California-Sunnyvale Lease Agreement - BNP Leasing Corp. and Network Appliance Inc.
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$44,000,000
LEASE AGREEMENT
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
NETWORK APPLIANCE, INC.
("NAI")
JANUARY 20, 1999
(SUNNYVALE, CALIFORNIA)
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TABLE OF CONTENTS
Page
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1. TERM................................................................................ 2
(a) Scheduled Term............................................................... 2
(b) Automatic Termination as of the Base Rent Commencement Date Resulting
From an Election by NAI to Terminate the Purchase Option and NAI's
Initial Remarketing Rights and Obligations................................... 2
(c) Election by BNPLC to Terminate After an Issue 97-10 Election................. 2
(d) Election by NAI to Terminate After Accelerating the Designated Sale Date..... 2
(e) Extension of the Term........................................................ 3
2. USE AND CONDITION OF THE PROPERTY................................................... 4
(a) Use.......................................................................... 4
(b) Condition of the Property.................................................... 4
(c) Consideration for and Scope of Waiver........................................ 4
3. RENT................................................................................ 5
(a) Base Rent Generally.......................................................... 5
(b) Impact of Collateral Upon Formulas........................................... 5
(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............ 6
(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%.................... 7
(vi) Base Rent Formula for Periods During Which The Collateral
Percentage is Zero.................................................... 8
(d) Additional Rent.............................................................. 8
(e) Arrangement Fee.............................................................. 8
(f) Commitment Fees.............................................................. 8
(g) Administrative Agency Fees................................................... 9
(h) Issue 97-10 Prepayments...................................................... 9
(i) No Demand or Setoff.......................................................... 9
(j) Default Interest and Order of Application.................................... 9
4. NATURE OF THIS AGREEMENT............................................................ 9
(a) "Net" Lease Generally........................................................ 9
(b) No Termination............................................................... 10
(c) Tax Reporting................................................................ 11
(d) Characterization of this Lease............................................... 11
5. PAYMENT OF EXECUTORY COSTS AND LOSSES RELATED TO THE PROPERTY....................... 11
(a) Impositions.................................................................. 11
(b) Increased Costs; Capital Adequacy Charges.................................... 12
(c) NAI's Payment of Other Losses; General Indemnification....................... 13
(d) Exceptions and Qualifications to Indemnities................................. 14
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Page
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6. CONSTRUCTION........................................................................ 16
(a) Construction Advances; Outstanding Construction Allowance.................... 16
(b) Calculation of Carrying Costs................................................ 16
(c) Limits on the Amount of Carrying Costs....................................... 17
(d) NAI's Right to Control the Construction Project.............................. 17
(e) Landlord's Election to Continue Construction................................. 17
(i) Take Control of the Property.......................................... 17
(ii) Continuation of Construction.......................................... 17
(iii) Arrange for Turnkey Construction...................................... 18
(iv) Suspension or Termination of Construction............................. 18
(f) Powers Coupled With an Interest.............................................. 19
(g) Completion Notice............................................................ 19
7. STATUS OF PROPERTY ACQUIRED WITH FUNDS PROVIDED BY BNPLC............................ 19
8. ENVIRONMENTAL....................................................................... 20
(a) Environmental Covenants by NAI............................................... 20
(b) Right of BNPLC to do Remedial Work Not Performed by NAI...................... 20
(c) Environmental Inspections and Reviews........................................ 20
(d) Communications Regarding Environmental Matters............................... 21
9. INSURANCE REQUIRED AND CONDEMNATION................................................. 22
(a) Liability Insurance.......................................................... 22
(b) Property Insurance........................................................... 22
(c) Failure to Obtain Insurance.................................................. 22
(d) Condemnation................................................................. 22
(e) Waiver of Subrogation........................................................ 23
10. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS.................................. 23
(a) Collection and Application of Insurance and Condemnation Proceeds Generally.. 23
(b) Advances of Escrowed Proceeds to NAI......................................... 24
(c) Application of Escrowed Proceeds as a Qualified Prepayment................... 24
(d) Special Provisions Applicable After a CMA Termination Event or
Event of Default ............................................................ 24
(e) NAI's Obligation to Restore.................................................. 24
(f) Takings of All or Substantially All of the Property on or after the Base Rent
Commencement Date............................................................ 25
11. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF NAI CONCERNING THE PROPERTY. 25
(a) Compliance with Covenants and Laws........................................... 25
(b) Operation of the Property.................................................... 25
(c) Debts for Construction, Maintenance, Operation or Development................ 26
(d) Repair, Maintenance, Alterations and Additions............................... 27
(e) Permitted Encumbrances and Development Documents............................. 27
(f) Books and Records Concerning the Property.................................... 27
12. FINANCIAL COVENANTS AND OTHER COVENANTS INCORPORATED BY REFERENCE TO SCHEDULE 1..... 28
13. FINANCIAL STATEMENTS AND OTHER REPORTS.............................................. 28
(a) Financial Statements; Required Notices; Certificates......................... 28
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Page
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14 Assignment and Subletting by NAI ................................................... 29
(a) BNPLC's Consent Required..................................................... 29
(b) Standard for BNPLC's Consent to Assignments and Certain Other Matters........ 30
(c) Consent Not a Waiver......................................................... 30
15. ASSIGNMENT BY BNPLC................................................................. 30
(a) Restrictions on Transfers.................................................... 30
(b) Effect of Permitted Transfer or other Assignment by BNPLC.................... 30
16. BNPLC'S RIGHT OF ACCESS............................................................. 30
17. EVENTS OF DEFAULT................................................................... 31
18. REMEDIES............................................................................ 33
(a) Basic Remedies............................................................... 33
(b) Notice Required So Long As the Purchase Option and NAI's Initial Remarketing
Rights and Obligations Continue Under the Purchase Agreement................. 34
(c) Enforceability............................................................... 35
(d) Remedies Cumulative.......................................................... 35
19. DEFAULT BY BNPLC.................................................................... 35
20. QUIET ENJOYMENT..................................................................... 35
21. SURRENDER UPON TERMINATION.......................................................... 36
22. HOLDING OVER BY NAI................................................................. 36
23. INDEPENDENT OBLIGATIONS EVIDENCED BY THE OTHER OPERATIVE DOCUMENTS.................. 36
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EXHIBITS AND SCHEDULES
Exhibit A....................................................................Legal Description
Exhibit B...............................................................Insurance Requirements
Exhibit C...........................................................Libor Period Election Form
Schedule 1..........................................Financial Covenants and Other Requirements
(v)
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LEASE AGREEMENT
This LEASE AGREEMENT (this "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 January 20, 1999, the
Effective Date. ("EFFECTIVE DATE" and other capitalized terms used and not
otherwise defined in this Lease are intended to have the meanings assigned to
them in the Common Definitions and Provisions Agreement executed by BNPLC and
NAI contemporaneously with this Lease. By this reference, the Common Definitions
and Provisions Agreement is incorporated into and made a part of this 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 and all
existing Improvements thereon from Seller contemporaneously with the execution
of this Lease.
In anticipation of BNPLC's acquisition of the Land and the existing
Improvements thereon 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, the existing Improvements and the Improvements to be constructed on
the Land as hereinafter provided, and by this 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) any and all Improvements;
(3) all easements and other rights appurtenant to the Land or to
the Improvements, whether now owned or hereafter acquired by BNPLC; and
(4) (A) any land lying within the right-of-way of any street,
open or proposed, adjoining the Land, (B) any sidewalks and alleys
adjacent to the Land and (C) any strips and gores between the Land and
any abutting land not owned or leased by BNPLC.
BNPLC's interest in all property described in clauses (1) through (4) above are
hereinafter referred to collectively as the "REAL PROPERTY".
To the extent, but only to the extent, that assignable rights or
interests in, to or under the following have been or will be acquired by 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 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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(a) any goods, equipment, furnishings, furniture and other
tangible personal property of whatever nature that are located on the
Real Property and all renewals or replacements of or substitutions for
any of the foregoing;
(b) the benefits, if any, conferred upon the owner of the Real
Property by the Permitted Encumbrances 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
Lease, to the 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 Lease (the "TERM") shall
commence on and include the Effective Date, and end on the first Business Day of
February, 2004, unless sooner terminated as expressly herein provided.
(b) Automatic Termination as of the Base Rent Commencement Date
Resulting From an Election by NAI to Terminate the Purchase Option and NAI's
Initial Remarketing Rights and Obligations. If NAI terminates the Purchase
Option and NAI's Initial Remarketing Rights and Obligations prior to the Base
Rent Commencement Date pursuant to subparagraph 4(B) of the Purchase Agreement,
then this Lease shall terminate automatically on the Base Rent Commencement
Date. Just as any such termination of the Purchase Option and NAI's Initial
Remarketing Rights and Obligations shall be subject to the condition (set forth
in subparagraph 4(B) of the Purchase Agreement) that NAI pay an Issue 97-10
Prepayment to BNPLC, so too will the termination of this Lease pursuant to this
subparagraph be subject the condition that NAI make the Issue 97-10 Prepayment
to BNPLC.
(c) Election by BNPLC to Terminate After an Issue 97-10 Election.
By notice to NAI BNPLC shall be entitled to terminate this Lease, as BNPLC deems
appropriate in its sole and absolute discretion, at any time after receiving a
notice given by NAI to make any Issue 97-10 Election. Upon any termination of
this Lease by BNPLC pursuant to this subparagraph, NAI shall become obligated to
pay to BNPLC an Issue 97-10 Prepayment, which obligation will survive the
termination of this Lease.
(d) Election by NAI to Terminate After Accelerating the
Designated Sale Date. Provided NAI has not made any Issue 97-10 Election, NAI
shall be entitled to accelerate the Designated Sale Date (and thus accelerate
the purchase of BNPLC's interest in the Property by NAI or by an Applicable
Purchaser
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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. 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 Lease
on or after the Designated Sale Date; provided, however, as a condition to any
such termination by NAI, NAI must have done the following prior to the
termination:
(i) purchased or caused an Applicable Purchaser to purchase the
Property pursuant to the Purchase Agreement and satisfied all of NAI's
other obligations under the Purchase Agreement;
(ii) paid to BNPLC all Base Rent, all Commitment Fees and all
other Rent due on or before or accrued through the Designated Sale Date;
and
(iii) paid any Breakage Costs caused by BNPLC's sale of the
Property pursuant to the Purchase Agreement.
(e) Extension of the Term. The Term may be extended at the option
of NAI for two successive periods of five years each; provided, however, that
prior to any such extension the following conditions must have been satisfied:
(A) at least ninety days prior to the commencement of any such extension, BNPLC
and NAI must have agreed in writing upon, and received the consent and approval
of BNPLC's Parent and all other Participants to (1) a corresponding extension
not only to the date for the expiration of the Term specified above in this
Section, but also to the date specified in clause (1) of the definition of
Designated Sale Date in the Common Definitions and Provisions Agreement, and (2)
an adjustment to the Rent that NAI will be required to pay for the extension, it
being expected that the Rent for the extension may be different than the Rent
required for the original Term, and it being understood that the Rent for any
extension must in all events be satisfactory to both BNPLC and NAI, each in its
sole and absolute discretion; (B) no Event of Default shall have occurred and be
continuing at the time of NAI's exercise of its option to extend; (C) prior to
any such extension, NAI must have completed the Construction Project in
accordance with the Construction Management Agreement and must not have made any
Issue 97-10 Election; and (D) immediately prior to any such extension, this
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
Lease shall continue in full force and effect, and the leasehold estate hereby
granted to NAI shall continue without interruption and without any loss of
priority over other interests in or claims against the Property that may be
created or arise after the date hereof and before the extension.
2 USE AND CONDITION OF THE PROPERTY.
(a) Use. Subject to the Permitted Encumbrances, the Development
Documents and the terms hereof, NAI may use and occupy the Property during the
Term, but only for the following purposes and other lawful purposes incidental
thereto:
(i) construction and development of the Construction Project;
(ii) administrative and office space;
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(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, library and other support facilities that NAI
may provide to its employees; and
(vi) other lawful purposes (including NAI's research and
development or production of products that are not of substantially the
same type and character as those regularly sold by NAI in the ordinary
course of its business as of the Effective Date) approved in advance and
in writing by BNPLC, which approval will not be unreasonably withheld
after completion of the Construction Project (but NAI acknowledges that
BNPLC's withholding of such approval shall be reasonable if BNPLC
determines in good faith that (1) giving the approval may materially
increase BNPLC's risk of liability for any existing or future
environmental problem, or (2) giving the approval is likely to
substantially increase BNPLC's administrative burden of complying with
or monitoring NAI's compliance with the requirements of this Lease or
other Operative Documents).
(b) Condition of the Property. NAI ACKNOWLEDGES THAT IT HAS
CAREFULLY AND FULLY INSPECTED THE PROPERTY AND ACCEPTS THE PROPERTY IN ITS
PRESENT STATE, AS IS, AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE CONDITION OF SUCH PROPERTY OR AS TO THE USE WHICH MAY BE MADE
THEREOF. NAI ALSO ACCEPTS THE PROPERTY WITHOUT ANY COVENANT, REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, BY 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, 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 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.
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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 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 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 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 on the Base Rent Commencement Date shall equal the
difference (if any) between (a) the total amount that would have been
added to the Outstanding Construction Allowance as Carrying Costs on
such date if not for the limit set forth in subparagraph 6.(c), and (b)
the Carrying Costs actually added on such date to the Outstanding
Construction Allowance.
(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:
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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, 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.
Assume, only for the purpose of illustration: that the
Collateral Percentage for a hypothetical Base Rent Period is one hundred
percent (100%); that prior to the first day of such Base Rent Period the
Construction Allowance has been fully funded, but a total of $4,000,000
of Qualified Prepayments have been received by BNPLC, leaving a
Stipulated Loss Value of $40,000,000; 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:
$40,000,000 x .30% x 30/360 = $10,000
(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
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- 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 the
Construction Allowance has been fully funded, but a total of $4,000,000
of Qualified Prepayments have been received by BNPLC, leaving a
Stipulated Loss Value of $40,000,000; 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:
$40,000,000 x {(40% x .30%) + ([1 - 40%] x [6% + 1.50%])} x 30/360 = $154,000
(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
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- the sum of (a) the Effective Rate with respect to such
Base Rent Period, plus (b) the Unsecured Spread for the
period from and including the preceding Base Rent Date
to but not including the Base Rent Date upon which the
installment is due, times
- the number of days in the period from and including the
preceding Base Rent Date to but not including the Base
Rent Date upon which the installment is due, divided by
- three hundred sixty.
Assume, only for the purpose of illustration: that the
Collateral Percentage for a hypothetical Base Rent Period is zero
percent (0%); that prior to the first day of such Base Rent Period the
Construction Allowance has been fully funded, but a total of $4,000,000
of Qualified Prepayments have been received by BNPLC, leaving a
Stipulated Loss Value of $40,000,000; 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:
$40,000,000 x (6% + 1.50%) x 30/360 = $250,000
(d) Additional Rent. All amounts which NAI is required to pay to
or on behalf of BNPLC pursuant to this Lease, together with every charge,
premium, interest and cost set forth herein which may be added for nonpayment or
late payment thereof, 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 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 December 8, 1998 from BNPLC to NAI.
(f) Commitment Fees. For each Construction Period NAI shall pay
BNPLC a fee (a "COMMITMENT FEE") from Construction Advances made pursuant to the
Construction Management Agreement equal to:
- the Commitment Fee Rate for such Construction Period,
times an amount equal to:
(i) the Maximum Construction Allowance, less
(ii) the Funded Construction Allowance on the first day
of such Construction Period; times
- the number of days in such Construction Period; divided
by
- three hundred sixty.
NAI shall pay Commitment Fees in arrears on the first Business Day of April,
July, October and January of each calendar year, beginning with the first
Business Day of April, 1999 and continuing regularly throughout the Term so long
as Commitment Fees have accrued and remain unpaid. However, if any Commitment
Fees shall have accrued and remain unpaid on the Designated Sale Date, such
accrued unpaid Commitment Fees shall be due on the Designated Sale Date.
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(g) Administrative Agency Fees. Upon execution and delivery of
this 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 December 8, 1998 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 December 8, 1998 from BNPLC to NAI.
(h) Issue 97-10 Prepayments. Following any Issue 97-10 Election
or any CMA Termination Event under (and as defined in) the Construction
Management Agreement, NAI shall make an Issue 97-10 Prepayment to BNPLC within
three Business Days after receipt of any demand for such a payment. BNPLC may
demand an Issue 97-10 Prepayment pursuant to this subparagraph at any time and
from time to time (as Project Costs increase) after any Issue 97-10 Election or
CMA Termination Event.
(i) No Demand or Setoff. Except as expressly provided herein, NAI
shall pay all Rent without notice or demand and without counterclaim, deduction,
setoff or defense.
(j) Default Interest and Order of Application. All Rent shall
bear interest, if not paid when first due, at the Default Rate in effect from
time to time from the date due until paid; provided, that nothing herein
contained will be construed as permitting the charging or collection of interest
at a rate exceeding the maximum rate permitted under Applicable Laws. BNPLC
shall be entitled to apply any amounts paid by or on behalf of NAI against any
Rent then past due in the order the same became due or in such other order as
BNPLC may elect.
4. NATURE OF THIS AGREEMENT.
(a "Net" Lease Generally. Subject only to the exceptions listed
in subparagraph 5.(d) below, it is the intention of BNPLC and NAI that Base
Rent, the Arrangement Fees, any Upfront Syndication Fees, Administrative Agency
Fees, Commitment Fees and other payments herein specified shall be absolutely
net to BNPLC and that NAI shall pay all costs, expenses and obligations of every
kind relating to the Property or this 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 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 Lease
itself, this Lease shall not terminate, nor shall NAI have any right to
terminate this Lease, nor shall NAI be entitled to any abatement of the Rent,
nor shall the obligations of NAI under this Lease be excused, for any reason
whatsoever, including any of the following: (i) any damage to or the destruction
of all or any part of the Property from whatever cause, (ii) the taking of the
Property or any portion thereof by eminent domain or otherwise for any reason,
(iii) the prohibition, limitation or restriction of NAI's use or development of
all or any portion of the Property or any interference with
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<PAGE> 15
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 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 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 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 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 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 Lease which are binding upon BNPLC.
(c Tax Reporting. BNPLC and NAI shall report this 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 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 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.
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<PAGE> 16
(d Characterization of this Lease. For purposes of determining
the appropriate financial accounting for this Lease and for purposes of
determining their respective rights and remedies under state law, BNPLC and NAI
believe and intend that (i) this 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 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 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 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 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 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
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<PAGE> 17
time by BNPLC's Parent or other Participants pursuant to the Pledge
Agreement would be an increase covered by the preceding sentence. A
certificate as to the amount of such increased cost, submitted to BNPLC
and NAI by BNPLC's Parent or the other Participant, shall be conclusive
and binding upon NAI, absent clear and demonstrable error.
(ii BNPLC's Parent or any other Participant may demand
additional payments ("CAPITAL ADEQUACY CHARGES") if BNPLC's Parent or
the other Participant determines that any Banking Rules Change affects
the amount of capital to be maintained by it and that the amount of such
capital is increased by or based upon the existence of advances made or
to be made to BNPLC to permit BNPLC to maintain BNPLC's investment in
the Property or to make Construction Advances. To the extent that
BNPLC's Parent or another Participant demands Capital Adequacy Charges
as compensation for the additional capital requirements reasonably
allocable to such investment or advances, NAI shall pay to BNPLC for the
account of BNPLC's Parent or the other Participant, as the case may be,
the amount so demanded. Without limiting the foregoing, BNPLC and NAI
hereby acknowledge and agree that the provisions for calculating 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 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 Funding Advances, (E) the Construction Project, (F)
the breach by NAI of this 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
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<PAGE> 18
ANOTHER INTERESTED PARTY. FURTHER, SUCH INDEMNITIES AND RELEASES WILL
APPLY EVEN IF INSURANCE OBTAINED BY NAI OR REQUIRED OF NAI BY THIS 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 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 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 Lease or at any time during the Term. Such
costs and expenses will also include Attorneys' Fees or other costs
incurred to evaluate lien releases and other information submitted by
NAI with requests for Construction Advances.
(iv NAI's obligations under this subparagraph 5.(c) shall
survive the termination or expiration of this 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.
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<PAGE> 19
(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, (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 Lease and other Operative Documents) to include
the following in the calculation of the Outstanding Construction
Allowance, Stipulated Loss Value, the Break Even Price and the Maximum
Permitted Prepayment (as applicable) or to collect Base Rent, Issue
97-10 Prepayments, a Supplemental Payment and other amounts, the
calculation of which depends upon the Outstanding Construction
Allowance, Stipulated Loss Value, the Break Even Price and the Maximum
Permitted Prepayment, BNPLC acknowledges and agrees that nothing in
subparagraph 4.(a) or the preceding subparagraphs of this Paragraph 5
shall be construed to require NAI to pay or reimburse an Interested
Party for:
a) costs paid by BNPLC with the proceeds of the Initial
Funding Advance as part of the Transaction Expenses; or
b) Construction Advances, including costs and expenditures
incurred or paid by or on behalf of BNPLC after any Landlord's
Election to Continue Construction, to the extent that such costs
and expenditures are considered to be Construction Advances
pursuant to subparagraph 6.(e).
Further, if an Interested Party receives a written notice of Losses that
such Interested Party believes are covered by the indemnity in
subparagraph 5.(c)(i), then such Interested Party will be expected to
promptly furnish a copy of such notice to NAI. The failure to so provide
a copy of the notice to NAI shall not excuse NAI from its obligations
under subparagraph 5.(c)(i); provided, that if NAI is unaware of the
matters described in the notice and such failure renders unavailable
defenses that NAI might otherwise assert, or precludes actions that NAI
might otherwise take, to minimize its obligations, then NAI shall be
excused from its obligation to indemnify such Interested Party (and any
Affiliate of such Interested Party) against the Losses, if any, which
would not have been incurred or suffered but for such failure. For
example, if BNPLC fails to provide NAI with a copy of a notice of an
obligation covered by the indemnity set out in subparagraph 5.(c)(i) and
NAI is not otherwise already aware of such obligation, and if as a
result of such failure BNPLC becomes liable for penalties and interest
covered by the indemnity in excess of the penalties and interest that
would have accrued if NAI had been promptly provided with a copy of the
notice, then NAI will be excused from any obligation to BNPLC (or any
Affiliate of BNPLC) to pay the excess.
(ii Notwithstanding anything to the contrary in subparagraph
4.(a) or the preceding subparagraphs of this Paragraph 5, NAI's
liability for payments required by the preceding subparagraphs of this
Paragraph 5, and not excused by the preceding subparagraph 5.(d)(i),
prior to substantial completion of the Construction Project
("CONSTRUCTION-PERIOD INDEMNITY PAYMENTS") shall be subject to the
following provisions:
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<PAGE> 20
a) NAI may decline to pay any Construction-Period Indemnity
Payments other than the following (it being understood that NAI's
payment of the following Construction-Period Indemnity Payments shall
not be subject to any abatement or deferral by anything contained in
this subparagraph 5.(d)(ii)):
(1 Construction-Period Indemnity Payments eligible for
reimbursement to NAI under the terms and conditions of the
Construction Management Agreement; and
(2 Construction-Period Indemnity Payments that constitute
Absolute NAI Construction Obligations.
b) Any Construction-Period Indemnity Payment NAI is excused from
paying by this subparagraph 5.(d)(ii), together with interest thereon at
the Default Rate, will be included in the calculation of the Break Even
Price under (and as defined in) the Purchase Agreement.
6. CONSTRUCTION.
(a Construction Advances; Outstanding Construction Allowance. The
Construction Management Agreement entitles NAI to receive from BNPLC - subject
to the terms and conditions set forth in the Construction Management Agreement -
Construction Advances on Advance Dates from time to time to pay or reimburse NAI
for the costs of the Construction Project and certain other costs described in
the Construction Management Agreement. In addition, BNPLC may from time to time
make expenditures or incur costs constituting Construction Advances after a
Landlord's Election to Continue Construction as described in subparagraph 6.(e).
As used herein, references to the "OUTSTANDING CONSTRUCTION ALLOWANCE" mean the
difference on the date in question (but not less than zero) of (A) the total
Construction Advances made by or on behalf of BNPLC on or prior to the date in
question, plus (B) all Carrying Costs added on or prior to the date in question,
less (C) any funds received and applied as Qualified Prepayments on or prior to
the date in question. Charges ("CARRYING COSTS") shall accrue as described below
for each Construction Period and will be added to (and thereafter be included
in) the Outstanding Construction Allowance on the last day of such Construction
Period (i.e., generally on the Advance Date upon which such Construction Period
ends). However, if for any reason Stipulated Loss Value (and thus the
Outstanding Construction Allowance included as a component thereof) must be
determined as of any date between Advance Dates, the Outstanding Construction
Allowance determined on such date shall include not only Carrying Costs added on
or before the immediately preceding Advance Date computed as described below,
but also Carrying Costs accruing on and after such preceding Advance Date to but
not including the date in question.
(b Calculation of Carrying Costs. Carrying Costs accruing for any
Construction Period shall equal:
- Stipulated Loss Value on the first day of such
Construction Period, times
- the sum of (a) the Effective Rate with respect to such
Construction Period, plus (b) the Unsecured Spread for
such Construction Period, times
- the number of days in the period from and including the
preceding Advance Date to but not including the Advance
Date upon which the period ends, divided by
- three hundred sixty.
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<PAGE> 21
Assume, only for the purpose of illustration: that the
Collateral Percentage for a hypothetical Construction Period is zero
percent (0%); that on the first day of such Construction Period
Stipulated Loss Value is $40,000,000; that the Effective Rate for the
Construction Period is 6%; that the Unsecured Spread for such
Construction Period is one hundred fifty basis points (150/100 of 1%);
and that such Construction Period contains exactly thirty days. Under
such assumptions, the Carrying Costs for the hypothetical Construction
Period will equal:
$40,000,000 x (6% + 1.50%) x 30/360 = $250,000
(c Limits on the Amount of Carrying Costs. Notwithstanding the
foregoing, because the Construction Allowance available to NAI under the
Construction Management Agreement is limited in amount to the Maximum
Construction Allowance, and because Carrying Costs are to be charged against the
Construction Allowance, Carrying Costs added to the Outstanding Construction
Allowance on the Base Rent Commencement Date shall not exceed the amount that
can be added without causing the Funded Construction Allowance to exceed the
Maximum Construction Allowance. If, because of an extension of the Base Rent
Commencement Date by BNPLC (as described in the definition thereof in the Common
Definitions and Provisions Agreement) or because of any Landlord's Election to
Continue Construction, the Funded Construction Allowance already exceeds the
Maximum Construction Allowance, then no Carrying Costs will be added to the
Outstanding Construction Allowance on the Base Rent Commencement Date.
(d NAI's Right to Control the Construction Project. Subject to
BNPLC's rights under subparagraph 6.(e) of this Lease, the Construction
Management Agreement grants to NAI the sole right and responsibility for
designing and constructing the Construction Project, it being understood that
although title to all Improvements will pass directly to BNPLC (as more
particularly provided in Paragraph 7), BNPLC's obligation with respect to the
Construction Project shall be limited to the making of advances under and
subject to the conditions set forth in the Construction Management Agreement. No
contractor or other third party shall be entitled to require BNPLC to make
advances as a third party beneficiary of this Lease or of the Construction
Management Agreement or otherwise.
(e Landlord's Election to Continue Construction. Without limiting
BNPLC's other rights and remedies under this Lease, and without terminating this
Lease or NAI's obligations hereunder or under any of the other documents
referenced herein, in the event of any termination of the Construction
Management Agreement as provided in subparagraph 5(D) or subparagraph 5(E)
thereof, BNPLC shall be entitled (but not obligated) to take whatever action it
deems necessary or appropriate by the use of legal proceedings or otherwise to
continue or complete the Construction Project in a manner substantially
consistent (to the extent practicable under Applicable Laws) with the general
description of the Construction Project set forth in Exhibit B to the
Construction Management Agreement and with the permitted use of the Property set
forth in subparagraph 2.(a). (As used herein, "LANDLORD'S ELECTION TO CONTINUE
CONSTRUCTION" means any election by BNPLC to continue or complete the
Construction Project pursuant to the preceding sentence.) After any Landlord's
Election to Continue Construction, BNPLC may do any one or more of the following
pursuant to this subparagraph without further notice and regardless of whether
any Event of Default is then continuing:
(i Take Control of the Property. BNPLC may cause NAI and any
contractors or other parties on the Property to vacate the Property
until the Construction Project is complete or BNPLC elects not to
continue work on the Construction Project.
(ii Continuation of Construction. BNPLC may perform or cause to
be performed any work to complete or continue the construction of the
Construction Project. In this regard, so long as work ordered or
undertaken by BNPLC is substantially consistent (to the extent
practicable under Applicable Laws) with
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<PAGE> 22
the general description of the Construction Project set forth in Exhibit
B to the Construction Management Agreement and the permitted use of the
Property set forth in subparagraph 2.(a), BNPLC shall have complete
discretion to:
a) proceed with construction according to such plans and
specifications as BNPLC may from time to time approve;
b) establish and extend construction deadlines as BNPLC from
time to time deems appropriate, without obligation to adhere to
the deadlines for Construction Milestones set forth in the
Construction Management Agreement;
c) hire, fire and replace architects, engineers,
contractors, construction managers and other consultants as
BNPLC from time to time deems appropriate, without obligation to
use, consider or compensate architects, engineers, contractors,
construction managers or other consultants previously selected
or engaged by NAI;
d) determine the compensation that any architect, engineer,
contractor, construction manager or other consultant engaged by
BNPLC will be paid, and the terms and conditions that will
govern the payment of such compensation (including whether
payment will be due in advance, over the course of construction
or on some other basis and including whether contracts will be
let on a fixed price basis, a cost plus a fee basis or some
other basis), as BNPLC from time to time deems appropriate;
e) pay, settle or compromise existing or future bills and
claims which are or may be liens against the Property or as
BNPLC considers necessary or desirable for the completion of the
Construction Project or the removal of any clouds on title to
the Property;
f) prosecute and defend all actions or proceedings in
connection with the construction of the Construction Project;
g) select and change interior and exterior finishes for the
Improvements and landscaping as BNPLC from time to time deems
appropriate; and
h) generally do anything that NAI itself might have done if
NAI had satisfied or obtained BNPLC's waiver of the conditions
specified therein.
(iii Arrange for Turnkey Construction. Without limiting the
generality of the foregoing, BNPLC may engage any contractor or real
estate developer BNPLC believes to be reputable to take over and
complete construction of the Construction Project on a "turnkey" basis.
(iv Suspension or Termination of Construction. Notwithstanding
any Landlord's Election to Continue Construction, BNPLC may subsequently
elect at any time to suspend or terminate further construction without
obligation to NAI.
For purposes of this Lease and other Operative Documents (including the
determination of the Outstanding Construction Allowance, Stipulated Loss Value,
the Break Even Price and the Maximum Permitted Prepayment), after any Landlord's
Election to Continue Construction, all costs and expenditures incurred or paid
by or on behalf of BNPLC to complete or continue construction as provided in
this subparagraph shall be considered Construction Advances and Project Costs,
regardless of whether they cause the Funded Construction Allowance to exceed the
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Maximum Construction Allowance. Further, as used in the preceding sentence,
"costs incurred" by BNPLC will include costs that BNPLC has become obligated to
pay to any third party that is not an Affiliate of BNPLC (including any
contractor), even if the payments for which BNPLC has become so obligated will
constitute prepayments for work or services to be rendered after payment and
notwithstanding that BNPLC's obligations for the payments may be conditioned
upon matters beyond BNPLC's control. For example, even if a construction
contract between BNPLC and a contractor excused BNPLC from making further
progress payments to the contractor upon NAI's failure to make any required
Issue 97-10 Prepayment hereunder, the obligation to make a progress payment
would nonetheless be "incurred" by BNPLC, for purposes of determining whether
BNPLC has incurred costs considered to be Project Costs and Construction
Advances, when BNPLC's obligation to pay it became subject only to NAI's payment
of an Issue 97-10 Prepayment or other conditions beyond BNPLC's control. If and
to the extent, however, BNPLC does incur costs considered as Construction
Advances under this subparagraph, but (1) BNPLC does not actually pay the costs
and after incurring them BNPLC is fully and finally excused from the obligation
to pay them for any reason other than a breach by NAI of this Lease or other
Operative Documents, or (2) BNPLC receives a refund of such costs, then the
costs BNPLC is excused from paying or refunded to BNPLC shall be considered
Qualified Prepayments.
(f Powers Coupled With an Interest. BNPLC's rights under
subparagraph 6.(e) are intended to constitute powers coupled with an interest
which cannot be revoked.
(g Completion Notice. After any Landlord's Election to Continue
Construction, BNPLC may provide a notice (a "COMPLETION NOTICE") to NAI,
advising NAI that construction of the Construction Project is substantially
complete or that BNPLC no longer intends to continue such construction at that
time.
7. STATUS OF PROPERTY ACQUIRED WITH FUNDS PROVIDED BY BNPLC. All
Improvements constructed during the term of this Lease shall be owned by BNPLC
and shall constitute "Property" covered by this Lease. Further, to the extent
heretofore or hereafter acquired (in whole or in part) with any portion of the
Initial Funding Advance or with any Construction Advances or with other funds
for which NAI has received or hereafter receives reimbursement from the Initial
Funding Advance or Construction Advances, all furnishings, furniture, chattels,
permits, licenses, franchises, certificates and other personal property of
whatever nature shall have been acquired on behalf of BNPLC by NAI, shall be
owned by BNPLC and shall constitute "Property" covered by this 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 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:
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(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 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 Lease.
(b Right of BNPLC to do Remedial Work Not Performed by NAI. If
NAI's failure to cure any breach of the covenants set forth in subparagraph
8.(a) continues beyond the Environmental Cure Period (as defined below), BNPLC
may, in addition to any other remedies available to it, conduct all or any part
of the Remedial Work. To the extent that Remedial Work is done by BNPLC pursuant
to the preceding sentence (including any removal of Hazardous Substances), the
cost thereof shall be a demand obligation owing by NAI to BNPLC. As used in this
subparagraph, "ENVIRONMENTAL CURE PERIOD" means the period ending on the earlier
of: (1) one hundred eighty days after NAI is notified of the breach which must
be cured within such period, (2) the date that any writ or order is issued for
the levy or sale of any property owned by BNPLC (including the Property) because
of such breach, (3) the date that any criminal action is instituted or overtly
threatened against BNPLC or any of its directors, officers or employees because
of such breach, or (4) any Designated Sale Date upon which, for any reason, NAI
or an Affiliate of NAI or any Applicable Purchaser shall not purchase BNPLC's
interest in the Property pursuant to the Purchase Agreement for a net price to
BNPLC (when taken together with any Supplemental Payment made by NAI pursuant to
Paragraph 1(A)(2) of the Purchase Agreement, in the case of a purchase by an
Applicable Purchaser) equal to Stipulated Loss Value.
(c Environmental Inspections and Reviews. BNPLC reserves the
right to retain environmental consultants to review any report prepared by NAI
or to conduct BNPLC's own investigation to confirm whether NAI is complying with
the requirements of this Paragraph 8. NAI grants to BNPLC and to BNPLC's agents,
employees, consultants and contractors the right to enter upon the Property at
any time to inspect the Property and to perform such tests as BNPLC deems
necessary or appropriate to review or investigate Hazardous Substances in, on,
under or about the Property or any discharge or suspected discharge of Hazardous
Substances into groundwater or surface water from the Property. NAI shall
promptly reimburse BNPLC for the fees of its environmental consultants and the
costs of any such inspections and tests.
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(d) Communications Regarding Environmental Matters.
(i) NAI shall immediately advise BNPLC of (1) any discovery of
any event or circumstance which would render any of the representations
of NAI herein or in the Closing Certificate concerning environmental
matters materially inaccurate or misleading if made at the time of such
discovery and assuming that NAI was aware of all relevant facts, (2) any
Remedial Work (or change in Remedial Work) required or undertaken by NAI
or its Affiliates in response to any (A) discovery of any Hazardous
Substances on, under or about the Property other than Permitted
Hazardous Substances or (B) any claim for damages resulting from
Hazardous Substance Activities, (3) NAI's discovery of any occurrence or
condition on any real property adjoining or in the vicinity of the
Property which could cause the Property or any part thereof to be
subject to any ownership, occupancy, transferability or use restrictions
under Environmental Laws, or (4) any investigation or inquiry of any
failure or alleged failure by NAI to comply with Environmental Laws
affecting the Property by any governmental authority responsible for
enforcing Environmental Laws. In such event, NAI shall deliver to BNPLC
within thirty days after BNPLC's request, a preliminary written
environmental plan setting forth a general description of the action
that NAI proposes to take with respect thereto, if any, to bring the
Property into compliance with Environmental Laws or to correct any
breach by NAI of this Paragraph 8, including any proposed Remedial Work,
the estimated cost and time of completion, the name of the contractor
and a copy of the construction contract, if any, and such additional
data, instruments, documents, agreements or other materials or
information as BNPLC may request.
(ii) NAI shall provide BNPLC with copies of all material written
communications with federal, state and local governments, or agencies
relating to the matters listed in the preceding clause (i). NAI shall
also provide BNPLC with copies of any correspondence from third Persons
which threaten litigation over any significant failure or alleged
significant failure of NAI to maintain or operate the Property in
accordance with Environmental Laws.
(iii) Prior to NAI's submission of a Material Environmental
Communication to any governmental or regulatory agency or third party,
NAI shall, to the extent practicable, deliver to BNPLC a draft of the
proposed submission (together with the proposed date of submission), and
in good faith assess and consider any comments of BNPLC regarding the
same. Promptly after BNPLC's request, NAI shall meet with BNPLC to
discuss the submission, shall provide any additional information
requested by BNPLC and shall provide a written explanation to BNPLC
addressing the issues raised by comments (if any) of BNPLC regarding the
submission, including a reasoned analysis supporting any decision by NAI
not to modify the submission in accordance with comments of BNPLC.
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 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
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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 Lease written confirmation of the policy and the scope
of the coverage provided thereby issued by the applicable insurer or its
authorized agent, which confirmation must also satisfy the requirements set
forth in Exhibit B. If any of the Property is destroyed or damaged by fire,
explosion, windstorm, hail or by any other casualty against which insurance
shall have been required hereunder, (i) BNPLC may, but shall not be obligated
to, make proof of loss if not made promptly by NAI after notice from BNPLC, (ii)
each insurance company concerned is hereby authorized and directed to make
payment for such loss directly to BNPLC for application as required by Paragraph
10, and (iii) BNPLC may settle, adjust or compromise any and all claims for
loss, damage or destruction under any policy or policies of insurance (provided,
that if any such claim is for less than $500,000, if no CMA Termination Event
shall have occurred and no Event of Default shall have occurred and be
continuing, NAI shall have the right to settle, adjust or compromise the claim
as NAI deems appropriate; and, provided further, that so long as no CMA
Termination Event shall have occurred and no Event of Default shall have
occurred and be continuing, BNPLC must provide NAI with at least forty-five days
notice of BNPLC's intention to settle any such claim before settling it unless
NAI shall already have approved of the settlement by BNPLC). If any casualty
shall result in damage to or loss or destruction of the Property, NAI shall give
immediate notice thereof to BNPLC and Paragraph 10 shall apply.
(c) Failure to Obtain Insurance. If NAI fails to obtain any
insurance or to provide confirmation of any such insurance as required by this
Lease, BNPLC shall be entitled (but not required) to obtain the insurance that
NAI has failed to obtain or for which NAI has not provided the required
confirmation and, without limiting BNPLC's other remedies under the
circumstances, BNPLC may require NAI to reimburse BNPLC for the cost of such
insurance and to pay interest thereon computed at the Default Rate from the date
such cost was paid by BNPLC until the date of reimbursement by NAI (provided,
however, that any such insurance cost paid by BNPLC prior to the Base Rent
Commencement Date will be charged against the Construction Allowance under the
Construction Management Agreement as if it had been paid by NAI).
(d) Condemnation. Immediately upon obtaining knowledge of the
institution of any proceedings for the condemnation of the Property or any
portion thereof, or any other similar governmental or quasi-governmental
proceedings arising out of injury or damage to the Property or any portion
thereof, each party shall notify the other (provided, however, BNPLC shall have
no liability for its failure to provide such notice) of the pendency of such
proceedings. NAI shall, at its expense, diligently prosecute any such
proceedings and shall consult with BNPLC, its attorneys and experts and
cooperate with them as requested in the carrying on or defense of any such
proceedings. All proceeds of condemnation awards or proceeds of sale in lieu of
condemnation with respect to the Property and all judgments, decrees and awards
for injury or damage to the Property shall be paid to BNPLC as Escrowed
Proceeds, and all such proceeds will be applied as provided in Paragraph 10.
BNPLC is hereby authorized, in the name of NAI, at any time after a CMA
Termination Event or when an Event of Default shall have occurred and be
continuing, or otherwise with NAI's prior consent, to execute and deliver valid
acquittances for, and to appeal from, any such judgment, decree or award
concerning condemnation of any of the Property. BNPLC shall not be in any event
or circumstances liable or responsible for failure to collect, or to exercise
diligence in the collection of, any such proceeds, judgments, decrees or awards.
(e) Waiver of Subrogation. NAI, for itself and for any Person
claiming through it (including any insurance company claiming by way of
subrogation), waives any and every claim which arises or may arise in its favor
against BNPLC or any other Interested Party and the officers, directors, and
employees of the Interested Parties for any and all Losses, to the extent that
NAI is compensated by insurance or would be compensated by the insurance
policies contemplated in this Lease, but for any deductible or self-insured
retention maintained under such insurance or but for a failure of NAI to
maintain the insurance as required by this Lease. NAI agrees to have
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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 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 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 NAI has completed the Construction Project pursuant to the Construction
Management Agreement and no Event of Default shall have occurred and be
continuing, BNPLC shall apply any Remaining Proceeds paid to it (or other
amounts available for application as a Qualified Prepayment) as a Qualified
Prepayment on any date that BNPLC is directed to do so by a notice from NAI;
however, if such a notice from NAI specifies an effective date for a Qualified
Prepayment that is less than five Business Days after BNPLC's actual receipt of
the notice, BNPLC may postpone the date of the Qualified Prepayment to any date
not later than five Business Days after BNPLC's receipt of the notice. In any
event, except when BNPLC is required by the preceding sentence to apply
Remaining Proceeds or other amounts as a Qualified Prepayment on an Advance Date
or Base Rent Date, BNPLC may deduct Breakage
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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 a CMA Termination Event
or Event of Default. Notwithstanding the foregoing, after any CMA Termination
Event, and when any Event of Default shall have occurred and be continuing,
BNPLC shall be entitled to receive and collect all insurance, condemnation or
other proceeds governed by this Paragraph 10 and to apply all Remaining
Proceeds, when and to the extent deemed appropriate by BNPLC in its sole
discretion, either (A) to the reimbursement of NAI or BNPLC for the
out-of-pocket cost of repairing or restoring the Property, or (B) as Qualified
Prepayments.
(e) NAI's Obligation to Restore. Regardless of the adequacy of
any Remaining Proceeds available to NAI hereunder, and notwithstanding other
provisions of this Lease to the contrary:
(1) If, prior to the Base Rent Commencement Date, the Property
is damaged by fire or other casualty or any part of the Property is
taken by condemnation, NAI shall to the maximum extent possible, as part
of the Work contemplated in the Construction Management Agreement,
restore the Property or the remainder thereof and continue construction
of the Construction Project on and subject to the terms and conditions
set forth in the Construction Management Agreement. However, any
additional costs required to complete the Construction Project resulting
from such a casualty or taking prior to the Base Rent Commencement Date
shall, to the extent not covered by Remaining Proceeds paid to NAI as
provided in this Lease, be subject to reimbursement by BNPLC under the
Construction Management Agreement on the same terms and conditions that
apply to reimbursements of other costs of the Work thereunder.
(2) If, on or after the Base Rent Commencement Date, the
Property is damaged by fire or other casualty or less than all or
substantially all of the Property is taken by condemnation, NAI must:
A) increase the value of the Property or the remainder
thereof by restoring or improving the same (in a manner
consistent with the requirements and limitations imposed by this
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 resulting from such
condemnation, then BNPLC shall be entitled to recover the excess from NAI upon
demand as an additional Qualified Prepayment, whereupon this 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:
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(a) Compliance with Covenants and Laws. The use of the Property
permitted by this Lease complies, or will comply after NAI obtains available
permits as the tenant under this Lease, in all material respects with all
Applicable Laws. NAI has obtained or will promptly obtain all utility, building,
health and operating permits as may be required by any governmental authority or
municipality having jurisdiction over the Property for the construction
contemplated herein and the use of the Property permitted by this Lease.
(b) Operation of the Property. During the Term, NAI shall operate
the Property in a good and workmanlike manner and substantially in compliance
with all Applicable Laws and will pay or cause to be paid all fees or charges of
any kind in connection therewith. (If NAI does not promptly correct any failure
of the Property to comply with Applicable Laws that is the subject of a written
notice given to NAI or BNPLC by any governmental authority, then for purposes of
the preceding sentence, NAI shall be considered not to have maintained the
Property "substantially in accordance with Applicable Laws" whether or not the
noncompliance would be substantial in the absence of the notice.) During the
Term, NAI shall not use or occupy, or allow the use or occupancy of, the
Property in any manner which violates any Applicable Law or which constitutes a
public or private nuisance or which makes void, voidable or cancelable any
insurance then in force with respect thereto. During the Term, to the extent
that any of the following would, individually or in the aggregate, increase the
likelihood of a CMA Termination Event under the Construction Management
Agreement or materially and adversely affect the value of the Property or NAI's
use, occupancy or operations on the Property, NAI shall not, without BNPLC's
prior consent: (i) initiate or permit any zoning reclassification of the
Property; (ii) seek any variance under existing zoning ordinances applicable to
the Property; (iii) use or permit the use of the Property in a manner that would
result in such use becoming a nonconforming use under applicable zoning
ordinances or similar laws, rules or regulations; (iv) execute or file any
subdivision plat affecting the Property; or (v) consent to the annexation of the
Property to any municipality. If (A) a change in the zoning or other Applicable
Laws affecting the permitted use or development of the Property shall occur
after the Base Rent Commencement Date that reduces the value of the Property, or
(B) conditions or circumstances on or about the Property are discovered after
the Base Rent Commencement Date (such as the presence of an endangered species)
which substantially impede development and thereby reduce the value of the
Property, and if after any such reduction under clause (A) or (B) preceding the
Current AS IS 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
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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 Improvements or alter Improvements in any material respect, except
as part of the Work performed in accordance with the Construction Management
Agreement. Without limiting the foregoing, NAI will notify BNPLC before making
any significant alterations to the Improvements after the completion of the
Construction Project. Nothing in this subparagraph, however, is intended to
limit NAI's rights and obligations under other express provisions of this Lease
and the Construction Management Agreement with respect to the Construction
Project.
(e) Permitted Encumbrances and Development Documents. NAI shall
during the Term comply with and will cause to be performed all of the covenants,
agreements and obligations imposed upon the
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owner of any interest in the Property by the Permitted Encumbrances 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 the 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 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 the 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 the 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
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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 the Lease has
occurred and is continuing or, if a Default or Event of Default under
the 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 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, if (and
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after) NAI completes the Construction Project pursuant to the Construction
Management Agreement and so long as no Event of Default has occurred and is
continuing: (1) NAI shall be entitled to sublet no more than forty-nine percent
(49%) (computed on the basis of square footage) of the useable space in then
existing and completed building Improvements, if any, so long as (i) any
sublease by NAI is made expressly subject and subordinate to the terms hereof,
and (ii) such sublease has a term equal to or less than the remainder of the
then effective Term of this Lease; and (2) NAI shall be entitled to assign or
transfer this 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 Lease.
(c) Consent Not a Waiver. No consent by BNPLC to a sale,
assignment, transfer, mortgage, pledge or hypothecation of this Lease or NAI's
interest hereunder, and no assignment or subletting of the Property or any part
thereof in accordance with this Lease or otherwise with 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 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
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
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 Lease and the other
Operative Documents, then BNPLC shall thereby be released from any obligations
arising after such assumption under this Lease or the other Operative Documents
(other than any liability for a breach of any continuing obligation to provide
Construction Advances under the Construction Management Agreement), and NAI
shall look solely to each successor in interest of BNPLC for performance of such
obligations.
16. BNPLC'S RIGHT OF ACCESS.
(a) During the Term, BNPLC and BNPLC's representatives may
(subject to subparagraph 16.(c)) enter the Property at any reasonable time after
five Business Days advance written notice to
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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 Lease or the other
Operative Documents.
(b) If NAI fails to perform any act or to take any action
required of it by this Lease or the Closing Certificate, or to pay any money
which NAI is required by this Lease or the Closing Certificate to pay, and if
such failure or action constitutes an Event of Default or renders 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 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 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 Lease and the other Operative
Documents without evaluating such information. For purposes of this 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 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 Lease:
(a) NAI shall fail to pay when due any installment of Rent due hereunder
and such failure shall continue for three (3) Business Days after NAI is
notified in writing thereof.
(b) NAI shall fail to cause any representation or warranty of NAI
contained herein or in the Construction Management Agreement or the Closing
Certificate that was false or misleading in any material respect when made to be
made true and not misleading (other than as described in the other clauses of
this
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Paragraph 17), or NAI shall fail to comply with any term, provision or covenant
of this Lease or of the Construction Management Agreement or the Closing
Certificate (other than as described in the other clauses of this Paragraph 17),
and in either case shall not cure such failure prior to the earlier of (A)
thirty days after written notice thereof is sent to NAI or (B) the date any writ
or order is issued for the levy or sale of any property owned by BNPLC
(including the Property) or any criminal prosecution is instituted or overtly
threatened against BNPLC or any of its directors, officers or employees because
of such failure; provided, however, that so long as no such writ or order is
issued and no such criminal prosecution is instituted or overtly threatened, the
period within which such failure may be cured by NAI shall be extended for a
further period (not to exceed an additional sixty days) as shall be necessary
for the curing thereof with diligence, if (but only if) (x) such failure is
susceptible of cure but cannot with reasonable diligence be cured within such
thirty day period, (y) NAI shall promptly have commenced to cure such failure
and shall thereafter continuously prosecute the curing thereof with reasonable
diligence and (z) the extension of the period for cure will not, in any event,
cause the period for cure to extend beyond five days prior to the expiration of
this 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) 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 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
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<PAGE> 36
Agreement on the Designated Sale Date or shall fail to provide Collateral as and
when due pursuant to the Pledge Agreement Documents.
(j) NAI shall fail to comply with any term, provision or condition of
the Pledge Agreements after the expiration of any applicable notice and cure
period set forth in the Pledge Agreement.
18. REMEDIES.
(a) Basic Remedies. At any time after an Event of Default and
after BNPLC has given any notice required by subparagraph 18.(b), BNPLC shall be
entitled at BNPLC's option (and without limiting BNPLC in the exercise of any
other right or remedy BNPLC may have, and without any further demand or notice
except as expressly described in this subparagraph 18.(a)), to exercise any one
or more of the following remedies:
(i) By notice to NAI, BNPLC may terminate NAI's right to
possession of the Property. A notice given in connection with unlawful
detainer proceedings specifying a time within which to cure a default
shall terminate NAI's right to possession if NAI fails to cure the
default within the time specified in the notice.
(ii) Upon termination of NAI's right to possession and without
further demand or notice, BNPLC may re-enter the Property in any manner
not prohibited by Applicable Law and take possession of all
improvements, additions, alterations, equipment and fixtures thereon and
remove any persons in possession thereof. Any property on the Land or 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 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 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
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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 Lease and
abandoned the Property, this 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 Lease, including
the right to recover the Rent as it becomes due under this 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 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
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favor of BNPLC under Applicable Law or in equity. In addition to other remedies
provided in this 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 Lease, or to a decree compelling performance of
any of the other covenants, agreements, conditions or provisions of this Lease
to be performed by NAI, or to any other remedy allowed to BNPLC at law or in
equity. Nothing contained in this 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 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 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 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
Lease or excuse NAI from its obligation to pay Rent.
21. SURRENDER UPON TERMINATION. Unless NAI or an Applicable Purchaser
purchases BNPLC's entire interest in the Property pursuant to the terms of the
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 Lease, and (ii) demolition, alterations and additions which are
expressly permitted by the terms of this Lease and which have been completed by
NAI in a good and workmanlike manner in accordance with all Applicable Laws. Any
movable furniture or movable personal property belonging to NAI or any party
claiming under NAI, if not removed at the time of such termination and if 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.
-33-
<PAGE> 39
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 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 Lease shall reinstate, continue or
extend the Term of this Lease and no extension of this 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 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 Lease, the express terms
and provisions of the Purchase Documents shall control. In the event of any
inconsistency between the express terms and provisions of the Construction
Management Agreement or the Closing Certificate and the express terms and
provisions of this Lease, the express terms and provisions of this Lease shall
control; provided, nothing herein will limit or impair NAI's obligations under
the Closing Certificate following any expiration of termination of this Lease.
[The signature pages follow.]
-34-
<PAGE> 40
IN WITNESS WHEREOF, NAI and BNPLC have caused this Lease Agreement to be
executed as of January 20, 1999.
"NAI"
NETWORK APPLIANCE, INC.
By:
------------------------------------
Name:
-----------------------------
Title:
----------------------------
<PAGE> 41
[Continuation of signature pages to Lease Agreement dated to be effective
January 20, 1999]
"BNPLC"
BNP LEASING CORPORATION
By:
------------------------------------
Lloyd G. Cox, Vice President
<PAGE> 42
Exhibit A
LEGAL DESCRIPTION
All that certain real property situate in the City of Sunnyvale, State of
California, described as follows:
PARCEL ONE:
PARCEL "A", as shown upon that certain Parcel Map filed for record on October
25, 1966 in Book 216 of Maps, page 2, in the Office of the Recorder of the
County of Santa Clara.
EXCEPTING THEREFROM those portions thereof described in the Deed to Santa Clara
Valley Transit District, recorded October 24, 1997, Document No. 13912193;
Official Records.
ALSO EXCEPTING THEREFROM that portion of said PARCEL "A" described in the deed
from 495 Java Drive Associates, L.P. to 475 Java Drive Associates, L.P. recorded
September 16, 1998, Document No. 14395998; Official Records, as follows:
Beginning at the Northwest corner of Parcel A as shown upon said Parcel Map
filed for record in Book 216 at Page 2; thence along the Westerly line of said
Parcel A, South 14 degrees 51 minutes 33 seconds West 223.09 feet to a point
hereinafter referred to as Point "X"; thence leaving said Westerly line North 38
degrees 52 minutes 02 seconds East 134.85 feet; thence North 51 degrees 07
minutes 58 seconds West 49.68; thence North 38 degrees 52 minutes 02 seconds
East 87.23 feet to the Northerly line of last said Parcel A; thence along said
Northerly line North 75 degrees 07 minutes 58 seconds West 44.97 feet to the
point of beginning.
TOGETHER WITH that portion of PARCEL "A", as shown upon that certain Parcel Map
filed for record on November 10, 1971 in Book 292 of Maps, page 41, in the
Office of the Recorder of the County of Santa Clara, described in the deed from
475 Java Drive Associates, L.P. to 495 Java Drive Associates, L.P., recorded
September 16, 1998, Document No. 14395997, Official
Records, as follows:
Beginning at the Northwest corner of PARCEL "A" as shown upon that certain
Parcel Map recorded in Book 216 of Maps at page 2; thence along the Westerly
line of said PARCEL "A", South 14 degrees 51 minutes 33 seconds West 223.09 feet
to a point hereinafter referred to as Point "X"; thence continuing along the
Westerly line of last said Parcel A, South 14 degrees 51 minutes 33 seconds West
186.10 feet to a point on the Northeasterly line of that parcel of land
described in the deed to Santa Clara Valley Transit District, recorded October
24, 1997 as Instrument No. 13912192, Official Records, said point being on a
non-tangent curve concave Southwesterly and having a radius of 1002.05 feet, a
radial line through said point bears North 45 degrees 01 minutes 56 seconds
East; thence Northwesterly along said Northeasterly line and along said curve
through a central angle of 04 degrees 20 minutes 28 seconds an arc length of
75.92 feet; thence leaving said Northeasterly line non-tangent from last said
curve North 38 degrees 52 minutes 02 seconds East 164.71 feet to the said Point
of Beginning.
PARCEL TWO:
Non-exclusive easements for storm drain purposes as granted to The Prudential
Insurance Company of America by Deed recorded June 17, 1975 in Book B467, page
173, Official Records, particularly described in said deed.
<PAGE> 43
PARCEL THREE:
A non-exclusive easement for ingress to and egress from motor vehicle parking
spaces as granted to The Prudential Insurance Company of America by Deed
recorded June 17, 1975 in Book B467, page 178.
PARCEL FOUR:
Non-exclusive easements for ingress and egress granted by 475 Java Drive
Associates, L.P. to 495 Java Drive Associates, L.P., described in the Reciprocal
Easement Agreement recorded September 16, 1998, Document No. 14396001, Official
Records, as follows:
ONE:
Commencing at the Northeasterly corner of that parcel of land described in the
Deed to Santa Clara Valley Transit District, recorded October 24, 1997 as
Instrument No. 13912192, Official Records, said point lying on the Easterly line
of said PARCEL "A", as shown upon that certain Parcel Map filed for record in
Book 292, page 41; thence Northwesterly along the Northeasterly line of said
parcel of land described in the deed to Santa Clara Valley Transit District
along a curve to the left with a radius of 1002.05 feet, from which a radial
line bears North 45 degrees 01 minutes 56 seconds East, through a central angle
of 4 degrees 20 minutes 28 seconds for an arc length of 75.92 feet to the true
point of beginning; thence North 38 degrees 52 minutes 02 seconds East 82.92
feet to a point hereafter referred to as Point A; thence North 51 degrees 07
minutes 58 seconds West 12.96 feet; thence South 38 degrees 52 minutes 02
seconds West 64.41 feet; thence Westerly along a tangent curve to the right with
a radius of 20.00 feet, through a central angle of 64 degrees 20 minutes 39
seconds for an arc length of 22.46 feet to a point on said Northeasterly line of
said parcel of land described in the Deed to Santa Clara Valley Transit
District; thence Southeasterly along said Northeasterly line along a non-tangent
curve to the right with a radius of 1002.05 feet, from which a radial line bears
North 39 degrees 18 minutes 05 seconds East, through a central angle of 1
degrees 23 minutes 23 seconds for an arc length of 24.30 feet to the true point
of beginning.
TWO:
Commencing at said Point A; thence North 38 degrees 52 minutes 02 seconds East
216.65 feet to the true point of beginning; thence North 51 degrees 07 minutes
58 seconds West 49.68 feet; thence North 38 degrees 52 minutes 02 seconds East
87.23 feet to the Northeasterly line of said PARCEL "A", as shown upon that
certain Parcel Map filed for record in Book 216 at page 2; thence North 75
degrees 07 minutes 58 seconds West 13.91 feet along said Northeasterly line;
thence South 38 degrees 52 minutes 02 seconds West 94.26 feet; thence South 51
degrees 07 minutes 58 seconds East 62.39 feet; thence North 38 degrees 52
minutes 02 seconds East 12.70 feet to the true point of beginning.
APN: 110-32-009
ARB: 110-3-X57,66.02
Exhibit A - Page 2
<PAGE> 44
Exhibit B
INSURANCE REQUIREMENTS
I. LIABILITY INSURANCE:
A. NAI must maintain commercial general liability ("CGL") insurance on an
occurrence basis, affording afford 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 Lease (though such coverage or the amount
thereof shall in no way limit such indemnifications).
B. Any deductible or self-insured retention applicable to the CGL insurance
shall not exceed $1,000 at any time when NAI shall continue to have the right to
exercise any Issue 97-10 Election, or shall have previously exercised an Issue
97-10 Election. After the expiration of NAI's right to exercise any Issue 97-10
Election, and provided no Issue 97-10 Election has been exercised by NAI, NAI
may increase any deductible or self-insured retention applicable to such
insurance, but not to an amount in excess of $500,000.
C. The forms of insurance policies (including endorsements) used to provide
the CGL insurance required by this Lease, and the insurance company or companies
providing the CGL insurance, must be acceptable to BNPLC. BNPLC shall have the
right from time to time and at any time to review and approve such policy forms
(including endorsements) and the insurance company or companies providing the
insurance. Without limiting the generality of the foregoing, BNPLC may
reasonably require (and unless and until NAI is otherwise notified by BNPLC,
BNPLC does require) that such insurance be provided under forms and by companies
consistent with the following:
(1) Forms: CGL Insurance must be provided on Insurance Services
Office ("ISO") forms CG 0001 1093 or CG 0001 0196 or equivalent
substitute forms providing the same or greater coverage.
(2) Rating Requirements: Insurance must be provided through
insurance or reinsurance companies rated by the A.M. Best
Company of Oldwick, New Jersey as having a policyholder's rating
of A or better and a reported financial information rating of X
or better.
(3) Required Endorsements: CGL Insurance must be endorsed to provide
or include:
(a) in any policy containing a general aggregate limit, ISO form
amendment "Aggregate Limits of Insurance Per Location" CG 2504
1185 or equivalent substitute form;
(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 between Network Appliance, Inc. and BNP
Leasing Corporation dated January 20, 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 between Network Appliance, Inc. and BNP
Leasing Corporation dated
<PAGE> 45
January 20, 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:
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> 46
(13) loss of rental income;
(14) legal/professional fees (in the amount of no less than
$1,500,000) and other soft costs as reasonably determined by
NAI, subject to BNPLC's approval.
B. The property insurance required hereby must provide coverage in the
amount no less than replacement value (exclusive of land, foundation, footings,
excavations and grading) with endorsements for contingent liability from
operation of building laws, increased cost of construction and demolition costs
which may be necessary to comply with building laws. Subject to the approval of
BNPLC, NAI will be responsible for determining the amount of property insurance
to be maintained from time to time, but NAI must maintain such coverage on an
agreed value basis to eliminate the effects of coinsurance.
C. Any deductible or self-insured retention applicable to the property
insurance shall not exceed $50,000 at any time when NAI shall continue to have
the right to exercise any Issue 97-10 Election, or shall have previously
exercised an Issue 97-10 Election; provided, that with respect to earthquake
coverage the deductible may be as high as five percent of the value of the
Improvements. After the expiration of NAI's right to exercise any Issue 97-10
Election, and provided no Issue 97-10 Election has been exercised by NAI, NAI
may increase any deductible or self-insured retention applicable to such
insurance, provided the increased amount shall not exceed (1) $500,000 for all
coverages other than earthquake coverage, and (2) for earthquake coverage only,
five percent of the aggregate amount of the property insurance required to
satisfy this 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 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 between Network Appliance, Inc.
and BNP Leasing Corporation dated January 20, 1999)";
(b) that NAI's insurance is primary, with any policies of
BNPLC or other Interested Parties being excess,
secondary and noncontributing;
Exhibit B - Page-3
<PAGE> 47
(c) that the protection afforded to BNPLC by such insurance
shall not be reduced or impaired by acts or omissions of
NAI or any other beneficiary or insured; and
(d) that BNPLC must be notified at least thirty days prior
to any cancellation, nonrenewal or reduction of
insurance coverage.
III. OTHER INSURANCE RELATED REQUIREMENTS:
A. BNPLC must be notified in writing immediately by NAI of claims against
NAI that might cause a reduction below seventy-five percent (75%) of any
aggregate limit of any policy.
B. NAI's property insurance must be evidenced by ACORD form 27 "Evidence of
Property Insurance" completed and interlineated in a manner satisfactory to
BNPLC to show compliance with the requirements of this Exhibit. Copies of
endorsements to the property insurance must be attached to such form.
C. NAI's CGL insurance must be evidenced by ACORD form 25 "Certificate of
Insurance" completed and interlineated in a manner satisfactory to BNPLC to show
compliance with the requirements of this Exhibit. Copies of endorsements to the
CGL insurance must be attached to such form.
D. Such evidence of required insurance must be delivered upon execution of
this Lease and new certificate or evidence of insurance must be delivered no
later than 30 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
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> 48
Exhibit C
NOTICE OF LIBOR PERIOD ELECTION
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Re: Lease Agreement dated as of January 20, 1999, 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 Lease referenced above. This letter constitutes notice
to you that the LIBOR Period Election under the Lease 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 AGREEMENT ATTACHED TO THE
LEASE, 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:_______________________________________
[cc all Participants]
<PAGE> 49
Schedule 1
FINANCIAL COVENANTS
This Schedule 1 is attached to and made a part of (a) the Lease Agreement
(the "LEASE") dated to be effective as of January 20, 1999 (the "EFFECTIVE
DATE"), between BNP Leasing Corporation, a Delaware corporation ("BNPLC") and
Network Appliance, Inc., a California corporation ("NAI") and (b) the Pledge
Agreement (the "PLEDGE AGREEMENT") 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 Lease or the Common Definitions and
Provisions Agreement referenced in the Lease; 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 Agreement, where "Debt" of any Person is
defined to mean (without duplication of any item): (a) indebtedness of such
Person for borrowed money; (b) indebtedness of such Person for the deferred
purchase price of property or services (except trade payables and accrued
expenses constituting current liabilities in the ordinary course of
business); (c) the face amount of any outstanding letters of credit issued
for the account of such Person; (d) obligations of such Person arising under
acceptance facilities; (e) guaranties, endorsements (other than for
collection in the ordinary course of business) and other contingent
obligations of such Person to purchase, to provide funds for payment, to
provide funds to invest in any Person, or otherwise to assure a creditor
against loss; (f) obligations of others secured by any Lien on property of
such Person; (g) obligations of such Person as lessee under Capital Leases;
and (h) the obligations of such Person, contingent or otherwise, under any
lease of property or related documents (including a separate purchase
agreement) which provide that such Person or any of its Affiliates must
purchase or cause another Person to purchase any interest in the leased
property and thereby guarantee a minimum residual value of the leased
property to the lessor. For purposes of this definition, the amount of the
obligations described in clause (h) of the preceding sentence with respect
to
<PAGE> 50
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
Agreement, the Collateral Percentage for purposes of the Pledge Agreement
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; provided, however, that if any
such charges for any fiscal period ending after the Effective Date, when
added to all such charges for prior fiscal periods (if any) ending after the
Effective Date, shall exceed $15,000,000, then neither the excess nor any
such charges for subsequent fiscal periods will constitute "Permitted
Non-Cash Charges" for purposes of this Exhibit.
"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): 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 Funded Debt, 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
Schedule 1 - Page-2
<PAGE> 51
quarters ends after December 31, 1999.
"TOTAL FUNDED DEBT" means the sum (without duplication of any item) of (A)
all liabilities of NAI and its Subsidiaries (determined on a consolidated
basis) for borrowed money or other Debt, to the extent that GAAP requires
the reporting of such liabilities on the consolidated balance sheet of NAI
and its Subsidiaries, excluding, however, any short term payables incurred
in the ordinary course of business that are reported on the consolidated
balance sheet of NAI and its Subsidiaries, and (B) other obligations of NAI
and its Subsidiaries (determined on a consolidated basis), contingent or
otherwise, under any lease of property or related documents (including a
separate purchase agreement) which provide that NAI or any of its
Subsidiaries 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 (B) 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 of the applicable determination of Total Funded Debt, 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.
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 Agreement 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
Funded Debt.
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 1.25 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 Funded Debt 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.
Schedule 1 - Page-3
<PAGE> 52
PART III - TESTS FOR MANDATORY COLLATERAL PERIODS
The period commencing on any Collateral Test Date, and ending on the next
Collateral Test Date, shall constitute a Mandatory Collateral Period if, at the
end of the latest fiscal quarter of NAI ending before such period, NAI shall
have both:
(A) failed to maintain a ratio of (1) the sum (without duplication of
any item) of 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 1.50 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.
PART III - TESTS FOR MANDATORY COLLATERAL PERIODS
The period commencing on any Collateral Test Date, and ending on the next
Collateral Test Date, shall constitute a Mandatory Collateral Period if, at the
end of the latest fiscal quarter of NAI ending before such period, NAI shall
have both:
(A) failed to maintain a ratio of (1) the sum (without duplication of
any item) of 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) Debt of NAI and its Subsidiaries (determined on a consolidated
basis), of at least 1.50 to 1.00; and.
(B) failed to maintain a ratio of (i) 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.
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
Schedule 1 - Page-4
<PAGE> 53
are not past due for more than thirty (30) days, or which are being
contested in good faith by appropriate proceedings and for which appropriate
reserves have been established;
3. Liens under workmen's compensation, unemployment insurance, social
security or similar laws (other than ERISA);
4. Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), leases,
public or statutory obligations, surety, stay, appeal, indemnity,
performance or other similar bonds, or other similar obligations arising in
the ordinary course of business;
5. judgment and other similar Liens against assets other than the
Property or any part thereof in an aggregate amount not in excess of
$3,000,000 arising in connection with court proceedings; provided that the
execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith by
appropriate proceedings;
6. easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by NAI or any such Consolidated Subsidiary of
the property or assets encumbered thereby in the normal course of its
business or materially impair the value of the property subject thereto;
7. Liens securing obligations of such a Consolidated Subsidiary to
NAI or to another such Consolidated Subsidiary;
8. Liens not otherwise permitted by this subparagraph A (and not
encumbering the Property or any Collateral) incurred in connection with the
incurrence of additional Debt or asserted to secure Unfunded Benefit
Liabilities, provided that (a) the sum of the aggregate principal amount of
all outstanding obligations secured by Liens incurred pursuant to this
clause shall not at any time exceed five percent (5%) of Consolidated
Tangible Net Worth at such time; and (b) such Liens do not constitute Liens
against NAI's interest in any material Subsidiary or blanket Liens against
all or substantially all of the inventory, receivables, general intangibles
or equipment of NAI or of any material Subsidiary of NAI (for purposes of
this clause, a "material Subsidiary" means any subsidiary whose assets
represent a substantial part of the total assets of NAI and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP);
and
9. Liens incurred in connection with any renewals, extensions or
refundings of any Debt secured by Liens described in the preceding clauses
of this subparagraph A, provided that there is no increase in the aggregate
principal amount of Debt secured thereby from that which was outstanding as
of the date of such renewal, extension or refunding and no additional
property is encumbered.
B. Transactions with Affiliates. Enter into or permit any Subsidiary of NAI
to enter into any material transactions (including, without limitation, the
purchase, sale or exchange of property or the 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
Schedule 1 - Page-5
<PAGE> 54
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 $20,000,000.00.
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> 55
COMMON DEFINITIONS AND PROVISIONS AGREEMENT
BETWEEN
BNP LEASING CORPORATION
AND
NETWORK APPLIANCE, INC.
DATED AS OF JANUARY 20, 1999
<PAGE> 56
TABLE OF CONTENTS
Page
----
ARTICLE I - LIST OF DEFINED TERMS:
ABSOLUTE NAI CONSTRUCTION OBLIGATIONS.............................................................. 1
ACTIVE NEGLIGENCE.................................................................................. 2
ADDITIONAL RENT.................................................................................... 2
ADMINISTRATIVE AGENCY FEE.......................................................................... 2
ADJUSTED EBIT...................................................................................... 2
ADVANCE DATE....................................................................................... 3
AFFILIATE.......................................................................................... 3
APPLICABLE LAWS.................................................................................... 3
APPLICABLE PURCHASER............................................................................... 3
ARRANGEMENT FEE.................................................................................... 3
ATTORNEYS' FEES.................................................................................... 3
BALANCE OF UNPAID CONSTRUCTION-PERIOD INDEMNITY PAYMENTS........................................... 3
BANKING RULES CHANGE............................................................................... 3
BASE RATE.......................................................................................... 3
BASE RENT.......................................................................................... 4
BASE RENT COMMENCEMENT DATE........................................................................ 4
BASE RENT DATE..................................................................................... 4
BASE RENT PERIOD................................................................................... 5
BNPLC.............................................................................................. 5
BNPLC'S PARENT..................................................................................... 5
BREAKAGE COSTS..................................................................................... 5
BREAK EVEN PRICE................................................................................... 6
BUSINESS DAY....................................................................................... 6
CAPITAL ADEQUACY CHARGES........................................................................... 6
CAPITAL LEASE...................................................................................... 6
CARRYING COSTS..................................................................................... 6
CLOSING CERTIFICATE................................................................................ 6
CMA SUSPENSION EVENT............................................................................... 6
CMA SUSPENSION NOTICE.............................................................................. 6
CMA SUSPENSION PERIOD.............................................................................. 6
CMA TERMINATION EVENT.............................................................................. 7
CODE............................................................................................... 7
COLLATERAL......................................................................................... 7
COLLATERAL PERCENTAGE.............................................................................. 7
COMMITMENT FEE RATE................................................................................ 7
COMMON DEFINITIONS AND PROVISIONS AGREEMENT........................................................ 8
COMPLETION NOTICE.................................................................................. 8
CONSTRUCTION ADVANCES.............................................................................. 8
CONSTRUCTION ADVANCE REQUEST....................................................................... 8
CONSTRUCTION ALLOWANCE............................................................................. 8
CONSTRUCTION MANAGEMENT AGREEMENT.................................................................. 8
(i)
<PAGE> 57
Page
----
CONSTRUCTION MILESTONE............................................................................. 8
CONSTRUCTION PERIOD................................................................................ 9
CONSTRUCTION-PERIOD INDEMNITY PAYMENTS............................................................. 9
CONSTRUCTION PROJECT............................................................................... 9
CURRENT AS IS MARKET VALUE......................................................................... 9
DEBT............................................................................................... 10
DEFAULT............................................................................................ 10
DEFAULT RATE....................................................................................... 10
DEFAULTING PARTICIPANT............................................................................. 10
DEFECTIVE WORK..................................................................................... 10
DEPOSIT TAKER...................................................................................... 11
DEPOSIT TAKER LOSSES............................................................................... 11
DESIGNATED SALE DATE............................................................................... 11
DEVELOPMENT DOCUMENTS.............................................................................. 11
DIRECT PAYMENTS TO PARTICIPANTS.................................................................... 11
EFFECTIVE DATE..................................................................................... 11
EFFECTIVE RATE..................................................................................... 12
ENVIRONMENTAL LAWS................................................................................. 12
ENVIRONMENTAL CUTOFF DATE.......................................................................... 12
ENVIRONMENTAL LOSSES............................................................................... 12
ENVIRONMENTAL REPORTS.............................................................................. 13
ERISA.............................................................................................. 13
ERISA AFFILIATE.................................................................................... 13
ESCROWED PROCEEDS.................................................................................. 13
ESTABLISHED MISCONDUCT............................................................................. 13
EUROCURRENCY LIABILITIES........................................................................... 14
EURODOLLAR RATE RESERVE PERCENTAGE................................................................. 14
EVENT OF DEFAULT................................................................................... 14
EXCLUDED TAXES..................................................................................... 14
EXISTING CONTRACT.................................................................................. 14
FAILED COLLATERAL TEST DATE........................................................................ 14
FED FUNDS RATE..................................................................................... 15
FOCB NOTICE........................................................................................ 15
FUNDED CONSTRUCTION ALLOWANCE...................................................................... 15
FUNDING ADVANCES................................................................................... 15
FUTURE WORK........................................................................................ 15
GAAP............................................................................................... 15
HAZARDOUS SUBSTANCE................................................................................ 15
HAZARDOUS SUBSTANCE ACTIVITY....................................................................... 15
IMPOSITIONS........................................................................................ 16
IMPROVEMENTS....................................................................................... 16
INITIAL FUNDING ADVANCE............................................................................ 16
INTERESTED PARTY................................................................................... 16
ISSUE 97-1 NON-PERFORMANCE-RELATED SUBJECTIVE EVENT OF DEFAULT..................................... 17
(ii)
<PAGE> 58
Page
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ISSUE 97-10 ELECTION............................................................................... 17
ISSUE 97-10 PREPAYMENT............................................................................. 17
LAND............................................................................................... 17
LANDLORD'S ELECTION TO CONTINUE CONSTRUCTION....................................................... 17
LEASE.............................................................................................. 17
LIBOR.............................................................................................. 17
LIBOR PERIOD ELECTION.............................................................................. 18
LIEN............................................................................................... 18
LIENS REMOVABLE BY BNPLC........................................................................... 18
LOSSES............................................................................................. 19
MANDATORY COLLATERAL PERIOD........................................................................ 19
MATERIAL ENVIRONMENTAL COMMUNICATION............................................................... 19
MAXIMUM CONSTRUCTION ALLOWANCE..................................................................... 19
MAXIMUM PERMITTED TERMINATION FEES................................................................. 19
MAXIMUM PERMITTED PREPAYMENT....................................................................... 19
MAXIMUM REMARKETING OBLIGATION..................................................................... 20
MINIMUM EXTENDED REMARKETING PRICE................................................................. 20
MULTIEMPLOYER PLAN................................................................................. 20
NAI................................................................................................ 20
NAI'S EXTENDED REMARKETING PERIOD.................................................................. 20
NAI'S EXTENDED REMARKETING RIGHT................................................................... 20
NAI'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS................................................... 20
NORMAL TENANT IMPROVEMENTS......................................................................... 20
NOTICE OF NAI'S INTENT TO TERMINATE................................................................ 20
OPERATIVE DOCUMENTS................................................................................ 20
OUTSTANDING CONSTRUCTION ALLOWANCE................................................................. 21
PARTICIPANT........................................................................................ 21
PARTICIPATION AGREEMENT............................................................................ 21
PBGC............................................................................................... 21
PERIOD............................................................................................. 21
PERMITTED ENCUMBRANCES............................................................................. 21
PERMITTED HAZARDOUS SUBSTANCE USE.................................................................. 21
PERMITTED HAZARDOUS SUBSTANCES..................................................................... 22
PERMITTED TRANSFER................................................................................. 22
PERSON............................................................................................. 22
PERSONAL PROPERTY.................................................................................. 22
PLAN............................................................................................... 23
PLEDGE AGREEMENT................................................................................... 23
PRE-COMMENCEMENT CASUALTY.......................................................................... 23
PREEMPTIVE NOTICE.................................................................................. 23
PRIME RATE......................................................................................... 23
PRIOR WORK......................................................................................... 23
PROJECT COSTS...................................................................................... 23
PROJECTED COST OVERRUNS............................................................................ 24
(iii)
<PAGE> 59
Page
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PROPERTY........................................................................................... 24
PURCHASE AGREEMENT................................................................................. 24
PURCHASE DOCUMENTS................................................................................. 24
PURCHASE OPTION.................................................................................... 24
QUALIFIED AFFILIATE................................................................................ 24
QUALIFIED PREPAYMENTS.............................................................................. 25
REAL PROPERTY...................................................................................... 25
REIMBURSABLE CONSTRUCTION-PERIOD COSTS............................................................. 25
REMEDIAL WORK...................................................................................... 25
RENT............................................................................................... 25
RESIDUAL RISK PERCENTAGE........................................................................... 25
RESPONSIBLE FINANCIAL OFFICER...................................................................... 25
SALE CLOSING DOCUMENTS............................................................................. 26
SCOPE CHANGE....................................................................................... 26
SECURED SPREAD..................................................................................... 26
SELLER............................................................................................. 26
STIPULATED LOSS VALUE.............................................................................. 26
SUBSIDIARY......................................................................................... 26
SUPPLEMENTAL PAYMENT............................................................................... 26
TERM............................................................................................... 26
THIRD PARTY CONTRACT............................................................................... 26
THIRD PARTY PRICE.................................................................................. 26
THIRD PARTY SALE NOTICE............................................................................ 26
THIRD PARTY SALE PROPOSAL.......................................................................... 26
THIRD PARTY TARGET PRICE........................................................................... 26
TRANSACTION EXPENSES............................................................................... 26
UNFUNDED BENEFIT LIABILITIES....................................................................... 27
UPFRONT SYNDICATION FEES........................................................................... 27
UNSECURED SPREAD................................................................................... 27
VOLUNTARY NAI CONSTRUCTION CONTRIBUTIONS........................................................... 28
VOLUNTARY RETENTION OF THE PROPERTY................................................................ 28
WORK............................................................................................... 28
ARTICLE II - PROVISIONS USED IN COMMON:
1 NOTICES........................................................................................ 28
2 SEVERABILITY................................................................................... 30
3 NO MERGER...................................................................................... 30
4 NO IMPLIED WAIVER.............................................................................. 31
5 ENTIRE AND ONLY AGREEMENTS..................................................................... 31
6 BINDING EFFECT................................................................................. 31
7 TIME IS OF THE ESSENCE......................................................................... 31
8 GOVERNING LAW.................................................................................. 31
9 PARAGRAPH HEADINGS............................................................................. 31
(iv)
<PAGE> 60
Page
----
10 Negotiated Documents .......................................................................... 31
11 TERMS NOT EXPRESSLY DEFINED IN AN OPERATIVE DOCUMENT........................................... 32
12 OTHER TERMS AND REFERENCES..................................................................... 32
13 EXECUTION IN COUNTERPARTS...................................................................... 32
14 NOT A PARTNERSHIP, ETC......................................................................... 32
(v)
<PAGE> 61
COMMON DEFINITIONS AND PROVISIONS AGREEMENT
This Common Definitions and Provisions Agreement, by and between BNP
LEASING CORPORATION, a Delaware corporation ("BNPLC"), and NETWORK APPLIANCE,
INC., a California corporation ("NAI"), is dated as of January 20, 1999, the
Effective Date.
RECITALS
Contemporaneously with the execution of this Common Definitions and
Provisions Agreement, NAI is executing the Closing Certificate (as defined
below) in favor of BNPLC, and BNPLC and NAI are executing the Lease (as defined
below), the Construction Management Agreement (as defined below), and the
Purchase Agreement (as defined below), all of which concern the Property (as
defined below). Each of the Closing Certificate, the Lease, the Construction
Management Agreement and the Purchase Agreement (together with this Common
Definitions and Provisions Agreement 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 and incorporating it by reference
into each of the other Operative Documents.
AGREEMENTS
ARTICLE I - LIST OF DEFINED TERMS
UNLESS A CLEAR CONTRARY INTENTION APPEARS, THE FOLLOWING TERMS SHALL
HAVE THE RESPECTIVE INDICATED MEANINGS AS USED HEREIN AND IN THE OTHER OPERATIVE
DOCUMENTS:
"ABSOLUTE NAI CONSTRUCTION OBLIGATIONS" means the following:
(1) Construction-Period Indemnity Payments required because of
or in connection with or arising out of Environmental Losses incurred or
suffered by any Interested Party;
(2) Construction-Period Indemnity Payments required because of
or in connection with or arising out of Losses incurred or suffered by
BNPLC that BNPLC would not have incurred or suffered but for any act or
any omission of NAI or of any NAI's contractors or subcontractors during
the period that the Construction Management Agreement remains in force
or during any other period that NAI remains in possession or control of
the Construction Project (excluding, however, as described below certain
Losses consisting of claims related to any failure by NAI to complete
the Construction Project);
(3) Construction-Period Indemnity Payments required because of
or in connection with or arising out of Losses incurred or suffered by
BNPLC that would not have been incurred but for any fraud,
misapplication of funds (including Construction Advances), illegal acts,
or willful misconduct on the part of the NAI or its employees or agents
or any other party for whom NAI is responsible; and
(4) Construction-Period Indemnity Payments required because of
or in connection with or arising out of Losses incurred or suffered by
BNPLC that would not have been incurred but for any bankruptcy
proceeding involving NAI.
<PAGE> 62
For purposes of clause (2) of this definition, "acts and omissions of NAI" shall
include (i) any decision by NAI to make a Scope Change without the prior
approval of BNPLC, (ii) any failure of NAI to maintain insurance required by the
Lease or the Construction Management Agreement, (iii) any decision not to
continue or complete Work under the Construction Management Agreement because of
a change in NAI's facility needs or in NAI's plans to meet its facility needs
(such as, for example, a decision by NAI to lease or acquire another less
expensive facility as an alternative to the Improvements), (iv) any failure by
NAI to reserve termination rights in Third Party Contracts as required by
subparagraph 1(A)(2)(b) of the Construction Management Agreement, and (v) any
other breach by NAI of the Construction Management Agreement.
Thus, for example, if a third party asserts a claim for damages against BNPLC
because of injuries the third party sustained while on the Land as a result of
NAI's breach of its obligation under the Construction Management Agreement to
keep the Land and the Improvements thereon in a reasonably safe condition as
Work progresses under NAI's direction and control, then any Construction-Period
Indemnity Payment required because of such third party claim will constitute an
Absolute NAI Construction Obligation under clause (2) of this definition.
Similarly, if a claim against BNPLC by a third party injured on the Land during
the progress of the Work is uninsured or under-insured only because of NAI's
failure to obtain liability insurance in accordance with the requirements of the
Lease (the premiums for which insurance are reimbursable from Construction
Advances as provided in the Construction Management Agreement), then
Construction-Period Indemnity Payments to BNPLC for the uninsured or
under-insured Losses arising out of the third party claim will constitute
Absolute NAI Construction Obligations under clause (2) of this definition.
It is understood, however, that a failure of NAI to complete construction of the
Construction Project will not necessarily constitute a breach of the
Construction Management Agreement, given that NAI may elect to terminate the
Construction Management Agreement as provided in subparagraph 5(D) thereof. In
the event the Construction Management Agreement is terminated by NAI pursuant to
subparagraph 5(D) thereof or by BNPLC pursuant to subparagraph 5(E) thereof,
clause (2) of this definition will not be construed to include
Construction-Period Indemnity Payments, the sole reason for which are Losses
suffered by BNPLC consisting of claims related to NAI's failure to complete the
Construction Project.
"ACTIVE NEGLIGENCE" of any Person (including BNPLC) means, and is
limited to, the negligent conduct on the Property (and not mere omissions) by
such Person or by others acting and authorized to act on such Person's behalf in
a manner that proximately causes actual bodily injury or property damage for
which NAI does not carry (and is not obligated by the 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 Property or as a party to the transactions described in the Lease, (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 Lease or other Operative
Documents, 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 Lease or the other Operative Documents.
"ADDITIONAL RENT" shall have the meaning assigned to it in subparagraph
3.(d) of the Lease.
"ADMINISTRATIVE AGENCY FEE" shall have the meaning assigned to it in
subparagraph 9 of the Lease.
"ADJUSTED EBIT" shall have the meaning assigned to it in Part I of
Schedule 1 attached to the Lease and to
Common Definitions and Provisions Agreement - Page 2
<PAGE> 63
the Pledge Agreement.
"ADVANCE DATE" means, regardless of whether any Construction Advance
shall actually be made thereon, the first Business Day of every calendar month,
beginning with January 2, 1999 and continuing regularly thereafter to and
including the Base Rent Commencement Date.
"AFFILIATE" of any Person means any other Person controlling, controlled
by or under common control with such Person. For purposes of this definition,
the term "control" when used with respect to any Person means the power to
direct the management of policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"APPLICABLE LAWS" means any or all of the following, to the extent
applicable to NAI or the Property or the 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 Lease.
"ATTORNEYS' FEES" means the expenses and reasonable fees of counsel to
the parties incurring the same, excluding costs or expenses of in-house counsel
(whether or not accounted for as general overhead or administrative expenses),
but otherwise including printing, photostating, duplicating and other expenses,
air freight charges, and fees billed for law clerks, paralegals, librarians and
others not admitted to the bar but performing services under the supervision of
an attorney. Such terms shall also include all such fees and expenses incurred
with respect to appeals, arbitrations and bankruptcy proceedings, and whether or
not any manner of proceeding is brought with respect to the matter for which
such fees and expenses were incurred.
"BALANCE OF UNPAID CONSTRUCTION-PERIOD INDEMNITY PAYMENTS" shall have
the meaning assigned to it in subparagraph 1(A)(1) of the Purchase Agreement.
"BANKING RULES CHANGE" means either: (1) the introduction of or any
change in any law or regulation applicable to BNPLC, BNPLC's Parent or any other
Participant, or in the generally accepted interpretation by the institutional
lending community of any such law or regulation, or in the interpretation of any
such law or regulation asserted by any regulator, court or other governmental
authority (other than any change by way of imposition or increase of reserve
requirements included in the Eurodollar Rate Reserve Percentage) or (2) the
compliance by BNPLC, BNPLC's Parent or any other Participant with any new
guideline or new request from any central bank or other governmental authority
(whether or not having the force of law).
"BASE RATE" for any Construction Period or Base Rent Period means a rate
equal to the higher of (1) the Prime Rate in effect on the first day of such
period, or (2) the rate which is fifty basis points (50/100 of 1%) above the Fed
Funds Rate for that period.
Common Definitions and Provisions Agreement - Page 3
<PAGE> 64
"BASE RENT" means the rent payable by NAI pursuant to subparagraph 3.(a)
of the Lease.
"BASE RENT COMMENCEMENT DATE" means the earlier of (1) the first
Business Day of January, 2000, (2) the first Business Day of the first calendar
month to follow by twenty days or more the day upon which any Completion Notice
is given, or (3) the first Business Day of the first calendar month upon which
the Funded Construction Allowance shall equal or exceed the Maximum Construction
Allowance. For example, if on the first Business Day of November, 1999
construction of the Construction Project is continuing, the Funded Construction
Allowance is $23,990,000 (before adding any Carrying Costs for the preceding
month) and the Maximum Construction Allowance is $24,000,000 (assuming the
Initial Funding Advance is $20,000,000), and if Carrying Costs of $17,500 would
be added to the Funded Construction Allowance on such day if the Construction
Allowance were not limited to the Maximum Construction Allowance, then (absent
an extension by BNPLC as described below) such day shall be the Base Rent
Commencement Date and on such day $10,000 will be added to the Funded
Construction Allowance as Carrying Cost and $7,500 will be payable as Base Rent
pursuant to subparagraph 3.(c)(i) of the Lease. Notwithstanding the forgoing, if
for any reason (including a termination of the Construction Management
Agreement) NAI has not completed the Construction Project thirty days in advance
of the scheduled Base Rent Commencement Date determined pursuant to the first
sentence of this definition, BNPLC shall be entitled (but not obligated) to
extend the Base Rent Commencement Date one or more times and at any time before
the Construction Project actually is complete and ready for occupancy. To so
extend the Base Rent Commencement Date, BNPLC shall notify NAI thereof and of
the date to which the Base Rent Commencement Date is extended, which may be the
first Business Day of any calendar month designated by BNPLC in the notice of
extension, provided that BNPLC will not so designate any date more than sixty
days after the date upon which the Construction Project is expected by BNPLC (at
the time of the designation) to be complete.
"BASE RENT DATE" means a date upon which Base Rent must be paid under
the 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 September, 1999 and a
Common Definitions and Provisions Agreement - Page 4
<PAGE> 65
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 November,
1999.
"BASE RENT PERIOD" means a period for which Base Rent must be paid under
the 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.
"BNPLC'S PARENT" means BNPLC's Affiliate, Banque Nationale de Paris, a
bank organized and existing under the laws of France and any successors of such
bank.
"BREAKAGE COSTS" means any and all costs, losses or expenses incurred or
sustained by BNPLC's Parent (as a Participant or otherwise) or any other
Participant, for which BNPLC's Parent or the Participant shall request
reimbursement from BNPLC, because of the resulting liquidation or redeployment
of deposits or other funds:
(1) used to make or maintain Funding Advances upon application
of a Qualified Prepayment or upon any sale of the Property pursuant to
the Purchase Agreement, if such application or sale occurs on any day
other than the last day of a Construction Period or Base Rent Period; or
(2) reserved to provide a Construction Advance that NAI
requests, but thereafter declines to take for any reason, or that NAI
requests but is not permitted to take because of its failure to satisfy
any of the conditions specified in the Construction Management
Agreement; or
Common Definitions and Provisions Agreement - Page 5
<PAGE> 66
(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 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 Lease.
"CAPITAL LEASE" means any lease which has been or should be capitalized
on the books of the lessee in accordance with GAAP or for federal income tax
purposes.
"CARRYING COSTS" means the charges added to and made a part of the
Outstanding Construction Allowance (and thus also added to and made a part of
the Funded Construction Allowance) from time to time on and before the Base Rent
Commencement Date pursuant to and as more particularly described in subparagraph
6.(a) of the Lease.
"CLOSING CERTIFICATE" means the Closing Certificate and Agreement dated
as of January 20, 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.
"CMA SUSPENSION EVENT" shall have the meaning assigned to it in
subparagraph 5(A) of the Construction Management Agreement.
"CMA SUSPENSION NOTICE" shall have the meaning assigned to it in
subparagraph 5(B)(1) of the Construction Management Agreement.
"CMA SUSPENSION PERIOD" shall have the meaning assigned to it in
subparagraph 5(C) of the Construction Management Agreement.
"CMA TERMINATION EVENT" shall have the meaning assigned to it in
subparagraph 5(B)(3) of the Construction Management Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
Common Definitions and Provisions Agreement - Page 6
<PAGE> 67
"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 Lease, the Collateral
Percentage for any Base Rent Period shall not exceed a fraction; the numerator
of which fraction shall equal the value (determined as provided in the Pledge
Agreement) of all Collateral (a) that is, on the first day of such period, held
by the Deposit Takers under (and as defined in) the Pledge Agreement subject to
a Qualifying Security Interest (as defined below), (b) that is free from claims
or security interests held or asserted by any third party, and (c) that is not
in excess of Stipulated Loss Value; and the denominator of which fraction shall
equal the Stipulated Loss Value on the first day of such period. "QUALIFYING
SECURITY INTEREST" means a first priority perfected security interest under the
Pledge Agreement.
"COMMITMENT FEE RATE" means, for each Construction Period, the amount
established as described below in this definition on the date (in this
definition, the "CFR TEST DATE") that is two Business Days prior to such
Construction Period by reference to the ratio calculated be dividing (1)
Adjusted EBIT for the then latest Rolling Four Quarters Period that ended prior
to (and for which NAI has reported earnings as necessary to compute Adjusted
EBIT) into (2) the total Debt of NAI and its Subsidiaries (determined on a
consolidated basis) as of the end of such Rolling Four Quarters Period. The
Commitment Fee Rate shall be established at the Level in the pricing grid below
which corresponds to such ratio; provided, that:
(a) for any Construction Period commencing on or prior to the
first Business Day of June, 1999, the Commitment Fee Rate will be the
amount indicated for Level II in the pricing grid below;
(b) promptly after earnings are reported by NAI for the latest
quarter in any Rolling Four Quarters Period, NAI must notify BNPLC of
any resulting change in the Commitment Fee Rate under this definition,
and no reduction in the Commitment Fee Rate from one period to the next
will be effective for purposes of the Operative Documents unless, prior
to the CFR Test Date for the next period, NAI shall have provided BNPLC
with a written notice setting forth and certifying the calculation under
this definition that justifies the reduction; and
(c) notwithstanding anything to the contrary in this definition,
on any date when an Event of Default has occurred and is continuing, the
Commitment Fee Rate shall equal the amount indicated for Level IV in the
pricing grid below.
LEVELS RATIO OF TOTAL DEBT TO ADJUSTED EBIT COMMITMENT FEE RATE
------ ------------------------------------ -------------------
Level I less than 1.0 20.0 basis points
Level II greater than or equal to 1.0, but 25.0 basis points
less than 1.5
Level III greater than or equal to 1.5, but 37.5 basis points
less than 2.0
Level IV greater than or equal to 2.0 50.0 basis points
Common Definitions and Provisions Agreement - Page 7
<PAGE> 68
All determinations of the Commitment Fee Rate by BNPLC shall, in the absence of
clear and demonstrable error, be binding and conclusive for purposes of the
Lease. Further BNPLC may, but shall not be required, to rely on the
determination of the Commitment Fee Rate set forth in any notice delivered by
NAI as described above in clause (b) of this definition.
"COMMON DEFINITIONS AND PROVISIONS AGREEMENT" means this Agreement,
which is incorporated by reference into each of the other Operative Documents.
"COMPLETION NOTICE" means (1) a notice required by subparagraph 1(B) of
the Construction Management Agreement from NAI to BNPLC, advising BNPLC when
construction of the Construction Project is substantially complete, or (2) a
notice permitted by subparagraph 6.(g) of the Lease from BNPLC to NAI, advising
NAI after any Landlord's Election to Complete Construction when construction of
the Construction Project is substantially complete or that BNPLC no longer
intends to continue such construction.
"CONSTRUCTION ADVANCES" means (1) actual advances of funds made by or on
behalf of BNPLC to or on behalf of NAI pursuant to Paragraph 2 of the
Construction Management Agreement, and (2) amounts considered as Construction
Advances pursuant to subparagraph 6.(e) of the Lease.
"CONSTRUCTION ADVANCE REQUEST" shall have the meaning assigned to it in
subparagraph 2(C)(1) of the Construction Management Agreement.
"CONSTRUCTION ALLOWANCE" means the allowance, consisting of Construction
Advances and Carrying Costs, which is to be provided for the Construction
Project as more particularly described in the Construction Management Agreement
and Paragraph 6 of the Lease.
"CONSTRUCTION MANAGEMENT AGREEMENT" means the Construction Management
Agreement dated as of January 20, 1999 between BNPLC and NAI, as such Management
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
"CONSTRUCTION MILESTONE" shall have the meaning assigned to it in
subparagraph 5(B)(2) of the Construction Management Agreement.
"CONSTRUCTION PERIOD" means each successive period of approximately one
month, with the first Construction Period beginning on and including the
Effective Date and ending on but not including the first Advance Date. Each
successive Construction Period after the first Construction Period shall begin
on and include the day on which the preceding Construction Period ends and shall
end on but not include the next following Advance Date, until the last
Construction Period, which shall end on but not include the earlier of the Base
Rent Commencement Date or any Designated Sale Date upon which NAI or any
Applicable Purchaser shall purchase BNPLC's interest in the Property pursuant to
the Purchase Agreement.
"CONSTRUCTION-PERIOD INDEMNITY PAYMENTS" shall have the meaning assigned
to it in subparagraph 5.(d)(ii) of the Lease.
"CONSTRUCTION PROJECT" means the new buildings or other substantial
Improvements to be constructed, or the alteration of existing Improvements, as
described generally in Exhibit B attached to the Construction Management
Agreement.
Common Definitions and Provisions Agreement - Page 8
<PAGE> 69
"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 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
Common Definitions and Provisions Agreement - Page 9
<PAGE> 70
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.
"DEFAULTING PARTICIPANT" shall have the meaning assigned to it in
Section 1 of the Participation Agreement.
"DEFECTIVE WORK" shall have the meaning assigned to it in subparagraph
1(A)(2)(f) of the Construction Management Agreement.
"DEPOSIT TAKER" shall have the meaning assigned to it in the Pledge
Agreement.
"DEPOSIT TAKER LOSSES" shall have the meaning assigned to it in the
Pledge Agreement.
"DESIGNATED SALE DATE" means the earlier of:
(1) the first Business Day of February, 2004; or
(2) any Business Day designated as such in an irrevocable,
unconditional notice given by NAI to BNPLC before NAI has made an Issue
97-10 Election; provided, that to be effective for purposes of this
definition, any such notice from NAI to BNPLC must designate a Business
Day that is more than thirty days after the date of such notice; and
provided, further, to be effective for purposes of this definition, the
notice must include an express, unconditional, unequivocal and
irrevocable (A) waiver by NAI of any remaining right NAI may have under
any of the Operative Documents to make any Issue 97-10 Election, and (B)
acknowledgment by NAI that because of NAI's election to accelerate the
Designated Sale Date, the Maximum Remarketing Obligation will equal the
Break Even Price under the Purchase Agreement; or
Common Definitions and Provisions Agreement - Page 10
<PAGE> 71
(3) any Business Day designated as such in a notice given by
BNPLC to NAI after the effective date of any termination of the
Construction Management Agreement as provided in subparagraphs 5(D) or
5(E) thereof; provided, that to be effective for purposes of this
definition, any such notice from BNPLC to NAI must designate a Business
Day that is more than thirty days after the date of such notice; or
(4) the first Business Date after any termination by NAI of the
Purchase Option and NAI's Initial Remarketing Rights and Obligations as
provided in subparagraph 4(B) of the Purchase Agreement; or
(5) any Business Day designated as such in a notice given by
BNPLC to NAI when any Event of Default has occurred and is continuing;
provided, that to be effective for purposes of this definition, any such
notice from BNPLC to NAI must designate a Business Day that is more than
thirty days after the date of such notice.
"DEVELOPMENT DOCUMENTS" means the contracts, ordinances and other
documents described in Exhibit C attached to the Closing Certificate, as the
same may be modified from time to time in accordance with the 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 January 20, 1999.
"EFFECTIVE RATE" means for each Construction Period and for each Base
Rent Period, the per annum rate determined by dividing (A) LIBOR for such
Construction Period or Base Rent Period, as the case may be, by (B) one hundred
percent (100%) minus the Eurodollar Rate Reserve Percentage for such
Construction Period or Base Rent Period. If LIBOR or the Eurodollar Rate Reserve
Percentage changes from Construction Period to Construction Period or from Base
Rent Period to Base Rent Period, then the Effective Rate shall be automatically
increased or decreased as of the date of such change, as the case may be,
without prior notice to NAI. If for any reason BNPLC determines that it is
impossible or unreasonably difficult to determine the Effective Rate with
respect to a given Construction Period or Base Rent Period in accordance with
the foregoing, then the "EFFECTIVE RATE" for that Construction Period or Base
Rent Period shall equal any published index or per annum interest rate
determined in good faith by BNPLC's Parent to be comparable to LIBOR at the
beginning of the first day of that period. A comparable interest rate might be,
for example, the then existing yield on short term United States Treasury
obligations (as compiled by and published in the then most recently published
United States Federal Reserve Statistical Release H.15(519) or its successor
publication), plus or minus a 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.
Common Definitions and Provisions Agreement - Page 11
<PAGE> 72
"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)
this 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 this 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 and Screening Level Phase II Environmental Assessment of
TRW SL01 Office Building Located at 495 Java Drive, Sunnyvale California, dated
October 1, 1997, prepared by McLaren Hart Environmental Engineering Corporation.
"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
Common Definitions and Provisions Agreement - Page 12
<PAGE> 73
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 Lease for repairs or the restoration of the
Property or to obtain development rights or the release of restrictions that
will inure to the benefit of future owners or occupants of the Property. Until
Escrowed Proceeds are paid to NAI pursuant to Paragraph 10 of the Lease,
transferred to a purchaser under the Purchase Agreement as therein provided or
applied as a Qualified Prepayment or as otherwise described in the preceding
sentence, 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 Lease or the Purchase Documents.
"EUROCURRENCY LIABILITIES" shall have the meaning assigned to it in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR RATE RESERVE PERCENTAGE" means, for purposes of determining
the Effective Rate for any Construction Period or Base Rent Period, the reserve
percentage applicable two Business Days before the first day of such period
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) for BNPLC's Parent with respect to liabilities or deposits
consisting of or including Eurocurrency Liabilities (or with respect to any
other category or liabilities by reference to which LIBOR is determined) having
a term comparable to such period.
"EVENT OF DEFAULT" shall have the meaning assigned to it in subparagraph
17 of the Lease.
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<PAGE> 74
"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.(j) of the Lease, and any additional
compensation claimed by BNPLC pursuant to subparagraph 5.(b)(ii) of the 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 this
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 Purchase and Sale dated June
11, 1998 (as amended by a First Amendment of Agreement of Purchase and Sale and
work letter dated December 22, 1998), between Seller and NAI covering the Land
described in Exhibit A attached to the Lease, the interests of NAI therein
having being assigned to BNPLC pursuant to the assignment dated as of January
20, 1999 between NAI and BNPLC, with the consent and approval of Seller.
"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 Lease.
"FED FUNDS RATE" means, for any period, a fluctuating interest rate
(expressed as a per annum rate and rounded upwards, if necessary, to the next
1/16 of 1%) equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rates are not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by BNPLC's Parent from three Federal funds brokers of
recognized standing selected by BNPLC's Parent. All determinations of the Fed
Funds Rate by BNPLC's Parent shall, in the absence of clear and demonstrable
error, be binding and conclusive upon NAI.
"FOCB NOTICE" shall have the meaning assigned to it in subparagraph
5(B)(1) of the Construction Management Agreement.
"FUNDED CONSTRUCTION ALLOWANCE" means on any day the Outstanding
Construction Allowance on that day, including all Construction Advances and
Carrying Costs added to the Outstanding Construction Allowance on or prior to
that day, plus the amount of any Qualified Prepayments deducted on or prior to
that day in the calculation of such Outstanding Construction Allowance, less any
Voluntary NAI Construction Contributions added on or prior to that day in the
calculation of such Qualified Prepayments.
"FUNDING ADVANCES" means (1) the Initial Funding Advance and (2) all
future advances made by BNPLC's Parent or any other Participant to or on behalf
of BNPLC to allow BNPLC to provide the Construction Allowance.
Common Definitions and Provisions Agreement - Page 14
<PAGE> 75
"FUTURE WORK" shall have the meaning assigned to it in subparagraph
2(C)(2)(b) of the Construction Management Agreement.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
subparagraph 13.(a) of the 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 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
Common Definitions and Provisions Agreement - Page 15
<PAGE> 76
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 payment or reimbursement of
expenses incurred by NAI in connection with the Construction Project, including
the planning, design, engineering, construction and permitting of thereof; (3)
the maintenance of the Property; or (4) the payment of Rents next due.
"INTERESTED PARTY" means each of (1) BNPLC, its Affiliates and its
successors and assigns as to the Property or any part thereof or any interest
therein, (2) BNPLC's Parent, and (3) any other Participants and their permitted
successors and assigns under the Participation Agreement; provided, however,
none of the following shall constitute an Interested Party: (a) any Person to
whom BNPLC may 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
Lease, the occurrence of which event cannot be objectively determined. For
example, an Event of Default under subparagraph 17.(e) of the 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 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 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 Lease, or (4) any failure of NAI to pay the full amount of
any Supplemental Payment on the Designated Sale Date as required by the Purchase
Agreement. Except as provided in subparagraph 1(A)(2)(c)(i) of the Purchase
Agreement, the characterization of any Event of Default as an Issue 97-1
Non-performance-related Subjective Event of Default will not affect the rights
or remedies available to BNPLC because of the Event of Default.
"ISSUE 97-10 ELECTION" means any of the following elections by NAI: (1)
an election to terminate the Construction Management Agreement as provided in
subparagraph 5(D) thereof; and (2) an election to terminate NAI's Initial
Remarketing Rights and Obligations as provided in subparagraph 4(B) of the
Purchase Agreement.
"ISSUE 97-10 PREPAYMENT" means a payment to BNPLC, required by
subparagraph 3.(h) of the Lease or by subparagraphs 4(B) or 4(C) of the Purchase
Agreement, equal in each case to (A) the Maximum Permitted
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<PAGE> 77
Prepayment, computed as of the date on which the payment becomes due, less (B)
the accreted value of any prior payments actually received by BNPLC from NAI
constituting Issue 97-10 Prepayments or Voluntary NAI Construction
Contributions. For purposes of the preceding sentence, "accreted value" of a
payment shall mean the amount of the payment plus an amount equal to the
interest that would have accrued on the payment if it bore interest at the
Effective Rate.
"LAND" means the land covered by the land described in Exhibit A
attached to the Closing Certificate, the Lease and the Purchase Agreement.
"LANDLORD'S ELECTION TO CONTINUE CONSTRUCTION" shall have the meaning
assigned to it in subparagraph 6.(e) of the Lease.
"LEASE" means the Lease Agreement dated as of January 20, 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
Construction Period or Base Rent Period, the rate determined by BNPLC's Parent
to be the average rate of interest per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) of the rates at which deposits of dollars are offered or
available to BNPLC's Parent in the London interbank market at approximately
11:00 a.m. (London time) on the second Business Day preceding the first day of
such period. BNPLC shall instruct BNPLC's Parent to consider deposits, for
purposes of making the determination described in the preceding sentence, that
are offered: (i) for delivery on the first day of such Construction Period or
Base Rent Period, as the case may be, (ii) in an amount equal or comparable to
the total (projected on the applicable date of determination by BNPLC's Parent)
Stipulated Loss Value on the first day of such period, and (iii) for a time
equal or comparable to the length of such period. If BNPLC's Parent so chooses,
it may determine LIBOR for any period by reference to the rate reported by the
British Banker's Association on Page 3750 of the Telerate Service at
approximately 11:00 a.m. (London time) on the second Business Day preceding the
first day of such period. If for any reason BNPLC's Parent determines that it is
impossible or unreasonably difficult to determine LIBOR with respect to a given
Construction Period or Base Rent Period in accordance with the foregoing, or if
BNPLC's Parent shall determine that it is unlawful (or any central bank or
governmental authority shall assert that it is unlawful) for BNPLC, BNPLC's
Parent or any Participant to provide or maintain Funding Advances during any
Construction Period or Base Rent Period for which Carrying Costs or Base Rent is
computed by reference to LIBOR, then "LIBOR" for that period shall equal the
Base Rate for that period. All determinations of LIBOR by BNPLC's Parent shall,
in the absence of clear and demonstrable error, be binding and conclusive upon
NAI.
"LIBOR PERIOD ELECTION" for any Base Rent Period means a period of one
month, three months or six months as designated by NAI at least five Business
Days prior to the commencement of such Base Rent Period by a notice given to
BNPLC in the form of Exhibit C attached to the Lease. (For purposes of the 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
Common Definitions and Provisions Agreement - Page 17
<PAGE> 78
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; and (4) 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 the 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
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 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
Common Definitions and Provisions Agreement - Page 18
<PAGE> 79
the Lease and to the Pledge Agreement.
"MATERIAL ENVIRONMENTAL COMMUNICATION" means a communication between NAI
or its agents and a regulatory agency or third party, which causes, or
potentially could cause (whether by implementation of or response to said
communication), a material change in the scope, duration, or nature of any
Remedial Work.
"MAXIMUM CONSTRUCTION ALLOWANCE" means an amount equal to $44,000,000,
less the Initial Funding Advance.
"MAXIMUM PERMITTED TERMINATION FEES" shall have the meaning indicated in
subparagraph 1(A)(2)(b) of the Construction Management Agreement.
"MAXIMUM PERMITTED PREPAYMENT" as of any date means the amount equal to
the lesser of the following:
(1) the sum of:
(A) eighty-nine and nine-tenths of one percent
(89.9%) of the aggregate of (i) all Project
Costs paid or incurred on or prior to such date,
plus (ii) ninety-seven percent (97%) of (a)
Carrying Costs added to the Outstanding
Construction Allowance on or prior to such date,
and (b) Commitment Fees reimbursed pursuant to
the Construction Management Agreement on or
prior to such date, plus (iii) any Upfront
Syndication Fees paid to Participants pursuant
to the Closing Certificate and Agreement and
reimbursed pursuant to the Construction
Management Agreement on or prior to such date;
plus
(B) any amount by which the value of BNPLC's
interest in the Land and its appurtenances are
less than the price paid by BNPLC for the same
as determined reasonably and in good faith by
BNPLC after consulting with an independent
appraiser; or
(2) eighty-nine and nine-tenths of one percent (89.9%) of
Stipulated Loss Value on such date.
"MAXIMUM REMARKETING OBLIGATION" shall have the meaning indicated in
subparagraph 1(A)(2)(c) of the Purchase Agreement.
"MINIMUM EXTENDED REMARKETING PRICE" shall have the meaning assigned to
it in subparagraph 2(B) of the Purchase Agreement.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section
3(37) of ERISA to which contributions have been made by NAI or any ERISA
Affiliate during the preceding six years and which is covered by Title IV of
ERISA.
"NAI" means Network Appliance, Inc., a California corporation.
"NAI'S EXTENDED REMARKETING PERIOD" shall have the meaning assigned to
it in subparagraph 2(A) of the
Common Definitions and Provisions Agreement - Page 19
<PAGE> 80
Purchase Agreement.
"NAI'S EXTENDED REMARKETING RIGHT" shall have the meaning assigned to it
in subparagraph 2(A) of the Purchase Agreement.
"NAI'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS" shall have the
meaning assigned to it in subparagraph 1(A)(2) of the Purchase Agreement.
"NORMAL TENANT IMPROVEMENTS" shall have the meaning assigned to it in
subparagraph 3(A) of the Construction Management Agreement.
"NOTICE OF NAI'S INTENT TO TERMINATE" shall have the meaning assigned to
it in subparagraph 5(D) of the Construction Management Agreement.
"OPERATIVE DOCUMENTS" means the Closing Certificate, the Lease, the
Construction Management Agreement, the Purchase Agreement, the Pledge Agreement
and this Common Definitions and Provisions Agreement.
"OUTSTANDING CONSTRUCTION ALLOWANCE" shall have the meaning assigned to
it in subparagraph 6.(a) of the Lease.
"PARTICIPANT" means BNPLC's Parent and any other Person that, upon
becoming a party to the Participation Agreement and the Pledge Agreement by
executing supplements as contemplated therein, agrees from time to time to
participate in all or some of the risks and rewards to BNPLC of the 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 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 Lease and the other Operative Documents, as such Participation Agreement may
be extended, supplemented, amended, restated or otherwise modified from time to
time in accordance with its terms. It is understood, however, that because the
Participation Agreement expressly makes NAI a third party beneficiary of the
Participant's obligations thereunder to make advances to BNPLC in connection
with Construction Advances under the Construction Management Agreement, NAI's
consent will be required to any amendment of the Participation Agreement that
purports to limit or excuse such obligations.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"PERIOD" means a Construction Period or a Base Rent Period, as the
context requires.
Common Definitions and Provisions Agreement - Page 20
<PAGE> 81
"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,
(iii) 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 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 Lease.
"PERMITTED HAZARDOUS SUBSTANCE USE" means the use, generation, storage
and offsite disposal of Permitted Hazardous Substances in strict accordance with
applicable Environmental Laws and with due care given the nature of the
Hazardous Substances involved; provided, the scope and nature of such use,
generation, storage and disposal shall not:
(1) exceed that reasonably required for the construction of the
Construction Project in accordance with the Lease and the Construction
Management Agreement or for the operation of the Property for the
purposes expressly permitted under subparagraph 2.(a) of the Lease; or
(2) include any disposal, discharge or other release of
Hazardous Substances from the Property in any manner that might allow
such substances to reach surface water or groundwater, except (i)
through a lawful and properly authorized discharge (A) to a publicly
owned treatment works or (B) with rainwater or storm water runoff in
accordance with Applicable Laws and any permits obtained by NAI that
govern such runoff; or (ii) any such disposal, discharge or other
release of Hazardous Substances for which no permits are required and
which are not otherwise regulated under applicable Environmental Laws.
Further, notwithstanding anything to the contrary herein contained, Permitted
Hazardous Substance Use shall not include any use of the Property in a manner
that requires a RCRA treatment, storage or disposal permit, including a
landfill, incinerator or other waste disposal facility.
"PERMITTED HAZARDOUS SUBSTANCES" means Hazardous Substances used and
reasonably required for the construction of the Construction Project or for the
use of the Property by NAI and its permitted subtenants and assigns for the
purposes expressly permitted by subparagraph 2.(a) of the Lease, in either case
in strict compliance with all Environmental Laws and with due care given the
nature of the Hazardous Substances involved. Without limiting the generality of
the foregoing, Permitted Hazardous Substances shall include usual and customary
office, laboratory and janitorial products.
"PERMITTED TRANSFER" means any one or more of the following: (1) the
creation or conveyance by BNPLC of rights and interests in favor of any
Participant pursuant to the Participation Agreement; (2) the creation or
conveyance of rights and interests in favor of or to Banque Nationale de Paris
(through its San Francisco Branch or otherwise), as BNPLC's Parent, or any other
Qualified Affiliate of BNPLC, provided that NAI must be notified before any such
conveyance to Banque Nationale de Paris or another Qualified Affiliate of (A)
any interest in the Property or any portion thereof by an assignment or other
document which will be recorded in the real property records of San Mateo
County, California or (B) BNPLC's entire interest in the 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
Common Definitions and Provisions Agreement - Page 21
<PAGE> 82
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 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 dated as of the date
hereof between BNPLC and NAI, pursuant to which NAI may pledge certificates of
deposit as security for NAI's obligations under the Purchase Agreement (and for
the corresponding obligations of BNPLC to the Participants under the
Participation Agreement), as such Pledge Agreement may be extended,
supplemented, amended, restated or otherwise modified from time to time in
accordance with its terms.
"PRE-COMMENCEMENT CASUALTY" shall have the meaning assigned to it in
subparagraph 1(A)(2)(a) of the Construction Management Agreement.
"PREEMPTIVE NOTICE" shall have the meaning assigned to it in
subparagraph 5(B)(2) of the Construction Management Agreement.
"PRIME RATE" means the prime interest rate or equivalent charged by
BNPLC's Parent in the United States of America as announced or published by
BNPLC's Parent from time to time, which need not be the lowest interest rate
charged by BNPLC's Parent. If for any reason BNPLC's Parent does not announce or
publish a prime rate or equivalent, the prime rate or equivalent announced or
published by either CitiBank, N.A. or any New York branch or office of Credit
Commercial de France as selected by BNPLC shall be used to compute the rate
describe in the preceding sentence. The prime rate or equivalent announced or
published by such bank need not be the lowest rate charged by it. The Prime Rate
may change from time to time after the Effective Date without notice to NAI as
of the effective time of each change in rates described in this definition.
"PRIOR WORK" shall have the meaning assigned to it in subparagraph
2(C)(2)(b) of the Construction Management Agreement.
"PROJECT COSTS" means the following:
(a) the difference computed by subtracting $9,200,000 (the value
of the Land, if unimproved, determined by an appraisal performed for
BNPLC prior to the Effective Date) from the purchase price paid by BNPLC
to Seller at the closing under the Existing Contract, it being agreed
that such difference represents the portion of the purchase price that
is properly allocable to cost of the existing Improvements
Common Definitions and Provisions Agreement - Page 22
<PAGE> 83
under construction at the time of such purchase (to be distinguished
from the portion of the purchase price allocable to the Land);
(b) costs incurred for the Work (as defined in the Construction
Management Agreement), including not only hard costs incurred for the
new Improvements described in Exhibit C attached to the Construction
Management Agreement, but also the following costs to the extent
reasonably incurred in connection with the Construction Project:
- soft costs, such as architectural fees,
engineering fees and fees and costs paid in
connection with obtaining project permits and
approvals required by governmental authorities
or the Development Documents,
- site preparation costs, and
- costs of offsite and other public improvements
required as conditions of governmental approvals
for the Construction Project;
(c) costs incurred to maintain insurance required by (and
consistent with the requirements of) the Lease prior to the Base Rent
Commencement Date, and costs of repairing any damage to the Improvements
by fire or other casualty prior to the Base Rent Commencement Date, to
the extent such cost is not covered by insurance proceeds made available
to NAI as provided in the Lease;
(d) a fraction of the cost of any title insurance policy or
binder provided to BNPLC in connection with its acquisition of the Land
and Improvements, the numerator of which fraction is the difference
computed by subtracting the price paid by BNPLC for the Land from the
maximum dollar amount of coverage provided by the title insurance, and
the denominator of which fraction is equal to such maximum dollar amount
of coverage;
(e) Impositions that have accrued or become due under the Lease
prior to the Base Rent Commencement Date; and
(f) cancellation or termination fees or other compensation
payable by NAI or BNPLC pursuant to any contract concerning the
Construction Project made by NAI or BNPLC with any general contractor,
architect, engineer or other third party because of any election by NAI
or BNPLC to cancel or terminate such contract.
Project Costs will include costs incurred by BNPLC to continue or complete the
Construction Project after any Landlord's Election to Continue Construction as
provided in subparagraph 6.(e) of the Lease.
"PROJECTED COST OVERRUNS" shall have the meaning assigned to it in
subparagraph 4(A) of the Construction Management Agreement.
"PROPERTY" means the Personal Property and the Real Property,
collectively.
"PURCHASE AGREEMENT" means the Purchase Agreement dated as of January
20, 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.
Common Definitions and Provisions Agreement - Page 23
<PAGE> 84
"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 (A) any Issue 97-10 Prepayments received
by BNPLC, (B) any Voluntary NAI Construction Contributions received by BNPLC
pursuant to subparagraph 4(C) of the Construction Management Agreement, and (C)
any payments received by BNPLC from time to time during the Term (1) under any
property insurance policy as a result of damage to the Property, (2) as
compensation for any restriction placed upon the use or development of the
Property or for the condemnation of the Property or any portion thereof, (3)
because of any judgment, decree or award for injury or damage to the Property or
(4) under any title insurance policy or otherwise as a result of any title
defect or claimed title defect with respect to the Property; provided, however,
that (x) in determining the amount of "Qualified Prepayments", there shall be
deducted all expenses and costs of every kind, type and nature (including taxes,
Breakage Costs and Attorneys' Fees) incurred by BNPLC with respect to the
collection or application of such payments, (y) "Qualified Prepayments" shall
not include any payment to BNPLC by a Participant or an Affiliate of BNPLC that
is made to compensate BNPLC for the Participant's or Affiliate's share of any
Losses BNPLC may incur as a result of any of the events described in the
preceding clauses (1) through (4) and (z) "Qualified Prepayments" shall not
include any payments received by BNPLC that BNPLC has paid or is obligated to
pay to NAI for the restoration or repair of the Property or that BNPLC is
holding as Escrowed Proceeds pursuant to Paragraph 10 of the Lease or any other
provision of the Lease. For purposes of computing the total Qualified
Prepayments (and other amounts dependent upon Qualified Prepayments, such as
Stipulated Loss Value and the Outstanding Construction Allowance) paid to or
received by BNPLC as of any date, payments described in the preceding clauses
(1) through (4) will be considered as Escrowed Proceeds, not Qualified
Prepayments, until they are actually applied as Qualified Prepayments by BNPLC
as provided in the Paragraph 10 of the Lease.
"REAL PROPERTY" shall have the meaning assigned to it on page 1 of the
Lease.
"REIMBURSABLE CONSTRUCTION-PERIOD COSTS" shall have the meaning assigned
to it in Paragraph 2 of the Construction Management Agreement.
"REMEDIAL WORK" means any investigation, monitoring, clean-up,
containment, remediation, removal, payment of response costs, or restoration
work and the preparation and implementation of any closure or other required
remedial plans that any governmental agency or political subdivision requires or
approves (or could reasonably be expected to require if it was aware of all
relevant circumstances concerning the Property), whether by judicial order or
otherwise, because of the presence of or suspected presence of Hazardous
Substances in, on,
Common Definitions and Provisions Agreement - Page 24
<PAGE> 85
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 sixteen percent (16%).
"RESPONSIBLE FINANCIAL OFFICER" means the chief financial officer, the
controller, the treasurer or the assistant treasurer of NAI.
"SALE CLOSING DOCUMENTS" shall have the meaning assigned to it in
subparagraph 1(C) of the Purchase Agreement.
"SCOPE CHANGE" shall have the meaning assigned to it in subparagraph
1(A)(1)(b) of the Construction Management Agreement.
"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 495 Java Drive Associates, L.P., a California limited
partnership.
"STIPULATED LOSS VALUE" as of any date means the amount equal to the sum
of the Initial Funding Advance, plus the sum of all Construction Advances and
Carrying Costs added to the Outstanding Construction Allowance on or prior to
such date, minus all funds actually received by BNPLC and applied as Qualified
Prepayments on or prior to such date. Under no circumstances will any payment of
Base Rent, the Arrangement Fee, any Upfront Syndication Fees, Administrative
Agency Fees or Commitment 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 Lease.
"THIRD PARTY CONTRACT" shall have the meaning assigned to it in
subparagraph 1(A)(2)(b) of the Construction Management Agreement.
"THIRD PARTY PRICE" shall have the meaning assigned to it in
subparagraph 1(A)(2) of the Purchase Agreement.
"THIRD PARTY SALE NOTICE" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
Common Definitions and Provisions Agreement - Page 25
<PAGE> 86
"THIRD PARTY SALE PROPOSAL" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"THIRD PARTY TARGET PRICE" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"TRANSACTION EXPENSES" means costs incurred in connection with the
preparation and negotiation of the Operative Documents and related documents and
the consummation of the transactions contemplated therein.
"UNFUNDED BENEFIT LIABILITIES" means, with respect to any Plan or
Multiemployer Plan, the amount (if any) by which the present value of all
benefit liabilities (within the meaning of Section 4001(a)(16) of ERISA) under
the Plan or Multiemployer Plan exceeds the market value of all Plan or
Multiemployer assets allocable to such benefit liabilities, as determined on the
most recent valuation date of the Plan or Multiemployer Plan and in accordance
with the provisions of ERISA for calculating the potential liability of NAI or
any ERISA Affiliate of NAI under Title IV of ERISA.
"UPFRONT SYNDICATION FEES" shall have the meaning assigned to it in
subparagraph 2(M) of the Closing Certificate and Agreement.
"UNSECURED SPREAD" means, for each Construction Period or any period
beginning on and including the Base Rent Commencement Date or a Base Rent Date
and ending on but not including the next Base Rent Date, the amount established
as described below in this definition on the date (in this definition, the
"SPREAD TEST DATE") that is two Business Days prior to such period by reference
to the ratio calculated by dividing (1) Adjusted EBIT for the then latest
Rolling Four Quarters Period that ended prior to (and for which NAI has reported
earnings as necessary to compute Adjusted EBIT) into (2) the total Debt of NAI
and its Subsidiaries (determined on a consolidated basis) as of the end of such
Rolling Four Quarters Period. The Unsecured Spread shall be established at the
Level in the pricing grid below which corresponds to such ratio; provided, that:
(a) for any Construction Period commencing on or prior to the
first Business Day of June, 1999, the Unsecured Spread will be the
amount indicated for Level II in the pricing grid below;
(b) promptly after earnings are reported by NAI for the latest
quarter in any Rolling Four Quarters Period, NAI must notify BNPLC of
any resulting change in the Unsecured Spread under this definition, and
no reduction in the Unsecured Spread from one period to the next will be
effective for purposes of the Operative Documents unless, prior to the
Spread Test Date for the next period, NAI shall have provided BNPLC with
a written notice setting forth and certifying the calculation under this
definition that justifies the reduction; and
(c) notwithstanding anything to the contrary in this definition,
on any date when an Event of Default has occurred and is continuing, the
Unsecured Spread shall equal the Default Rate less the Effective Rate.
LEVELS RATIO OF TOTAL DEBT TO ADJUSTED EBIT UNSECURED SPREAD
------ ------------------------------------ ----------------
Common Definitions and Provisions Agreement - Page 26
<PAGE> 87
LEVELS RATIO OF TOTAL DEBT TO ADJUSTED EBIT UNSECURED SPREAD
------ ------------------------------------ ----------------
Level I less than 1.0 137.5 basis points
Level II greater than or equal to 1.0, but 150.0 basis points
less than 1.5
Level III greater than or equal to 1.5, but 162.5 basis points
less than 2.0
Level IV greater than or equal to 2.0 187.5 basis points
All determinations of the Unsecured Spread by BNPLC shall, in the absence of
clear and demonstrable error, be binding and conclusive for purposes of the
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 NAI CONSTRUCTION CONTRIBUTIONS" shall have the meaning
assigned to it in subparagraph 4(C) of the Construction Management Agreement.
"VOLUNTARY RETENTION OF THE PROPERTY" means an affirmative election made
by BNPLC to keep the Property pursuant to, and under the circumstances described
in, the second sentence of subparagraph 1(A)(2)(a) of the Purchase Agreement.
"WORK" shall have the meaning assigned to it in subparagraph 1(A)(2)(a)
of the Construction Management Agreement.
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
Common Definitions and Provisions Agreement - Page 27
<PAGE> 88
/Ref/ NAI Sunnyvale Synthetic Lease
or at such other place and in such other manner as BNPLC may designate
in a notice to NAI.
(ii) All Collateral required to be paid by NAI to the Agent shall
be paid in immediately available funds by wire transfer to:
Federal Reserve Bank of New York
ABA 026007689 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/ 14334000176
/Ref/ NAI Collateral Payment
or at such other place and in such other manner as Agent may designate
in a notice to NAI.
(iii) All advances paid to NAI by BNPLC under the Construction
Management Agreement or in connection therewith shall be paid to NAI in
immediately available funds at such place and in such manner as NAI may
reasonably designate from time to time by notice to BNPLC signed by a
Responsible Financial Officer of NAI.
(iv) All notices, demands, approvals, consents and other
communications to be made under any Operative Document to or by the
parties thereto must, to be effective for purpose of such Operative
Document, be in writing. Notices, demands and other communications
required or permitted under any Operative Document are to be sent to the
addresses set forth below (or in the case of communications to
Participants, at the addresses set forth in Schedule 1 to the
Participation Agreement) and shall be given by any of the following
means: (A) personal service, with proof of delivery or attempted
delivery retained; (B) electronic communication, whether by telex,
telegram or telecopying (if confirmed in writing sent by United States
first class mail, return receipt requested); or (C) registered or
certified first class mail, return receipt requested. Such addresses may
be changed by notice to the other parties given in the same manner as
provided above. Any notice or other communication sent pursuant to
clause (A) or (B) 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
Common Definitions and Provisions Agreement - Page 28
<PAGE> 89
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) 296-8954
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 Lease or of the
leasehold estate created by the Lease with any other interest in the Property by
reason of the fact that the same person may acquire or hold, directly or
indirectly, the Lease or the leasehold estate created 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 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
Common Definitions and Provisions Agreement - Page 29
<PAGE> 90
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 Lease or any other Operative Document shall not be
deemed a waiver of such breach. A receipt by Agent of any Collateral or other
payment under the Pledge Agreement with knowledge of the breach by NAI of any
covenant or agreement contained in the Pledge Agreement shall not be deemed a
waiver of such breach.
5 ENTIRE AND ONLY AGREEMENTS. The Operative Documents supersede
any prior negotiations and agreements between BNPLC, Agent and NAI concerning
the Property or the Collateral, and no amendment or modification of any
Operative Document shall be binding or valid unless expressed in a writing
executed by all parties to such Operative Document.
6 BINDING EFFECT. Except to the extent, if any, expressly
provided to the contrary in any Operative Document with respect to assignments
thereof, all of the covenants, agreements, terms and conditions to be observed
and performed by the parties to the Operative Documents shall be applicable to
and binding upon their respective successors and, to the extent assignment is
permitted thereunder, their respective assigns.
7 TIME IS OF THE ESSENCE. Time is of the essence as to all
obligations of NAI and BNPLC and all notices required of NAI and BNPLC under the
Operative Documents.
8 GOVERNING LAW. Each Operative Document shall be governed by and
construed in accordance with the laws of the State of California without regard
to conflict or choice of laws (subject, however, in the case of the Pledge
Agreement to any contrary provisions of the "UCC," as defined in the Pledge
Agreement).
9 PARAGRAPH HEADINGS. The paragraph and section headings
contained in the Operative Documents are for convenience only and shall in no
way enlarge or limit the scope or meaning of the various and several provisions
thereof.
10 NEGOTIATED DOCUMENTS. All the parties to each Operative
Document and their counsel have reviewed and revised or requested revisions to
such Operative Document, and the usual rule of construction that any ambiguities
are to be resolved against the drafting party shall not apply to the
construction or interpretation of any Operative Documents or any amendments
thereof.
11 TERMS NOT EXPRESSLY DEFINED IN AN OPERATIVE DOCUMENT. As used
in any Operative Document, a capitalized term that is not defined therein or in
this Common Definitions and Provisions Agreement, 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
Common Definitions and Provisions Agreement - Page 30
<PAGE> 91
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 Lease", "herein", "hereof", "hereby", "hereunder" and words of
similar import when used in each Operative Document refer to that Operative
Document as a whole and not to any particular subdivision unless expressly so
limited. The phrases "this Paragraph", "this subparagraph", "this Section",
"this subsection" and similar phrases used in any operative document refer only
to the Paragraph, subparagraph, Section, subsection or other subdivision
described in which the phrase occurs. As used in the Operative Documents the
word "or" is not exclusive. As used in the Operative Documents, the words
"include", "including" and similar terms shall be construed as if followed by
"without limitation to".
13 EXECUTION IN COUNTERPARTS. To facilitate execution, each
Operative Document may be executed in as many identical counterparts as may be
required. It shall not be necessary that the signature of, or on behalf of, each
party, or that the signature of all persons required to bind any party, appear
on each counterpart. All counterparts, taken together, shall collectively
constitute a single instrument. It shall not be necessary in making proof of any
Operative Document to produce or account for more than a single counterpart
containing the respective signatures of, or on behalf of, each of the parties
hereto. Any signature page to any counterpart may be detached from such
counterpart without impairing the legal effect of the signatures thereon and
thereafter attached to another counterpart identical thereto except having
attached to it additional signature pages.
14 NOT A PARTNERSHIP, ETC. NOTHING IN ANY OPERATIVE
DOCUMENT IS INTENDED TO CREATE ANY PARTNERSHIP, JOINT VENTURE, OR OTHER JOINT
ENTERPRISE BETWEEN BNPLC AND NAI. NEITHER THE EXECUTION OF ANY OPERATIVE
DOCUMENT NOR THE ADMINISTRATION THEREOF OR OTHER DOCUMENTS REFERENCED HEREIN BY
BNPLC, NOR ANY OTHER RIGHT, DUTY OR OBLIGATION OF BNPLC UNDER OR PURSUANT TO ANY
OPERATIVE DOCUMENT IS INTENDED TO BE OR TO CREATE ANY FIDUCIARY OBLIGATIONS OF
BNPLC TO NAI.
[The signature pages follows.]
Common Definitions and Provisions Agreement - Page 31
<PAGE> 92
IN WITNESS WHEREOF, NAI and BNPLC have caused this Common Definitions
and Provisions Agreement to be executed as of January 20, 1999.
"NAI"
NETWORK APPLIANCE, INC.
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 93
[Continuation of signature pages to Common Definitions and Provisions Agreement
dated to be effective January 20, 1999]
"BNPLC"
BNP LEASING CORPORATION
By:
-------------------------------
Lloyd G. Cox, Vice President