1
EXHIBIT 10.51
================================================================================
LEASE AGREEMENT
(PHASE IV - IMPROVEMENTS)
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
NETWORK APPLIANCE, INC.
("NAI")
DECEMBER ___, 1999
(SUNNYVALE, CALIFORNIA)
================================================================================
2
TABLE OF CONTENTS
Page
----
1. TERM.................................................................................2
(a) Scheduled Term................................................................2
(b) [Intentionally deleted.]......................................................2
(c) [Intentionally deleted.]......................................................2
(d) Election by NAI to Terminate After Accelerating the Designated Sale Date......2
(e) Extension of the Term.........................................................3
2. USE AND CONDITION OF THE PROPERTY....................................................3
(a) Use...........................................................................3
(b) Condition of the Property.....................................................4
(c) Consideration for and Scope of Waiver.........................................4
3. RENT.................................................................................4
(a) Base Rent Generally...........................................................4
(b) Impact of Collateral Upon Formulas............................................4
(c) Calculation of and Due Dates for Base Rent....................................5
(i) Amount Payable On the Base Rent Commencement Date......................5
(ii) Determination of Payment Due Dates, After the Base Rent Commencement
Date, Generally........................................................5
(iii) Special Adjustments to Base Rent Payment Dates and Periods.............5
(iv) Base Rent Formula for Periods During Which The Collateral Percentage
is 100%................................................................6
(v) Base Rent Formula for Periods During Which The Collateral Percentage
is Greater Than Zero and Less Than 100%................................6
(vi) Base Rent Formula for Periods During Which The Collateral Percentage
is Zero................................................................7
(d) Additional Rent...............................................................8
(e) Arrangement Fee...............................................................8
(f) [intentionally deleted].......................................................8
(g) Administrative Agency Fees....................................................8
(h) [Intentionally deleted.]......................................................8
(i) [Intentionally deleted.]......................................................8
(j) No Demand or Setoff...........................................................8
(k) Default Interest and Order of Application.....................................8
4. NATURE OF THIS AGREEMENT.............................................................8
(a) Net Lease Generally...........................................................8
(b) No Termination................................................................9
(c) Tax Reporting.................................................................9
(d) Characterization of this Improvements Lease..................................10
5. PAYMENT OF EXECUTORY COSTS AND LOSSES RELATED TO THE PROPERTY.......................10
(a) Impositions..................................................................10
(b) Increased Costs; Capital Adequacy Charges....................................11
(c) NAI's Payment of Other Losses; General Indemnification.......................11
(d) Exceptions and Qualifications to Indemnities.................................13
6. INTENTIONALLY DELETED...............................................................13
7. STATUS OF PROPERTY ACQUIRED WITH FUNDS PROVIDED BY BNPLC............................14
8. ENVIRONMENTAL.......................................................................14
i
3
Page
----
(a) Environmental Covenants by NAI...............................................14
(b) Right of BNPLC to do Remedial Work Not Performed by NAI......................15
(c) Environmental Inspections and Reviews........................................15
(d) Communications Regarding Environmental Matters...............................15
9. INSURANCE REQUIRED AND CONDEMNATION.................................................16
(a) Liability Insurance..........................................................16
(b) Property Insurance...........................................................16
(c) Failure to Obtain Insurance..................................................16
(d) Condemnation.................................................................17
(e) Waiver of Subrogation........................................................17
10. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS..................................17
(a) Collection and Application of Insurance and Condemnation Proceeds Generally..17
(b) Advances of Escrowed Proceeds to NAI.........................................18
(c) Application of Escrowed Proceeds as a Qualified Prepayment...................18
(d) Special Provisions Applicable After an Event of Default......................18
(e) NAI's Obligation to Restore..................................................18
(f) Takings of All or Substantially All of the Property on or after the Base
Rent Commencement Date.......................................................18
11. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF NAI CONCERNING THE
PROPERTY............................................................................19
(a) Compliance with Covenants and Laws...........................................19
(b) Operation of the Property....................................................19
(c) Debts for Construction, Maintenance, Operation or Development................20
(d) Repair, Maintenance, Alterations and Additions...............................20
(e) Permitted Encumbrances and Development Documents.............................21
(f) Books and Records Concerning the Property....................................21
12. FINANCIAL COVENANTS AND OTHER COVENANTS INCORPORATED BY REFERENCE TO SCHEDULE 1.....21
13. FINANCIAL STATEMENTS AND OTHER REPORTS..............................................21
(ai Financial Statements; Required Notices; Certificates.........................21
14. ASSIGNMENT AND SUBLETTING BY NAI....................................................23
(a) BNPLC's Consent Required.....................................................23
(b) Standard for BNPLC's Consent to Assignments and Certain Other Matters........23
(c) Consent Not a Waiver.........................................................23
15. ASSIGNMENT BY BNPLC.................................................................23
(a) Restrictions on Transfers....................................................23
(b) Effect of Permitted Transfer or other Assignment by BNPLC....................24
16. BNPLC'S RIGHT OF ACCESS.............................................................24
17. EVENTS OF DEFAULT...................................................................25
18. REMEDIES............................................................................26
(a) Basic Remedies...............................................................26
(b) Notice Required So Long As the Purchase Option and NAI's Initial
Remarketing Rights and Obligations Continue Under the Purchase
Agreement....................................................................27
(c) Enforceability...............................................................28
(d) Remedies Cumulative..........................................................28
19. DEFAULT BY BNPLC....................................................................28
20. QUIET ENJOYMENT.....................................................................28
21. SURRENDER UPON TERMINATION..........................................................29
22. HOLDING OVER BY NAI.................................................................29
23. INDEPENDENT OBLIGATIONS EVIDENCED BY THE OTHER OPERATIVE DOCUMENTS..................29
ii
4
EXHIBITS AND SCHEDULES
Exhibit A......................................................Legal Description
Exhibit B.................................................Insurance Requirements
Exhibit C.............................................LIBOR Period Election Form
Schedule 1............................Financial Covenants and Other Requirements
(iii)
5
LEASE AGREEMENT
(PHASE IV - IMPROVEMENTS)
This LEASE AGREEMENT (PHASE IV- IMPROVEMENTS) (this "IMPROVEMENTS
LEASE"), by and between BNP LEASING CORPORATION, a Delaware corporation
("BNPLC"), and NETWORK APPLIANCE, INC., a California corporation ("NAI"), is
made and dated as of December ___, 1999, the Effective Date. ("EFFECTIVE DATE"
and other capitalized terms used and not otherwise defined in this Improvements
Lease are intended to have the meanings assigned to them in the Common
Definitions and Provisions Agreement (Phase IV - Improvements) executed by BNPLC
and NAI contemporaneously with this Improvements Lease. By this reference, the
Common Definitions and Provisions Agreement (Phase IV - Improvements) is
incorporated into and made a part of this Improvements Lease for all purposes.)
RECITALS
Pursuant to the Existing Contract, which covers the Land described in
Exhibit A, BNPLC is acquiring the Land and the Improvements and any
appurtenances thereto from Seller contemporaneously with the execution of this
Improvements Lease.
In anticipation of BNPLC's acquisition of the Improvements under the
Existing Contract, BNPLC and NAI have reached agreement as to the terms and
conditions upon which BNPLC is willing to lease the Improvements to NAI, and by
this Improvements Lease BNPLC and NAI desire to evidence such agreement.
GRANTING CLAUSES
BNPLC does hereby LEASE, DEMISE and LET unto NAI for the term
hereinafter set forth all right, title and interest of BNPLC, now owned or
hereafter acquired, in and to:
(1) any and all Improvements; and
(2) all easements and other rights appurtenant to the
Improvements, whether now owned or hereafter acquired by BNPLC.
BNPLC's interest in all property described in clauses (1) and (2) above are
hereinafter referred to collectively as the "REAL PROPERTY". The Real Property
does not include the Land itself, it being understood that the Other Lease
Agreement will constitute a separate lease of the Land and the appurtenances
thereto, and only the Land and the appurtenances thereto, from BNPLC to NAI.
To the extent, but only to the extent, that assignable rights or
interests in, to or under the following have been or will be acquired by BNPLC
under the Existing Contract or acquired by BNPLC pursuant to Paragraph 7 below,
BNPLC also hereby grants and assigns to NAI for the term of this Improvements
Lease the right to use and enjoy (and, in the case of contract rights, to
enforce) such rights or interests of BNPLC:
(a) any goods, equipment, furnishings, furniture and other
tangible personal property of whatever nature that are located on the
Land and all renewals or replacements of or substitutions for any of the
foregoing;
6
(b) the benefits, if any, conferred upon the owner of the Real
Property by the Permitted Encumbrances (including the right to receive
rents under and to otherwise enforce the Premises Leases) and
Development Documents; and
(c) any permits, licenses, franchises, certificates, and other
rights and privileges against third parties related to the Real
Property.
Such rights and interests of BNPLC, whether now existing or hereafter arising,
are hereinafter collectively called the "PERSONAL PROPERTY". The Real Property
and the Personal Property are hereinafter sometimes collectively called the
"PROPERTY."
However, the leasehold estate conveyed hereby and NAI's rights
hereunder are expressly made subject and subordinate to the terms and conditions
of this Improvements Lease, to the Premises Leases and all other Permitted
Encumbrances, and to any other claims or encumbrances not constituting Liens
Removable by BNPLC.
GENERAL TERMS AND CONDITIONS
The Property is leased by BNPLC to NAI and is accepted and is to be used
and possessed by NAI upon and subject to the following terms and conditions:
1 TERM.
(a) Scheduled Term. The term of this Improvements Lease (the
"TERM") shall commence on and include the Effective Date, and end on the first
Business Day of January, 2005, unless sooner terminated as expressly herein
provided.
(b) [Intentionally deleted.]
(c) [Intentionally deleted.]
(d) Election by NAI to Terminate After Accelerating the
Designated Sale Date. NAI shall be entitled to accelerate the Designated Sale
Date (and thus accelerate the purchase of BNPLC's interest in the Property by
NAI or by an Applicable Purchaser pursuant to the Purchase Agreement) by sending
a notice to BNPLC as provided in clause (2) of the definition of "Designated
Sale Date" in the Common Definitions and Provisions Agreement (Phase IV -
Improvements). In the event, because of NAI's election to so accelerate the
Designated Sale Date or for any other reason, the Designated Sale Date occurs
before the end of the scheduled Term, NAI may terminate this Improvements Lease
on or after the Designated Sale Date; provided, however, as a condition to any
such termination by NAI, NAI must have done the following prior to the
termination:
(i) purchased or caused an Applicable Purchaser to purchase the
Property pursuant to the Purchase Agreement and satisfied all of NAI's
other obligations under the Purchase Agreement;
(ii) paid to BNPLC all Base Rent and all other Rent due on or
before or accrued through the Designated Sale Date; and
(iii) paid any Breakage Costs caused by BNPLC's sale of the
Property pursuant to the Purchase Agreement.
-2-
7
(e) Extension of the Term. The Term may be extended at the option
of NAI for two successive periods of five years each; provided, however, that
prior to any such extension the following conditions must have been satisfied:
(A) at least ninety days prior to the commencement of any such extension, BNPLC
and NAI must have agreed in writing upon, and received the consent and approval
of BNPLC's Parent and all other Participants to (1) a corresponding extension
not only to the date for the expiration of the Term specified above in this
Section, but also to the date specified in clause (1) of the definition of
Designated Sale Date in the Common Definitions and Provisions Agreement (Phase
IV - Improvements), and (2) an adjustment to the Rent that NAI will be required
to pay for the extension, it being expected that the Rent for the extension may
be different than the Rent required for the original Term, and it being
understood that the Rent for any extension must in all events be satisfactory to
both BNPLC and NAI, each in its sole and absolute discretion; (B) no Event of
Default shall have occurred and be continuing at the time of NAI's exercise of
its option to extend; and (C) immediately prior to any such extension, this
Improvements Lease must remain in effect. With respect to the condition that
BNPLC and NAI must have agreed upon the Rent required for any extension of the
Term, neither NAI nor BNPLC is willing to submit itself to a risk of liability
or loss of rights hereunder for being judged unreasonable. Accordingly, both NAI
and BNPLC hereby disclaim any obligation express or implied to be reasonable in
negotiating the Rent for any such extension. Subject to the changes to the Rent
payable during any extension of the Term as provided in this Paragraph, if NAI
exercises its option to extend the Term as provided in this Paragraph, this
Improvements Lease shall continue in full force and effect, and the leasehold
estate hereby granted to NAI shall continue without interruption and without any
loss of priority over other interests in or claims against the Property that may
be created or arise after the date hereof and before the extension.
2 USE AND CONDITION OF THE PROPERTY.
(a) Use. Subject to the Permitted Encumbrances, the Development
Documents and the terms hereof, NAI may use and occupy the Property during the
Term, but only for the following purposes and other lawful purposes incidental
thereto:
(i) [intentionally deleted];
(ii) administrative and office space;
(iii) activities related to NAI's research and development or
production of products that are of substantially the same type and
character as those regularly sold by NAI in the ordinary course of its
business as of the Effective Date;
(iv) cafeteria and other support facilities that NAI may provide
to its employees; and
(v) other lawful purposes (including NAI's research and
development or production of products that are not of substantially the
same type and character as those regularly sold by NAI in the ordinary
course of its business as of the Effective Date) approved in advance and
in writing by BNPLC, which approval will not be unreasonably withheld
(but NAI acknowledges that BNPLC's withholding of such approval shall be
reasonable if BNPLC determines in good faith that (1) giving the
approval may materially increase BNPLC's risk of liability for any
existing or future environmental problem, or (2) giving the approval is
likely to substantially increase BNPLC's administrative burden of
complying with or monitoring NAI's compliance with the requirements of
this Improvements Lease or other Operative Documents).
-3-
8
Nothing in this subparagraph will prevent a tenant under a
Premises Lease executed by NAI, as Landlord, prior to or concurrently
with the Effective Date, from using the space covered thereby for
purposes expressly authorized by the terms and conditions of such
Premises Lease.
(b) Condition of the Property. NAI ACKNOWLEDGES THAT IT HAS
CAREFULLY AND FULLY INSPECTED THE PROPERTY AND ACCEPTS THE PROPERTY IN ITS
PRESENT STATE, AS IS, AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE CONDITION OF SUCH PROPERTY OR AS TO THE USE WHICH MAY BE MADE
THEREOF. NAI ALSO ACCEPTS THE PROPERTY WITHOUT ANY COVENANT, REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, BY BNPLC OR ITS AFFILIATES REGARDING THE TITLE
THERETO OR THE RIGHTS OF ANY PARTIES IN POSSESSION OF ANY PART THEREOF, EXCEPT
AS EXPRESSLY SET FORTH IN PARAGRAPH 20. BNPLC SHALL NOT BE RESPONSIBLE FOR ANY
LATENT OR OTHER DEFECT OR CHANGE OF CONDITION IN THE LAND OR IN IMPROVEMENTS,
FIXTURES AND PERSONAL PROPERTY FORMING A PART OF THE PROPERTY OR FOR ANY
VIOLATIONS WITH RESPECT THERETO OF APPLICABLE LAWS. FURTHER, THOUGH NAI MAY
OBTAIN FROM THIRD PARTIES ANY FACILITIES OR SERVICES TO WHICH NAI IS ENTITLED BY
REASON OF THE ASSIGNMENT AND LEASE OF PERSONAL PROPERTY SET FORTH ON PAGE 2 OF
THIS IMPROVEMENTS LEASE, BNPLC SHALL NOT BE REQUIRED TO FURNISH TO NAI ANY
FACILITIES OR SERVICES OF ANY KIND, INCLUDING WATER, STEAM, HEAT, GAS, AIR
CONDITIONING, ELECTRICITY, LIGHT OR POWER.
(c) Consideration for and Scope of Waiver. The provisions of
subparagraph 2.(b) above have been negotiated by BNPLC and NAI after due
consideration for the Rent payable hereunder and are intended to be a complete
exclusion and negation of any representations or warranties of BNPLC or its
Affiliates, express or implied, with respect to the Property that may arise
pursuant to any law now or hereafter in effect or otherwise, except as expressly
set forth herein.
However, such exclusion of representations and warranties by BNPLC is
not intended to impair any representations or warranties made by other parties,
the benefit of which may pass to NAI during the Term because of the definition
of Personal Property and Property above.
3. RENT.
(a) Base Rent Generally. On the Base Rent Commencement Date and
on each Base Rent Date through the end of the Term, NAI shall pay BNPLC rent
("BASE RENT"). Each payment of Base Rent must be received by BNPLC no later than
10:00 a.m. (Pacific time) on the date it becomes due; if received after 10:00
a.m. (Pacific time) it will be considered for purposes of this Improvements
Lease as received on the next following Business Day. At least five days prior
to any Base Rent Commencement Date or Base Rent Date upon which an installment
of Base Rent shall become due, BNPLC shall notify NAI in writing of the amount
of each installment, calculated as provided below. Any failure by BNPLC to so
notify NAI, however, shall not constitute a waiver of BNPLC's right to payment,
but absent such notice NAI shall not be in default hereunder for any
underpayment resulting therefrom if NAI, in good faith, reasonably estimates the
payment required, makes a timely payment of the amount so estimated and corrects
any underpayment within three Business Days after being notified by BNPLC of the
underpayment.
(b) Impact of Collateral Upon Formulas. To ease the
administrative burden of this Improvements Lease and the Pledge Agreement, the
formulas for calculating Base Rent set out below in subparagraph 3.(c) reflect a
reduction in the Base Rent equal to the interest that would accrue on any
Collateral provided in accordance with the requirements of the Pledge Agreement
from time to time if the Accounts (as
-4-
9
defined in the Pledge Agreement) bore interest at the Effective Rate. BNPLC has
agreed to such reduction to provide NAI with the economic equivalent of interest
on such Collateral, and in return NAI has agreed to the provisions of the Pledge
Agreement that excuse the actual payment of interest on the Accounts. By
incorporating such reduction of Base Rent into the formulas below, and by
providing for noninterest bearing Accounts in the Pledge Agreement, the parties
will avoid an unnecessary and cumbersome periodic exchange of equal payments. It
is not, however, the intent of BNPLC or NAI to understate Base Rent or interest
for financial reporting purposes. Accordingly, for purposes of any financial
reports that this Improvements Lease requires of NAI from time to time, NAI may
report Base Rent as if there had been no such reduction and as if the Collateral
from time to time provided in accordance with the requirements of the Pledge
Agreement had been maintained in Accounts bearing interest at the Effective
Rate.
(c) Calculation of and Due Dates for Base Rent. Payments of Base
Rent shall be calculated and become due as follows:
(i) Amount Payable On the Base Rent Commencement Date. The Base
Rent payable for each day (including the Effective Date) prior to but
not including the Base Rent Commencement Date shall be equal to (a) the
sum of (1) the per annum interest rate, as determined by BNPLC, at which
BNPLC can borrow funds overnight from BNPLC's Parent on that day, plus
(2) the Unsecured Spread, multiplied by (b) the Initial Funding Advance,
divided by (c) 360. All such Base Rent shall become due on the Base Rent
Commencement Date.
(ii) Determination of Payment Due Dates, After the Base Rent
Commencement Date, Generally. For all Base Rent Periods subject to a
LIBOR Period Election of one month or three months, Base Rent shall be
due in one installment on the Base Rent Date upon which the Base Rent
Period ends. For Base Rent Periods subject to a LIBOR Period Election of
six months, Base Rent shall be payable in two installments, with the
first installment becoming due on the Base Rent Date that occurs on the
first Business Day of the third calendar month following the
commencement of such Base Rent Period, and with the second installment
becoming due on the Base Rent Date upon which the Base Rent Period ends.
(iii) Special Adjustments to Base Rent Payment Dates and Periods.
Notwithstanding the foregoing:
(a) Any Base Rent Period that begins before, and does not
otherwise end before, a Failed Collateral Test Date shall end
upon but not include such Failed Collateral Test Date, and such
Failed Collateral Test Date shall constitute a Base Rent Date,
upon which NAI must pay all accrued, unpaid Base Rent for the
Base Rent Period just ended.
(b) Consistent with clause (3) of the definition of LIBOR
Period Election in the Common Definitions and Provisions
Agreement (Phase IV - Improvements), each successive Base Rent
Date after any such Failed Collateral Test Date shall be the
first Business Day of the first calendar month following the
calendar month which includes the preceding Base Rent Date, so
long as any Mandatory Collateral Period shall continue.
(c) In addition to Base Rent due on a Failed Collateral
Test Date, NAI must pay the Breakage Costs, if any, resulting
from any early ending of a Base Rent Period on the Failed
Collateral Test Date pursuant to the preceding clause
3.(c)(iii)a).
-5-
10
(d) If NAI or any Applicable Purchaser purchases BNPLC's
interest in the Property pursuant to the Purchase Agreement, any
accrued unpaid Base Rent and all outstanding Additional Rent
shall be due on the date of purchase in addition to the purchase
price and other sums due BNPLC under the Purchase Agreement.
(iv) Base Rent Formula for Periods During Which The Collateral
Percentage is 100%. Each installment of Base Rent payable for any Base
Rent Period during which the Collateral Percentage is one hundred
percent (100%) shall equal:
- Stipulated Loss Value on the first day of such Base Rent
Period, times
- the Secured Spread for the period from and including the
preceding Base Rent Date to but not including the Base
Rent Date upon which the installment is due, times
- the number of days in the period from and including the
preceding Base Rent Date to but not including the Base
Rent Date upon which the installment is due, divided by
- three hundred sixty.
Assume, only for the purpose of illustration: that the Collateral
Percentage for a hypothetical Base Rent Period is one hundred percent
(100%); that prior to the first day of such Base Rent Period Qualified
Prepayments have been received by BNPLC, leaving a Stipulated Loss Value
of $20,000,000; that the Secured Spread is thirty basis points (30/100
of 1%); and that such Base Rent Period contains exactly thirty days.
Under such assumptions, the Base Rent for the hypothetical Base Rent
Period will equal:
$20,000,000 x .30% x 30/360 = $5,000
(v) Base Rent Formula for Periods During Which The Collateral
Percentage is Greater Than Zero and Less Than 100%. Each installment of
Base Rent payable for any Base Rent Period during which the Collateral
Percentage is greater than zero and less than one hundred percent (100%)
shall equal:
- Stipulated Loss Value on the first day of such Base Rent
Period, times
- the sum of:
(A) the product of:
(1) the Collateral Percentage for such
Base Rent Period, times
(2) the Secured Spread for the period
from and including the preceding
Base Rent Date to but not including
the Base Rent Date upon which the
installment is due, plus
(B) the product of:
-6-
11
(1) one minus the Collateral Percentage
for such Base Rent Period, times
(2) the sum of (a) the Effective Rate
with respect to such Base Rent
Period, plus (b) the Unsecured
Spread for the period from and
including the preceding Base Rent
Date to but not including the Base
Rent Date upon which the installment
is due, times
- the number of days in the period from and including the
preceding Base Rent Date to but not including the Base
Rent Date upon which the installment is due, divided by
- three hundred sixty.
Assume, only for the purpose of illustration: that the Collateral
Percentage for a hypothetical Base Rent Period is forty percent (40%);
that prior to the first day of such Base Rent Period Qualified
Prepayments have been received by BNPLC, leaving a Stipulated Loss Value
of $20,000,000; that the Effective Rate for the Base Rent Period is 6%;
that the Secured Spread is thirty basis points (30/100 of 1%); that upon
the commencement of such Base Rent Period the Unsecured Spread is one
hundred fifty basis points (150/100 of 1%); and that such Base Rent
Period contains exactly thirty days. Under such assumptions, the Base
Rent for the hypothetical Base Rent Period will equal:
$20,000,000 x {(40% x .30%) + ([1 - 40%] x [6% + 1.50%])} x 30/360 = $77,000
(vi) Base Rent Formula for Periods During Which The Collateral
Percentage is Zero. Each installment of Base Rent payable for any Base
Rent Period during which the Collateral Percentage is zero shall equal:
- Stipulated Loss Value on the first day of such Base Rent
Period, times
- the sum of (a) the Effective Rate with respect to such
Base Rent Period, plus (b) the Unsecured Spread for the
period from and including the preceding Base Rent Date to
but not including the Base Rent Date upon which the
installment is due, times
- the number of days in the period from and including the
preceding Base Rent Date to but not including the Base
Rent Date upon which the installment is due, divided by
- three hundred sixty.
Assume, only for the purpose of illustration: that the Collateral
Percentage for a hypothetical Base Rent Period is zero percent (0%);
that prior to the first day of such Base Rent Period Qualified
Prepayments have been received by BNPLC, leaving a Stipulated Loss Value
of $20,000,000; that the Effective Rate for the Base Rent Period is 6%;
that the Unsecured Spread is one hundred fifty basis points (150/100 of
1%) upon the commencement of such Base Rent Period; and that such Base
Rent Period contains exactly thirty days. Under such assumptions, the
Base Rent for the hypothetical Base Rent Period will equal:
$20,000,000 x (6% + 1.50%) x 30/360 = $125,000
-7-
12
(d) Additional Rent. All amounts which NAI is required to pay to
or on behalf of BNPLC pursuant to this Improvements Lease, together with every
charge, premium, interest and cost set forth herein which may be added for
nonpayment or late payment thereof, shall constitute rent (all such amounts,
other than Base Rent, are herein called "ADDITIONAL RENT", and together Base
Rent and Additional Rent are herein sometimes called "RENT").
(e) Arrangement Fee. Upon execution and delivery of this
Improvements Lease by BNPLC, an Arrangement Fee (the "ARRANGEMENT FEE") will be
paid to BNPLC from the Initial Funding Advance (and thus be included in
Stipulated Loss Value) in the amount provided in the letter dated as of October
20, 1999 from BNPLC to NAI.
(f) [intentionally deleted].
(g) Administrative Agency Fees. Upon execution and delivery of
this Improvements Lease by BNPLC, an administrative agency fee (an
"ADMINISTRATIVE AGENCY FEE") will be paid to BNPLC from the Initial Funding
Advance (and thus be included in Stipulated Loss Value) in the amount provided
in the letter dated as of October 20, 1999 from BNPLC to NAI. Also, on each
anniversary of the date hereof, NAI shall pay to BNPLC an administrative agency
fee (also, an "ADMINISTRATIVE AGENCY FEE") in the amount set forth in the letter
agreement dated as of October 20, 1999 from BNPLC to NAI.
(h) [Intentionally deleted.]
(i) [Intentionally deleted.]
(j) No Demand or Setoff. Except as expressly provided herein, NAI
shall pay all Rent without notice or demand and without counterclaim, deduction,
setoff or defense.
(k) Default Interest and Order of Application. All Rent shall
bear interest, if not paid when first due, at the Default Rate in effect from
time to time from the date due until paid; provided, that nothing herein
contained will be construed as permitting the charging or collection of interest
at a rate exceeding the maximum rate permitted under Applicable Laws. BNPLC
shall be entitled to apply any amounts paid by or on behalf of NAI against any
Rent then past due in the order the same became due or in such other order as
BNPLC may elect.
4 NATURE OF THIS AGREEMENT.
(a) "Net" Lease Generally. Subject only to the exceptions listed
in subparagraph 5.(d) below, it is the intention of BNPLC and NAI that Base
Rent, the Arrangement Fees, the Upfront Syndication Fees, Administrative Agency
Fees, and other payments herein specified shall be absolutely net to BNPLC and
that NAI shall pay all costs, expenses and obligations of every kind relating to
the Property or this Improvements Lease which may arise or become due,
including: (i) any taxes payable by virtue of BNPLC's receipt of amounts paid to
or on behalf of BNPLC in accordance with Paragraph 5; (ii) any amount for which
BNPLC is or becomes liable with respect to the Permitted Encumbrances or the
Development Documents; and (iii) any costs incurred by BNPLC (including
Attorneys' Fees) because of BNPLC's acquisition or ownership of any interest in
the Property or because of this Improvements Lease or the transactions
contemplated herein.
However, neither this subparagraph 4.(a) nor the indemnity in this
subparagraph 5.(c)(i) shall be construed to make NAI liable for (I) an
allocation of general overhead or internal administrative expenses of BNPLC or
any
-8-
13
other Interested Party or (II) any duplicate payment of the same Loss to both
BNPLC and another Interested Party. (If, for example, BNPLC were required to
make a $10 fine because of a failure of the Property to comply with Applicable
Laws, and a Participant were required by the Participation Agreement to
reimburse BNPLC for 20% of the $10, NAI would not be required by this
subparagraph 4.(a) or by subparagraph 5.(c)(i) to pay both $10 to BNPLC and $2
to the Participant on account of the fine.)
(b) No Termination. Except as expressly provided in this
Improvements Lease itself, this Improvements Lease shall not terminate, nor
shall NAI have any right to terminate this Improvements Lease, nor shall NAI be
entitled to any abatement of the Rent, nor shall the obligations of NAI under
this Improvements Lease be excused, for any reason whatsoever, including any of
the following: (i) any damage to or the destruction of all or any part of the
Property from whatever cause, (ii) the taking of the Property or any portion
thereof by eminent domain or otherwise for any reason, (iii) the prohibition,
limitation or restriction of NAI's use or development of all or any portion of
the Property or any interference with such use by governmental action or
otherwise, (iv) any eviction of NAI or of anyone claiming through or under NAI,
(v) any default on the part of BNPLC under this Improvements Lease or under any
other agreement to which BNPLC and NAI are parties, (vi) the inadequacy in any
way whatsoever of the design, construction, assembly or installation of any
improvements, fixtures or tangible personal property included in the Property
(it being understood that BNPLC has not made, does not make and will not make
any representation express or implied as to the adequacy thereof), (vii) any
latent or other defect in the Property or any change in the condition thereof or
the existence with respect to the Property of any violations of Applicable Laws,
or (viii) any other cause whether similar or dissimilar to the foregoing. It is
the intention of the parties hereto that the obligations of NAI hereunder shall
be separate and independent of the covenants and agreements of BNPLC, that Base
Rent and all other sums payable by NAI hereunder shall continue to be payable in
all events and that the obligations of NAI hereunder shall continue unaffected,
unless the requirement to pay or perform the same shall have been terminated or
limited pursuant to an express provision of this Improvements Lease. Without
limiting the foregoing, NAI waives to the extent permitted by Applicable Laws,
except as otherwise expressly provided herein, all rights to which NAI may now
or hereafter be entitled by law (including any such rights arising because of
any implied "warranty of suitability" or other warranty under Applicable Laws)
(i) to quit, terminate or surrender this Improvements Lease or the Property or
any part thereof or (ii) to any abatement, suspension, deferment or reduction of
the Rent.
However, nothing in this subparagraph 4.(b) shall be construed as a
waiver by NAI of any right NAI may have at law or in equity to the following
remedies, whether because of BNPLC's failure to remove a Lien Removable by BNPLC
or because of any other default by BNPLC under this Improvements Lease that
continues beyond the period for cure provided in Paragraph 19: (i) the recovery
of monetary damages, (ii) injunctive relief in case of the violation, or
attempted or threatened violation, by BNPLC of any of the express covenants,
agreements, conditions or provisions of this Improvements Lease which are
binding upon BNPLC (including the confidentiality provisions set forth in
subparagraph 16.(c) below), or (iii) a decree compelling performance by BNPLC of
any of the express covenants, agreements, conditions or provisions of this
Improvements Lease which are binding upon BNPLC.
(c) Tax Reporting. BNPLC and NAI shall report this Improvements
Lease and the Purchase Agreement for federal income tax purposes as a
conditional sale unless prohibited from doing so by the Internal Revenue
Service. If the Internal Revenue Service shall challenge BNPLC's
characterization of this Improvements Lease and the Purchase Agreement as a
conditional sale for federal income tax reporting purposes, BNPLC shall notify
NAI in writing of such challenge and consider in good faith any reasonable
suggestions by NAI about an appropriate response. In any event, NAI shall
(subject only to the limitations set forth in this subparagraph) indemnify and
hold harmless BNPLC from and against all liabilities, costs, additional taxes
(other than Excluded Taxes) and other expenses that may arise or become due
because of such challenge or because of any resulting
-9-
14
recharacterization required by the Internal Revenue Service, including any
additional taxes that may become due upon any sale under the Purchase Agreement
to the extent (if any) that such additional taxes are not offset by tax savings
resulting from additional depreciation deductions or other tax benefits to BNPLC
of the recharacterization. If BNPLC receives a written notice of any challenge
by the Internal Revenue Service that BNPLC believes will be covered by this
Paragraph, then BNPLC shall promptly furnish a copy of such notice to NAI. The
failure to so provide a copy of the notice to NAI shall not excuse NAI from its
obligations under this Paragraph; provided, that if none of the officers of NAI
and none of the employees of NAI responsible for tax matters are aware of the
challenge described in the notice and such failure by BNPLC renders unavailable
defenses that NAI might otherwise assert, or precludes actions that NAI might
otherwise take, to minimize its obligations hereunder, then NAI shall be excused
from its obligation to indemnify BNPLC against liabilities, costs, additional
taxes and other expenses, if any, which would not have been incurred but for
such failure. For example, if BNPLC fails to provide NAI with a copy of a notice
of a challenge by the Internal Revenue Service covered by the indemnities set
out in this Improvements Lease and NAI is not otherwise already aware of such
challenge, and if as a result of such failure BNPLC becomes liable for penalties
and interest covered by the indemnities in excess of the penalties and interest
that would have accrued if NAI had been promptly provided with a copy of the
notice, then NAI will be excused from any obligation to BNPLC to pay the excess.
(d) Characterization of this Improvements Lease. For purposes of
determining the appropriate financial accounting for this Improvements Lease and
for purposes of determining their respective rights and remedies under state
law, BNPLC and NAI believe and intend that (i) this Improvements Lease
constitutes a true lease, not a mere financing arrangement, enforceable in
accordance with its express terms, and the preceding subparagraph is not
intended to affect the enforcement of any other provisions of this Improvements
Lease or the Purchase Agreement, and (ii) the Purchase Agreement shall
constitute a separate and independent contract, enforceable in accordance with
the express terms and conditions set forth therein. In this regard, NAI
acknowledges that NAI asked BNPLC to participate in the transactions evidenced
by this Improvements Lease and the Purchase Agreement as a landlord and owner of
the Property, not as a lender. Although other transactions might have been used
to accomplish similar results, NAI expects to receive certain material
accounting and other advantages through the use of a lease transaction.
Accordingly, and notwithstanding the reporting for income tax purposes described
in the preceding subparagraph, NAI cannot equitably deny that this Improvements
Lease and the Purchase Agreement should be construed and enforced in accordance
with their respective terms, rather than as a mortgage or other security device,
in any action brought by BNPLC to enforce this Improvements Lease or the
Purchase Agreement.
5. PAYMENT OF EXECUTORY COSTS AND LOSSES RELATED TO THE PROPERTY.
(a) Impositions. Subject only to the exceptions listed in
subparagraph 5.(d) below, NAI shall pay or cause to be paid prior to delinquency
all ad valorem taxes assessed against the Property and other Impositions. If
requested by BNPLC from time to time, NAI shall furnish BNPLC with receipts
showing payment of all Impositions prior to the applicable delinquency date
therefor.
Notwithstanding the foregoing, NAI may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted
Imposition, and pending such contest NAI shall not be deemed in default under
any of the provisions of this Improvements Lease because of the Imposition if
(1) NAI diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and (2) NAI promptly causes to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all costs,
penalties and interest thereon, promptly after such judgment becomes final;
provided, however, in any event each such contest shall be concluded and the
contested Impositions must be paid by NAI prior to the earlier of (i) the date
that any criminal prosecution is instituted or overtly threatened against BNPLC
or its directors, officers or employees because of the nonpayment
-10-
15
thereof or (ii) the date any writ or order is issued under which any property
owned or leased by BNPLC (including the Property) may be seized or sold or any
other action is taken against BNPLC or against any property owned or leased by
BNPLC because of the nonpayment thereof, or (iii) any Designated Sale Date upon
which, for any reason, NAI or an Affiliate of NAI or any Applicable Purchaser
shall not purchase BNPLC's interest in the Property pursuant to the Purchase
Agreement for a price to BNPLC (when taken together with any additional payments
made by NAI pursuant to Paragraph 1(A)(2) of the Purchase Agreement, in the case
of a purchase by an Applicable Purchaser) equal to the Break Even Price.
(b) Increased Costs; Capital Adequacy Charges. Subject only to
the exceptions listed in subparagraph 5.(d) below:
(i) If after the Effective Date there shall be any increase in
the cost to BNPLC's Parent or any other Participant agreeing to make or
making, funding or maintaining advances to BNPLC in connection with the
Property because of any Banking Rules Change, then NAI shall from time
to time, pay to BNPLC for the account of BNPLC's Parent or such other
Participant, as the case may be, additional amounts sufficient to
compensate BNPLC's Parent or the Participant for such increased cost. An
increase in costs resulting from any imposition or increase of reserve
requirements applicable to Collateral held from time to time by BNPLC's
Parent or other Participants pursuant to the Pledge Agreement would be
an increase covered by the preceding sentence. A certificate as to the
amount of such increased cost, submitted to BNPLC and NAI by BNPLC's
Parent or the other Participant, shall be conclusive and binding upon
NAI, absent clear and demonstrable error.
(ii) BNPLC's Parent or any other Participant may demand
additional payments ("CAPITAL ADEQUACY CHARGES") if BNPLC's Parent or
the other Participant determines that any Banking Rules Change affects
the amount of capital to be maintained by it and that the amount of such
capital is increased by or based upon the existence of advances made or
to be made to BNPLC to permit BNPLC to maintain BNPLC's investment in
the Property. To the extent that BNPLC's Parent or another Participant
demands Capital Adequacy Charges as compensation for the additional
capital requirements reasonably allocable to such investment or
advances, NAI shall pay to BNPLC for the account of BNPLC's Parent or
the other Participant, as the case may be, the amount so demanded.
Without limiting the foregoing, BNPLC and NAI hereby acknowledge and
agree that the provisions for calculating Base Rent set forth herein
reflect the assumption that the Pledge Agreement will cause a zero
percent (0%) risk weight to be assigned to a percentage (equal to the
Collateral Percentage) of the collective investment of BNPLC and the
Participants in the Property pursuant to 12 Code of Federal Regulations,
part 225, as from time to time supplemented or amended, or pursuant to
any other similar or successor statute or regulation applicable to BNPLC
and the Participants. If and so long as such risk weight is increased
the assumed amount of zero percent (0%) because of a Banking Rules
Change, Capital Adequacy Charges may be collected to yield the same rate
of return to BNPLC, BNPLC's Parent and any other Participants (net of
their costs of maintaining required capital) that they would have
enjoyed from this Improvements Lease absent such increase.
(iii) Any amount required to be paid by NAI under this
subparagraph 5.(b) shall be due ten days after a demand for such payment
is received by NAI.
(c) NAI's Payment of Other Losses; General Indemnification.
Subject only to the exceptions listed in subparagraph 5.(d) below:
(i) All Losses (including Environmental Losses) asserted against
or incurred or suffered by BNPLC or other Interested Parties at any time
and from time to time by reason of, in connection with or
-11-
16
arising out of (A) their ownership or alleged ownership of any interest
in the Property or the Rents, (B) the use and operation of the Property,
(C) the negotiation, administration or enforcement of the Operative
Documents, (D) the making of Funding Advances, (E) the Premises Leases;
(F) the breach by NAI of this Improvements Lease or any other document
executed by NAI in connection herewith, (G) any failure of the Property
or NAI itself to comply with Applicable Laws, (H) Permitted
Encumbrances, (I) Hazardous Substance Activities, including those
occurring prior to Effective Date, (J) any obligations under the
Existing Contract that survive the closing thereunder, or (K) any bodily
or personal injury or death or property damage occurring in or upon or
in the vicinity of the Property through any cause whatsoever, shall be
paid by NAI, and NAI shall indemnify and defend BNPLC and other
Interested Parties from and against all such Losses.
(ii) THE INDEMNITIES AND RELEASES PROVIDED HEREIN FOR THE BENEFIT
OF BNPLC AND OTHER INTERESTED PARTIES, INCLUDING THE INDEMNITY SET FORTH
IN THE PRECEDING SUBPARAGRAPH 5.(c)(i), SHALL APPLY EVEN IF AND WHEN THE
SUBJECT MATTERS OF THE INDEMNITIES AND RELEASES ARE CAUSED BY OR ARISE
OUT OF THE NEGLIGENCE OR STRICT LIABILITY OF BNPLC OR ANOTHER INTERESTED
PARTY. FURTHER, SUCH INDEMNITIES AND RELEASES WILL APPLY EVEN IF
INSURANCE OBTAINED BY NAI OR REQUIRED OF NAI BY THIS IMPROVEMENTS LEASE
OR OTHER OPERATIVE DOCUMENTS IS NOT ADEQUATE TO COVER LOSSES AGAINST OR
FOR WHICH THE INDEMNITIES AND RELEASES ARE PROVIDED. NAI'S LIABILITY,
HOWEVER, FOR ANY FAILURE TO OBTAIN INSURANCE REQUIRED BY THIS
IMPROVEMENTS LEASE OR OTHER OPERATIVE DOCUMENTS WILL NOT BE LIMITED TO
LOSSES AGAINST WHICH INDEMNITIES ARE PROVIDED HEREIN, IT BEING
UNDERSTOOD THAT SUCH INSURANCE IS INTENDED TO DO MORE THAN PROVIDE A
SOURCE OF PAYMENT FOR LOSSES AGAINST WHICH BNPLC AND OTHER INTERESTED
PARTIES ARE ENTITLED TO INDEMNIFICATION BY THIS IMPROVEMENTS LEASE.
(iii) Costs and expenses for which NAI shall be responsible
pursuant to this subparagraph 5.(c) will include appraisal fees, filing
and recording fees, inspection fees, survey fees, taxes, brokerage fees
and commissions, abstract fees, title policy fees, Uniform Commercial
Code search fees, escrow fees and Attorneys' Fees incurred by BNPLC with
respect to the Property, whether such costs and expenses are incurred at
the time of execution of this Improvements Lease or at any time during
the Term.
(iv ) NAI's obligations under this subparagraph 5.(c) shall
survive the termination or expiration of this Improvements Lease. Any
amount to be paid by NAI under this subparagraph 5.(c) shall be due ten
days after a demand for such payment is received by NAI.
(v) If an Interested Party notifies NAI of any claim or
proceeding included in, or any investigation or allegation concerning,
Losses for which NAI is responsible pursuant to this subparagraph 5.(c),
NAI shall assume on behalf of the Interested Party and conduct with due
diligence and in good faith the investigation and defense thereof and
the response thereto with counsel selected by NAI, but satisfactory to
the Interested Party; provided, that the Interested Party shall have the
right to be represented by advisory counsel of its own selection and at
its own expense; and provided further, that if any such claim,
proceeding, investigation or allegation involves both NAI and the
Interested Party and the Interested Party shall have reasonably
concluded that there are legal defenses available to it which are
inconsistent with or in addition to those available to NAI, then the
Interested Party shall have the right to select separate counsel to
participate in the investigation and defense of and response to such
claim,
-12-
17
proceeding, investigation or allegation on its own behalf, and NAI shall
pay or reimburse the Interested Party for all Attorney's Fees incurred
by the Interested Party because of the selection of such separate
counsel. If NAI fails to assume promptly (and in any event within
fifteen days after being notified of the applicable claim, proceeding,
investigation or allegation) the defense of the Interested Party, then
the Interested Party may contest (or settle, with the prior consent of
NAI, which consent will not be unreasonably withheld) the claim,
proceeding, investigation or allegation at NAI's expense using counsel
selected by the Interested Party. Moreover, if any such failure by NAI
continues for forty-five days or more after NAI is notified of any such
claim, proceeding, investigation or allegation, the Interested Party may
elect not to contest or continue contesting the same and instead, in
accordance with the written advice of counsel, settle (or pay in full)
all claims related thereto without NAI's consent and without releasing
NAI from any obligations to the Interested Party under this subparagraph
5.(c).
(d) Exceptions and Qualifications to Indemnities.
(vi) BNPLC acknowledges and agrees that nothing in subparagraph
4.(a) or the preceding subparagraphs of this Paragraph 5 shall be
construed to require NAI to pay or reimburse an Interested Party for (w)
any costs or expenses incurred by BNPLC or any transferee to accomplish
any Permitted Transfers described in clauses (2), (3), (4), (6) or (7)
of the definition thereof in the Common Definitions and Provisions
Agreement (Phase IV - Improvements), (x) Excluded Taxes, (y) Losses
incurred or suffered by such Interested Party that are proximately
caused by (and attributed by any applicable principles of comparative
fault to) the Established Misconduct of that Interested Party, or (z)
Losses incurred or suffered by Participants in connection with their
negotiation or execution of the Participation Agreement or Pledge
Agreement (or supplements making them parties thereto) or in connection
with any due diligence they may undertake before entering into the
Participation Agreement or Pledge Agreement. Further, without limiting
BNPLC's rights (as provided in other provisions of this Improvements
Lease and other Operative Documents) to include the following in the
calculation of the Stipulated Loss Value, and the Break Even Price (as
applicable) or to collect Base Rent, a Supplemental Payment and other
amounts, the calculation of which depends upon the Stipulated Loss
Value, and the Break Even Price, BNPLC acknowledges and agrees that
nothing in subparagraph 4.(a) or the preceding subparagraphs of this
Paragraph 5 shall be construed to require NAI to pay or reimburse an
Interested Party for costs paid by BNPLC with the proceeds of the
Initial Funding Advance as part of the Transaction Expenses.
Further, if an Interested Party receives a written notice of Losses that
such Interested Party believes are covered by the indemnity in
subparagraph 5.(c)(i), then such Interested Party will be expected to
promptly furnish a copy of such notice to NAI. The failure to so provide
a copy of the notice to NAI shall not excuse NAI from its obligations
under subparagraph 5.(c)(i); provided, that if NAI is unaware of the
matters described in the notice and such failure renders unavailable
defenses that NAI might otherwise assert, or precludes actions that NAI
might otherwise take, to minimize its obligations, then NAI shall be
excused from its obligation to indemnify such Interested Party (and any
Affiliate of such Interested Party) against the Losses, if any, which
would not have been incurred or suffered but for such failure. For
example, if BNPLC fails to provide NAI with a copy of a notice of an
obligation covered by the indemnity set out in subparagraph 5.(c)(i) and
NAI is not otherwise already aware of such obligation, and if as a
result of such failure BNPLC becomes liable for penalties and interest
covered by the indemnity in excess of the penalties and interest that
would have accrued if NAI had been promptly provided with a copy of the
notice, then NAI will be excused from any obligation to BNPLC (or any
Affiliate of BNPLC) to pay the excess.
6. INTENTIONALLY DELETED.
-13-
18
7. STATUS OF PROPERTY ACQUIRED WITH FUNDS PROVIDED BY BNPLC. All
Improvements constructed during the term of this Improvements Lease shall be
owned by BNPLC and shall constitute "Property" covered by this Improvements
Lease. Further, to the extent heretofore or hereafter acquired (in whole or in
part) with any portion of the Initial Funding Advance or with other funds for
which NAI has received or hereafter receives reimbursement from the Initial
Funding Advance, all furnishings, furniture, chattels, permits, licenses,
franchises, certificates and other personal property of whatever nature shall
have been acquired on behalf of BNPLC by NAI, shall be owned by BNPLC and shall
constitute "Property" covered by this Improvements Lease, as shall all renewals
or replacements of or substitutions for any such Property. NAI shall not
authorize or permit the transfer of title to the Improvements or to any other
such Property to pass through NAI or NAI's Affiliates before it is transferred
to BNPLC from contractors, suppliers, vendors or other third Persons. Nothing
herein shall constitute authorization of NAI by BNPLC to bind BNPLC to any
construction contract or other agreement with a third Person, but any
construction contract or other agreement executed by NAI for the acquisition or
construction of Improvements or other components of the Property may provide for
the transfer of title as required by the preceding sentence. Upon request of
BNPLC, but not more often than once in any period of twelve consecutive months,
NAI shall deliver to BNPLC an inventory describing all significant items of
Personal Property (and, in the case of tangible personal property, showing the
make, model, serial number and location thereof) other than Improvements, with a
certification by NAI that such inventory is true and complete and that all items
specified in the inventory are covered by this Improvements Lease free and clear
of any Lien other than the Permitted Encumbrances or Liens Removable by BNPLC.
8. ENVIRONMENTAL.
(a) Environmental Covenants by NAI. NAI covenants that:
(i) NAI shall not conduct or permit others to conduct
Hazardous Substance Activities, except Permitted Hazardous Substance Use
and Remedial Work.
(ii) NAI shall not discharge or permit the discharge of
anything on or from the Property that would require any permit under
applicable Environmental Laws, other than (1) storm water runoff, (2)
waste water discharges through a publicly owned treatment works, (3)
discharges that are a necessary part of any Remedial Work, and (4) other
similar discharges consistent with the definition herein of Permitted
Hazardous Substance Use, in each case in strict compliance with
Environmental Laws.
(iii) Following any discovery that Remedial Work is
required by Environmental Laws or otherwise believed by BNPLC to be
reasonably required, and to the extent not inconsistent with the other
provisions of this Improvements Lease, NAI shall promptly perform and
diligently and continuously pursue such Remedial Work, in each case in
strict compliance with Environmental Laws.
(iv) If requested by BNPLC in connection with any Remedial
Work required by this subparagraph, NAI shall retain independent
environmental consultants acceptable to BNPLC to evaluate any
significant new information generated during NAI's implementation of the
Remedial Work and to discuss with NAI whether such new information
indicates the need for any additional measures that NAI should take to
protect the health and safety of persons (including employees,
contractors and subcontractors and their employees) or to protect the
environment. NAI shall implement any such additional measures to the
extent required with respect to the Property by Environmental Laws or
otherwise believed by BNPLC to be reasonably required and to the extent
not inconsistent with the other provisions of this Improvements Lease.
-14-
19
(b) Right of BNPLC to do Remedial Work Not Performed by NAI. If
NAI's failure to cure any breach of the covenants set forth in subparagraph
8.(a) continues beyond the Environmental Cure Period (as defined below), BNPLC
may, in addition to any other remedies available to it, conduct all or any part
of the Remedial Work. To the extent that Remedial Work is done by BNPLC pursuant
to the preceding sentence (including any removal of Hazardous Substances), the
cost thereof shall be a demand obligation owing by NAI to BNPLC. As used in this
subparagraph, "ENVIRONMENTAL CURE PERIOD" means the period ending on the earlier
of: (1) one hundred eighty days after NAI is notified of the breach which must
be cured within such period, (2) the date that any writ or order is issued for
the levy or sale of any property owned by BNPLC (including the Property) because
of such breach, (3) the date that any criminal action is instituted or overtly
threatened against BNPLC or any of its directors, officers or employees because
of such breach, or (4) any Designated Sale Date upon which, for any reason, NAI
or an Affiliate of NAI or any Applicable Purchaser shall not purchase BNPLC's
interest in the Property pursuant to the Purchase Agreement for a net price to
BNPLC (when taken together with any Supplemental Payment made by NAI pursuant to
Paragraph 1(A)(2) of the Purchase Agreement, in the case of a purchase by an
Applicable Purchaser) equal to Stipulated Loss Value.
(c) Environmental Inspections and Reviews. BNPLC reserves the
right to retain environmental consultants to review any report prepared by NAI
or to conduct BNPLC's own investigation to confirm whether NAI is complying with
the requirements of this Paragraph 8. NAI grants to BNPLC and to BNPLC's agents,
employees, consultants and contractors the right to enter upon the Property at
any time to inspect the Property and to perform such tests as BNPLC deems
necessary or appropriate to review or investigate Hazardous Substances in, on,
under or about the Property or any discharge or suspected discharge of Hazardous
Substances into groundwater or surface water from the Property. NAI shall
promptly reimburse BNPLC for the fees of its environmental consultants and the
costs of any such inspections and tests.
(d) Communications Regarding Environmental Matters.
(i) NAI shall immediately advise BNPLC of (1) any
discovery of any event or circumstance which would render any of the
representations of NAI herein or in the Closing Certificate concerning
environmental matters materially inaccurate or misleading if made at the
time of such discovery and assuming that NAI was aware of all relevant
facts, (2) any Remedial Work (or change in Remedial Work) required or
undertaken by NAI or its Affiliates in response to any (A) discovery of
any Hazardous Substances on, under or about the Property other than
Permitted Hazardous Substances or (B) any claim for damages resulting
from Hazardous Substance Activities, (3) NAI's discovery of any
occurrence or condition on any real property adjoining or in the
vicinity of the Property which could cause the Property or any part
thereof to be subject to any ownership, occupancy, transferability or
use restrictions under Environmental Laws, or (4) any investigation or
inquiry of any failure or alleged failure by NAI to comply with
Environmental Laws affecting the Property by any governmental authority
responsible for enforcing Environmental Laws. In such event, NAI shall
deliver to BNPLC within thirty days after BNPLC's request, a preliminary
written environmental plan setting forth a general description of the
action that NAI proposes to take with respect thereto, if any, to bring
the Property into compliance with Environmental Laws or to correct any
breach by NAI of this Paragraph 8, including any proposed Remedial Work,
the estimated cost and time of completion, the name of the contractor
and a copy of the construction contract, if any, and such additional
data, instruments, documents, agreements or other materials or
information as BNPLC may request.
(ii) NAI shall provide BNPLC with copies of all material
written communications with federal, state and local governments, or
agencies relating to the matters listed in the preceding clause
-15-
20
(i). NAI shall also provide BNPLC with copies of any correspondence from
third Persons which threaten litigation over any significant failure or
alleged significant failure of NAI to maintain or operate the Property
in accordance with Environmental Laws.
(iii) Prior to NAI's submission of a Material
Environmental Communication to any governmental or regulatory agency or
third party, NAI shall, to the extent practicable, deliver to BNPLC a
draft of the proposed submission (together with the proposed date of
submission), and in good faith assess and consider any comments of BNPLC
regarding the same. Promptly after BNPLC's request, NAI shall meet with
BNPLC to discuss the submission, shall provide any additional
information requested by BNPLC and shall provide a written explanation
to BNPLC addressing the issues raised by comments (if any) of BNPLC
regarding the submission, including a reasoned analysis supporting any
decision by NAI not to modify the submission in accordance with comments
of BNPLC.
9. INSURANCE REQUIRED AND CONDEMNATION.
(a) Liability Insurance. Throughout the Term NAI shall maintain
commercial general liability insurance against claims for bodily and personal
injury, death and property damage occurring in or upon or resulting from any
occurrence in or upon the Property under one or more insurance policies that
satisfy the requirements set forth in Exhibit B. NAI shall deliver and maintain
with BNPLC for each liability insurance policy required by this Improvements
Lease written confirmation of the policy and the scope of the coverage provided
thereby issued by the applicable insurer or its authorized agent, which
confirmation must also satisfy the requirements set forth in Exhibit B.
(b) Property Insurance. Throughout the Term NAI will keep all
Improvements (including all alterations, additions and changes made to the
Improvements) insured against fire and other casualty under one or more property
insurance policies that satisfy the requirements set forth in Exhibit B. NAI
shall deliver and maintain with BNPLC for each property insurance policy
required by this Improvements Lease written confirmation of the policy and the
scope of the coverage provided thereby issued by the applicable insurer or its
authorized agent, which confirmation must also satisfy the requirements set
forth in Exhibit B. If any of the Property is destroyed or damaged by fire,
explosion, windstorm, hail or by any other casualty against which insurance
shall have been required hereunder, (i) BNPLC may, but shall not be obligated
to, make proof of loss if not made promptly by NAI after notice from BNPLC, (ii)
each insurance company concerned is hereby authorized and directed to make
payment for such loss directly to BNPLC for application as required by Paragraph
10, and (iii) BNPLC may settle, adjust or compromise any and all claims for
loss, damage or destruction under any policy or policies of insurance (provided,
that if any such claim is for less than $500,000, and if no Event of Default
shall have occurred and be continuing, NAI shall have the right to settle,
adjust or compromise the claim as ▇▇▇ ▇▇▇▇▇ appropriate; and, provided further,
that so long as no Event of Default shall have occurred and be continuing, BNPLC
must provide NAI with at least forty-five days notice of BNPLC's intention to
settle any such claim before settling it unless NAI shall already have approved
of the settlement by BNPLC). If any casualty shall result in damage to or loss
or destruction of the Property, NAI shall give immediate notice thereof to BNPLC
and Paragraph 10 shall apply.
(c) Failure to Obtain Insurance. If NAI fails to obtain any
insurance or to provide confirmation of any such insurance as required by this
Improvements Lease, BNPLC shall be entitled (but not required) to obtain the
insurance that NAI has failed to obtain or for which NAI has not provided the
required confirmation and, without limiting BNPLC's other remedies under the
circumstances, BNPLC may require NAI to reimburse BNPLC for the cost of such
insurance and to pay interest thereon computed at the Default Rate from the date
such cost was paid by BNPLC until the date of reimbursement by NAI.
-16-
21
(d) Condemnation. Immediately upon obtaining knowledge of the
institution of any proceedings for the condemnation of the Property or any
portion thereof, or any other similar governmental or quasi-governmental
proceedings arising out of injury or damage to the Property or any portion
thereof, each party shall notify the other (provided, however, BNPLC shall have
no liability for its failure to provide such notice) of the pendency of such
proceedings. NAI shall, at its expense, diligently prosecute any such
proceedings and shall consult with BNPLC, its attorneys and experts and
cooperate with them as requested in the carrying on or defense of any such
proceedings. All proceeds of condemnation awards or proceeds of sale in lieu of
condemnation with respect to the Property and all judgments, decrees and awards
for injury or damage to the Property shall be paid to BNPLC as Escrowed
Proceeds, and all such proceeds will be applied as provided in Paragraph 10.
BNPLC is hereby authorized, in the name of NAI, at any time after an Event of
Default shall have occurred and be continuing, or otherwise with NAI's prior
consent, to execute and deliver valid acquittances for, and to appeal from, any
such judgment, decree or award concerning condemnation of any of the Property.
BNPLC shall not be in any event or circumstances liable or responsible for
failure to collect, or to exercise diligence in the collection of, any such
proceeds, judgments, decrees or awards.
(e) Waiver of Subrogation. NAI, for itself and for any Person
claiming through it (including any insurance company claiming by way of
subrogation), waives any and every claim which arises or may arise in its favor
against BNPLC or any other Interested Party and the officers, directors, and
employees of the Interested Parties for any and all Losses, to the extent that
NAI is compensated by insurance or would be compensated by the insurance
policies contemplated in this Improvements Lease, but for any deductible or
self-insured retention maintained under such insurance or but for a failure of
NAI to maintain the insurance as required by this Improvements Lease. NAI agrees
to have such insurance policies properly endorsed so as to make them valid
notwithstanding this waiver, if such endorsement is required to prevent a loss
of insurance.
10. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS.
(a) Collection and Application of Insurance and Condemnation
Proceeds Generally. This Paragraph 10 shall govern the application of proceeds
received by BNPLC or NAI during the Term from any third party (1) under any
property insurance policy as a result of damage to the Property (including
proceeds payable under any insurance policy covering the Property which is
maintained by NAI), (2) as compensation for any restriction placed upon the use
or development of the Property or for the condemnation of the Property or any
portion thereof, or (3) because of any judgment, decree or award for injury or
damage to the Property; excluding, however, any funds paid to BNPLC by BNPLC's
Parent, by an Affiliate of BNPLC or by any Participant that is made to
compensate BNPLC for any Losses BNPLC may suffer or incur in connection with
this Improvements Lease or the Property. NAI will promptly pay over to BNPLC any
insurance, condemnation or other proceeds covered by this Paragraph 10 which NAI
may receive from any insurer, condemning authority or other third party. All
proceeds covered by this Paragraph 10, including those received by BNPLC from
NAI or third parties, shall be applied as follows:
(i) First, proceeds covered by this Paragraph 10 will be
used to reimburse BNPLC for any costs and expenses, including Attorneys'
Fees, that BNPLC incurred to collect the proceeds.
(ii) Second, the proceeds remaining after such
reimbursement to BNPLC (hereinafter, the "REMAINING PROCEEDS") will be
applied, as hereinafter more particularly provided, either as a
Qualified Prepayment or to reimburse NAI or BNPLC for the actual
out-of-pocket costs of repairing or restoring the Property. Until,
however, any Remaining Proceeds received by BNPLC are applied by BNPLC
as a Qualified Prepayment or applied by BNPLC to reimburse costs of
repairs to or restoration of the Property pursuant to this Paragraph 10,
BNPLC shall hold and maintain such Remaining Proceeds as
-17-
22
Escrowed Proceeds in an interest bearing account, and all interest
earned on such account shall be added to and made a part of such
Escrowed Proceeds.
(b) Advances of Escrowed Proceeds to NAI. Except as otherwise
provided below in this Paragraph 10, BNPLC shall advance all Remaining Proceeds
held by it as Escrowed Proceeds to reimburse NAI for the actual out-of-pocket
cost to NAI of repairing or restoring the Property in accordance with the
requirements of this Improvements Lease and the other Operative Documents as the
applicable repair or restoration progresses and upon compliance by NAI with such
terms, conditions and requirements as may be reasonably imposed by BNPLC. In no
event, however, shall BNPLC be required to pay Escrowed Proceeds to NAI in
excess of the actual out-of-pocket cost to NAI of the applicable repair or
restoration, as evidenced by invoices or other documentation satisfactory to
BNPLC, it being understood that BNPLC may retain and apply any such excess as a
Qualified Prepayment.
(c) Application of Escrowed Proceeds as a Qualified Prepayment.
Provided no Event of Default shall have occurred and be continuing, BNPLC shall
apply any Remaining Proceeds paid to it (or other amounts available for
application as a Qualified Prepayment) as a Qualified Prepayment on any date
that BNPLC is directed to do so by a notice from NAI; however, if such a notice
from NAI specifies an effective date for a Qualified Prepayment that is less
than five Business Days after BNPLC's actual receipt of the notice, BNPLC may
postpone the date of the Qualified Prepayment to any date not later than five
Business Days after BNPLC's receipt of the notice. In any event, except when
BNPLC is required by the preceding sentence to apply Remaining Proceeds or other
amounts as a Qualified Prepayment on a Base Rent Date, BNPLC may deduct Breakage
Costs incurred in connection with any Qualified Prepayment from the Remaining
Proceeds or other amounts available for application as the Qualified Prepayment,
and NAI will reimburse BNPLC upon request for any such Breakage Costs that BNPLC
incurs but does not deduct.
(d) Special Provisions Applicable After an Event of Default.
Notwithstanding the foregoing, when any Event of Default shall have occurred and
be continuing, BNPLC shall be entitled to receive and collect all insurance,
condemnation or other proceeds governed by this Paragraph 10 and to apply all
Remaining Proceeds, when and to the extent deemed appropriate by BNPLC in its
sole discretion, either (A) to the reimbursement of NAI or BNPLC for the
out-of-pocket cost of repairing or restoring the Property, or (B) as Qualified
Prepayments.
(e) NAI's Obligation to Restore. Regardless of the adequacy of
any Remaining Proceeds available to NAI hereunder, and notwithstanding other
provisions of this Improvements Lease to the contrary, if the Property is
damaged by fire or other casualty or less than all or substantially all of the
Property is taken by condemnation, NAI must:
A) increase the value of the Property or the remainder thereof by
restoring or improving the same (in a manner consistent with the
requirements and limitations imposed by this Improvements Lease and the
other Operative Documents or otherwise acceptable to BNPLC), or decrease
Stipulated Loss Value by tendering a payment to BNPLC for application as
a Qualified Prepayment, as necessary to cause Current AS IS Market Value
to be not less than sixty percent (60%) of Stipulated Loss Value; and
B) restore the Property or the remainder thereof to a reasonably
safe and sightly condition.
(f) Takings of All or Substantially All of the Property on or
after the Base Rent Commencement Date. In the event of any taking of all or
substantially all of the Property on or after the Base Rent Commencement Date,
BNPLC shall be entitled to apply all Remaining Proceeds as a Qualified
Prepayment. In addition, if Stipulated Loss Value immediately prior to any such
taking exceeds the sum of the Remaining Proceeds
-18-
23
resulting from such condemnation, then BNPLC shall be entitled to recover the
excess from NAI upon demand as an additional Qualified Prepayment, whereupon
this Improvements Lease shall terminate. Any taking of so much of the Real
Property as, in BNPLC's reasonable good faith judgment, makes it impracticable
to restore or improve the remainder thereof as required by part (2) of the
preceding subparagraph shall be considered a taking of substantially all the
Property for purposes of this Paragraph 10.
11. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF NAI
CONCERNING THE PROPERTY. NAI represents, warrants and covenants as follows:
(a) Compliance with Covenants and Laws. The use of the Property
permitted by this Improvements Lease complies, or will comply after NAI obtains
available permits as the tenant under this Improvements Lease, in all material
respects with all Applicable Laws. NAI has obtained or will promptly obtain all
utility, building, health and operating permits as may be required by any
governmental authority or municipality having jurisdiction over the Property for
any construction upon or use of the Property permitted by this Improvements
Lease.
(b) Operation of the Property. During the Term, NAI shall operate
the Property in a good and workmanlike manner and substantially in compliance
with all Applicable Laws and will pay or cause to be paid all fees or charges of
any kind in connection therewith. (If NAI does not promptly correct any failure
of the Property to comply with Applicable Laws that is the subject of a written
notice given to NAI or BNPLC by any governmental authority, then for purposes of
the preceding sentence, NAI shall be considered not to have maintained the
Property "substantially in accordance with Applicable Laws" whether or not the
noncompliance would be substantial in the absence of the notice.) During the
Term, NAI shall not use or occupy, or allow the use or occupancy of, the
Property in any manner which violates any Applicable Law or which constitutes a
public or private nuisance or which makes void, voidable or cancelable any
insurance then in force with respect thereto. During the Term, to the extent
that any of the following would, individually or in the aggregate, materially
and adversely affect the value of the Property or NAI's use, occupancy or
operations on the Property, NAI shall not, without BNPLC's prior consent: (i)
initiate or permit any zoning reclassification of the Property; (ii) seek any
variance under existing zoning ordinances applicable to the Property; (iii) use
or permit the use of the Property in a manner that would result in such use
becoming a nonconforming use under applicable zoning ordinances or similar laws,
rules or regulations; (iv) execute or file any subdivision plat affecting the
Property; or (v) consent to the annexation of the Property to any municipality.
If (A) a change in the zoning or other Applicable Laws affecting the permitted
use or development of the Property shall occur after the Base Rent Commencement
Date that reduces the value of the Property, or (B) conditions or circumstances
on or about the Property are discovered after the Base Rent Commencement Date
(such as the presence of an endangered species) which substantially impede
development and thereby reduce the value of the Property, and if after any such
reduction under clause (A) or (B) preceding the Current AS IS Market Value of
the Property is less than sixty percent (60%) of Stipulated Loss Value, then NAI
shall pay BNPLC upon request the amount by which Current AS IS Market Value is
less than sixty percent (60%) of Stipulated Loss Value, for application as a
Qualified Prepayment. During the Term, NAI shall not cause or permit any
drilling or exploration for, or extraction, removal or production of, minerals
from the surface or subsurface of the Property, and NAI shall not do any act
whereby the market value of the Property may reasonably be expected to be
materially lessened. During the Term, if NAI receives a written notice or claim
from any federal, state or other governmental entity that the Property is not in
compliance in any material respect with any Applicable Law, or that any action
may be taken against the owner of the Property because the Property does not
comply with Applicable Law, NAI shall promptly furnish a copy of such notice or
claim to BNPLC.
Notwithstanding the foregoing, NAI may in good faith, by appropriate
proceedings, contest the validity and applicability of any Applicable Law with
respect to the Property, and pending such contest NAI shall not be
-19-
24
deemed in default hereunder because of the violation of such Applicable Law, if
NAI diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and if NAI promptly causes the Property to comply with
any such Applicable Law upon a final determination by a court of competent
jurisdiction that the same is valid and applicable to the Property; provided,
however, in any event such contest shall be concluded and the violation of such
Applicable Law must be corrected by NAI and any claims asserted against BNPLC or
the Property because of such violation must be paid by NAI, all prior to the
earlier of (i) the date that any criminal prosecution is instituted or overtly
threatened against BNPLC or any of its directors, officers or employees because
of such violation, (ii) the date that any action is taken by any governmental
authority against BNPLC or any property owned by BNPLC (including the Property)
because of such violation, or (iii) a Designated Sale Date upon which, for any
reason, NAI or an Affiliate of NAI or any Applicable Purchaser shall not
purchase BNPLC's interest in the Property pursuant to the Purchase Agreement for
a price to BNPLC (when taken together with any additional payments made by NAI
pursuant to Paragraph 1(A)(2) of the Purchase Agreement, in the case of a
purchase by an Applicable Purchaser) equal to the Break Even Price.
(c) Debts for Construction, Maintenance, Operation or
Development. NAI shall cause all debts and liabilities incurred in the
construction, maintenance, operation or development of the Property, including
all debts and liabilities for labor, material and equipment and all debts and
charges for utilities servicing the Property, to be promptly paid; provided,
that nothing in this subparagraph will be construed to require NAI to remove
Liens Removable by BNPLC.
Notwithstanding the foregoing, NAI may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted
mechanic's or materialmen's lien and pending such contest NAI shall not be
deemed in default under this subparagraph because of the contested lien if (1)
within sixty days after being asked to do so by BNPLC, NAI bonds over to BNPLC's
reasonable satisfaction all such contested liens against the Property alleged to
secure an amount in excess of $500,000 (individually or in the aggregate), (2)
NAI diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and (3) NAI promptly causes to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all costs and
interest thereon, promptly after such judgment becomes final; provided, however,
that in any event each such contest shall be concluded and the lien, interest
and costs must be paid by NAI prior to the earlier of (i) the date that any
criminal prosecution is instituted or overtly threatened against BNPLC or its
directors, officers or employees because of the nonpayment thereof, (ii) the
date that any writ or order is issued under which the Property or any other
property in which BNPLC has an interest may be seized or sold or any other
action is taken against BNPLC or any property in which BNPLC has an interest
because of the nonpayment thereof, or (iii) a Designated Sale Date upon which,
for any reason, NAI or an Affiliate of NAI or any Applicable Purchaser shall not
purchase BNPLC's interest in the Property pursuant to the Purchase Agreement for
a price to BNPLC (when taken together with any additional payments made by NAI
pursuant to Paragraph 1(A)(2) of the Purchase Agreement, in the case of a
purchase by an Applicable Purchaser) equal to the Break Even Price.
(d) Repair, Maintenance, Alterations and Additions. NAI shall
keep the Property in good order, operating condition and appearance and shall
cause all necessary repairs, renewals and replacements to be promptly made. NAI
will not allow any of the Property to be materially misused, abused or wasted,
and NAI shall promptly replace any worn-out fixtures and Personal Property with
fixtures and Personal Property comparable to the replaced items when new. NAI
shall not, without the prior consent of BNPLC, (i) remove from the Property any
fixture or Personal Property having significant value except such as are
replaced by NAI by fixtures or Personal Property of equal suitability and value,
free and clear of any lien or security interest (and for purposes of this clause
"significant value" will mean any fixture or Personal Property that has a value
of more than $100,000 or that, when considered together with all other fixtures
and Personal Property removed and not replaced by NAI by items of equal
suitability and value, has an aggregate value of $500,000 or more) or (ii) make
material new
-20-
25
Improvements or alter Improvements in any material respect. Without limiting the
foregoing, NAI will notify BNPLC before making any significant alterations to
the Improvements.
The parties acknowledge that NAI has proposed to BNPLC that additional
Improvements be constructed on the Land in the future, and BNPLC has consented
thereto, provided that (1) no Event of Default has occurred and is continuing,
and (b) BNPLC is satisfied, in its sole discretion, that (i) the location,
configuration, architectural style, and manner and type of construction of such
additional Improvements shall not reduce the value of the Improvements taken as
a whole and will otherwise be constructed in accordance with the requirements of
this Lease, and (ii) such additional Improvements will comply with all
Applicable Laws.
(e) Permitted Encumbrances and Development Documents. NAI shall
during the Term comply with and will cause to be performed all of the covenants,
agreements and obligations imposed upon the owner of any interest in the
Property by the Permitted Encumbrances (including the Premises Leases) or the
Development Documents. Without limiting the foregoing, NAI shall cause all
amounts to be paid when due, the payment of which is secured by any Lien against
the Property created by the Permitted Encumbrances. Without the prior consent of
BNPLC, NAI shall not enter into, initiate, approve or consent to any
modification of any Permitted Encumbrance or Development Document that would
create or expand or purport to create or expand obligations or restrictions
which would encumber BNPLC's interest in the Property. (Whether BNPLC must give
any such consent requested by NAI during the Term of this Improvements Lease
shall be governed by subparagraph 3(A) of the Closing Certificate and
Agreement.)
(f) Books and Records Concerning the Property. NAI shall keep
books and records that are accurate and complete in all material respects for
the Property and, subject to Paragraph 16.(c), will permit all such books and
records (including all contracts, statements, invoices, bills and claims for
labor, materials and services supplied for the construction and operation of any
Improvements) to be inspected and copied by BNPLC. This subparagraph shall not
be construed as requiring NAI to regularly maintain separate books and records
relating exclusively to the Property; provided, however, that upon request, NAI
shall construct or abstract from its regularly maintained books and records
information required by this subparagraph relating to the Property.
12. FINANCIAL COVENANTS AND OTHER COVENANTS INCORPORATED BY REFERENCE TO
SCHEDULE 1. Throughout the Term of this Improvements Lease, NAI shall comply
with the requirements of Schedule 1 attached hereto.
13. FINANCIAL STATEMENTS AND OTHER REPORTS.
(a) Financial Statements; Required Notices; Certificates.
Throughout the Term of this Improvements Lease, NAI shall deliver to BNPLC and
to each Participant:
(i) as soon as available and in any event within one hundred
twenty days after the end of each fiscal year of NAI, a consolidated
balance sheet of NAI and its Consolidated Subsidiaries as of the end of
such fiscal year and a consolidated income statement and statement of
cash flows of NAI and its Consolidated Subsidiaries for such fiscal
year, all in reasonable detail and all prepared in accordance with GAAP
and accompanied by a report and opinion of accountants of national
standing selected by NAI, which report and opinion shall be prepared in
accordance with generally accepted auditing standards and shall not be
subject to any qualifications or exceptions as to the scope of the audit
nor to any qualification or exception which BNPLC determines, in BNPLC's
reasonable discretion, is unacceptable;
(ii) as soon as available and in any event within sixty days
after the end of each of the first three
-21-
26
quarters of each fiscal year of NAI, the consolidated balance sheet of
NAI and its Consolidated Subsidiaries as of the end of such quarter and
the consolidated income statement and the consolidated statement of cash
flows of NAI and its Consolidated Subsidiaries for the period commencing
at the end of the previous fiscal year and ending with the end of such
quarter, all in reasonable detail and all prepared in accordance with
GAAP and certified by the chief financial officer or controller of NAI
(subject to year-end adjustments);
(iii) together with the financial statements furnished in
accordance with subparagraph 13.(a)(i) and 13.(a)(ii), a certificate of
the chief financial officer or controller of NAI: (i) certifying that to
the knowledge of NAI no Default or Event of Default under this
Improvements Lease has occurred and is continuing or, if a Default or
Event of Default has occurred and is continuing, a brief statement as to
the nature thereof and the action which is proposed to be taken with
respect thereto, (ii) certifying that the representations of NAI set
forth in the Operative Documents are true and correct in all material
respects as of the date thereof as though made on and as of the date
thereof or, if not then true and correct, a brief statement as to why
such representations are no longer true and correct, and (iii) with
computations demonstrating compliance with the financial covenants
contained in Schedule 1;
(iv) within five days after the end of each calendar month, a
certificate of the chief financial officer or controller of NAI
certifying that at the end of the preceding calendar month, NAI had
sufficient cash and other assets described in Paragraph 1 of Part II of
Schedule 1 to comply with the requirements of that paragraph;
(v) promptly after the sending or filing thereof, copies of all
proxy statements, financial statements and reports which NAI sends to
NAI's stockholders, and copies of all regular, periodic and special
reports, and all registration statements (other than registration
statements on Form S-8 or any form substituted therefor) which NAI files
with the Securities and Exchange Commission or any governmental
authority which may be substituted therefor, or with any national
securities exchange;
(vi) upon request by BNPLC, a statement in writing certifying
that the Operative Documents are unmodified and in full effect (or, if
there have been modifications, that the Operative Documents are in full
effect as modified, and setting forth such modifications) and the dates
to which the Base Rent has been paid and either stating that to the
knowledge of NAI no Default or Event of Default under this Improvements
Lease has occurred and is continuing or, if a Default or Event of
Default under this Improvements Lease has occurred and is continuing, a
brief statement as to the nature thereof; it being intended that any
such statement by NAI may be relied upon by any prospective purchaser or
mortgagee of the Property and by the Participants
(vii) as soon as possible after, and in any event within ten days
after NAI becomes aware that, any of the following has occurred, with
respect to which the potential aggregate liability to NAI relating
thereto is $500,000 or more, a notice signed by a senior financial
officer of NAI setting forth details of the following and the response,
if any, which NAI or its ERISA Affiliate proposes to take with respect
thereto (and a copy of any report or notice required to be filed with or
given to PBGC by NAI or an ERISA Affiliate with respect to any of the
following or the events or conditions leading up to the following): (A)
the assertion, to secure any Unfunded Benefit Liabilities, of any Lien
against the assets of NAI, against the assets of any Plan or
Multiemployer Plan or against any interest of BNPLC or NAI in the
Property, or (B) the taking of any action by the PBGC or any other
governmental authority against NAI to terminate any Plan of NAI or any
ERISA Affiliate of NAI or to cause the appointment of a trustee or
receiver to administer any such Plan ; and
-22-
27
(viii) such other information respecting the condition or
operations, financial or otherwise, of NAI, of any of its Subsidiaries
or of the Property as BNPLC or any Participant through BNPLC may from
time to time reasonably request.
BNPLC is hereby authorized to deliver a copy of any information or certificate
delivered to it pursuant to this subparagraph 13.(a) to BNPLC's Parent, to the
Participants and to any regulatory body having jurisdiction over BNPLC or
BNPLC's Parent or any Participant that requires or requests it.
14. ASSIGNMENT AND SUBLETTING BY NAI.
(a) BNPLC's Consent Required. Without the prior consent of BNPLC,
NAI shall not assign, transfer, mortgage, pledge or hypothecate this
Improvements Lease or any interest of NAI hereunder and shall not sublet all or
any part of the Property, by operation of law or otherwise; provided, that
subject to subparagraph 14.(c) below, (I) this provision shall not be construed
to prohibit any Premises Lease described in the Common Definitions and
Provisions Agreement (Phase IV - Improvements) or any transfer or sublease by a
lessee thereunder which is authorized by the Premises Leases, and (II) so long
as no Event of Default has occurred and is continuing: (1) NAI shall be entitled
to sublet no more than forty-nine percent (49%) (computed on the basis of square
footage) of the useable space in then existing and completed building
Improvements, if any, so long as (i) any sublease by NAI is made expressly
subject and subordinate to the terms hereof, and (ii) such sublease has a term
equal to or less than the remainder of the then effective Term of this
Improvements Lease; and (2) NAI shall be entitled to assign or transfer this
Improvements Lease or any interest of NAI hereunder to an Affiliate of NAI if
both NAI and its Affiliate confirm their joint and several liability hereunder
by written notice given to BNPLC.
(b) Standard for BNPLC's Consent to Assignments and Certain Other
Matters. Consents and approvals of BNPLC which are required by this Paragraph 14
will not be unreasonably withheld or delayed, but NAI acknowledges that BNPLC's
withholding of such consent or approval shall be reasonable if BNPLC determines
in good faith that (1) giving the approval may materially increase BNPLC's risk
of liability for any existing or future environmental problem, or (2) giving the
approval is likely to increase BNPLC's administrative burden of complying with
or monitoring NAI's compliance with the requirements of this Improvements Lease.
(c) Consent Not a Waiver. No consent by BNPLC to a sale,
assignment, transfer, mortgage, pledge or hypothecation of this Improvements
Lease or NAI's interest hereunder, and no assignment or subletting of the
Property or any part thereof in accordance with this Improvements Lease or
otherwise with BNPLC's consent, shall release NAI from liability hereunder; and
any such consent shall apply only to the specific transaction thereby authorized
and shall not relieve NAI from any requirement of obtaining the prior consent of
BNPLC to any further sale, assignment, transfer, mortgage, pledge or
hypothecation of this Improvements Lease or any interest of NAI hereunder.
15. ASSIGNMENT BY BNPLC.
(a) Restrictions on Transfers. Except by a Permitted Transfer,
BNPLC shall not assign, transfer, mortgage, pledge, encumber or hypothecate this
Improvements Lease or the other Operative Documents or any interest of BNPLC in
and to the Property during the Term without the prior consent of NAI, which
consent NAI may withhold in its sole discretion. Further, notwithstanding
anything to the contrary herein contained, if withholding taxes are imposed on
the rents and other amounts payable to BNPLC hereunder because of BNPLC's
assignment of this Improvements Lease to any citizen of, or any corporation or
other entity formed under the laws of, a country other than the United States,
NAI shall not be required to compensate BNPLC or any such assignee
-23-
28
for the withholding tax. If, in breach of this subparagraph, BNPLC transfer the
Property or any part thereof by a conveyance or that does not constitute a
Permitted Transfer, with the result that additional transfer taxes or other
Impositions are assessed against the Property or the owner thereof, BNPLC shall
be required to pay such additional transfer taxes or other Impositions.
(b) Effect of Permitted Transfer or other Assignment by BNPLC.
If, without breaching subparagraph 15.(a), BNPLC sells or otherwise transfers
the Property and assigns all of its rights under this Improvements Lease and the
other Operative Documents, then BNPLC shall thereby be released from any
obligations arising after such assumption under this Improvements Lease or the
other Operative Documents, and NAI shall look solely to each successor in
interest of BNPLC for performance of such obligations.
16. BNPLC'S RIGHT OF ACCESS.
(a) During the Term, BNPLC and BNPLC's representatives may
(subject to subparagraph 16.(c)) enter the Property at any reasonable time after
five Business Days advance written notice to NAI for the purpose of making
inspections or performing any work BNPLC is authorized to undertake by the next
subparagraph or for the purpose confirming whether NAI has complied with the
requirements of this Improvements Lease or the other Operative Documents.
(b) If NAI fails to perform any act or to take any action
required of it by this Improvements Lease or the Closing Certificate, or to pay
any money which NAI is required by this Improvements Lease or the Closing
Certificate to pay, and if such failure or action constitutes an Event of
Default or renders BNPLC or any director, officer, employee or Affiliate of
BNPLC at risk of criminal prosecution or renders BNPLC's interest in the
Property or any part thereof at risk of forfeiture by forced sale or otherwise,
then in addition to any other remedies specified herein or otherwise available,
BNPLC may, perform or cause to be performed such act or take such action or pay
such money. Any expenses so incurred by BNPLC, and any money so paid by BNPLC,
shall be a demand obligation owing by NAI to BNPLC. Further, BNPLC, upon making
such payment, shall be subrogated to all of the rights of the person,
corporation or body politic receiving such payment. But nothing herein shall
imply any duty upon the part of BNPLC to do any work which under any provision
of this Improvements Lease NAI may be required to perform, and the performance
thereof by BNPLC shall not constitute a waiver of NAI's default. BNPLC may
during the progress of any such work permitted by BNPLC hereunder on or in the
Property keep and store upon the Property all necessary materials, tools, and
equipment. BNPLC shall not in any event be liable for inconvenience, annoyance,
disturbance, loss of business, or other damage to NAI or the subtenants or
invitees of NAI by reason of making such repairs or the performance of any such
work on or in the Property, or on account of bringing materials, supplies and
equipment into or through the Property during the course of such work (except
for any liability in excess of the liability insurance limits established in
Exhibit B resulting from death or injury or damage to the property of third
parties caused by the Established Misconduct of BNPLC or its officers,
employees, or agents in connection therewith), and the obligations of NAI under
this Improvements Lease shall not thereby be excused in any manner.
(c) NAI shall have no obligation to provide proprietary
information (as defined in the next sentence) to BNPLC, except and to the extent
that (1) BNPLC reasonably determines that BNPLC cannot accomplish the purposes
of BNPLC's inspection of the Property or exercise of other rights granted
pursuant to the various express provisions of this Improvements Lease and the
other Operative Documents without evaluating such information. For purposes of
this Improvements Lease "PROPRIETARY INFORMATION" includes NAI's intellectual
property, trade secrets and other confidential information of value to NAI
about, among other things, NAI's manufacturing processes, products, marketing
and corporate strategies, but in no event will "proprietary information" include
any disclosure of substances and materials (and their chemical composition)
which are or
-24-
29
previously have been present in, on or under the Property at the time of any
inspections by BNPLC, nor will "proprietary information" include any additional
disclosures reasonably required to permit BNPLC to determine whether the
presence of such substances and materials has constituted a violation of
Environmental Laws. In addition, under no circumstances shall NAI have any
obligation to disclose to BNPLC or any other party any proprietary information
of NAI (including, without limitation, any pending applications for patents or
trademarks, any research and design and any trade secrets) except if and to the
limited extent reasonably necessary to comply with the express provisions of
this Improvements Lease or the other Operative Documents.
17. EVENTS OF DEFAULT. Each of the following events shall be an "EVENT
OF DEFAULT" by NAI under this Improvements Lease:
(a) NAI shall fail to pay when due any installment of Rent due hereunder
and such failure shall continue for three (3) Business Days after NAI is
notified in writing thereof.
(b) NAI shall fail to cause any representation or warranty of NAI
contained herein or in the Closing Certificate that was false or misleading in
any material respect when made to be made true and not misleading (other than as
described in the other clauses of this Paragraph 17), or NAI shall fail to
comply with any term, provision or covenant of this Improvements Lease or the
Closing Certificate (other than as described in the other clauses of this
Paragraph 17), and in either case shall not cure such failure prior to the
earlier of (A) thirty days after written notice thereof is sent to NAI or (B)
the date any writ or order is issued for the levy or sale of any property owned
by BNPLC (including the Property) or any criminal prosecution is instituted or
overtly threatened against BNPLC or any of its directors, officers or employees
because of such failure; provided, however, that so long as no such writ or
order is issued and no such criminal prosecution is instituted or overtly
threatened, the period within which such failure may be cured by NAI shall be
extended for a further period (not to exceed an additional sixty days) as shall
be necessary for the curing thereof with diligence, if (but only if) (x) such
failure is susceptible of cure but cannot with reasonable diligence be cured
within such thirty day period, (y) NAI shall promptly have commenced to cure
such failure and shall thereafter continuously prosecute the curing thereof with
reasonable diligence and (z) the extension of the period for cure will not, in
any event, cause the period for cure to extend beyond five days prior to the
expiration of this Improvements Lease.
(c) NAI shall abandon the Property.
(d) NAI or any Subsidiary shall fail to make any payment or payments of
principal, premium or interest, of Debt of NAI described in the next sentence
when due (taking into consideration the time NAI may have to cure such failure,
if any, under the documents governing such Debt). As used in this clause
14(a)(v), "DEBT" shall include only Debt (as defined in the Common Definitions
and Provisions Agreement (Phase IV - Improvements)) of NAI or any of its
Subsidiaries now existing or arising in the future (a) payable to BNPLC or any
Affiliate of BNPLC, or (B) payable to any other Person and with respect to which
$3,000,000 or more is actually due and payable because of acceleration or
otherwise.
(e) NAI: (a) shall generally not, or be unable to, or shall admit in
writing its inability to, pay its debts as such debts become due; or (b) shall
make an assignment for the benefit of creditors, petition or apply to any
tribunal for the appointment of a custodian, receiver or trustee for it or a
substantial part of its assets; or (c) shall file any petition or application to
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or (d) shall have had any such
petition or application filed against it; or (e) by any act or omission shall
indicate its consent to, approval of or acquiescence in any such petition,
application or proceeding or order for relief or the appointment of a custodian,
receiver or trustee for all or any substantial part of its property; or (f)
shall suffer any such custodianship, receivership or trusteeship to continue
undischarged for a period of sixty days or
-25-
30
more.
(f) One or more final judgments, decrees or orders for the payment of
money in excess of $3,000,000 in the aggregate shall be rendered against NAI and
such judgments, decrees or orders shall continue unsatisfied and in effect for a
period of thirty consecutive days without NAI's having obtained an agreement (or
after the expiration or termination of an agreement) of the Persons entitled to
enforce such judgment, decrees or orders not to enforce the same pending
negotiations with NAI concerning the satisfaction or other discharge of the
same.
(g) NAI shall breach the requirements of Paragraph 12, which by
reference to Schedule 1 establishes certain financial covenants and other
requirements.
(h) as of the effective date of this Improvements Lease, any of the
representations or warranties of NAI contained in subparagraphs 2(A) - (J) of
the Closing Certificate shall be false or misleading in any material respect.
(i) NAI shall fail to pay the full amount of any Supplemental Payment
required by the Purchase Agreement on the Designated Sale Date or shall fail to
provide Collateral as and when due pursuant to the Pledge Agreement Documents.
(j) NAI shall fail to comply with any term, provision or condition of
the Pledge Agreements after the expiration of any applicable notice and cure
period set forth in the Pledge Agreement.
18. REMEDIES.
(a) Basic Remedies. At any time after an Event of Default and
after BNPLC has given any notice required by subparagraph 18.(b), BNPLC shall be
entitled at BNPLC's option (and without limiting BNPLC in the exercise of any
other right or remedy BNPLC may have, and without any further demand or notice
except as expressly described in this subparagraph 18.(a)), to exercise any one
or more of the following remedies:
(i) By notice to NAI, BNPLC may terminate NAI's right to
possession of the Property. A notice given in connection with unlawful
detainer proceedings specifying a time within which to cure a default
shall terminate NAI's right to possession if NAI fails to cure the
default within the time specified in the notice.
(ii) Upon termination of NAI's right to possession and
without further demand or notice, BNPLC may re-enter the Property in any
manner not prohibited by Applicable Law and take possession of all
improvements, additions, alterations, equipment and fixtures thereon and
remove any persons in possession thereof. Any property in the
Improvements may be removed and stored in a warehouse or elsewhere at
the expense and risk of and for the account of NAI.
(iii) Upon termination of NAI's right to possession, this
Improvements Lease shall terminate and BNPLC may recover from NAI:
a) The worth at the time of award of the unpaid
Rent which had been earned at the time of termination;
b) The worth at the time of award of the amount by
which the unpaid Rent which would have been earned after
termination until the time of award exceeds the amount of
-26-
31
such rental loss that NAI proves could have been reasonably
avoided;
c) The worth at the time of award of the amount by
which the unpaid Rent for the balance of the scheduled Term after
the time of award exceeds the amount of such rental loss that NAI
proves could be reasonably avoided; and
d) Any other amount necessary to compensate BNPLC
for all the detriment proximately caused by NAI's failure to
perform NAI's obligations under this Improvements Lease or which
in the ordinary course of things would be likely to result
therefrom, including the costs and expenses (including Attorneys'
Fees, advertising costs and brokers' commissions) of recovering
possession of the Property, removing persons or property
therefrom, placing the Property in good order, condition, and
repair, preparing and altering the Property for reletting, all
other costs and expenses of reletting, and any loss incurred by
BNPLC as a result of NAI's failure to perform NAI's obligations
under the other Operative Documents.
The "WORTH AT THE TIME OF AWARD" of the amounts referred to in
subparagraph 18.(a)(iii)a) and subparagraph 18.(a)(iii)b) shall
be computed by allowing interest at the Default Rate. The "WORTH
AT THE TIME OF AWARD" of the amount referred to in subparagraph
18.(a)(iii)c) shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent (1%).
e) Such other amounts in addition to or in lieu of
the foregoing as may be permitted from time to time by applicable
California law.
(iv) BNPLC shall have the remedy described in California Civil
Code Section 1951.4 (lessor may continue lease in force even after
lessee's breach and abandonment and recover rent as it becomes due, if
lessee has right to sublet or assign, subject only to reasonable
limitations). Accordingly, even if NAI has breached this Improvements
Lease and abandoned the Property, this Improvements Lease shall continue
in effect for so long as BNPLC does not terminate NAI's right to
possession, and BNPLC may enforce all of BNPLC's rights and remedies
under this Improvements Lease, including the right to recover the Rent
as it becomes due under this Improvements Lease. NAI's right to
possession shall not be deemed to have been terminated by BNPLC except
pursuant to subparagraph 18.(a)(i) hereof. The following shall not
constitute a termination of NAI's right to possession:
a) Acts of maintenance or preservation or efforts
to relet the Property;
b) The appointment of a receiver upon the
initiative of BNPLC to protect BNPLC's interest under this
Improvements Lease; or
c) Reasonable withholding of consent to an
assignment or subletting, or terminating a subletting or
assignment by NAI.
(b) Notice Required So Long As the Purchase Option and NAI's
Initial Remarketing Rights and Obligations Continue Under the Purchase
Agreement. So long as NAI remains in possession of the Property and there has
been no termination of the Purchase Option and NAI's Initial Remarketing Rights
and Obligations as provided Paragraph 4 of the Purchase Agreement, BNPLC's right
to exercise remedies provided in subparagraph 18.(a) will be subject to the
condition precedent that BNPLC shall have notified NAI, at a time when an Event
of Default shall have occurred and be continuing, of BNPLC's intent to exercise
remedies provided in
-27-
32
subparagraph 18.(a) at least sixty days prior to exercising the remedies. The
condition precedent is intended to provide NAI with an opportunity to exercise
the Purchase Option or NAI's Initial Remarketing Rights and Obligations before
losing possession of the Property pursuant to subparagraph 18.(a). The condition
precedent is not, however, intended to extend any period for curing an Event of
Default. Accordingly, if an Event of Default has occurred, and regardless of
whether any Event of Default is then continuing, BNPLC may proceed immediately
to exercise remedies provided in subparagraph 18.(a) at any time after the
earlier of (i) sixty days after BNPLC has given such a notice to NAI, (ii) any
date upon which NAI relinquishes possession of the Property, or (iii) any
termination of the Purchase Option and NAI's Initial Remarketing Rights and
Obligations.
(c) Enforceability. This Paragraph 18 shall be enforceable to the
maximum extent not prohibited by Applicable Law, and the unenforceability of any
provision in this Paragraph shall not render any other provision unenforceable.
(d) Remedies Cumulative. No right or remedy herein conferred upon
or reserved to BNPLC is intended to be exclusive of any other right or remedy,
and each and every such right and remedy shall be cumulative and in addition to
any other right or remedy given to BNPLC hereunder or now or hereafter existing
in favor of BNPLC under Applicable Law or in equity. In addition to other
remedies provided in this Improvements Lease, BNPLC shall be entitled, to the
extent permitted by Applicable Law or in equity, to injunctive relief in case of
the violation, or attempted or threatened violation, of any of the covenants,
agreements, conditions or provisions of this Improvements Lease, or to a decree
compelling performance of any of the other covenants, agreements, conditions or
provisions of this Improvements Lease to be performed by NAI, or to any other
remedy allowed to BNPLC at law or in equity. Nothing contained in this
Improvements Lease shall limit or prejudice the right of BNPLC to prove for and
obtain in proceedings for bankruptcy or insolvency of NAI by reason of the
termination of this Improvements Lease, an amount equal to the maximum allowed
by any statute or rule of law in effect at the time when, and governing the
proceedings in which, the damages are to be proved, whether or not the amount be
greater, equal to, or less than the amount of the loss or damages referred to
above. Without limiting the generality of the foregoing, nothing contained
herein shall modify, limit or impair any of the rights and remedies of BNPLC
under the Purchase Documents, and BNPLC shall not be required to give the sixty
day notice described in subparagraph 18.(b) as a condition precedent to any
acceleration of the Designated Sale Date or to taking any action to enforce the
Purchase Documents.
19. DEFAULT BY BNPLC. If BNPLC should default in the performance of any
of its obligations under this Improvements Lease, BNPLC shall have the time
reasonably required, but in no event less than thirty days, to cure such default
after receipt of notice from NAI specifying such default and specifying what
action NAI believes is necessary to cure the default. If NAI prevails in any
litigation brought against BNPLC because of BNPLC's failure to cure a default
within the time required by the preceding sentence, then NAI shall be entitled
to an award against BNPLC for the monetary damages proximately caused to NAI by
such default.
Notwithstanding the foregoing, BNPLC's right to cure as provided in this
Paragraph 19 will not in any event extend the time within which BNPLC must
remove Liens Removable by BNPLC as required by Paragraph 20 beyond the
Designated Sale Date.
20. QUIET ENJOYMENT. Provided NAI pays the Base Rent and all Additional
Rent payable hereunder as and when due and payable and keeps and fulfills all of
the terms, covenants, agreements and conditions to be performed by NAI
hereunder, BNPLC shall not during the Term disturb NAI's peaceable and quiet
enjoyment of the Property; however, such enjoyment shall be subject to the
terms, provisions, covenants, agreements and conditions of this Improvements
Lease, to Permitted Encumbrances, to Development Documents and to any other
claims not constituting Liens Removable by BNPLC. If any Lien Removable by BNPLC
is
-28-
33
claimed against the Property, BNPLC will remove the Lien Removable by BNPLC
promptly. Any breach by BNPLC of this Paragraph shall render BNPLC liable to NAI
for any monetary damages proximately caused thereby, but as more specifically
provided in subparagraph 4.(b) above, no such breach shall entitle NAI to
terminate this Improvements Lease or excuse NAI from its obligation to pay Rent.
21. SURRENDER UPON TERMINATION. Unless NAI or an Applicable Purchaser
purchases or has purchased BNPLC's entire interest in the Property pursuant to
the terms of the Purchase Agreement and BNPLC's entire interest in the
Improvements and other "Property" under (and as defined in) the Other Purchase
Agreement, NAI shall, upon the termination of NAI's right to occupancy,
surrender to BNPLC the Property, including Improvements constructed by NAI and
fixtures and furnishings included in the Property, free of all Hazardous
Substances (including Permitted Hazardous Substances) and tenancies and with all
Improvements in substantially the same condition as of the date the same were
initially completed, excepting only (i) ordinary wear and tear that occurs
between the maintenance, repairs and replacements required by other provisions
of this Improvements Lease or the Other Lease Agreement, and (ii) demolition,
alterations and additions which are expressly permitted by the terms of this
Improvements Lease or the Other Lease Agreement and which have been completed by
NAI in a good and workmanlike manner in accordance with all Applicable Laws. Any
movable furniture or movable personal property belonging to NAI or any party
claiming under NAI, if not removed at the time of such termination and if BNPLC
shall so elect, shall be deemed abandoned and become the property of BNPLC
without any payment or offset therefor. If BNPLC shall not so elect, BNPLC may
remove such property from the Property and store it at NAI's risk and expense.
22. HOLDING OVER BY NAI. Should NAI not purchase BNPLC's right, title
and interest in the Property as provided in the Purchase Agreement, but
nonetheless continue to hold the Property after the termination of this
Improvements Lease without BNPLC's consent, whether such termination occurs by
lapse of time or otherwise, such holding over shall constitute and be construed
as a tenancy from day to day only, at a daily Base Rent equal to: (i) Stipulated
Loss Value on the day in question, times (ii) the Default Rate for such day;
divided by (iii) three hundred and sixty; subject, however, to all of the terms,
provisions, covenants and agreements on the part of NAI hereunder. No payments
of money by NAI to BNPLC after the termination of this Improvements Lease shall
reinstate, continue or extend the Term of this Improvements Lease and no
extension of this Improvements Lease after the termination thereof shall be
valid unless and until the same shall be reduced to writing and signed by both
BNPLC and NAI.
23. INDEPENDENT OBLIGATIONS EVIDENCED BY THE OTHER OPERATIVE DOCUMENTS.
NAI acknowledges and agrees that nothing contained in this Improvements Lease
shall limit, modify or otherwise affect any of NAI's obligations under the other
Operative Documents, which obligations are intended to be separate, independent
and in addition to, and not in lieu of, the obligations set forth herein. In the
event of any inconsistency between the express terms and provisions of the
Purchase Documents and the express terms and provisions of this Improvements
Lease, the express terms and provisions of the Purchase Documents shall control.
In the event of any inconsistency between the express terms and provisions of
the Closing Certificate and the express terms and provisions of this
Improvements Lease, the express terms and provisions of this Improvements Lease
shall control; provided, nothing herein will limit or impair NAI's obligations
under the Closing Certificate following any expiration of termination of this
Improvements Lease.
[The signature pages follow.]
-29-
34
IN WITNESS WHEREOF, NAI and BNPLC have caused this Improvements Lease
Agreement to be executed as of December ___, 1999.
"NAI"
NETWORK APPLIANCE, INC.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
35
[Continuation of signature pages to Lease Agreement dated to be effective
December ___, 1999]
"BNPLC"
BNP LEASING CORPORATION
By:
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇, Vice President
36
Exhibit A
LEGAL DESCRIPTION
The real property located in the City of Sunnyvale, County of Santa ▇▇▇▇▇, State
of California, described as follows:
TRACT 1:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of a portion of Parcel B, as
shown upon that certain Parcel Map recorded in Book 345 of Maps, at page 20,
Santa ▇▇▇▇▇ County Records", which Map was filed for record in the Office of the
Recorder of the County of Santa ▇▇▇▇▇, State of California, on November 17,
1976, in Book 383 of Maps, at page 35.
TRACT 2:
Together with an easement for vehicles parking over the following described
property:
A 7-foot strip of land for parking easement purposes over a portion of Parcel A,
as said Parcel A is shown on that certain Parcel Map filed for record on
November 10, 1974 in Book 292 of Maps, at page 41, records of said County, and
being more particularly described as follows:
Commencing at the Northeast corner of said Parcel A; thence North 75~8'27" West
500.00 feet along the Northeasterly line of said Parcel A; thence South
14~51'33" West 7.00 feet; thence parallel to Northeasterly line of said Parcel
A, South 75~08'27" East 500.00 feet to the Southeast line of said Parcel A,
North 14~51'33" East 7.00 feet to the point of beginning.
APN: ▇▇▇-▇▇-▇▇▇
ARB: 110-3-65.02
TRACT 3:
Parcel 1, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa ▇▇▇▇▇, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-6
ARB: 110-3-x65
TRACT 4:
Parcel 2, as shown on that certain Parcel Map which filed for record in the
office of the recorder of the County of Santa ▇▇▇▇▇, State of California on July
7, 1994, in Book 657 of Parcel Maps, Page 9.
APN: 110-32-7
ARB: 110-3-x65
37
TRACT 5:
Parcel 2, as shown on that certain parcel Map which filed for record in the
office of the recorder of the County of Santa ▇▇▇▇▇, State of California on
October 7, 1998, in Book 708 of Parcel Maps, Pages 51 and 52.
APN: ▇▇▇-▇▇-▇▇
ARB: 110-03-65.11
Exhibit A - Page 2
38
Exhibit B
INSURANCE REQUIREMENTS
I. LIABILITY INSURANCE:
A. NAI must maintain commercial general liability ("CGL") insurance on an
occurrence basis, affording immediate protection to the limit of not less than
$20,000,000 combined single limit for bodily and personal injury, death and
property damage in respect of any one occurrence. The CGL insurance must be
primary to, and shall receive no contribution from, any insurance policies or
self-insurance programs otherwise afforded to or available to the Interested
Parties, collectively or individually. Further, the CGL insurance must include
blanket contractual liability coverage which insures contractual liability under
the indemnifications set forth in this Improvements Lease (though such coverage
or the amount thereof shall in no way limit such indemnifications).
B. Any deductible or self-insured retention applicable to the CGL insurance
shall not exceed $500,000.
C. The forms of insurance policies (including endorsements) used to provide
the CGL insurance required by this Improvements Lease, and the insurance company
or companies providing the CGL insurance, must be acceptable to BNPLC. BNPLC
shall have the right from time to time and at any time to review and approve
such policy forms (including endorsements) and the insurance company or
companies providing the insurance. Without limiting the generality of the
foregoing, BNPLC may reasonably require (and unless and until NAI is otherwise
notified by BNPLC, BNPLC does require) that such insurance be provided under
forms and by companies consistent with the following:
(1) Forms: CGL Insurance must be provided on Insurance Services
Office ("ISO") forms CG 0001 1093 or CG 0001 0196 or
equivalent substitute forms providing the same or greater
coverage.
(2) Rating Requirements: Insurance must be provided through
insurance or reinsurance companies rated by the A.M. Best
Company of Oldwick, New Jersey as having a policyholder's
rating of A or better and a reported financial information
rating of VI or better.
(3) Required Endorsements: CGL Insurance must be endorsed to
provide or include:
(a) in any policy containing a general aggregate limit, ISO
form amendment "Aggregate Limits of Insurance Per Location" CG
2504 1185 or equivalent substitute form;
(c) a waiver of subrogation, using ISO form CG 2404 1093 or
equivalent substitute form (and under the commercial umbrella,
if any), in favor of "BNP Leasing Corporation and other
Interested Parties (as defined in the Common Definitions and
Provisions Agreement (Phase IV - Improvements) between Network
Appliance, Inc. and BNP Leasing Corporation dated December
___, 1999)";
(c) ISO additional insured form CG 2026 1185 or equivalent
substitute form, without modification (and under the
commercial umbrella, if any), designating as additional
insureds "BNPLC and other Interested Parties, as defined in
the Common Definitions and Provisions Agreement (Phase IV -
Improvements) between Network Appliance, Inc. and BNP Leasing
39
Corporation dated December ___, 1999)"; and
(d) provisions entitling BNPLC to 30 days' notice from the
insurer prior to any cancellation, nonrenewal or material
modification to the CGL coverage.
(4) Other Insurance: Each policy to contain standard CGL "other
insurance" wording, unmodified in any way that would make it
excess over or contributory with the additional insured's own
commercial general liability coverage.
II. PROPERTY INSURANCE: From and after the commencement of any construction of
Improvements on or about the Land or the delivery of any materials in
anticipation of such construction:
A. NAI must maintain property insurance in "special form" (including theft)
or against "all risks," providing the broadest available coverage for all
Improvements (as defined in the Common Provisions and Definitions Agreement) and
equipment included in the Property, on a blanket basis if multiple buildings are
involved, with no exclusions for vandalism, malicious mischief, or sprinkler
leakage, and including coverage against earthquake and all coverage perils
normally included within the definitions of extended coverage, vandalism,
malicious mischief and, if the Property is in a flood zone, flood. In addition,
boiler and machinery coverage must be maintained at all times by endorsement to
the property insurance policy or by separate policy. Also, during any period of
significant construction on any Improvements, the property insurance must
include builder's completed value risk insurance for such Improvements, with no
protective safeguard endorsement, and (without limiting the other requirements
of this Exhibit) builder's completed value risk insurance must provide the
following coverages:
(1) materials and supplies at other locations awaiting
installation;
(2) materials and supplies in transit to the worksite for
installation;
(3) loss of use or consequential loss;
(4) pollutant cleanup and removal;
(5) freezing;
(6) collapse during construction, resulting from fault, defect,
error or omission in design, plan, specification or
workmanship;
(7) construction ordinance or law;
(8) mechanical or electrical breakdown;
(9) debris removal additional limit;
(10) preservation of property;
(11) fire department service charge;
(12) additional interest on construction loan due to delays in the
completion of construction;
Exhibit B - Page 2
40
(13) loss of rental income;
(14) legal/professional fees (in the amount of no less than
$1,500,000) and other soft costs as reasonably determined by
NAI, subject to BNPLC's approval.
B. The property insurance required hereby must provide coverage in the
amount no less than replacement value (exclusive of land, foundation, footings,
excavations and grading) with endorsements for contingent liability from
operation of building laws, increased cost of construction and demolition costs
which may be necessary to comply with building laws. Subject to the approval of
BNPLC, NAI will be responsible for determining the amount of property insurance
to be maintained from time to time, but NAI must maintain such coverage on an
agreed value basis to eliminate the effects of coinsurance.
C. Any deductible or self-insured retention applicable to the property
insurance shall not exceed (1) $500,000 for all coverages other than earthquake
coverage, and (2) for earthquake coverage only, five percent of the aggregate
amount of the property insurance required to satisfy this Improvements Lease,
calculated as described in the preceding paragraph.
D. The property insurance shall cover not only the value of NAI's interest
in the Improvements, but also the interest of BNPLC, with BNPLC shown as an
insured as its interests may appear.
E. The forms of insurance policies (including endorsements) used to provide
the property insurance required by this Improvements Lease, and the insurance
company or companies providing the property insurance, must be acceptable to
BNPLC. BNPLC shall have the right from time to time and at any time to review
and approve such policy forms (including endorsements) and the insurance company
or companies providing such insurance. Without limiting the generality of the
foregoing, BNPLC may reasonably require (and unless and until NAI is otherwise
notified by BNPLC, BNPLC does require) that such insurance be provided under
forms and by companies consistent with the following:
(1) Rating Requirements: Insurance to be provided through insurance
or reinsurance companies rated by the A.M. Best Company of Oldwick,
New Jersey as having (a) a policyholder's rating of A or better, (b)
a reported financial information rating of no less than X, and (c) in
the case of each insurance or reinsurance company, a reported
financial information rating which indicates an adjusted
policyholders' surplus equal to or greater than the underwriting
exposure that such company has under the insurance or reinsurance it
is providing for the Property.
(2) Required Endorsements: NAI's property insurance must be endorsed
to provide or include:
(a) a waiver of subrogation in favor of "BNPLC and other
Interested Parties, as defined in the Common
Definitions and Provisions Agreement (Phase IV -
Improvements) between Network Appliance, Inc. and BNP
Leasing Corporation dated December ___, 1999)";
(b) that NAI's insurance is primary, with any policies of
BNPLC or other Interested Parties being excess,
secondary and noncontributing;
(c) that the protection afforded to BNPLC by such
insurance shall not be reduced or impaired by acts or
omissions of NAI or any other beneficiary or insured;
and
(d) that BNPLC must be notified at least thirty days prior
to any cancellation, nonrenewal or reduction of
insurance coverage.
Exhibit B - Page 3
41
III. OTHER INSURANCE RELATED REQUIREMENTS:
A. BNPLC must be notified in writing immediately by NAI of claims against
NAI that might cause a reduction below seventy-five percent (75%) of any
aggregate limit of any policy.
B. NAI's property insurance must be evidenced by ▇▇▇▇▇ 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 ▇▇▇▇▇ form 25 "Certificate of
Insurance" completed and interlineated in a manner satisfactory to BNPLC to show
compliance with the requirements of this Exhibit. Copies of endorsements to the
CGL insurance must be attached to such form.
D. Such evidence of required insurance must be delivered upon execution of
this Improvements Lease and new certificate or evidence of insurance must be
delivered no later than 10 days prior to expiration of existing policy.
E. NAI shall not cancel, fail to renew, or make or permit any material
reduction in any of the policies or certificates described in this Exhibit
without the prior written consent of BNPLC. The certificates (▇▇▇▇▇ forms 27 and
25) described in this Exhibit must contain the following express provision:
"This is to certify that the policies of insurance described herein have
been issued to the insured Network Appliance, Inc. for whom this certificate
is executed and are in force at this time. In the event of cancellation,
non-renewal, or material reduction in coverage affecting the certificate
holder, at least sixty days prior notice shall be given to the certificate
holder."
F. The limits of liability under the liability insurance required by this
Improvements Lease may be provided by a single policy of insurance or by a
combination of primary and umbrella policies, but in no event shall the total
limits of liability available for any one occurrence or accident be less than
those required by this Exhibit.
G. NAI shall provide copies, certified as complete and correct by an
authorized agent of the applicable insurer, of all insurance policies required
by this Exhibit within ten days after receipt of a request for such copies from
BNPLC.
Exhibit B - Page 4
42
Exhibit C
NOTICE OF LIBOR PERIOD ELECTION
BNP Leasing Corporation
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇
Banque Nationale de Paris, San Francisco
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
Re: Lease Agreement (Phase IV - Improvements) and Lease Agreement (Phase
IV - Land), both dated as of December ___, 1999, and both between
Network Appliance, Inc., as tenant, and BNP Leasing Corporation, as
landlord
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the two Lease Agreements referenced above. This letter
constitutes notice to you that the LIBOR Period Election under both of the Lease
Agreements shall be:
________________ month(s),
beginning with the first Base Rent Period that commences on or after:
______________, ____.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE NUMBER OF MONTHS
SPECIFIED ABOVE IS NOT A PERMITTED NUMBER UNDER THE DEFINITION OF "LIBOR PERIOD
ELECTION" IN THE COMMON DEFINITIONS AND PROVISIONS AGREEMENTS REFERENCED IN THE
LEASE AGREEMENTS, OR IF THE DATE SPECIFIED ABOVE CONCERNING THE COMMENCEMENT OF
THE LIBOR PERIOD ELECTION IS LESS THAN TEN BUSINESS DAYS AFTER YOUR RECEIPT OF
THIS NOTICE. HOWEVER, WE ASK THAT YOU NOTIFY US IMMEDIATELY IF FOR ANY REASON
YOU BELIEVE THIS NOTICE IS DEFECTIVE.
Executed this _____ day of ______________, 19___.
Network Appliance, Inc.
Name:
-----------------------------------
Title:
----------------------------------
43
[cc all Participants]
44
Schedule 1
FINANCIAL COVENANTS
This Schedule 1 is attached to and made a part of (a) the Lease Agreement
(Phase IV - Improvements) (the "IMPROVEMENTS LEASE") dated to be effective as of
December ___, 1999 (the "EFFECTIVE DATE"), between BNP Leasing Corporation, a
Delaware corporation ("BNPLC") and Network Appliance, Inc., a California
corporation ("NAI"), (b) the Lease Agreement (Phase IV - Land) (the "LAND LEASE"
and, together with the Improvements Lease, the "LEASES") dated to be effective
as of the Effective Date, between BNPLC and NAI, (c) the Pledge Agreement (Phase
IV - Improvements) (the "PLEDGE AGREEMENT (IMPROVEMENTS)") dated to be effective
as of the Effective Date, among BNPLC, NAI, and Banque Nationale de Paris, as a
Participant and as agent for any financial institutions that become Participants
thereunder from time to time, and (d) the Pledge Agreement (Phase IV - Land)
(collectively with the Pledge Agreement (Improvements), the "PLEDGE AGREEMENTS")
dated to be effective as of the Effective Date, among BNPLC, NAI, and Banque
Nationale de Paris, as a Participant and as agent for any financial institutions
that become Participants thereunder from time to time.
PART I - DEFINED TERMS
In this Schedule 1, capitalized terms used but not defined herein shall have
the meaning assigned to them in the Leases or the Common Definitions and
Provisions Agreements referenced in the Leases; and the following capitalized
terms shall have the following meanings:
"ADJUSTED NET INCOME" means, for any fiscal period of NAI, the aggregate net
income earned (or net losses incurred) during such period by NAI and its
Subsidiaries (determined on a consolidated basis), plus any Permitted
Non-Cash Charges deducted in determining such net income (or net loss).
"ADJUSTED EBIT" means, for any accounting period, net income (or net loss)
of NAI and its Subsidiaries (determined on a consolidated basis), plus the
amounts (if any) which, in the determination of net income (or net loss) for
such period, have been deducted for (a) interest expense, (b) income tax
expense (c) rent expense under leases of property, and (d) Permitted
Non-Cash Charges.
"COLLATERAL TEST DATES" mean the Base Rent Commencement Date and the earlier
of the following dates after each fiscal quarter of NAI that ends after the
Base Rent Commencement Date : (1) the seventh Business Day after the release
by NAI of its financial statements for the fiscal quarter; or (2) the first
Business Day of the third calendar month following the end of the fiscal
quarter.
"CONSOLIDATED TANGIBLE NET WORTH" means the excess of (1) the total assets,
other than Intangible Assets, of NAI and its Subsidiaries (determined on a
consolidated basis) over (2) the total liabilities of NAI and its
Subsidiaries (determined on a consolidated basis).
"DEBT" as used in this Exhibit shall have the meaning assigned to it in the
Common Definitions and Provisions Agreements, where "Debt" of any Person is
defined to mean (without duplication of any item): (a) indebtedness of such
Person for borrowed money; (b) indebtedness of such Person for the deferred
purchase price of property or services (except trade payables and accrued
expenses constituting current liabilities in the ordinary course of
business); (c) the face amount of any outstanding letters of credit issued
for the account of such Person; (d) obligations of such Person arising under
acceptance facilities; (e) guaranties, endorsements (other than for
collection in the ordinary course of business) and other contingent
obligations of such Person to purchase, to provide funds for payment, to
provide funds to invest in any Person, or otherwise to assure a
45
creditor against loss; (f) obligations of others secured by any Lien on
property of such Person; (g) obligations of such Person as lessee under
Capital Leases; and (h) the obligations of such Person, contingent or
otherwise, under any lease of property or related documents (including a
separate purchase agreement) which provide that such Person or any of its
Affiliates must purchase or cause another Person to purchase any interest in
the leased property and thereby guarantee a minimum residual value of the
leased property to the lessor. For purposes of this definition, the amount
of the obligations described in clause (h) of the preceding sentence with
respect to any lease classified according to GAAP as an "operating lease,"
shall equal the sum of (1) the present value of rentals and other minimum
lease payments required in connection with such lease [calculated in
accordance with SFAS 13 and other GAAP relevant to the determination of the
whether such lease must be accounted for as an operating lease or capital
lease], plus (2) the fair value of the property covered by the lease;
provided, however, that such amount shall not exceed the price, as of the
date a determination of Debt is required hereunder, for which the lessee can
purchase the leased property pursuant to any valid ongoing purchase option
if, upon such a purchase, the lessee shall be excused from paying rentals or
other minimum lease payments that would otherwise accrue after the purchase.
"FIXED CHARGES" means, for any accounting period, the sum (without
duplication of any item) of the following charges or costs incurred or paid
by NAI and its Subsidiaries (determined on a consolidated basis): (a) gross
interest expense, plus (b) amortization of principal or debt discount in
respect of all Debt during such period, plus (c) rent payable under all
leases of property during such period, plus (d) taxes payable during such
period.
"INTANGIBLE ASSETS" means assets of NAI and its Subsidiaries (determined on
a consolidated basis) that are properly classified as "INTANGIBLE ASSETS" in
accordance with GAAP and, in any event, shall include goodwill, patents,
trade names, trademarks, copyrights, franchises, experimental expense,
organization expense, unamortized debt discount and expense, and deferred
charges (other than prepaid insurance, prepaid taxes and current deferred
taxes to the extent any such prepaid or deferred items are classified on the
balance sheet of NAI and its consolidated Subsidiaries as current assets in
accordance with GAAP and with the concurrence of NAI's independent public
accountants).
"MANDATORY COLLATERAL PERIOD" means any period during which, notwithstanding
any contrary designation of a Collateral Percentage by NAI under the Pledge
Agreements, the Collateral Percentage for purposes of the Pledge Agreements
shall be one hundred percent (100%), determined as set forth in Part III of
this Schedule 1.
"PERMITTED NON-CASH CHARGES" means the amounts (if any) which, in the
determination of net income (or net loss) for any relevant fiscal period,
have been deducted by NAI or its Subsidiaries for non-cash charges made to
write down goodwill or research and development costs in connection with
acquisitions permitted by this Schedule 1.
"QUICK RATIO" means the ratio of:
(A) the sum (without duplication of any item) of the following
assets of NAI and its Subsidiaries (determined on a consolidated
basis): Collateral delivered and pledged under the Pledge Agreements
in accordance with the requirements thereof (if any); plus
unencumbered cash; plus unencumbered short term cash investments;
plus other unencumbered marketable securities which are classified as
short term investments in accordance with GAAP; plus unencumbered
accounts receivable, computed net of reserves for uncollectible
amounts as determined in accordance with GAAP, to
(B) the sum (without duplication of any item) of (1) all
liabilities of NAI and its Subsidiaries (determined on a consolidated
basis) treated as current liabilities in accordance with GAAP, plus
(2)
Schedule 1 - Page 2
46
other obligations included in total Debt of NAI and its Subsidiaries
(determined on a consolidated basis), the payment of which is due on
demand or will become due within one year after the date on which the
applicable determination of Quick Ratio is required hereunder.
"ROLLING FOUR QUARTER PERIOD" means a period of four consecutive fiscal
quarters of NAI, the last of which quarters ends after December 31, 1999.
PART II - FINANCIAL COVENANTS FOR LEASE AGREEMENT
NAI covenants that it shall not at any time suffer or permit:
1. Minimum Unencumbered Cash and Cash Equivalents. The sum (without duplication
of any item) of the unrestricted cash, Collateral delivered and pledged
under the Pledge Agreements in accordance with the requirements thereof (if
any), unencumbered short term cash investments and unencumbered marketable
securities classified as short term investments according to GAAP of NAI and
its Subsidiaries (determined on a consolidated basis) to be less than total
Debt of NAI and its Subsidiaries (determined on a consolidated basis).
2. Minimum Tangible Net Worth. Consolidated Tangible Net Worth to be less than
the sum of: (a) ninety percent of the Consolidated Tangible Net Worth as of
October 30, 1998; plus (b) seventy-five percent of NAI's net income
(computed without deduction for net losses in any fiscal quarter) earned in
each fiscal quarter since October 30, 1998; plus (c) one-hundred percent of
the net proceeds of sales of stock in NAI or its Subsidiaries (other than
sales to NAI or its Subsidiaries) after October 30, 1998; less (d) Permitted
Non-Cash Charges for any period after October 30, 1998.
3. Minimum Quick Ratio. The Quick Ratio to be less than 1.50 to 1.00.
4. Minimum Fixed Charge Coverage. The ratio of (a) Adjusted EBIT for any
Rolling Four Quarter Period to (b) Fixed Charges for the same Rolling Four
Quarter Period, to be less than 1.50 to 1.00.
5. Minimum Profitability. Adjusted Net Income to be less than $1.00 in more
than one fiscal quarter of any Rolling Four Quarter Period.
6. Maximum Leverage Ratio. the ratio of (a) total Debt of NAI and its
Subsidiaries (determined on a consolidated basis) at the end of any Rolling
Four Quarter Period to (b) the Adjusted EBIT for the same Four Quarter
Rolling Period, to exceed 3.00 to 1.00.
PART III - TESTS FOR MANDATORY COLLATERAL PERIODS
If, as of the end of the latest fiscal quarter of NAI ending before any
Collateral Test Date, NAI shall have both:
(A) failed to maintain a ratio of (1) the sum (without duplication of
any item) of Collateral delivered and pledged under the Pledge Agreements in
accordance with the requirements thereof (if any), unencumbered cash,
unencumbered short term cash investments and unencumbered marketable
securities classified as short term investments according to GAAP of NAI and
its Subsidiaries (determined on a consolidated basis) to (2) all Debt of NAI
and its Subsidiaries (determined on a consolidated basis), of at least 1.5
to 1.00; and
Schedule 1 - Page 3
47
(B) failed to maintain a ratio of (i) all Debt of NAI and its
Subsidiaries (determined on a consolidated basis) to (ii) Consolidated
Tangible Net Worth of NAI, of no more than 0.45 to 1.00;
such Collateral Test Date shall constitute a "FAILED COLLATERAL TEST DATE" for
purposes of the determination of Mandatory Collateral Periods. A Mandatory
Collateral Period shall commence on each Failed Collateral Test, and such
Mandatory Collateral Period shall continue until the second of any two
subsequent CONSECUTIVE Collateral Test Dates, neither of which constitutes a
Failed Collateral Test Date.
For purposes of illustration only, assume that the following dates are
consecutive Collateral Test Dates, some of which are Failed Collateral Test
Dates and some of which are not, as indicated opposite each date:
Date Failed Collateral Test Date?
---- ----------------------------
February 15, 2001 Yes
May 12, 2001 No
August 16, 2001 Yes
November 11, 2001 No
February 18, 2002 No
May 14, 2002 Yes
August 18, 2002 Yes
November 18, 2002 No
February 15, 2003 No
Under these assumptions, the entire period from February 15, 2001 to February
18, 2002 falls within one or more Mandatory Collateral Periods. Also, the entire
period commencing May 14, 2002 and ending February 15, 2003 falls within one or
more Mandatory Collateral Periods. The period from February 18, 2002 to May 14,
2002 does not constitute Mandatory Collateral Period.
PART IV - OTHER COVENANTS
Without limiting NAI's obligations under the other provisions of the Operative
Documents, during the Term, NAI shall not, without the prior written consent of
BNPLC in each case:
A. Liens. Create, incur, assume or suffer to exist, or permit any of its
Consolidated Subsidiaries to create, incur, assume or suffer to exist, any Lien,
upon or with respect to any of its properties, now owned or hereafter acquired,
provided that the following shall be permitted except to the extent that they
would encumber any interest in the Property in violation of other provisions of
the Operative Documents:
1. Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if they are being contested in good
faith by appropriate proceedings and for which appropriate reserves are
maintained;
2. Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are
not past due for more than thirty (30) days, or which are being contested in
good faith by appropriate proceedings and for which appropriate reserves
have been established;
3. Liens under workmen's compensation, unemployment insurance, social
security or similar
Schedule 1 - Page 4
48
laws (other than ERISA);
4. Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), leases,
public or statutory obligations, surety, stay, appeal, indemnity,
performance or other similar bonds, or other similar obligations arising in
the ordinary course of business;
5. judgment and other similar Liens against assets other than the
Property or any part thereof in an aggregate amount not in excess of
$3,000,000 arising in connection with court proceedings; provided that the
execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith by
appropriate proceedings;
6. easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by NAI or any such Consolidated Subsidiary of
the property or assets encumbered thereby in the normal course of its
business or materially impair the value of the property subject thereto;
7. Liens securing obligations of such a Consolidated Subsidiary to
NAI or to another such Consolidated Subsidiary;
8. Liens not otherwise permitted by this subparagraph A (and not
encumbering the Property or any Collateral) incurred in connection with the
incurrence of additional Debt or asserted to secure Unfunded Benefit
Liabilities, provided that (a) the sum of the aggregate principal amount of
all outstanding obligations secured by Liens incurred pursuant to this
clause shall not at any time exceed five percent (5%) of Consolidated
Tangible Net Worth at such time; and (b) such Liens do not constitute Liens
against NAI's interest in any material Subsidiary or blanket Liens against
all or substantially all of the inventory, receivables, general intangibles
or equipment of NAI or of any material Subsidiary of NAI (for purposes of
this clause, a "material Subsidiary" means any subsidiary whose assets
represent a substantial part of the total assets of NAI and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP);
and
9. Liens incurred in connection with any renewals, extensions or
refundings of any Debt secured by Liens described in the preceding clauses
of this subparagraph A, provided that there is no increase in the aggregate
principal amount of Debt secured thereby from that which was outstanding as
of the date of such renewal, extension or refunding and no additional
property is encumbered.
B. Transactions with Affiliates. Enter into or permit any Subsidiary of NAI
to enter into any material transactions (including, without limitation, the
purchase, sale or exchange of property or the rendering of any service) with any
Affiliates of NAI except on terms (1) that would not cause or result in a
Default by NAI under the financial covenants set forth in Part II of this
Schedule, and (2) that are no less favorable to NAI or the relevant Subsidiary
than those that would have been obtained in a comparable transaction on an arm's
length basis from an unrelated Person.
C. Compliance. Fail to preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; or fail to comply with the provisions of all documents
pursuant to which NAI is organized and/or which govern NAI's continued existence
and with the requirements of all laws, rules, regulations and orders of a
governmental agency applicable to NAI and/or its business.
D. Insurance. Fail to maintain and keep in force insurance of the types and
in amounts customarily carried in lines of business similar to that of NAI,
including but not limited to fire, extended coverage, public liability,
Schedule 1 - Page 5
49
flood, property damage and workers' compensation, with all such insurance
carried with companies and in amounts satisfactory to BNPLC, or fail to deliver
to BNPLC from time to time at BNPLC's request schedules setting forth all
insurance then in effect.
E. Facilities. fail to keep all properties useful or necessary to NAI's
business in good repair and condition, or to from time to time make necessary
repairs, renewals and replacements thereto so that such properties shall be
fully and efficiently preserved and maintained.
F. Taxes and Other Liabilities. Fail to pay and discharge when due any and
all indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as NAI may in good faith contest
or as to which a bona fide dispute may arise, and (b) for which NAI has made
provisions, to BNPLC's satisfaction, for eventual payment thereof in the event
that NAI is obligated to make such payment.
G. Capital Expenditures. Make any additional investment in fixed assets in
any fiscal year in excess of an aggregate of twenty percent (20%) of NAI's total
assets as of the end of the prior fiscal year.
H. Merger, Consolidation, Transfer of Assets. Merge into or consolidate with
any other entity (unless NAI is the surviving entity and remains in compliance
of all provisions of the Operative Documents); or make any substantial change in
the nature of NAI's business as conducted as of the date hereof; or sell, lease,
transfer or otherwise dispose of all or a substantial or material portion of
NAI's assets except in the ordinary course of its business.
I. Loans, Advances, Investments. Make any loans or advances to or
investments in any person or entity, except (a) any of the foregoing existing as
of, and disclosed to BNPLC prior to, the date hereof, (b) loans to employees for
travel advances, relocation loans and other loans in the ordinary course of
business, (c) investments in accordance with NAI's investment policy, as in
effect from time to time, (d) existing investments in subsidiaries and joint
ventures which have been disclosed to BNPLC in writing prior to the date hereof,
and new investments in subsidiaries and joint ventures in amounts up to an
aggregated of $10,000,000.00, (e) loans to employees, officers, directors to
finance or refinance the purchase of equity securities of NAI.
J. Dividends, Distributions. Declare or pay any dividend or distribution
either in cash, stock or any other property on NAI's stock now or hereafter
outstanding, nor redeem, retire, repurchase or otherwise acquire any shares of
any class of NAI's stock now or hereafter outstanding.
Schedule 1 - Page 6
50
COMMON DEFINITIONS AND PROVISIONS AGREEMENT
(PHASE IV - IMPROVEMENTS)
BETWEEN
BNP LEASING CORPORATION
AND
NETWORK APPLIANCE, INC.
DATED AS OF DECEMBER ___, 1999
51
TABLE OF CONTENTS
Page
----
ARTICLE I - LIST OF DEFINED TERMS:
ACTIVE NEGLIGENCE....................................................................1
ADDITIONAL RENT......................................................................1
ADMINISTRATIVE AGENCY FEE............................................................2
ADJUSTED EBIT........................................................................2
AFFILIATE............................................................................2
APPLICABLE LAWS......................................................................2
APPLICABLE PURCHASER.................................................................2
ARRANGEMENT FEE......................................................................2
ATTORNEYS' FEES......................................................................2
BANKING RULES CHANGE.................................................................2
BASE RATE............................................................................3
BASE RENT............................................................................3
BASE RENT COMMENCEMENT DATE..........................................................3
BASE RENT DATE.......................................................................3
BASE RENT PERIOD.....................................................................3
BNPLC................................................................................4
BNPLC'S PARENT.......................................................................4
BREAKAGE COSTS.......................................................................4
BREAK EVEN PRICE.....................................................................5
BUSINESS DAY.........................................................................5
CAPITAL ADEQUACY CHARGES.............................................................5
CAPITAL LEASE........................................................................5
CLOSING CERTIFICATE..................................................................5
CODE.................................................................................5
COLLATERAL...........................................................................5
COLLATERAL PERCENTAGE................................................................5
COMMON DEFINITIONS AND PROVISIONS AGREEMENT (PHASE IV - IMPROVEMENTS)................5
CURRENT AS IS MARKET VALUE...........................................................5
DEBT.................................................................................6
DEFAULT..............................................................................7
DEFAULT RATE.........................................................................7
DEPOSIT TAKER........................................................................7
DEPOSIT TAKER LOSSES.................................................................7
DESIGNATED SALE DATE.................................................................7
DEVELOPMENT DOCUMENTS................................................................8
DIRECT PAYMENTS TO PARTICIPANTS......................................................8
EFFECTIVE DATE.......................................................................8
EFFECTIVE RATE.......................................................................8
ENVIRONMENTAL LAWS...................................................................8
ENVIRONMENTAL CUTOFF DATE............................................................8
ENVIRONMENTAL LOSSES.................................................................8
(i)
52
Page
----
ENVIRONMENTAL REPORTS................................................................9
ERISA................................................................................9
ERISA AFFILIATE......................................................................9
ESCROWED PROCEEDS....................................................................9
ESTABLISHED MISCONDUCT..............................................................10
EUROCURRENCY LIABILITIES............................................................10
EURODOLLAR RATE RESERVE PERCENTAGE..................................................10
EVENT OF DEFAULT....................................................................10
EXCLUDED TAXES......................................................................10
EXISTING CONTRACT...................................................................11
FAILED COLLATERAL TEST DATE.........................................................11
FED FUNDS RATE......................................................................11
FUNDING ADVANCES....................................................................11
GAAP................................................................................11
HAZARDOUS SUBSTANCE.................................................................11
HAZARDOUS SUBSTANCE ACTIVITY........................................................11
IMPOSITIONS.........................................................................12
IMPROVEMENTS........................................................................12
IMPROVEMENTS LEASE..................................................................12
INITIAL FUNDING ADVANCE.............................................................12
INTERESTED PARTY....................................................................12
ISSUE 97-1 NON-PERFORMANCE-RELATED SUBJECTIVE EVENT OF DEFAULT......................13
LAND................................................................................13
LIBOR...............................................................................13
LIBOR PERIOD ELECTION...............................................................13
LIEN................................................................................14
LIENS REMOVABLE BY BNPLC............................................................14
LOSSES..............................................................................15
MANDATORY COLLATERAL PERIOD.........................................................15
MATERIAL ENVIRONMENTAL COMMUNICATION................................................15
MAXIMUM REMARKETING OBLIGATION......................................................15
MINIMUM EXTENDED REMARKETING PRICE..................................................15
MULTIEMPLOYER PLAN..................................................................15
NAI.................................................................................15
NAI'S EXTENDED REMARKETING PERIOD...................................................15
NAI'S EXTENDED REMARKETING RIGHT....................................................15
NAI'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS....................................15
OPERATIVE DOCUMENTS.................................................................15
OTHER COMMON DEFINITIONS AND PROVISIONS AGREEMENT...................................16
OTHER LEASE AGREEMENT...............................................................16
OTHER PURCHASE AGREEMENT............................................................16
PARTICIPANT.........................................................................16
PARTICIPATION AGREEMENT.............................................................16
PBGC................................................................................16
(ii)
53
Page
----
PERIOD..............................................................................16
PERMITTED ENCUMBRANCES..............................................................16
PERMITTED HAZARDOUS SUBSTANCE USE...................................................17
PERMITTED HAZARDOUS SUBSTANCES......................................................17
PERMITTED TRANSFER..................................................................17
PERSON..............................................................................18
PERSONAL PROPERTY...................................................................18
PLAN................................................................................18
PLEDGE AGREEMENT....................................................................18
PREMISES LEASES.....................................................................18
PRIME RATE..........................................................................18
PROPERTY............................................................................18
PURCHASE AGREEMENT..................................................................18
PURCHASE DOCUMENTS..................................................................18
PURCHASE OPTION.....................................................................19
QUALIFIED AFFILIATE.................................................................19
QUALIFIED PREPAYMENTS...............................................................19
REAL PROPERTY.......................................................................19
REMEDIAL WORK.......................................................................19
RENT................................................................................19
RESIDUAL RISK PERCENTAGE............................................................19
RESPONSIBLE FINANCIAL OFFICER.......................................................19
SALE CLOSING DOCUMENTS..............................................................20
SECURED SPREAD......................................................................20
SELLER..............................................................................20
STIPULATED LOSS VALUE...............................................................20
SUBSIDIARY..........................................................................20
SUPPLEMENTAL PAYMENT................................................................20
TERM................................................................................20
THIRD PARTY PRICE...................................................................20
THIRD PARTY SALE NOTICE.............................................................20
THIRD PARTY SALE PROPOSAL...........................................................20
THIRD PARTY TARGET PRICE............................................................20
TRANSACTION EXPENSES................................................................20
UNFUNDED BENEFIT LIABILITIES........................................................21
UNSECURED SPREAD....................................................................21
UPFRONT SYNDICATION FEES............................................................22
VOLUNTARY RETENTION OF THE PROPERTY.................................................22
ARTICLE II - PROVISIONS USED IN COMMON:
1 NOTICES.........................................................................22
2 SEVERABILITY....................................................................24
3 NO MERGER.......................................................................24
(iii)
54
Page
----
4 NO IMPLIED WAIVER...............................................................25
5 ENTIRE AND ONLY AGREEMENTS......................................................25
6 BINDING EFFECT..................................................................25
7 TIME IS OF THE ESSENCE..........................................................25
8 GOVERNING LAW...................................................................25
9 PARAGRAPH HEADINGS..............................................................25
10 NEGOTIATED DOCUMENTS............................................................26
11 TERMS NOT EXPRESSLY DEFINED IN AN OPERATIVE DOCUMENT............................26
12 OTHER TERMS AND REFERENCES......................................................26
13 EXECUTION IN COUNTERPARTS.......................................................26
14 NOT A PARTNERSHIP, ETC..........................................................26
(iv)
55
COMMON DEFINITIONS AND PROVISIONS AGREEMENT
(PHASE IV - IMPROVEMENTS)
This Common Definitions and Provisions Agreement (Phase IV -
Improvements), by and between BNP LEASING CORPORATION, a Delaware corporation
("BNPLC"), and NETWORK APPLIANCE, INC., a California corporation ("NAI"), is
dated as of December ___, 1999, the Effective Date.
RECITALS
Contemporaneously with the execution of this Common Definitions and
Provisions Agreement (Phase IV - Improvements), NAI is executing the Closing
Certificate (as defined below) in favor of BNPLC, and BNPLC and NAI are
executing the Improvements Lease (as defined below), and the Purchase Agreement
(as defined below), all of which concern the Property (as defined below). Each
of the Closing Certificate, the Improvements Lease and the Purchase Agreement
(together with this Common Definitions and Provisions Agreement (Phase IV -
Improvements) and the Pledge Agreement [as defined below], the "OPERATIVE
DOCUMENTS") are intended to create separate and independent obligations upon the
parties thereto. However, NAI and BNPLC intend that all of the Operative
Documents share certain consistent definitions and other miscellaneous
provisions. To that end, the parties are executing this Common Definitions and
Provisions Agreement (Phase IV - Improvements) and incorporating it by reference
into each of the other Operative Documents.
AGREEMENTS
ARTICLE I - LIST OF DEFINED TERMS
UNLESS A CLEAR CONTRARY INTENTION APPEARS, THE FOLLOWING TERMS SHALL
HAVE THE RESPECTIVE INDICATED MEANINGS AS USED HEREIN AND IN THE OTHER OPERATIVE
DOCUMENTS:
"ACTIVE NEGLIGENCE" of any Person (including BNPLC) means, and is
limited to, the negligent conduct on the Property (and not mere omissions) by
such Person or by others acting and authorized to act on such Person's behalf in
a manner that proximately causes actual bodily injury or property damage for
which NAI does not carry (and is not obligated by the Improvements Lease to
carry) insurance. "ACTIVE NEGLIGENCE" shall not include (1) any negligent
failure of BNPLC to act when the duty to act would not have been imposed but for
BNPLC's status as owner of the Land, the Improvements or any interest in any
other Property or as a party to the transactions described in the Improvements
Lease or the other Operative Documents or in the Other Lease Agreement or the
Other Purchase Agreement, (2) any negligent failure of any other Interested
Party to act when the duty to act would not have been imposed but for such
party's contractual or other relationship to BNPLC or participation or
facilitation in any manner, directly or indirectly, of the transactions
described in the Improvements Lease or other Operative Documents or in the Other
Lease Agreement or Other Purchase Agreement, or (3) the exercise in a lawful
manner by BNPLC (or any party lawfully claiming through or under BNPLC) of any
right or remedy provided in or under the Improvements Lease or the other
Operative Documents, or in the Other Lease Agreement or Other Purchase
Agreement.
"ADDITIONAL RENT" shall have the meaning assigned to it in subparagraph
3.(d) of the Improvements Lease.
"ADMINISTRATIVE AGENCY FEE" shall have the meaning assigned to it in
subparagraph 3.(g) of the Improvements Lease.
56
"ADJUSTED EBIT" shall have the meaning assigned to it in Part I of
Schedule 1 attached to the Improvements Lease and to the Pledge Agreement.
"AFFILIATE" of any Person means any other Person controlling, controlled
by or under common control with such Person. For purposes of this definition,
the term "control" when used with respect to any Person means the power to
direct the management of policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"APPLICABLE LAWS" means any or all of the following, to the extent
applicable to NAI or the Property or the Improvements Lease or the other
Operative Documents: restrictive covenants; zoning ordinances and building
codes; flood disaster laws; health, safety and environmental laws and
regulations; the Americans with Disabilities Act and other laws pertaining to
disabled persons; and other laws, statutes, ordinances, rules, permits,
regulations, orders, determinations and court decisions.
"APPLICABLE PURCHASER" means any third party designated by NAI to
purchase BNPLC's interest in the Property and in any Escrowed Proceeds as
provided in the Purchase Agreement.
"ARRANGEMENT FEE" shall have the meaning assigned to it in subparagraph
3.(e) of the Improvements Lease.
"ATTORNEYS' FEES" means the expenses and reasonable fees of counsel to
the parties incurring the same, excluding costs or expenses of in-house counsel
(whether or not accounted for as general overhead or administrative expenses),
but otherwise including printing, photostating, duplicating and other expenses,
air freight charges, and fees billed for law clerks, paralegals, librarians and
others not admitted to the bar but performing services under the supervision of
an attorney. Such terms shall also include all such fees and expenses incurred
with respect to appeals, arbitrations and bankruptcy proceedings, and whether or
not any manner of proceeding is brought with respect to the matter for which
such fees and expenses were incurred.
"BANKING RULES CHANGE" means either: (1) the introduction of or any
change in any law or regulation applicable to BNPLC, BNPLC's Parent or any other
Participant, or in the generally accepted interpretation by the institutional
lending community of any such law or regulation, or in the interpretation of any
such law or regulation asserted by any regulator, court or other governmental
authority (other than any change by way of imposition or increase of reserve
requirements included in the Eurodollar Rate Reserve Percentage) or (2) the
compliance by BNPLC, BNPLC's Parent or any other Participant with any new
guideline or new request from any central bank or other governmental authority
(whether or not having the force of law).
"BASE RATE" for any Base Rent Period means a rate equal to the higher of
(1) the Prime Rate in effect on the first day of such period, or (2) the rate
which is fifty basis points (50/100 of 1%) above the Fed Funds Rate for that
period.
"BASE RENT" means the rent payable by NAI pursuant to subparagraph 3.(a)
of the Improvements Lease.
"BASE RENT COMMENCEMENT DATE" means the first Business Day of January,
2000.
Page 2
57
"BASE RENT DATE" means a date upon which Base Rent must be paid under
the Improvements Lease, all of which dates shall be the first Business Day of a
calendar month. The first Base Rent Date shall be determined as follows:
a) If a LIBOR Period Election of one month is in effect on
the Base Rent Commencement Date, then the first Business Day of
the first calendar month following the Base Rent Commencement
Date shall be the first Base Rent Date.
b) If the LIBOR Period Election in effect on the Base Rent
Commencement Date is three months or six months, then the first
Business Day of the third calendar month following the Base Rent
Commencement Date shall be the first Base Rent Date.
Each successive Base Rent Date after the first Base Rent Date shall be the first
Business Day of the first or third calendar month following the calendar month
which includes the preceding Base Rent Date, determined as follows:
(1) If a LIBOR Period Election of one month is in effect
on a Base Rent Date, then the first Business Day of the first
calendar month following such Base Rent Date shall be the next
following Base Rent Date.
(2) If a LIBOR Period Election of three months or six
months is in effect on a Base Rent Date, then the first Business
Day of the third calendar month following such Base Rent Date
shall be the next following Base Rent Date.
Thus, for example, if the Base Rent Commencement Date falls on the first
Business Day of January, 2000 and a LIBOR Period Election of two months
commences on the Base Rent Commencement Date, then the first Base Rent Date
shall be the first Business Day of March, 2000.
"BASE RENT PERIOD" means a period for which Base Rent must be paid under
the Improvements Lease, each of which periods shall correspond to the LIBOR
Period Election for such period. The first Base Rent Period shall begin on and
include the Base Rent Commencement Date, and each successive Base Rent Period
shall begin on and include the Base Rent Date upon which the preceding Base Rent
Period ends. Each Base Rent Period, including the first Base Rent Period, shall
end on but not include the first or second Base Rent Date after the Base Rent
Date upon which such period began, determined as follows:
(1) If the LIBOR Period Election for a Base Rent Period is
one month or three months, then such Base Rent Period shall end
on the first Base Rent Date after the Base Rent Date upon which
such period began.
(2) If the LIBOR Period Election for a Base Rent Period is
six months, then such Base Rent Period shall end on the second
Base Rent Date after the Base Rent Date upon which such period
began.
The determination of Base Rent Periods can be illustrated by two examples:
1) If NAI makes a LIBOR Period Election of three months
for a hypothetical Base Rent Period beginning on the first
Business Day in January, 2001, then such Base Rent Period will
end
Page 3
58
on but not include the first Base Rent Date after it begins; that
is, such Base Rent Period will end on the first Business Day in
April, 2001, the third calendar month after January, 2001.
2) If, however, NAI makes a LIBOR Period Election of six
months for the hypothetical Base Rent Period beginning the first
Business Day in January, 2001, then such Base Rent Period will
end on but not include the second Base Rent Date after it begins;
that is, the first Business Day in July, 2001.
"BNPLC" means BNP Leasing Corporation, a Delaware corporation.
"BNPLC'S PARENT" means BNPLC's Affiliate, Banque Nationale de Paris, a
bank organized and existing under the laws of France and any successors of such
bank.
"BREAKAGE COSTS" means any and all costs, losses or expenses incurred or
sustained by BNPLC's Parent (as a Participant or otherwise) or any other
Participant, for which BNPLC's Parent or the Participant shall request
reimbursement from BNPLC, because of the resulting liquidation or redeployment
of deposits or other funds:
(1) used to make or maintain Funding Advances upon application of
a Qualified Prepayment or upon any sale of the Property pursuant to the
Purchase Agreement, if such application or sale occurs on any day other
than the last day of a Base Rent Period; or
(2) [intentionally deleted];
(3) used to make or maintain Funding Advances upon the
acceleration of the end of any Base Rent Period pursuant subparagraph
3.(c)(iii) of the Improvements Lease.
Breakage Costs will include, for example, losses attributable to any decline in
LIBOR as of the effective date of any application described in the clause (1)
preceding, as compared to LIBOR used to determine the Effective Rate then in
effect. Each determination by BNPLC's Parent or the applicable Participant of
Breakage Costs shall, in the absence of clear and demonstrable error, be
conclusive and binding upon NAI.
"BREAK EVEN PRICE" shall have the meaning assigned to it in subparagraph
1(B)(1) of the Purchase Agreement.
"BUSINESS DAY" means any day that is (1) not a Saturday, Sunday or day
on which commercial banks are generally closed or required to be closed in New
York City, New York or San Francisco, California, and (2) a day on which
dealings in deposits of dollars are transacted in the London interbank market;
provided that if such dealings are suspended indefinitely for any reason,
"Business Day" shall mean any day described in clause (1).
"CAPITAL ADEQUACY CHARGES" means any additional amounts BNPLC's Parent
or any other Participant requests BNPLC to pay as compensation for an increase
in required capital as provided in subparagraph 5.(b)(ii) of the Improvements
Lease.
"CAPITAL LEASE" means any lease which has been or should be capitalized
on the books of the lessee in accordance with GAAP or for federal income tax
purposes.
Page 4
59
"CLOSING CERTIFICATE" means the Closing Certificate and Agreement dated
as of December ___, 1999 executed by NAI in favor of BNPLC, as such Closing
Certificate may be extended, supplemented, amended, restated or otherwise
modified from time to time in accordance with its terms.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" shall have the meaning assigned to it in the Pledge
Agreement.
"COLLATERAL PERCENTAGE" for each Base Rent Period means the Collateral
Percentage for such period determined under (and as defined in) the Pledge
Agreement; provided, however, for purposes of the Improvements Lease, the
Collateral Percentage for any Base Rent Period shall not exceed a fraction; the
numerator of which fraction shall equal the value (determined as provided in the
Pledge Agreement) of all Collateral (a) that is, on the first day of such
period, held by the Deposit Takers under (and as defined in) the Pledge
Agreement subject to a Qualifying Security Interest (as defined below), (b) that
is free from claims or security interests held or asserted by any third party,
and (c) that is not in excess of Stipulated Loss Value; and the denominator of
which fraction shall equal the Stipulated Loss Value on the first day of such
period. "QUALIFYING SECURITY INTEREST" means a first priority perfected security
interest under the Pledge Agreement.
"COMMON DEFINITIONS AND PROVISIONS AGREEMENT (PHASE IV - IMPROVEMENTS)"
means this Agreement, which is incorporated by reference into each of the other
Operative Documents.
"CURRENT AS IS MARKET VALUE" means an amount equal to the fair market
value of BNPLC's interest in the Property (or any applicable portion thereof),
AS IS, WHERE IS AND WITH ALL FAULTS on the date in question. Whenever a
determination of Current AS IS Market Value is required by the express terms of
any Operative Document, it will be determined accordance with the following
procedure unless BNPLC and NAI have otherwise agreed in writing upon a Current
AS IS Market Value at that time:
(A) BNPLC and NAI shall each, within ten days after written notice
from either to the other, select an appraiser. If either BNPLC or
NAI fails to select an appraiser within the required period, then
the appraiser who has been timely selected shall conclusively
determine the fair market value of the Property (or applicable
portion thereof) in accordance with this definition within
forty-five days after his or her selection.
(B) Upon the selection of the two appraisers as provided above, such
appraisers shall proceed to determine the fair market value of
BNPLC's interest in the Property (or applicable portion thereof)
in accordance with this clause (v). Such appraisals shall be
submitted in writing no later than forty-five days after
selection of the second appraiser. If the fair market value as
determined by such appraisers is identical, such sum shall be
Current AS IS Market Value. If the fair market value indicated by
the lower appraisal differs from the fair market value indicated
by the higher appraisal by less than five percent (5%) of the
fair market value indicated by the higher appraisal, then Current
AS IS Market Value shall be the sum of the two appraisal figures
divided by two (2). If either appraiser fails to timely submit
his or her appraisal, the timely submitted appraisal shall be
determinative of Current AS IS Market Value.
(C) If the fair market value indicated by the lower appraisal differs
from the fair market value indicated by the higher appraisal by
more than five percent (5%) of the fair market value indicated by
the
Page 5
60
higher appraisal, then the two appraisers previously selected
shall select a third appraiser. The name of such appraiser shall
be submitted at the same time the written appraisals are due.
Such third appraiser shall then review the previously submitted
appraisals and select the one that, in his professional opinion,
more closely reflects the fair market value of BNPLC's interest
in the Property (or applicable portion thereof), such selection
to be submitted in writing no later than ten days after selection
of the third appraiser. Such selection shall be determinative of
Current AS IS Market Value.
(D) In making any such determination of fair market value, the
appraisers shall assume that any improvements then located on the
Property (or applicable portion thereof) or under construction
thereon constitute the highest and best use, and that neither the
Improvements Lease nor the Purchase Agreement add any value to
the Property. Each appraiser selected hereunder shall be an
independent MAI-designated appraiser with not less than ten
years' experience in commercial real estate appraisal in
Sunnyvale, California and surrounding areas.
"DEBT" of any Person means (without duplication of any item): (a)
indebtedness of such Person for borrowed money; (b) indebtedness of such Person
for the deferred purchase price of property or services (except trade payables
and accrued expenses constituting current liabilities in the ordinary course of
business); (c) the face amount of any outstanding letters of credit issued for
the account of such Person; (d) obligations of such Person arising under
acceptance facilities; (e) guaranties, endorsements (other than for collection
in the ordinary course of business) and other contingent obligations of such
Person to purchase, to provide funds for payment, to provide funds to invest in
any Person, or otherwise to assure a creditor against loss; (f) obligations of
others secured by any Lien on property of such Person; (g) obligations of such
Person as lessee under Capital Leases; and (h) the obligations of such Person,
contingent or otherwise, under any lease of property or related documents
(including a separate purchase agreement) which provide that such Person or any
of its Affiliates must purchase or cause another Person to purchase any interest
in the leased property and thereby guarantee a minimum residual value of the
leased property to the lessor. For purposes of this definition, the amount of
the obligations described in clause (h) of the preceding sentence with respect
to any lease classified according to GAAP as an "operating lease," shall equal
the sum of (1) the present value of rentals and other minimum lease payments
required in connection with such lease [calculated in accordance with SFAS 13
and other GAAP relevant to the determination of the whether such lease must be
accounted for as an operating lease or capital lease], plus (2) the fair value
of the property covered by the lease; provided, however, that such amount shall
not exceed the price, as of the date a determination of Debt is required
hereunder, for which the lessee can purchase the leased property pursuant to any
valid ongoing purchase option if, upon such a purchase, the lessee shall be
excused from paying rentals or other minimum lease payments that would otherwise
accrue after the purchase.
"DEFAULT" means any event which, with the passage of time or the giving
of notice or both, would (if not cured within any applicable cure period)
constitute an Event of Default.
"DEFAULT RATE" means, for any period prior to the Designated Sale Date,
a floating per annum rate equal to two percent (2%) above the Prime Rate, and
for any period commencing on or after the Designated Sale Date, Default Rate
shall mean a floating per annum rate equal to five percent (5%) above the Prime
Rate. However, in no event will the "Default Rate" at any time exceed the
maximum interest rate permitted by law.
"DEPOSIT TAKER" shall have the meaning assigned to it in the Pledge
Agreement.
"DEPOSIT TAKER LOSSES" shall have the meaning assigned to it in the
Pledge Agreement.
Page 6
61
"DESIGNATED SALE DATE" means the earlier of:
(1) the first Business Day of January, 2005; or
(2) any Business Day designated as such in an irrevocable,
unconditional notice given by NAI to BNPLC; provided, that to be
effective for purposes of this definition, any such notice from NAI to
BNPLC must designate a Business Day that is more than thirty days after
the date of such notice; and provided, further, to be effective for
purposes of this definition, the notice must include an express,
unconditional, unequivocal and irrevocable acknowledgment by NAI that
because of NAI's election to accelerate the Designated Sale Date, the
Maximum Remarketing Obligation will equal the Break Even Price under the
Purchase Agreement; or
(3) [intentionally deleted];
(4) the first Business Date after any termination by NAI of the
Purchase Option and NAI's Initial Remarketing Rights and Obligations as
provided in subparagraph 4(B) of the Purchase Agreement; or
(5) any Business Day designated as such in a notice given by
BNPLC to NAI when any Event of Default has occurred and is continuing;
provided, that to be effective for purposes of this definition, any such
notice from BNPLC to NAI must designate a Business Day that is more than
thirty days after the date of such notice.
"DEVELOPMENT DOCUMENTS" means the contracts, ordinances and other
documents described in Exhibit C attached to the Closing Certificate, as the
same may be modified from time to time in accordance with the Improvements Lease
and the Closing Certificate, and any applications, permits or certificates
concerning or affecting the use or development of the Property that may be
submitted, issued or executed from time to time as contemplated in such
contracts, ordinances and other documents or that BNPLC may hereafter execute,
approve or consent to at the request of NAI.
"DIRECT PAYMENTS TO PARTICIPANTS" means the amounts paid or required to
be paid directly to Participants on the Designated Sale Date as provided in
Section 6.2 of the Pledge Agreement at the direction of and for NAI by the
collateral agent appointed pursuant to the Pledge Agreement from all or any part
of the Collateral described therein.
"EFFECTIVE DATE" means December ___, 1999.
"EFFECTIVE RATE" means for each Base Rent Period, the per annum rate
determined by dividing (A) LIBOR for such Base Rent Period, as the case may be,
by (B) one hundred percent (100%) minus the Eurodollar Rate Reserve Percentage
for such Base Rent Period. If LIBOR or the Eurodollar Rate Reserve Percentage
changes from Base Rent Period to Base Rent Period, then the Effective Rate shall
be automatically increased or decreased as of the date of such change, as the
case may be, without prior notice to NAI. If for any reason BNPLC determines
that it is impossible or unreasonably difficult to determine the Effective Rate
with respect to a given Base Rent Period in accordance with the foregoing, then
the "EFFECTIVE RATE" for that Base Rent Period shall equal any published index
or per annum interest rate determined in good faith by BNPLC's Parent to be
comparable to LIBOR at the
Page 7
62
beginning of the first day of that period. A comparable interest rate might be,
for example, the then existing yield on short term United States Treasury
obligations (as compiled by and published in the then most recently published
United States Federal Reserve Statistical Release H.15(519) or its successor
publication), plus or minus a fixed adjustment based on BNPLC's Parent's
comparison of past eurodollar market rates to past yields on such Treasury
obligations. Any determination by BNPLC of the Effective Rate under this
definition shall, in the absence of clear and demonstrable error, be conclusive
and binding upon NAI.
"ENVIRONMENTAL LAWS" means any and all existing and future Applicable
Laws pertaining to safety, health or the environment, or to Hazardous Substances
or Hazardous Substance Activities, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended, "CERCLA"), and the
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984 (as amended, "RCRA").
"ENVIRONMENTAL CUTOFF DATE" means the later of the dates upon which (i)
the Improvements Lease terminates, or (ii) NAI surrenders possession and control
of the Property and ceases to have interest in the Land or Improvements or
rights with respect thereto under any of the Operative Documents.
"ENVIRONMENTAL LOSSES" means Losses suffered or incurred by BNPLC or any
other Interested Party, directly or indirectly, relating to or arising out of,
based on or as a result of any of the following: (i) any Hazardous Substance
Activity on or prior to the Environmental Cutoff Date; (ii) any violation on or
prior to the Environmental Cutoff Date of any applicable Environmental Laws
relating to the Property or to the ownership, use, occupancy or operation
thereof; (iii) any investigation, inquiry, order, hearing, action, or other
proceeding by or before any governmental or quasi-governmental agency or
authority in connection with any Hazardous Substance Activity that occurs or is
alleged to have occurred on or prior to the Environmental Cutoff Date; or (iv)
any claim, demand, cause of action or investigation, or any action or other
proceeding, whether meritorious or not, brought or asserted against any
Interested Party which directly or indirectly relates to, arises from, is based
on, or results from any of the matters described in clauses (i), (ii), or (iii)
of this definition or any allegation of any such matters. For purposes of
determining whether Losses constitute "Environmental Losses," as the term is
used in the Improvements Lease, any actual or alleged Hazardous Substance
Activity or violation of Environmental Laws relating to the Property will be
presumed to have occurred prior to the Environmental Cutoff Date unless NAI
establishes by clear and convincing evidence to the contrary that the relevant
Hazardous Substance Activity or violation of Environmental Laws did not occur or
commence prior to the Environmental Cutoff Date.
"ENVIRONMENTAL REPORTS" means collectively the following reports
(whether one or more), which were provided by NAI to BNPLC prior to the
Effective Date: Phase I Environmental Site Assessment for 1330-1350 Geneva and
▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, dated November 1999 by ▇▇▇▇▇
Consulting Engineers.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA AFFILIATE" means any Person who for purposes of Title IV of ERISA
is a member of NAI's controlled group, or under common control with NAI, within
the meaning of Section 414 of the Internal Revenue Code, and the regulations
promulgated and rulings issued thereunder.
Page 8
63
"ESCROWED PROCEEDS" means, subject to the exclusions specified in the
next sentence, any money that is received by BNPLC from time to time during the
Term (and any interest earned thereon) from any party (1) under any property
insurance policy as a result of damage to the Property, (2) as compensation for
any restriction imposed by any governmental authority upon the use or
development of the Property or for the condemnation of the Property or any
portion thereof, (3) because of any judgment, decree or award for physical
damage to the Property or (4) as compensation under any title insurance policy
or otherwise as a result of any title defect or claimed title defect with
respect to the Property; provided, however, in determining the amount of
"Escrowed Proceeds" there shall be deducted all expenses and costs of every
type, kind and nature (including Attorneys' Fees) incurred by BNPLC to collect
such proceeds. Notwithstanding the foregoing, "Escrowed Proceeds" will not
include (A) any payment to BNPLC by a Participant or an Affiliate of BNPLC that
is made to compensate BNPLC for the Participant's or Affiliate's share of any
Losses BNPLC may incur as a result of any of the events described in the
preceding clauses (1) through (4), (B) any money or proceeds that have been
applied as a Qualified Prepayment or to pay any Breakage Costs or other costs
incurred in connection with a Qualified Prepayment, (C) any money or proceeds
that, after no less than ten days notice to NAI, BNPLC returns or pays to a
third party because of BNPLC's good faith belief that such return or payment is
required by law, (D) any money or proceeds paid by BNPLC to NAI or offset
against any amount owed by NAI, or (E) any money or proceeds used by BNPLC in
accordance with the Improvements Lease for repairs or the restoration of the
Property or to obtain development rights or the release of restrictions that
will inure to the benefit of future owners or occupants of the Property. Until
Escrowed Proceeds are paid to NAI pursuant to Paragraph 10 of the Improvements
Lease, transferred to a purchaser under the Purchase Agreement as therein
provided or applied as a Qualified Prepayment or as otherwise described in the
preceding sentence, BNPLC shall keep the same deposited in one or more interest
bearing accounts, and all interest earned on such account shall be added to and
made a part of Escrowed Proceeds.
"ESTABLISHED MISCONDUCT" of a Person means, and is limited to: (1) if
the Person is bound by the Operative Documents or the Participation Agreement, a
breach by such Person of the express provisions of the Operative Documents or
the Participation Agreement, as applicable, that continues beyond any period for
cure provided therein, and (2) conduct of such Person or its Affiliates that has
been determined to constitute wilful misconduct or Active Negligence in or as a
necessary element of a final judgment rendered against such Person by a court
with jurisdiction to make such determination. Established Misconduct of one
Interested Party shall not be attributed to a second Interested Party unless the
second Interested Party is an Affiliate of the first. Negligence which does not
constitute Active Negligence shall not in any event constitute Established
Misconduct. For purposes of this definition, "conduct of a Person" will include
(1) the conduct of an employee of that Person, but only to the extent that the
employee is acting within the scope of his employment by that Person, as
determined in or as a necessary element of a final judgment rendered against
such Person by a court with jurisdiction to make such determination, and (2) the
conduct of an agent of that Person (such as an independent environmental
consultant engaged by that Person), but only to the extent that the agent is, as
determined in or as a necessary element of a final judgment rendered against
such Person by a court with jurisdiction to make such determination, (x) acting
within the scope of the authority granted to him by such Person, (y) not acting
with the consent or approval of or under the direction of NAI or NAI's
Affiliates, employees or agents, and (z) not acting in good faith to mitigate
Losses that such Person may suffer because of a breach or repudiation by NAI of
the Improvements Lease or the Purchase Documents.
"EUROCURRENCY LIABILITIES" shall have the meaning assigned to it in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
Page 9
64
"EURODOLLAR RATE RESERVE PERCENTAGE" means, for purposes of determining
the Effective Rate for any Base Rent Period, the reserve percentage applicable
two Business Days before the first day of such period under regulations issued
from time to time by the Board of Governors of the Federal Reserve System (or
any successor) for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement) for BNPLC's
Parent with respect to liabilities or deposits consisting of or including
Eurocurrency Liabilities (or with respect to any other category or liabilities
by reference to which LIBOR is determined) having a term comparable to such
period.
"EVENT OF DEFAULT" shall have the meaning assigned to it in subparagraph
17 of the Improvements Lease.
"EXCLUDED TAXES" means (1) all federal, state and local income taxes
upon Base Rent, Administrative Agency Fees, any interest paid to BNPLC or any
Participant pursuant to subparagraph 3.(k) of the Improvements Lease, and any
additional compensation claimed by BNPLC pursuant to subparagraph 5.(b)(ii) of
the Improvements Lease; (2) any transfer or change of ownership taxes assessed
because of BNPLC's transfer or conveyance to any third party of any rights or
interest in the Improvements Lease, the Purchase Agreement or the Property
(other than any such taxes assessed because of any Permitted Transfer under
clauses (1), (3), (4), (5), (6) or (7) of the definition of Permitted Transfer
in this Agreement), (3) all federal, state and local income taxes upon any
amounts paid as reimbursement for or to satisfy Losses incurred by BNPLC or any
Participant to the extent such taxes are offset by a corresponding reduction of
BNPLC's or the applicable Participant's income taxes because of BNPLC's or such
Participant's deduction of the reimbursed Losses from its taxable income or
because of any tax credits attributable thereto. If, however, a change in
Applicable Laws after the Effective Date results in an increase in such taxes
for any reason other than an increase in the applicable tax rates (e.g., a
disallowance of deductions that would otherwise be available against payments
described in clause (A) of this definition), then for purposes of the Operative
Documents, the term "Excluded Taxes" will not include the increase in such taxes
attributable to the change.
"EXISTING CONTRACT" means the Agreement of Sale covering the Land
between NAI and Seller, dated November 16, 1999.
"FAILED COLLATERAL TEST DATE" shall have the meaning indicated in Part
III of Schedule 1 attached to the Improvements Lease.
"FED FUNDS RATE" means, for any period, a fluctuating interest rate
(expressed as a per annum rate and rounded upwards, if necessary, to the next
1/16 of 1%) equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rates are not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by BNPLC's Parent from three Federal funds brokers of
recognized standing selected by BNPLC's Parent. All determinations of the Fed
Funds Rate by BNPLC's Parent shall, in the absence of clear and demonstrable
error, be binding and conclusive upon NAI.
"FUNDING ADVANCES" means (1) the Initial Funding Advance and (2) all
future advances made by BNPLC's Parent or any other Participant to or on behalf
of BNPLC to allow BNPLC to provide additional advances (if any) to NAI.
Page 10
65
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
subparagraph 13.(a) of the Improvements Lease (except for changes with which
NAI's independent public accountants concur).
"HAZARDOUS SUBSTANCE" means (i) any chemical, compound, material,
mixture or substance that is now or hereafter defined or listed in, regulated
under, or otherwise classified pursuant to, any Environmental Laws as a
"hazardous substance," "hazardous material," "hazardous waste," "extremely
hazardous waste or substance," "infectious waste," "toxic substance," "toxic
pollutant," or any other formulation intended to define, list or classify
substances by reason of deleterious properties, including ignitability,
corrosiveness, reactivity, carcinogenicity, toxicity or reproductive toxicity;
(ii) petroleum, any fraction of petroleum, natural gas, natural gas liquids,
liquified natural gas, synthetic gas usable for fuel (or mixtures of natural gas
and such synthetic gas), and ash produced by a resource recovery facility
utilizing a municipal solid waste stream, and drilling fluids, produced waters
and other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources; (iii) asbestos and any asbestos
containing material; and (v) any other material that, because of its quantity,
concentration or physical or chemical characteristics, poses a significant
present or potential hazard to human health or safety or to the environment if
released into the workplace or the environment.
"HAZARDOUS SUBSTANCE ACTIVITY" means any actual, proposed or threatened
use, storage, holding, release (including any spilling, leaking, leaching,
pumping, pouring, emitting, emptying, dumping, disposing into the environment,
and the continuing migration into or through soil, surface water, groundwater or
any body of water), discharge, deposit, placement, generation, processing,
construction, treatment, abatement, removal, disposal, disposition, handling or
transportation of any Hazardous Substance from, under, in, into or on the
Property, including the movement or migration of any Hazardous Substance from
surrounding property, surface water, groundwater or any body of water under, in,
into or onto the Property and any resulting residual Hazardous Substance
contamination in, on or under the Property. "HAZARDOUS SUBSTANCE ACTIVITY" also
means any existence of Hazardous Substances on the Property that would cause the
Property or the owner or operator thereof to be in violation of, or that would
subject the Property to any remedial obligations under, any Environmental Laws,
including CERCLA and RCRA, assuming disclosure to the applicable governmental
authorities of all relevant facts, conditions and circumstances pertaining to
the Property.
"IMPOSITIONS" means all sales, excise, ad valorem, gross receipts,
business, transfer, stamp, occupancy, rental and other taxes, levies, fees,
charges, surcharges, assessments or penalties which arise out of or are
attributable to the Improvements Lease or which are imposed upon BNPLC or the
Property because of the ownership, leasing, occupancy, sale or operation of the
Property, or any part thereof or interest therein, or relating to or required to
be paid by any of the Permitted Encumbrances or the Development Documents,
excluding only Excluded Taxes. "IMPOSITIONS" shall include real estate taxes
imposed because of a change of use or ownership of the Property on or prior to
the date of any sale by BNPLC pursuant to the Purchase Agreement.
"IMPROVEMENTS" means any and all (1) buildings and other real property
improvements now or hereafter erected on the Land, and (2) equipment (e.g., HVAC
systems, elevators and plumbing fixtures) attached to the buildings or other
real property improvements, the removal of which would cause structural or other
material damage to the buildings or other real property improvements or would
materially and adversely affect the value or use of the buildings or other real
property improvements.
Page 11
66
"IMPROVEMENTS LEASE" means the Lease Agreement (Phase IV -
Improvements") dated as of December ___, 1999 between BNPLC, as landlord, and
NAI, as tenant, pursuant to which NAI has agreed to lease BNPLC's interest in
the Property, as such Lease Agreement may be extended, supplemented, amended,
restated or otherwise modified from time to time in accordance with its terms.
"INITIAL FUNDING ADVANCE" means the advance made by BNPLC's Parent
(directly or through one or more of its Affiliates) to or on behalf of BNPLC on
or prior to the Effective Date to cover the cost of BNPLC's acquisition of the
Property and certain Transaction Expenses and other amounts described in this
definition. The amount of the Initial Funding Advance may be confirmed by a
separate closing certificate executed by NAI as of the Effective Date. To the
extent that BNPLC does not itself use the entire Initial Funding Advance to pay
Transaction Expenses incurred by BNPLC, the remainder thereof will be advanced
to NAI, with the understanding that NAI shall use any such amount advanced for
one or more of the following purposes: (1) the payment or reimbursement of
Transaction Expenses incurred by NAI; (2) the maintenance of the Property; or
(3) the payment of Rents next due.
"INTERESTED PARTY" means each of (1) BNPLC, its Affiliates and its
successors and assigns as to the Property or any part thereof or any interest
therein, (2) BNPLC's Parent, and (3) any other Participants and their permitted
successors and assigns under the Participation Agreement; provided, however,
none of the following shall constitute an Interested Party: (a) any Person to
whom BNPLC may transfer an interest in the Property by a conveyance that is not
a Permitted Transfer and others that cannot lawfully claim an interest in the
Property except through or under such a transfer by BNPLC, (b) NAI or any Person
that cannot lawfully claim an interest in the Property except through or under a
conveyance from NAI, or (c) any Applicable Purchaser under the Purchase
Agreement and any Person that cannot lawfully claim an interest in the Property
except through or under a conveyance from such Applicable Purchaser.
"ISSUE 97-1 NON-PERFORMANCE-RELATED SUBJECTIVE EVENT OF DEFAULT" means
an Event of Default that is unrelated to the Property or the use or maintenance
thereof and that results solely from (A) a breach by NAI of a provision in any
Operative Document, the occurrence of which breach cannot be objectively
determined, or (B) any other event described in subparagraph 17.(e) of the
Improvements Lease, the occurrence of which event cannot be objectively
determined. For example, an Event of Default under subparagraph 17.(e) of the
Improvements Lease resulting solely from a failure of NAI to "generally" pay its
debts as such debts become due (in contrast to a failure of NAI to pay Rent to
BNPLC as it becomes due under the Improvements Lease) would constitute an Issue
97-1 Non-performance-related Subjective Event of Default. In no event, however,
will the term "Issue 97-1 Non-performance-related Subjective Event of Default"
include an Event of Default resulting from (1) a failure of NAI to make any
payment required to BNPLC under the Operative Documents, (2) a breach by NAI of
the provisions set forth in Schedule 1 attached to the Improvements Lease (which
set forth financial covenants), (3) any failure of NAI to use, maintain and
insure the Property in accordance with the requirements of the Improvements
Lease, or (4) any failure of NAI to pay the full amount of any Supplemental
Payment on the Designated Sale Date as required by the Purchase Agreement.
Except as provided in subparagraph 1(A)(2)(c)(i) of the Purchase Agreement, the
characterization of any Event of Default as an Issue 97-1
Non-performance-related Subjective Event of Default will not affect the rights
or remedies available to BNPLC because of the Event of Default.
"LAND" means the land covered by the land described in Exhibit A
attached to the Closing Certificate, the Improvements Lease and the Purchase
Agreement.
Page 12
67
"LIBOR" means, for purposes of determining the Effective Rate for each
Base Rent Period, the rate determined by BNPLC's Parent to be the average rate
of interest per annum (rounded upwards, if necessary, to the next 1/16 of 1%) of
the rates at which deposits of dollars are offered or available to BNPLC's
Parent in the London interbank market at approximately 11:00 a.m. (London time)
on the second Business Day preceding the first day of such period. BNPLC shall
instruct BNPLC's Parent to consider deposits, for purposes of making the
determination described in the preceding sentence, that are offered: (i) for
delivery on the first day of such Base Rent Period, as the case may be, (ii) in
an amount equal or comparable to the total (projected on the applicable date of
determination by BNPLC's Parent) Stipulated Loss Value on the first day of such
period, and (iii) for a time equal or comparable to the length of such period.
If BNPLC's Parent so chooses, it may determine LIBOR for any period by reference
to the rate reported by the British Banker's Association on Page 3750 of the
Telerate Service at approximately 11:00 a.m. (London time) on the second
Business Day preceding the first day of such period. If for any reason BNPLC's
Parent determines that it is impossible or unreasonably difficult to determine
LIBOR with respect to a given Base Rent Period in accordance with the foregoing,
or if BNPLC's Parent shall determine that it is unlawful (or any central bank or
governmental authority shall assert that it is unlawful) for BNPLC, BNPLC's
Parent or any Participant to provide or maintain Funding Advances during any
Base Rent Period for which Carrying Costs or Base Rent is computed by reference
to LIBOR, then "LIBOR" for that period shall equal the Base Rate for that
period. All determinations of LIBOR by BNPLC's Parent shall, in the absence of
clear and demonstrable error, be binding and conclusive upon NAI.
"LIBOR PERIOD ELECTION" for any Base Rent Period means a period of one
month, three months or six months as designated by NAI at least five Business
Days prior to the commencement of such Base Rent Period by a notice given to
BNPLC in the form of Exhibit C attached to the Improvements Lease. (For purposes
of the Improvements Lease a LIBOR Period Election for any Base Rent Period shall
also be considered the LIBOR Period Election in effect on the Base Rent
Commencement Date or Base Rent Date upon which such Base Rent Period begins.)
Any LIBOR Period Election so designated by NAI shall remain in effect for the
entire Base Rent Period specified in NAI's notice to BNPLC (provided such Base
Rent Period commences at least ten Business Days after BNPLC's receipt of the
notice) and for all subsequent Base Rent Periods until a new designation becomes
effective in accordance with the provisions set forth in this definition.
Notwithstanding the foregoing, however: (1) NAI shall not be entitled to
designate a LIBOR Period Election that would cause a Base Rent Period to extend
beyond the end of the scheduled Term; (2) changes in the LIBOR Period Election
shall become effective only upon the commencement of a new Base Rent Period; (3)
for each Base Rent Period that occurs within any Mandatory Collateral Period,
the LIBOR Period Election shall be one month; (4) no LIBOR Period Election
designated by NAI hereunder shall be different than the LIBOR Period Election
specified under (and as defined in) the Other Common Definitions and Provisions
Agreement; and (5) if NAI fails to make a LIBOR Period Election consistent with
the foregoing requirements for any Base Rent Period, or if an Event of Default
shall have occurred and be continuing on the third Business Day preceding the
commencement of any Base Rent Period, the LIBOR Period Election for such Base
Rent Period shall be deemed to be one month.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any agreement to sell receivables with recourse, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction). In addition, for purposes of subparagraph A.(8) of Part IV of
Schedule 1 attached to the Improvements Lease, "Lien" includes any Liens under
ERISA relating to Unfunded Benefit Liabilities of which NAI is required to
notify BNPLC under subparagraph 13.(a)(vii) of the Improvements Lease
(irrespective of whether NAI actually notifies BNPLC as required thereunder).
Page 13
68
"LIENS REMOVABLE BY BNPLC" means, and is limited to, Liens encumbering
the Property that are asserted (1) other than as contemplated in the Operative
Documents, by BNPLC itself, (2) by third parties lawfully claiming through or
under BNPLC (which for purposes of the Improvements Lease shall include any
judgment liens established against the Property because of a judgment rendered
against BNPLC and shall also include any liens established against the Property
to secure past due Excluded Taxes), or (3) by third parties lawfully claiming
under a deed or other instrument duly executed by BNPLC; provided, however,
Liens Removable by BNPLC shall not include (A) any Permitted Encumbrances or
Development Documents (regardless of whether claimed through or under BNPLC),
(B) the Operative Documents or any other document executed by BNPLC with the
knowledge of (and without objection by) NAI's counsel contemporaneously with the
execution and delivery of the Operative Documents, (C) Liens which are neither
lawfully claimed through or under BNPLC (as described above) nor claimed under a
deed or other instrument duly executed by BNPLC, (D) Liens claimed by NAI or
claimed through or under a conveyance made by NAI, (E) Liens arising because of
BNPLC's compliance with Applicable Law, the Operative Documents, Permitted
Encumbrances, the Development Documents or any written request made by NAI, (F)
Liens securing the payment of property taxes or other amounts assessed against
the Property by any governmental authority, other than to secure the payment of
past due Excluded Taxes or to secure damages caused by (and attributed by any
applicable principles of comparative fault to) BNPLC's own Established
Misconduct, (G) Liens resulting from or arising in connection with any breach by
NAI of the Operative Documents; or (H) Liens resulting from or arising in
connection with any Permitted Transfer that occurs more than thirty days after
any Designated Sale Date upon which, for any reason, NAI or an Affiliate of NAI
or any Applicable Purchaser shall not purchase BNPLC's interest in the Property
pursuant to the Purchase Agreement for a cash price to BNPLC (when taken
together with any Supplemental Payment made by NAI pursuant to Paragraph 1(A)(2)
of the Purchase Agreement, in the case of a purchase by an Applicable Purchaser)
equal to the Break Even Price.
"LOSSES" means the following: any and all losses, liabilities, damages
(whether actual, consequential, punitive or otherwise denominated), demands,
claims, administrative or legal proceedings, actions, judgments, causes of
action, assessments, fines, penalties, costs and expenses (including Attorneys'
Fees and the fees of outside accountants and environmental consultants), of any
and every kind or character, foreseeable and unforeseeable, liquidated and
contingent, proximate and remote.
"MANDATORY COLLATERAL PERIOD" shall have the meaning assigned to it in
Part I of Schedule 1 attached to the Improvements Lease and to the Pledge
Agreement.
"MATERIAL ENVIRONMENTAL COMMUNICATION" means a communication between NAI
or its agents and a regulatory agency or third party, which causes, or
potentially could cause (whether by implementation of or response to said
communication), a material change in the scope, duration, or nature of any
Remedial Work.
"MAXIMUM REMARKETING OBLIGATION" shall have the meaning indicated in
subparagraph 1(A)(2)(c) of the Purchase Agreement.
"MINIMUM EXTENDED REMARKETING PRICE" shall have the meaning assigned to
it in subparagraph 2(B) of the Purchase Agreement.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section
3(37) of ERISA to which contributions have been made by NAI or any ERISA
Affiliate during the preceding six years and which is covered by Title IV of
ERISA.
Page 14
69
"NAI" means Network Appliance, Inc., a California corporation.
"NAI'S EXTENDED REMARKETING PERIOD" shall have the meaning assigned to
it in subparagraph 2(A) of the Purchase Agreement.
"NAI'S EXTENDED REMARKETING RIGHT" shall have the meaning assigned to it
in subparagraph 2(A) of the Purchase Agreement.
"NAI'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS" shall have the
meaning assigned to it in subparagraph 1(A)(2) of the Purchase Agreement.
"OPERATIVE DOCUMENTS" means the Closing Certificate, the Improvements
Lease, the Purchase Agreement, the Pledge Agreement and this Common Definitions
and Provisions Agreement (Phase IV - Improvements).
"OTHER COMMON DEFINITIONS AND PROVISIONS AGREEMENT" means the Common
Definitions and Provisions Agreement (Phase IV - Land), dated as of December
___, 1999, between BNPLC and NAI, as such Common Definitions and Provisions
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
"OTHER LEASE AGREEMENT" means the Lease Agreement (Phase IV - Land),
dated as of December ___, 1999, between BNPLC and NAI, as such Lease Agreement
may be extended, supplemented, amended, restated or otherwise modified from time
to time in accordance with its terms.
"OTHER PURCHASE AGREEMENT" means the Purchase Agreement (Phase IV -
Land), dated December ___, 1999, between BNPLC and NAI, as such Purchase
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
"PARTICIPANT" means BNPLC's Parent and any other Person that, upon
becoming a party to the Participation Agreement and the Pledge Agreement by
executing supplements as contemplated therein, agrees from time to time to
participate in all or some of the risks and rewards to BNPLC of the Improvements
Lease and the Purchase Documents. As of the Effective Date, the only Participant
is BNPLC's Parent, but BNPLC may agree after the Effective Date to share in
risks and rewards of the Improvements Lease and the Purchase Documents with
other Participants. However, no Person other than BNPLC's Parent and its
Affiliates shall qualify as a Participant for purposes of the Operative
Documents or other agreements concerning the Property to which NAI is a party
unless such Person, during the continuance of an Event of Default or otherwise
with NAI's prior written approval (which approval will not be unreasonably
withheld), became a party to the Pledge Agreement and to the Participation
Agreement by executing supplements to those agreements as contemplated therein.
"PARTICIPATION AGREEMENT" means the Participation Agreement between
BNPLC and BNPLC's Parent dated as of the Effective Date, pursuant to which
BNPLC's Parent has agreed to participate in the risks and rewards to BNPLC of
the Improvements Lease and the other Operative Documents, as such Participation
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
Page 15
70
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"PERIOD" means a Base Rent Period.
"PERMITTED ENCUMBRANCES" means (i) the encumbrances and other matters
affecting the Property that are set forth in Exhibit B attached to the Closing
Certificate, (ii) any easement agreement or other document affecting title to
the Property executed by BNPLC at the request of or with the consent of NAI
(including the Other Lease Agreement, the Other Purchase Agreement and all
documents executed by BNPLC pursuant to the Other Purchase Agreement), (iii) the
Premises Leases, (iv) any Liens securing the payment of Impositions which are
not delinquent or claimed to be delinquent or which are being contested in
accordance with subparagraph 5.(a) of the Improvements Lease, and (iv)
mechanics' and materialmen's liens for amounts not past due or claimed to be
past due or which are being contested in accordance with subparagraph 11.(c) of
the Improvements Lease.
"PERMITTED HAZARDOUS SUBSTANCE USE" means the use, generation, storage
and offsite disposal of Permitted Hazardous Substances in strict accordance with
applicable Environmental Laws and with due care given the nature of the
Hazardous Substances involved; provided, the scope and nature of such use,
generation, storage and disposal shall not:
(1) exceed that reasonably required for the operation of the
Property for the purposes expressly permitted under subparagraph 2.(a)
of the Improvements Lease; or
(2) include any disposal, discharge or other release of Hazardous
Substances from the Property in any manner that might allow such
substances to reach surface water or groundwater, except (i) through a
lawful and properly authorized discharge (A) to a publicly owned
treatment works or (B) with rainwater or storm water runoff in
accordance with Applicable Laws and any permits obtained by NAI that
govern such runoff; or (ii) any such disposal, discharge or other
release of Hazardous Substances for which no permits are required and
which are not otherwise regulated under applicable Environmental Laws.
Further, notwithstanding anything to the contrary herein contained, Permitted
Hazardous Substance Use shall not include any use of the Property in a manner
that requires a RCRA treatment, storage or disposal permit, including a
landfill, incinerator or other waste disposal facility.
"PERMITTED HAZARDOUS SUBSTANCES" means Hazardous Substances used and
reasonably required for the use of the Property by NAI and its permitted
subtenants and assigns for the purposes expressly permitted by subparagraph
2.(a) of the Improvements Lease, in either case in strict compliance with all
Environmental Laws and with due care given the nature of the Hazardous
Substances involved. Without limiting the generality of the foregoing, Permitted
Hazardous Substances shall include usual and customary office, laboratory and
janitorial products.
"PERMITTED TRANSFER" means any one or more of the following: (1) the
creation or conveyance by BNPLC of rights and interests in favor of any
Participant pursuant to the Participation Agreement; (2) the creation or
conveyance of rights and interests in favor of or to Banque Nationale de Paris
(through its San ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 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
Page 16
71
records of San Mateo County, California or (B) BNPLC's entire interest in the
Land and the Property; (3) any assignment or conveyance by BNPLC or its
permitted successors or assigns to any present or future Participant of any lien
or security interest against the Property (in contrast to a conveyance of
BNPLC's fee estate in the Land and Improvements) or of any interest in Rent,
payments required by or under the Purchase Documents or payments to be generated
from the Property after the Term, provided that such assignment or conveyance is
made expressly subject to the rights of NAI under the Operative Documents; (4)
any agreement to exercise or refrain from exercising rights or remedies under
the Operative Documents made by BNPLC with any present or future Participant;
(5) any assignment or conveyance by BNPLC requested by NAI or required by any
Permitted Encumbrance, by the Purchase Agreement, by the Existing Contract, by
any other Development Contract or by Applicable Laws; or (6) any assignment or
conveyance after a Designated Sale Date on which NAI shall not have purchased or
caused an Applicable Purchaser to purchase BNPLC's interest in the Property and,
if applicable, after the expiration of the thirty day cure period specified in
Paragraph 4(D) of the Purchase Agreement.
"PERSON" means an individual, a corporation, a partnership, an
unincorporated organization, an association, a joint stock company, a joint
venture, a trust, an estate, a government or agency or political subdivision
thereof or other entity, whether acting in an individual, fiduciary or other
capacity.
"PERSONAL PROPERTY" shall have the meaning assigned to it on page 2 of
the Improvements Lease.
"PLAN" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by NAI or any ERISA
Affiliate of NAI during the preceding six years and which is covered by Title IV
of ERISA, other than a Multiemployer Plan.
"PLEDGE AGREEMENT" means the Pledge Agreement (Phase IV - Improvements)
dated as of the date hereof between BNPLC and NAI, pursuant to which NAI may
pledge certificates of deposit as security for NAI's obligations under the
Purchase Agreement (and for the corresponding obligations of BNPLC to the
Participants under the Participation Agreement), as such Pledge Agreement may be
extended, supplemented, amended, restated or otherwise modified from time to
time in accordance with its terms.
"PREMISES LEASES" means the four subleases of space within the
Improvements, each between NAI, as landlord, and TRW Inc., as tenant, executed
of even date herewith, and any subleases or other transfers under and permitted
by the terms of any such leases.
"PRIME RATE" means the prime interest rate or equivalent charged by
BNPLC's Parent in the United States of America as announced or published by
BNPLC's Parent from time to time, which need not be the lowest interest rate
charged by BNPLC's Parent. If for any reason BNPLC's Parent does not announce or
publish a prime rate or equivalent, the prime rate or equivalent announced or
published by either CitiBank, N.A. or any New York branch or office of Credit
Commercial de France as selected by BNPLC shall be used to compute the rate
describe in the preceding sentence. The prime rate or equivalent announced or
published by such bank need not be the lowest rate charged by it. The Prime Rate
may change from time to time after the Effective Date without notice to NAI as
of the effective time of each change in rates described in this definition.
"PROPERTY" means the Personal Property and the Real Property,
collectively. The fee interest in the Land itself will not be included in the
Property. Any rights, titles and interests acquired by BNPLC under the Existing
Contract, to the extent not covered by the Improvements Lease and thus not
encompassed within this definition of
Page 17
72
Property, are intended to be covered by the Other Lease Agreement and
encompassed within the term "Property" as defined in the Other Common
Definitions and Provisions.
"PURCHASE AGREEMENT" means the Purchase Agreement (Phase IV -
Improvements) dated as of December _____, 1999 between BNPLC and NAI, as such
Purchase Agreement may be extended, supplemented, amended, restated or otherwise
modified from time to time in accordance with its terms.
"PURCHASE DOCUMENTS" means collectively (1) the Purchase Agreement, (2)
the Memorandum of Purchase Agreement executed by BNPLC and NAI as of the
Effective Date and recorded to provide notice of the Purchase Agreement; and (3)
the Pledge Agreement and all financing statements, notices, acknowledgments and
certificates of deposit executed or delivered from time to time by NAI, BNPLC or
the other parties to the Pledge Agreement pursuant to and as expressly provided
therein.
"PURCHASE OPTION" shall have the meaning assigned to it in subparagraph
1(A)(1) of the Purchase Agreement.
"QUALIFIED AFFILIATE" means any Person that is one hundred percent
(100%) owned, directly or indirectly, by Banque Nationale de Paris or any
successor of such bank; provided, that such Person can make (and has in writing
made) the same representations to NAI that BNPLC has made in Paragraphs 3(D) and
3(E) of the Closing Certificate; and, provided, further, that such Person is not
insolvent.
"QUALIFIED PREPAYMENTS" means any payments received by BNPLC from time
to time during the Term (1) under any property insurance policy as a result of
damage to the Property, (2) as compensation for any restriction placed upon the
use or development of the Property or for the condemnation of the Property or
any portion thereof, (3) because of any judgment, decree or award for injury or
damage to the Property or (4) under any title insurance policy or otherwise as a
result of any title defect or claimed title defect with respect to the Property;
provided, however, that (x) in determining the amount of "Qualified
Prepayments", there shall be deducted all expenses and costs of every kind, type
and nature (including taxes, Breakage Costs and Attorneys' Fees) incurred by
BNPLC with respect to the collection or application of such payments, (y)
"Qualified Prepayments" shall not include any payment to BNPLC by a Participant
or an Affiliate of BNPLC that is made to compensate BNPLC for the Participant's
or Affiliate's share of any Losses BNPLC may incur as a result of any of the
events described in the preceding clauses (1) through (4) and (z) "Qualified
Prepayments" shall not include any payments received by BNPLC that BNPLC has
paid or is obligated to pay to NAI for the restoration or repair of the Property
or that BNPLC is holding as Escrowed Proceeds pursuant to Paragraph 10 of the
Improvements Lease or any other provision of the Improvements Lease. For
purposes of computing the total Qualified Prepayments (and other amounts
dependent upon Qualified Prepayments, such as Stipulated Loss Value) paid to or
received by BNPLC as of any date, payments described in the preceding clauses
(1) through (4) will be considered as Escrowed Proceeds, not Qualified
Prepayments, until they are actually applied as Qualified Prepayments by BNPLC
as provided in the Paragraph 10 of the Improvements Lease.
"REAL PROPERTY" shall have the meaning assigned to it on page 1 of the
Improvements Lease.
"REMEDIAL WORK" means any investigation, monitoring, clean-up,
containment, remediation, removal, payment of response costs, or restoration
work and the preparation and implementation of any closure or other required
remedial plans that any governmental agency or political subdivision requires or
approves (or could reasonably be expected to require if it was aware of all
relevant circumstances concerning the Property), whether
Page 18
73
by judicial order or otherwise, because of the presence of or suspected
presence of Hazardous Substances in, on, under or about the Property or because
of any prior Hazardous Substance Activity. Without limiting the generality of
the foregoing, Remedial Work also means any obligations imposed upon or
undertaken by NAI pursuant to Development Documents or any recommendations or
proposals made therein.
"RENT" means the Base Rent and all Additional Rent.
"RESIDUAL RISK PERCENTAGE" means seventeen percent (17%).
"RESPONSIBLE FINANCIAL OFFICER" means the chief financial officer, the
controller, the treasurer or the assistant treasurer of NAI.
"SALE CLOSING DOCUMENTS" shall have the meaning assigned to it in
subparagraph 1(C) of the Purchase Agreement.
"SECURED SPREAD" means thirty basis points (30/100 of 1%); provided,
however, that for purposes of calculating the Base Rent for any period
commencing on a Failed Collateral Test Date and continuing through the next
Collateral Test Date (under and as defined in Schedule 1 attached to the Lease)
that does not constitute a Failed Collateral Test Date, the Secured Spread shall
equal one-half of the Unsecured Spread.
"SELLER" means, collectively, TRW Inc., an Ohio corporation, and ESL
Incorporated, a California corporation.
"STIPULATED LOSS VALUE" as of any date means the amount equal to the sum
of the Initial Funding Advance, minus all funds actually received by BNPLC and
applied as Qualified Prepayments on or prior to such date. Under no
circumstances will any payment of Base Rent, the Arrangement Fee, the Upfront
Syndication Fees, or Administrative Agency Fees reduce Stipulated Loss Value.
"SUBSIDIARY" means, with respect to any Person, any Affiliate of which
at least a majority of the securities or other ownership interests having
ordinary voting power then exercisable for the election of directors or other
persons performing similar functions are at the time owned directly or
indirectly by such Person.
"SUPPLEMENTAL PAYMENT" shall have the meaning assigned to it in
subparagraph 1(A)(2)(c) of the Purchase Agreement.
"TERM" shall have the meaning assigned to it in subparagraph 1.(a) of
the Improvements Lease.
"THIRD PARTY PRICE" shall have the meaning assigned to it in
subparagraph 1(A)(2) of the Purchase Agreement.
"THIRD PARTY SALE NOTICE" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"THIRD PARTY SALE PROPOSAL" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
Page 19
74
"THIRD PARTY TARGET PRICE" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"TRANSACTION EXPENSES" means costs incurred in connection with the
preparation and negotiation of the Operative Documents and related documents and
the consummation of the transactions contemplated therein.
"UNFUNDED BENEFIT LIABILITIES" means, with respect to any Plan or
Multiemployer Plan, the amount (if any) by which the present value of all
benefit liabilities (within the meaning of Section 4001(a)(16) of ERISA) under
the Plan or Multiemployer Plan exceeds the market value of all Plan or
Multiemployer assets allocable to such benefit liabilities, as determined on the
most recent valuation date of the Plan or Multiemployer Plan and in accordance
with the provisions of ERISA for calculating the potential liability of NAI or
any ERISA Affiliate of NAI under Title IV of ERISA.
"UNSECURED SPREAD" means, for any period beginning on and including the
Base Rent Commencement Date or a Base Rent Date and ending on but not including
the next Base Rent Date, the amount established as described below in this
definition on the date (in this definition, the "SPREAD TEST DATE") that is two
Business Days prior to such period by reference to the ratio calculated by
dividing (1) Adjusted EBIT for the then latest Rolling Four Quarters Period that
ended prior to (and for which NAI has reported earnings as necessary to compute
Adjusted EBIT) into (2) the total Debt of NAI and its Subsidiaries (determined
on a consolidated basis) as of the end of such Rolling Four Quarters Period. The
Unsecured Spread shall be established at the Level in the pricing grid below
which corresponds to such ratio; provided, that:
(a) for any period commencing on or prior to the first Business
Day of February, 2000, the Unsecured Spread will be the amount indicated
for Level III in the pricing grid below plus 100 basis points;
(b) promptly after earnings are reported by NAI for the latest
quarter in any Rolling Four Quarters Period, NAI must notify BNPLC of
any resulting change in the Unsecured Spread under this definition, and
no reduction in the Unsecured Spread from one period to the next will be
effective for purposes of the Operative Documents unless, prior to the
Spread Test Date for the next period, NAI shall have provided BNPLC with
a written notice setting forth and certifying the calculation under this
definition that justifies the reduction; and
(c) notwithstanding anything to the contrary in this definition,
on any date when an Event of Default has occurred and is continuing, the
Unsecured Spread shall equal the Default Rate less the Effective Rate.
====================================================================================================
LEVELS RATIO OF TOTAL DEBT TO ADJUSTED EBIT UNSECURED SPREAD
----------------------------------------------------------------------------------------------------
Level I less than 0.5 125.0 basis points
----------------------------------------------------------------------------------------------------
Level II greater than or equal to 0.5, but 137.5 basis points
less than 1.0
----------------------------------------------------------------------------------------------------
Page 20
75
----------------------------------------------------------------------------------------------------
Level III greater than or equal to 1.0, but 150.0 basis points
less than 1.5
----------------------------------------------------------------------------------------------------
Level IV greater than or equal to 1.5, but 175.0 basis points
less than 2.0
----------------------------------------------------------------------------------------------------
Level V greater than or equal to 2.0 200.0 basis points
====================================================================================================
All determinations of the Unsecured Spread by BNPLC shall, in the absence of
clear and demonstrable error, be binding and conclusive for purposes of the
Improvements Lease. Further BNPLC may, but shall not be required, to rely on the
determination of the Unsecured Spread set forth in any notice delivered by NAI
as described above in clause (b) of this definition.
"UPFRONT SYNDICATION FEES" shall have the meaning assigned to it in
subparagraph 2(M) of the Closing Certificate and Agreement.
"VOLUNTARY RETENTION OF THE PROPERTY" means an affirmative election made
by BNPLC to keep the Property pursuant to, and under the circumstances described
in, the second sentence of subparagraph 1(A)(2)(a) of the Purchase Agreement.
ARTICLE II - RULES OF INTERPRETATION
THE FOLLOWING PROVISIONS WILL APPLY TO AND GOVERN THE INTERPRETATION OF
EACH OF THE OPERATIVE DOCUMENTS:
1 NOTICES. The provision of any Operative Document, or of any Applicable
Laws with reference to the sending, mailing or delivery of any notice or demand
under any Operative Document or with reference to the making of any payment
required under any Operative Document, shall be deemed to be complied with when
and if the following steps are taken:
(i) All Rent and other amounts required to be paid by NAI to
BNPLC shall be paid to BNPLC in immediately available funds by wire
transfer to:
Federal Reserve Bank of New York
ABA ▇▇▇▇▇▇▇▇▇ Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/ 14334000176
/Ref/ NAI Sunnyvale Synthetic Improvements Lease (Phase IV)
or at such other place and in such other manner as BNPLC may designate
in a notice to NAI.
Page 21
76
(ii) All Collateral required to be paid by NAI to the Agent shall
be paid in immediately available funds by wire transfer to:
Federal Reserve Bank of New York
ABA ▇▇▇▇▇▇▇▇▇ Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/ 14334000176
/Ref/ NAI Collateral Payment
or at such other place and in such other manner as Agent may designate
in a notice to NAI.
(iii) [intentionally deleted];
(iv) All notices, demands, approvals, consents and other
communications to be made under any Operative Document to or by the
parties thereto must, to be effective for purpose of such Operative
Document, be in writing. Notices, demands and other communications
required or permitted under any Operative Document are to be sent to the
addresses set forth below (or in the case of communications to
Participants, at the addresses set forth in Schedule 1 to the
Participation Agreement) and shall be given by any of the following
means: (A) personal service, with proof of delivery or attempted
delivery retained; (B) electronic communication, whether by telex,
telegram or telecopying (if confirmed in writing sent by United States
first class mail, return receipt requested); or (C) registered or
certified first class mail, return receipt requested. Such addresses may
be changed by notice to the other parties given in the same manner as
provided above. Any notice or other communication sent pursuant to
clause (A) or (B) hereof shall be deemed received upon such personal
service or upon dispatch by electronic means, and, if sent pursuant to
clause (C) shall be deemed received five days following deposit in the
mail.
Address of BNPLC:
BNP Leasing Corporation
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Banque Nationale de Paris, San Francisco
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
And for draw requests and funding notices, with
a copy to:
Banque Nationale de Paris, San Francisco
Page 22
77
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Address of NAI:
Network Appliance, Inc.
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
2 SEVERABILITY. If any term or provision of any Operative
Document or the application thereof shall to any extent be held by a court of
competent jurisdiction to be invalid and unenforceable, the remainder of such
document, or the application of such term or provision other than to the extent
to which it is invalid or unenforceable, shall not be affected thereby.
3 NO MERGER. There shall be no merger of the Improvements Lease
or of the leasehold estate created by the Improvements Lease with any other
interest in the Property by reason of the fact that the same person may acquire
or hold, directly or indirectly, the Improvements Lease or the leasehold estate
created hereby and any other interest in the Property, unless all Persons with
an interest in the Property that would be adversely affected by any such merger
specifically agree in writing that such a merger shall occur. There shall be no
merger of the Purchase Agreement or of the purchase options or obligations
created by the Purchase Agreement with any other interest in the Property by
reason of the fact that the same person may acquire or hold, directly or
indirectly, the Improvements Lease or the leasehold estate created hereby and
any other interest in the Property, unless all Persons with an interest in the
Property that would be adversely affected by any such merger specifically agree
in writing that such a merger shall occur.
4 NO IMPLIED WAIVER. The failure of BNPLC or NAI to insist at any
time upon the strict performance of any covenant or agreement or to exercise any
option, right, power or remedy contained in any Operative Document shall not be
construed as a waiver or a relinquishment thereof for the future. The failure of
Agent to insist at any time upon the strict performance of any covenant or
agreement or to exercise any option, right, power or remedy contained in the
Pledge Agreement shall not be construed as a waiver or a relinquishment thereof
for the future. The waiver of or redress for any breach of any Operative
Document by any party thereto shall not prevent a similar subsequent act from
constituting a violation. Any express waiver of any provision of any Operative
Document shall affect only the term or condition specified in such waiver and
only for the time and in the manner specifically stated therein. No waiver by
any party to any Operative Document of any provision therein shall be deemed to
have been made unless expressed in writing and signed by the party to be bound
by the waiver. A receipt by BNPLC of any Rent with knowledge of the breach by
NAI of any covenant or agreement contained in the Improvements Lease or any
other Operative Document shall not be deemed a waiver of such breach. A receipt
by Agent of any Collateral or other payment under the Pledge Agreement with
knowledge of the breach by NAI of any covenant or agreement contained in the
Pledge Agreement shall not be deemed a waiver of such breach.
Page 23
78
5 ENTIRE AND ONLY AGREEMENTS. The Operative Documents supersede
any prior negotiations and agreements between BNPLC, Agent and NAI concerning
the Property or the Collateral, and no amendment or modification of any
Operative Document shall be binding or valid unless expressed in a writing
executed by all parties to such Operative Document.
6 BINDING EFFECT. Except to the extent, if any, expressly
provided to the contrary in any Operative Document with respect to assignments
thereof, all of the covenants, agreements, terms and conditions to be observed
and performed by the parties to the Operative Documents shall be applicable to
and binding upon their respective successors and, to the extent assignment is
permitted thereunder, their respective assigns.
7 TIME IS OF THE ESSENCE. Time is of the essence as to all
obligations of NAI and BNPLC and all notices required of NAI and BNPLC under the
Operative Documents.
8 GOVERNING LAW. Each Operative Document shall be governed by and
construed in accordance with the laws of the State of California without regard
to conflict or choice of laws (subject, however, in the case of the Pledge
Agreement to any contrary provisions of the "UCC," as defined in the Pledge
Agreement).
9 PARAGRAPH HEADINGS. The paragraph and section headings
contained in the Operative Documents are for convenience only and shall in no
way enlarge or limit the scope or meaning of the various and several provisions
thereof.
10 NEGOTIATED DOCUMENTS. All the parties to each Operative
Document and their counsel have reviewed and revised or requested revisions to
such Operative Document, and the usual rule of construction that any ambiguities
are to be resolved against the drafting party shall not apply to the
construction or interpretation of any Operative Documents or any amendments
thereof.
11 TERMS NOT EXPRESSLY DEFINED IN AN OPERATIVE DOCUMENT. As used
in any Operative Document, a capitalized term that is not defined therein or in
this Common Definitions and Provisions Agreement (Phase IV - Improvements), but
is defined in another Operative Document, shall have the meaning ascribed to it
in the other Operative Document.
12 OTHER TERMS AND REFERENCES. Words of any gender used in each
Operative Document shall be held and construed to include any other gender, and
words in the singular number shall be held to include the plural and vice versa,
unless the context otherwise requires. References in any Operative Document to
Paragraphs, subparagraphs, Sections, subsections or other subdivisions shall
refer to the corresponding Paragraphs, subparagraphs, Sections, subsections or
subdivisions of that Operative Document, unless specific reference is made to
another document or instrument. References in any Operative Document to any
Schedule or Exhibit shall refer to the corresponding Schedule or Exhibit
attached to that Operative Document, which shall be made a part thereof by such
reference. All capitalized terms used in each Operative Document which refer to
other documents shall be deemed to refer to such other documents as they may be
renewed, extended, supplemented, amended or otherwise modified from time to
time, provided such documents are not renewed, extended or modified in breach of
any provision contained in the Operative Documents or, in the case of any other
document to which BNPLC is a party or of which BNPLC is an intended beneficiary,
without the consent of BNPLC. All accounting terms used but not specifically
defined in any Operative Document shall be construed in accordance with GAAP.
The words "this [Agreement]", "herein", "hereof", "hereby", "hereunder" and
words of similar import when used in each Operative Document refer to that
Operative Document as a whole and not to any particular
Page 24
79
subdivision unless expressly so limited. The phrases "this Paragraph", "this
subparagraph", "this Section", "this subsection" and similar phrases used in any
operative document refer only to the Paragraph, subparagraph, Section,
subsection or other subdivision described in which the phrase occurs. As used in
the Operative Documents the word "or" is not exclusive. As used in the Operative
Documents, the words "include", "including" and similar terms shall be construed
as if followed by "without limitation to".
13 EXECUTION IN COUNTERPARTS. To facilitate execution, each
Operative Document may be executed in as many identical counterparts as may be
required. It shall not be necessary that the signature of, or on behalf of, each
party, or that the signature of all persons required to bind any party, appear
on each counterpart. All counterparts, taken together, shall collectively
constitute a single instrument. It shall not be necessary in making proof of any
Operative Document to produce or account for more than a single counterpart
containing the respective signatures of, or on behalf of, each of the parties
hereto. Any signature page to any counterpart may be detached from such
counterpart without impairing the legal effect of the signatures thereon and
thereafter attached to another counterpart identical thereto except having
attached to it additional signature pages.
14 NOT A PARTNERSHIP, ETC. NOTHING IN ANY OPERATIVE DOCUMENT IS
INTENDED TO CREATE ANY PARTNERSHIP, JOINT VENTURE, OR OTHER JOINT ENTERPRISE
BETWEEN BNPLC AND NAI. NEITHER THE EXECUTION OF ANY OPERATIVE DOCUMENT NOR THE
ADMINISTRATION THEREOF OR OTHER DOCUMENTS REFERENCED HEREIN BY BNPLC, NOR ANY
OTHER RIGHT, DUTY OR OBLIGATION OF BNPLC UNDER OR PURSUANT TO ANY OPERATIVE
DOCUMENT IS INTENDED TO BE OR TO CREATE ANY FIDUCIARY OBLIGATIONS OF BNPLC TO
NAI.
[The signature pages follows.]
Page 25
80
IN WITNESS WHEREOF, NAI and BNPLC have caused this Common Definitions
and Provisions Agreement (Phase IV - Improvements) to be executed as of December
___, 1999.
"NAI"
NETWORK APPLIANCE, INC.
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
81
[Continuation of signature pages to Common Definitions and Provisions Agreement
(Phase IV - Improvements) dated to be effective December ___, 1999]
"BNPLC"
BNP LEASING CORPORATION
By:
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇, Vice President