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EXHIBIT 10.55
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PLEDGE AGREEMENT
(PHASE IV - IMPROVEMENTS)
AMONG
BNP LEASING CORPORATION
("BNPLC")
BANQUE NATIONALE DE PARIS, AS AGENT
("AGENT")
NETWORK APPLIANCE, INC.
("NAI")
AND
PARTICIPANTS AS DESCRIBED HEREIN
DECEMBER ___, 1999
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS AND INTERPRETATION..................................................... 1
Section 1.1 Capitalized Terms Used But Not Defined in This Agreement................... 1
Section 1.2 Definitions............................................................... 1
Account......................................................................... 1
Account Office.................................................................. 2
Agent........................................................................... 2
BNPLC........................................................................... 2
BNPLC's Corresponding Obligations to Participants............................... 2
Cash Collateral................................................................. 2
Certificate of Deposit.......................................................... 2
Collateral...................................................................... 2
Collateral Imbalance............................................................ 2
Collateral Percentage........................................................... 2
Default......................................................................... 2
Deposit Taker................................................................... 3
Deposit Taker Losses............................................................ 3
Deposit Taker's Acknowledgment and Agreement.................................... 3
Disqualified Deposit Taker...................................................... 3
Event of Default................................................................ 3
Failed Collateral Test Date..................................................... 4
Initially Qualified Deposit Taker............................................... 4
Lien............................................................................ 4
Material Lease Default.......................................................... 5
Mandatory Collateral Period..................................................... 5
Minimum Collateral Value........................................................ 5
NAI............................................................................. 5
NAI's Purchase Agreement Obligations............................................ 5
Notice of Security Interest..................................................... 5
Other Liable Party.............................................................. 5
Participants.................................................................... 5
Participation Agreement......................................................... 5
Percentage...................................................................... 6
Qualified Pledge................................................................ 6
Secured Obligations............................................................. 6
Supplement...................................................................... 6
Transaction Documents........................................................... 6
Value........................................................................... 6
Section 1.3 Attachments............................................................... 6
Section 1.4 Amendment of Defined Instruments.......................................... 6
Section 1.5 References and Titles..................................................... 6
ARTICLE II SECURITY INTEREST................................................................. 7
Section 2.1 Pledge and Grant of Security Interest..................................... 7
Section 2.2 Return of Collateral After the Secured Obligations are Satisfied in Full.. 7
ARTICLE III DESIGNATION OF MINIMUM COLLATERAL PERCENTAGE..................................... 7
Section 3.1 Determination of Minimum Collateral Percentage Generally.................. 7
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Section 3.2 Limitations on NAI's Right to Lower the Collateral Percentage............. 8
Section 3.3 Mandatory Collateral Periods.............................................. 8
ARTICLE IV PROVISIONS CONCERNING DEPOSIT TAKERS.............................................. 8
Section 4.1 Qualification of Deposit Takers Generally................................. 8
Section 4.2 Existing Deposit Takers................................................... 9
Section 4.3 Replacement of Participants Proposed by NAI............................... 9
Section 4.4 Mandatory Substitution for Disqualified Deposit Takers.................... 9
Section 4.5 Voluntary Substitution of Deposit Takers.................................. 10
Section 4.6 Delivery of Notice of Security Interest by NAI and Agent.................. 10
Section 4.7 Constructive Possession of Collateral..................................... 10
Section 4.8 Attempted Setoff by Deposit Takers........................................ 10
Section 4.9 Deposit Taker Losses...................................................... 10
Section 4.10 Losses Resulting from Failure of Deposit Taker to Comply with this
Agreement............................................................. 11
ARTICLE V DELIVERY AND MAINTENANCE OF CASH COLLATERAL........................................ 11
Section 5.1 Delivery of Funds by NAI.................................................. 11
Section 5.2 Transition Account........................................................ 11
Section 5.3 Allocation of Cash Collateral Among Deposit Takers........................ 11
Section 5.4 Issuance and Redemption of Certificates of Deposit........................ 12
Section 5.5 Status of the Accounts Under the Reserve Requirement Regulations.......... 12
Section 5.6 Acknowledgment by NAI that Requirements of this Agreement are
Commercially Reasonable............................................... 13
ARTICLE VI WITHDRAWAL OF CASH COLLATERAL..................................................... 13
Section 6.1 Withdrawal of Collateral Prior to the Designated Sale Date................ 13
Section 6.2 Withdrawal and Application of Cash Collateral to Reduce or Satisfy the
Secured Obligations to the Participants............................... 13
Section 6.3 Withdrawal and Application of Cash Collateral to Reduce or Satisfy the
Secured Obligations to BNPLC.......................................... 14
Section 6.4 Withdrawal of Cash Collateral From Accounts Maintained by Disqualified
Deposit Takers........................................................ 14
ARTICLE VII REPRESENTATIONS AND COVENANTS OF NAI............................................. 14
Section 7.1 Representations of NAI.................................................... 14
Section 7.2 Covenants of NAI.......................................................... 15
ARTICLE VIII AUTHORIZED ACTION BY AGENT..................................................... 17
Section 8.1 Power of Attorney......................................................... 17
ARTICLE IX DEFAULT AND REMEDIES............................................................. 17
Section 9.1 Remedies.................................................................. 17
ARTICLE X OTHER RECOURSE.................................................................... 18
Section 10.1 Recovery Not Limited..................................................... 18
ARTICLE XI PROVISIONS CONCERNING AGENT....................................................... 18
Section 11.1 Appointment and Authority................................................ 18
Section 11.2 Exculpation, Agent's Reliance, Etc....................................... 19
Section 11.3 Participant's Credit Decisions........................................... 19
Section 11.4 Indemnity................................................................ 20
Section 11.5 Agent's Rights as Participant and Deposit Taker.......................... 20
Section 11.6 Investments.............................................................. 20
Section 11.7 Benefit of Article XI.................................................... 20
Section 11.8 Resignation.............................................................. 20
ARTICLE XII MISCELLANEOUS.................................................................... 21
Section 12.1 Provisions Incorporated From Other Operative Documents.................... 21
Section 12.2 Cumulative Rights, etc................................................... 21
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Section 12.3 Survival of Agreements................................................... 21
Section 12.4 Other Liable Party....................................................... 21
Section 12.5 Termination.............................................................. 21
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Attachment 1......................................Form of Certificate of Deposit
Attachment 2............Supplement to Pledge Agreement (Phase IV - Improvements)
Attachment 3........Notice of NAI's Election to Change the Collateral Percentage
Attachment 4.........................................Notice of Security Interest
Attachment 5............................................Examples of Calculations
Attachment 6......Notice of NAI's Requirement to Withdraw Excess Cash Collateral
Attachment 7......Notice of NAI's Requirement of Direct Payments to Participants
Attachment 8.............Notice of NAI's Requirement of Direct Payments to BNPLC
Attachment 9.........................Notice of NAI's Requirement of a Withdrawal
of Cash Collateral from a Disqualified Deposit Taker
Schedule 1............................Financial Covenants and Negative Covenants
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PLEDGE AGREEMENT
(PHASE IV - IMPROVEMENTS)
This PLEDGE AGREEMENT (PHASE IV - IMPROVEMENTS) (this "AGREEMENT") is
made as of December ___, 1999 (the "EFFECTIVE DATE"), by NETWORK APPLIANCE,
INC., a California corporation ("NAI"); BNP LEASING CORPORATION, a Delaware
corporation ("BNPLC"); BANQUE NATIONALE DE PARIS ("BNPLC'S PARENT"), as a
"PARTICIPANT"; and BANQUE NATIONALE DE PARIS, acting in its capacity as agent
for BNPLC and the Participants (in such capacity, "AGENT"), is made and dated as
of the Effective Date.
RECITALS
A. NAI and BNPLC are parties to: (i) a Common Definitions and Provisions
Agreement (Phase IV - Improvements) dated as of the Effective Date (the "COMMON
DEFINITIONS AND PROVISIONS AGREEMENT (PHASE IV - IMPROVEMENTS)"); and (ii) a
Purchase Agreement (Phase IV - Improvements) dated as of the Effective Date (the
"PURCHASE AGREEMENT"), pursuant to which NAI has agreed to make a "SUPPLEMENTAL
PAYMENT" (as defined in the Common Definitions and Provisions Agreement (Phase
IV - Improvements)), in consideration of the rights granted to NAI by the
Purchase Agreement.
B. Pursuant to a Participation Agreement dated the date hereof (the
"PARTICIPATION AGREEMENT"), BNPLC's Parent has agreed with BNPLC to participate
in the risks and rewards to BNPLC of the Purchase Agreement and other Operative
Documents (as defined in the Common Definitions and Provisions Agreement (Phase
IV - Improvements)), and the parties to this Agreement anticipate that other
financial institutions may become parties to the Participation Agreement as
Participants, agreeing to participate in the risks and rewards to BNPLC of the
Purchase Agreement and other Operative Documents.
C. NAI may from time to time deliver cash collateral for its obligations
to BNPLC under the Purchase Agreement and for BNPLC's corresponding obligations
to Participants under the Participation Agreement. This Agreement sets forth the
terms and conditions governing such cash collateral.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I DEFINITIONS AND INTERPRETATION
Section 1.1 Capitalized Terms Used But Not Defined in This Agreement.
All capitalized terms used in this Agreement which are defined in Article I of
the Common Definitions and Provisions Agreement (Phase IV - Improvements) and
not otherwise defined herein shall have the same meanings herein as set forth in
the Common Definitions and Provisions Agreement (Phase IV - Improvements). All
terms used in this Agreement which are defined in the UCC and not otherwise
defined herein shall have the same meanings herein as set forth therein, except
where the context otherwise requires.
Section 1.2 Definitions. When used in this Agreement, the following
terms shall have the following respective meanings:
"ACCOUNT" shall mean any deposit account maintained by a Deposit
Taker into which Cash Collateral may be deposited at any time, excluding
the Transition Account.
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"ACCOUNT OFFICE" shall mean, with respect to any Account
maintained by any Deposit Taker, the office of such Deposit Taker in
California or New York at which such Account is maintained as specified
in the applicable Deposit Taker's Acknowledgment and Agreement.
"AGENT" shall have the meaning given to that term in the
introductory paragraph hereof.
"BNPLC" shall have the meaning given to that term in the
introductory paragraph hereof.
"BNPLC'S CORRESPONDING OBLIGATIONS TO PARTICIPANTS" shall mean
BNPLC's obligations under the Participation Agreement to pay
Participants their respective Percentages of (or amounts equal to their
respective Percentages of) sums "actually received by BNPLC" (as defined
in the Participation Agreement) in satisfaction of NAI's Purchase
Agreement Obligations; provided, however, any modification of the
Participation Agreement executed after the date hereof without NAI's
written consent shall not be considered for purposes of determining
BNPLC's Corresponding Obligations to Participants under this Agreement.
"CASH COLLATERAL" shall mean (i) all money of NAI which NAI has
delivered to Agent for deposit with a Deposit Taker pursuant to this
Agreement, and (ii) any additional money delivered to Agent as
Collateral pursuant to Section 4.9.
"CERTIFICATE OF DEPOSIT" shall mean a certificate of deposit
issued by a Deposit Taker as required by Section 5.4 below to evidence
an Account into which Cash Collateral has been deposited pursuant to
this Agreement. Each Certificate of Deposit shall be issued in an amount
equal to the Value of the Account which it evidences and shall otherwise
be in the form set forth as ATTACHMENT 1.
"COLLATERAL" shall have the meaning given to that term in
Section 2.1 hereof.
"COLLATERAL IMBALANCE" shall mean on any date prior to the
Designated Sale Date that the Value (without duplication) of Accounts
maintained by and Certificates of Deposit issued by the Deposit Taker
for any Participant (other than a Disqualified Deposit Taker) does not
equal such Participant's Percentage, multiplied by the lesser of (1) the
Minimum Collateral Value in effect on such date, or (2) the aggregate
Value of all Collateral subject to this Agreement on such date. For
purposes of determining whether a Collateral Imbalance exists, the Value
of any Accounts maintained by a bank that is acting as Deposit Taker for
two or more Participants will be deemed to be held for them in
proportion to their respective Percentages, and the Value of any
Accounts maintained by a bank as Deposit Taker for both a Participant
and BNPLC (as in the case of BNPLC's Parent acting as Deposit Taker for
itself, as a Participant, and for BNPLC) will be deemed to be held for
the Participant only to the extent necessary to prevent or mitigate a
Collateral Imbalance and otherwise for BNPLC.
"COLLATERAL PERCENTAGE" shall mean the percentage designated by
NAI or required during a Mandatory Collateral Period pursuant to Part
III of Schedule 1.
"DEFAULT" means any Event of Default and any default, event or
condition which would, with the giving of any requisite notices and the
passage of any requisite periods of time, constitute an Event of
Default.
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"DEPOSIT TAKER" for BNPLC shall mean BNPLC's Parent and for each
Participant shall mean the Participant itself; provided, that each of
BNPLC and the Participants, for itself only, may from time to time
designate another Deposit Taker as provided in Sections 4.4 and 4.5
below.
"DEPOSIT TAKER LOSSES" shall mean the Value of any Cash
Collateral delivered to a Deposit Taker, but that the Deposit Taker will
not (because of the insolvency of the Deposit Taker, offsets by the
Deposit Taker in violation of the Deposit Taker's Acknowledgment and
Agreement, or otherwise) return to NAI or return to Agent for
disposition or application as provided herein or as required by
applicable law.
"DEPOSIT TAKER'S ACKNOWLEDGMENT AND AGREEMENT" shall have the
meaning given to that term in subsection 4.1.2 hereof.
"DISQUALIFIED DEPOSIT TAKER" shall mean any Deposit Taker with
whom Agent may decline to deposit Collateral pursuant to Section 4.1.
"EVENT OF DEFAULT" shall mean the occurrence of any of the
following:
(a) the failure by NAI to pay all or any part of NAI's
Purchase Agreement Obligations when due, after giving effect to
any applicable notice and grace periods expressly provided for
in the Purchase Agreement;
(b) the failure by NAI to provide funds as and when
required by Section 5.1 of this Agreement, if within seven
Business Days after such failure commences NAI does not (1) cure
such failure by delivering the funds required by Section 5.1,
and (2) pay to BNPLC as additional Rent under the Improvements
Lease an amount equal to interest at the Default Rate (as
defined in the Improvements Lease) on such funds for the period
from which they were first due to the date of receipt by Agent;
(c) the failure of the pledge or security interest
contemplated herein in the Transition Account or any Account,
Certificate of Deposit or Cash Collateral to be a Qualified
Pledge (regardless of the characterization of the Transition
Account or any Accounts, Certificates of Deposit or Cash
Collateral as deposit accounts, instruments or general
intangibles under the UCC), if within five Business Days after
NAI becomes aware of such failure, NAI does not (1) notify
Agent, BNPLC and the Participants of such failure, and (2) cure
such failure, and (3) to the extent required by Section 7.2.9,
pay to BNPLC any additional Base Rent that has accrued under the
Improvements Lease because of (or that would have accrued if
BNPLC had been aware of) such failure, together with interest at
the Default Rate on any such additional Base Rent;
(d) the failure of any representation herein by NAI to
be true (other than a failure described in another clause of
this definition of Event of Default), if such failure is not
cured within thirty days after NAI receives written notice
thereof from Agent;
(e) the failure of any representation made by NAI in
subsection 7.1.1 to be true, if within fifteen (15) days after
NAI becomes aware of such failure, NAI does not (1) notify
Agent, BNPLC and the Participants of such failure, and (2) cure
such failure, and (3) pay to BNPLC any additional Base Rent that
has accrued under the Improvements Lease because of (or that
would have accrued if BNPLC had been aware of) such failure, and
(4) pay to BNPLC interest at the Default Rate on any such
additional Base Rent;
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(f) the failure by NAI timely and properly to observe,
keep or perform any covenant, agreement, warranty or condition
herein required to be observed, kept or performed (other than a
failure described in another clause of this definition of Event
of Default), if such failure is not cured within thirty days
after NAI receives written notice thereof from Agent; and
(g) the failure by BNPLC to pay when due on or after the
Designated Sale Date any of BNPLC's Corresponding Obligations to
Participants, after giving effect to any applicable notice and
grace periods expressly provided for in the Participation
Agreement.
Notwithstanding the foregoing, if ever the aggregate Value of Cash
Collateral held by Agent and the Deposit Takers EXCEEDS the Minimum
Collateral Value then in effect, a failure of the pledge or security
interest contemplated herein in SUCH EXCESS Cash Collateral to be a
valid, perfected, first priority pledge or security interest shall not
constitute an Event of Default under this Agreement. Accordingly, to
provide a cure as required to avoid an Event of Default under clauses
(c) or (e) of this definition, NAI could deliver additional Cash
Collateral - the pledge of which or security interest in which created
by this Agreement is a Qualified Pledge - sufficient in amount to cause
the aggregate Value of the Cash Collateral then held by Agent and the
Deposit Takers subject to a Qualified Pledge hereunder to equal or
exceed the Minimum Collateral Value.
"FAILED COLLATERAL TEST DATE" means any date upon which commences
a Mandatory Collateral Period as described in Part III of Schedule 1.
"INITIALLY QUALIFIED DEPOSIT TAKER" means (1) Banque Nationale de
Paris, acting through any branch, office or agency that can lawfully
maintain an Account as a Deposit Taker hereunder, and (2) any of the
fifty largest (measured by total assets) U.S. banks, or one of the one
hundred largest (measured by total assets) banks in the world, with debt
ratings of at least (i) A- (in the case of long term debt) and A-1 (in
the case of short term debt) or the equivalent thereof by Standard and
Poor's Corporation, and (ii) A3 (in the case of long term debt) and P-2
(in the case of short term debt) or the equivalent thereof by ▇▇▇▇▇'▇
Investor Service, Inc. The parties believe it improbable that the
ratings systems used by Standard and Poor's Corporation and by ▇▇▇▇▇'▇
Investor Service, Inc. will be discontinued or changed, but if such
ratings systems are discontinued or changed, NAI shall be entitled to
select and use a comparable ratings systems as a substitute for the S&P
Rating or the ▇▇▇▇▇ Rating, as the case may be, for purposes of
determining the status of any bank as an Initially Qualified Deposit
Taker.
"LIEN" shall mean, with respect to any property or assets, any
right or interest therein of a creditor to secure indebtedness of any
kind which is owed to him or any other arrangement with such creditor
which provides for the payment of such indebtedness out of such property
or assets or which allows him to have such indebtedness satisfied out of
such property or assets prior to the general creditors of any owner
thereof, including any lien, mortgage, security interest, pledge,
deposit, production payment, rights of a vendor under any title
retention or conditional sale agreement or lease substantially
equivalent thereto, tax lien, mechanic's or materialman's lien, or any
other charge or encumbrance for security purposes, whether arising by
law or agreement or otherwise, but excluding any right of setoff which
arises without agreement in the ordinary course of business. "Lien" also
means any filed financing statement, any registration with an issuer of
uncertificated securities, or any other arrangement which would serve to
perfect a Lien described in the preceding sentence, regardless of
whether such financing statement is filed, such registration is made, or
such arrangement is undertaken before or after such Lien exists.
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"MATERIAL LEASE DEFAULT" shall mean any of the following:
(1) any "Event of Default" under and as defined in the
Improvements Lease, including any such Event of Default
consisting of a failure of NAI to comply with the requirements of
Exhibit I attached to the Improvements Lease; and
(2)(a) any failure of NAI to make any payment required by
and when first due under the Improvements Lease, regardless of
whether any period provided in the Improvements Lease for the
cure of such failure by NAI shall have expired, and (b) any other
default, event or condition which would, with the giving of any
requisite notices and the passage of any requisite periods of
time, constitute an "Event of Default" under and as defined in
the Improvements Lease, if such other default, event or failure
involves a material noncompliance with Applicable Law. (For
purposes of this definition, "material" noncompliance with
Applicable Law will include any noncompliance, the correction of
which has been requested by a governmental authority, or because
of which a threat of action against the Property or BNPLC has
been asserted by a governmental authority.)
"MANDATORY COLLATERAL PERIOD" shall mean any period, as
determined in accordance with Part III of Schedule 1, during which NAI
is required to maintain a Collateral Percentage of one hundred percent
(100%) pursuant to Section 3.2.
"MINIMUM COLLATERAL VALUE" shall mean (1) as of the Designated
Sale Date or any prior date, an amount equal to the Collateral
Percentage multiplied by the Stipulated Loss Value determined as of that
date in accordance with the Improvements Lease; and (2) as of any date
after the Designated Sale Date, an amount equal to the Break Even Price
plus any unpaid interest accrued on past due amounts payable pursuant to
Paragraph 1(a) of the Purchase Agreement.
"NAI" shall have the meaning given to that term in the
introductory paragraph hereof.
"NAI'S PURCHASE AGREEMENT OBLIGATIONS" shall mean all of NAI's
obligations under the Purchase Agreement, including (i) NAI's obligation
to pay any Supplemental Payment as required under subparagraph 1(A) of
the Purchase Agreement, and (ii) any damages incurred by BNPLC because
of (A) NAI's breach of the Purchase Agreement or (B) the rejection by
NAI of the Purchase Agreement in any bankruptcy or insolvency
proceeding.
"NOTICE OF SECURITY INTEREST" shall have the meaning given to
that term in subsection 4.1.1 hereof.
"OTHER LIABLE PARTY" shall mean any Person, other than NAI, who
may now or may at any time hereafter be primarily or secondarily liable
for any of the Secured Obligations or who may now or may at any time
hereafter have granted to Agent a pledge of or security interest in any
of the Collateral.
"PARTICIPANTS" shall mean BNPLC's Parent and any other financial
institutions which may hereafter become parties to (i) this Agreement by
completing, executing and delivering to NAI and Agent a Supplement, and
(ii) the Participation Agreement.
"PARTICIPATION AGREEMENT" shall have the meaning given to such
term in Recital B hereof.
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"PERCENTAGE" shall mean with respect to each Participant and the
Deposit Taker for such Participant, such Participant's "Percentage"
under and as defined in the Participation Agreement for purposes of
computing such Participant's right thereunder to receive payments of (or
amounts equal to a percentage of) any sales proceeds or Supplemental
Payment received by BNPLC under the Purchase Agreement. Percentages may
be adjusted from time to time as provided in the Participation Agreement
or as provided in supplements thereto executed as provided in the
Participation Agreement.
"QUALIFIED PLEDGE" means a pledge or security interest that
constitutes a valid, perfected, first priority pledge or security
interest.
"SECURED OBLIGATIONS" shall mean and include both NAI's Purchase
Agreement Obligations and BNPLC's Corresponding Obligations to
Participants.
"SUPPLEMENT" shall mean a supplement to this Agreement in the
form of ATTACHMENT 2.
"TRANSACTION DOCUMENTS" shall mean, collectively, this Agreement,
the Improvements Lease, the Purchase Agreement and the Participation
Agreement.
"TRANSITION ACCOUNT" shall have the meaning given it in Section
5.2.
"UCC" shall mean the Uniform Commercial Code as in effect in the
State of California from time to time, and the Uniform Commercial Code
as in effect in any other jurisdiction which governs the perfection or
non-perfection of the pledge of and security interests in the Collateral
created by this Agreement.
"VALUE" shall mean with respect to any Account, Certificate of
Deposit or Cash Collateral on any date, a dollar value determined as
follows (without duplication):
(a) cash shall be valued at its face amount on such
date;
(b) an Account shall be valued at the principal balance
thereof on such date; and
(c) a Certificate of Deposit shall be valued at the face
amount thereof.
Section 1.3 Attachments. All attachments to this Agreement are a part
hereof for all purposes.
Section 1.4 Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein, references in this
Agreement to a particular agreement, instrument or document (including
references to the Improvements Lease, Purchase Agreement and Participation
Agreement) also refer to and include all valid renewals, extensions, amendments,
modifications, supplements or restatements of any such agreement, instrument or
document; provided that nothing contained in this Section shall be construed to
authorize any Person to execute or enter into any such renewal, extension,
amendment, modification, supplement or restatement.
Section 1.5 References and Titles. All references in this Agreement to
Attachments, Articles, Sections, subsections, and other subdivisions refer to
the Attachments, Articles, Sections, subsections and other subdivisions of this
Agreement unless expressly provided otherwise. Titles appearing at the beginning
of any subdivision are for convenience only and do not constitute any part of
any such
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subdivision and shall be disregarded in construing the language contained in
this Agreement. The words "this Agreement", "herein", "hereof", "hereby",
"hereunder" and words of similar import refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. The phrases "this
Article," "this Section" and "this subsection" and similar phrases refer only to
the Articles, Sections or subsections hereof in which the phrase occurs. The
word "or" is not exclusive, and the word "including" (in all of its forms) means
"including without limitation". Pronouns in masculine, feminine and neuter
gender shall be construed to include any other gender, and words in the singular
form shall be construed to include the plural and vice versa unless the context
otherwise requires.
ARTICLE II SECURITY INTEREST
Section 2.1 Pledge and Grant of Security Interest. As security for the
Secured Obligations, NAI hereby pledges and assigns to Agent (for the ratable
benefit of BNPLC and the Participants) and grants to Agent (for the ratable
benefit of BNPLC and the Participants) a continuing security interest and lien
in and against all right, title and interest of NAI in and to the following
property, whether now owned or hereafter acquired by NAI (collectively and
severally, the "COLLATERAL"):
(a) All Cash Collateral, all Accounts, the Transition Account
and all Certificates of Deposit issued from time to time and general
intangibles arising therefrom or relating thereto (however, "general
intangibles" as used in this clause shall not include any general
intangibles not related to Cash Collateral, Accounts, the Transition
Account or Certificates of Deposit issued from time to time, and thus
will not include, without limitation, any intellectual property of NAI);
and all documents, instruments and agreements evidencing the same; and
all extensions, renewals, modifications and replacements of the
foregoing; and any interest or other amounts payable in connection
therewith; and
(b) All proceeds of the foregoing (including whatever is
receivable or received when Collateral or proceeds is invested, sold,
collected, exchanged, returned, substituted or otherwise disposed of,
whether such disposition is voluntary or involuntary, including rights
to payment and return premiums and insurance proceeds under insurance
with respect to any Collateral, and all rights to payment with respect
to any cause of action affecting or relating to the Collateral).
The pledge, assignment and grant of a security interest made by NAI hereunder is
for security of the Secured Obligations only; the parties to this Agreement do
not intend that NAI's delivery of the Collateral to Agent as herein provided
will constitute an advance payment of any Secured Obligations or liquidated
damages, nor do the parties intend that the Collateral increase the dollar
amount of the Secured Obligations.
Section 2.2 Return of Collateral After the Secured Obligations are
Satisfied in Full. If any proceeds of Collateral remain after all Secured
Obligations have been paid in full, Agent will deliver or direct the Deposit
Takers to deliver such proceeds to NAI or other Persons entitled thereto by law.
ARTICLE III DESIGNATION OF MINIMUM COLLATERAL PERCENTAGE
Section 3.1 Determination of Minimum Collateral Percentage Generally.
Effective as of the date of this Agreement, and until a new Collateral
Percentage becomes effective, the Collateral Percentage is zero percent (0%).
Subject to the provisions of this Article III, NAI may from time to time
designate a new Collateral Percentage between 0% and 100% by written notice
delivered to Agent, BNPLC and the Participants in the form of ATTACHMENT 3. Any
new Collateral Percentage so designated shall not become effective, however,
until the commencement of the later of (A) the first Base Rent Period to
commence on or after the first Business Day of January, 2002, or (B) the next
following Base Rent Period
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which is at least ten Business Days after the receipt of such notice by Agent,
BNPLC and the Participants. Further, after the first change in the Collateral
Percentage resulting from a designation by NAI of a Collateral Percentage
greater than zero percent (0%), any subsequent change resulting from NAI's
designation of a new Collateral Percentage shall not become effective before the
first Business Day of the first Base Rent Period that commences at least ninety
days after the effective date of the last preceding change in the Collateral
Period. In any event, if NAI provides more than one notice of a change in the
Collateral Percentage to be effective on a particular Base Rent Date, then the
latest such notice from NAI which satisfies the requirements of this Section
(and of Sections 3.2 and 3.3) will control. After any Collateral Percentage
becomes effective as provided in this Article, it shall remain in effect until a
different Collateral Percentage becomes effective as provided in this Article.
Section 3.2 Limitations on NAI's Right to Lower the Collateral
Percentage. Notwithstanding the foregoing, no designation by NAI of a new
Collateral Percentage will be effective to reduce the Collateral Percentage if
the designation is given, or the reduction would otherwise become effective, on
or after the Designated Sale Date or when any of the following shall have
occurred and be continuing:
3.2.1 any Material Lease Default;
3.2.2 any Event of Default under and as defined in this
Agreement; or
3.2.3 any Default under and as defined in this Agreement -
excluding, however, any such Default limited to a failure of NAI
described in clause (c) or clause (e) of the definition of Event of
Default above, with respect to which the time for cure specified in
clause (c) or clause (e), as applicable, has not expired.
Section 3.3 Mandatory Collateral Periods. NOTWITHSTANDING ANYTHING TO
THE CONTRARY HEREIN CONTAINED, THE COLLATERAL PERCENTAGE DURING ANY MANDATORY
COLLATERAL PERIOD SHALL BE ONE HUNDRED PERCENT (100%). No later than five
Business Days prior to any Failed Collateral Test Date, NAI shall notify Agent,
BNPLC and the Participants of the conditions set forth in Part III of Schedule 1
that NAI will be unable to satisfy on the Failed Collateral Test Date.
ARTICLE IV PROVISIONS CONCERNING DEPOSIT TAKERS
Section 4.1 Qualification of Deposit Takers Generally. Agent may decline
to deposit or maintain Collateral hereunder with any Person designated as a
Deposit Taker, if such Person has failed to satisfy or no longer satisfies the
following requirements:
4.1.1 Such Person must have received from Agent and NAI a
completed, executed Notice of Security Interest in the form of
ATTACHMENT 4 (a "NOTICE OF SECURITY INTEREST") which specifically
identifies any and all Accounts in which such Person shall hold Cash
Collateral delivered to it pursuant to this Agreement and which
designates Account Offices with respect to all such Accounts in New York
or California.
4.1.2 Such Person must have executed the Acknowledgment and
Agreement at the end of such Notice of Security Interest (the "DEPOSIT
TAKER'S ACKNOWLEDGMENT AND AGREEMENT") and returned the same to Agent.
Further, such Person must have complied with the Deposit Taker's
Acknowledgment and Agreement, and the representations set forth therein
with respect to such Person must continue to be true and correct.
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4.1.3 Such Person must be a commercial bank, organized under the
laws of the United States of America or a state thereof or under the
laws of another country which is doing business in the United States of
America; must be authorized to maintain deposit accounts for others
through Account Offices in New York or California (as specified in the
Deposit Taker's Acknowledgment and Agreement); and must be an Affiliate
of BNPLC or the Participant for whom such Person will act as Deposit
Taker or must have a combined capital, surplus and undivided profits of
at least $500,000,000.
4.1.4 Such Person must have complied with the provisions in this
Agreement applicable to Deposit Takers, including the provisions of
Section 5.4 concerning the issuance and redemption of Certificates of
Deposit.
Section 4.2 Existing Deposit Takers. BNPLC's Parent (as Deposit Taker
for itself and for BNPLC) has received a Notice of Security Agreement dated the
Effective Date and has responded to such a notice with a Deposit Taker's
Acknowledgment and Agreement dated the Effective Date, as contemplated in
subsections 4.1.1 and 4.1.2.
Section 4.3 Replacement of Participants Proposed by NAI. So long as no
Event of Default has occurred and is continuing, BNPLC shall not unreasonably
withhold its approval for a substitution under the Participation Agreement of a
new Participant proposed by NAI for any Participant, the Deposit Taker for whom
would no longer meet the requirements for an Initially Qualified Deposit Taker;
provided, however, that (A) the proposed substitution can be accomplished
without a release or breach by BNPLC of its rights and obligations under the
Participation Agreement; (B) the new Participant will agree (by executing a
Supplement and a supplement to the Participation Agreement as contemplated
therein and by other agreements as may be reasonably required by BNPLC and NAI)
to become a party to the Participation Agreement and to this Agreement, to
designate an Initially Qualified Deposit Taker as the Deposit Taker for it under
this Agreement and to accept a Percentage under the Participation Agreement
equal to the Percentage of the Participant to be replaced; (C) the new
Participant (or NAI) will provide the funds required to pay the termination fee
by Section 6.4 of the Participation Agreement to accomplish the substitution;
(D) NAI (or the new Participant) agrees in writing to indemnify and defend BNPLC
for any and all Losses incurred by BNPLC in connection with or because of the
substitution, including the cost of preparing supplements to the Participation
Agreement and this Agreement and including any cost of defending and paying any
claim asserted by the Participant to be replaced because of the substitution
(but not including any liability of BNPLC to such Participant for damages caused
by BNPLC's bad faith or gross negligence in the performance of BNPLC's
obligations under the Participation Agreement prior to the substitution); (E)
the new Participant shall be a reputable financial institution having a net
worth of no less than seven and one half percent (7.5%) of total assets and
total assets of no less than $10,000,000,000.00 (all according to then recent
audited financial statements); and (F) in no event will BNPLC be required to
approve a substitution pursuant to this Section 4.3 which will replace a
Participant that is an Affiliate of BNPLC. BNPLC shall attempt in good faith to
assist (and cause BNPLC's Parent to attempt in good faith to assist) NAI in
identifying a new Participant that NAI may propose to substitute for an existing
Participant pursuant to this Section, as NAI may reasonably request from time to
time. However, in no event shall BNPLC itself, or any of its Affiliates, be
required to take the Percentage of any Participant to be replaced.
Section 4.4 Mandatory Substitution for Disqualified Deposit Takers. If
any Deposit Taker shall cease to satisfy the requirements set forth in Section
4.1, the party for whom such Disqualified Deposit Taker has been designated as
Deposit Taker (i.e., BNPLC or the applicable Participant) shall promptly (1)
provide notice thereof to Agent and NAI, and (2) designate a substitute Deposit
Taker and cause the substitute to satisfy the requirements set forth in Section
4.1. Pending the designation of the substitute and
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the satisfaction by it of the requirements set forth in Section 4.1, Agent may
withdraw Collateral held by the Disqualified Deposit Taker and deposit such
Collateral with other Deposit Takers, subject to Section 5.3 below.
Section 4.5 Voluntary Substitution of Deposit Takers. With the written
approval of Agent, which approval will not be unreasonably withheld, BNPLC or
any Participant may at any time designate for itself a new Deposit Taker (in
replacement of any prior Deposit Taker acting for it hereunder); provided, the
Person so designated has satisfied the requirements set forth in Section 4.1;
and, provided further, unless the designation of a new Deposit Taker is required
by Section 4.4 to replace a Disqualified Deposit Taker, at the time of the
replacement such Person must be an Initially Qualified Deposit Taker.
Section 4.6 Delivery of Notice of Security Interest by NAI and Agent. To
the extent required for the designation of a new Deposit Taker by BNPLC or any
Participant pursuant to Section 4.5, or to permit the substitution or
replacement of a Deposit Taker for BNPLC or any Participant as provided in
Sections 4.4 and 4.5, NAI and Agent shall promptly execute and deliver any
properly completed Notice of Security Interest requested by BNPLC or the
applicable Participant.
Section 4.7 Constructive Possession of Collateral. The possession by a
Deposit Taker of any deposit accounts, money, instruments, chattel paper or
other property constituting Collateral or evidencing Collateral shall be deemed
to be possession by Agent or a person designated by Agent, for purposes of
perfecting the security interest granted to Agent hereunder pursuant to the UCC
or other Applicable Law; and notifications to a Deposit Taker by other Persons
holding any such property, and Acknowledgments, receipts or confirmations from
any such Persons delivered to a Deposit Taker, shall be deemed notifications to,
or Acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of such Deposit Taker for the benefit of Agent
for the purposes of perfecting such security interests under Applicable Law.
Section 4.8 Attempted Setoff by Deposit Takers. By delivery of a Deposit
Taker's Acknowledgment and Agreement, each Deposit Taker shall be required to
agree not to setoff or attempt a setoff, WITHOUT IN EACH CASE FIRST OBTAINING
THE PRIOR WRITTEN AUTHORIZATION OF AGENT, Secured Obligations owed to it against
any Collateral held by it from time to time. Further, by delivery of a Deposit
Taker's Acknowledgment and Agreement, each Deposit Taker shall be required to
agree not to setoff or attempt a setoff, WITHOUT IN EACH CASE FIRST OBTAINING
THE PRIOR WRITTEN AUTHORIZATION OF BOTH NAI AND AGENT, obligations owed to it
other than Secured Obligations against any Collateral held by it from time to
time. Any Deposit Taker for BNPLC or a Participant shall not be permitted by
BNPLC or the applicable Participant, as the case may be, to violate such
agreements. However, NAI acknowledges and agrees (without limiting its right to
recover damages from a Deposit Taker that violates such agreements) that Agent
shall not be responsible for, or be deemed to have taken any action against NAI
because of, any Deposit Taker's violation of such agreements; and, neither BNPLC
nor any Participant shall be responsible for, or be deemed to have taken any
action against NAI because of, any violation of such agreements by a Deposit
Taker for another party.
Section 4.9 Deposit Taker Losses. Agent shall not be responsible for any
Deposit Taker Losses. However, Deposit Taker Losses with respect to a Deposit
Taker for a particular Participant shall reduce the amount of BNPLC's
Corresponding Obligations to Participants which are payable to such Participant
as provided in Section 2.2 of the Participation Agreement. Further, when Deposit
Taker Losses with respect to a Deposit Taker for a particular Participant are
incurred in excess of the payments of Secured Obligations that such Participant
would then have been entitled to receive under the Participation Agreement but
for such Deposit Taker Losses, such Participant must immediately pay the excess
to Agent
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as additional Collateral hereunder, failing which NAI may recover any damages
suffered by it because of the Deposit Taker Losses from such Deposit Taker or
such Participant.
Section 4.10 Losses Resulting from Failure of Deposit Taker to Comply
with this Agreement. Any Participant, the Deposit Taker for whom has failed to
comply with the requirements of this Agreement or any Notices of Security
Interest and any Deposit Taker's Acknowledgments and Agreements (the
"RESPONSIBLE PARTICIPANT") must defend, indemnify, and hold harmless BNPLC,
Agent and the other Participants from and against any Losses resulting from such
failure. Without limiting the foregoing, if the failure of a Deposit Taker for a
Responsible Participant to comply strictly with the terms of this Agreement
(including, without limitation, the provisions of Section 5.4 concerning the
issuance and redemption of Certificates of Deposit and the requirement that any
cash deposits be held in a deposit account located in either New York or
California) causes, in whole or in part, the security interest of Agent in the
Collateral held by such Deposit Taker to be unperfected, then any and all Losses
suffered as a result of such nonperfection shall be borne solely by the
Responsible Participant and shall not be shared by BNPLC, Agent or the other
Participants.
ARTICLE V DELIVERY AND MAINTENANCE OF CASH COLLATERAL
Section 5.1 Delivery of Funds by NAI. On each Base Rent Date, NAI must
deliver to Agent, subject to the pledge and security interest created hereby,
funds as Cash Collateral then needed (if any) to cause the Value of the
Collateral to be no less than the Minimum Collateral Value. Each delivery of
funds required by the preceding sentence must be received by Agent no later than
12:00 noon (San Francisco time) on the date it is required; if received after
12:00 noon it will be considered for purposes of the Improvements Lease as
received on the next following Business Day. At least five Business Days prior
to any Base Rent Date upon which it is expected that NAI will be required to
deliver additional funds pursuant to this Section, NAI shall notify BNPLC, Agent
and each of the Participants thereof and of the amount NAI expects to deliver to
Agent as Cash Collateral on the applicable Base Rent Date. In addition to
required deliveries of Cash Collateral as provided in the foregoing provisions,
NAI may on any date (whether or not a Base Rent Date) deliver additional Cash
Collateral to Agent as necessary to prevent any Default from becoming an Event
of Default. Upon receipt of any funds delivered to it by NAI as Cash Collateral,
Agent shall immediately deposit the same with the Deposit Takers in accordance
with the requirements of Sections 5.3 and 5.4 below.
Section 5.2 Transition Account. Pending deposit in the Accounts or other
application as provided herein, all Cash Collateral received by Agent shall be
credited to and held by Agent in an account (the "TRANSITION ACCOUNT") styled
"NAI Collateral Account, held for the benefit of BNP Leasing Corporation and the
Participants," separate and apart from all other property and funds of NAI or
other Persons, and no other property or funds shall be deposited in the
Transition Account. The books and records of Agent shall reflect that the
Transition Account and all Cash Collateral on deposit therein are owned by NAI,
subject to a pledge and security interest in favor of Agent for the benefit of
BNPLC and Participants.
Section 5.3 Allocation of Cash Collateral Among Deposit Takers. Funds
received by Agent from NAI as Cash Collateral will be allocated for deposit
among the Deposit Takers as follows:
first, to the extent possible the funds will be allocated as required to
rectify and prevent any Collateral Imbalance; and
second, the funds will be allocated to the Deposit Taker for BNPLC,
unless the Deposit Taker for BNPLC has become a Disqualified Deposit
Taker, in which case the funds will be allocated to other Deposit Takers
who are not Disqualified Deposit Takers as Agent deems appropriate.
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Further, if for any reason a Collateral Imbalance is determined by Agent to
exist, Agent shall, as required to rectify or mitigate the Collateral Imbalance,
promptly reallocate Collateral among Deposit Takers by withdrawing Cash
Collateral from some Accounts and redepositing it in other Accounts. (If any
party to this Agreement believes that the Value of the Accounts held by a
particular Deposit Taker causes a Collateral Imbalance to exist, that party will
promptly notify BNPLC, NAI and Agent.) Subject to the foregoing, and provided
that Agent does not thereby create or exacerbate a Collateral Imbalance, Agent
may withdraw and redeposit Cash Collateral in order to reallocate the same among
Deposit Takers from time to time as Agent deems appropriate. For purposes of
illustration only, examples of the allocations required by this Section are set
forth in ATTACHMENT 5.
Section 5.4 Issuance and Redemption of Certificates of Deposit. Upon the
receipt of any deposit of Cash Collateral from Agent, each Deposit Taker shall
issue a Certificate of Deposit evidencing the Account into which such deposit is
made and deliver such Certificate of Deposit to Agent for the benefit of BNPLC
and the Participants. Each Certificate of Deposit shall be issued in an amount
equal to the Value of the Account which it evidences and shall otherwise be in
the form set forth as ATTACHMENT 1 to this Agreement. Upon depositing any Cash
Collateral into an Account that is already evidenced by an outstanding
Certificate of Deposit, Agent will surrender the outstanding Certificate of
Deposit, and in exchange the Deposit Taker receiving the deposit will issue a
new Certificate of Deposit, evidencing the total amount of Cash Collateral in
the Account after the deposit. A Deposit Taker that has issued a Certificate of
Deposit may require the surrender of the Certificate of Deposit as a condition
to a withdrawal from the Account evidenced thereby, including any withdrawal
required or permitted by this Agreement. Upon surrender of a Certificate of
Deposit in connection with a withdrawal of less than all of the Cash Collateral
in the Account evidenced thereby, the applicable Deposit Taker will concurrently
issue a new Certificate of Deposit to Agent, evidencing the balance of the Cash
Collateral remaining on deposit in the Account after the withdrawal.
Notwithstanding the foregoing, if any Certificate of Deposit held by Agent shall
be destroyed, lost or stolen, the Deposit Taker that issued the Certificate,
upon the written request of Agent, shall issue a new Certificate of Deposit to
Agent in lieu of and in substitution for the Certificate of Deposit so
destroyed, lost or stolen. However, as applicant for the substitute Certificate
of Deposit, Agent must indemnify (at no cost to NAI) the applicable Deposit
Taker against any liability on the Certificate of Deposit destroyed, lost or
stolen, and Agent shall furnish to the Deposit Taker an affidavit of an officer
of Agent setting forth the fact of destruction, loss or theft and confirming the
status of Agent as holder of the Certificate of Deposit immediately prior to the
destruction, loss or theft. If any Certificate of Deposit held by Agent shall
become mutilated, the Deposit Taker that issued the Certificate, upon the
written request of Agent, shall issue a new Certificate of Deposit to Agent in
exchange and substitution for the mutilated Certificate of Deposit. Agent shall
hold all Certificates of Deposit for the benefit of BNPLC and the Participants,
subject to the pledge and security interest created hereby.
Section 5.5 Status of the Accounts Under the Reserve Requirement
Regulations. Deposit Takers shall be permitted to structure the Accounts as
nonpersonal time deposits under 12 C.F.R., Part II, Chapter 204 (commonly known
as "Regulation D"). Accordingly, each Deposit Taker may require at least seven
days advance notice of any withdrawal or transfer of funds from Accounts it
maintains and may limit the number of withdrawals or transfers from such
Accounts to no more than six in any calendar month, notwithstanding anything to
the contrary herein or in any deposit agreement that NAI and any Deposit Taker
may enter into with respect to any Account. As necessary to satisfy the seven
days notice requirement with respect to withdrawals by Agent when required by
NAI pursuant to the provisions below, Agent shall notify Deposit Takers promptly
after receipt of any notice from NAI described in subsection 6.1.2 or 6.2.1 or
in Section 6.3.
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Section 5.6 Acknowledgment by NAI that Requirements of this Agreement
are Commercially Reasonable. NAI acknowledges and agrees that the requirements
set forth herein concerning receipt, deposit, withdrawal, allocation,
application and distribution of Cash Collateral by Agent, including the
requirements and time periods set forth in the next Article, are commercially
reasonable.
ARTICLE VI WITHDRAWAL OF CASH COLLATERAL
NAI may not withdraw Cash Collateral, except as follows:
Section 6.1 Withdrawal of Collateral Prior to the Designated Sale Date.
NAI may require Agent to present Certificates of Deposit for payment and
withdraw Cash Collateral from Accounts on any date prior to the Designated Sale
Date and to deliver such Cash Collateral to NAI (which delivery shall be free
and clear of all liens and security interests hereunder); provided, however,
that in each case:
6.1.1 Such withdrawal and delivery of the Cash Collateral to NAI
will not cause the Value of the remaining Collateral to be less than the
Minimum Collateral Value.
6.1.2 by a notice in the form of ATTACHMENT 6, NAI must give
Agent, BNPLC and the Participants notice of the required withdrawal at
least ten days prior to the date upon which the withdrawal is to occur.
6.1.3 No Default or Event of Default shall have occurred and be
continuing at the time NAI gives the notice required by the preceding
subsection or on the date upon which the withdrawal is required.
6.1.4 NAI must pay to Agent any and all costs incurred by Agent
in connection with the withdrawal.
6.1.5 Agent shall determine the Accounts from which to make any
withdrawal required by NAI pursuant to this Section as necessary to
prevent or mitigate any Collateral Imbalance.
Section 6.2 Withdrawal and Application of Cash Collateral to Reduce or
Satisfy the Secured Obligations to the Participants. To reduce the "Break Even
Price" or "Supplemental Payment" required under (and as defined in) the Purchase
Agreement (and, thus, to reduce the Secured Obligations), NAI may require Agent
to withdraw Cash Collateral then held by or for Agent pursuant to this Agreement
on the Designated Sale Date and to deliver the same on the Designated Sale Date
or on any date thereafter prior to an Event of Default (which delivery shall be
free and clear of all liens and security interests hereunder) directly to the
Participants in proportion to their respective rights to payment of BNPLC's
Corresponding Obligations to Participants and for application thereto or the
reduction thereof pursuant to Section 2.2 of the Participation Agreement;
provided, that:
6.2.1 by a notice in the form of ATTACHMENT 7, NAI must have
notified Agent, BNPLC and each of the Participants of the required
withdrawal and payment to Participants at least ten days prior to the
date upon which it is to occur;
6.2.2 the required withdrawal shall be made as determined by
Agent, first, from the Accounts maintained by the Deposit Takers for the
Participants, and then (to the extent necessary) from the Accounts
maintained by the Deposit Taker for BNPLC; and
6.2.3 in any event, no withdrawals or payments directly to
Participants shall be required by this Section 6.2 (or permitted over
the objection of BNPLC) in excess of those required to
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satisfy BNPLC's Corresponding Obligations to Participants or to reduce
such obligations to zero under the Participation Agreement.
Section 6.3 Withdrawal and Application of Cash Collateral to Reduce or
Satisfy the Secured Obligations to BNPLC. To satisfy NAI's Purchase Agreement
Obligations, NAI may require Agent to withdraw any Cash Collateral held by the
Deposit Taker for BNPLC pursuant to this Agreement on the Designated Sale Date
and to deliver the same on the Designated Sale Date or on any date thereafter
prior to an Event of Default (which delivery shall be free and clear of all
liens and security interests hereunder) directly to BNPLC as a payment on behalf
of NAI of amounts due under the Purchase Agreement; provided, that by a notice
in the form of ATTACHMENT 8, NAI must have notified Agent and BNPLC of the
required withdrawal and payment to BNPLC at least ten days prior to the date
upon which it is to occur.
Section 6.4 Withdrawal of Cash Collateral From Accounts Maintained by
Disqualified Deposit Takers. NAI may from time to time prior to the Designated
Sale Date (regardless of the existence of any Default or Event of Default)
require Agent to withdraw any or all Cash Collateral from any Account maintained
by a Disqualified Deposit Taker and deposit it, still subject to the pledge and
grant of security interest hereunder, with other Deposit Takers who are not
Disqualified Deposit Takers (in accordance with the requirements of Sections 5.3
and 5.4) on any date prior to the Designated Sale Date; provided, that by a
notice in the form of ATTACHMENT 9, NAI must have notified Agent, BNPLC and each
of the Participants of the required withdrawal at least ten days prior to the
date upon which it is to occur.
ARTICLE VII REPRESENTATIONS AND COVENANTS OF NAI
Section 7.1 Representations of NAI. NAI represents to BNPLC, Agent and
the Participants as follows:
7.1.1 NAI is the legal and beneficial owner of the Collateral
(or, in the case of after-acquired Collateral, at the time NAI acquires
rights in the Collateral, will be the legal and beneficial owner
thereof). No other Person has (or, in the case of after-acquired
Collateral, at the time NAI acquires rights therein, will have) any
right, title, claim or interest (by way of Lien, purchase option or
otherwise) in, against or to the Collateral, except for rights created
hereunder.
7.1.2 Agent has (or in the case of after-acquired Collateral, at
the time NAI acquires rights therein, will have) a valid, first
priority, perfected pledge of and security interest in the Collateral,
regardless of the characterization of the Collateral as deposit
accounts, instruments or general intangibles under the UCC, but assuming
that the representations of each Deposit Taker in its Deposit Taker's
Acknowledgment and Agreement are true.
7.1.3 NAI has delivered to Agent, together with all necessary
stock powers, endorsements, assignments and other necessary instruments
of transfer, the originals of all documents, instruments and agreements
evidencing Accounts, Certificates of Deposit or Cash Collateral.
7.1.4 NAI's chief executive office is located at the address of
NAI set forth in Article II of the Common Definitions and Provisions
Agreement (Phase IV - Improvements) or at another address in California
specified in a notice that NAI has given to Agent as required by Section
7.2.4.
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7.1.5 To the knowledge of NAI, neither the ownership or the
intended use of the Collateral by NAI, nor the pledge of Accounts or the
grant of the security interest by NAI to Agent herein, nor the exercise
by Agent of its rights or remedies hereunder, will (i) violate any
provision of (a) Applicable Law, (b) the articles or certificate of
incorporation, charter or bylaws of NAI, or (c) any agreement, judgment,
license, order or permit applicable to or binding upon NAI, or (ii)
result in or require the creation of any Lien, charge or encumbrance
upon any assets or properties of NAI except as expressly contemplated in
this Agreement. Except as expressly contemplated in this Agreement, to
the knowledge of NAI no consent, approval, authorization or order of,
and no notice to or filing with any court, governmental authority or
third party is required in connection with the pledge or grant by NAI of
the security interest contemplated herein or the exercise by Agent of
its rights and remedies hereunder.
Section 7.2 Covenants of NAI. NAI hereby agrees as follows:
7.2.1 NAI, at NAI's expense, shall promptly procure, execute and
deliver to Agent all documents, instruments and agreements and perform
all acts which are necessary, or which Agent may reasonably request, to
establish, maintain, preserve, protect and perfect the Collateral, the
pledge thereof to Agent or the security interest granted to Agent
therein and the first priority of such pledge or security interest or to
enable Agent to exercise and enforce its rights and remedies hereunder
with respect to any Collateral. Without limiting the generality of the
preceding sentence, NAI shall (A) procure, execute and deliver to Agent
all stock powers, endorsements, assignments, financing statements and
other instruments of transfer requested by Agent, (B) deliver to Agent
promptly upon receipt all originals of Collateral consisting of
instruments, documents and chattel paper, (C) cause the security
interest of Agent in any Collateral consisting of securities to be
recorded or registered in the books of any financial intermediary or
clearing corporation requested by Agent, and (D) reimburse Agent upon
request for any legal opinion Agent may elect to obtain from a
nationally recognized commercial law firm authorized to practice in New
York concerning the enforceability, first priority and perfection of
Agent's security interest in any Collateral maintained in New York, if
BNPLC or any Participant should at any time elect to use a Deposit Taker
that will maintain one or more Accounts in New York.
7.2.2 NAI shall not use or consent to any use of any Collateral
in violation of any provision of the this Agreement or any other
Transaction Document or any Applicable Law.
7.2.3 NAI shall pay promptly when due all taxes and other
governmental charges, all Liens and all other charges now or hereafter
imposed upon, relating to or affecting any Collateral.
7.2.4 Without thirty days' prior written notice to Agent, NAI
shall not change NAI's name or place of business (or, if NAI has more
than one place of business, its chief executive office).
7.2.5 NAI shall appear in and defend, on behalf of Agent, any
action or proceeding which may affect NAI's title to or Agent's interest
in the Collateral.
7.2.6 Subject to the express rights of NAI under Article VI, NAI
shall not surrender or lose possession of (other than to Agent or a
Deposit Taker pursuant hereto), sell, encumber, lease, rent, option, or
otherwise dispose of or transfer any Collateral or right or interest
therein, and NAI shall keep the Collateral free of all Liens.
7.2.7 NAI will not take any action which would in any manner
impair the value or enforceability of Agent's pledge of or security
interest in any Collateral, nor will NAI fail to take
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any action which is required to prevent (and which NAI knows is required
to prevent) an impairment of the value or enforceability of Agent's
pledge of or security interest in any Collateral.
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7.2.8 NAI shall pay (and shall indemnify and hold harmless Agent
from and against) all Losses incurred by Agent in connection with or
because of (A) the interest acquired by Agent in any Collateral pursuant
to this Agreement, or (B) the negotiation or administration of this
Agreement, whether such Losses are incurred at the time of execution of
this Agreement or at any time in the future. Costs and expenses included
in such Losses may include, without limitation, all filing and recording
fees, taxes, UCC search fees and Attorneys' Fees incurred by Agent with
respect to the Collateral.
7.2.9 Without limiting the foregoing, within five Business Days
after NAI becomes aware of any failure of the pledge or security
interest contemplated herein in the Transition Account or any Account,
Certificate of Deposit or Cash Collateral to be a valid, perfected,
first priority pledge or security interest (regardless of the
characterization of the Transition Account or any Accounts, Certificates
of Deposit or Cash Collateral as deposit accounts, instruments or
general intangibles under the UCC), NAI shall notify Agent, BNPLC and
the Participants of such failure. In addition, if the failure would not
exist but for NAI's delivery of Cash Collateral to Agent subject to
prior Liens or other claims by one or more third parties, or but for the
grant by NAI itself of any Lien or other interest in the Collateral to
one or more third parties, then, in addition to any other remedies
available to BNPLC or Agent under the circumstances, NAI must pay to
BNPLC any additional Base Rent that has accrued under the Improvements
Lease because of (or that would have accrued if BNPLC had been aware of)
the failure, together with interest at the Default Rate on any such
additional Base Rent.
ARTICLE VIII AUTHORIZED ACTION BY AGENT
Section 8.1 Power of Attorney. NAI hereby irrevocably appoints Agent as
NAI's attorney-in-fact for the purpose of authorizing Agent to perform (but
Agent shall not be obligated to and shall incur no liability to NAI or any third
party for failure to perform) any act which NAI is obligated by this Agreement
to perform, and to exercise, consistent with the other provisions of this
Agreement, such rights and powers as NAI might exercise with respect to the
Collateral during any period in which a Default or Event of Default has occurred
and is continuing, including the right to (a) collect by legal proceedings or
otherwise and endorse, receive and receipt for all dividends, interest,
payments, proceeds and other sums and property now or hereafter payable on or on
account of the Collateral; (b) enter into any extension, reorganization,
deposit, merger, consolidation or other agreement pertaining to, or deposit,
surrender, accept, hold or apply other property in exchange for the Collateral;
(c) insure, process, preserve and enforce the Collateral; (d) make any
compromise or settlement, and take any action it deems advisable, with respect
to the Collateral; (e) pay any indebtedness of NAI relating to the Collateral;
and (f) execute UCC financing statements and other documents, instruments and
agreements required hereunder. NAI agrees that such care as Agent gives to the
safekeeping of its own property of like kind shall constitute reasonable care of
the Collateral when in Agent's possession; provided, however, that Agent shall
not be obligated to NAI to give any notice or take any action to preserve rights
against any other Person in connection with the Secured Obligations or with
respect to the Collateral.
ARTICLE IX DEFAULT AND REMEDIES
Section 9.1 Remedies. In addition to all other rights and remedies
granted to Agent, BNPLC or the Participants by this Agreement, the Improvements
Lease, the Purchase Agreement, the Participation Agreement, the UCC and other
Applicable Laws, Agent may, upon the occurrence and during the continuance of
any Event of Default, exercise any one or more of the following rights and
remedies, all of which will be in furtherance of its rights as a secured party
under the UCC:
[Phase IV - Improvements] -17-
23
(a) Agent may collect, receive, appropriate or realize upon the
Collateral or otherwise foreclose or enforce the pledge of or security
interests in any or all Collateral in any manner permitted by Applicable
Law or in this Agreement; and
(b) Agent may notify any or all Deposit Takers to pay all or any
portion of the Collateral held by such Deposit Taker(s) directly to
Agent.
Agent shall distribute the proceeds of all Collateral received by Agent after
the occurrence of an Event of Default to BNPLC and the Participants for
application to the Secured Obligations. If any proceeds of Collateral remain
after all Secured Obligations have been paid in full, Agent will deliver or
direct the Deposit Takers to deliver such proceeds to NAI or other Persons
entitled thereto. In any case where notice of any sale or disposition of any
Collateral is required, NAI hereby agrees that seven (7) Business Days notice of
such sale or disposition is reasonable.
ARTICLE X OTHER RECOURSE
Section 10.1 Recovery Not Limited. To the fullest extent permitted by
applicable law, NAI waives any right to require that Agent, BNPLC or the
Participants proceed against any other Person, exhaust any Collateral or other
security for the Secured Obligations, or to have any Other Liable Party joined
with NAI in any suit arising out of the Secured Obligations or this Agreement,
or pursue any other remedy in their power. NAI waives any and all notice of
acceptance of this Agreement. NAI further waives notice of the creation,
modification, rearrangement, renewal or extension for any period of any of the
Secured Obligations of any Other Liable Party from time to time and any defense
arising by reason of any disability or other defense of any Other Liable Party
or by reason of the cessation from any cause whatsoever of the liability of any
Other Liable Party. Until all of the Secured Obligations shall have been paid in
full, NAI shall have no right to subrogation, reimbursement, contribution or
indemnity against any Other Liable Party and NAI waives the right to enforce any
remedy which Agent, BNPLC or any Participant has or may hereafter have against
any Other Liable Party, and waives any benefit of and any right to participate
in any other security whatsoever now or hereafter held by Agent, BNPLC or any
Participant. NAI authorizes Agent, BNPLC and the Participants, without notice or
demand and without any reservation of rights against NAI and without affecting
NAI's liability hereunder or on the Secured Obligations, from time to time to
(a) take or hold any other property of any type from any other Person as
security for the Secured Obligations, and exchange, enforce, waive and release
any or all of such other property, (b) after any Event of Default, apply or
require the application of the Collateral (in accordance with this Agreement) or
such other property in any order they may determine and to direct the order or
manner of sale thereof as they may determine, (c) renew, extend for any period,
accelerate, modify, compromise, settle or release any of the obligations of any
Other Liable Party with respect to any or all of the Secured Obligations or
other security for the Secured Obligations, and (d) release or substitute any
Other Liable Party.
ARTICLE XI PROVISIONS CONCERNING AGENT
In the event of any conflict between the following and other provisions
in this Agreement, the following will control:
Section 11.1 Appointment and Authority. BNPLC and each Participant
hereby irrevocably authorizes Agent, and Agent hereby undertakes, to take all
actions and to exercise such powers under this Agreement as are specifically
delegated to Agent by the terms hereof, together with all other powers
reasonably incidental thereto. The relationship of Agent to the Participants is
only that of one commercial bank acting as collateral agent for others, and
nothing herein shall be construed to constitute Agent a
[Phase IV - Improvements] -18-
24
trustee or other fiduciary for any Participant or anyone claiming through or
under a Participant nor to impose on Agent duties and obligations other than
those expressly provided for in this Agreement. With respect to any matters not
expressly provided for in this Agreement and any matters which this Agreement
places within the discretion of Agent, Agent shall not be required to exercise
any discretion or take any action, and it may request instructions from BNPLC
and Participants with respect to any such matter, in which case it shall be
required to act or to refrain from acting (and shall be fully protected and free
from liability to all Participants in so acting or refraining from acting) upon
the instructions of the Majority, as defined in the Participation Agreement,
including itself as a Participant and BNPLC; provided, however, that Agent shall
not be required to take any action which exposes it to a risk of personal
liability that it considers unreasonable or which is contrary to this Agreement
or the other documents referenced herein or to Applicable Law.
Section 11.2 Exculpation, Agent's Reliance, Etc. Neither Agent nor any
of its directors, officers, agents, attorneys, or employees shall be liable for
any action taken or omitted to be taken by any of them under or in connection
with this Agreement, INCLUDING THEIR NEGLIGENCE OF ANY KIND, EXCEPT THAT EACH
SHALL BE LIABLE FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. Without
limiting the generality of the foregoing, Agent (1) may treat the rights of any
Participant under its Participation Agreement as continuing until Agent receives
written notice of the assignment or transfer of those rights in accordance with
such Participation Agreement, signed by such Participant and in form
satisfactory to Agent; (2) may consult with legal counsel (including counsel for
NAI), independent public accountants and other experts selected by it and shall
not be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts, unless the
action taken or omitted constitutes misconduct; (3) makes no warranty or
representation and shall not be responsible for any statements, warranties or
representations made in or in connection with this Agreement or the other
documents referenced herein; (4) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of the Transaction Documents on the part of any party thereto, or to
inspect the property (including the books and records) of any party thereto; (5)
shall not be responsible to any Participant for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of any Transaction
Document or any instrument or document furnished in connection therewith; (6)
may rely upon the representations and warranties of NAI, Participants and
Deposit Takers in exercising its powers hereunder; and (6) shall incur no
liability under or in respect of the Transaction Documents by acting upon any
notice, consent, certificate or other instrument or writing (including any
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper Person or Persons.
Section 11.3 Participant's Credit Decisions. Each Participant
acknowledges that it has, independently and without reliance upon Agent or any
other Participant, made its own analysis of NAI and the transactions
contemplated hereby and its own independent decision to enter into the
Transaction Documents to which it is a party. Each Participant also acknowledges
that it will, independently and without reliance upon Agent or any other
Participant and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Transaction Documents.
Section 11.4 Indemnity. Each Participant agrees to indemnify Agent (to
the extent not reimbursed by NAI within ten days after demand) from and against
such Participant's Percentage of any and all Losses of any kind or nature
whatsoever which to any extent (in whole or in part) may be imposed on, incurred
by, or asserted against Agent growing out of, resulting from or in any other way
associated with any of the Collateral, the Transaction Documents and the
transactions and events (including the enforcement thereof) at any time
associated therewith or contemplated therein. THE FOREGOING INDEMNIFICATION
SHALL APPLY WHETHER OR NOT SUCH LOSSES ARE IN ANY WAY OR TO ANY
[Phase IV - Improvements] -19-
25
EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY,
OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND
BY AGENT, PROVIDED ONLY THAT NO PARTICIPANT SHALL BE OBLIGATED UNDER THIS
SECTION TO INDEMNIFY AGENT FOR THAT PORTION, IF ANY, OF ANY LOSS WHICH IS
PROXIMATELY CAUSED BY AGENT'S OWN INDIVIDUAL GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, AS DETERMINED IN A FINAL JUDGMENT RENDERED AGAINST AGENT. Cumulative
of the foregoing, each Participant agrees to reimburse Agent promptly upon
demand for such Participant's Percentage share of any costs and expenses to be
paid to Agent by NAI hereunder to the extent that Agent is not timely reimbursed
by NAI as provided in subsection 7.2.8. As used in this Section the term "Agent"
shall refer not only to the Person designated as such in the introductory
paragraph of this Agreement, but also to each director, officer, agent,
attorney, employee, representative and Affiliate of such Person.
Section 11.5 Agent's Rights as Participant and Deposit Taker. In its
capacity as a Participant, Banque Nationale de Paris shall have the same rights
and obligations as any Participant and may exercise such rights as though it
were not Agent. In its capacity as a Deposit Taker, Banque Nationale de Paris
shall have the same rights and obligations as any Deposit Taker and may exercise
such rights as though it were not Agent. Banque Nationale de Paris and any of
its Affiliates may accept deposits from, lend money to, act as Trustee under
indentures of, and generally engage in any kind of business with NAI or its
Affiliates, all as if Banque Nationale de Paris were not designated as the Agent
hereunder and without any duty to account therefor to any other Participant.
Section 11.6 Investments. Whenever Agent in good faith determines that
it is uncertain about how to distribute any funds which it has received
hereunder, or whenever Agent in good faith determines that there is any dispute
among BNPLC and Participants about how such funds should be distributed, Agent
may choose to defer distribution of the funds which are the subject of such
uncertainty or dispute. If Agent in good faith believes that the uncertainty or
dispute will not be promptly resolved, or if Agent is otherwise required to
invest funds pending distribution, Agent shall invest such funds pending
distribution, all interest on any such investment shall be distributed upon the
distribution of such investment and in the same proportion and to the same
Persons as such investment. All moneys received by Agent for distribution to
BNPLC or Participants shall be held by Agent pending such distribution solely as
Agent hereunder, and Agent shall have no equitable title to any portion thereof.
Section 11.7 Benefit of Article XI. The provisions of this Article
(other than the following Section 11.8) are intended solely for the benefit of
Agent, BNPLC and Participants, and NAI shall not be entitled to rely on any such
provision or assert any such provision in a claim or defense against Agent,
BNPLC or any Participant. Agent, BNPLC and Participants may waive or amend such
provisions as they desire without any notice to or consent of NAI.
Section 11.8 Resignation. Agent may resign at any time by giving written
notice thereof to BNPLC, Participants and NAI. Upon any such resignation the
Majority (as defined in the Participation Agreement) shall have the right to
appoint a successor Agent, subject to NAI's consent, such consent not to be
unreasonably withheld. A successor must be appointed for any retiring Agent, and
such Agent's resignation shall become effective when such successor accepts such
appointment. If, within thirty days after the date of the retiring Agent's
resignation, no successor Agent has been appointed and has accepted such
appointment, then the retiring Agent may appoint a successor Agent, which shall
be a commercial bank organized or licensed to conduct a banking or trust
business under the laws of the United States of America or of any state thereof.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
the retiring Agent shall be discharged from its duties and obligations under
this
[Phase IV - Improvements] -20-
26
Agreement. After any retiring Agent's resignation hereunder, the provisions
of this Article 10.1 shall continue to inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent.
ARTICLE XII MISCELLANEOUS
Section 12.1 Provisions Incorporated From Other Operative Documents.
Reference is made to the Common Definitions and Provisions Agreement (Phase IV -
Improvements), to the Purchase Agreement and to the Participation Agreement for
a statement of the terms thereof. Without limiting the generality of the
foregoing, the provisions of Article II of the Common Definitions and Provisions
Agreement (Phase IV - Improvements) are incorporated into this Agreement for all
purposes as if set forth in this Article.
Section 12.2 Cumulative Rights, etc. Except as herein expressly provided
to the contrary, the rights, powers and remedies of Agent, BNPLC and the
Participants under this Agreement shall be in addition to all rights, powers and
remedies given to them by virtue of any Applicable Law, any other Transaction
Document or any other agreement, all of which rights, powers, and remedies shall
be cumulative and may be exercised successively or concurrently without
impairing their respective rights hereunder. NAI waives any right to require
Agent, BNPLC or any Participant to proceed against any Person or to exhaust any
Collateral or to pursue any remedy in Agent's, BNPLC's or such Participant's
power.
Section 12.3 Survival of Agreements. All representations and warranties
of NAI herein, and all covenants and agreements herein shall survive the
execution and delivery of this Agreement, the execution and delivery of any
other Transaction Documents and the creation of the Secured Obligations and
continue until terminated or released as provided herein.
Section 12.4 Other Liable Party. Neither this Agreement nor the exercise
by Agent or the failure of Agent to exercise any right, power or remedy
conferred herein or by law shall be construed as relieving any Other Liable
Party from liability on the Secured Obligations or any deficiency thereon. This
Agreement shall continue irrespective of the fact that the liability of any
Other Liable Party may have ceased or irrespective of the validity or
enforceability of any other agreement evidencing or securing the Secured
Obligations to which NAI or any Other Liable Party may be a party, and
notwithstanding the reorganization, death, incapacity or bankruptcy of any Other
Liable Party, or any other event or proceeding affecting any Other Liable Party.
Section 12.5 Termination. Following the Designated Sale Date, upon
satisfaction in full of all Secured Obligations and upon written request for the
termination hereof delivered by NAI to Agent, (i) this Agreement and the pledge
and security interest created hereby shall terminate and all rights to the
Collateral shall revert to NAI and (ii) Agent will, upon NAI's request and at
NAI's expense execute and deliver to NAI such documents as NAI shall reasonably
request to evidence such termination and release.
[The signature pages follow.]
[Phase IV - Improvements] -21-
27
IN WITNESS WHEREOF, NAI, BNPLC, Agent and the Participants whose
signatures appear below have caused this Agreement to be executed as of December
___, 1999.
"NAI"
NETWORK APPLIANCE, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
28
[Continuation of signature pages to Pledge Agreement (Phase IV - Improvements)
dated to be effective December ___, 1999]
"BNPLC"
BNP LEASING CORPORATION
By:
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇, Vice President
29
[Continuation of signature pages to Pledge Agreement (Phase IV - Improvements)
dated to be effective December ___, 1999]
"AGENT"
BANQUE NATIONALE DE PARIS
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
"PARTICIPANT"
BANQUE NATIONALE DE PARIS
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
30
ATTACHMENT 1
TO PLEDGE AGREEMENT
CERTIFICATE OF DEPOSIT
(No. _________)
[_________, _____]
[NAME OF THE ISSUING
DEPOSIT TAKER AND THE
ADDRESS OF ITS APPLICABLE
ACCOUNT OFFICE]
PAYABLE TO
THE ORDER OF: BANQUE NATIONALE DE PARIS, as Agent under the Pledge Agreement
(Phase IV - Improvements) dated December ____, 1999, among
Network Appliance, Inc., BNP Leasing Corporation, Banque
Nationale de Paris and any other financial institutions which
are from time to time Participants under such Pledge Agreement
(Phase IV - Improvements) and Banque Nationale de Paris, acting
in its capacity as agent for BNPLC and the Participants
__________________Dollars in current funds, without interest, seven days after
presentment of this certificate properly endorsed.
The bank issuing this certificate acknowledges and certifies that on the
date indicated above the payee deposited the dollar amount indicated above, and
that such amount shall be payable as provided above.
________________________________________________
Authorized Signature
31
ATTACHMENT 2
TO PLEDGE AGREEMENT
SUPPLEMENT TO PLEDGE AGREEMENT
[__________, ____]
Banque Nationale de Paris
_________________________
_________________________
_________________________
Network Appliance, Inc.
_________________________
_________________________
_________________________
1. Reference is made to the Pledge Agreement (Phase IV - Improvements)
(the "PLEDGE AGREEMENT") dated December ____, 1999 among Network Appliance, Inc.
("NAI"), BNP Leasing Corporation ("BNPLC"), Banque Nationale de Paris and any
other financial institutions which are from time to time Participants under such
Pledge Agreement (collectively, the "PARTICIPANTS") and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the Participants (in such
capacity, "AGENT"). Unless otherwise defined herein, all capitalized terms used
in this Supplement have the respective meanings given to those terms in the
Pledge Agreement.
2. The undersigned hereby certifies to Agent and NAI that the
undersigned has become a party to the Participation Agreement by executing a
supplement as provided therein and that its Percentage thereunder is ______%.
3. The undersigned, by executing and delivering this Supplement to NAI
and Agent, hereby agrees to become a party to the Pledge Agreement and agrees to
be bound by all of the terms thereof applicable to Participants. The Deposit
Taker for the undersigned shall be _________________, until such time as another
Deposit Taker for the undersigned shall be designated in accordance with
Sections 4.4 or 4.5 of the Pledge Agreement. The undersigned certifies to Agent
and NAI that such Deposit Taker is an Initially Qualified Deposit Taker and
satisfies the requirements for a Deposit Taker set forth in Section 4.1 of the
Pledge Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Supplement as of
the day and year indicated above.
[ ]
--------------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
32
ATTACHMENT 3
TO PLEDGE AGREEMENT
NOTICE OF NAI'S ELECTION TO CHANGE THE COLLATERAL PERCENTAGE
[_________, _____]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase IV - Improvements) (the "PLEDGE
AGREEMENT") dated December ____, 1999 among Network Appliance,
Inc., BNP Leasing Corporation, Banque Nationale de Paris and any
other financial institutions which are from time to time
Participants under such Pledge Agreement and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the
Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement referenced above. This letter
constitutes notice to you, as Agent under the Pledge Agreement, that pursuant to
Section 3.1 of the Pledge Agreement, NAI elects to change the Collateral
Percentage to:
__________ percent (___%),
on the following Base Rent Date:
__________, ____
NAI expects that multiplying the new Collateral Percentage specified above
against Stipulated Loss Value of:
____________________________ Dollars ($__________),
will result in an expected new Minimum Collateral Value of:
____________________________ Dollars ($__________).
[NOTE: THE NEXT PARAGRAPH WILL BE INCLUDED ONLY IN A NOTICE OF AN INCREASE IN
THE COLLATERAL PERCENTAGE, BECAUSE OF WHICH NAI WILL BE REQUIRED TO DELIVER
ADDITIONAL CASH COLLATERAL TO SATISFY THE MINIMUM COLLATERAL VALUE REQUIREMENTS
IN SECTION 5.1 OF THE PLEDGE AGREEMENT:
Because of the increase in the Collateral Percentage which will result from
this notice and the corresponding increase in the Minimum Collateral Value, NAI
will deliver additional Cash Collateral to you as required by Section 5.1 of the
Pledge Agreement no later than 12:00 noon (San Francisco time) on the Base Rent
Date specified above, in the amount of:
33
____________________________ Dollars ($__________).]
To assure you that NAI has satisfied the conditions to its right to change the
Collateral Percentage as provided in this notice, and to induce you to rely upon
this notice in discharging your responsibilities under the Pledge Agreement, NAI
certifies to you that:
1. NAI is giving this notice to you, BNPLC and the Participants at least
ten Business Days prior to the Base Rent Date specified above, and such Base
Rent Date is the commencement of a Base Rent Period.
2. No Event of Default or other event or circumstance that would,
pursuant to Section 3.2 of the Pledge Agreement, preclude NAI from designating
the new Collateral Percentage above has occurred and is continuing, and NAI
does not anticipate that on the Base Rent Date specified above there will have
occurred and be continuing any such Event of Default or other event or
circumstance.
3. No Mandatory Collateral Period shall be in effect as of the effective
date specified above.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE STATEMENTS ABOVE ARE
NOT CORRECT. HOWEVER, WE ASK THAT YOU NOTIFY NAI IMMEDIATELY IF FOR ANY REASON
YOU BELIEVE THIS NOTICE IS DEFECTIVE.
Network Appliance, Inc.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
[cc BNPLC and all Participants]
[Phase IV - Improvements] -2-
34
ATTACHMENT 4
TO PLEDGE AGREEMENT
NOTICE OF SECURITY INTEREST
[_________, _____]
[Name of Deposit Taker]
[Address of Deposit Taker]
1. Reference is made to the Pledge Agreement (Phase IV - Improvements) (the
"PLEDGE AGREEMENT") dated December ____, 1999 among Network Appliance, Inc.
("NAI"), BNP Leasing Corporation ("BNPLC"), Banque Nationale de Paris and any
other financial institutions which are from time to time Participants under such
Pledge Agreement (collectively, the "PARTICIPANTS") and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the Participants (in such
capacity, "AGENT"). Unless otherwise defined herein, all capitalized terms used
in this Notice have the respective meanings given to those terms in the Pledge
Agreement.
2. NAI has informed Agent that NAI has established with the addressee of this
Notice (the "DEPOSIT TAKER") the following non-interest bearing Account(s) to be
maintained at the following Account Office(s):
Account Account Account
Type Office Number
------- ------- -------
Time Deposit __________ __________
Time Deposit __________ __________
Time Deposit __________ __________
NAI has further informed Agent that NAI intends to maintain Cash Collateral in
such Account(s), and that to evidence such Account(s) and the amount of Cash
Collateral held therein from time to time, NAI has authorized the Deposit Taker
to issue Certificates of Deposit payable to the order of Agent as provided in
the Pledge Agreement.
3. NAI and Agent hereby notify Deposit Taker that, pursuant to the
Pledge Agreement, NAI has granted to Agent, for the ratable benefit of BNPLC and
the Participants as security for the Secured Obligations, a pledge of and
security interest in all Accounts and other Collateral maintained by NAI with
Deposit Taker, including the Account(s) described in Section 2 above.
4. In furtherance of such grant, NAI and Agent hereby authorize and
direct Deposit Taker to:
(a) hold all Collateral for Agent and as Agent's bailee, separate
and apart from all other property and funds of NAI and all other Persons
and to permit no other funds to be deposited or credited to the
Account(s);
35
(b) make a notation in its books and records of the interest of
Agent in the Collateral and that the Account(s) and all deposits therein
or sums credited thereto are subject to a pledge and security interest
in favor of Agent;
(c) issue and redeem Certificates of Deposit evidencing the
Account(s), as directed by Agent pursuant to the Pledge Agreement;
(d) take such other steps as Agent may reasonably request to
record, maintain, validate and perfect its pledge of and security
interest in the Collateral; and
(e) upon receipt of notice from Agent that an Event of Default
has occurred, transfer and deliver to Agent or its nominee, together
with all necessary endorsements, all or such portion of the Collateral
held by Deposit Taker as Agent shall direct; provided, however, that in
connection therewith the Deposit Taker may require compliance by Agent
with the provisions in Section 5.4 of the Pledge Agreement for
redemption of any outstanding Certificates of Deposit which evidence the
Account(s).
5. NAI and Agent agree that (a) the possession by Deposit Taker of all
money, instruments, chattel paper and other property constituting Collateral
shall be deemed to be possession by Agent or a person designated by Agent, for
purposes of perfecting the security interest granted to Agent hereunder pursuant
to Section 9305, 8313 or 8213 of the UCC (as the case may be), and (b)
notifications by Deposit Taker to other Persons holding any such property, and
Acknowledgments, receipts or confirmations from such Persons delivered to
Deposit Taker, shall be deemed notifications to, or Acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Deposit Taker for the benefit of Agent for the purposes of perfecting
such security interests under applicable law.
6. As contemplated by the Pledge Agreement, please acknowledge Deposit
Taker's receipt of, and consent to, this notice and confirm the representations
and agreements set forth in the Acknowledgment and Agreement attached hereto by
executing the same and returning this letter to Agent. For your files, a copy of
this letter is enclosed which you may retain. The authorizations and directions
set forth herein may not be revoked or modified without the written consent of
Agent.
"AGENT"
BANQUE NATIONALE DE PARIS
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
"NAI"
Network Appliance, Inc.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
[Phase IV - Improvements] -2-
36
ACKNOWLEDGMENT AND AGREEMENT
OF DEPOSIT TAKER
Deposit Taker hereby acknowledges receipt of, and consents to, the above
notice, acknowledges that it will hold the Collateral for Agent and as Agent's
bailee, agrees to comply with the authorizations and directions set forth above
and represents to and agrees with NAI and Agent as follows:
(a) Deposit Taker is a commercial bank, organized under the laws
of the United States of America or a state thereof or under the laws of
another country which is doing business in the United States of America.
Deposit Taker is authorized to maintain deposit accounts for others
through the Account Offices specified in the above notice, and Deposit
Taker will not move the accounts described in the above notice to other
offices without the prior written authorization of Agent and NAI.
(b) Deposit Taker has a combined capital, surplus and undivided
profits of at least $500,000,000.
(c) The information set forth above regarding the Account(s) is
accurate. Such Account(s) is (are) currently open and Deposit Taker has
no prior notice of any other pledge, security interest, Lien, adverse
claim or interest in such Account(s).
(e) Deposit Taker shall promptly notify NAI and Agent if the
representations made by Deposit Taker above cease to be true and
correct.
(f) Deposit Taker shall not (i) allow the withdrawal of funds
from any Account by any Person other than Agent, or (ii) WITHOUT IN EACH
CASE FIRST OBTAINING THE PRIOR WRITTEN AUTHORIZATION OF AGENT, setoff or
attempt to setoff any Secured Obligations owed to Deposit Taker against
any Collateral held from time to time by Deposit Taker, or (iii) WITHOUT
IN EACH CASE FIRST OBTAINING THE PRIOR WRITTEN AUTHORIZATION OF BOTH NAI
AND AGENT, setoff or attempt to setoff any obligations owed to Deposit
Taker other than Secured Obligations, against any Collateral held from
time to time by Deposit Taker.
[ ]
---------------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
[Date]
37
ATTACHMENT 5
TO PLEDGE AGREEMENT
EXAMPLES OF CALCULATIONS REQUIRED
TO AVOID A COLLATERAL IMBALANCE
The examples below are provided to illustrate the calculations required
for allocations of Cash Collateral in a manner that will avoid a Collateral
Imbalance. The examples are not intended to reflect actual numbers under this
Agreement or actual Percentages of BNPLC or any of the Participants; nor are the
examples intended to provide a formula for the allocations that would be
appropriate in every case. The examples also reflect adjustments that would be
appropriate if the Collateral Percentage were adjusted from time to time from
and after the Base Rent Commencement Date, although this Agreement provides that
such percentage is not to increase above zero until the second anniversary of
the Effective Date (expected to be well after the Base Rent Commencement Date),
except in a Mandatory Collateral Period, during which such percentage would be
100%.
EXAMPLE NO. 1
Assumptions:
1. Two Participants ("Participant A" and "Participant B") are parties to
the Participation Agreement with BNPLC. Participant A's Percentage is
50% and Participant B's Percentage is 45%, leaving BNPLC with a
Percentage of 5%.
2. On the Base Rent Commencement Date, Funding Advances (including those to
cover Carrying Costs under the Improvements Lease) totaled $12,000,000,
resulting in a Stipulated Loss Value of $12,000,000, allocable as
follows:
A. BNPLC's Parent (providing BNPLC's share) (5%) ......... $ 600,000
B. Participant A (50%) ................................... 6,000,000
C. Participant B (45%) ................................... 5,400,000
-----------
TOTAL ................................................. $12,000,000
3. The Minimum Collateral Value on the Base Rent Commencement Date was
$7,200,000 (reflecting a Collateral Percentage of 60% times Stipulated
Loss Value).
4. On the Base Rent Commencement Date, NAI had delivered to Agent Cash
Collateral of $7,200,000, equal to the Minimum Collateral Value, as
required by Section 5.1 of this Agreement.
Allocation of Cash Collateral Required: To avoid a Collateral Imbalance under
these assumptions, Agent would be required to allocate the $7,200,000 to the
Deposit Takers for BNPLC and the Participants as follows:
A BNPLC's Deposit Taker (5% of Minimum Collateral Value) ........... $ 360,000
B Participant A's Deposit Taker (50% of Minimum Collateral Value) .. 3,600,000
C Participant B's Deposit Taker (45% of Minimum Collateral Value) .. 3,240,000
----------
TOTAL .............................................................. $7,200,000
EXAMPLE NO. 2
38
Assumptions: Assume the same facts as in Example No. 1, and in addition assume
that:
1. Effective as of the first Base Rent Date, NAI increased its Collateral
Percentage from 60% to 80%, raising the Minimum Collateral Value to
$9,600,000. Because of such increase, NAI also delivered an additional
$2,400,000 as Cash Collateral to Agent on the first Base Rent Date,
bringing the total of all Cash Collateral delivered by NAI to $9,600,000
as required by Section 5.1 of this Agreement.
2. Also effective as of the first Base Rent Date, a new Participant
approved by NAI ("Participant C") became a party to this Agreement and
the Participation Agreement, taking a Percentage of 20%. Simultaneously,
Participant A and Participant B entered into supplements to the
Participation Agreement which reduced their Percentages to 40% and 35%,
respectively.
Allocation of Cash Collateral Required: To avoid a Collateral Imbalance under
these assumptions, Agent would be required to allocate the Cash Collateral as
required to leave the Deposit Takers for BNPLC and the Participants with the
following amounts:
A. BNPLC's Deposit Taker (5% of Minimum Collateral Value) ................ $ 480,000
B. Participant A's Deposit Taker (40% of Minimum Collateral Value) ....... 3,840,000
C. Participant B's Deposit Taker (35% of Minimum Collateral Value) ....... 3,360,000
D. Participant C's Deposit Taker (20% of Minimum Collateral Value) ...... 1,920,000
----------
TOTAL .............................................................. $9,600,000
Thus, to prevent a Collateral Imbalance, Agent would have to allocate the
$2,400,000 of additional Cash Collateral it received on the first Base Rent Date
as follows:
A. BNPLC's Deposit Taker ($480,000 less $360,000 already on deposit) ................. $ 120,000
B. Participant A's Deposit Taker ($3,840,000 less $3,600,000 already on deposit) ..... 240,000
C. Participant B's Deposit Taker ($3,360,000 less $3,240,000 already on deposit) ..... 120,000
D. Participant C's Deposit Taker ($1,920,000 less $0 already on deposit) ............ 1,920,000
----------
TOTAL .......................................................................... $2,400,000
EXAMPLE NO. 3
Assumptions: Assume the same facts as in Example No. 2, except that:
1. Instead of increasing its Collateral Percentage from 60% to 80%, NAI
increased its Collateral Percentage to 70% on the first Base Rent Date,
raising the Minimum Collateral Value to $8,400,000. Because of such
increase, NAI delivered an additional $1,200,000 as additional Cash
Collateral to Agent on the first Base Rent Date, bringing the total of
all Cash Collateral delivered by NAI to $8,400,000 as required by
Section 5.1 of this Agreement.
Allocation of Cash Collateral Required: To avoid a Collateral Imbalance under
these assumptions, Agent would be required to allocate the Cash Collateral as
required to leave the Deposit Takers for BNPLC and the Participants with the
following amounts:
[Phase IV - Improvements] -2-
39
A. BNPLC's Deposit Taker (5% of Minimum Collateral Value) ................ $ 420,000
B. Participant A's Deposit Taker (40% of Minimum Collateral Value) ....... 3,360,000
C. Participant B's Deposit Taker (35% of Minimum Collateral Value) ....... 2,940,000
D. Participant C's Deposit Taker (20% of Minimum Collateral Value) ...... 1,680,000
----------
TOTAL .............................................................. $8,400,000
Thus, to prevent a Collateral Imbalance, Agent would have to allocate the
$1,200,000 of additional Cash Collateral it received on the first Base Rent Date
as follows:
A. BNPLC's Deposit Taker ($420,000 less $360,000 already on deposit) ................... $ 60,000
B. Participant A's Deposit Taker ($3,360,000 less $3,600,000 already on deposit) ....... (240,000)
C. Participant B's Deposit Taker ($2,940,000 less $3,240,000 already on deposit) ....... (300,000)
D. Participant C's Deposit Taker ($1,680,000 less $0 already on deposit) .............. 1,680,000
-----------
TOTAL ........................................................................... $ 1,200,000
NOTE: THE NEGATIVE AMOUNTS (IN PARENTHESIS) ABOVE REPRESENT REQUIRED WITHDRAWALS
RATHER THAN DEPOSITS. AS EXAMPLE NO. 3 ILLUSTRATES, TO AVOID A COLLATERAL
IMBALANCE AGENT MAY FROM TIME TO TIME HAVE TO WITHDRAW CASH COLLATERAL HELD BY
THE DEPOSIT TAKER FOR ONE PARTICIPANT AND DEPOSIT IT IN AN ACCOUNT MAINTAINED BY
A DEPOSIT TAKER FOR ANOTHER PARTICIPANT.
[Phase IV - Improvements] -3-
40
ATTACHMENT 6
TO PLEDGE AGREEMENT
NOTICE OF NAI'S REQUIREMENT TO
WITHDRAW EXCESS CASH COLLATERAL
[_________, _____]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase IV - Improvements) dated December __,
1999 among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial institutions
which are from time to time Participants under such Pledge
Agreement (Phase IV - Improvements) and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the
Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice to you, as Agent
under the Pledge Agreement, that pursuant to Section 6.1 of the Pledge
Agreement, NAI requires you to withdraw from the Accounts and return to NAI the
following amount:
____________________________ Dollars ($__________)
on the following date:
__________, ____
To assure you that NAI has satisfied the conditions to its right to
require such withdrawal, and to induce you to comply with this notice, NAI
certifies to you that:
1. Your withdrawal and delivery of the amount specified above to
NAI will not cause the Value of the remaining Collateral to be less than
the Minimum Collateral Value. After giving effect to such withdrawal,
the Collateral remaining in the Accounts maintained by the Deposit
Takers will be:
____________________________ Dollars ($__________),
41
and the Minimum Collateral Value on the date specified above will equal:
____________________________ Dollars ($__________).
Such Minimum Collateral Value equals the Collateral Percentage of:
__________ percent (___%),
times the Stipulated Loss Value of:
____________________________ Dollars ($__________).
2. NAI is giving this notice to you, BNPLC and the Participants
at least ten days prior to the Base Rent Date specified above.
3. No Default or Event of Default has occurred and is continuing
as of the date of this notice, and NAI does not anticipate that any
Default or Event of Default will have occurred and be continuing on the
date upon which the withdrawal is required.
4. NAI agrees that you may determine the Accounts from which to
make any withdrawal required by NAI pursuant to this Section as
necessary to prevent or mitigate any Collateral Imbalance.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE STATEMENTS
ABOVE ARE NOT CORRECT OR IF THE DATE FOR WITHDRAWAL SPECIFIED ABOVE IS
LESS THAN TEN DAYS AFTER YOUR RECEIPT OF THIS NOTICE. HOWEVER, WE ASK
THAT YOU NOTIFY NAI IMMEDIATELY IF FOR ANY REASON YOU BELIEVE THIS
NOTICE IS DEFECTIVE.
[Phase IV - Improvements] -2-
42
Please remember that the express terms of Certificates of Deposit issued
pursuant to the Pledge Agreement require presentment of the Certificates of
Deposit seven days before Cash Collateral is to be withdrawn from the Accounts
they evidence. Accordingly, you must present Certificates of Deposit to Deposit
Takers seven days prior to the withdrawal of Cash Collateral required by this
notice. For your convenience, we have attached a letter as Annex 1 to this
notice that you might execute and send to Deposit Takers to advise them of your
intent to withdraw and of your presentment of Certificates of Deposit as
required in connection therewith. The attached letter also sets forth the
amounts NAI believes you must withdraw from each Account to avoid a Collateral
Imbalance.
Network Appliance, Inc.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
[cc BNPLC and all Participants]
[Phase IV - Improvements] -3-
43
Annex 1
TO NAI'S NOTICE OF REQUIREMENT TO
WITHDRAW CASH EXCESS COLLATERAL
[_________, _____]
Deposit Takers on the
Attached Distribution List
Re: Pledge Agreement (Phase IV - Improvements) dated December ____,
1999 among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial institutions
which are from time to time Participants under such Pledge
Agreement (Phase IV - Improvements) and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the
Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice from the
undersigned, as Agent under the Pledge Agreement, that pursuant to Section 6.1
of the Pledge Agreement, NAI requires Agent to withdraw from the Accounts and
return to NAI the amounts listed below on the following date:
__________, ____
Accordingly, on such date, the undersigned intends to withdraw the
following amounts from the following Accounts, and with this letter the
undersigned is presenting Certificates of Deposit as required in connection with
such withdrawal:
Deposit Taker Account No. Amount
------------- ----------- ------
1.
____________________ ______________________ $_____________
2.
____________________ ______________________ $_____________
3.
____________________ ______________________ $_____________
4.
____________________ ______________________ $_____________
TOTAL WITHDRAWALS: $_____________
BANQUE NATIONALE DE PARIS, AS AGENT
Name:
-----------------------------------
Title:
----------------------------------
[cc BNPLC and NAI]
[Phase IV - Improvements] -4-
44
ATTACHMENT 7
TO PLEDGE AGREEMENT
NOTICE OF NAI'S REQUIREMENT OF
DIRECT PAYMENTS TO PARTICIPANTS
[_________, _____]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase IV - Improvements) dated December ____,
1999 among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial institutions
which are from time to time Participants under such Pledge
Agreement (Phase IV - Improvements) and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the
Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice to you, as Agent
under the Pledge Agreement, that pursuant to Section 6.2 of the Pledge
Agreement, NAI requires you to withdraw from the Accounts and pay directly to
the Participants (in proportion to their respective Percentages) the following
amount:
____________________________ Dollars ($__________)
on the following date (which, NAI acknowledges, must be the Designated Sale Date
or a date thereafter prior to an Event of Default):
__________, ____
The amount specified above equals the following percentage (equal to the
aggregate of all Participant's Percentages):
__________ percent (___%),
times the total of all Cash Collateral presently pledged under the Pledge
Agreement:
____________________________ Dollars ($__________).
45
To assure you that NAI has satisfied the conditions to its right to
require such withdrawal, and to induce you to comply with this notice, NAI
certifies to you that NAI is giving this notice to you, BNPLC and the
Participants at least ten days prior to the date of required withdrawal and
payment specified above.
Please remember that the express terms of Certificates of Deposit issued
pursuant to the Pledge Agreement require presentment of the Certificates of
Deposit seven days before Cash Collateral is to be withdrawn from the Accounts
they evidence. Accordingly, you must present Certificates of Deposit to Deposit
Takers seven days prior to the withdrawal of Cash Collateral required by this
notice. For your convenience, we have attached a letter as Annex 1 to this
notice that you might execute and send to Deposit Takers to advise them of your
intent to withdraw and of your presentment of Certificates of Deposit as
required in connection therewith. The attached letter also sets forth the
amounts NAI believes you must withdraw from each Account to comply with
subsection 6.2.2 of the Pledge Agreement.
Network Appliance, Inc.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
[cc BNPLC and all Participants]
[Phase IV - Improvements] -2-
46
Annex 1
TO NAI'S NOTICE OF REQUIREMENT TO
WITHDRAW CASH COLLATERAL FOR
DIRECT PAYMENTS TO PARTICIPANTS
[_________, _____]
Deposit Takers on the
Attached Distribution List
Re: Pledge Agreement (Phase IV - Improvements) dated December ____,
1999 among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial institutions
which are from time to time Participants under such Pledge
Agreement (Phase IV - Improvements) and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the
Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice from the
undersigned, as Agent under the Pledge Agreement, that pursuant to Section 6.2
of the Pledge Agreement, NAI requires Agent to withdraw from the Accounts and
pay to the Participants (in proportion to their respective Percentages) the
amounts listed below on the following date:
__________, ____
Accordingly, on such date, the undersigned intends to withdraw the
following amounts from the following Accounts, and with this letter the
undersigned is presenting Certificates of Deposit as required in connection with
such withdrawal:
Deposit Taker Account No. Amount
------------- ----------- ------
1.
____________________ ______________________ $_____________
2.
____________________ ______________________ $_____________
3.
____________________ ______________________ $_____________
4.
____________________ ______________________ $_____________
TOTAL WITHDRAWALS: $_____________
BANQUE NATIONALE DE PARIS, AS AGENT
Name:
-----------------------------------
Title:
----------------------------------
[cc BNPLC and NAI]
[Phase IV - Improvements] -3-
47
ATTACHMENT 8
TO PLEDGE AGREEMENT
NOTICE OF NAI'S REQUIREMENT OF
DIRECT PAYMENT TO BNPLC
[_________, _____]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase IV - Improvements) dated December ____,
1999 among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial institutions
which are from time to time Participants under such Pledge
Agreement (Phase IV - Improvements) and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the
Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice to you, as Agent
under the Pledge Agreement, that pursuant to Section 6.3 of the Pledge
Agreement, NAI requires you to withdraw from the Account maintained by the
Deposit Taker for BNPLC and pay directly to BNPLC on behalf of NAI as a payment
required by the Purchase Agreement the following amount:
____________________________ Dollars ($__________)
on the following date (which, NAI acknowledges, must be the Designated Sale Date
or a date thereafter prior to an Event of Default):
__________, ____
To assure you that NAI has satisfied the conditions to its right to
require such withdrawal, and to induce you to comply with this notice, NAI
certifies to you that NAI is giving this notice to you and BNPLC at least ten
days prior to the date of required withdrawal and payment specified above.
Please remember that the express terms of Certificates of Deposit issued
pursuant to the Pledge Agreement require presentment of the Certificates of
Deposit seven days before Cash Collateral is to be withdrawn from the Accounts
they evidence. Accordingly, you must present Certificates of Deposit to the
Deposit Taker for BNPLC seven days prior to the withdrawal of Cash Collateral
required by this notice. For your convenience, we have attached a letter as
Annex 1 to this notice that you might execute and send to the Deposit Taker for
BNPLC to advise it of your intent to withdraw and of your presentment of
Certificates of Deposit as required in connection therewith. The attached letter
also sets forth the amount NAI believes you must withdraw to comply with Section
6.3 of the Pledge Agreement.
Network Appliance, Inc.
By:
-------------------------
Name:
----------------
Title:
---------------
[cc BNPLC]
48
Annex 1
TO NAI'S NOTICE OF REQUIREMENT OF
DIRECT PAYMENT TO BNPLC
[_________, _____]
[Name of the Deposit Taker for BNPLC]
[Address of such Deposit Taker]
Re: Pledge Agreement (Phase IV - Improvements) dated December ____,
1999 among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial institutions
which are from time to time Participants under such Pledge
Agreement (Phase IV - Improvements) and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the
Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice from the
undersigned, as Agent under the Pledge Agreement, that pursuant to Section 6.3
of the Pledge Agreement, NAI requires Agent to withdraw from the Account
maintained by you, as Deposit Taker for BNPLC, the sum of:
____________________________ Dollars ($__________)
and pay the same to BNPLC as a payment required by the Purchase Agreement on the
following date:
__________, ____
Accordingly, on such date, the undersigned intends to withdraw such
amount from the following Account maintained by you as Deposit Taker for BNPLC,
and with this letter the undersigned is presenting Certificate(s) of Deposit as
required in connection with such withdrawal.
BANQUE NATIONALE DE PARIS, AS AGENT
Name:
-----------------------------------
Title:
----------------------------------
[cc BNPLC and NAI]
[Phase IV - Improvements] -2-
49
ATTACHMENT 9
TO PLEDGE AGREEMENT
NOTICE OF NAI'S REQUIREMENT OF A WITHDRAWAL
OF CASH COLLATERAL FROM
A DISQUALIFIED DEPOSIT TAKER
[_________, _____]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase IV - Improvements) dated December ____,
1999 among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial institutions
which are from time to time Participants under such Pledge
Agreement (Phase IV - Improvements) and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the
Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice to you, as Agent
under the Pledge Agreement, that pursuant to Section 6.4 of the Pledge
Agreement, NAI requires you to withdraw from the following Account maintained by
the following Deposit Taker:
Deposit Taker Account No.
------------- -----------
Cash Collateral in the following amount:
____________________________ Dollars ($__________)
and to deposit such Cash Collateral with other Deposit Takers who are not
Disqualified Deposit Takers no later than ten days after the date upon which you
receive this notice.
To assure you that NAI has the right to require such withdrawal, and to
induce you to comply with this notice, NAI certifies to you that the Deposit
Taker specified above has become a Disqualified Deposit Taker because it no
longer satisfies the requirements listed in Section 4.1 of the Pledge Agreement.
Specifically, such Deposit Taker no longer satisfies the following requirements:
[NAI MUST INSERT HERE A DESCRIPTION OF WHICH REQUIREMENTS THE DEPOSIT TAKER NO
LONGER SATISFIES AND HOW NAI HAS DETERMINED THAT THE REQUIREMENTS ARE NO LONGER
SATISFIED, ALL IN SUFFICIENT DETAIL TO
50
PERMIT THE PARTICIPANT FOR WHOM SUCH DEPOSIT TAKER HAS BEEN MAINTAINING AN
ACCOUNT TO RESPOND IF IT BELIEVES THAT NAI IS IN ERROR.]
Please remember that the express terms of Certificates of Deposit issued
pursuant to the Pledge Agreement require presentment of the Certificates of
Deposit seven days before Cash Collateral is to be withdrawn from the Accounts
they evidence. Accordingly, you must present Certificates of Deposit to the
Deposit Taker specified above seven days prior to the withdrawal of Cash
Collateral required by this notice. For your convenience, we have attached a
letter as Annex 1 to this notice that you might execute and send to such Deposit
Taker to advise it of your intent to withdraw and of your presentment of
Certificates of Deposit as required in connection therewith. The attached letter
also sets forth the amount NAI believes you must withdraw to comply with Section
6.4 of the Pledge Agreement.
Network Appliance, Inc.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
[cc BNPLC]
[Phase IV - Improvements] -2-
51
Annex 1
TO NAI'S NOTICE OF REQUIREMENT OF A WITHDRAWAL
OF CASH COLLATERAL FROM
A DISQUALIFIED DEPOSIT TAKER
[_________, _____]
[Name of the Deposit Taker for BNPLC]
[Address of such Deposit Taker]
Re: Pledge Agreement (Phase IV - Improvements) dated December ____,
1999 among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial institutions
which are from time to time Participants under such Pledge
Agreement (Phase IV - Improvements) and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the
Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase IV - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice from the
undersigned, as Agent under the Pledge Agreement, that pursuant to Section 6.4
of the Pledge Agreement, NAI has advised Agent that you are a Disqualified
Deposit Taker, and NAI requires Agent to withdraw from the Account maintained by
you, as a Deposit Taker under the Pledge Agreement, the sum of:
____________________________ Dollars ($__________)
no later than the following date:
__________, ____
Accordingly, on such date, the undersigned intends to withdraw such
amount from the Account maintained by you as Deposit Taker (Account No.
__________), and with this letter the undersigned is presenting Certificate(s)
of Deposit as required in connection with such withdrawal.
BANQUE NATIONALE DE PARIS, AS AGENT
Name:
-----------------------------------
Title:
----------------------------------
[cc BNPLC and NAI]
[Phase IV - Improvements] -3-
52
Schedule 1
Financial Covenants and Negative Covenants
This Schedule 1 is attached to and made a part of (a) the Lease
Agreement (Phase IV - Improvements) (the "IMPROVEMENTS LEASE") dated to be
effective as of December ___, 1999 (the "EFFECTIVE DATE"), between BNP Leasing
Corporation, a Delaware corporation ("BNPLC") and Network Appliance, Inc., a
California corporation ("NAI"), (b) the Lease Agreement (Phase IV - Land) (the
"LAND LEASE" and, together with the Improvements Lease, the "LEASES") dated to
be effective as of the Effective Date, between BNPLC and NAI, (c) the Pledge
Agreement (Phase IV - Improvements) (the "PLEDGE AGREEMENT (IMPROVEMENTS)")
dated to be effective as of the Effective Date, among BNPLC, NAI, and Banque
Nationale de Paris, as a Participant and as agent for any financial institutions
that become Participants thereunder from time to time, and (d) the Pledge
Agreement (Phase IV - Land) (collectively with the Pledge Agreement
(Improvements), the "PLEDGE AGREEMENTS") dated to be effective as of the
Effective Date, among BNPLC, NAI, and Banque Nationale de Paris, as a
Participant and as agent for any financial institutions that become Participants
thereunder from time to time.
PART I - DEFINED TERMS
In this Schedule 1, capitalized terms used but not defined herein shall
have the meaning assigned to them in the Leases or the Common Definitions and
Provisions Agreements referenced in the Leases; and the following capitalized
terms shall have the following meanings:
"ADJUSTED NET INCOME" means, for any fiscal period of NAI, the aggregate
net income earned (or net losses incurred) during such period by NAI and
its Subsidiaries (determined on a consolidated basis), plus any
Permitted Non-Cash Charges deducted in determining such net income (or
net loss).
"ADJUSTED EBIT" means, for any accounting period, net income (or net
loss) of NAI and its Subsidiaries (determined on a consolidated basis),
plus the amounts (if any) which, in the determination of net income (or
net loss) for such period, have been deducted for (a) interest expense,
(b) income tax expense (c) rent expense under leases of property, and
(d) Permitted Non-Cash Charges.
"COLLATERAL TEST DATES" mean the Base Rent Commencement Date and the
earlier of the following dates after each fiscal quarter of NAI that
ends after the Base Rent Commencement Date : (1) the seventh Business
Day after the release by NAI of its financial statements for the fiscal
quarter; or (2) the first Business Day of the third calendar month
following the end of the fiscal quarter.
"CONSOLIDATED TANGIBLE NET WORTH" means the excess of (1) the total
assets, other than Intangible Assets, of NAI and its Subsidiaries
(determined on a consolidated basis) over (2) the total liabilities of
NAI and its Subsidiaries (determined on a consolidated basis).
"DEBT" as used in this Exhibit shall have the meaning assigned to it in
the Common Definitions and Provisions Agreements, where "Debt" of any
Person is defined to mean (without duplication of any item): (a)
indebtedness of such Person for borrowed money; (b) indebtedness of such
Person for the deferred purchase price of property or services (except
trade payables and accrued expenses constituting current liabilities in
the ordinary course of business); (c) the face amount of any outstanding
letters of credit issued for the account of such Person; (d) obligations
of such
[Phase IV - Improvements] -4-
53
Person arising under acceptance facilities; (e) guaranties, endorsements
(other than for collection in the ordinary course of business) and other
contingent obligations of such Person to purchase, to provide funds for
payment, to provide funds to invest in any Person, or otherwise to
assure a creditor against loss; (f) obligations of others secured by any
Lien on property of such Person; (g) obligations of such Person as
lessee under Capital Leases; and (h) the obligations of such Person,
contingent or otherwise, under any lease of property or related
documents (including a separate purchase agreement) which provide that
such Person or any of its Affiliates must purchase or cause another
Person to purchase any interest in the leased property and thereby
guarantee a minimum residual value of the leased property to the lessor.
For purposes of this definition, the amount of the obligations described
in clause (h) of the preceding sentence with respect to any lease
classified according to GAAP as an "operating lease," shall equal the
sum of (1) the present value of rentals and other minimum lease payments
required in connection with such lease [calculated in accordance with
SFAS 13 and other GAAP relevant to the determination of the whether such
lease must be accounted for as an operating lease or capital lease],
plus (2) the fair value of the property covered by the lease; provided,
however, that such amount shall not exceed the price, as of the date a
determination of Debt is required hereunder, for which the lessee can
purchase the leased property pursuant to any valid ongoing purchase
option if, upon such a purchase, the lessee shall be excused from paying
rentals or other minimum lease payments that would otherwise accrue
after the purchase.
"FIXED CHARGES" means, for any accounting period, the sum (without
duplication of any item) of the following charges or costs incurred or
paid by NAI and its Subsidiaries (determined on a consolidated basis):
(a) gross interest expense, plus (b) amortization of principal or debt
discount in respect of all Debt during such period, plus (c) rent
payable under all leases of property during such period, plus (d) taxes
payable during such period.
"INTANGIBLE ASSETS" means assets of NAI and its Subsidiaries (determined
on a consolidated basis) that are properly classified as "INTANGIBLE
ASSETS" in accordance with GAAP and, in any event, shall include
goodwill, patents, trade names, trademarks, copyrights, franchises,
experimental expense, organization expense, unamortized debt discount
and expense, and deferred charges (other than prepaid insurance, prepaid
taxes and current deferred taxes to the extent any such prepaid or
deferred items are classified on the balance sheet of NAI and its
consolidated Subsidiaries as current assets in accordance with GAAP and
with the concurrence of NAI's independent public accountants).
"MANDATORY COLLATERAL PERIOD" means any period during which,
notwithstanding any contrary designation of a Collateral Percentage by
NAI under the Pledge Agreements, the Collateral Percentage for purposes
of the Pledge Agreements shall be one hundred percent (100%), determined
as set forth in Part III of this Schedule 1.
"PERMITTED NON-CASH CHARGES" means the amounts (if any) which, in the
determination of net income (or net loss) for any relevant fiscal
period, have been deducted by NAI or its Subsidiaries for non-cash
charges made to write down goodwill or research and development costs in
connection with acquisitions permitted by this Schedule 1.
"QUICK RATIO" means the ratio of:
(A) the sum (without duplication of any item) of the
following assets of NAI and its Subsidiaries (determined on a
consolidated basis): Collateral delivered and pledged under the
Pledge Agreements in accordance with the requirements thereof
(if any); plus
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unencumbered cash; plus unencumbered short term cash
investments; plus other unencumbered marketable securities which
are classified as short term investments in accordance with
GAAP; plus unencumbered accounts receivable, computed net of
reserves for uncollectible amounts as determined in accordance
with GAAP, to
(B) the sum (without duplication of any item) of (1) all
liabilities of NAI and its Subsidiaries (determined on a
consolidated basis) treated as current liabilities in accordance
with GAAP, plus (2) other obligations included in total Debt of
NAI and its Subsidiaries (determined on a consolidated basis),
the payment of which is due on demand or will become due within
one year after the date on which the applicable determination of
Quick Ratio is required hereunder.
"ROLLING FOUR QUARTER PERIOD" means a period of four consecutive fiscal
quarters of NAI, the last of which quarters ends after December 31,
1999.
PART II - FINANCIAL COVENANTS
NAI covenants that it shall not at any time suffer or permit:
1. Minimum Unencumbered Cash and Cash Equivalents. The sum (without
duplication of any item) of the unrestricted cash, Collateral delivered
and pledged under the Pledge Agreements in accordance with the
requirements thereof (if any), unencumbered short term cash investments
and unencumbered marketable securities classified as short term
investments according to GAAP of NAI and its Subsidiaries (determined on
a consolidated basis) to be less than total Debt of NAI and its
Subsidiaries (determined on a consolidated basis).
2. Minimum Tangible Net Worth. Consolidated Tangible Net Worth to be less
than the sum of: (a) ninety percent of the Consolidated Tangible Net
Worth as of October 30, 1998; plus (b) seventy-five percent of NAI's net
income (computed without deduction for net losses in any fiscal quarter)
earned in each fiscal quarter since October 30, 1998; plus (c)
one-hundred percent of the net proceeds of sales of stock in NAI or its
Subsidiaries (other than sales to NAI or its Subsidiaries) after October
30, 1998; less (d) Permitted Non-Cash Charges for any period after
October 30, 1998.
3. Minimum Quick Ratio. The Quick Ratio to be less than 1.50 to 1.00.
4. Minimum Fixed Charge Coverage. The ratio of (a) Adjusted EBIT for any
Rolling Four Quarter Period to (b) Fixed Charges for the same Rolling
Four Quarter Period, to be less than 1.50 to 1.00.
5. Minimum Profitability. Adjusted Net Income to be less than $1.00 in more
than one fiscal quarter of any Rolling Four Quarter Period.
6. Maximum Leverage Ratio. the ratio of (a) total Debt of NAI and its
Subsidiaries (determined on a consolidated basis) at the end of any
Rolling Four Quarter Period to (b) the Adjusted EBIT for the same Four
Quarter Rolling Period, to exceed 3.00 to 1.00.
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PART III - TESTS FOR MANDATORY COLLATERAL PERIODS
If, as of the end of the latest fiscal quarter of NAI ending before any
Collateral Test Date, NAI shall have both:
(A) failed to maintain a ratio of (1) the sum (without
duplication of any item) of Collateral delivered and pledged under the
Pledge Agreements in accordance with the requirements thereof (if any),
unencumbered cash, unencumbered short term cash investments and
unencumbered marketable securities classified as short term investments
according to GAAP of NAI and its Subsidiaries (determined on a
consolidated basis) to (2) all Debt of NAI and its Subsidiaries
(determined on a consolidated basis), of at least 1.5 to 1.00; and
(B) failed to maintain a ratio of (i) all Debt of NAI and its
Subsidiaries (determined on a consolidated basis) to (ii) Consolidated
Tangible Net Worth of NAI, of no more than 0.45 to 1.00;
such Collateral Test Date shall constitute a "FAILED COLLATERAL TEST DATE" for
purposes of the determination of Mandatory Collateral Periods. A Mandatory
Collateral Period shall commence on each Failed Collateral Test, and such
Mandatory Collateral Period shall continue until the second of any two
subsequent CONSECUTIVE Collateral Test Dates, neither of which constitutes a
Failed Collateral Test Date.
For purposes of illustration only, assume that the following dates are
consecutive Collateral Test Dates, some of which are Failed Collateral Test
Dates and some of which are not, as indicated opposite each date:
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
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Operative Documents:
1. Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if they are being contested in good
faith by appropriate proceedings and for which appropriate reserves are
maintained;
2. Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which
are not past due for more than thirty (30) days, or which are being
contested in good faith by appropriate proceedings and for which
appropriate reserves have been established;
3. Liens under workmen's compensation, unemployment insurance,
social security or similar laws (other than ERISA);
4. Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money),
leases, public or statutory obligations, surety, stay, appeal,
indemnity, performance or other similar bonds, or other similar
obligations arising in the ordinary course of business;
5. judgment and other similar Liens against assets other than
the Property or any part thereof in an aggregate amount not in excess of
$3,000,000 arising in connection with court proceedings; provided that
the execution or other enforcement of such Liens is effectively stayed
and the claims secured thereby are being actively contested in good
faith by appropriate proceedings;
6. easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with
the occupation, use and enjoyment by NAI or any such Consolidated
Subsidiary of the property or assets encumbered thereby in the normal
course of its business or materially impair the value of the property
subject thereto;
7. Liens securing obligations of such a Consolidated Subsidiary
to NAI or to another such Consolidated Subsidiary;
8. Liens not otherwise permitted by this subparagraph A (and not
encumbering the Property or any Collateral) incurred in connection with
the incurrence of additional Debt or asserted to secure Unfunded Benefit
Liabilities, provided that (a) the sum of the aggregate principal amount
of all outstanding obligations secured by Liens incurred pursuant to
this clause shall not at any time exceed five percent (5%) of
Consolidated Tangible Net Worth at such time; and (b) such Liens do not
constitute Liens against NAI's interest in any material Subsidiary or
blanket Liens against all or substantially all of the inventory,
receivables, general intangibles or equipment of NAI or of any material
Subsidiary of NAI (for purposes of this clause, a "material Subsidiary"
means any subsidiary whose assets represent a substantial part of the
total assets of NAI and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP); and
9. Liens incurred in connection with any renewals, extensions or
refundings of any Debt secured by Liens described in the preceding
clauses of this subparagraph A, provided that there is no increase in
the aggregate principal amount of Debt secured thereby from that which
was outstanding as of the date of such renewal, extension or refunding
and no additional property is encumbered.
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B. Transactions with Affiliates. Enter into or permit any Subsidiary of
NAI to enter into any material transactions (including, without limitation, the
purchase, sale or exchange of property or the rendering of any service) with any
Affiliates of NAI except on terms (1) that would not cause or result in a
Default by NAI under the financial covenants set forth in Part II of this
Schedule, and (2) that are no less favorable to NAI or the relevant Subsidiary
than those that would have been obtained in a comparable transaction on an arm's
length basis from an unrelated Person.
C. Compliance. Fail to preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; or fail to comply with the provisions of all documents
pursuant to which NAI is organized and/or which govern NAI's continued existence
and with the requirements of all laws, rules, regulations and orders of a
governmental agency applicable to NAI and/or its business.
D. Insurance. Fail to maintain and keep in force insurance of the types
and in amounts customarily carried in lines of business similar to that of NAI,
including but not limited to fire, extended coverage, public liability, flood,
property damage and workers' compensation, with all such insurance carried with
companies and in amounts satisfactory to BNPLC, or fail to deliver to BNPLC from
time to time at BNPLC's request schedules setting forth all insurance then in
effect.
E. Facilities. fail to keep all properties useful or necessary to NAI's
business in good repair and condition, or to from time to time make necessary
repairs, renewals and replacements thereto so that such properties shall be
fully and efficiently preserved and maintained.
F. Taxes and Other Liabilities. Fail to pay and discharge when due any
and all indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as NAI may in good faith contest
or as to which a bona fide dispute may arise, and (b) for which NAI has made
provisions, to BNPLC's satisfaction, for eventual payment thereof in the event
that NAI is obligated to make such payment.
G. Capital Expenditures. Make any additional investment in fixed assets
in any fiscal year in excess of an aggregate of twenty percent (20%) of NAI's
total assets as of the end of the prior fiscal year.
H. Merger, Consolidation, Transfer of Assets. Merge into or consolidate
with any other entity (unless NAI is the surviving entity and remains in
compliance of all provisions of the Operative Documents); or make any
substantial change in the nature of NAI's business as conducted as of the date
hereof; or sell, lease, transfer or otherwise dispose of all or a substantial or
material portion of NAI's assets except in the ordinary course of its business.
I. Loans, Advances, Investments. Make any loans or advances to or
investments in any person or entity, except (a) any of the foregoing existing as
of, and disclosed to BNPLC prior to, the date hereof, (b) loans to employees for
travel advances, relocation loans and other loans in the ordinary course of
business, (c) investments in accordance with NAI's investment policy, as in
effect from time to time, (d) existing investments in subsidiaries and joint
ventures which have been disclosed to BNPLC in writing prior to the date hereof,
and new investments in subsidiaries and joint ventures in amounts up to an
aggregated of $10,000,000.00, (e) loans to employees, officers, directors to
finance or refinance the purchase of equity securities of NAI.
J. Dividends, Distributions. Declare or pay any dividend or distribution
either in cash, stock
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or any other property on NAI's stock now or hereafter outstanding, nor redeem,
retire, repurchase or otherwise acquire any shares of any class of NAI's stock
now or hereafter outstanding.
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