reasonably be expected to reduce or
postpone) any payments that BNPLC would, but for such modification or
amendment, be expected to receive, or (3) release BNPLC's interest in all
or a substantial part of the Property; and (C) BNPLC is not excused from
executing the waiver, modification or amendment by Section 6.3.
6.1.2. BNPLC will, with reasonable promptness, provide the
Participants with copies of all default notices it sends or receives under
the Operative Documents and notify the Participants of any Event of Default
under the Leases or Critical Event of which BNPLC is actually aware and of
any other matters known to BNPLC which, in BNPLC's reasonable judgment, are
likely to materially affect the payments any Participant will be required
to make or be entitled to receive under this Agreement, but BNPLC will not
in any event be liable to any Participant for BNPLC's failure to do so
unless such failure constitutes gross negligence or wilful misconduct on
the part of BNPLC.
6.1.3. Before taking possession of the Property because of any breach
by NAI of the Operative Documents, filing any lawsuit against NAI,
exercising foreclosure or offset rights against the
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<PAGE> 15
Collateral under the Pledge Agreements, or exercising termination rights
provided in subparagraph 1(c) of the Leases or subparagraph 4(B) of the
Purchase Agreements, or if requested in writing by any Participant at any
time when a Critical Event has occurred and is continuing, BNPLC shall call
a meeting with the Participants to discuss what action by BNPLC, if any, is
appropriate under the Operative Documents and what direction, if any, a
Majority may give to BNPLC. Such meeting shall be scheduled during regular
business hours in the offices of Banque Nationale de Paris, San Francisco,
or another appropriate location in San Francisco, California, not earlier
than five and not later than twenty Business Days after BNPLC's receipt of
the written request from any Participant. BNPLC shall attempt in good faith
and with reasonable diligence to comply with the direction of a Majority
if, when a Critical Event or an Event of Default have occurred and be
continuing, a Majority shall direct BNPLC in writing to do any one or more
of the following, as applicable under the circumstances: (a) send any
default notices required before a Critical Event can become an Event of
Default, (b) bring a lawsuit against NAI to enforce the Operative
Documents, or (c) exercise termination rights provided in subparagraph 1(c)
of the Leases or subparagraph 4(B) of the Purchase Agreements. However, if
BNPLC is not a member of the Majority voting pursuant to this subsection
6.1.3 in favor of any such action, then BNPLC may require that it first
receive the written agreement (in form reasonably acceptable to BNPLC) of
the members of the Majority so voting to indemnify BNPLC from and against
all costs, liabilities and claims that may be incurred by or asserted
against BNPLC because of the action the Majority directs BNPLC to take. In
no event shall any Participant instigate any suit or other action directly
against NAI with respect to the Operative Documents or the Property, even
if the Participant would, but for this Agreement, be entitled to do so as a
party or third party beneficiary under the Operative Documents or
otherwise.
6.1.4. In the event NAI or an Applicable Purchaser fails to purchase
the Property on the Designated Sale Date when required to do so pursuant to
the Purchase Agreements, BNPLC shall, unless the Participants shall
otherwise agree in writing, bring suit against NAI to enforce the Operative
Documents in such form as shall be recommended by reputable counsel no
later than sixty days after the expiration of any applicable cure or grace
period given NAI by the express terms of the Purchase Agreements, and
thereafter BNPLC shall prosecute the suit with reasonable diligence in
accordance with the advice of reputable counsel. If BNPLC acquires the
interests of NAI in any of the Property as a result of such suit or
otherwise, BNPLC shall thereafter proceed with reasonable diligence to sell
the Property in a commercially reasonable manner to one or more bona fide
third party purchasers and shall in any event have consummated the sale of
the entire Property (through a single sale of the entire property or a
series of sales of parts) within five years following the date BNPLC
recovers possession of the Property at the best price or prices BNPLC
believes are reasonably attainable within such time. Further, after the
Designated Sale Date and prior to BNPLC's sale of the entire Property,
BNPLC shall retain a property management company experienced in the area
where the Property is located to manage the operation of the Property and
pursue the leasing of any completed improvements which are part of the
Property. BNPLC shall not retain an Affiliate of BNPLC to act as the
property manager except under a bona fide, arms-length management contract
containing commercially reasonable terms. Further, after the Designated
Sale Date and until BNPLC sells the Property, BNPLC shall (i) endeavor in
good faith to maintain, or shall obtain the agreement of one or more
tenants to maintain, the Property in good order and repair, (ii) procure
and maintain casualty insurance against risks customarily insured against
by owners of comparable properties, in amounts sufficient to eliminate the
effects of coinsurance, (iii) keep and allow the Participants to review
accurate books and records covering the operation of the Property, and (iv)
pay prior to delinquency all taxes and assessments lawfully levied against
the Property.
Notwithstanding the foregoing, any Participants that have failed to fund any
amount due hereunder, and that have not corrected such failure within five
Business Days after being notified thereof, shall have no
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<PAGE> 16
voting or consent rights under this Section 6.1 and no rights to require BNPLC
to call a meeting pursuant to subsection 6.1.3 until such failure is corrected.
6.2. General. Subject to the limitations set forth in Section 6.1:
6.2.1. BNPLC shall have the exclusive right to take any action and to
exercise any available powers, rights and remedies to enforce the
obligations of NAI under the Operative Documents, or to refrain from taking
any such action or exercising any such power, right or remedy.
6.2.2. BNPLC shall be entitled to (i) give any consent, waiver or
approval requested by NAI with respect to any construction or other
approval contemplated in the Leases or (ii) waive or consent to any adverse
title claims affecting the Property, provided that, in either case, BNPLC
believes in good faith that such action will not have a material adverse
effect upon NAI's obligations or ability to make the payments required
under the Operative Documents or upon the rights and remedies, taken as
whole, of BNPLC under the Operative Documents or of the Participants'
hereunder.
6.3. Conflicts and Purchase Agreements Defaults. Notwithstanding anything
to the contrary herein contained, BNPLC shall be entitled, even over the
objection of any Participant or the Majority, (A) to take any action recommended
in writing by reputable counsel and believed in good faith by BNPLC to be
required of BNPLC by the Operative Documents or any law, rule or regulation to
which BNPLC is subject, (B) to refrain from taking any action if BNPLC believes
in good faith that the action is prohibited by the Operative Documents or any
law, rule or regulation to which BNPLC is subject, and if reputable counsel
recommends in writing that BNPLC refrain from taking the action, and (C) after
notice to the Participants, to bring and prosecute a suit against NAI in the
form recommended by and in accordance with advice of reputable counsel at any
time when a breach of the Operative Documents by NAI shall have put BNPLC (or
any of its officers or employees) at risk of criminal prosecution or significant
liability to third parties or at any time after NAI or an Applicable Purchaser
fails to purchase the Property on the Designated Sale Date pursuant to the
Purchase Agreements. (If, however, BNPLC takes any action or refrains from
taking any action over the objection of a Majority pursuant to the preceding
sentence, BNPLC must provide the Majority a written explanation (including a
copy of a supporting written recommendation of counsel) of the basis for BNPLC's
conclusion that taking the action, or refraining from taking the action, is
permitted by the preceding sentence.) Further, nothing herein contained shall be
construed to require BNPLC to agree to modify the Operative Documents or to take
any action or refrain from taking any action in any manner that could increase
BNPLC's liability to NAI or others, that could reduce or postpone payments to
which BNPLC is entitled thereunder, or that could reduce the scope and coverage
of the indemnities provided for BNPLC's benefit therein.
6.4. Refusal to Give Consents; Failure to Fund; Failure of a Deposit Taker
to Satisfy Minimum Ratings. If any Participant declines to consent to any
amendment, modification, waiver, release or consent for which the Participant's
consent is requested or required by reason of this Agreement, or if any
Participant fails to pay any amount owed by it hereunder, or if the Deposit
Taker for any Participant shall cease to be a Qualified Deposit Taker (as
defined in the Pledge Agreement), BNPLC shall have the right, but not the
obligation and without limiting any other remedy of BNPLC, to reduce such
Participant's Percentage to zero and to terminate such Participant's rights to
receive any further payments under Article 2 of this Agreement by paying to such
Participant a termination fee equal to the total amount it would be entitled to
receive from BNPLC hereunder if the date of such payment were the Designated
Sale Date and on such date NAI had itself purchased BNPLC's interest in the
Property pursuant to and in accordance with the Purchase Agreements. No
Participant's rights to receive payments equal to such Participant's Adjusted
Percentage of any Excess Reimbursement of a Protective Advance or interest
thereon as provided in Section 3.3 shall be impaired or affected by any
termination contemplated in this Section 6.4; accordingly,
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<PAGE> 17
BNPLC shall not, as a condition to such a termination, be required to reimburse
a Participant for any payments the Participant has made in connection with
Protective Advances pursuant to Section 3.3.
7.0 REQUIRED REPAYMENTS. Each Participant shall repay to BNPLC, upon written
request or demand by BNPLC (i) any sums paid by BNPLC to such Participant under
this Agreement from, or that were computed by reference to, any Distributable
Payment or other amounts which BNPLC shall be required to return or pay over to
another party, whether pursuant to any bankruptcy or insolvency law or
proceeding or otherwise and (ii) any interest or other amount that BNPLC is also
required to pay to another party with respect to such sums. Such repayment by a
Participant shall not constitute a release of such Participant's right to
receive payments from BNPLC hereunder upon BNPLC's receipt of any such
Distributable Payment or other amount (or any interest thereon) that BNPLC may
later recover.
8.0 NAI INFORMATION; INDEPENDENT ANALYSIS. Prior to the execution of this
Agreement, BNPLC has provided to the Participants copies of the executed
Operative Documents and of various certificates, legal opinions and other
documents delivered to BNPLC by or on behalf of NAI with the Operative
Documents. In the future, BNPLC shall provide (A) to all Participants copies of
all amendments of the Operative Documents and certificates and legal opinions,
if any, delivered by or on behalf of NAI in connection therewith, and (B) to any
Participant, as reasonably required to comply with a specific, reasonable
written request for information made by the Participant, copies of other
information readily available to BNPLC concerning NAI or Guarantor and the
transactions contemplated in the Operative Documents. However, BNPLC shall not
be liable for its failure to provide the Participants any of the foregoing
documents unless such failure constitutes gross negligence or wilful misconduct
on BNPLC's part. Each Participant has entered into this Agreement without
reliance upon representations made outside this Agreement by BNPLC or by any
Affiliate, agent or attorney of BNPLC and only after independently reviewing
such documents, independently making such inspections, independently consulting
with counsel and independently collecting and verifying such information, as the
Participant determined to be necessary or appropriate. Without limiting the
foregoing, each Participant has independently reviewed the Operative Documents
and independently made such inquiries and investigations of NAI and the Property
as the Participant determined to be necessary or appropriate before executing
this Agreement.
9.0 PERFORMANCE THROUGH REPRESENTATIVES. BNPLC may perform any of its duties
hereunder by or through officers, directors, employees, attorneys or agents
(collectively, "REPRESENTATIVES"), and BNPLC and its Representatives shall be
entitled to rely, and shall be fully protected in relying, upon any
communication or document believed by it or them to be genuine and correct and
to have been signed or made by the proper Person and, with respect to legal
matters, upon the opinion of counsel selected by BNPLC. The Participants
acknowledge that Banque Nationale de Paris shall be entitled to act as agent for
BNPLC with respect to the administration of this Agreement, and to the extent it
does so, it shall be a Representative of BNPLC hereunder.
10.0 DUTY OF CARE. NEITHER BNPLC NOR ANY OF ITS REPRESENTATIVES SHALL BE LIABLE
OR RESPONSIBLE TO ANY PARTICIPANT OR ANY OTHER PERSON FOR ANY ACTION TAKEN OR
OMITTED TO BE TAKEN BY BNPLC OR ANY OF ITS REPRESENTATIVES UNDER THIS AGREEMENT
OR THE OPERATIVE DOCUMENTS OR OTHERWISE (EVEN IF NEGLIGENT OR RELATED TO A
MATTER FOR WHICH BNPLC OR ANY OF ITS REPRESENTATIVES MAY OTHERWISE BE STRICTLY
LIABLE); provided, this provision will not excuse BNPLC from liability for
failing to make timely payments required of BNPLC to the Participants by the
express provisions of Article 2 or Section 3.3 or from liability for actions
taken or omitted to be taken by BNPLC which constitute gross negligence or
wilful misconduct. Without limiting the generality of the foregoing, BNPLC (1)
may consult with legal counsel (including counsel for NAI), independent public
accountants and other experts selected by it and shall not be liable for any
action
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<PAGE> 18
taken or omitted to be taken in good faith by it in accordance with the advice
of such counsel, accountants or experts; (2) makes no warranty or representation
to the Participants except as provided in Article 12 and shall not be
responsible to the Participants for any statements, warranties or
representations made in or in connection with the Operative Documents; (3) shall
not have any duty to the Participants to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of the
Operative Documents or to inspect the Property or the books and records of NAI;
(4) shall not be responsible to the Participants for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Operative Documents or any instrument or document furnished in connection
therewith; (5) may rely upon the representations and warranties of NAI and the
Participants in exercising its powers hereunder unless BNPLC shall have actual
knowledge that such representations and warranties are untrue; and (6) shall
incur no liability under or in respect of the Operative Documents by acting upon
any notice, consent, certificate or other instrument or writing (including any
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper Person or Persons.
11.0 REPRESENTATIONS BY EACH PARTICIPANT. Each Participant represents that as of
the date it became a party to this Agreement:
11.1. Nature of this Agreement. It is the type of financial institution set
forth under its name in SCHEDULE 1, or in the Participation Agreement Schedule
which made it a party to this Agreement, and it is entering into this Agreement
for its own account in respect of a commercial transaction made in ordinary
course of its business and not with a view to or in connection with any
subparticipation, sale or distribution to any Person (other than its
Affiliates). Such Participant does not consider the acceptance of the risk
participation hereunder to constitute the "purchase" or "sale" of a "security"
within the meaning of any federal or state securities statute or law, or any
rule or regulations under any of the foregoing.
11.2. No Default or Violation. To such Participant's knowledge, the
execution, delivery and performance of this Agreement do not and will not
contravene, result in a breach of or constitute a default under any material
contract or agreement to which the Participant is a party or by which the
Participant is bound and do not violate or contravene any law, order, decree,
rule or regulation to which the Participant is subject.
11.3. No Suits. To such Participant's knowledge, there are no judicial or
administrative actions, suits or proceedings involving the validity,
enforceability or priority of this Agreement and no such suits or proceedings
are threatened.
11.4. Organization. Such Participant is duly incorporated and legally
existing under the laws of jurisdiction indicated in SCHEDULE 1 or in the
Participation Agreement Schedule which made it a party to this Agreement. Such
Participant has all requisite power and all material governmental certificates
of authority, licenses, permits, qualifications and other documentation
necessary to perform its obligations under this Agreement.
11.5. Enforceability. This Agreement constitutes a legal, valid and binding
obligation of such Participant, enforceable in accordance with its terms,
subject to bankruptcy and other laws affecting creditors' rights generally and
general equitable principles. The execution and delivery of, and performance
under, this Agreement are within such Participant's powers and have been duly
authorized by all requisite action and are not in contravention of the powers of
the charter or other corporate papers of the Participant.
11.6. No Funding With Plan Assets. Such Participant has not and will not
provide advances required by this Participant from the assets of any employee
benefit plan (or its related trust).
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<PAGE> 19
12.0 REPRESENTATIONS BY BNPLC. BNPLC represents to each Participant, as of the
date such Participant became a party to this Agreement, that:
12.1. No Default or Violation. To BNPLC's knowledge, its execution,
delivery and performance of this Agreement and the Operative Documents do not
contravene, result in a breach of or constitute a default under any material
contract or agreement to which BNPLC is a party or by which BNPLC is bound and
do not violate or contravene any law, order, decree, rule or regulation to which
BNPLC is subject.
12.2. No Suits. To BNPLC's knowledge, there are no judicial or
administrative actions, suits or proceedings involving the validity,
enforceability or priority of this Agreement and no such suits or proceedings
are threatened.
12.3. Organization. BNPLC is duly incorporated and legally existing under
the laws of Delaware and is duly qualified to do business in the State of
California. BNPLC has all requisite power and all material governmental
certificates of authority, licenses, permits, qualifications and other
documentation necessary to perform its obligations under this Agreement. BNPLC
has obtained or will obtain, at NAI's expense pursuant to the provisions of the
Leases, all requisite power and all material governmental certificates of
authority, licenses, permits, qualifications and other documentation necessary
to own and lease the Property and to perform its obligations under the Operative
Documents.
12.4. Enforceability. This Agreement and the Operative Documents constitute
legal, valid and binding obligations of BNPLC, enforceable in accordance with
their respective terms, subject to bankruptcy and other laws affecting
creditors' rights generally and general equitable principles. BNPLC's execution
and delivery of, and performance under, this Agreement and the Operative
Documents are within BNPLC's powers and have been duly authorized by all
requisite action and are not in contravention of the powers of the charter,
by-laws or other corporate papers of BNPLC; provided, BNPLC makes no
representation or warranty that conditions imposed by any state or local
Applicable Laws to the purchase, ownership, lease or operation of the Property
have been satisfied.
12.5. Liens Removable by BNPLC. BNPLC shall not create or permit any Liens
Removable by BNPLC not claimed by, through or under any of the Participants
(other than BNPLC's Affiliates), without NAI's consent.
12.6. BNPLC's Status as a Subsidiary of a Bank Holding Company. As of the
effective date of this Agreement, BNPLC is a "subsidiary" of a "bank holding
company" (as those terms are defined in Chapter 17 of Title 12 of the United
States Code).
13.0 ASSIGNMENTS.
13.1. By the Participants Generally. Except as expressly provided below, no
Participant shall assign or attempt to assign any interest in or rights under
this Agreement without the prior written consent of BNPLC, which consent shall
not be unreasonably withheld so long as the Participant requesting the approval
is not in default hereunder; provided, this provision shall not prevent a
Participant from transferring its rights hereunder to its Affiliates or to any
other Participants who are already parties to this Agreement. Notwithstanding
any permitted assignment by a Participant, if the assignment is to any Person
that does not qualify as a "Participant" for purposes of the Leases itself
(which, as more particularly provided in the definition of Participant in the
Common Definitions and Provisions Agreements, may require the written approval
of such Person by NAI), then such Participant's obligations under this Agreement
shall remain unchanged, such Participant shall remain primarily responsible for
the performance of its obligations hereunder, and BNPLC may continue to deal
solely and directly with such
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<PAGE> 20
Participant in connection with all rights and obligations under this Agreement.
In the event, however, of a permitted assignment by a Participant to a Person
that does qualify as a "Participant" for purposes of the Leases itself,
accomplished by the execution of appropriate Participation Agreement Supplements
as herein provided, the assigning Participant shall not be liable for any
failure by the assignee to fulfill the obligations assumed hereunder by the
assignee by reason of such assignment.
13.2. By BNPLC. Except as expressly provided herein, BNPLC shall not assign
or attempt to assign any rights under or interest in the Operative Documents or
this Agreement or any interest in the Property without the Participants' prior
written consent, which consent shall not be unreasonably withheld. By a
Participation Agreement Supplement, BNPLC may, without the prior written consent
of any other Participant, assign participations in the Operative Documents or
the payments required to BNPLC thereunder to any then existing Participant and
to other financial institutions or Affiliates of financial institutions approved
by NAI; provided, that the assignment of participations by BNPLC shall not
reduce the Percentage of BNPLC (or any Affiliate of BNPLC that may become the
owner of BNPLC's interest in the Property) to less than three percent (3%). In
addition, BNPLC may assign its right to receive Distributable Payments and its
rights and interests in and to the Property, the Operative Documents and this
Agreement to Affiliates of BNPLC that do not become Participants; provided,
however, that BNPLC's obligations under this Agreement shall remain unchanged,
BNPLC shall remain primarily responsible for the performance of its obligations
hereunder, and all Distributable Payments received by any such Affiliates as
assignee of BNPLC shall, for purposes of computing payments required to any
Participant hereunder, be considered as received by BNPLC. In addition, BNPLC
shall be permitted to transfer any rights or interests as BNPLC shall believe in
good faith to be necessary to satisfy the Operative Documents or Applicable
Laws.
13.3. Execution of Participation Agreement Supplements. Promptly after the
execution of a Participation Agreement Supplement by BNPLC and any Participant,
BNPLC will provide a copy thereof to all other Participants, but the other
Participants need not join in or approve the Participation Agreement Supplement
for it to be effective.
13.4. Regulation A. Notwithstanding Sections 13.1 or 13.2, a Participant
may assign and pledge all or any portion of its rights under this Agreement to
any Federal Reserve Bank as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any Operating Circulars
issued by such Federal Reserve Bank.
13.5. Costs. Each Participant shall pay all costs incurred by BNPLC in
connection with any permitted assignment by or through such Participant,
including, but not limited to, reasonable fees and disbursements of its counsel,
and any transfer taxes or other taxes assessed because of such assignment which
NAI is not required to pay under the Leases.
14.0 GOVERNING LAW; SUBMISSION TO PROCESS; WAIVER OF JURY TRIAL. THIS AGREEMENT
SHALL BE DEEMED A CONTRACT MADE UNDER THE LAWS OF THE STATE OF CALIFORNIA AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF CALIFORNIA AND THE LAWS OF THE UNITED STATES OF AMERICA, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS. EACH OF BNPLC AND THE PARTICIPANTS
HEREBY IRREVOCABLY SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE
AND THE FEDERAL COURTS SITTING IN SAN FRANCISCO, CALIFORNIA, AND AGREES AND
CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING
RELATING TO THIS AGREEMENT BY ANY MEANS ALLOWED UNDER CALIFORNIA OR FEDERAL LAW.
EACH OF BNPLC AND THE PARTICIPANTS HEREBY WAIVES AND AGREES NOT TO
-15-
<PAGE> 21
ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, THAT ANY SUCH PROCEEDING
WHICH IS BROUGHT IN A COURT IN SAN FRANCISCO, CALIFORNIA IS BROUGHT IN AN
INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS IMPROPER. EACH OF BNPLC AND THE
PARTICIPANTS, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A
JURY TRIAL OF ANY DISPUTE RELATING TO THIS AGREEMENT AND AGREES THAT ANY SUCH
DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
15.0 TERMINATION. This Agreement shall terminate on the first date on which all
obligations of NAI under the Operative Documents shall have been indefeasibly
paid or otherwise satisfied or excused, BNPLC shall have ceased to have any
rights in the Property and each party hereto shall have fully performed its
obligations hereunder to the other parties hereto. The agreements of BNPLC and
the Participants in Section 3.3 (which concerns payments by Participants of
their respective Percentages of Protective Advances) shall survive the
termination of this Agreement. Following any sale of the Property by BNPLC
pursuant to the Purchase Agreements and the payment to any Participant of all
amounts payable to such Participant hereunder (including, without limitation,
such Participant's Percentage of all Net Sales Proceeds payable by NAI and any
Applicable Purchaser on the Designated Sale Date), such Participant will execute
and deliver such a quitclaim and release (in recordable form) to NAI or any
Applicable Purchaser.
16.0 MISCELLANEOUS.
16.1. Reliance by Others. None of the provisions of this Agreement shall
inure to the benefit of any Person other than the Participants and BNPLC and
BNPLC's Representatives; consequently, no Person other than the Participants and
BNPLC shall be entitled to rely upon or raise as a defense, in any manner
whatsoever, the failure of any Participant or BNPLC to comply with the
provisions of this Agreement. None of the Participants nor BNPLC shall incur any
liability to any other Person for any act of omission of another.
Notwithstanding the foregoing, however, NAI shall be a third party
beneficiary of the representations of each Participant in Section 11, of the
limitations upon each Participant's right to assign in Section 13.1, of each
Participant's agreements concerning choice of law and other matters in Section
14, and of each Participant's agreement to provided a release and quitclaim of
the Property pursuant to the last sentence of Section 15. As a third party
beneficiary of the obligations of the Participants specified in the preceding
sentence, NAI shall have standing to bring a claim against any Participant in
NAI's own name if that Participant breaches such obligations. Further, BNPLC may
assign to NAI any claims it may have against a Participant because of the
Participant's breach of any of the provisions referenced in this paragraph or
because of any adverse title claim made against the Property by, through or
under the Participant.
16.2. Waivers, Etc. No delay or omission by any party to exercise any right
under this Agreement shall impair any such right, nor shall it be construed to
be a waiver thereof. No waiver of any single breach or default under this
Agreement shall be deemed a waiver of any other breach or default. Any waiver,
consent, or approval under this Agreement must be in writing to be effective.
16.3. Severability. The illegality or unenforceability of any provision of
this Agreement shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement.
16.4. Notices. All notices, demands, approvals, consents and other
communications to be made hereunder to or by the parties hereto must, to be
effective for purpose of this Agreement, be in writing. Notices, demands and
other communications required or permitted hereunder are to be sent to the
-16-
<PAGE> 22
addresses set forth in Schedule 1 to this Agreement and shall be given by any of
the following means: (A) personal service, with proof of delivery or attempted
delivery retained; (B) electronic communication, whether by telex, telegram or
telecopying (if confirmed in writing sent by United States first class mail,
return receipt requested); or (C) registered or certified first class mail,
return receipt requested. Such addresses may be changed by notice to the other
parties given in the same manner as provided above. Any notice or other
communication sent pursuant to clause (A) or (C) hereof shall be deemed received
(whether or not actually received) upon first attempted delivery at the proper
notice address on any Business Day between 9:00 A.M. and 5:00 P.M., and any
notice or other communication sent pursuant to clause (B) hereof shall be deemed
received upon dispatch by electronic means.
16.5. Construction. Words of any gender used in this Agreement shall be
held and construed to include any other gender, and words in the singular number
shall be held to include the plural and vice versa, unless the context otherwise
requires. References herein to Articles, Sections, subsections or other
subdivisions shall refer to the corresponding Articles, Sections, subsections or
subdivisions of this Agreement, unless specific reference is made to another
document or instrument. References herein to any Schedule or Exhibit shall refer
to the corresponding Schedule or Exhibit attached hereto, which shall be made a
part hereof by such reference. All capitalized terms used in this Agreement
which refer to other documents shall be deemed to refer to such other documents
as they may be renewed, extended, supplemented, amended or otherwise modified
from time to time, provided such documents are not renewed, extended or modified
in breach of any provision contained herein or therein or, in the case of any
other document to which BNPLC is a party or of which BNPLC is an intended
beneficiary, without the consent of BNPLC. All accounting terms used but not
specifically defined herein shall be construed in accordance with GAAP. The
words "THIS AGREEMENT", "HEREIN", "HEREOF", "HEREBY", "HEREUNDER" and words of
similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular subdivision unless expressly so limited. The phrases
"THIS ARTICLE" and "THIS SECTION" and "THIS SUBSECTION" and similar phrases used
herein refer only to the Articles, Sections or subsections hereof in which the
phrase occurs. As used herein the word "OR" is not exclusive. As used herein the
words "INCLUDE", "INCLUDING" and similar terms shall be construed as if followed
by "without limitation to".
16.6. Headings. The Article and Section headings contained in this
Agreement are for convenience only and shall in no way enlarge or limit the
scope or meaning of the various and several provisions hereof.
16.7. Entire Agreement. This Agreement (a) embodies the entire agreement
between the parties, supersedes all prior agreements and understandings between
the parties, if any, relating to the subject matter hereof, and may be amended
only by an instrument in writing executed by an authorized representative of
each party to be bound by such amendment, and (b) has been executed in a number
of identical counterparts, each of which shall be deemed an original for all
purposes and all of which constitute, collectively, one agreement or
certificate; but, in making proof of this Agreement it shall not be necessary to
produce or account for more than one such counterpart signed by each party
thereto.
16.8. Further Assurances. Subject to any restriction in the Operative
Documents, each of BNPLC and the Participants will promptly execute and deliver
all further instruments and documents and take all further action as any of them
may reasonably request in order to evidence the agreements made hereunder and
otherwise to effect the purposes of this Agreement.
16.9. Impairment of Operative Documents. Nothing herein contained
(including the provisions governing the application of payments in Section 4.6
and the provisions authorizing assignments by BNPLC in Section 13.2) shall
impair or modify NAI's rights under the Operative Documents.
-17-
<PAGE> 23
16.10. Books and Records. BNPLC shall keep accurate books and records in
which full, true and correct entries shall be promptly made as to all payments
made and received concerning the Property and will permit all such books and
records (excluding any information that would otherwise be protected by BNPLC's
attorney client privilege) to be inspected and copied by the Participants and
their duly accredited representatives at all times during reasonable business
hours after five Business Days advance notice. This Section shall not be
construed as requiring BNPLC to regularly maintain separate books and records
relating exclusively to the Property; provided, however, that upon reasonable
request, BNPLC shall, at the requesting Participant's expense, construct or
abstract from its regularly maintained books and records information required by
this Section relating to the Property.
16.11. Definition of Knowledge. Representations and warranties made in this
Agreement but limited to the "knowledge" of BNPLC or any Participant, as the
case may be, shall be limited to the present actual knowledge of the officers or
other employees of such party primarily responsible for reviewing and
negotiating this Agreement. Also, as used herein with respect to the existence
of any facts or circumstances after the date of this Agreement, "knowledge" of
BNPLC or a Participant, as the case may be, shall be limited to the present
actual knowledge at the time in question of the officers or other employees of
such party primarily responsible for administering this Agreement. However, none
of the officers or employees of any party to this Agreement shall be personally
liable for any representations or warranties made herein or for taking or
failing to take any action required hereby.
16.12. Attorneys' Fees. If any party to this Agreement commences any legal
action or other proceeding against another party hereto to enforce any of the
terms of this Agreement, or because of any breach of the other party or dispute
hereunder, the successful or prevailing party shall be entitled to recover from
the nonprevailing party all Attorneys' Fees incurred in connection therewith,
whether or not such controversy, claim or dispute is prosecuted to a final
judgment. Any such Attorneys' Fees incurred by any party in enforcing a judgment
in its favor under this Agreement shall be recoverable separately from such
judgment, and the obligation for such Attorneys' Fees is intended to be
severable from other provisions of this Agreement and not to be merged into any
such judgment.
[The signature pages follow.]
-18-
<PAGE> 24
IN WITNESS WHEREOF, BNPLC and the Participants whose signatures appear
below have caused this Participation Agreement to be executed by their
respective, duly authorized representatives, as of the date first above written.
"BNPLC"
BNP LEASING CORPORATION
By:
---------------------------------
Lloyd G. Cox, Vice President
<PAGE> 25
[Continuation of signature pages to Participation Agreement effective as of
December ___, 1999]
"PARTICIPANT"
BANQUE NATIONALE DE PARIS
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
<PAGE> 26
SCHEDULE 1 - Page 1
A. BNPLC: BNP LEASING CORPORATION,
a Delaware corporation
1. Amount Retained: $1,860,000
2. Initial Percentage: 3%
3. Address for Notices:
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Telephone: (972) 788-9191
Facsimile: (972) 788-9140
4. Payment Instructions:
Federal Reserve Bank of New York
ABA 026007689 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/
/Ref/ Network Appliance/Sunnyvale Synthetic Leases/Phase IV
5. Operations Contact:
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Telephone: (972) 788-9191
Facsimile: (972) 788-9140
<PAGE> 27
SCHEDULE 1 - Page 2
B. Participant: BANQUE NATIONALE DE PARIS,
a banking corporation organized under the laws
of France
1. Amount of Participation: $60,140,000
2. Percentage: 97%
3. Address for Notices:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, CA 94104
Attention: Rafael Lumanlan or Gavin Holles
Telephone: (415) 956-0707
Facsimile: (415) 296-8954
4. Payment Instructions:
Federal Reserve Bank of New York
ABA 026007689 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/
/Ref/ Network Appliance/Sunnyvale Synthetic Leases/Phase IV
5. Operations Contact:
George Fung
Banque Nationale de Paris
180 Montgomery Street
San Francisco, CA 94104
Telephone: (415) 956-0707
Facsimile: (415) 956-4230
6. "Initial Payment" Due from
Participant to BNPLC: An amount equal to ninety-seven percent
(97%) of initial funding advanced under
the Leases.
<PAGE> 28
EXHIBIT A
SUPPLEMENT TO PARTICIPATION AGREEMENT
[ , ]
---------- ----
BNP Leasing Corporation
- --------------------
- --------------------
- --------------------
Reference is made to the Participation Agreement dated as of December ___,
1999 (as heretofore amended, the "PARTICIPATION AGREEMENT") between BNP Leasing
Corporation ("BNPLC"), Banque Nationale de Paris and other financial
institutions which are from time to time Participants under and as defined in
such Participation Agreement (collectively, the "PARTICIPANTS"). Unless
otherwise defined herein, all capitalized terms used in this Supplement have the
respective meanings given to those terms in the Participation Agreement.
[NOTE: THE NEXT TWO PARAGRAPHS, AND THE ADDENDUM TO SCHEDULE 1 ATTACHED TO THIS
EXHIBIT, WILL BE INCLUDED ONLY AS PART OF A SUPPLEMENT THAT ADDS A NEW
PARTICIPANT UNDER THE PARTICIPATION AGREEMENT:
The undersigned hereby certifies to BNPLC that the undersigned has become a
party to the Pledge Agreements by executing a supplement as provided therein,
and that NAI has approved of the undersigned as a party to the Pledge Agreements
by executing and returning that supplement.
The undersigned, by executing and delivering this Supplement to BNPLC,
hereby agrees to become a party to the Participation Agreement as a Participant
and agrees to be bound by all of the terms thereof applicable to Participants.
The undersigned hereby agrees that its Percentage under the Participation
Agreement shall be ___________ percent (____%), effective as of the date of this
letter. Contemporaneously with the execution of this letter, the undersigned is
paying to BNPLC the sum of $_____________ in consideration of the rights it is
acquiring as a Participant under the Participation Agreement with the foregoing
Percentages.
Schedule 1 attached to the Participation Agreement is amended by the
addition of an Addendum (concerning the undersigned) in the form attached to
this Supplement.]
[NOTE: THE NEXT PARAGRAPH WILL BE INCLUDED ONLY IN A SUPPLEMENT THAT REDUCES AN
EXISTING PARTICIPANT'S PERCENTAGE UNDER THE PARTICIPATION AGREEMENT:
In consideration of the payment of $____________ to the undersigned, the
receipt and sufficiency of which is hereby acknowledged by the undersigned, the
undersigned hereby agrees that its Percentage under the Participation Agreement
is reduced to ___________ percent (____%), effective as of the date of this
letter.]
[NOTE: THE NEXT PARAGRAPH WILL BE INCLUDED ONLY IN A SUPPLEMENT THAT INCREASES
AN EXISTING PARTICIPANT'S PERCENTAGE UNDER THE PARTICIPATION AGREEMENT:
<PAGE> 29
The undersigned hereby agrees that its Percentage under the Participation
Agreement is increased to ___________ percent (____%), effective as of the date
of this letter. Contemporaneously with the execution of this letter, the
undersigned is paying BNPLC the sum of $_____________ in consideration of such
increase.]
IN WITNESS WHEREOF, the undersigned has executed this Supplement as of the
day and year indicated above.
[NAME]
By:
---------------------------------
Printed Name:
Title:
Accepted and agreed:
BNP LEASING CORPORATION
By:
--------------------------------
Printed Name:
Title:
<PAGE> 30
ADDENDUM TO SCHEDULE 1
Participant:
1. Amount of Participation: $
2. Percentage: ___%
3. Address for Notices:
Attention:
Telephone:
Facsimile:
4. Payment Instructions:
Bank:
Account:
Account No.:
ABA No.:
Reference:
5. Operations Contact:
Attention:
Telephone:
Facsimile:
Exhibit A - Page 3
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-28-2000
<PERIOD-START> MAY-01-1999
<PERIOD-END> JAN-28-2000
<CASH> 231,416
<SECURITIES> 58,636
<RECEIVABLES> 99,674
<ALLOWANCES> 2,882
<INVENTORY> 20,878
<CURRENT-ASSETS> 447,428
<PP&E> 53,111
<DEPRECIATION> 19,465
<TOTAL-ASSETS> 493,916
<CURRENT-LIABILITIES> 77,748
<BONDS> 0
0
0
<COMMON> 312,144
<OTHER-SE> 103,969
<TOTAL-LIABILITY-AND-EQUITY> 493,916
<SALES> 379,281
<TOTAL-REVENUES> 379,281
<CGS> 155,470
<TOTAL-COSTS> 155,470
<OTHER-EXPENSES> 154,507
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 76,457
<INCOME-TAX> 27,142
<INCOME-CONTINUING> 49,315
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,315
<EPS-BASIC> 0.33
<EPS-DILUTED> 0.29
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> APR-30-1999 APR-24-1998
<PERIOD-START> APR-25-1998 APR-26-1997
<PERIOD-END> APR-30-1999 APR-24-1998
<CASH> 221,284 37,315
<SECURITIES> 5,800 10,800
<RECEIVABLES> 57,163 34,313
<ALLOWANCES> 1,886 811
<INVENTORY> 13,581 8,707
<CURRENT-ASSETS> 315,346 98,939
<PP&E> 33,959 21,723
<DEPRECIATION> 14,688 9,506
<TOTAL-ASSETS> 346,347 115,736
<CURRENT-LIABILITIES> 50,530 29,308
<BONDS> 0 0
0 0
0 0
<COMMON> 240,093 65,924
<OTHER-SE> 55,631 20,341
<TOTAL-LIABILITY-AND-EQUITY> 346,347 115,736
<SALES> 289,420 166,163
<TOTAL-REVENUES> 289,420 166,163
<CGS> 118,120 67,549
<TOTAL-COSTS> 118,120 67,549
<OTHER-EXPENSES> 116,174 65,956
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 56,990 33,547
<INCOME-TAX> 21,377 12,582
<INCOME-CONTINUING> 35,613 20,965
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 35,613 20,965
<EPS-BASIC> 0.26 0.16
<EPS-DILUTED> 0.23 0.15
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> APR-25-1997 APR-26-1996
<PERIOD-START> APR-27-1996 MAY-01-1995
<PERIOD-END> APR-25-1997 APR-26-1996
<CASH> 21,520 24,637
<SECURITIES> 6,916 2,982
<RECEIVABLES> 13,911 5,330
<ALLOWANCES> 330 330
<INVENTORY> 9,920 4,825
<CURRENT-ASSETS> 56,620 40,402
<PP&E> 13,752 6,582
<DEPRECIATION> 4,514 1,733
<TOTAL-ASSETS> 68,941 45,449
<CURRENT-LIABILITIES> 14,701 6,121
<BONDS> 0 0
0 0
0 0
<COMMON> 54,653 39,903
<OTHER-SE> (624) 0
<TOTAL-LIABILITY-AND-EQUITY> 68,941 45,449
<SALES> 93,333 46,632
<TOTAL-REVENUES> 93,333 46,632
<CGS> 38,061 20,557
<TOTAL-COSTS> 38,061 20,557
<OTHER-EXPENSES> 52,189 20,075
<LOSS-PROVISION> 0 110
<INTEREST-EXPENSE> 0 68
<INCOME-PRETAX> 4,043 6,600
<INCOME-TAX> 3,793 0
<INCOME-CONTINUING> 250 6,600
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 250 6,600
<EPS-BASIC> 0.00 0.09
<EPS-DILUTED> 0.00 0.05
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> APR-30-1999 APR-30-1999 APR-30-1999
<PERIOD-START> APR-25-1998 APR-25-1998 APR-25-1998
<PERIOD-END> JUL-31-1998 OCT-30-1998 JAN-29-1999
<CASH> 31,476 48,355 59,886
<SECURITIES> 14,930 8,750 8,150
<RECEIVABLES> 35,960 44,928 50,735
<ALLOWANCES> 911 1,511 1,686
<INVENTORY> 9,732 10,722 11,751
<CURRENT-ASSETS> 99,523 121,565 143,720
<PP&E> 22,292 25,188 29,939
<DEPRECIATION> 9,631 11,128 12,735
<TOTAL-ASSETS> 126,073 150,548 172,648
<CURRENT-LIABILITIES> 26,397 39,150 36,792
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 72,064 75,468 90,655
<OTHER-SE> 27,455 35,796 45,085
<TOTAL-LIABILITY-AND-EQUITY> 126,073 150,548 172,648
<SALES> 57,375 123,000 198,616
<TOTAL-REVENUES> 57,375 123,000 198,616
<CGS> 23,239 50,120 80,938
<TOTAL-COSTS> 23,239 50,120 80,938
<OTHER-EXPENSES> 22,901 49,239 79,540
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 0 0 0
<INCOME-PRETAX> 11,356 24,757 39,796
<INCOME-TAX> 4,259 9,284 14,929
<INCOME-CONTINUING> 7,097 15,473 24,867
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 7,097 15,473 24,867
<EPS-BASIC> 0.05 0.11 0.18
<EPS-DILUTED> 0.05 0.10 0.16
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> APR-24-1998 APR-24-1998 APR-24-1998
<PERIOD-START> APR-26-1997 APR-26-1997 APR-26-1997
<PERIOD-END> JUL-25-1997 OCT-24-1997 JAN-23-1998
<CASH> 25,578 28,520 39,302
<SECURITIES> 4,850 5,250 5,250
<RECEIVABLES> 16,852 23,113 26,684
<ALLOWANCES> 296 421 546
<INVENTORY> 12,719 11,718 9,045
<CURRENT-ASSETS> 63,855 73,361 85,394
<PP&E> 15,161 17,014 18,638
<DEPRECIATION> 5,543 6,783 8,074
<TOTAL-ASSETS> 76,492 86,598 98,908
<CURRENT-LIABILITIES> 16,891 20,479 25,122
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 55,814 57,457 59,579
<OTHER-SE> 3,597 8,482 14,037
<TOTAL-LIABILITY-AND-EQUITY> 76,492 86,598 98,908
<SALES> 33,420 71,821 115,805
<TOTAL-REVENUES> 33,420 71,821 115,805
<CGS> 13,570 29,316 47,196
<TOTAL-COSTS> 13,570 29,316 47,196
<OTHER-EXPENSES> 13,264 28,332 45,791
<LOSS-PROVISION> 0 125 125
<INTEREST-EXPENSE> 0 0 0
<INCOME-PRETAX> 6,754 14,570 23,458
<INCOME-TAX> 2,533 5,464 8,797
<INCOME-CONTINUING> 4,221 9,106 14,661
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 4,221 9,106 14,661
<EPS-BASIC> 0.03 0.07 0.11
<EPS-DILUTED> 0.03 0.06 0.10
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> APR-25-1997 APR-25-1997 APR-25-1997
<PERIOD-START> APR-27-1996 APR-27-1996 APR-27-1996
<PERIOD-END> JUL-26-1996 OCT-25-1996 JAN-24-1997
<CASH> 21,758 15,244 20,938
<SECURITIES> 6,350 8,850 6,850
<RECEIVABLES> 6,751 10,866 12,336
<ALLOWANCES> 330 0 0
<INVENTORY> 6,993 8,318 9,585
<CURRENT-ASSETS> 44,891 46,314 53,007
<PP&E> 5,704 5,841 6,148
<DEPRECIATION> 0 0 0
<TOTAL-ASSETS> 50,803 52,345 59,357
<CURRENT-LIABILITIES> 11,475 10,225 12,833
<BONDS> 0 0 0
0 40,448 0
0 0 0
<COMMON> 40,416 0 41,495
<OTHER-SE> (1,365) 1,416 4,796
<TOTAL-LIABILITY-AND-EQUITY> 50,803 52,345 59,357
<SALES> 18,460 39,508 64,353
<TOTAL-REVENUES> 18,460 39,508 64,353
<CGS> 7,593 16,176 26,292
<TOTAL-COSTS> 7,593 16,176 26,292
<OTHER-EXPENSES> 11,913 20,361 30,131
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 0 0 0
<INCOME-PRETAX> (755) 3,523 8,723
<INCOME-TAX> (264) 1,233 3,053
<INCOME-CONTINUING> (491) 2,290 5,670
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (491) 2,290 5,670
<EPS-BASIC> (0.00) 0.02 0.05
<EPS-DILUTED> (0.00) 0.02 0.04
</TABLE>
