1
Exhibit 10.35
================================================================================
LEASE AGREEMENT
(PHASE III - IMPROVEMENTS)
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
NETWORK APPLIANCE, INC.
("NAI")
JUNE 16, 1999
(SUNNYVALE, CALIFORNIA)
================================================================================
2
TABLE OF CONTENTS
Page
1. TERM 2
(a) Scheduled Term 2
(b) Automatic Termination as of the Base Rent Commencement Date Resulting
From an Election by NAI to Terminate the Purchase Option and NAI's
Initial Remarketing Rights and Obligations 2
(c) Election by BNPLC to Terminate After an Issue 97-10 Election 2
(d) Election by NAI to Terminate After Accelerating the Designated Sale
Date 3
(e) Extension of the Term 3
2. USE AND CONDITION OF THE PROPERTY 4
(a) Use 4
(b) Condition of the Property 4
(c) Consideration for and Scope of Waiver 4
3. RENT 5
(a) Base Rent Generally 5
(b) Impact of Collateral Upon Formulas 5
(c) Calculation of and Due Dates for Base Rent 5
(i) Amount Payable On the Base Rent Commencement Date 5
(ii) Determination of Payment Due Dates, After the Base Rent
Commencement Date, Generally 5
(iii) Special Adjustments to Base Rent Payment Dates and Periods 6
(iv) Base Rent Formula for Periods During Which The Collateral
Percentage is 100% 6
(v) Base Rent Formula for Periods During Which The Collateral
Percentage is Greater Than Zero and Less Than 100% 7
(vi) Base Rent Formula for Periods During Which The Collateral
Percentage is Zero 8
(d) Additional Rent 8
(e) Arrangement Fee 8
(f) Commitment Fees 8
(g) Administrative Agency Fees 9
(h) Underwriting Fee 9
(i) Issue 97-10 Prepayments 9
(j) No Demand or Setoff 9
(k) Default Interest and Order of Application 9
4. NATURE OF THIS AGREEMENT 10
(a) "Net" Lease Generally 10
(b) No Termination 10
(c) Tax Reporting 11
(d) Characterization of this Improvements Lease 11
3
Page
5. PAYMENT OF EXECUTORY COSTS AND LOSSES RELATED TO THE PROPERTY 12
(a) Impositions 12
(b) Increased Costs; Capital Adequacy Charges 12
(c) NAI's Payment of Other Losses; General Indemnification 13
(d) Exceptions and Qualifications to Indemnities 14
6. CONSTRUCTION 16
(a) Construction Advances; Outstanding Construction Allowance 16
(b) Calculation of Carrying Costs 17
(c) Limits on the Amount of Carrying Costs 17
(d) NAI's Right to Control the Construction Project 17
(e) Landlord's Election to Continue Construction 18
(i) Take Control of the Property 18
(ii) Continuation of Construction 18
(iii) Arrange for Turnkey Construction 19
(iv) Suspension or Termination of Construction 19
(f) Powers Coupled With an Interest 20
(g) Completion Notice 20
7. STATUS OF PROPERTY ACQUIRED WITH FUNDS PROVIDED BY BNPLC 20
8. ENVIRONMENTAL 20
(a) Environmental Covenants by NAI 20
(b) Right of BNPLC to do Remedial Work Not Performed by NAI 21
(c) Environmental Inspections and Reviews 21
(d) Communications Regarding Environmental Matters 21
9. INSURANCE REQUIRED AND CONDEMNATION 22
(a) Liability Insurance 22
(b) Property Insurance 22
(c) Failure to Obtain Insurance 23
(d) Condemnation 23
(e) Waiver of Subrogation 23
10. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS 24
(a) Collection and Application of Insurance and Condemnation
Proceeds Generally 24
(b) Advances of Escrowed Proceeds to NAI 24
(c) Application of Escrowed Proceeds as a Qualified Prepayment 24
(d) Special Provisions Applicable After a CMA Termination Event or
Event of Default 25
(e) NAI's Obligation to Restore 25
(f) Takings of All or Substantially All of the Property on or
after the Base Rent Commencement Date 25
11. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF NAI
CONCERNING THE PROPERTY 26
(a) Compliance with Covenants and Laws 26
(b) Operation of the Property 26
(c) Debts for Construction, Maintenance, Operation or Development 27
2
4
Page
(d) Repair, Maintenance, Alterations and Additions 27
(e) Permitted Encumbrances and Development Documents 28
(f) Books and Records Concerning the Property 28
12. FINANCIAL COVENANTS AND OTHER COVENANTS INCORPORATED BY REFERENCE
TO SCHEDULE 1 28
13. FINANCIAL STATEMENTS AND OTHER REPORTS 28
(a) Financial Statements; Required Notices; Certificates 28
14. ASSIGNMENT AND SUBLETTING BY NAI 30
(a) BNPLC's Consent Required 30
(b) Standard for BNPLC's Consent to Assignments and Certain Other Matters 30
(c) Consent Not a Waiver 30
15. ASSIGNMENT BY BNPLC 31
(a) Restrictions on Transfers 31
(b) Effect of Permitted Transfer or other Assignment by BNPLC 31
16. BNPLC'S RIGHT OF ACCESS 31
17. EVENTS OF DEFAULT 32
18. REMEDIES 33
(a) Basic Remedies 33
(b) Notice Required So Long As the Purchase Option and NAI's
Initial Remarketing Rights and Obligations Continue Under the
Purchase Agreement 35
(c) Enforceability 35
(d) Remedies Cumulative 35
19. DEFAULT BY BNPLC 36
20. QUIET ENJOYMENT 36
21. SURRENDER UPON TERMINATION 36
22. HOLDING OVER BY NAI 37
23. INDEPENDENT OBLIGATIONS EVIDENCED BY THE OTHER OPERATIVE DOCUMENTS 37
EXHIBITS AND SCHEDULES
3
5
Exhibit A Legal Description
Exhibit B Insurance Requirements
Exhibit C LIBOR Period Election Form
Schedule 1 Financial Covenants and Other Requirements
4
6
LEASE AGREEMENT
(PHASE III - IMPROVEMENTS)
This LEASE AGREEMENT (PHASE III- IMPROVEMENTS) (this "IMPROVEMENTS LEASE"),
by and between BNP LEASING CORPORATION, a Delaware corporation ("BNPLC"), and
NETWORK APPLIANCE, INC., a California corporation ("NAI"), is made and dated as
of June 16, 1999, the Effective Date. ("EFFECTIVE DATE" and other capitalized
terms used and not otherwise defined in this Improvements Lease are intended to
have the meanings assigned to them in the Common Definitions and Provisions
Agreement (Phase III - Improvements) executed by BNPLC and NAI contemporaneously
with this Improvements Lease. By this reference, the Common Definitions and
Provisions Agreement (Phase III - Improvements) is incorporated into and made a
part of this Improvements Lease for all purposes.)
RECITALS
Pursuant to the Existing Contracts, which cover the Land described in
Exhibit A, NAI is leasing the Land and any appurtenances thereto from Seller.
In anticipation of BNPLC's lease of Improvements to be constructed on the
Land and subsequent acquisition of the Land and lease thereof to NAI pursuant to
the Agreement to Lease, BNPLC and NAI have reached agreement as to the terms and
conditions upon which BNPLC is willing to lease the Improvements to be
constructed on the Land as hereinafter provided, and by this Improvements Lease
BNPLC and NAI desire to evidence such agreement.
GRANTING CLAUSES
BNPLC does hereby LEASE, DEMISE and LET unto NAI for the term hereinafter
set forth all right, title and interest of BNPLC, now owned or hereafter
acquired, in and to:
1. any and all Improvements; and
2. all easements and other rights appurtenant to the Improvements,
whether now owned or hereafter acquired by BNPLC.
BNPLC's interest in all property described in clauses (1) and (2) above are
hereinafter referred to collectively as the "REAL PROPERTY". The Real Property
does not include the Land itself, it being understood that when executed
pursuant to the Agreement to Lease, the Other Lease Agreement will constitute a
separate lease of the Land and the appurtenances thereto, and only the Land and
the appurtenances thereto, from BNPLC to NAI.
To the extent, but only to the extent, that assignable rights or interests
in, to or under the following have been or will be acquired by BNPLC under the
Existing Contracts or acquired by BNPLC pursuant to Paragraph 7 below, BNPLC
also hereby grants and assigns to NAI for the term of this Improvements Lease
the right to use and enjoy (and, in the case of contract rights, to enforce)
such rights or interests of BNPLC:
(a) any goods, equipment, furnishings, furniture and other tangible
personal property of whatever nature that are located on the Land and all
renewals or replacements of or substitutions for any of the foregoing;
5
7
(b) the benefits, if any, conferred upon the owner of the Real
Property by the Permitted Encumbrances and Development Documents; and
(c) any permits, licenses, franchises, certificates, and other rights
and privileges against third parties related to the Real Property.
Such rights and interests of BNPLC, whether now existing or hereafter arising,
are hereinafter collectively called the "PERSONAL PROPERTY". The Real Property
and the Personal Property are hereinafter sometimes collectively called the
"PROPERTY."
However, the leasehold estate conveyed hereby and NAI's rights hereunder
are expressly made subject and subordinate to the terms and conditions of this
Improvements Lease, to the Permitted Encumbrances, and to any other claims or
encumbrances not constituting Liens Removable by BNPLC.
GENERAL TERMS AND CONDITIONS
The Property is leased by BNPLC to NAI and is accepted and is to be used
and possessed by NAI upon and subject to the following terms and conditions:
1. TERM.
A. Scheduled Term. The term of this Improvements Lease (the "TERM") shall
commence on and include the Effective Date, and end on the first Business
Day of July, 2004, unless sooner terminated as expressly herein provided.
B. Automatic Termination as of the Base Rent Commencement Date Resulting From
an Election by NAI to Terminate the Purchase Option and NAI's Initial
Remarketing Rights and Obligations. If NAI terminates the Purchase Option and
NAI's Initial Remarketing Rights and Obligations prior to the Base Rent
Commencement Date pursuant to subparagraph 4(B) of the Purchase Agreement, then
this Improvements Lease shall terminate automatically on the Base Rent
Commencement Date. Just as any such termination of the Purchase Option and NAI's
Initial Remarketing Rights and Obligations shall be subject to the condition
(set forth in subparagraph 4(B) of the Purchase Agreement) that NAI pay an Issue
97-10 Prepayment to BNPLC, so too will the termination of this Improvements
Lease pursuant to this subparagraph be subject the condition that NAI make the
Issue 97-10 Prepayment to BNPLC.
C. Election by BNPLC to Terminate After an Issue 97-10 Election. By notice to
NAI BNPLC shall be entitled to terminate this Improvements Lease, as BNPLC deems
appropriate in its sole and absolute discretion, at any time after receiving a
notice given by NAI to make any Issue 97-10 Election. Upon any termination of
this Improvements Lease by BNPLC pursuant to this subparagraph, NAI shall become
obligated to pay to BNPLC an Issue 97-10 Prepayment, which obligation will
survive the termination of this Improvements Lease.
D. Election by NAI to Terminate After Accelerating the Designated Sale Date.
Provided NAI has not made any Issue 97-10 Election, NAI shall be entitled to
accelerate the Designated Sale Date (and thus accelerate the purchase of BNPLC's
interest in the Property by NAI or by an Applicable Purchaser pursuant to the
Purchase Agreement) by sending a notice to BNPLC as provided in clause (2) of
the definition of" Designated Sale Date" in the Common Definitions and
Provisions Agreement (Phase III - Improvements). In the event, because of NAI's
election to so accelerate the Designated Sale Date or for any other reason, the
Designated Sale Date occurs before the end of the scheduled Term, NAI may
terminate this Improvements Lease on or after the Designated Sale Date;
provided, however, as a condition to any such termination by NAI, NAI must have
done the following prior to the termination:
2
8
(i) purchased or caused an Applicable Purchaser to purchase the Property
pursuant to the Purchase Agreement and satisfied all of NAI's other
obligations under the Purchase Agreement;
(ii) paid to BNPLC all Base Rent, all Commitment Fees and all other Rent
due on or before or accrued through the Designated Sale Date; and
(iii) paid any Breakage Costs caused by BNPLC's sale of the Property
pursuant to the Purchase Agreement.
E. Extension of the Term. The Term may be extended at the option of NAI for
two successive periods of five years each; provided, however, that prior to any
such extension the following conditions must have been satisfied: (A) at least
ninety days prior to the commencement of any such extension, BNPLC and NAI must
have agreed in writing upon, and received the consent and approval of BNPLC's
Parent and all other Participants to (1) a corresponding extension not only to
the date for the expiration of the Term specified above in this Section, but
also to the date specified in clause (1) of the definition of Designated Sale
Date in the Common Definitions and Provisions Agreement (Phase III -
Improvements), and (2) an adjustment to the Rent that NAI will be required to
pay for the extension, it being expected that the Rent for the extension may be
different than the Rent required for the original Term, and it being understood
that the Rent for any extension must in all events be satisfactory to both BNPLC
and NAI, each in its sole and absolute discretion; (B) no Event of Default shall
have occurred and be continuing at the time of NAI's exercise of its option to
extend; (C) prior to any such extension, NAI must have completed the
Construction Project in accordance with the Construction Management Agreement
and must not have made any Issue 97-10 Election; and (D) immediately prior to
any such extension, this Improvements Lease must remain in effect. With respect
to the condition that BNPLC and NAI must have agreed upon the Rent required for
any extension of the Term, neither NAI nor BNPLC is willing to submit itself to
a risk of liability or loss of rights hereunder for being judged unreasonable.
Accordingly, both NAI and BNPLC hereby disclaim any obligation express or
implied to be reasonable in negotiating the Rent for any such extension. Subject
to the changes to the Rent payable during any extension of the Term as provided
in this Paragraph, if NAI exercises its option to extend the Term as provided in
this Paragraph, this Improvements Lease shall continue in full force and effect,
and the leasehold estate hereby granted to NAI shall continue without
interruption and without any loss of priority over other interests in or claims
against the Property that may be created or arise after the date hereof and
before the extension.
2. USE AND CONDITION OF THE PROPERTY.
A. Use. Subject to the Permitted Encumbrances, the Development Documents and
the terms hereof, NAI may use and occupy the Property during the Term, but only
for the following purposes and other lawful purposes incidental thereto:
(i) construction and development of the Construction Project;
(ii) administrative and office space;
(iii) activities related to NAI's research and development or production of
products that are of substantially the same type and character as those
regularly sold by NAI in the ordinary course of its business as of the
Effective Date;
(iv) cafeteria and other support facilities that NAI may provide to its
employees; and
(v) other lawful purposes (including NAI's research and development or
production of products that are not of substantially the same type and
character as those regularly sold by NAI in the ordinary course of its
business as of the Effective Date) approved in advance and in writing by
BNPLC, which approval will not be unreasonably withheld after
3
9
completion of the Construction Project (but NAI acknowledges that BNPLC's
withholding of such approval shall be reasonable if BNPLC determines in
good faith that (1) giving the approval may materially increase BNPLC's
risk of liability for any existing or future environmental problem, or (2)
giving the approval is likely to substantially increase BNPLC's
administrative burden of complying with or monitoring NAI's compliance with
the requirements of this Improvements Lease or other Operative Documents).
B. Condition of the Property.
NAI ACKNOWLEDGES THAT IT HAS CAREFULLY AND FULLY INSPECTED THE PROPERTY AND
ACCEPTS THE PROPERTY IN ITS PRESENT STATE, AS IS, AND WITHOUT ANY REPRESENTATION
OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE CONDITION OF SUCH PROPERTY OR AS TO
THE USE WHICH MAY BE MADE THEREOF. NAI ALSO ACCEPTS THE PROPERTY WITHOUT ANY
COVENANT, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, BY BNPLC OR ITS
AFFILIATES REGARDING THE TITLE THERETO OR THE RIGHTS OF ANY PARTIES IN
POSSESSION OF ANY PART THEREOF, EXCEPT AS EXPRESSLY SET FORTH IN PARAGRAPH 20.
BNPLC SHALL NOT BE RESPONSIBLE FOR ANY LATENT OR OTHER DEFECT OR CHANGE OF
CONDITION IN THE LAND OR IN IMPROVEMENTS, FIXTURES AND PERSONAL PROPERTY FORMING
A PART OF THE PROPERTY OR FOR ANY VIOLATIONS WITH RESPECT THERETO OF APPLICABLE
LAWS. FURTHER, THOUGH NAI MAY OBTAIN FROM THIRD PARTIES ANY FACILITIES OR
SERVICES TO WHICH NAI IS ENTITLED BY REASON OF THE ASSIGNMENT AND LEASE OF
PERSONAL PROPERTY SET FORTH ON PAGE 2 OF THIS IMPROVEMENTS LEASE, BNPLC SHALL
NOT BE REQUIRED TO FURNISH TO NAI ANY FACILITIES OR SERVICES OF ANY KIND,
INCLUDING WATER, STEAM, HEAT, GAS, AIR CONDITIONING, ELECTRICITY, LIGHT OR
POWER.
C. Consideration for and Scope of Waiver. The provisions of subparagraph
above have been negotiated by BNPLC and NAI after due consideration for the Rent
payable hereunder and are intended to be a complete exclusion and negation of
any representations or warranties of BNPLC or its Affiliates, express or
implied, with respect to the Property that may arise pursuant to any law now or
hereafter in effect or otherwise, except as expressly set forth herein.
However, such exclusion of representations and warranties by BNPLC is not
intended to impair any representations or warranties made by other parties, the
benefit of which may pass to NAI during the Term because of the definition of
Personal Property and Property above.
3. RENT.
A. Base Rent Generally. On the Base Rent Commencement Date and on each Base
Rent Date through the end of the Term, NAI shall pay BNPLC rent ("BASE RENT").
Each payment of Base Rent must be received by BNPLC no later than 10:00 a.m.
(Pacific time) on the date it becomes due; if received after 10:00 a.m. (Pacific
time) it will be considered for purposes of this Improvements Lease as received
on the next following Business Day. At least five days prior to any Base Rent
Commencement Date or Base Rent Date upon which an installment of Base Rent shall
become due, BNPLC shall notify NAI in writing of the amount of each installment,
calculated as provided below. Any failure by BNPLC to so notify NAI, however,
shall not constitute a waiver of BNPLC's right to payment, but absent such
notice NAI shall not be in default hereunder for any underpayment resulting
therefrom if NAI, in good faith, reasonably estimates the payment required,
makes a timely payment of the amount so estimated and corrects any underpayment
within three Business Days after being notified by BNPLC of the underpayment.
B. Impact of Collateral Upon Formulas. To ease the administrative burden of this
Improvements Lease and the Pledge Agreement, the formulas for calculating Base
Rent set out below in subparagraph 3.(c) reflect a reduction in the Base Rent
equal to the interest that would accrue on any Collateral provided in accordance
with the requirements of the Pledge Agreement from time to time if the Accounts
(as defined in the Pledge Agreement) bore interest at the Effective Rate. BNPLC
has agreed to such reduction to provide NAI with the economic equivalent of
interest on such Collateral, and in return NAI has agreed to the provisions of
the Pledge Agreement that excuse the actual payment of interest on the Accounts.
By incorporating such reduction of Base Rent into the formulas below, and by
providing for noninterest bearing Accounts in the
4
10
Pledge Agreement, the parties will avoid an unnecessary and cumbersome periodic
exchange of equal payments. It is not, however, the intent of BNPLC or NAI to
understate Base Rent or interest for financial reporting purposes. Accordingly,
for purposes of any financial reports that this Improvements Lease requires of
NAI from time to time, NAI may report Base Rent as if there had been no such
reduction and as if the Collateral from time to time provided in accordance with
the requirements of the Pledge Agreement had been maintained in Accounts bearing
interest at the Effective Rate.
C. Calculation of and Due Dates for Base Rent. Payments of Base Rent shall be
calculated and become due as follows:
(i) Amount Payable On the Base Rent Commencement Date. The Base Rent
payable on the Base Rent Commencement Date shall equal the difference (if
any) between (a) the total amount that would have been added to the
Outstanding Construction Allowance as Carrying Costs on such date if not
for the limit set forth in subparagraph 6.(c), and (b) the Carrying Costs
actually added on such date to the Outstanding Construction Allowance.
(ii) Determination of Payment Due Dates, After the Base Rent Commencement
Date, Generally. For all Base Rent Periods subject to a LIBOR Period
Election of one month or three months, Base Rent shall be due in one
installment on the Base Rent Date upon which the Base Rent Period ends. For
Base Rent Periods subject to a LIBOR Period Election of six months, Base
Rent shall be payable in two installments, with the first installment
becoming due on the Base Rent Date that occurs on the first Business Day of
the third calendar month following the commencement of such Base Rent
Period, and with the second installment becoming due on the Base Rent Date
upon which the Base Rent Period ends.
(iii) Special Adjustments to Base Rent Payment Dates and Periods.
Notwithstanding the foregoing:
a) Any Base Rent Period that begins before, and does not otherwise
end before, a Failed Collateral Test Date shall end upon but not
include such Failed Collateral Test Date, and such Failed Collateral
Test Date shall constitute a Base Rent Date, upon which NAI must pay
all accrued, unpaid Base Rent for the Base Rent Period just ended.
b) Consistent with clause (3) of the definition of LIBOR Period
Election in the Common Definitions and Provisions Agreement (Phase III
- Improvements), each successive Base Rent Date after any such Failed
Collateral Test Date shall be the first Business Day of the first
calendar month following the calendar month which includes the
preceding Base Rent Date, so long as any Mandatory Collateral Period
shall continue.
c) In addition to Base Rent due on a Failed Collateral Test Date,
NAI must pay the Breakage Costs, if any, resulting from any early
ending of a Base Rent Period on the Failed Collateral Test Date
pursuant to the preceding clause 3.(c)(iii)a).
d) If NAI or any Applicable Purchaser purchases BNPLC's interest in
the Property pursuant to the Purchase Agreement, any accrued unpaid
Base Rent and all outstanding Additional Rent shall be due on the date
of purchase in addition to the purchase price and other sums due BNPLC
under the Purchase Agreement.
(iv) Base Rent Formula for Periods During Which The Collateral Percentage
is 100%. Each installment of Base Rent payable for any Base Rent Period
during which the Collateral Percentage is one hundred percent (100%) shall
equal:
o Stipulated Loss Value on the first day of such Base Rent Period,
times
5
11
o the Secured Spread for the period from and including the
preceding Base Rent Date to but not including the Base Rent Date
upon which the installment is due, times
o the number of days in the period from and including the preceding
Base Rent Date to but not including the Base Rent Date upon which
the installment is due, divided by
o three hundred sixty.
Assume, only for the purpose of illustration: that the Collateral
Percentage for a hypothetical Base Rent Period is one hundred percent
(100%); that prior to the first day of such Base Rent Period the
Construction Allowance has been fully funded, but Qualified Prepayments
have been received by BNPLC, leaving a Stipulated Loss Value of
$20,000,000; that the Secured Spread is thirty basis points (30/100 of 1%);
and that such Base Rent Period contains exactly thirty days. Under such
assumptions, the Base Rent for the hypothetical Base Rent Period will
equal:
$20,000,000 x .30% x 30/360 = $5,000
(v) Base Rent Formula for Periods During Which The Collateral Percentage
is Greater Than Zero and Less Than 100% . Each installment of Base Rent
payable for any Base Rent Period during which the Collateral Percentage is
greater than zero and less than one hundred percent (100%) shall equal:
o Stipulated Loss Value on the first day of such Base Rent Period,
times
o the sum of:
(A) the product of:
(1) the Collateral Percentage for such Base Rent Period,
times
(2) the Secured Spread for the period from and including
the preceding Base Rent Date to but not including the
Base Rent Date upon which the installment is due, plus
(B) the product of:
(1) one minus the Collateral Percentage for such Base Rent
Period, times
(2) the sum of (a) the Effective Rate with respect to such
Base Rent Period, plus (b) the Unsecured Spread for the
period from and including the preceding Base Rent Date
to but not including the Base Rent Date upon which the
installment is due, times
o the number of days in the period from and including the preceding
Base Rent Date to but not including the Base Rent Date upon which
the installment is due, divided by
o three hundred sixty.
6
12
Assume, only for the purpose of illustration: that the Collateral
Percentage for a hypothetical Base Rent Period is forty percent (40%); that
prior to the first day of such Base Rent Period the Construction Allowance
has been fully funded, but Qualified Prepayments have been received by
BNPLC, leaving a Stipulated Loss Value of $20,000,000; that the Effective
Rate for the Base Rent Period is 6%; that the Secured Spread is thirty
basis points (30/100 of 1%); that upon the commencement of such Base Rent
Period the Unsecured Spread is one hundred fifty basis points (150/100 of
1%); and that such Base Rent Period contains exactly thirty days. Under
such assumptions, the Base Rent for the hypothetical Base Rent Period will
equal:
$20,000,000 x {(40% x .30%) + ([1 - 40%] x [6% + 1.50%])} x 30/360 = $77,000
(vi) Base Rent Formula for Periods During Which The Collateral Percentage
is Zero . Each installment of Base Rent payable for any Base Rent Period
during which the Collateral Percentage is zero shall equal:
o Stipulated Loss Value on the first day of such Base Rent Period,
times
o the sum of (a) the Effective Rate with respect to such Base Rent
Period, plus (b) the Unsecured Spread for the period from and
including the preceding Base Rent Date to but not including the
Base Rent Date upon which the installment is due, times
o the number of days in the period from and including the preceding
Base Rent Date to but not including the Base Rent Date upon which
the installment is due, divided by
o three hundred sixty.
Assume, only for the purpose of illustration: that the Collateral
Percentage for a hypothetical Base Rent Period is zero percent (0%); that
prior to the first day of such Base Rent Period the Construction Allowance
has been fully funded, but a total Qualified Prepayments have been received
by BNPLC, leaving a Stipulated Loss Value of $20,000,000; that the
Effective Rate for the Base Rent Period is 6%; that the Unsecured Spread is
one hundred fifty basis points (150/100 of 1%) upon the commencement of
such Base Rent Period; and that such Base Rent Period contains exactly
thirty days. Under such assumptions, the Base Rent for the hypothetical
Base Rent Period will equal:
$20,000,000 x (6% + 1.50%) x 30/360 = $125,000
D. Additional Rent . All amounts which NAI is required to pay to or on behalf
of BNPLC pursuant to this Improvements Lease, together with every charge,
premium, interest and cost set forth herein which may be added for nonpayment or
late payment thereof, shall constitute rent (all such amounts, other than Base
Rent, are herein called "ADDITIONAL RENT", and together Base Rent and Additional
Rent are herein sometimes called" RENT").
E. Arrangement Fee . Upon execution and delivery of this Improvements Lease by
BNPLC, an Arrangement Fee (the "ARRANGEMENT FEE") will be paid to BNPLC from the
Initial Funding Advance (and thus be included in Stipulated Loss Value) in the
amount provided in the letter dated as of June 2, 1999 from BNPLC to NAI.
F. Commitment Fees . For each Construction Period NAI shall pay BNPLC a fee (a
"COMMITMENT FEE") from Construction Advances made pursuant to the Construction
Management Agreement equal to:
o the Commitment Fee Rate for such Construction Period, times an amount
equal to:
(i) the Maximum Construction Allowance, less
7
13
(ii) the Funded Construction Allowance on the first day of such
Construction Period; times
o the number of days in such Construction Period; divided by
o three hundred sixty.
NAI shall pay Commitment Fees in arrears on the first Business Day of May,
August, November and February of each calendar year, beginning with the first
Business Day of August, 1999 and continuing regularly throughout the Term so
long as Commitment Fees have accrued and remain unpaid. However, if any
Commitment Fees shall have accrued and remain unpaid on the Designated Sale
Date, such accrued unpaid Commitment Fees shall be due on the Designated Sale
Date.
G. Administrative Agency Fees . Upon execution and delivery of this
Improvements Lease by BNPLC, an administrative agency fee (an "ADMINISTRATIVE
AGENCY FEE") will be paid to BNPLC from the Initial Funding Advance (and thus be
included in Stipulated Loss Value) in the amount provided in the letter dated as
of June 2, 1999 from BNPLC to NAI. Also, on each anniversary of the date hereof,
NAI shall pay to BNPLC an administrative agency fee (also, an "ADMINISTRATIVE
AGENCY FEE") in the amount set forth in the letter agreement dated as of June 2,
1999 from BNPLC to NAI.
H. Underwriting Fee . Upon execution and delivery of this Improvements Lease
by BNPLC, an Underwriting Fee (the "UNDERWRITING FEE") will be paid to BNPLC
from the Initial Funding Advance (and thus be included in Stipulated Loss Value)
in the amount provided in the letter dated as of June 2, 1999 from BNPLC to NAI.
I. Issue 97-10 Prepayments . Following any Issue 97-10 Election or any CMA
Termination Event under (and as defined in) the Construction Management
Agreement, NAI shall make an Issue 97-10 Prepayment to BNPLC within three
Business Days after receipt of any demand for such a payment. BNPLC may demand
an Issue 97-10 Prepayment pursuant to this subparagraph at any time and from
time to time (as Project Costs increase) after any Issue 97-10 Election or CMA
Termination Event.
J. No Demand or Setoff . Except as expressly provided herein, NAI shall pay
all Rent without notice or demand and without counterclaim, deduction, setoff or
defense.
K. Default Interest and Order of Application . All Rent shall bear interest,
if not paid when first due, at the Default Rate in effect from time to time from
the date due until paid; provided, that nothing herein contained will be
construed as permitting the charging or collection of interest at a rate
exceeding the maximum rate permitted under Applicable Laws. BNPLC shall be
entitled to apply any amounts paid by or on behalf of NAI against any Rent then
past due in the order the same became due or in such other order as BNPLC may
elect.
4. NATURE OF THIS AGREEMENT.
(a). "Net" Lease Generally . Subject only to the exceptions listed in
subparagraph below, it is the intention of BNPLC and NAI that Base Rent, the
Arrangement Fees, the Upfront Syndication Fees, the Underwriting Fee,
Administrative Agency Fees, Commitment Fees and other payments herein specified
shall be absolutely net to BNPLC and that NAI shall pay all costs, expenses and
obligations of every kind relating to the Property or this Improvements Lease
which may arise or become due, including: (i) any taxes payable by virtue of
BNPLC's receipt of amounts paid to or on behalf of BNPLC in accordance with
Paragraph 5; (ii) any amount for which BNPLC is or becomes liable with respect
to the Permitted Encumbrances or the Development Documents; and (iii) any costs
incurred by BNPLC (including Attorneys' Fees) because of BNPLC's acquisition or
ownership of any interest in the Property or because of this Improvements Lease
or the transactions contemplated herein.
8
14
However, neither this subparagraph 4.(a) nor the indemnity in this
subparagraph 5(c)(i) shall be construed to make NAI liable for (I) an allocation
of general overhead or internal administrative expenses of BNPLC or any other
Interested Party or (II) any duplicate payment of the same Loss to both BNPLC
and another Interested Party. (If, for example, BNPLC were required to make a
$10 fine because of a failure of the Property to comply with Applicable Laws,
and a Participant were required by the Participation Agreement to reimburse
BNPLC for 20% of the $10, NAI would not be required by this subparagraph 4(a) or
by subparagraph 5.(c)(i) to pay both $10 to BNPLC and $2 to the Participant on
account of the fine.)
(b). No Termination . Except as expressly provided in this Improvements Lease
itself, this Improvements Lease shall not terminate, nor shall NAI have any
right to terminate this Improvements Lease, nor shall NAI be entitled to any
abatement of the Rent, nor shall the obligations of NAI under this Improvements
Lease be excused, for any reason whatsoever, including any of the following: (i)
any damage to or the destruction of all or any part of the Property from
whatever cause, (ii) the taking of the Property or any portion thereof by
eminent domain or otherwise for any reason, (iii) the prohibition, limitation or
restriction of NAI's use or development of all or any portion of the Property or
any interference with such use by governmental action or otherwise, (iv) any
eviction of NAI or of anyone claiming through or under NAI, (v) any default on
the part of BNPLC under this Improvements Lease or under any other agreement to
which BNPLC and NAI are parties, (vi) the inadequacy in any way whatsoever of
the design, construction, assembly or installation of any improvements, fixtures
or tangible personal property included in the Property (it being understood that
BNPLC has not made, does not make and will not make any representation express
or implied as to the adequacy thereof), (vii) any latent or other defect in the
Property or any change in the condition thereof or the existence with respect to
the Property of any violations of Applicable Laws, or (viii) any other cause
whether similar or dissimilar to the foregoing. It is the intention of the
parties hereto that the obligations of NAI hereunder shall be separate and
independent of the covenants and agreements of BNPLC, that Base Rent and all
other sums payable by NAI hereunder shall continue to be payable in all events
and that the obligations of NAI hereunder shall continue unaffected, unless the
requirement to pay or perform the same shall have been terminated or limited
pursuant to an express provision of this Improvements Lease. Without limiting
the foregoing, NAI waives to the extent permitted by Applicable Laws, except as
otherwise expressly provided herein, all rights to which NAI may now or
hereafter be entitled by law (including any such rights arising because of any
implied" warranty of suitability" or other warranty under Applicable Laws) (i)
to quit, terminate or surrender this Improvements Lease or the Property or any
part thereof or (ii) to any abatement, suspension, deferment or reduction of the
Rent.
However, nothing in this subparagraph 4.(b) shall be construed as a waiver
by NAI of any right NAI may have at law or in equity to the following remedies,
whether because of BNPLC's failure to remove a Lien Removable by BNPLC or
because of any other default by BNPLC under this Improvements Lease that
continues beyond the period for cure provided in Paragraph 19: (i) the recovery
of monetary damages, (ii) injunctive relief in case of the violation, or
attempted or threatened violation, by BNPLC of any of the express covenants,
agreements, conditions or provisions of this Improvements Lease which are
binding upon BNPLC (including the confidentiality provisions set forth in
subparagraph 16.(c) below), or (iii) a decree compelling performance by BNPLC of
any of the express covenants, agreements, conditions or provisions of this
Improvements Lease which are binding upon BNPLC.
(c). Tax Reporting . BNPLC and NAI shall report this Improvements Lease and
the Purchase Agreement for federal income tax purposes as a conditional sale
unless prohibited from doing so by the Internal Revenue Service. If the Internal
Revenue Service shall challenge BNPLC's characterization of this Improvements
Lease and the Purchase Agreement as a conditional sale for federal income tax
reporting purposes, BNPLC shall notify NAI in writing of such challenge and
consider in good faith any reasonable suggestions by NAI about an appropriate
response. In any event, NAI shall (subject only to the limitations set forth in
this subparagraph) indemnify and hold harmless BNPLC from and against all
liabilities, costs, additional taxes (other than Excluded Taxes) and other
expenses that may arise or become due because of such challenge or because of
any resulting recharacterization required by the Internal Revenue Service,
including any additional taxes that may become due upon any sale under the
Purchase Agreement to the extent (if any) that such additional taxes are not
offset by tax savings resulting from additional depreciation deductions or other
tax benefits to BNPLC of the
9
15
recharacterization. If BNPLC receives a written notice of any challenge by the
Internal Revenue Service that BNPLC believes will be covered by this Paragraph,
then BNPLC shall promptly furnish a copy of such notice to NAI. The failure to
so provide a copy of the notice to NAI shall not excuse NAI from its obligations
under this Paragraph; provided, that if none of the officers of NAI and none of
the employees of NAI responsible for tax matters are aware of the challenge
described in the notice and such failure by BNPLC renders unavailable defenses
that NAI might otherwise assert, or precludes actions that NAI might otherwise
take, to minimize its obligations hereunder, then NAI shall be excused from its
obligation to indemnify BNPLC against liabilities, costs, additional taxes and
other expenses, if any, which would not have been incurred but for such failure.
For example, if BNPLC fails to provide NAI with a copy of a notice of a
challenge by the Internal Revenue Service covered by the indemnities set out in
this Improvements Lease and NAI is not otherwise already aware of such
challenge, and if as a result of such failure BNPLC becomes liable for penalties
and interest covered by the indemnities in excess of the penalties and interest
that would have accrued if NAI had been promptly provided with a copy of the
notice, then NAI will be excused from any obligation to BNPLC to pay the excess.
(d). Characterization of this Improvements Lease . For purposes of determining
the appropriate financial accounting for this Improvements Lease and for
purposes of determining their respective rights and remedies under state law,
BNPLC and NAI believe and intend that (i) this Improvements Lease constitutes a
true lease, not a mere financing arrangement, enforceable in accordance with its
express terms, and the preceding subparagraph is not intended to affect the
enforcement of any other provisions of this Improvements Lease or the Purchase
Agreement, and (ii) the Purchase Agreement shall constitute a separate and
independent contract, enforceable in accordance with the express terms and
conditions set forth therein. In this regard, NAI acknowledges that NAI asked
BNPLC to participate in the transactions evidenced by this Improvements Lease
and the Purchase Agreement as a landlord and owner of the Property, not as a
lender. Although other transactions might have been used to accomplish similar
results, NAI expects to receive certain material accounting and other advantages
through the use of a lease transaction. Accordingly, and notwithstanding the
reporting for income tax purposes described in the preceding subparagraph, NAI
cannot equitably deny that this Improvements Lease and the Purchase Agreement
should be construed and enforced in accordance with their respective terms,
rather than as a mortgage or other security device, in any action brought by
BNPLC to enforce this Improvements Lease or the Purchase Agreement.
5. PAYMENT OF EXECUTORY COSTS AND LOSSES RELATED TO THE PROPERTY.
(a). Impositions . Subject only to the exceptions listed in subparagraph
below, NAI shall pay or cause to be paid prior to delinquency all ad valorem
taxes assessed against the Property and other Impositions. If requested by BNPLC
from time to time, NAI shall furnish BNPLC with receipts showing payment of all
Impositions prior to the applicable delinquency date therefor.
Notwithstanding the foregoing, NAI may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted
Imposition, and pending such contest NAI shall not be deemed in default under
any of the provisions of this Improvements Lease because of the Imposition if
(1) NAI diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and (2) NAI promptly causes to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all costs,
penalties and interest thereon, promptly after such judgment becomes final;
provided, however, in any event each such contest shall be concluded and the
contested Impositions must be paid by NAI prior to the earlier of (i) the date
that any criminal prosecution is instituted or overtly threatened against BNPLC
or its directors, officers or employees because of the nonpayment thereof or
(ii) the date any writ or order is issued under which any property owned or
leased by BNPLC (including the Property) may be seized or sold or any other
action is taken against BNPLC or against any property owned or leased by BNPLC
because of the nonpayment thereof, or (iii) any Designated Sale Date upon which,
for any reason, NAI or an Affiliate of NAI or any Applicable Purchaser shall not
purchase BNPLC's interest in the Property pursuant to the Purchase Agreement for
a price to BNPLC (when taken together with any additional payments
10
16
made by NAI pursuant to Paragraph 1(A)(2) of the Purchase Agreement, in the case
of a purchase by an Applicable Purchaser) equal to the Break Even Price.
(b). Increased Costs; Capital Adequacy Charges . Subject only to the
exceptions listed in subparagraph 5.(a) below:
(i) If after the Effective Date there shall be any increase in the
cost to BNPLC's Parent or any other Participant agreeing to make or
making, funding or maintaining advances to BNPLC in connection with the
Property because of any Banking Rules Change, then NAI shall from time to
time, pay to BNPLC for the account of BNPLC's Parent or such other
Participant, as the case may be, additional amounts sufficient to
compensate BNPLC's Parent or the Participant for such increased cost. An
increase in costs resulting from any imposition or increase of reserve
requirements applicable to Collateral held from time to time by BNPLC's
Parent or other Participants pursuant to the Pledge Agreement would be an
increase covered by the preceding sentence. A certificate as to the
amount of such increased cost, submitted to BNPLC and NAI by BNPLC's
Parent or the other Participant, shall be conclusive and binding upon
NAI, absent clear and demonstrable error.
(ii) BNPLC's Parent or any other Participant may demand additional
payments ("CAPITAL ADEQUACY CHARGES") if BNPLC's Parent or the other
Participant determines that any Banking Rules Change affects the amount
of capital to be maintained by it and that the amount of such capital is
increased by or based upon the existence of advances made or to be made
to BNPLC to permit BNPLC to maintain BNPLC's investment in the Property
or to make Construction Advances. To the extent that BNPLC's Parent or
another Participant demands Capital Adequacy Charges as compensation for
the additional capital requirements reasonably allocable to such
investment or advances, NAI shall pay to BNPLC for the account of BNPLC's
Parent or the other Participant, as the case may be, the amount so
demanded. Without limiting the foregoing, BNPLC and NAI hereby
acknowledge and agree that the provisions for calculating Base Rent set
forth herein reflect the assumption that the Pledge Agreement will cause
a zero percent (0%) risk weight to be assigned to a percentage (equal to
the Collateral Percentage) of the collective investment of BNPLC and the
Participants in the Property pursuant to 12 Code of Federal Regulations,
part 225, as from time to time supplemented or amended, or pursuant to
any other similar or successor statute or regulation applicable to BNPLC
and the Participants. If and so long as such risk weight is increased the
assumed amount of zero percent (0%) because of a Banking Rules Change,
Capital Adequacy Charges may be collected to yield the same rate of
return to BNPLC, BNPLC's Parent and any other Participants (net of their
costs of maintaining required capital) that they would have enjoyed from
this Improvements Lease absent such increase.
(iii) Any amount required to be paid by NAI under this subparagraph
5.(b) shall be due ten days after a demand for such payment is received
by NAI.
(c). NAI's Payment of Other Losses; General Indemnification . Subject only to
the exceptions listed in subparagraph below:
(i) All Losses (including Environmental Losses) asserted against or
incurred or suffered by BNPLC or other Interested Parties at any time and
from time to time by reason of, in connection with or arising out of (A)
their ownership or alleged ownership of any interest in the Property or
the Rents, (B) the use and operation of the Property, (C) the
negotiation, administration or enforcement of the Operative Documents,
(D) the making of Funding Advances, (E) the Construction Project, (F) the
breach by NAI of this Improvements Lease or any other document executed
by NAI in connection herewith, (G) any failure of the Property or NAI
itself to comply with Applicable Laws, (H) Permitted Encumbrances, (I)
Hazardous Substance Activities, including those occurring prior to
Effective Date, (J) any obligations under the Existing Contracts that
survive the closing thereunder, or (K) any bodily or personal injury or
death or property
11
17
damage occurring in or upon or in the vicinity of the Property through any
cause whatsoever, shall be paid by NAI, and NAI shall indemnify and defend
BNPLC and other Interested Parties from and against all such Losses.
(ii) THE INDEMNITIES AND RELEASES PROVIDED HEREIN FOR THE BENEFIT OF
BNPLC AND OTHER INTERESTED PARTIES, INCLUDING THE INDEMNITY SET FORTH IN
THE PRECEDING SUBPARAGRAPH , SHALL APPLY EVEN IF AND WHEN THE SUBJECT
MATTERS OF THE INDEMNITIES AND RELEASES ARE CAUSED BY OR ARISE OUT OF THE
NEGLIGENCE OR STRICT LIABILITY OF BNPLC OR ANOTHER INTERESTED PARTY.
FURTHER, SUCH INDEMNITIES AND RELEASES WILL APPLY EVEN IF INSURANCE
OBTAINED BY NAI OR REQUIRED OF NAI BY THIS IMPROVEMENTS LEASE OR OTHER
OPERATIVE DOCUMENTS IS NOT ADEQUATE TO COVER LOSSES AGAINST OR FOR WHICH
THE INDEMNITIES AND RELEASES ARE PROVIDED. NAI'S LIABILITY, HOWEVER, FOR
ANY FAILURE TO OBTAIN INSURANCE REQUIRED BY THIS IMPROVEMENTS LEASE OR
OTHER OPERATIVE DOCUMENTS WILL NOT BE LIMITED TO LOSSES AGAINST WHICH
INDEMNITIES ARE PROVIDED HEREIN, IT BEING UNDERSTOOD THAT SUCH INSURANCE IS
INTENDED TO DO MORE THAN PROVIDE A SOURCE OF PAYMENT FOR LOSSES AGAINST
WHICH BNPLC AND OTHER INTERESTED PARTIES ARE ENTITLED TO INDEMNIFICATION BY
THIS IMPROVEMENTS LEASE.
(iii) Costs and expenses for which NAI shall be responsible pursuant to
this subparagraph will include appraisal fees, filing and recording fees,
inspection fees, survey fees, taxes, brokerage fees and commissions,
abstract fees, title policy fees, Uniform Commercial Code search fees,
escrow fees and Attorneys' Fees incurred by BNPLC with respect to the
Property, whether such costs and expenses are incurred at the time of
execution of this Improvements Lease or at any time during the Term. Such
costs and expenses will also include Attorneys' Fees or other costs
incurred to evaluate lien releases and other information submitted by NAI
with requests for Construction Advances.
(iv) NAI's obligations under this subparagraph 5.(c) shall survive the
termination or expiration of this Improvements Lease. Any amount to be paid
by NAI under this subparagraph 5.(c) shall be due ten days after a demand
for such payment is received by NAI.
12
18
(v) If an Interested Party notifies NAI of any claim or proceeding
included in, or any investigation or allegation concerning, Losses for
which NAI is responsible pursuant to this subparagraph 5.(c), NAI shall
assume on behalf of the Interested Party and conduct with due diligence and
in good faith the investigation and defense thereof and the response
thereto with counsel selected by NAI, but satisfactory to the Interested
Party; provided, that the Interested Party shall have the right to be
represented by advisory counsel of its own selection and at its own
expense; and provided further, that if any such claim, proceeding,
investigation or allegation involves both NAI and the Interested Party and
the Interested Party shall have reasonably concluded that there are legal
defenses available to it which are inconsistent with or in addition to
those available to NAI, then the Interested Party shall have the right to
select separate counsel to participate in the investigation and defense of
and response to such claim, proceeding, investigation or allegation on its
own behalf, and NAI shall pay or reimburse the Interested Party for all
Attorney's Fees incurred by the Interested Party because of the selection
of such separate counsel. If NAI fails to assume promptly (and in any event
within fifteen days after being notified of the applicable claim,
proceeding, investigation or allegation) the defense of the Interested
Party, then the Interested Party may contest (or settle, with the prior
consent of NAI, which consent will not be unreasonably withheld) the claim,
proceeding, investigation or allegation at NAI's expense using counsel
selected by the Interested Party. Moreover, if any such failure by NAI
continues for forty-five days or more after NAI is notified of any such
claim, proceeding, investigation or allegation, the Interested Party may
elect not to contest or continue contesting the same and instead, in
accordance with the written advice of counsel, settle (or pay in full) all
claims related thereto without NAI's consent and without releasing NAI from
any obligations to the Interested Party under this subparagraph .
(d) Exceptions and Qualifications to Indemnities .
i. BNPLC acknowledges and agrees that nothing in subparagraph 4.(a) or
the preceding subparagraphs of this Paragraph 5 shall be construed to
require NAI to pay or reimburse an Interested Party for (w) any costs or
expenses incurred by BNPLC or any transferee to accomplish any Permitted
Transfers described in clauses (2), (3), (4), (6) or (7) of the definition
thereof in the Common Definitions and Provisions Agreement (Phase III -
Improvements), (x) Excluded Taxes, (y) Losses incurred or suffered by such
Interested Party that are proximately caused by (and attributed by any
applicable principles of comparative fault to) the Established Misconduct
of that Interested Party, or (z) Losses incurred or suffered by
Participants in connection with their negotiation or execution of the
Participation Agreement or Pledge Agreement (or supplements making them
parties thereto) or in connection with any due diligence they may undertake
before entering into the Participation Agreement or Pledge Agreement.
Further, without limiting BNPLC's rights (as provided in other provisions
of this Improvements Lease and other Operative Documents) to include the
following in the calculation of the Outstanding Construction Allowance,
Stipulated Loss Value, the Break Even Price and the Maximum Permitted
Prepayment (as applicable) or to collect Base Rent, Issue 97-10
Prepayments, a Supplemental Payment and other amounts, the calculation of
which depends upon the Outstanding Construction Allowance, Stipulated Loss
Value, the Break Even Price and the Maximum Permitted Prepayment, BNPLC
acknowledges and agrees that nothing in subparagraph 4.(a) or the preceding
subparagraphs of this Paragraph 5 shall be construed to require NAI to pay
or reimburse an Interested Party for:
a) costs paid by BNPLC with the proceeds of the Initial Funding
Advance as part of the Transaction Expenses; or
b) Construction Advances, including costs and expenditures incurred
or paid by or on behalf of BNPLC after any Landlord's Election to
Continue Construction, to the extent that such costs and expenditures
are considered to be Construction Advances pursuant to subparagraph
6.(e).
Further, if an Interested Party receives a written notice of Losses that
such Interested Party believes are covered by the indemnity in subparagraph
5.(c)(i), then such Interested Party will be expected to promptly furnish a
copy of such notice to NAI. The failure to so provide a copy of the notice
to NAI shall not excuse NAI from its obligations under subparagraph
5.(c)(i);
13
19
provided, that if NAI is unaware of the matters described in the notice and
such failure renders unavailable defenses that NAI might otherwise assert,
or precludes actions that NAI might otherwise take, to minimize its
obligations, then NAI shall be excused from its obligation to indemnify
such Interested Party (and any Affiliate of such Interested Party) against
the Losses, if any, which would not have been incurred or suffered but for
such failure. For example, if BNPLC fails to provide NAI with a copy of a
notice of an obligation covered by the indemnity set out in subparagraph
5.(c)(i) and NAI is not otherwise already aware of such obligation, and if
as a result of such failure BNPLC becomes liable for penalties and interest
covered by the indemnity in excess of the penalties and interest that would
have accrued if NAI had been promptly provided with a copy of the notice,
then NAI will be excused from any obligation to BNPLC (or any Affiliate of
BNPLC) to pay the excess.
(ii) Notwithstanding anything to the contrary in subparagraph 4.(a) or the
preceding subparagraphs of this Paragraph 5, NAI's liability for payments
required by the preceding subparagraphs of this Paragraph 5, and not
excused by the preceding subparagraph 5.(d)(i), prior to substantial
completion of the Construction Project ("CONSTRUCTION-PERIOD INDEMNITY
PAYMENTS") shall be subject to the following provisions:
a) NAI may decline to pay any Construction-Period Indemnity Payments
other than the following (it being understood that NAI's payment of
the following Construction-Period Indemnity Payments shall not be
subject to any abatement or deferral by anything contained in this
subparagraph 5.(d)(ii)):
(1) Construction-Period Indemnity Payments eligible for
reimbursement to NAI under the terms and conditions of the
Construction Management Agreement; and
(2) Construction-Period Indemnity Payments that constitute
Absolute NAI Construction Obligations.
b) Any Construction-Period Indemnity Payment NAI is excused from
paying by this subparagraph 5.(d)(ii), together with interest thereon
at the Default Rate, will be included in the calculation of the Break
Even Price under (and as defined in) the Purchase Agreement.
6. CONSTRUCTION.
(a) Construction Advances; Outstanding Construction Allowance . The
Construction Management Agreement entitles NAI to receive from BNPLC - subject
to the terms and conditions set forth in the Construction Management Agreement -
Construction Advances on Advance Dates from time to time to pay or reimburse NAI
for the costs of the Construction Project and certain other costs described in
the Construction Management Agreement. In addition, BNPLC may from time to time
make expenditures or incur costs constituting Construction Advances after a
Landlord's Election to Continue Construction as described in subparagraph 6.(e).
As used herein, references to the" OUTSTANDING CONSTRUCTION ALLOWANCE" mean the
difference on the date in question (but not less than zero) of (A) the total
Construction Advances made by or on behalf of BNPLC on or prior to the date in
question, plus (B) all Carrying Costs added on or prior to the date in question,
less (C) any funds received and applied as Qualified Prepayments on or prior to
the date in question. Charges ("CARRYING COSTS") shall accrue as described below
for each Construction Period and will be added to (and thereafter be included
in) the Outstanding Construction Allowance on the last day of such Construction
Period (i.e., generally on the Advance Date upon which such Construction Period
ends). However, if for any reason Stipulated Loss Value (and thus the
Outstanding Construction Allowance included as a component thereof) must be
determined as of any date between Advance Dates, the Outstanding Construction
Allowance determined on such date shall include not only Carrying Costs added on
or before the immediately preceding Advance Date computed as described below,
but also Carrying Costs accruing on and after such preceding Advance Date to but
not including the date in question.
14
20
(b) Calculation of Carrying Costs. Carrying Costs accruing for any
Construction Period shall equal:
o the sum on the first day of such Construction Period of (i) Stipulated
Loss Value under (and as defined in) the Common Definitions and
Provisions Agreement (Phase III - Improvements) and (ii) after the
execution and effective date of the Other Lease Agreement and the
Other Purchase Agreement, Stipulated Loss Value under (and as defined
in) the Other Common Definitions and Provisions Agreement, times
o the sum of (a) the Effective Rate with respect to such Construction
Period, plus (b) the Unsecured Spread for such Construction Period,
times
o the number of days in the period from and including the preceding
Advance Date to but not including the Advance Date upon which the
period ends, divided by
o three hundred sixty.
Assume, only for the purpose of illustration: that the Collateral
Percentage for a hypothetical Construction Period is zero percent (0%);
that on the first day of such Construction Period Combined Stipulated Loss
Value is $15,000,000; that the Effective Rate for the Construction Period
is 6%; that the Unsecured Spread for such Construction Period is one
hundred fifty basis points (150/100 of 1%); and that such Construction
Period contains exactly thirty days. Under such assumptions, the Carrying
Costs for the hypothetical Construction Period will equal:
$15,000,000 x (6% + 1.50%) x 30/360 = $93,750
If the date that the Other Lease Agreement and the Other Purchase
Agreement are executed and become effective falls within, but not on the
first date of, a Construction Period, then Carrying Costs will accrue
during such Construction Period on the Stipulated Loss Value under the
Other Lease Agreement, but such accrual will not commence until the date
upon which the Other Lease Agreement and Other Purchase Agreement are
executed and become effective. (Prior to that date, interest under the
Agreement to Lease will continue to accrue.)
(c) Limits on the Amount of Carrying Costs. Notwithstanding the foregoing,
because the Construction Allowance available to NAI under the Construction
Management Agreement is limited in amount to the Maximum Construction Allowance,
and because Carrying Costs are to be charged against the Construction Allowance,
Carrying Costs added to the Outstanding Construction Allowance on the Base Rent
Commencement Date shall not exceed the amount that can be added without causing
the Funded Construction Allowance to exceed the Maximum Construction Allowance.
If, because of an extension of the Base Rent Commencement Date by BNPLC (as
described in the definition thereof in the Common Definitions and Provisions
Agreement (Phase III - Improvements)) or because of any Landlord's Election to
Continue Construction, the Funded Construction Allowance already exceeds the
Maximum Construction Allowance, then no Carrying Costs will be added to the
Outstanding Construction Allowance on the Base Rent Commencement Date.
(d) NAI's Right to Control the Construction Project. Subject to BNPLC's rights
under subparagraph 6.(e) of this Improvements Lease, the Construction Management
Agreement grants to NAI the sole right and responsibility for designing and
constructing the Construction Project, it being understood that although title
to all Improvements will pass directly to BNPLC (as more particularly provided
in Paragraph 7), BNPLC's obligation with respect to the Construction Project
shall be limited to the making of advances under and subject to the conditions
set forth in the Construction Management Agreement. No contractor or other third
party shall be entitled to require BNPLC to make advances as a third party
beneficiary of this Improvements Lease or of the Construction Management
Agreement or otherwise.
15
21
(e) Landlord's Election to Continue Construction. Without limiting BNPLC's
other rights and remedies under this Improvements Lease, and without terminating
this Improvements Lease or NAI's obligations hereunder or under any of the other
documents referenced herein, in the event of any termination of the Construction
Management Agreement as provided in subparagraph 5(D) or subparagraph 5(E)
thereof, BNPLC shall be entitled (but not obligated) to take whatever action it
deems necessary or appropriate by the use of legal proceedings or otherwise to
continue or complete the Construction Project in a manner substantially
consistent (to the extent practicable under Applicable Laws) with the general
description of the Construction Project set forth in Exhibit B to the
Construction Management Agreement and with the permitted use of the Property set
forth in subparagraph 2.(a). (As used herein, "LANDLORD'S ELECTION TO CONTINUE
CONSTRUCTION" means any election by BNPLC to continue or complete the
Construction Project pursuant to the preceding sentence.) After any Landlord's
Election to Continue Construction, BNPLC may do any one or more of the following
pursuant to this subparagraph without further notice and regardless of whether
any Event of Default is then continuing:
(i) Take Control of the Property. BNPLC may cause NAI and any contractors
or other parties on the Property to vacate the Property until the
Construction Project is complete or BNPLC elects not to continue work on
the Construction Project.
(ii) Continuation of Construction. BNPLC may perform or cause to be
performed any work to complete or continue the construction of the
Construction Project. In this regard, so long as work ordered or undertaken
by BNPLC is substantially consistent (to the extent practicable under
Applicable Laws) with the general description of the Construction Project
set forth in Exhibit B to the Construction Management Agreement and the
permitted use of the Property set forth in subparagraph 2.(a), BNPLC shall
have complete discretion to:
a) proceed with construction according to such plans and
specifications as BNPLC may from time to time approve;
b) establish and extend construction deadlines as BNPLC from time to
time deems appropriate, without obligation to adhere to the deadlines
for Construction Milestones set forth in the Construction Management
Agreement;
c) hire, fire and replace architects, engineers, contractors,
construction managers and other consultants as BNPLC from time to time
deems appropriate, without obligation to use, consider or compensate
architects, engineers, contractors, construction managers or other
consultants previously selected or engaged by NAI;
d) determine the compensation that any architect, engineer,
contractor, construction manager or other consultant engaged by BNPLC
will be paid, and the terms and conditions that will govern the
payment of such compensation (including whether payment will be due in
advance, over the course of construction or on some other basis and
including whether contracts will be let on a fixed price basis, a cost
plus a fee basis or some other basis), as BNPLC from time to time
deems appropriate;
e) pay, settle or compromise existing or future bills and claims
which are or may be liens against the Property or as BNPLC considers
necessary or desirable for the completion of the Construction Project
or the removal of any clouds on title to the Property;
f) prosecute and defend all actions or proceedings in connection
with the construction of the Construction Project;
16
22
g) select and change interior and exterior finishes for the
Improvements and landscaping as BNPLC from time to time deems
appropriate; and
h) generally do anything that NAI itself might have done if NAI
had satisfied or obtained BNPLC's waiver of the conditions specified
therein.
(iii) Arrange for Turnkey Construction. Without limiting the generality of
the foregoing, BNPLC may engage any contractor or real estate developer
BNPLC believes to be reputable to take over and complete construction of
the Construction Project on a" turnkey" basis.
(iv) Suspension or Termination of Construction. Notwithstanding any
Landlord's Election to Continue Construction, BNPLC may subsequently elect
at any time to suspend or terminate further construction without obligation
to NAI.
For purposes of this Improvements Lease and other Operative Documents (including
the determination of the Outstanding Construction Allowance, Stipulated Loss
Value, the Break Even Price and the Maximum Permitted Prepayment), after any
Landlord's Election to Continue Construction, all costs and expenditures
incurred or paid by or on behalf of BNPLC to complete or continue construction
as provided in this subparagraph shall be considered Construction Advances and
Project Costs, regardless of whether they cause the Funded Construction
Allowance to exceed the Maximum Construction Allowance. Further, as used in the
preceding sentence," costs incurred" by BNPLC will include costs that BNPLC has
become obligated to pay to any third party that is not an Affiliate of BNPLC
(including any contractor), even if the payments for which BNPLC has become so
obligated will constitute prepayments for work or services to be rendered after
payment and notwithstanding that BNPLC's obligations for the payments may be
conditioned upon matters beyond BNPLC's control. For example, even if a
construction contract between BNPLC and a contractor excused BNPLC from making
further progress payments to the contractor upon NAI's failure to make any
required Issue 97-10 Prepayment hereunder, the obligation to make a progress
payment would nonetheless be" incurred" by BNPLC, for purposes of determining
whether BNPLC has incurred costs considered to be Project Costs and Construction
Advances, when BNPLC's obligation to pay it became subject only to NAI's payment
of an Issue 97-10 Prepayment or other conditions beyond BNPLC's control. If and
to the extent, however, BNPLC does incur costs considered as Construction
Advances under this subparagraph, but (1) BNPLC does not actually pay the costs
and after incurring them BNPLC is fully and finally excused from the obligation
to pay them for any reason other than a breach by NAI of this Improvements Lease
or other Operative Documents, or (2) BNPLC receives a refund of such costs, then
the costs BNPLC is excused from paying or refunded to BNPLC shall be considered
Qualified Prepayments.
(f) Powers Coupled With an Interest. BNPLC's rights under subparagraph 6.(e)
are intended to constitute powers coupled with an interest which cannot be
revoked.
(g) Completion Notice. After any Landlord's Election to Continue Construction,
BNPLC may provide a notice (a "COMPLETION NOTICE") to NAI, advising NAI that
construction of the Construction Project is substantially complete or that BNPLC
no longer intends to continue such construction at that time.
17
23
7. STATUS OF PROPERTY ACQUIRED WITH FUNDS PROVIDED BY BNPLC. All Improvements
constructed during the term of this Improvements Lease shall be owned by BNPLC
and shall constitute" Property" covered by this Improvements Lease. Further, to
the extent heretofore or hereafter acquired (in whole or in part) with any
portion of the Initial Funding Advance or with any Construction Advances or with
other funds for which NAI has received or hereafter receives reimbursement from
the Initial Funding Advance or Construction Advances, all furnishings,
furniture, chattels, permits, licenses, franchises, certificates and other
personal property of whatever nature shall have been acquired on behalf of BNPLC
by NAI, shall be owned by BNPLC and shall constitute" Property" covered by this
Improvements Lease, as shall all renewals or replacements of or substitutions
for any such Property. NAI shall not authorize or permit the transfer of title
to the Improvements or to any other such Property to pass through NAI or NAI's
Affiliates before it is transferred to BNPLC from contractors, suppliers,
vendors or other third Persons. Nothing herein shall constitute authorization of
NAI by BNPLC to bind BNPLC to any construction contract or other agreement with
a third Person, but any construction contract or other agreement executed by NAI
for the acquisition or construction of Improvements or other components of the
Property may provide for the transfer of title as required by the preceding
sentence. Upon request of BNPLC, but not more often than once in any period of
twelve consecutive months, NAI shall deliver to BNPLC an inventory describing
all significant items of Personal Property (and, in the case of tangible
personal property, showing the make, model, serial number and location thereof)
other than Improvements, with a certification by NAI that such inventory is true
and complete and that all items specified in the inventory are covered by this
Improvements Lease free and clear of any Lien other than the Permitted
Encumbrances or Liens Removable by BNPLC.
8. ENVIRONMENTAL.
(a) Environmental Covenants by NAI. NAI covenants that:
(i) NAI shall not conduct or permit others to conduct Hazardous Substance
Activities, except Permitted Hazardous Substance Use and Remedial Work.
(ii) NAI shall not discharge or permit the discharge of anything on or
from the Property that would require any permit under applicable
Environmental Laws, other than (1) storm water runoff, (2) waste water
discharges through a publicly owned treatment works, (3) discharges that
are a necessary part of any Remedial Work, and (4) other similar discharges
consistent with the definition herein of Permitted Hazardous Substance Use,
in each case in strict compliance with Environmental Laws.
(iii) Following any discovery that Remedial Work is required by
Environmental Laws or otherwise believed by BNPLC to be reasonably
required, and to the extent not inconsistent with the other provisions of
this Improvements Lease, NAI shall promptly perform and diligently and
continuously pursue such Remedial Work, in each case in strict compliance
with Environmental Laws.
(iv) If requested by BNPLC in connection with any Remedial Work required
by this subparagraph, NAI shall retain independent environmental
consultants acceptable to BNPLC to evaluate any significant new information
generated during NAI's implementation of the Remedial Work and to discuss
with NAI whether such new information indicates the need for any additional
measures that NAI should take to protect the health and safety of persons
(including employees, contractors and subcontractors and their employees)
or to protect the environment. NAI shall implement any such additional
measures to the extent required with respect to the Property by
Environmental Laws or otherwise believed by BNPLC to be reasonably required
and to the extent not inconsistent with the other provisions of this
Improvements Lease.
18
24
(b) Right of BNPLC to do Remedial Work Not Performed by NAI. If NAI's failure
to cure any breach of the covenants set forth in subparagraph 8.(a) continues
beyond the Environmental Cure Period (as defined below), BNPLC may, in addition
to any other remedies available to it, conduct all or any part of the Remedial
Work. To the extent that Remedial Work is done by BNPLC pursuant to the
preceding sentence (including any removal of Hazardous Substances), the cost
thereof shall be a demand obligation owing by NAI to BNPLC. As used in this
subparagraph, "ENVIRONMENTAL CURE PERIOD" means the period ending on the earlier
of: (1) one hundred eighty days after NAI is notified of the breach which must
be cured within such period, (2) the date that any writ or order is issued for
the levy or sale of any property owned by BNPLC (including the Property) because
of such breach, (3) the date that any criminal action is instituted or overtly
threatened against BNPLC or any of its directors, officers or employees because
of such breach, or (4) any Designated Sale Date upon which, for any reason, NAI
or an Affiliate of NAI or any Applicable Purchaser shall not purchase BNPLC's
interest in the Property pursuant to the Purchase Agreement for a net price to
BNPLC (when taken together with any Supplemental Payment made by NAI pursuant to
Paragraph 1(A)(2) of the Purchase Agreement, in the case of a purchase by an
Applicable Purchaser) equal to Stipulated Loss Value.
(c) Environmental Inspections and Reviews. BNPLC reserves the right to retain
environmental consultants to review any report prepared by NAI or to conduct
BNPLC's own investigation to confirm whether NAI is complying with the
requirements of this Paragraph. NAI grants to BNPLC and to BNPLC's agents,
employees, consultants and contractors the right to enter upon the Property at
any time to inspect the Property and to perform such tests as BNPLC deems
necessary or appropriate to review or investigate Hazardous Substances in, on,
under or about the Property or any discharge or suspected discharge of Hazardous
Substances into groundwater or surface water from the Property. NAI shall
promptly reimburse BNPLC for the fees of its environmental consultants and the
costs of any such inspections and tests.
(d) Communications Regarding Environmental Matters .
(i) NAI shall immediately advise BNPLC of (1) any discovery of any event
or circumstance which would render any of the representations of NAI herein
or in the Closing Certificate concerning environmental matters materially
inaccurate or misleading if made at the time of such discovery and assuming
that NAI was aware of all relevant facts, (2) any Remedial Work (or change
in Remedial Work) required or undertaken by NAI or its Affiliates in
response to any (A) discovery of any Hazardous Substances on, under or
about the Property other than Permitted Hazardous Substances or (B) any
claim for damages resulting from Hazardous Substance Activities, (3) NAI's
discovery of any occurrence or condition on any real property adjoining or
in the vicinity of the Property which could cause the Property or any part
thereof to be subject to any ownership, occupancy, transferability or use
restrictions under Environmental Laws, or (4) any investigation or inquiry
of any failure or alleged failure by NAI to comply with Environmental Laws
affecting the Property by any governmental authority responsible for
enforcing Environmental Laws. In such event, NAI shall deliver to BNPLC
within thirty days after BNPLC's request, a preliminary written
environmental plan setting forth a general description of the action that
NAI proposes to take with respect thereto, if any, to bring the Property
into compliance with Environmental Laws or to correct any breach by NAI of
this Paragraph , including any proposed Remedial Work, the estimated cost
and time of completion, the name of the contractor and a copy of the
construction contract, if any, and such additional data, instruments,
documents, agreements or other materials or information as BNPLC may
request.
(ii) NAI shall provide BNPLC with copies of all material written
communications with federal, state and local governments, or agencies
relating to the matters listed in the preceding clause (i). NAI shall also
provide BNPLC with copies of any correspondence from third Persons which
threaten litigation over any significant failure or alleged significant
failure of NAI to maintain or operate the Property in accordance with
Environmental Laws.
(iii) Prior to NAI's submission of a Material Environmental Communication
to any governmental or regulatory agency or third party, NAI shall, to the
extent practicable, deliver to BNPLC a draft of the proposed submission
(together with the proposed date of submission), and in good faith assess
and consider any comments of BNPLC
19
25
regarding the same. Promptly after BNPLC's request, NAI shall meet with
BNPLC to discuss the submission, shall provide any additional information
requested by BNPLC and shall provide a written explanation to BNPLC
addressing the issues raised by comments (if any) of BNPLC regarding the
submission, including a reasoned analysis supporting any decision by NAI
not to modify the submission in accordance with comments of BNPLC.
9. INSURANCE REQUIRED AND CONDEMNATION.
(a) Liability Insurance. Throughout the Term NAI shall maintain commercial
general liability insurance against claims for bodily and personal injury, death
and property damage occurring in or upon or resulting from any occurrence in or
upon the Property under one or more insurance policies that satisfy the
requirements set forth in Exhibit B. NAI shall deliver and maintain with BNPLC
for each liability insurance policy required by this Improvements Lease written
confirmation of the policy and the scope of the coverage provided thereby issued
by the applicable insurer or its authorized agent, which confirmation must also
satisfy the requirements set forth in Exhibit B.
(b) Property Insurance. Throughout the Term NAI will keep all Improvements
(including all alterations, additions and changes made to the Improvements)
insured against fire and other casualty under one or more property insurance
policies that satisfy the requirements set forth in Exhibit B. NAI shall deliver
and maintain with BNPLC for each property insurance policy required by this
Improvements Lease written confirmation of the policy and the scope of the
coverage provided thereby issued by the applicable insurer or its authorized
agent, which confirmation must also satisfy the requirements set forth in
Exhibit B. If any of the Property is destroyed or damaged by fire, explosion,
windstorm, hail or by any other casualty against which insurance shall have been
required hereunder, (i) BNPLC may, but shall not be obligated to, make proof of
loss if not made promptly by NAI after notice from BNPLC, (ii) each insurance
company concerned is hereby authorized and directed to make payment for such
loss directly to BNPLC for application as required by Paragraph , and (iii)
BNPLC may settle, adjust or compromise any and all claims for loss, damage or
destruction under any policy or policies of insurance (provided, that if any
such claim is for less than $500,000, if no CMA Termination Event shall have
occurred and no Event of Default shall have occurred and be continuing, NAI
shall have the right to settle, adjust or compromise the claim as XXX xxxxx
appropriate; and, provided further, that so long as no CMA Termination Event
shall have occurred and no Event of Default shall have occurred and be
continuing, BNPLC must provide NAI with at least forty-five days notice of
BNPLC's intention to settle any such claim before settling it unless NAI shall
already have approved of the settlement by BNPLC). If any casualty shall result
in damage to or loss or destruction of the Property, NAI shall give immediate
notice thereof to BNPLC and Paragraph 10 shall apply.
(c) Failure to Obtain Insurance. If NAI fails to obtain any insurance or to
provide confirmation of any such insurance as required by this Improvements
Lease, BNPLC shall be entitled (but not required) to obtain the insurance that
NAI has failed to obtain or for which NAI has not provided the required
confirmation and, without limiting BNPLC's other remedies under the
circumstances, BNPLC may require NAI to reimburse BNPLC for the cost of such
insurance and to pay interest thereon computed at the Default Rate from the date
such cost was paid by BNPLC until the date of reimbursement by NAI (provided,
however, that any such insurance cost paid by BNPLC prior to the Base Rent
Commencement Date will be charged against the Construction Allowance under the
Construction Management Agreement as if it had been paid by NAI).
(d) Condemnation. Immediately upon obtaining knowledge of the institution of
any proceedings for the condemnation of the Property or any portion thereof, or
any other similar governmental or quasi-governmental proceedings arising out of
injury or damage to the Property or any portion thereof, each party shall notify
the other (provided, however, BNPLC shall have no liability for its failure to
provide such notice) of the pendency of such proceedings. NAI shall, at its
expense, diligently prosecute any such proceedings and shall consult with BNPLC,
its attorneys and experts and cooperate with them as requested in the carrying
on or defense of any such proceedings. All proceeds of condemnation awards or
proceeds of sale in lieu of condemnation with respect to the Property and all
judgments, decrees and awards for injury or damage to the Property shall be paid
to BNPLC as Escrowed Proceeds, and all such proceeds will be applied as provided
in
20
26
Paragraph 10. BNPLC is hereby authorized, in the name of NAI, at any time after
a CMA Termination Event or when an Event of Default shall have occurred and be
continuing, or otherwise with NAI's prior consent, to execute and deliver valid
acquittances for, and to appeal from, any such judgment, decree or award
concerning condemnation of any of the Property. BNPLC shall not be in any event
or circumstances liable or responsible for failure to collect, or to exercise
diligence in the collection of, any such proceeds, judgments, decrees or awards.
(e) Waiver of Subrogation. NAI, for itself and for any Person claiming through
it (including any insurance company claiming by way of subrogation), waives any
and every claim which arises or may arise in its favor against BNPLC or any
other Interested Party and the officers, directors, and employees of the
Interested Parties for any and all Losses, to the extent that NAI is compensated
by insurance or would be compensated by the insurance policies contemplated in
this Improvements Lease, but for any deductible or self-insured retention
maintained under such insurance or but for a failure of NAI to maintain the
insurance as required by this Improvements Lease. NAI agrees to have such
insurance policies properly endorsed so as to make them valid notwithstanding
this waiver, if such endorsement is required to prevent a loss of insurance.
10. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS.
(a) Collection and Application of Insurance and Condemnation Proceeds
Generally. This Paragraph shall govern the application of proceeds received by
BNPLC or NAI during the Term from any third party (1) under any property
insurance policy as a result of damage to the Property (including proceeds
payable under any insurance policy covering the Property which is maintained by
NAI), (2) as compensation for any restriction placed upon the use or development
of the Property or for the condemnation of the Property or any portion thereof,
or (3) because of any judgment, decree or award for injury or damage to the
Property; excluding, however, any funds paid to BNPLC by BNPLC's Parent, by an
Affiliate of BNPLC or by any Participant that is made to compensate BNPLC for
any Losses BNPLC may suffer or incur in connection with this Improvements Lease
or the Property. NAI will promptly pay over to BNPLC any insurance, condemnation
or other proceeds covered by this Paragraph 10 which NAI may receive from any
insurer, condemning authority or other third party. All proceeds covered by this
Paragraph 10, including those received by BNPLC from NAI or third parties, shall
be applied as follows:
(i) First, proceeds covered by this Paragraph 10 will be used to
reimburse BNPLC for any costs and expenses, including Attorneys' Fees, that
BNPLC incurred to collect the proceeds.
(ii) Second, the proceeds remaining after such reimbursement to BNPLC
(hereinafter, the "REMAINING PROCEEDS") will be applied, as hereinafter
more particularly provided, either as a Qualified Prepayment or to
reimburse NAI or BNPLC for the actual out-of-pocket costs of repairing or
restoring the Property. Until, however, any Remaining Proceeds received by
BNPLC are applied by BNPLC as a Qualified Prepayment or applied by BNPLC to
reimburse costs of repairs to or restoration of the Property pursuant to
this Paragraph 10, BNPLC shall hold and maintain such Remaining Proceeds as
Escrowed Proceeds in an interest bearing account, and all interest earned
on such account shall be added to and made a part of such Escrowed
Proceeds.
(b) Advances of Escrowed Proceeds to NAI. Except as otherwise provided below
in this Paragraph 10, BNPLC shall advance all Remaining Proceeds held by it as
Escrowed Proceeds to reimburse NAI for the actual out-of-pocket cost to NAI of
repairing or restoring the Property in accordance with the requirements of this
Improvements Lease and the other Operative Documents as the applicable repair or
restoration progresses and upon compliance by NAI with such terms, conditions
and requirements as may be reasonably imposed by BNPLC. In no event, however,
shall BNPLC be required to pay Escrowed Proceeds to NAI in excess of the actual
out-of-pocket cost to NAI of the applicable repair or restoration, as evidenced
by invoices or other documentation satisfactory to BNPLC, it being understood
that BNPLC may retain and apply any such excess as a Qualified Prepayment.
21
27
(c) Application of Escrowed Proceeds as a Qualified Prepayment. Provided NAI
has completed the Construction Project pursuant to the Construction Management
Agreement and no Event of Default shall have occurred and be continuing, BNPLC
shall apply any Remaining Proceeds paid to it (or other amounts available for
application as a Qualified Prepayment) as a Qualified Prepayment on any date
that BNPLC is directed to do so by a notice from NAI; however, if such a notice
from NAI specifies an effective date for a Qualified Prepayment that is less
than five Business Days after BNPLC's actual receipt of the notice, BNPLC may
postpone the date of the Qualified Prepayment to any date not later than five
Business Days after BNPLC's receipt of the notice. In any event, except when
BNPLC is required by the preceding sentence to apply Remaining Proceeds or other
amounts as a Qualified Prepayment on an Advance Date or Base Rent Date, BNPLC
may deduct Breakage Costs incurred in connection with any Qualified Prepayment
from the Remaining Proceeds or other amounts available for application as the
Qualified Prepayment, and NAI will reimburse BNPLC upon request for any such
Breakage Costs that BNPLC incurs but does not deduct.
(d) Special Provisions Applicable After a CMA Termination Event or Event of
Default. Notwithstanding the foregoing, after any CMA Termination Event, and
when any Event of Default shall have occurred and be continuing, BNPLC shall be
entitled to receive and collect all insurance, condemnation or other proceeds
governed by this Paragraph and to apply all Remaining Proceeds, when and to the
extent deemed appropriate by BNPLC in its sole discretion, either (A) to the
reimbursement of NAI or BNPLC for the out-of-pocket cost of repairing or
restoring the Property, or (B) as Qualified Prepayments.
(e) NAI's Obligation to Restore. Regardless of the adequacy of any Remaining
Proceeds available to NAI hereunder, and notwithstanding other provisions of
this Improvements Lease to the contrary:
(1) If, prior to the Base Rent Commencement Date, the Property is
damaged by fire or other casualty or any part of the Property is taken by
condemnation, NAI shall to the maximum extent possible, as part of the Work
contemplated in the Construction Management Agreement, restore the Property
or the remainder thereof and continue construction of the Construction
Project on and subject to the terms and conditions set forth in the
Construction Management Agreement. However, any additional costs required
to complete the Construction Project resulting from such a casualty or
taking prior to the Base Rent Commencement Date shall, to the extent not
covered by Remaining Proceeds paid to NAI as provided in this Improvements
Lease, be subject to reimbursement by BNPLC under the Construction
Management Agreement on the same terms and conditions that apply to
reimbursements of other costs of the Work thereunder.
(2) If, on or after the Base Rent Commencement Date, the Property is
damaged by fire or other casualty or less than all or substantially all of
the Property is taken by condemnation, NAI must:
A) increase the value of the Property or the remainder thereof by
restoring or improving the same (in a manner consistent with the
requirements and limitations imposed by this Improvements Lease and
the other Operative Documents or otherwise acceptable to BNPLC), or
decrease Stipulated Loss Value by tendering a payment to BNPLC for
application as a Qualified Prepayment, as necessary to cause Current
AS IS Market Value to be not less than sixty percent (60%) of
Stipulated Loss Value; and
B) restore the Property or the remainder thereof to a reasonably
safe and sightly condition.
(f) Takings of All or Substantially All of the Property on or after the Base
Rent Commencement Date. In the event of any taking of all or substantially all
of the Property on or after the Base Rent Commencement Date, BNPLC shall be
22
28
entitled to apply all Remaining Proceeds as a Qualified Prepayment. In addition,
if Stipulated Loss Value immediately prior to any such taking exceeds the sum of
the Remaining Proceeds resulting from such condemnation, then BNPLC shall be
entitled to recover the excess from NAI upon demand as an additional Qualified
Prepayment, whereupon this Improvements Lease shall terminate. Any taking of so
much of the Real Property as, in BNPLC's reasonable good faith judgment, makes
it impracticable to restore or improve the remainder thereof as required by part
(2) of the preceding subparagraph shall be considered a taking of substantially
all the Property for purposes of this Paragraph 10.
11. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF NAI CONCERNING THE
PROPERTY. NAI represents, warrants and covenants as follows:
(a) Compliance with Covenants and Laws. The use of the Property permitted by
this Improvements Lease complies, or will comply after NAI obtains available
permits as the tenant under this Improvements Lease, in all material respects
with all Applicable Laws. NAI has obtained or will promptly obtain all utility,
building, health and operating permits as may be required by any governmental
authority or municipality having jurisdiction over the Property for the
construction contemplated herein and the use of the Property permitted by this
Improvements Lease.
(b) Operation of the Property. During the Term, NAI shall operate the Property
in a good and workmanlike manner and substantially in compliance with all
Applicable Laws and will pay or cause to be paid all fees or charges of any kind
in connection therewith. (If NAI does not promptly correct any failure of the
Property to comply with Applicable Laws that is the subject of a written notice
given to NAI or BNPLC by any governmental authority, then for purposes of the
preceding sentence, NAI shall be considered not to have maintained the Property
"substantially in accordance with Applicable Laws" whether or not the
noncompliance would be substantial in the absence of the notice.) During the
Term, NAI shall not use or occupy, or allow the use or occupancy of, the
Property in any manner which violates any Applicable Law or which constitutes a
public or private nuisance or which makes void, voidable or cancelable any
insurance then in force with respect thereto. During the Term, to the extent
that any of the following would, individually or in the aggregate, increase the
likelihood of a CMA Termination Event under the Construction Management
Agreement or materially and adversely affect the value of the Property or NAI's
use, occupancy or operations on the Property, NAI shall not, without BNPLC's
prior consent: (i) initiate or permit any zoning reclassification of the
Property; (ii) seek any variance under existing zoning ordinances applicable to
the Property; (iii) use or permit the use of the Property in a manner that would
result in such use becoming a nonconforming use under applicable zoning
ordinances or similar laws, rules or regulations; (iv) execute or file any
subdivision plat affecting the Property; or (v) consent to the annexation of the
Property to any municipality. If (A) a change in the zoning or other Applicable
Laws affecting the permitted use or development of the Property shall occur
after the Base Rent Commencement Date that reduces the value of the Property, or
(B) conditions or circumstances on or about the Property are discovered after
the Base Rent Commencement Date (such as the presence of an endangered species)
which substantially impede development and thereby reduce the value of the
Property, and if after any such reduction under clause (A) or (B) preceding the
Current AS IS Market Value of the Property is less than sixty percent (60%) of
Stipulated Loss Value, then NAI shall pay BNPLC upon request the amount by which
Current AS IS Market Value is less than sixty percent (60%) of Stipulated Loss
Value, for application as a Qualified Prepayment. During the Term, NAI shall not
cause or permit any drilling or exploration for, or extraction, removal or
production of, minerals from the surface or subsurface of the Property, and NAI
shall not do any act whereby the market value of the Property may reasonably be
expected to be materially lessened. During the Term, if NAI receives a written
notice or claim from any federal, state or other governmental entity that the
Property is not in compliance in any material respect with any Applicable Law,
or that any action may be taken against the owner of the Property because the
Property does not comply with Applicable Law, NAI shall promptly furnish a copy
of such notice or claim to BNPLC.
Notwithstanding the foregoing, NAI may in good faith, by appropriate
proceedings, contest the validity and applicability of any Applicable Law with
respect to the Property, and pending such contest NAI shall not be deemed in
default hereunder because of the violation of such Applicable Law, if NAI
diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and if NAI promptly causes the Property to comply with
any such Applicable Law upon a final determination by a court of competent
jurisdiction that the same is valid and applicable to the Property; provided,
however, in any event such contest shall be concluded and the violation of such
Applicable Law must be corrected by NAI and
23
29
any claims asserted against BNPLC or the Property because of such violation must
be paid by NAI, all prior to the earlier of (i) the date that any criminal
prosecution is instituted or overtly threatened against BNPLC or any of its
directors, officers or employees because of such violation, (ii) the date that
any action is taken by any governmental authority against BNPLC or any property
owned by BNPLC (including the Property) because of such violation, or (iii) a
Designated Sale Date upon which, for any reason, NAI or an Affiliate of NAI or
any Applicable Purchaser shall not purchase BNPLC's interest in the Property
pursuant to the Purchase Agreement for a price to BNPLC (when taken together
with any additional payments made by NAI pursuant to Paragraph 1(A)(2) of the
Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal
to the Break Even Price.
(c) Debts for Construction, Maintenance, Operation or Development. NAI shall
cause all debts and liabilities incurred in the construction, maintenance,
operation or development of the Property, including all debts and liabilities
for labor, material and equipment and all debts and charges for utilities
servicing the Property, to be promptly paid; provided, that nothing in this
subparagraph will be construed to require NAI to remove Liens Removable by
BNPLC.
Notwithstanding the foregoing, NAI may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted
mechanic's or materialmen's lien and pending such contest NAI shall not be
deemed in default under this subparagraph because of the contested lien if (1)
within sixty days after being asked to do so by BNPLC, NAI bonds over to BNPLC's
reasonable satisfaction all such contested liens against the Property alleged to
secure an amount in excess of $500,000 (individually or in the aggregate), (2)
NAI diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and (3) NAI promptly causes to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all costs and
interest thereon, promptly after such judgment becomes final; provided, however,
that in any event each such contest shall be concluded and the lien, interest
and costs must be paid by NAI prior to the earlier of (i) the date that any
criminal prosecution is instituted or overtly threatened against BNPLC or its
directors, officers or employees because of the nonpayment thereof, (ii) the
date that any writ or order is issued under which the Property or any other
property in which BNPLC has an interest may be seized or sold or any other
action is taken against BNPLC or any property in which BNPLC has an interest
because of the nonpayment thereof, or (iii) a Designated Sale Date upon which,
for any reason, NAI or an Affiliate of NAI or any Applicable Purchaser shall not
purchase BNPLC's interest in the Property pursuant to the Purchase Agreement for
a price to BNPLC (when taken together with any additional payments made by NAI
pursuant to Paragraph 1(A)(2) of the Purchase Agreement, in the case of a
purchase by an Applicable Purchaser) equal to the Break Even Price.
(d) Repair, Maintenance, Alterations and Additions. NAI shall keep the
Property in good order, operating condition and appearance and shall cause all
necessary repairs, renewals and replacements to be promptly made. NAI will not
allow any of the Property to be materially misused, abused or wasted, and NAI
shall promptly replace any worn-out fixtures and Personal Property with fixtures
and Personal Property comparable to the replaced items when new. NAI shall not,
without the prior consent of BNPLC, (i) remove from the Property any fixture or
Personal Property having significant value except such as are replaced by NAI by
fixtures or Personal Property of equal suitability and value, free and clear of
any lien or security interest (and for purposes of this clause" significant
value" will mean any fixture or Personal Property that has a value of more than
$100,000 or that, when considered together with all other fixtures and Personal
Property removed and not replaced by NAI by items of equal suitability and
value, has an aggregate value of $500,000 or more) or (ii) make material new
Improvements or alter Improvements in any material respect, except as part of
the Work performed in accordance with the Construction Management Agreement.
Without limiting the foregoing, NAI will notify BNPLC before making any
significant alterations to the Improvements after the completion of the
Construction Project. Nothing in this subparagraph, however, is intended to
limit NAI's rights and obligations under other express provisions of this
Improvements Lease and the Construction Management Agreement with respect to the
Construction Project.
(e) Permitted Encumbrances and Development Documents. NAI shall during the
Term comply with and will cause to be performed all of the covenants, agreements
and obligations imposed upon the owner of any interest in the
24
30
Property by the Permitted Encumbrances or the Development Documents. Without
limiting the foregoing, NAI shall cause all amounts to be paid when due, the
payment of which is secured by any Lien against the Property created by the
Permitted Encumbrances. Without the prior consent of BNPLC, NAI shall not enter
into, initiate, approve or consent to any modification of any Permitted
Encumbrance or Development Document that would create or expand or purport to
create or expand obligations or restrictions which would encumber BNPLC's
interest in the Property. (Whether BNPLC must give any such consent requested by
NAI during the Term of this Improvements Lease shall be governed by subparagraph
3(A) of the Closing Certificate and Agreement.)
(f) Books and Records Concerning the Property. NAI shall keep books and records
that are accurate and complete in all material respects for the Property and,
subject to Paragraph 16.(c), will permit all such books and records (including
all contracts, statements, invoices, bills and claims for labor, materials and
services supplied for the construction and operation of any Improvements) to be
inspected and copied by BNPLC. This subparagraph shall not be construed as
requiring NAI to regularly maintain separate books and records relating
exclusively to the Property; provided, however, that upon request, NAI shall
construct or abstract from its regularly maintained books and records
information required by this subparagraph relating to the Property.
12. FINANCIAL COVENANTS AND OTHER COVENANTS INCORPORATED BY REFERENCE TO
SCHEDULE 1. Throughout the Term of this Improvements Lease, NAI shall comply
with the requirements of Schedule 1 attached hereto.
13. FINANCIAL STATEMENTS AND OTHER REPORTS.
(a) Financial Statements; Required Notices; Certificates. Throughout the Term
of this Improvements Lease, NAI shall deliver to BNPLC and to each Participant:
(i) as soon as available and in any event within one hundred twenty days
after the end of each fiscal year of NAI, a consolidated balance sheet of
NAI and its Consolidated Subsidiaries as of the end of such fiscal year and
a consolidated income statement and statement of cash flows of NAI and its
Consolidated Subsidiaries for such fiscal year, all in reasonable detail
and all prepared in accordance with GAAP and accompanied by a report and
opinion of accountants of national standing selected by NAI, which report
and opinion shall be prepared in accordance with generally accepted
auditing standards and shall not be subject to any qualifications or
exceptions as to the scope of the audit nor to any qualification or
exception which BNPLC determines, in BNPLC's reasonable discretion, is
unacceptable;
(ii) as soon as available and in any event within sixty days after the end
of each of the first three quarters of each fiscal year of NAI, the
consolidated balance sheet of NAI and its Consolidated Subsidiaries as of
the end of such quarter and the consolidated income statement and the
consolidated statement of cash flows of NAI and its Consolidated
Subsidiaries for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter, all in reasonable detail and
all prepared in accordance with GAAP and certified by the chief financial
officer or controller of NAI (subject to year-end adjustments);
(iii) together with the financial statements furnished in accordance with
subparagraph 13.(a)(i) and 13.(a)(ii), a certificate of the chief financial
officer or controller of NAI: (i) certifying that to the knowledge of NAI
no Default or Event of Default under this Improvements Lease has occurred
and is continuing or, if a Default or Event of Default has occurred and is
continuing, a brief statement as to the nature thereof and the action which
is proposed to be taken with respect thereto, (ii) certifying that the
representations of NAI set forth in the Operative Documents are true and
correct in all material respects as of the date thereof as though made on
and as of the date thereof or, if not then true and correct, a brief
statement as to why such representations are no longer true and correct,
and (iii) with computations demonstrating compliance with the financial
covenants contained in Schedule 1;
25
31
(iv) within five days after the end of each calendar month, a certificate
of the chief financial officer or controller of NAI certifying that at the
end of the preceding calendar month, NAI had sufficient cash and other
assets described in Paragraph 1 of Part III of Schedule 1 to comply with
the requirements of that paragraph;
(v) promptly after the sending or filing thereof, copies of all proxy
statements, financial statements and reports which NAI sends to NAI's
stockholders, and copies of all regular, periodic and special reports, and
all registration statements (other than registration statements on Form S-8
or any form substituted therefor) which NAI files with the Securities and
Exchange Commission or any governmental authority which may be substituted
therefor, or with any national securities exchange;
(vi) upon request by BNPLC, a statement in writing certifying that the
Operative Documents are unmodified and in full effect (or, if there have
been modifications, that the Operative Documents are in full effect as
modified, and setting forth such modifications) and the dates to which the
Base Rent has been paid and either stating that to the knowledge of NAI no
Default or Event of Default under this Improvements Lease has occurred and
is continuing or, if a Default or Event of Default under this Improvements
Lease has occurred and is continuing, a brief statement as to the nature
thereof; it being intended that any such statement by NAI may be relied
upon by any prospective purchaser or mortgagee of the Property and by the
Participants
(vii) as soon as possible after, and in any event within ten days after
NAI becomes aware that, any of the following has occurred, with respect to
which the potential aggregate liability to NAI relating thereto is $500,000
or more, a notice signed by a senior financial officer of NAI setting forth
details of the following and the response, if any, which NAI or its ERISA
Affiliate proposes to take with respect thereto (and a copy of any report
or notice required to be filed with or given to PBGC by NAI or an ERISA
Affiliate with respect to any of the following or the events or conditions
leading up to the following): (A) the assertion, to secure any Unfunded
Benefit Liabilities, of any Lien against the assets of NAI, against the
assets of any Plan or Multiemployer Plan or against any interest of BNPLC
or NAI in the Property, or (B) the taking of any action by the PBGC or any
other governmental authority against NAI to terminate any Plan of NAI or
any ERISA Affiliate of NAI or to cause the appointment of a trustee or
receiver to administer any such Plan ; and
(viii) such other information respecting the condition or operations,
financial or otherwise, of NAI, of any of its Subsidiaries or of the
Property as BNPLC or any Participant through BNPLC may from time to time
reasonably request.
BNPLC is hereby authorized to deliver a copy of any information or certificate
delivered to it pursuant to this subparagraph 13.(a) to BNPLC's Parent, to the
Participants and to any regulatory body having jurisdiction over BNPLC or
BNPLC's Parent or any Participant that requires or requests it.
14. ASSIGNMENT AND SUBLETTING BY NAI.
(a) BNPLC's Consent Required. Without the prior consent of BNPLC, NAI shall
not assign, transfer, mortgage, pledge or hypothecate this Improvements Lease or
any interest of NAI hereunder and shall not sublet all or any part of the
Property, by operation of law or otherwise; provided, that subject to
subparagraph 14.(c) below, if (and after) NAI completes the Construction Project
pursuant to the Construction Management Agreement and so long as no Event of
Default has occurred and is continuing: (1) NAI shall be entitled to sublet no
more than forty-nine percent (49%) (computed on the basis of square footage) of
the useable space in then existing and completed building Improvements, if any,
so long as (i) any sublease by NAI is made expressly subject and subordinate to
the terms hereof, and (ii) such sublease has a term equal to or less than the
remainder of the then effective Term of this Improvements Lease; and (2) NAI
shall be entitled to assign or transfer this Improvements Lease or any interest
of NAI hereunder to an Affiliate of NAI if both NAI and its Affiliate confirm
their joint and several liability hereunder by written notice given to BNPLC.
26
32
(b) Standard for BNPLC's Consent to Assignments and Certain Other Matters.
Consents and approvals of BNPLC which are required by this Paragraph 14 will not
be unreasonably withheld or delayed, but NAI acknowledges that BNPLC's
withholding of such consent or approval shall be reasonable if BNPLC determines
in good faith that (1) giving the approval may materially increase BNPLC's risk
of liability for any existing or future environmental problem, or (2) giving the
approval is likely to increase BNPLC's administrative burden of complying with
or monitoring NAI's compliance with the requirements of this Improvements Lease.
(c) Consent Not a Waiver. No consent by BNPLC to a sale, assignment, transfer,
mortgage, pledge or hypothecation of this Improvements Lease or NAI's interest
hereunder, and no assignment or subletting of the Property or any part thereof
in accordance with this Improvements Lease or otherwise with BNPLC's consent,
shall release NAI from liability hereunder; and any such consent shall apply
only to the specific transaction thereby authorized and shall not relieve NAI
from any requirement of obtaining the prior consent of BNPLC to any further
sale, assignment, transfer, mortgage, pledge or hypothecation of this
Improvements Lease or any interest of NAI hereunder.
15. ASSIGNMENT BY BNPLC.
(a) Restrictions on Transfers. Except by a Permitted Transfer, BNPLC shall not
assign, transfer, mortgage, pledge, encumber or hypothecate this Improvements
Lease or the other Operative Documents or any interest of BNPLC in and to the
Property during the Term without the prior consent of NAI, which consent NAI may
withhold in its sole discretion. Further, notwithstanding anything to the
contrary herein contained, if withholding taxes are imposed on the rents and
other amounts payable to BNPLC hereunder because of BNPLC's assignment of this
Improvements Lease to any citizen of, or any corporation or other entity formed
under the laws of, a country other than the United States, NAI shall not be
required to compensate BNPLC or any such assignee for the withholding tax. If,
in breach of this subparagraph, BNPLC transfer the Property or any part thereof
by a conveyance or that does not constitute a Permitted Transfer, with the
result that additional transfer taxes or other Impositions are assessed against
the Property or the owner thereof, BNPLC shall be required to pay such
additional transfer taxes or other Impositions.
(b) Effect of Permitted Transfer or other Assignment by BNPLC. If, without
breaching subparagraph 15.(a), BNPLC sells or otherwise transfers the Property
and assigns all of its rights under this Improvements Lease and the other
Operative Documents, then BNPLC shall thereby be released from any obligations
arising after such assumption under this Improvements Lease or the other
Operative Documents (other than any liability for a breach of any continuing
obligation to provide Construction Advances under the Construction Management
Agreement), and NAI shall look solely to each successor in interest of BNPLC for
performance of such obligations.
16. BNPLC'S RIGHT OF ACCESS.
(a) During the Term, BNPLC and BNPLC's representatives may (subject to
subparagraph 16.(c)) enter the Property at any reasonable time after five
Business Days advance written notice to NAI for the purpose of making
inspections or performing any work BNPLC is authorized to undertake by the next
subparagraph or for the purpose confirming whether NAI has complied with the
requirements of this Improvements Lease or the other Operative Documents.
(b) If NAI fails to perform any act or to take any action required of it by
this Improvements Lease or the Closing Certificate, or to pay any money which
NAI is required by this Improvements Lease or the Closing Certificate to pay,
and if such failure or action constitutes an Event of Default or renders BNPLC
or any director, officer, employee or Affiliate of BNPLC at risk of criminal
prosecution or renders BNPLC's interest in the Property or any part thereof at
risk of forfeiture by forced sale or otherwise, then in addition to any other
remedies specified herein or otherwise available, BNPLC may, perform or cause to
be performed such act or take such action or pay such money. Any expenses so
incurred by BNPLC, and any money so paid by BNPLC, shall be a demand obligation
owing by NAI to BNPLC. Further, BNPLC, upon making such payment, shall be
subrogated to all of the rights of the person, corporation or body politic
receiving such payment. But nothing
27
33
herein shall imply any duty upon the part of BNPLC to do any work which under
any provision of this Improvements Lease NAI may be required to perform, and the
performance thereof by BNPLC shall not constitute a waiver of NAI's default.
BNPLC may during the progress of any such work permitted by BNPLC hereunder on
or in the Property keep and store upon the Property all necessary materials,
tools, and equipment. BNPLC shall not in any event be liable for inconvenience,
annoyance, disturbance, loss of business, or other damage to NAI or the
subtenants or invitees of NAI by reason of making such repairs or the
performance of any such work on or in the Property, or on account of bringing
materials, supplies and equipment into or through the Property during the course
of such work (except for any liability in excess of the liability insurance
limits established in Exhibit B resulting from death or injury or damage to the
property of third parties caused by the Established Misconduct of BNPLC or its
officers, employees, or agents in connection therewith), and the obligations of
NAI under this Improvements Lease shall not thereby be excused in any manner.
(c) NAI shall have no obligation to provide proprietary information (as defined
in the next sentence) to BNPLC, except and to the extent that (1) BNPLC
reasonably determines that BNPLC cannot accomplish the purposes of BNPLC's
inspection of the Property or exercise of other rights granted pursuant to the
various express provisions of this Improvements Lease and the other Operative
Documents without evaluating such information. For purposes of this Improvements
Lease "PROPRIETARY INFORMATION" includes NAI's intellectual property, trade
secrets and other confidential information of value to NAI about, among other
things, NAI's manufacturing processes, products, marketing and corporate
strategies, but in no event will" proprietary information" include any
disclosure of substances and materials (and their chemical composition) which
are or previously have been present in, on or under the Property at the time of
any inspections by BNPLC, nor will" proprietary information" include any
additional disclosures reasonably required to permit BNPLC to determine whether
the presence of such substances and materials has constituted a violation of
Environmental Laws. In addition, under no circumstances shall NAI have any
obligation to disclose to BNPLC or any other party any proprietary information
of NAI (including, without limitation, any pending applications for patents or
trademarks, any research and design and any trade secrets) except if and to the
limited extent reasonably necessary to comply with the express provisions of
this Improvements Lease or the other Operative Documents.
17. EVENTS OF DEFAULT. Each of the following events shall be an "EVENT OF
DEFAULT" by NAI under this Improvements Lease:
(a) NAI shall fail to pay when due any installment of Rent due hereunder and
such failure shall continue for three (3) Business Days after NAI is notified in
writing thereof.
(b) NAI shall fail to cause any representation or warranty of NAI contained
herein or in the Construction Management Agreement or the Closing Certificate
that was false or misleading in any material respect when made to be made true
and not misleading (other than as described in the other clauses of this
Paragraph 17), or NAI shall fail to comply with any term, provision or covenant
of this Improvements Lease or of the Construction Management Agreement or the
Closing Certificate (other than as described in the other clauses of this
Paragraph 17), and in either case shall not cure such failure prior to the
earlier of (A) thirty days after written notice thereof is sent to NAI or (B)
the date any writ or order is issued for the levy or sale of any property owned
by BNPLC (including the Property) or any criminal prosecution is instituted or
overtly threatened against BNPLC or any of its directors, officers or employees
because of such failure; provided, however, that so long as no such writ or
order is issued and no such criminal prosecution is instituted or overtly
threatened, the period within which such failure may be cured by NAI shall be
extended for a further period (not to exceed an additional sixty days) as shall
be necessary for the curing thereof with diligence, if (but only if) (x) such
failure is susceptible of cure but cannot with reasonable diligence be cured
within such thirty day period, (y) NAI shall promptly have commenced to cure
such failure and shall thereafter continuously prosecute the curing thereof with
reasonable diligence and (z) the extension of the period for cure will not, in
any event, cause the period for cure to extend beyond five days prior to the
expiration of this Improvements Lease.
(c) NAI shall abandon the Property.
28
34
(d) NAI or any Subsidiary shall fail to make any payment or payments of
principal, premium or interest, of Debt of NAI described in the next sentence
when due (taking into consideration the time NAI may have to cure such failure,
if any, under the documents governing such Debt). As used in this clause
14(a)(v), "DEBT" shall include only Debt (as defined in the Common Definitions
and Provisions Agreement (Phase III - Improvements) of NAI or any of its
Subsidiaries now existing or arising in the future (a) payable to BNPLC or any
Affiliate of BNPLC, or (B) payable to any other Person and with respect to which
$3,000,000 or more is actually due and payable because of acceleration or
otherwise.
(e) NAI: (a) shall generally not, or be unable to, or shall admit in writing
its inability to, pay its debts as such debts become due; or (b) shall make an
assignment for the benefit of creditors, petition or apply to any tribunal for
the appointment of a custodian, receiver or trustee for it or a substantial part
of its assets; or (c) shall file any petition or application to commence any
proceeding under any bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction, whether now
or hereafter in effect; or (d) shall have had any such petition or application
filed against it; or (e) by any act or omission shall indicate its consent to,
approval of or acquiescence in any such petition, application or proceeding or
order for relief or the appointment of a custodian, receiver or trustee for all
or any substantial part of its property; or (f) shall suffer any such
custodianship, receivership or trusteeship to continue undischarged for a period
of sixty days or more.
(f) One or more final judgments, decrees or orders for the payment of money in
excess of $3,000,000 in the aggregate shall be rendered against NAI and such
judgments, decrees or orders shall continue unsatisfied and in effect for a
period of thirty consecutive days without NAI's having obtained an agreement (or
after the expiration or termination of an agreement) of the Persons entitled to
enforce such judgment, decrees or orders not to enforce the same pending
negotiations with NAI concerning the satisfaction or other discharge of the
same.
(g) NAI shall breach the requirements of Paragraph 12, which by reference to
Schedule 1 establishes certain financial covenants and other requirements.
(h) as of the effective date of this Improvements Lease, any of the
representations or warranties of NAI contained in subparagraphs 2(A) - (J) of
the Closing Certificate shall be false or misleading in any material respect.
(i) NAI shall fail to pay the full amount of any Supplemental Payment required
by the Purchase Agreement on the Designated Sale Date or shall fail to provide
Collateral as and when due pursuant to the Pledge Agreement Documents.
(j) NAI shall fail to comply with any term, provision or condition of the
Pledge Agreements after the expiration of any applicable notice and cure period
set forth in the Pledge Agreement.
18. REMEDIES.
(a) Basic Remedies. At any time after an Event of Default and after BNPLC has
given any notice required by subparagraph 18.(b), BNPLC shall be entitled at
BNPLC's option (and without limiting BNPLC in the exercise of any other right or
remedy BNPLC may have, and without any further demand or notice except as
expressly described in this subparagraph 18.(a)), to exercise any one or more of
the following remedies:
(i) By notice to NAI, BNPLC may terminate NAI's right to possession of the
Property. A notice given in connection with unlawful detainer proceedings
specifying a time within which to cure a default shall terminate NAI's
right to possession if NAI fails to cure the default within the time
specified in the notice.
(ii) Upon termination of NAI's right to possession and without further
demand or notice, BNPLC may re-enter the Property in any manner not
prohibited by Applicable Law and take possession of all improvements,
additions,
29
35
alterations, equipment and fixtures thereon and remove any persons in
possession thereof. Any property in the Improvements may be removed and
stored in a warehouse or elsewhere at the expense and risk of and for the
account of NAI.
(iii) Upon termination of NAI's right to possession, this Improvements
Lease shall terminate and BNPLC may recover from NAI:
a) The worth at the time of award of the unpaid Rent which had been
earned at the time of termination;
b) The worth at the time of award of the amount by which the unpaid
Rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that NAI proves could
have been reasonably avoided;
c) The worth at the time of award of the amount by which the unpaid
Rent for the balance of the scheduled Term after the time of award
exceeds the amount of such rental loss that NAI proves could be
reasonably avoided; and
d) Any other amount necessary to compensate BNPLC for all the
detriment proximately caused by NAI's failure to perform NAI's
obligations under this Improvements Lease or which in the ordinary
course of things would be likely to result therefrom, including the
costs and expenses (including Attorneys' Fees, advertising costs and
brokers' commissions) of recovering possession of the Property,
removing persons or property therefrom, placing the Property in good
order, condition, and repair, preparing and altering the Property for
reletting, all other costs and expenses of reletting, and any loss
incurred by BNPLC as a result of NAI's failure to perform NAI's
obligations under the other Operative Documents.
The "WORTH AT THE TIME OF AWARD" of the amounts referred to in
subparagraph 18.(a)(iii)c) and subparagraph 18.(a)(iii)b) shall be
computed by allowing interest at the Default Rate. The "WORTH AT THE
TIME OF AWARD" of the amount referred to in subparagraph 18.(a)(iii)c)
shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco at the time of award plus
one percent (1%).
e) Such other amounts in addition to or in lieu of the foregoing as
may be permitted from time to time by applicable California law.
(iv) BNPLC shall have the remedy described in California Civil Code
Section 1951.4 (lessor may continue lease in force even after lessee's
breach and abandonment and recover rent as it becomes due, if lessee has
right to sublet or assign, subject only to reasonable limitations).
Accordingly, even if NAI has breached this Improvements Lease and abandoned
the Property, this Improvements Lease shall continue in effect for so long
as BNPLC does not terminate NAI's right to possession, and BNPLC may
enforce all of BNPLC's rights and remedies under this Improvements Lease,
including the right to recover the Rent as it becomes due under this
Improvements Lease. NAI's right to possession shall not be deemed to have
been terminated by BNPLC except pursuant to subparagraph hereof. The
following shall not constitute a termination of NAI's right to possession:
a) Acts of maintenance or preservation or efforts to relet the
Property;
b) The appointment of a receiver upon the initiative of BNPLC to
protect BNPLC's interest under this Improvements Lease; or
30
36
c) Reasonable withholding of consent to an assignment or subletting,
or terminating a subletting or assignment by NAI.
(b) Notice Required So Long As the Purchase Option and NAI's Initial
Remarketing Rights and Obligations Continue Under the Purchase Agreement. So
long as NAI remains in possession of the Property and there has been no
termination of the Purchase Option and NAI's Initial Remarketing Rights and
Obligations as provided Paragraph 4 of the Purchase Agreement, BNPLC's right to
exercise remedies provided in subparagraph 18.(a) will be subject to the
condition precedent that BNPLC shall have notified NAI, at a time when an Event
of Default shall have occurred and be continuing, of BNPLC's intent to exercise
remedies provided in subparagraph 18.(a) at least sixty days prior to exercising
the remedies. The condition precedent is intended to provide NAI with an
opportunity to exercise the Purchase Option or NAI's Initial Remarketing Rights
and Obligations before losing possession of the Property pursuant to
subparagraph 18.(a). The condition precedent is not, however, intended to extend
any period for curing an Event of Default. Accordingly, if an Event of Default
has occurred, and regardless of whether any Event of Default is then continuing,
BNPLC may proceed immediately to exercise remedies provided in subparagraph
18.(a) at any time after the earlier of (i) sixty days after BNPLC has given
such a notice to NAI, (ii) any date upon which NAI relinquishes possession of
the Property, or (iii) any termination of the Purchase Option and NAI's Initial
Remarketing Rights and Obligations.
(c) Enforceability. This Paragraph shall be enforceable to the maximum extent
not prohibited by Applicable Law, and the unenforceability of any provision in
this Paragraph shall not render any other provision unenforceable.
(d) Remedies Cumulative. No right or remedy herein conferred upon or reserved
to BNPLC is intended to be exclusive of any other right or remedy, and each and
every such right and remedy shall be cumulative and in addition to any other
right or remedy given to BNPLC hereunder or now or hereafter existing in favor
of BNPLC under Applicable Law or in equity. In addition to other remedies
provided in this Improvements Lease, BNPLC shall be entitled, to the extent
permitted by Applicable Law or in equity, to injunctive relief in case of the
violation, or attempted or threatened violation, of any of the covenants,
agreements, conditions or provisions of this Improvements Lease, or to a decree
compelling performance of any of the other covenants, agreements, conditions or
provisions of this Improvements Lease to be performed by NAI, or to any other
remedy allowed to BNPLC at law or in equity. Nothing contained in this
Improvements Lease shall limit or prejudice the right of BNPLC to prove for and
obtain in proceedings for bankruptcy or insolvency of NAI by reason of the
termination of this Improvements Lease, an amount equal to the maximum allowed
by any statute or rule of law in effect at the time when, and governing the
proceedings in which, the damages are to be proved, whether or not the amount be
greater, equal to, or less than the amount of the loss or damages referred to
above. Without limiting the generality of the foregoing, nothing contained
herein shall modify, limit or impair any of the rights and remedies of BNPLC
under the Purchase Documents, and BNPLC shall not be required to give the sixty
day notice described in subparagraph 18.(b) as a condition precedent to any
acceleration of the Designated Sale Date or to taking any action to enforce the
Purchase Documents.
19. DEFAULT BY BNPLC. If BNPLC should default in the performance of any of its
obligations under this Improvements Lease, BNPLC shall have the time reasonably
required, but in no event less than thirty days, to cure such default after
receipt of notice from NAI specifying such default and specifying what action
NAI believes is necessary to cure the default. If NAI prevails in any litigation
brought against BNPLC because of BNPLC's failure to cure a default within the
time required by the preceding sentence, then NAI shall be entitled to an award
against BNPLC for the monetary damages proximately caused to NAI by such
default.
Notwithstanding the foregoing, BNPLC's right to cure as provided in this
Paragraph 19 will not in any event extend the time within which BNPLC must
remove Liens Removable by BNPLC as required by Paragraph 20 beyond the
Designated Sale Date.
31
37
20. QUIET ENJOYMENT. Provided NAI pays the Base Rent and all Additional Rent
payable hereunder as and when due and payable and keeps and fulfills all of the
terms, covenants, agreements and conditions to be performed by NAI hereunder,
BNPLC shall not during the Term disturb NAI's peaceable and quiet enjoyment of
the Property; however, such enjoyment shall be subject to the terms, provisions,
covenants, agreements and conditions of this Improvements Lease, to Permitted
Encumbrances, to Development Documents and to any other claims not constituting
Liens Removable by BNPLC. If any Lien Removable by BNPLC is claimed against the
Property, BNPLC will remove the Lien Removable by BNPLC promptly. Any breach by
BNPLC of this Paragraph shall render BNPLC liable to NAI for any monetary
damages proximately caused thereby, but as more specifically provided in
subparagraph 4.(b) above, no such breach shall entitle NAI to terminate this
Improvements Lease or excuse NAI from its obligation to pay Rent.
21. SURRENDER UPON TERMINATION. Unless NAI or an Applicable Purchaser
purchases or has purchased BNPLC's entire interest in the Property pursuant to
the terms of the Purchase Agreement and BNPLC's entire interest in the
Improvements and other" Property" under (and as defined in) the Other Purchase
Agreement, NAI shall, upon the termination of NAI's right to occupancy,
surrender to BNPLC the Property, including Improvements constructed by NAI and
fixtures and furnishings included in the Property, free of all Hazardous
Substances (including Permitted Hazardous Substances) and tenancies and with all
Improvements in substantially the same condition as of the date the same were
initially completed, excepting only (i) ordinary wear and tear that occurs
between the maintenance, repairs and replacements required by other provisions
of this Improvements Lease or the Other Lease Agreement, and (ii) demolition,
alterations and additions which are expressly permitted by the terms of this
Improvements Lease or the Other Lease Agreement and which have been completed by
NAI in a good and workmanlike manner in accordance with all Applicable Laws. Any
movable furniture or movable personal property belonging to NAI or any party
claiming under NAI, if not removed at the time of such termination and if BNPLC
shall so elect, shall be deemed abandoned and become the property of BNPLC
without any payment or offset therefor. If BNPLC shall not so elect, BNPLC may
remove such property from the Property and store it at NAI's risk and expense.
22. HOLDING OVER BY NAI. Should NAI not purchase BNPLC's right, title and
interest in the Property as provided in the Purchase Agreement, but nonetheless
continue to hold the Property after the termination of this Improvements Lease
without BNPLC's consent, whether such termination occurs by lapse of time or
otherwise, such holding over shall constitute and be construed as a tenancy from
day to day only, at a daily Base Rent equal to: (i) Stipulated Loss Value on the
day in question, times (ii) the Default Rate for such day; divided by (iii)
three hundred and sixty; subject, however, to all of the terms, provisions,
covenants and agreements on the part of NAI hereunder. No payments of money by
NAI to BNPLC after the termination of this Improvements Lease shall reinstate,
continue or extend the Term of this Improvements Lease and no extension of this
Improvements Lease after the termination thereof shall be valid unless and until
the same shall be reduced to writing and signed by both BNPLC and NAI.
23. INDEPENDENT OBLIGATIONS EVIDENCED BY THE OTHER OPERATIVE DOCUMENTS. NAI
acknowledges and agrees that nothing contained in this Improvements Lease shall
limit, modify or otherwise affect any of NAI's obligations under the other
Operative Documents, which obligations are intended to be separate, independent
and in addition to, and not in lieu of, the obligations set forth herein. In the
event of any inconsistency between the express terms and provisions of the
Purchase Documents and the express terms and provisions of this Improvements
Lease, the express terms and provisions of the Purchase Documents shall control.
In the event of any inconsistency between the express terms and provisions of
the Construction Management Agreement or the Closing Certificate and the express
terms and provisions of this Improvements Lease, the express terms and
provisions of this Improvements Lease shall control; provided, nothing herein
will limit or impair NAI's obligations under the Closing Certificate following
any expiration of termination of this Improvements Lease.
[The signature pages follow.]
32
38
IN WITNESS WHEREOF, NAI and BNPLC have caused this Improvements Lease
Agreement to be executed as of June 16, 1999.
" NAI"
NETWORK APPLIANCE, INC.
By:
-----------------------------
Name:
------------------------
Title:
-------------------
33
39
[Continuation of signature pages to Lease Agreement dated to be effective June
16, 1999]
" BNPLC"
BNP LEASING CORPORATION
By:
-------------------------------
Xxxxx Xxxxxx, Vice President
34
40
Exhibit A
LEGAL DESCRIPTION
The real property located in the City of Sunnyvale, County of Santa Xxxxx, State
of California, described as follows:
PARCEL ONE:
All of Parcel A, as shown upon that certain Parcel Map filed for record in Book
292 at page 41, on November 10, 1971, in the Office of the Recorder of the
County of Santa Xxxxx.
Together with that portion of Parcel A, as shown upon that certain Parcel Map
filed for record in Book 216 at Page 2, on October 25, 1966, in the Office of
the Recorder of the County of Santa Xxxxx, described as follows:
Beginning at the Northwest corner of Parcel A as shown upon said Parcel Map
filed for record in Book 216 at Page 2; thence along the Westerly line of said
Parcel A, South 14 degrees 51' 33" West 223.09 feet to a point hereinafter
referred to as Point" X"; thence leaving said Westerly line North 38 degrees 52'
02" East 134.85 feet; thence North 51 degrees 07' 58" West 49.68; thence North
38 degrees 52' 02" East 87.23 feet to the Northerly line of last said Parcel A;
thence along said Northerly line North 75 degrees 07' 58" West 44.97 feet to the
point of beginning.
Excepting therefrom that parcel of land described in the deed to Santa Xxxxx
Valley Transit District, recorded October 24, 1997 as Instrument No. 13912192,
Official Records in said Office of the Recorder of the County of Santa Xxxxx,
described as follows:
Also, excepting therefrom that portion of said Parcel A, as shown upon that
certain Parcel Map filed for record in Book 292 at page 41, on November 10,
1971, in the office of the Recorder of the County of Santa Xxxxx, described as
follows:
Beginning at above mentioned Point" X"; thence along the Easterly line of Parcel
A as shown upon said Parcel Map filed for record in Book 292 at page 41 South 14
degrees 51' 33" West 186.10 feet to a point on the Northeasterly line of that
parcel of land described in the deed to Santa Xxxxx Valley Transit District,
recorded October 24, 1997 as Instrument No. 13912192, Official Records in said
Office of the Recorder of the County of Santa Xxxxx, said point being on a
non-tangent curve concave Southwesterly and having a radius of 1002.05 feet, a
radial line through said point bears North 45 degrees 01' 56" East; thence
Northwesterly along said Northeasterly line and along said curve through a
central angle of 04 degrees 20' 28" an arc length of 75.92 feet; thence leaving
said Northeasterly line non-tangent from last said curve North 38 degrees 52'
02" East 164.71 feet to said Point of beginning. As created by that certain
Certificate of Compliance (Lot Line Adjustment) recorded September 16, 1998,
under Series No. 14395996.
1
41
PARCEL TWO:
Storm drain(age) easements, so described in the deeds referred to hereafter, in
and as to certain portions of Parcel 'A', so designated on the Parcel Map
recorded August 28, 1974 in Book 345 of Maps, page 20, Santa Xxxxx County
Records.
Said easements are the same as are described in the deeds to Los Altos Venture,
a Joint Venture consisting of Mape Industries, Inc., a California corporation,
and REBMA California Six, Inc., a Missouri corporation, recorded December 29,
1971 in Book 9647, page 183, and April 17, 1972 in Book 9790, page 380, Official
Records; and to Xxxx Enterprises, a partnership, and Northwest Poultry and Dairy
Products Co., an Oregon corporation, recorded June 17, 1975 in Book B467, page
167, Official Records.
PARCEL THREE:
A non-exclusive easement for ingress and egress as shown in that certain
Reciprocal Easement Agreement recorded September 16, 1998 under Series No.
14396001, more particularly described as follows:
Being a portion of Parcel A, as shown upon that certain Parcel Map filed for
record in Book 292 at page 41, on November 10, 1971, in the Office of the
Recorder of the County of Santa Xxxxx, and a portion of Parcel A, as shown upon
that certain Parcel Map filed for record in Book 216 at Page 2, on October 25,
1966, in the Office of the Recorder of the County of Santa Xxxxx, described as
follows:
Commencing at the Northeasterly corner of that parcel of land described in the
deed to Santa Xxxxx Valley Transit District, recorded October 24, 1997 as
Instrument No. 13912192, Official Records in said Office of the Recorder of the
County of Santa Xxxxx, said point lying on the easterly line of said Parcel A,
as shown upon that certain Parcel Map filed for record in Book 292 at page 41.
Thence Northwesterly along the Northeasterly line of said parcel of land
described in the deed to Santa Xxxxx Valley Transit District along a curve to
the left with a radius of 1002.05 feet, from which a radial line bears North 45
degrees 01' 56" East, through a central angle of 4 degrees 20' 28" for an arc
length of 75.92 feet to the true point of beginning; thence North 38 degrees 52'
02" East 82.92 feet; thence Southeasterly along a non-tangent curve to the left
with a radius of 78.00 feet, from which a radial line bears South 38 degrees 52'
02" West, through a central angle of 28 degrees 09' 05" for an arc length of
38.32 feet; thence North 38 degrees 52' 02" East 177.73 feet; thence
Northwesterly along a curve to the left with a radius of 17.00 feet through a
central angle of 90 degrees 00' 00" for an arc length of 26.70 feet; thence
North 51 degrees 07' 58" West 19.80 feet; thence the following three courses:
North 38 degrees 52' 02" East 12.69 feet North 51 degrees 07' 58" West 49.68
feet; North 38 degrees 52' 02" East 87.23 feet to the Northeasterly line of said
Parcel A, as shown upon that certain Parcel Map filed for record in Book 216 at
Page 2; thence South 75 degrees 07' 58" East 13.45 feet along said Northeasterly
line; thence South 38 degrees 52' 02" West 74.94 feet; thence Southerly along a
non-tangent curve to the left with a radius of 14.00 feet, from which a radial
line bears North 88 degrees 46' 22" West, through a central angle of 52 degrees
21' 36" for an arc length of 12.79 feet; thence South 51 degrees 07' 58" East
85.87 feet; thence South 38 degrees 52' 02" West 252.96 feet; North 51 degrees
07' 58" West 41.72 feet; thence Southwesterly along a non-tangent curve to the
left with a radius of 20.00 feet, from which a radial line bears North 10
degrees 35' 40" West, through a central angle of 40 degrees 32' 18" for an arc
length of 14.15 feet; thence South 38 degrees 52' 02" West 29.48 feet; thence
Southerly along a tangent curve to the left with a radius of 20.00 feet, through
a central angle of 60 degrees 45' 15" for an arc length 21.21 feet to a point on
2
42
said Northeasterly line of said parcel of land described in the deed to Santa
Xxxxx Valley Transit District; thence Northwesterly along said Northeasterly
line along a non-tangent curve to the left with a radius of 1002.05 feet, from
which a radial line bears North 42 degrees 01' 23" East, through a central angle
of 1 degree 19' 55" for an arc length of 23.29 feet to the True Point of
Beginning.
APN: 000-00-000
ARB: 110-03-x066
3
43
Exhibit B
INSURANCE REQUIREMENTS
I. LIABILITY INSURANCE:
A. NAI must maintain commercial general liability ("CGL") insurance on an
occurrence basis, affording immediate protection to the limit of not less than
$20,000,000 combined single limit for bodily and personal injury, death and
property damage in respect of any one occurrence. The CGL insurance must be
primary to, and shall receive no contribution from, any insurance policies or
self-insurance programs otherwise afforded to or available to the Interested
Parties, collectively or individually. Further, the CGL insurance must include
blanket contractual liability coverage which insures contractual liability under
the indemnifications set forth in this Improvements Lease (though such coverage
or the amount thereof shall in no way limit such indemnifications).
B. Any deductible or self-insured retention applicable to the CGL
insurance shall not exceed $1,000 at any time when NAI shall continue to have
the right to exercise any Issue 97-10 Election, or shall have previously
exercised an Issue 97-10 Election. After the expiration of NAI's right to
exercise any Issue 97-10 Election, and provided no Issue 97-10 Election has been
exercised by NAI, NAI may increase any deductible or self-insured retention
applicable to such insurance, but not to an amount in excess of $500,000.
C. The forms of insurance policies (including endorsements) used to
provide the CGL insurance required by this Improvements Lease, and the insurance
company or companies providing the CGL insurance, must be acceptable to BNPLC.
BNPLC shall have the right from time to time and at any time to review and
approve such policy forms (including endorsements) and the insurance company or
companies providing the insurance. Without limiting the generality of the
foregoing, BNPLC may reasonably require (and unless and until NAI is otherwise
notified by BNPLC, BNPLC does require) that such insurance be provided under
forms and by companies consistent with the following:
(1) Forms: CGL Insurance must be provided on Insurance Services
Office ("ISO") forms CG 0001 1093 or CG 0001 0196 or equivalent
substitute forms providing the same or greater coverage.
(2) Rating Requirements: Insurance must be provided through insurance
or reinsurance companies rated by the A.M. Best Company of Oldwick,
New Jersey as having a policyholder's rating of A or better and a
reported financial information rating of X or better.
(3) Required Endorsements: CGL Insurance must be endorsed to provide
or include:
(a) in any policy containing a general aggregate limit, ISO form
amendment" Aggregate Limits of Insurance Per Location" CG 2504
1185 or equivalent substitute form;
(b) a waiver of subrogation, using ISO form CG 2404 1093 or
equivalent substitute form (and under the commercial umbrella, if
any), in favor of" BNP Leasing Corporation and other Interested
Parties (as defined in the Common Definitions and Provisions
Agreement (Phase III - Improvements) between Network Appliance,
Inc. and BNP Leasing Corporation dated June 16, 1999)";
(c) ISO additional insured form CG 2026 1185 or equivalent
substitute form, without modification (and under the commercial
umbrella, if any), designating as additional insureds" BNPLC and
other Interested Parties, as defined in the Common Definitions
and Provisions Agreement
1
44
(Phase III - Improvements) between Network Appliance, Inc. and
BNP Leasing Corporation dated June 16, 1999)"; and
(d) provisions entitling BNPLC to 30 days' notice from the
insurer prior to any cancellation, nonrenewal or material
modification to the CGL coverage.
(4) Other Insurance: Each policy to contain standard CGL" other
insurance" wording, unmodified in any way that would make it excess
over or contributory with the additional insured's own commercial
general liability coverage.
II. PROPERTY INSURANCE: From and after the commencement of any construction of
Improvements on or about the Land or the delivery of any materials in
anticipation of such construction:
A. NAI must maintain property insurance in" special form" (including
theft) or against" all risks," providing the broadest available coverage for all
Improvements (as defined in the Common Provisions and Definitions Agreement but
excluding those Improvements to be demolished by NAI prior to the commencement
of construction contemplated in the Construction Management Agreement) and
equipment included in the Property, on a blanket basis if multiple buildings are
involved, with no exclusions for vandalism, malicious mischief, or sprinkler
leakage, and including coverage against earthquake and all coverage perils
normally included within the definitions of extended coverage, vandalism,
malicious mischief and, if the Property is in a flood zone, flood. In addition,
boiler and machinery coverage must be maintained at all times by endorsement to
the property insurance policy or by separate policy. Also, during any period of
significant construction on any Improvements, the property insurance must
include builder's completed value risk insurance for such Improvements, with no
protective safeguard endorsement, and (without limiting the other requirements
of this Exhibit) builder's completed value risk insurance must provide the
following coverages:
(1) materials and supplies at other locations awaiting installation;
(2) materials and supplies in transit to the worksite for installation;
(3) loss of use or consequential loss;
(4) pollutant cleanup and removal;
(5) freezing;
(6) collapse during construction, resulting from fault, defect, error or
omission in design, plan, specification or workmanship;
(7) construction ordinance or law; (8) mechanical or electrical breakdown;
(9) debris removal additional limit;
(10) preservation of property;
(11) fire department service charge;
(12) additional interest on construction loan due to delays in the
completion of construction;
2
45
(13) loss of rental income;
(14) legal/professional fees (in the amount of no less than $1,500,000) and
other soft costs as reasonably determined by NAI, subject to BNPLC's
approval.
B. The property insurance required hereby must provide coverage in the
amount no less than replacement value (exclusive of land, foundation, footings,
excavations and grading) with endorsements for contingent liability from
operation of building laws, increased cost of construction and demolition costs
which may be necessary to comply with building laws. Subject to the approval of
BNPLC, NAI will be responsible for determining the amount of property insurance
to be maintained from time to time, but NAI must maintain such coverage on an
agreed value basis to eliminate the effects of coinsurance.
C. Any deductible or self-insured retention applicable to the property
insurance shall not exceed $50,000 at any time when NAI shall continue to have
the right to exercise any Issue 97-10 Election, or shall have previously
exercised an Issue 97-10 Election; provided, that with respect to earthquake
coverage the deductible may be as high as five percent of the value of the
Improvements. After the expiration of NAI's right to exercise any Issue 97-10
Election, and provided no Issue 97-10 Election has been exercised by NAI, NAI
may increase any deductible or self-insured retention applicable to such
insurance, provided the increased amount shall not exceed (1) $500,000 for all
coverages other than earthquake coverage, and (2) for earthquake coverage only,
five percent of the aggregate amount of the property insurance required to
satisfy this Improvements Lease, calculated as described in the preceding
paragraph.
D. The property insurance shall cover not only the value of NAI's
interest in the Improvements, but also the interest of BNPLC, with BNPLC shown
as an insured as its interests may appear.
E. The forms of insurance policies (including endorsements) used to
provide the property insurance required by this Improvements Lease, and the
insurance company or companies providing the property insurance, must be
acceptable to BNPLC. BNPLC shall have the right from time to time and at any
time to review and approve such policy forms (including endorsements) and the
insurance company or companies providing such insurance. Without limiting the
generality of the foregoing, BNPLC may reasonably require (and unless and until
NAI is otherwise notified by BNPLC, BNPLC does require) that such insurance be
provided under forms and by companies consistent with the following:
(1) Rating Requirements: Insurance to be provided through insurance
or reinsurance companies rated by the A.M. Best Company of Oldwick, New
Jersey as having (a) a policyholder's rating of A or better, (b) a reported
financial information rating of no less than X, and (c) in the case of each
insurance or reinsurance company, a reported financial information rating
which indicates an adjusted policyholders' surplus equal to or greater than
the underwriting exposure that such company has under the insurance or
reinsurance it is providing for the Property.
(2) Required Endorsements: NAI's property insurance must be endorsed
to provide or include:
(a) a waiver of subrogation in favor of" BNPLC and other Interested
Parties, as defined in the Common Definitions and Provisions
Agreement (Phase III - Improvements) between Network Appliance,
Inc. and BNP Leasing Corporation dated June 16, 1999)";
(b) that NAI's insurance is primary, with any policies of BNPLC or
other Interested Parties being excess, secondary and
noncontributing;
(c) that the protection afforded to BNPLC by such insurance shall not
be reduced or impaired by acts or omissions of NAI or any other
beneficiary or insured; and
3
46
(d) that BNPLC must be notified at least thirty days prior to any
cancellation, nonrenewal or reduction of insurance coverage.
III. OTHER INSURANCE RELATED REQUIREMENTS:
A. BNPLC must be notified in writing immediately by NAI of claims against
NAI that might cause a reduction below seventy-five percent (75%) of any
aggregate limit of any policy.
B. NAI's property insurance must be evidenced by XXXXX form 27" Evidence
of Property Insurance" completed and interlineated in a manner satisfactory to
BNPLC to show compliance with the requirements of this Exhibit. Copies of
endorsements to the property insurance must be attached to such form.
C. NAI's CGL insurance must be evidenced by XXXXX form 25" Certificate of
Insurance" completed and interlineated in a manner satisfactory to BNPLC to show
compliance with the requirements of this Exhibit. Copies of endorsements to the
CGL insurance must be attached to such form.
D. Such evidence of required insurance must be delivered upon execution
of this Improvements Lease and new certificate or evidence of insurance must be
delivered no later than 10 days prior to expiration of existing policy.
E. NAI shall not cancel, fail to renew, or make or permit any material
reduction in any of the policies or certificates described in this Exhibit
without the prior written consent of BNPLC. The certificates (XXXXX forms 27 and
25) described in this Exhibit must contain the following express provision:
"This is to certify that the policies of insurance described herein have been
issued to the insured Network Appliance, Inc. for whom this certificate is
executed and are in force at this time. In the event of cancellation,
non-renewal, or material reduction in coverage affecting the certificate holder,
at least sixty days prior notice shall be given to the certificate holder."
F. The limits of liability under the liability insurance required by this
Improvements Lease may be provided by a single policy of insurance or by a
combination of primary and umbrella policies, but in no event shall the total
limits of liability available for any one occurrence or accident be less than
those required by this Exhibit.
G. NAI shall provide copies, certified as complete and correct by an
authorized agent of the applicable insurer, of all insurance policies required
by this Exhibit within ten days after receipt of a request for such copies from
BNPLC.
4
47
Exhibit C
NOTICE OF LIBOR PERIOD ELECTION
BNP Leasing Corporation
00000 Xxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxx
Re: Lease Agreement (Phase III - Improvements) and Lease Agreement (Phase
III - Land), both dated as of June 16, 1999, and both between Network
Appliance, Inc., as tenant, and BNP Leasing Corporation, as landlord
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the two Lease Agreements referenced above. This letter
constitutes notice to you that the LIBOR Period Election under both of the Lease
Agreements shall be:
________________ month(s),
beginning with the first Base Rent Period that commences on or after:
--------------, ----.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE NUMBER OF MONTHS
SPECIFIED ABOVE IS NOT A PERMITTED NUMBER UNDER THE DEFINITION OF" LIBOR PERIOD
ELECTION" IN THE COMMON DEFINITIONS AND PROVISIONS AGREEMENTS REFERENCED IN THE
LEASE AGREEMENTS, OR IF THE DATE SPECIFIED ABOVE CONCERNING THE COMMENCEMENT OF
THE LIBOR PERIOD ELECTION IS LESS THAN TEN BUSINESS DAYS AFTER YOUR RECEIPT OF
THIS NOTICE. HOWEVER, WE ASK THAT YOU NOTIFY US IMMEDIATELY IF FOR ANY REASON
YOU BELIEVE THIS NOTICE IS DEFECTIVE.
Executed this _____ day of ______________, 19___.
Network Appliance, Inc.
Name:
----------------------------
Title:
---------------------------
[cc all Participants]
1
48
Schedule 1
FINANCIAL COVENANTS
This Schedule 1 is attached to and made a part of (a) the Lease Agreement
(Phase III - Improvements) (the" IMPROVEMENTS LEASE") dated to be effective as
of June 16, 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 III - 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 III 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 III - Land) (collectively with the Pledge Agreement (Improvements), the
"PLEDGE AGREEMENTS") dated to be effective as of the Effective Date, among
BNPLC, NAI, and Banque Nationale de Paris, as a Participant and as agent for any
financial institutions that become Participants thereunder from time to time.
PART I - DEFINED TERMS
In this Schedule 1, capitalized terms used but not defined herein shall
have the meaning assigned to them in the Leases or the Common Definitions and
Provisions Agreements referenced in the Leases; and the following capitalized
terms shall have the following meanings:
"ADJUSTED NET INCOME" means, for any fiscal period of NAI, the aggregate net
income earned (or net losses incurred) during such period by NAI and its
Subsidiaries (determined on a consolidated basis), plus any Permitted Non-Cash
Charges deducted in determining such net income (or net loss).
"ADJUSTED EBIT" means, for any accounting period, net income (or net loss) of
NAI and its Subsidiaries (determined on a consolidated basis), plus the amounts
(if any) which, in the determination of net income (or net loss) for such
period, have been deducted for (a) interest expense, (b) income tax expense (c)
rent expense under leases of property, and (d) Permitted Non-Cash Charges.
"COLLATERAL TEST DATES" mean the Base Rent Commencement Date and the earlier of
the following dates after each fiscal quarter of NAI that ends after the Base
Rent Commencement Date : (1) the seventh Business Day after the release by NAI
of its financial statements for the fiscal quarter; or (2) the first Business
Day of the third calendar month following the end of the fiscal quarter.
"CONSOLIDATED TANGIBLE NET WORTH" means the excess of (1) the total assets,
other than Intangible Assets, of NAI and its Subsidiaries (determined on a
consolidated basis) over (2) the total liabilities of NAI and its Subsidiaries
(determined on a consolidated basis).
"DEBT" as used in this Exhibit shall have the meaning assigned to it in the
Common Definitions and Provisions Agreements, where" Debt" of any Person is
defined to mean (without duplication of any item): (a) indebtedness of such
Person for borrowed money; (b) indebtedness of such Person for the deferred
purchase price of property or services (except trade payables and accrued
expenses constituting current liabilities in the ordinary course of business);
(c) the face amount of any outstanding letters of credit issued for the account
of such Person; (d) obligations of such Person arising under acceptance
facilities; (e) guaranties, endorsements (other than for collection in the
ordinary course of business) and other contingent obligations of such Person to
purchase, to provide funds for payment, to provide funds to invest in any
Person, or otherwise to assure a 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
1
49
Affiliates must purchase or cause another Person to purchase any interest in the
leased property and thereby guarantee a minimum residual value of the leased
property to the lessor. For purposes of this definition, the amount of the
obligations described in clause (h) of the preceding sentence with respect to
any lease classified according to GAAP as an" operating lease," shall equal the
sum of (1) the present value of rentals and other minimum lease payments
required in connection with such lease [calculated in accordance with SFAS 13
and other GAAP relevant to the determination of the whether such lease must be
accounted for as an operating lease or capital lease], plus (2) the fair value
of the property covered by the lease; provided, however, that such amount shall
not exceed the price, as of the date a determination of Debt is required
hereunder, for which the lessee can purchase the leased property pursuant to any
valid ongoing purchase option if, upon such a purchase, the lessee shall be
excused from paying rentals or other minimum lease payments that would otherwise
accrue after the purchase.
"FIXED CHARGES" means, for any accounting period, the sum (without duplication
of any item) of the following charges or costs incurred or paid by NAI and its
Subsidiaries (determined on a consolidated basis): (a) gross interest expense,
plus (b) amortization of principal or debt discount in respect of all Debt
during such period, plus (c) rent payable under all leases of property during
such period, plus (d) taxes payable during such period.
"INTANGIBLE ASSETS" means assets of NAI and its Subsidiaries (determined on a
consolidated basis) that are properly classified as" INTANGIBLE ASSETS" in
accordance with GAAP and, in any event, shall include goodwill, patents, trade
names, trademarks, copyrights, franchises, experimental expense, organization
expense, unamortized debt discount and expense, and deferred charges (other than
prepaid insurance, prepaid taxes and current deferred taxes to the extent any
such prepaid or deferred items are classified on the balance sheet of NAI and
its consolidated Subsidiaries as current assets in accordance with GAAP and with
the concurrence of NAI's independent public accountants).
"MANDATORY COLLATERAL PERIOD" means any period during which, notwithstanding any
contrary designation of a Collateral Percentage by NAI under the Pledge
Agreements, the Collateral Percentage for purposes of the Pledge Agreements
shall be one hundred percent (100%), determined as set forth in Part III of this
Schedule 1.
"PERMITTED NON-CASH CHARGES" means the amounts (if any) which, in the
determination of net income (or net loss) for any relevant fiscal period, have
been deducted by NAI or its Subsidiaries for non-cash charges made to write down
goodwill or research and development costs in connection with acquisitions
permitted by this Schedule 1.
"QUICK RATIO" means the ratio of:
(A) the sum (without duplication of any item) of the following
assets of NAI and its Subsidiaries (determined on a consolidated
basis): Collateral delivered and pledged under the Pledge Agreements
in accordance with the requirements thereof (if any); plus
unencumbered cash; plus unencumbered short term cash investments; plus
other unencumbered marketable securities which are classified as short
term investments in accordance with GAAP; plus unencumbered accounts
receivable, computed net of reserves for uncollectible amounts as
determined in accordance with GAAP, to
(B) the sum (without duplication of any item) of (1) all
liabilities of NAI and its Subsidiaries (determined on a consolidated
basis) treated as current liabilities in accordance with GAAP, plus
(2) 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.
2
50
PART II - FINANCIAL COVENANTS FOR LEASE AGREEMENT
NAI covenants that it shall not at any time suffer or permit:
1. Minimum Unencumbered Cash and Cash Equivalents. The sum (without
duplication of any item) of the unrestricted cash, Collateral delivered and
pledged under the Pledge Agreements in accordance with the requirements thereof
(if any), unencumbered short term cash investments and unencumbered marketable
securities classified as short term investments according to GAAP of NAI and its
Subsidiaries (determined on a consolidated basis) to be less than total Debt of
NAI and its Subsidiaries (determined on a consolidated basis).
2. Minimum Tangible Net Worth. Consolidated Tangible Net Worth to be less than
the sum of: (a) ninety percent of the Consolidated Tangible Net Worth as of
October 30, 1998; plus (b) seventy-five percent of NAI's net income (computed
without deduction for net losses in any fiscal quarter) earned in each fiscal
quarter since October 30, 1998; plus (c) one-hundred percent of the net proceeds
of sales of stock in NAI or its Subsidiaries (other than sales to NAI or its
Subsidiaries) after October 30, 1998; less (d) Permitted Non-Cash Charges for
any period after October 30, 1998.
3. Minimum Quick Ratio. The Quick Ratio to be less than 1.50 to 1.00.
4. Minimum Fixed Charge Coverage. The ratio of (a) Adjusted EBIT for any
Rolling Four Quarter Period to (b) Fixed Charges for the same Rolling Four
Quarter Period, to be less than 1.50 to 1.00.
5. Minimum Profitability. Adjusted Net Income to be less than $1.00 in more
than one fiscal quarter of any Rolling Four Quarter Period.
6. Maximum Leverage Ratio. the ratio of (a) total Debt of NAI and its
Subsidiaries (determined on a consolidated basis) at the end of any Rolling Four
Quarter Period to (b) the Adjusted EBIT for the same Four Quarter Rolling
Period, to exceed 3.00 to 1.00.
PART III - TESTS FOR MANDATORY COLLATERAL PERIODS
If, as of the end of the latest fiscal quarter of NAI ending before any
Collateral Test Date, NAI shall have both:
(A) failed to maintain a ratio of (1) the sum (without duplication of any
item) of Collateral delivered and pledged under the Pledge Agreements in
accordance with the requirements thereof (if any), unencumbered cash,
unencumbered short term cash investments and unencumbered marketable securities
classified as short term investments according to GAAP of NAI and its
Subsidiaries (determined on a consolidated basis) to (2) all Debt of NAI and its
Subsidiaries (determined on a consolidated basis), of at least 1.5 to 1.00; and
(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:
3
51
Date Failed Collateral Test Date?
February 15, 2001 Yes
May 12, 2001 No
August 16, 2001 Yes
November 11, 2001 No
February 18, 2002 No
May 14, 2002 Yes
August 18, 2002 Yes
November 18, 2002 No
February 15, 2003 No
Under these assumptions, the entire period from February 15, 2001 to February
18, 2002 falls within one or more Mandatory Collateral Periods. Also, the entire
period commencing May 14, 2002 and ending February 15, 2003 falls within one or
more Mandatory Collateral Periods. The period from February 18, 2002 to May 14,
2002 does not constitute Mandatory Collateral Period.
PART IV - OTHER COVENANTS
Without limiting NAI's obligations under the other provisions of the Operative
Documents, during the Term, NAI shall not, without the prior written consent of
BNPLC in each case:
A. Liens. Create, incur, assume or suffer to exist, or permit any of its
Consolidated Subsidiaries to create, incur, assume or suffer to exist, any Lien,
upon or with respect to any of its properties, now owned or hereafter acquired,
provided that the following shall be permitted except to the extent that they
would encumber any interest in the Property in violation of other provisions of
the Operative Documents:
1. Liens for taxes or assessments or other government charges or levies if not
yet due and payable or if they are being contested in good faith by appropriate
proceedings and for which appropriate reserves are maintained;
2. Liens imposed by law, such as mechanic's, materialmen's, landlord's,
warehousemen's and carrier's Liens, and other similar Liens, securing
obligations incurred in the ordinary course of business which are not past due
for more than thirty (30) days, or which are being contested in good faith by
appropriate proceedings and for which appropriate reserves have been
established;
3. Liens under workmen's compensation, unemployment insurance, social security
or similar 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;
4
52
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 (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 , provided that there is no increase in the aggregate principal
amount of Debt secured thereby from that which was outstanding as of the date of
such renewal, extension or refunding and no additional property is encumbered.
B. Transactions with Affiliates. Enter into or permit any Subsidiary of NAI to
enter into any material transactions (including, without limitation, the
purchase, sale or exchange of property or the rendering of any service) with any
Affiliates of NAI except on terms (1) that would not cause or result in a
Default by NAI under the financial covenants set forth in Part II of this
Schedule, and (2) that are no less favorable to NAI or the relevant Subsidiary
than those that would have been obtained in a comparable transaction on an arm's
length basis from an unrelated Person.
C. Compliance. Fail to preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; or fail to comply with the provisions of all documents
pursuant to which NAI is organized and/or which govern NAI's continued existence
and with the requirements of all laws, rules, regulations and orders of a
governmental agency applicable to NAI and/or its business.
D. Insurance. Fail to maintain and keep in force insurance of the types and in
amounts customarily carried in lines of business similar to that of NAI,
including but not limited to fire, extended coverage, public liability, 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.
5
53
H. Merger, Consolidation, Transfer of Assets. Merge into or consolidate with
any other entity (unless NAI is the surviving entity and remains in compliance
of all provisions of the Operative Documents); or make any substantial change in
the nature of NAI's business as conducted as of the date hereof; or sell, lease,
transfer or otherwise dispose of all or a substantial or material portion of
NAI's assets except in the ordinary course of its business.
I. Loans, Advances, Investments. Make any loans or advances to or investments
in any person or entity, except (a) any of the foregoing existing as of, and
disclosed to BNPLC prior to, the date hereof, (b) loans to employees for travel
advances, relocation loans and other loans in the ordinary course of business,
(c) investments in accordance with NAI's investment policy, as in effect from
time to time, (d) existing investments in subsidiaries and joint ventures which
have been disclosed to BNPLC in writing prior to the date hereof, and new
investments in subsidiaries and joint ventures in amounts up to an aggregated of
$10,000,000.00, (e) loans to employees, officers, directors to finance or
refinance the purchase of equity securities of NAI.
J. Dividends, Distributions. Declare or pay any dividend or distribution
either in cash, stock or any other property on NAI's stock now or hereafter
outstanding, nor redeem, retire, repurchase or otherwise acquire any shares of
any class of NAI's stock now or hereafter outstanding.
6
54
COMMON DEFINITIONS AND PROVISIONS AGREEMENT
(PHASE III - IMPROVEMENTS)
BETWEEN
BNP LEASING CORPORATION
AND
NETWORK APPLIANCE, INC.
DATED AS OF JUNE 16, 1999
1
55
TABLE OF CONTENTS
Page
ARTICLE I - LIST OF DEFINED TERMS:
ABSOLUTE NAI CONSTRUCTION OBLIGATIONS......................................... 1
ACTIVE NEGLIGENCE ............................................................ 2
ADDITIONAL RENT .............................................................. 3
ADMINISTRATIVE AGENCY FEE .................................................... 3
ADJUSTED EBIT ................................................................ 3
ADVANCE DATE ................................................................. 3
AFFILIATE .................................................................... 3
AGREEMENT TO LEASE ........................................................... 3
APPLICABLE LAWS .............................................................. 3
APPLICABLE PURCHASER ......................................................... 3
ARRANGEMENT FEE .............................................................. 3
ATTORNEYS' FEES .............................................................. 3
BALANCE OF UNPAID CONSTRUCTION-PERIOD INDEMNITY PAYMENTS...................... 4
BANKING RULES CHANGE ......................................................... 4
BASE RATE .................................................................... 4
BASE RENT .................................................................... 4
BASE RENT COMMENCEMENT DATE................................................... 4
BASE RENT DATE ............................................................... 4
BASE RENT PERIOD ............................................................. 5
BNPLC ........................................................................ 6
BNPLC'S PARENT ............................................................... 6
BREAKAGE COSTS ............................................................... 6
BREAK EVEN PRICE ............................................................. 6
BUSINESS DAY ................................................................. 6
CAPITAL ADEQUACY CHARGES ..................................................... 6
CAPITAL LEASE ................................................................ 6
CARRYING COSTS ............................................................... 6
CLOSING CERTIFICATE .......................................................... 7
CMA SUSPENSION EVENT ......................................................... 7
CMA SUSPENSION NOTICE ........................................................ 7
CMA SUSPENSION PERIOD ........................................................ 7
CMA TERMINATION EVENT ........................................................ 7
CODE ......................................................................... 7
COLLATERAL ................................................................... 7
COLLATERAL PERCENTAGE ........................................................ 7
COMMITMENT FEE RATE .......................................................... 7
COMMON DEFINITIONS AND PROVISIONS AGREEMENT (PHASE III - IMPROVEMENTS)........ 8
COMPLETION NOTICE ............................................................ 8
CONSTRUCTION ADVANCES ........................................................ 8
CONSTRUCTION ADVANCE REQUEST.................................................. 8
CONSTRUCTION ALLOWANCE ....................................................... 9
i
56
Page
CONSTRUCTION MANAGEMENT AGREEMENT............................................. 9
CONSTRUCTION MILESTONE ....................................................... 9
CONSTRUCTION PERIOD .......................................................... 9
CONSTRUCTION-PERIOD INDEMNITY PAYMENTS........................................ 9
CONSTRUCTION PROJECT ......................................................... 9
CURRENT AS IS MARKET VALUE.................................................... 9
DEBT ......................................................................... 10
DEFAULT ...................................................................... 10
DEFAULT RATE ................................................................. 10
DEFAULTING PARTICIPANT ....................................................... 11
DEFECTIVE WORK ............................................................... 11
DEPOSIT TAKER ................................................................ 11
DEPOSIT TAKER LOSSES ......................................................... 11
DESIGNATED SALE DATE ......................................................... 11
DEVELOPMENT DOCUMENTS ........................................................ 11
DIRECT PAYMENTS TO PARTICIPANTS............................................... 12
EFFECTIVE DATE ............................................................... 12
EFFECTIVE RATE ............................................................... 12
ENVIRONMENTAL LAWS ........................................................... 12
ENVIRONMENTAL CUTOFF DATE .................................................... 12
ENVIRONMENTAL LOSSES ......................................................... 12
ENVIRONMENTAL REPORTS ........................................................ 13
ERISA ........................................................................ 13
ERISA AFFILIATE .............................................................. 13
ESCROWED PROCEEDS ............................................................ 13
ESTABLISHED MISCONDUCT ....................................................... 14
EUROCURRENCY LIABILITIES ..................................................... 14
EURODOLLAR RATE RESERVE PERCENTAGE............................................ 14
EVENT OF DEFAULT.............................................................. 14
EXCLUDED TAXES ............................................................... 14
EXISTING CONTRACTS ........................................................... 15
FAILED COLLATERAL TEST DATE................................................... 15
FED FUNDS RATE ............................................................... 15
FOCB NOTICE .................................................................. 15
FUNDED CONSTRUCTION ALLOWANCE................................................. 15
FUNDING ADVANCES ............................................................. 15
FUTURE WORK .................................................................. 15
GAAP ......................................................................... 15
HAZARDOUS SUBSTANCE .......................................................... 15
HAZARDOUS SUBSTANCE ACTIVITY.................................................. 16
IMPOSITIONS .................................................................. 16
IMPROVEMENTS ................................................................. 16
IMPROVEMENTS LEASE ........................................................... 16
INITIAL FUNDING ADVANCE ...................................................... 16
INTERESTED PARTY ............................................................. 17
ISSUE 97-1 NON-PERFORMANCE-RELATED SUBJECTIVE EVENT OF DEFAULT................ 17
ISSUE 97-10 ELECTION ......................................................... 17
ii
57
Page
ISSUE 97-10 PREPAYMENT ....................................................... 17
LAND ......................................................................... 18
LANDLORD'S ELECTION TO CONTINUE CONSTRUCTION.................................. 18
LIBOR ........................................................................ 18
LIBOR PERIOD ELECTION ........................................................ 18
LIEN ......................................................................... 19
LIENS REMOVABLE BY BNPLC ..................................................... 19
LOSSES ....................................................................... 19
MANDATORY COLLATERAL PERIOD................................................... 19
MATERIAL ENVIRONMENTAL COMMUNICATION.......................................... 20
MAXIMUM CONSTRUCTION ALLOWANCE................................................ 20
MAXIMUM PERMITTED TERMINATION FEES............................................ 20
MAXIMUM PERMITTED PREPAYMENT.................................................. 20
MAXIMUM REMARKETING OBLIGATION................................................ 20
MINIMUM EXTENDED REMARKETING PRICE............................................ 20
MULTIEMPLOYER PLAN ........................................................... 20
NAI .......................................................................... 21
NAI'S EXTENDED REMARKETING PERIOD............................................. 21
NAI'S EXTENDED REMARKETING RIGHT.............................................. 21
NAI'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS.............................. 21
NORMAL TENANT IMPROVEMENTS.................................................... 21
NOTICE OF NAI'S INTENT TO TERMINATE........................................... 21
OPERATIVE DOCUMENTS .......................................................... 21
OTHER COMMON DEFINITIONS AND PROVISIONS AGREEMENT............................. 21
OTHER LEASE AGREEMENT ........................................................ 21
OTHER PURCHASE AGREEMENT ..................................................... 21
OUTSTANDING CONSTRUCTION ALLOWANCE............................................ 22
PARTICIPANT .................................................................. 22
PARTICIPATION AGREEMENT ...................................................... 22
PBGC ......................................................................... 22
PERIOD ....................................................................... 22
PERMITTED ENCUMBRANCES ....................................................... 22
PERMITTED HAZARDOUS SUBSTANCE USE............................................. 22
PERMITTED HAZARDOUS SUBSTANCES................................................ 23
PERMITTED TRANSFER ........................................................... 23
PERSON ....................................................................... 23
PERSONAL PROPERTY ............................................................ 24
PLAN ......................................................................... 24
PLEDGE AGREEMENT ............................................................. 24
PRE-COMMENCEMENT CASUALTY .................................................... 24
PREEMPTIVE NOTICE ............................................................ 24
PRIME RATE ................................................................... 24
PRIOR WORK ................................................................... 24
PROJECT COSTS ................................................................ 24
PROJECTED COST OVERRUNS ...................................................... 25
PROPERTY ..................................................................... 25
PURCHASE AGREEMENT ........................................................... 25
iii
58
Page
PURCHASE DOCUMENTS ........................................................... 25
PURCHASE OPTION .............................................................. 25
QUALIFIED AFFILIATE .......................................................... 26
QUALIFIED PREPAYMENTS ........................................................ 26
REAL PROPERTY ................................................................ 26
REIMBURSABLE CONSTRUCTION-PERIOD COSTS........................................ 26
REMEDIAL WORK ................................................................ 26
RENT ......................................................................... 26
RESIDUAL RISK PERCENTAGE ..................................................... 26
RESPONSIBLE FINANCIAL OFFICER................................................. 27
SALE CLOSING DOCUMENTS ....................................................... 27
SCOPE CHANGE ................................................................. 27
SECURED SPREAD ............................................................... 27
SELLER ....................................................................... 27
STIPULATED LOSS VALUE ........................................................ 27
SUBSIDIARY ................................................................... 27
SUPPLEMENTAL PAYMENT ......................................................... 27
TERM ......................................................................... 27
THIRD PARTY CONTRACT ......................................................... 27
THIRD PARTY PRICE ............................................................ 27
THIRD PARTY SALE NOTICE ...................................................... 27
THIRD PARTY SALE PROPOSAL .................................................... 27
THIRD PARTY TARGET PRICE ..................................................... 27
TRANSACTION EXPENSES ......................................................... 28
UNDERWRITING FEE ............................................................. 28
UNFUNDED BENEFIT LIABILITIES.................................................. 28
UNSECURED SPREAD ............................................................. 28
UPFRONT SYNDICATION FEES ..................................................... 29
VOLUNTARY NAI CONSTRUCTION CONTRIBUTIONS...................................... 29
VOLUNTARY RETENTION OF THE PROPERTY........................................... 29
WORK.......................................................................... 29
Page
ARTICLE II - PROVISIONS USED IN COMMON:
1. NOTICES ................................................................... 30
2. SEVERABILITY .............................................................. 31
3. NO MERGER ................................................................. 31
4. NO IMPLIED WAIVER ......................................................... 32
5. ENTIRE AND ONLY AGREEMENTS................................................. 32
6. BINDING EFFECT ............................................................ 32
7. TIME IS OF THE ESSENCE..................................................... 32
8. GOVERNING LAW ............................................................. 32
9. PARAGRAPH HEADINGS ........................................................ 32
10. NEGOTIATED DOCUMENTS ...................................................... 33
11. TERMS NOT EXPRESSLY DEFINED IN AN OPERATIVE DOCUMENT....................... 33
iii
59
Page
12. OTHER TERMS AND REFERENCES................................................. 33
13. EXECUTION IN COUNTERPARTS.................................................. 33
14. NOT A PARTNERSHIP, ETC..................................................... 33
iv
60
COMMON DEFINITIONS AND PROVISIONS AGREEMENT
(PHASE III - IMPROVEMENTS)
This Common Definitions and Provisions Agreement (Phase III -
Improvements), by and between BNP LEASING CORPORATION, a Delaware corporation
("BNPLC"), and NETWORK APPLIANCE, INC., a California corporation ("NAI"), is
dated as of June 16, 1999, the Effective Date.
RECITALS
Contemporaneously with the execution of this Common Definitions and
Provisions Agreement (Phase III - Improvements), NAI is executing the Closing
Certificate (as defined below) in favor of BNPLC, and BNPLC and NAI are
executing the Improvements Lease (as defined below), the Construction Management
Agreement (as defined below), and the Purchase Agreement (as defined below), all
of which concern the Property (as defined below). Each of the Closing
Certificate, the Improvements Lease, the Construction Management Agreement and
the Purchase Agreement (together with this Common Definitions and Provisions
Agreement (Phase III - Improvements) and the Pledge Agreement [as defined
below], the "OPERATIVE DOCUMENTS") are intended to create separate and
independent obligations upon the parties thereto. However, NAI and BNPLC intend
that all of the Operative Documents share certain consistent definitions and
other miscellaneous provisions. To that end, the parties are executing this
Common Definitions and Provisions Agreement (Phase III - Improvements) and
incorporating it by reference into each of the other Operative Documents.
AGREEMENTS
ARTICLE I - LIST OF DEFINED TERMS
UNLESS A CLEAR CONTRARY INTENTION APPEARS, THE FOLLOWING TERMS SHALL HAVE
THE RESPECTIVE INDICATED MEANINGS AS USED HEREIN AND IN THE OTHER OPERATIVE
DOCUMENTS:
"ABSOLUTE NAI CONSTRUCTION OBLIGATIONS" means the following:
(1) Construction-Period Indemnity Payments required because of or in
connection with or arising out of Environmental Losses incurred or suffered
by any Interested Party;
(2) Construction-Period Indemnity Payments required because of or in
connection with or arising out of Losses incurred or suffered by BNPLC that
BNPLC would not have incurred or suffered but for any act or any omission
of NAI or of any NAI's contractors or subcontractors during the period that
the Construction Management Agreement remains in force or during any other
period that NAI remains in possession or control of the Construction
Project (excluding, however, as described below certain Losses consisting
of claims related to any failure by NAI to complete the Construction
Project);
(3) Construction-Period Indemnity Payments required because of or in
connection with or arising out of Losses incurred or suffered by BNPLC that
would not have been incurred but for any fraud, misapplication of funds
(including
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 1
61
Construction Advances), illegal acts, or willful misconduct on the part of
the NAI or its employees or agents or any other party for whom NAI is
responsible; and
(4) Construction-Period Indemnity Payments required because of or in
connection with or arising out of Losses incurred or suffered by BNPLC that
would not have been incurred but for any bankruptcy proceeding involving
NAI.
For purposes of clause (2) of this definition," acts and omissions of NAI" shall
include (i) any decision by NAI to make a Scope Change without the prior
approval of BNPLC, (ii) any failure of NAI to maintain insurance required by the
Improvements Lease or the Construction Management Agreement, (iii) any decision
not to continue or complete Work under the Construction Management Agreement
because of a change in NAI's facility needs or in NAI's plans to meet its
facility needs (such as, for example, a decision by NAI to lease or acquire
another less expensive facility as an alternative to the Improvements), (iv) any
failure by NAI to reserve termination rights in Third Party Contracts as
required by subparagraph 1(A)(2)(b) of the Construction Management Agreement,
and (v) any other breach by NAI of the Construction Management Agreement.
Thus, for example, if a third party asserts a claim for damages against BNPLC
because of injuries the third party sustained while on the Land as a result of
NAI's breach of its obligation under the Construction Management Agreement to
keep the Land and the Improvements thereon in a reasonably safe condition as
Work progresses under NAI's direction and control, then any Construction-Period
Indemnity Payment required because of such third party claim will constitute an
Absolute NAI Construction Obligation under clause (2) of this definition.
Similarly, if a claim against BNPLC by a third party injured on the Land during
the progress of the Work is uninsured or under-insured only because of NAI's
failure to obtain liability insurance in accordance with the requirements of the
Improvements Lease (the premiums for which insurance are reimbursable from
Construction Advances as provided in the Construction Management Agreement),
then Construction-Period Indemnity Payments to BNPLC for the uninsured or
under-insured Losses arising out of the third party claim will constitute
Absolute NAI Construction Obligations under clause (2) of this definition.
It is understood, however, that a failure of NAI to complete construction of the
Construction Project will not necessarily constitute a breach of the
Construction Management Agreement, given that NAI may elect to terminate the
Construction Management Agreement as provided in subparagraph 5(D) thereof. In
the event the Construction Management Agreement is terminated by NAI pursuant to
subparagraph 5(D) thereof or by BNPLC pursuant to subparagraph 5(E) thereof,
clause (2) of this definition will not be construed to include
Construction-Period Indemnity Payments, the sole reason for which are Losses
suffered by BNPLC consisting of claims related to NAI's failure to complete the
Construction Project.
"ACTIVE NEGLIGENCE" of any Person (including BNPLC) means, and is limited
to, the negligent conduct on the Property (and not mere omissions) by such
Person or by others acting and authorized to act on such Person's behalf in a
manner that proximately causes actual bodily injury or property damage for which
NAI does not carry (and is not obligated by the Improvements Lease to carry)
insurance. "ACTIVE NEGLIGENCE" shall not include (1) any negligent failure of
BNPLC to act when the duty to act would not have been imposed but for BNPLC's
status as owner of the Land, the Improvements or any interest in any other
Property or as a party to the transactions described in the Improvements Lease
or the other Operative Documents or in the Agreement to Lease, the Other Lease
Agreement or the Other Purchase Agreement, (2) any negligent failure of any
other Interested Party to act when the duty to act would not have been imposed
but for such party's contractual or other relationship to BNPLC or participation
or facilitation in any manner, directly or indirectly, of the transactions
described in the Improvements Lease or other Operative Documents or in the
Agreement to Lease, the Other Lease Agreement or Other Purchase Agreement, or
(3) the exercise in a lawful manner by BNPLC (or any party lawfully claiming
through or under BNPLC) of any right or remedy provided in or under the
Improvements Lease or the other Operative Documents or in the Agreement to
Lease, the Other Lease Agreement or Other Purchase Agreement.
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 2
62
"ADDITIONAL RENT" shall have the meaning assigned to it in subparagraph
3.(d) of the Improvements Lease.
"ADMINISTRATIVE AGENCY FEE" shall have the meaning assigned to it in
subparagraph 9 of the Improvements Lease.
"ADJUSTED EBIT" shall have the meaning assigned to it in Part I of
Schedule 1 attached to the Improvements Lease and to the Pledge Agreement.
"ADVANCE DATE" means, regardless of whether any Construction Advance shall
actually be made thereon, the first Business Day of every calendar month,
beginning with the first Business Day in May, 1999 and continuing regularly
thereafter to and including the Base Rent Commencement Date.
"AFFILIATE" of any Person means any other Person controlling, controlled
by or under common control with such Person. For purposes of this definition,
the term" control" when used with respect to any Person means the power to
direct the management of policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms" controlling" and" controlled" have meanings correlative to the
foregoing.
"AGREEMENT TO LEASE" shall mean the Agreement to Lease dated as of June
16, 1999 between BNPLC and NAI, pursuant to which BNPLC has agreed to provide
funds for the acquisition of the Land and NAI has agreed to cause Seller to
convey the fee interest in the Land to BNPLC, subject only to Permitted
Encumbrances.
"APPLICABLE LAWS" means any or all of the following, to the extent
applicable to NAI or the Property or the Improvements Lease or the other
Operative Documents: restrictive covenants; zoning ordinances and building
codes; flood disaster laws; health, safety and environmental laws and
regulations; the Americans with Disabilities Act and other laws pertaining to
disabled persons; and other laws, statutes, ordinances, rules, permits,
regulations, orders, determinations and court decisions.
"APPLICABLE PURCHASER" means any third party designated by NAI to purchase
BNPLC's interest in the Property and in any Escrowed Proceeds as provided in the
Purchase Agreement.
"ARRANGEMENT FEE" shall have the meaning assigned to it in subparagraph
3.(e) of the Improvements Lease.
"ATTORNEYS' FEES" means the expenses and reasonable fees of counsel to the
parties incurring the same, excluding costs or expenses of in-house counsel
(whether or not accounted for as general overhead or administrative expenses),
but otherwise including printing, photostating, duplicating and other expenses,
air freight charges, and fees billed for law clerks, paralegals, librarians and
others not admitted to the bar but performing services under the supervision of
an attorney. Such terms shall also include all such fees and expenses incurred
with respect to appeals, arbitrations and bankruptcy proceedings, and whether or
not any manner of proceeding is brought with respect to the matter for which
such fees and expenses were incurred.
"BALANCE OF UNPAID CONSTRUCTION-PERIOD INDEMNITY PAYMENTS" shall have the
meaning assigned to it in subparagraph 1(B)(1) of the Purchase Agreement.
"BANKING RULES CHANGE" means either: (1) the introduction of or any change
in any law or regulation applicable to BNPLC, BNPLC's Parent or any other
Participant, or in the generally accepted interpretation by the institutional
lending
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 3
63
community of any such law or regulation, or in the interpretation of any
such law or regulation asserted by any regulator, court or other governmental
authority (other than any change by way of imposition or increase of reserve
requirements included in the Eurodollar Rate Reserve Percentage) or (2) the
compliance by BNPLC, BNPLC's Parent or any other Participant with any new
guideline or new request from any central bank or other governmental authority
(whether or not having the force of law).
"BASE RATE" for any Construction Period or Base Rent Period means a rate
equal to the higher of (1) the Prime Rate in effect on the first day of such
period, or (2) the rate which is fifty basis points (50/100 of 1%) above the Fed
Funds Rate for that period.
"BASE RENT" means the rent payable by NAI pursuant to subparagraph 3.(a)
of the Improvements Lease.
"BASE RENT COMMENCEMENT DATE" means the earlier of (1) the first Business
Day of October, 2000, (2) the first Business Day of the first calendar month to
follow by twenty days or more the day upon which any Completion Notice is given,
or (3) the first Business Day of the first calendar month upon which the Funded
Construction Allowance shall equal or exceed the Maximum Construction Allowance.
For example, if on the first Business Day of November, 1999 construction of the
Construction Project is continuing, the Funded Construction Allowance
is $22,065,000 (before adding any Carrying Costs for the preceding month) and
the Maximum Construction Allowance is $22,055,000, and if Carrying Costs of
$17,500 would be added to the Funded Construction Allowance on such day if the
Construction Allowance were not limited to the Maximum Construction Allowance,
then (absent an extension by BNPLC as described below) such day shall be the
Base Rent Commencement Date and on such day $10,000 will be added to the Funded
Construction Allowance as Carrying Cost and $7,500 will be payable as Base Rent
pursuant to subparagraph 3.(c)(i) of the Improvements Lease. Notwithstanding the
forgoing, if for any reason (including a termination of the Construction
Management Agreement) NAI has not completed the Construction Project thirty days
in advance of the scheduled Base Rent Commencement Date determined pursuant to
the first sentence of this definition, BNPLC shall be entitled (but not
obligated) to extend the Base Rent Commencement Date one or more times and at
any time before the Construction Project actually is complete and ready for
occupancy. To so extend the Base Rent Commencement Date, BNPLC shall notify NAI
thereof and of the date to which the Base Rent Commencement Date is extended,
which may be the first Business Day of any calendar month designated by BNPLC in
the notice of extension, provided that BNPLC will not so designate any date more
than sixty days after the date upon which the Construction Project is expected
by BNPLC (at the time of the designation) to be complete.
"BASE RENT DATE" means a date upon which Base Rent must be paid under the
Improvements Lease, all of which dates shall be the first Business Day of a
calendar month. The first Base Rent Date shall be determined as follows:
a) If a LIBOR Period Election of one month is in effect on the
Base Rent Commencement Date, then the first Business Day of the first
calendar month following the Base Rent Commencement Date shall be the
first Base Rent Date.
b) If the LIBOR Period Election in effect on the Base Rent
Commencement Date is three months or six months, then the first
Business Day of the third calendar month following the Base Rent
Commencement Date shall be the first Base Rent Date.
Each successive Base Rent Date after the first Base Rent Date shall be the first
Business Day of the first or third calendar month following the calendar month
which includes the preceding Base Rent Date, determined as follows:
(1) If a LIBOR Period Election of one month is in effect on a
Base Rent Date, then the first Business Day of the first calendar
month following such Base Rent Date shall be the next following Base
Rent Date.
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 4
64
(2) If a LIBOR Period Election of three months or six months is
in effect on a Base Rent Date, then the first Business Day of the
third calendar month following such Base Rent Date shall be the next
following Base Rent Date.
Thus, for example, if the Base Rent Commencement Date falls on the first
Business Day of September, 1999 and a LIBOR Period Election of two months
commences on the Base Rent Commencement Date, then the first Base Rent Date
shall be the first Business Day of November, 1999.
"BASE RENT PERIOD" means a period for which Base Rent must be paid under
the Improvements Lease, each of which periods shall correspond to the LIBOR
Period Election for such period. The first Base Rent Period shall begin on and
include the Base Rent Commencement Date, and each successive Base Rent Period
shall begin on and include the Base Rent Date upon which the preceding Base Rent
Period ends. Each Base Rent Period, including the first Base Rent Period, shall
end on but not include the first or second Base Rent Date after the Base Rent
Date upon which such period began, determined as follows:
(1) If the LIBOR Period Election for a Base Rent Period is one
month or three months, then such Base Rent Period shall end on the
first Base Rent Date after the Base Rent Date upon which such period
began.
(2) If the LIBOR Period Election for a Base Rent Period is six
months, then such Base Rent Period shall end on the second Base Rent
Date after the Base Rent Date upon which such period began.
The determination of Base Rent Periods can be illustrated by two examples:
1) If NAI makes a LIBOR Period Election of three months for a
hypothetical Base Rent Period beginning on the first Business Day in
January, 2001, then such Base Rent Period will end on but not include
the first Base Rent Date after it begins; that is, such Base Rent
Period will end on the first Business Day in April, 2001, the third
calendar month after January, 2001.
2) If, however, NAI makes a LIBOR Period Election of six months
for the hypothetical Base Rent Period beginning the first Business Day
in January, 2001, then such Base Rent Period will end on but not
include the second Base Rent Date after it begins; that is, the first
Business Day in July, 2001.
"BNPLC" means BNP Leasing Corporation, a Delaware corporation.
"BNPLC'S PARENT" means BNPLC's Affiliate, Banque Nationale de Paris, a bank
organized and existing under the laws of France and any successors of such bank.
"BREAKAGE COSTS" means any and all costs, losses or expenses incurred or
sustained by BNPLC's Parent (as a Participant or otherwise) or any other
Participant, for which BNPLC's Parent or the Participant shall request
reimbursement from BNPLC, because of the resulting liquidation or redeployment
of deposits or other funds:
(1) used to make or maintain Funding Advances upon application of
a Qualified Prepayment or upon any sale of the Property pursuant to
the Purchase Agreement, if such application or sale occurs on any day
other than the last day of a Construction Period or Base Rent Period;
or
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 5
65
(2) reserved to provide a Construction Advance that NAI requests,
but thereafter declines to take for any reason, or that NAI requests
but is not permitted to take because of its failure to satisfy any of
the conditions specified in the Construction Management Agreement; or
(3) used to make or maintain Funding Advances upon the
acceleration of the end of any Base Rent Period pursuant subparagraph
3.(c)(iii) of the Improvements Lease.
Breakage Costs will include, for example, losses attributable to any decline in
LIBOR as of the effective date of any application described in the clause (1)
preceding, as compared to LIBOR used to determine the Effective Rate then in
effect. Each determination by BNPLC's Parent or the applicable Participant of
Breakage Costs shall, in the absence of clear and demonstrable error, be
conclusive and binding upon NAI.
"BREAK EVEN PRICE" shall have the meaning assigned to it in subparagraph
1(B)(1) of the Purchase Agreement.
"BUSINESS DAY" means any day that is (1) not a Saturday, Sunday or day on
which commercial banks are generally closed or required to be closed in New York
City, New York or San Francisco, California, and (2) a day on which dealings in
deposits of dollars are transacted in the London interbank market; provided that
if such dealings are suspended indefinitely for any reason," Business Day" shall
mean any day described in clause (1).
"CAPITAL ADEQUACY CHARGES" means any additional amounts BNPLC's Parent or
any other Participant requests BNPLC to pay as compensation for an increase in
required capital as provided in subparagraph 5.(b)(ii) of the Improvements
Lease.
"CAPITAL LEASE" means any lease which has been or should be capitalized on
the books of the lessee in accordance with GAAP or for federal income tax
purposes.
"CARRYING COSTS" means the charges added to and made a part of the
Outstanding Construction Allowance (and thus also added to and made a part of
the Funded Construction Allowance) from time to time on and before the Base Rent
Commencement Date pursuant to and as more particularly described in subparagraph
6.(a) of the Improvements Lease.
"CLOSING CERTIFICATE" means the Closing Certificate and Agreement dated as
of June 16, 1999 executed by NAI in favor of BNPLC, as such Closing Certificate
may be extended, supplemented, amended, restated or otherwise modified from time
to time in accordance with its terms. (Upon execution of the Amended and
Restated Closing Certificate pursuant to and as defined in the Agreement to
Lease, references in the Operative Documents to the Closing Certificate shall
constitute references to the Amended and Restated Closing Certificate.)
"CMA SUSPENSION EVENT" shall have the meaning assigned to it in
subparagraph 5(A) of the Construction Management Agreement.
"CMA SUSPENSION NOTICE" shall have the meaning assigned to it in
subparagraph 5(B)(1) of the Construction Management Agreement.
"CMA SUSPENSION PERIOD" shall have the meaning assigned to it in
subparagraph 5(C) of the Construction Management Agreement.
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 6
66
"CMA TERMINATION EVENT" shall have the meaning assigned to it in
subparagraph 5(B)(3) of the Construction Management Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" shall have the meaning assigned to it in the Pledge
Agreement.
"COLLATERAL PERCENTAGE" for each Base Rent Period means the Collateral
Percentage for such period determined under (and as defined in) the Pledge
Agreement; provided, however, for purposes of the Improvements Lease, the
Collateral Percentage for any Base Rent Period shall not exceed a fraction; the
numerator of which fraction shall equal the value (determined as provided in the
Pledge Agreement) of all Collateral (a) that is, on the first day of such
period, held by the Deposit Takers under (and as defined in) the Pledge
Agreement subject to a Qualifying Security Interest (as defined below), (b) that
is free from claims or security interests held or asserted by any third party,
and (c) that is not in excess of Stipulated Loss Value; and the denominator of
which fraction shall equal the Stipulated Loss Value on the first day of such
period." QUALIFYING SECURITY INTEREST" means a first priority perfected security
interest under the Pledge Agreement.
"COMMITMENT FEE RATE" means, for each Construction Period, the amount
established as described below in this definition on the date (in this
definition, the" CFR TEST DATE") that is two Business Days prior to such
Construction Period by reference to the ratio calculated be dividing (1)
Adjusted EBIT for the then latest Rolling Four Quarters Period that ended prior
to (and for which NAI has reported earnings as necessary to compute Adjusted
EBIT) into (2) the total Debt of NAI and its Subsidiaries (determined on a
consolidated basis) as of the end of such Rolling Four Quarters Period. The
Commitment Fee Rate shall be established at the Level in the pricing grid below
which corresponds to such ratio; provided, that:
(a) for any Construction Period commencing on or prior to the first
Business Day of June, 1999, the Commitment Fee Rate will be the amount
indicated for Level II in the pricing grid below;
(b) promptly after earnings are reported by NAI for the latest quarter
in any Rolling Four Quarters Period, NAI must notify BNPLC of any resulting
change in the Commitment Fee Rate under this definition, and no reduction
in the Commitment Fee Rate from one period to the next will be effective
for purposes of the Operative Documents unless, prior to the CFR Test Date
for the next period, NAI shall have provided BNPLC with a written notice
setting forth and certifying the calculation under this definition that
justifies the reduction; and
(c) notwithstanding anything to the contrary in this definition, on
any date when an Event of Default has occurred and is continuing, the
Commitment Fee Rate shall equal the amount indicated for Level V in the
pricing grid below.
================================================================================
LEVELS RATIO OF TOTAL DEBT TO ADJUSTED EBIT COMMITMENT FEE RATE
--------------------------------------------------------------------------------
Level I less than 0.50 25.0 basis points
--------------------------------------------------------------------------------
Level II greater than or equal to 0.50, but less than 1.0 25.0 basis points
--------------------------------------------------------------------------------
Level III greater than or equal to 1.0, but less than 1.5 32.5 basis points
--------------------------------------------------------------------------------
Level IV greater than or equal to 1.5, but less than 2.0 50.0 basis points
--------------------------------------------------------------------------------
Level V greater than or equal to 2.0 50.0 basis points
================================================================================
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 7
67
All determinations of the Commitment Fee Rate by BNPLC shall, in the absence of
clear and demonstrable error, be binding and conclusive for purposes of the
Improvements Lease. Further BNPLC may, but shall not be required, to rely on the
determination of the Commitment Fee Rate set forth in any notice delivered by
NAI as described above in clause (b) of this definition.
"COMMON DEFINITIONS AND PROVISIONS AGREEMENT (PHASE III - IMPROVEMENTS)"
means this Agreement, which is incorporated by reference into each of the other
Operative Documents.
"COMPLETION NOTICE" means (1) a notice required by subparagraph 1(B) of the
Construction Management Agreement from NAI to BNPLC, advising BNPLC when
construction of the Construction Project is substantially complete, or (2) a
notice permitted by subparagraph 6(g) of the Improvements Lease from BNPLC to
NAI, advising NAI after any Landlord's Election to Complete Construction when
construction of the Construction Project is substantially complete or that BNPLC
no longer intends to continue such construction.
"CONSTRUCTION ADVANCES" means (1) actual advances of funds made by or on
behalf of BNPLC to or on behalf of NAI pursuant to Paragraph 2 of the
Construction Management Agreement, and (2) amounts considered as Construction
Advances pursuant to subparagraph 6.(e) of the Improvements Lease.
"CONSTRUCTION ADVANCE REQUEST" shall have the meaning assigned to it in
subparagraph 2(C)(1) of the Construction Management Agreement.
"CONSTRUCTION ALLOWANCE" means the allowance, consisting of Construction
Advances and Carrying Costs, which is to be provided for the Construction
Project as more particularly described in the Construction Management Agreement
and Paragraph 6 of the Improvements Lease.
"CONSTRUCTION MANAGEMENT AGREEMENT" means the Construction Management
Agreement dated as of June 16, 1999 between BNPLC and NAI, as such Management
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
"CONSTRUCTION MILESTONE" shall have the meaning assigned to it in
subparagraph 5(B)(2) of the Construction Management Agreement.
"CONSTRUCTION PERIOD" means each successive period of approximately one
month, with the first Construction Period beginning on and including the
Effective Date and ending on but not including the first Advance Date. Each
successive Construction Period after the first Construction Period shall begin
on and include the day on which the preceding Construction Period ends and shall
end on but not include the next following Advance Date, until the last
Construction Period, which shall end on but not include the earlier of the Base
Rent Commencement Date or any Designated Sale Date upon which NAI or any
Applicable Purchaser shall purchase BNPLC's interest in the Property pursuant to
the Purchase Agreement.
"CONSTRUCTION-PERIOD INDEMNITY PAYMENTS" shall have the meaning assigned to
it in subparagraph 5.(d)(ii) of the Improvements Lease.
"CONSTRUCTION PROJECT" means the new buildings or other substantial
Improvements to be constructed, or the alteration of existing Improvements, as
described generally in Exhibit B attached to the Construction Management
Agreement.
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 8
68
"CURRENT AS IS MARKET VALUE" means an amount equal to the fair market value
of BNPLC's interest in the Property (or any applicable portion thereof), AS IS,
WHERE IS AND WITH ALL FAULTS on the date in question. Whenever a determination
of Current AS IS Market Value is required by the express terms of any Operative
Document, it will be determined accordance with the following procedure unless
BNPLC and NAI have otherwise agreed in writing upon a Current AS IS Market Value
at that time:
(A) BNPLC and NAI shall each, within ten days after written notice from
either to the other, select an appraiser. If either BNPLC or NAI fails
to select an appraiser within the required period, then the appraiser
who has been timely selected shall conclusively determine the fair
market value of the Property (or applicable portion thereof) in
accordance with this definition within forty-five days after his or
her selection.
(B) Upon the selection of the two appraisers as provided above, such
appraisers shall proceed to determine the fair market value of BNPLC's
interest in the Property (or applicable portion thereof) in accordance
with this clause (v). Such appraisals shall be submitted in writing no
later than forty-five days after selection of the second appraiser. If
the fair market value as determined by such appraisers is identical,
such sum shall be Current AS IS Market Value. If the fair market value
indicated by the lower appraisal differs from the fair market value
indicated by the higher appraisal by less than five percent (5%) of
the fair market value indicated by the higher appraisal, then Current
AS IS Market Value shall be the sum of the two appraisal figures
divided by two (2). If either appraiser fails to timely submit his or
her appraisal, the timely submitted appraisal shall be determinative
of Current AS IS Market Value.
(C) If the fair market value indicated by the lower appraisal differs from
the fair market value indicated by the higher appraisal by more than
five percent (5%) of the fair market value indicated by the higher
appraisal, then the two appraisers previously selected shall select a
third appraiser. The name of such appraiser shall be submitted at the
same time the written appraisals are due. Such third appraiser shall
then review the previously submitted appraisals and select the one
that, in his professional opinion, more closely reflects the fair
market value of BNPLC's interest in the Property (or applicable
portion thereof), such selection to be submitted in writing no later
than ten days after selection of the third appraiser. Such selection
shall be determinative of Current AS IS Market Value.
(D) In making any such determination of fair market value, the appraisers
shall assume that any improvements then located on the Property (or
applicable portion thereof) or under construction thereon constitute
the highest and best use, and that neither the Improvements Lease nor
the Purchase Agreement add any value to the Property. Each appraiser
selected hereunder shall be an independent MAI-designated appraiser
with not less than ten years' experience in commercial real estate
appraisal in Sunnyvale, California and surrounding areas.
"DEBT" of any Person means (without duplication of any item): (a)
indebtedness of such Person for borrowed money; (b) indebtedness of such Person
for the deferred purchase price of property or services (except trade payables
and accrued expenses constituting current liabilities in the ordinary course of
business); (c) the face amount of any outstanding letters of credit issued for
the account of such Person; (d) obligations of such Person arising under
acceptance facilities; (e) guaranties, endorsements (other than for collection
in the ordinary course of business) and other contingent obligations of such
Person to purchase, to provide funds for payment, to provide funds to invest in
any Person, or otherwise to assure a creditor against loss; (f) obligations of
others secured by any Lien on property of such Person; (g) obligations of such
Person as lessee under Capital Leases; and (h) the obligations of such Person,
contingent or otherwise, under any lease of property or related documents
(including a separate purchase agreement) which provide that such Person or any
of its Affiliates must purchase
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 9
69
or cause another Person to purchase any interest in the leased property and
thereby guarantee a minimum residual value of the leased property to the lessor.
For purposes of this definition, the amount of the obligations described in
clause (h) of the preceding sentence with respect to any lease classified
according to GAAP as an" operating lease," shall equal the sum of (1) the
present value of rentals and other minimum lease payments required in connection
with such lease [calculated in accordance with SFAS 13 and other GAAP relevant
to the determination of the whether such lease must be accounted for as an
operating lease or capital lease], plus (2) the fair value of the property
covered by the lease; provided, however, that such amount shall not exceed the
price, as of the date a determination of Debt is required hereunder, for which
the lessee can purchase the leased property pursuant to any valid ongoing
purchase option if, upon such a purchase, the lessee shall be excused from
paying rentals or other minimum lease payments that would otherwise accrue after
the purchase.
"DEFAULT" means any event which, with the passage of time or the giving of
notice or both, would (if not cured within any applicable cure period)
constitute an Event of Default.
"DEFAULT RATE" means, for any period prior to the Designated Sale Date, a
floating per annum rate equal to two percent (2%) above the Prime Rate, and for
any period commencing on or after the Designated Sale Date, Default Rate shall
mean a floating per annum rate equal to five percent (5%) above the Prime Rate.
However, in no event will the"Default Rate" at any time exceed the maximum
interest rate permitted by law.
"DEFAULTING PARTICIPANT" shall have the meaning assigned to it in Section 1
of the Participation Agreement.
"DEFECTIVE WORK" shall have the meaning assigned to it in subparagraph
1(A)(2)(f) of the Construction Management Agreement.
"DEPOSIT TAKER" shall have the meaning assigned to it in the Pledge
Agreement.
"DEPOSIT TAKER LOSSES" shall have the meaning assigned to it in the Pledge
Agreement.
"DESIGNATED SALE DATE" means the earlier of:
(1) the first Business Day of May, 2004; or
(2) any Business Day designated as such in an irrevocable,
unconditional notice given by NAI to BNPLC before NAI has made an Issue
97-10 Election; provided, that to be effective for purposes of this
definition, any such notice from NAI to BNPLC must designate a Business Day
that is more than thirty days after the date of such notice; and provided,
further, to be effective for purposes of this definition, the notice must
include an express, unconditional, unequivocal and irrevocable (A) waiver
by NAI of any remaining right NAI may have under any of the Operative
Documents to make any Issue 97-10 Election, and (B) acknowledgment by NAI
that because of NAI's election to accelerate the Designated Sale Date, the
Maximum Remarketing Obligation will equal the Break Even Price under the
Purchase Agreement; or
(3) any Business Day designated as such in a notice given by BNPLC to
NAI after the effective date of any termination of the Construction
Management Agreement as provided in subparagraphs 5(D) or 5(E) thereof;
provided, that to be effective for purposes of this definition, any such
notice from BNPLC to NAI must designate a Business Day that is more than
thirty days after the date of such notice; or
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 10
70
(4) the first Business Date after any termination by NAI of the
Purchase Option and NAI's Initial Remarketing Rights and Obligations as
provided in subparagraph 4(B) of the Purchase Agreement; or
(5) any Business Day designated as such in a notice given by BNPLC to
NAI when any Event of Default has occurred and is continuing; provided,
that to be effective for purposes of this definition, any such notice from
BNPLC to NAI must designate a Business Day that is more than thirty days
after the date of such notice.
"DEVELOPMENT DOCUMENTS" means the contracts, ordinances and other documents
described in Exhibit C attached to the Closing Certificate, as the same may be
modified from time to time in accordance with the Improvements Lease and the
Closing Certificate, and any applications, permits or certificates concerning or
affecting the use or development of the Property that may be submitted, issued
or executed from time to time as contemplated in such contracts, ordinances and
other documents or that BNPLC may hereafter execute, approve or consent to at
the request of NAI.
"DIRECT PAYMENTS TO PARTICIPANTS" means the amounts paid or required to be
paid directly to Participants on the Designated Sale Date as provided in Section
6.2 of the Pledge Agreement at the direction of and for NAI by the collateral
agent appointed pursuant to the Pledge Agreement from all or any part of the
Collateral described therein.
"EFFECTIVE DATE" means June 16, 1999.
"EFFECTIVE RATE" means for each Construction Period and for each Base Rent
Period, the per annum rate determined by dividing (A) LIBOR for such
Construction Period or Base Rent Period, as the case may be, by (B) one hundred
percent (100%) minus the Eurodollar Rate Reserve Percentage for such
Construction Period or Base Rent Period. If LIBOR or the Eurodollar Rate Reserve
Percentage changes from Construction Period to Construction Period or from Base
Rent Period to Base Rent Period, then the Effective Rate shall be automatically
increased or decreased as of the date of such change, as the case may be,
without prior notice to NAI. If for any reason BNPLC determines that it is
impossible or unreasonably difficult to determine the Effective Rate with
respect to a given Construction Period or Base Rent Period in accordance with
the foregoing, then the" EFFECTIVE RATE" for that Construction Period or Base
Rent Period shall equal any published index or per annum interest rate
determined in good faith by BNPLC's Parent to be comparable to LIBOR at the
beginning of the first day of that period. A comparable interest rate might be,
for example, the then existing yield on short term United States Treasury
obligations (as compiled by and published in the then most recently published
United States Federal Reserve Statistical Release H.15(519) or its successor
publication), plus or minus a fixed adjustment based on BNPLC's Parent's
comparison of past eurodollar market rates to past yields on such Treasury
obligations. Any determination by BNPLC of the Effective Rate under this
definition shall, in the absence of clear and demonstrable error, be conclusive
and binding upon NAI.
"ENVIRONMENTAL LAWS" means any and all existing and future Applicable Laws
pertaining to safety, health or the environment, or to Hazardous Substances or
Hazardous Substance Activities, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended,"CERCLA"), and the
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984 (as amended," RCRA").
"ENVIRONMENTAL CUTOFF DATE" means the later of the dates upon which (i) the
Improvements Lease terminates, or (ii) NAI surrenders possession and control of
the Property and ceases to have interest in the Land or Improvements or rights
with respect thereto under any of the Operative Documents.
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 11
71
"ENVIRONMENTAL LOSSES" means Losses suffered or incurred by BNPLC or any
other Interested Party, directly or indirectly, relating to or arising out of,
based on or as a result of any of the following: (i) any Hazardous Substance
Activity on or prior to the Environmental Cutoff Date; (ii) any violation on or
prior to the Environmental Cutoff Date of any applicable Environmental Laws
relating to the Property or to the ownership, use, occupancy or operation
thereof; (iii) any investigation, inquiry, order, hearing, action, or other
proceeding by or before any governmental or quasi-governmental agency or
authority in connection with any Hazardous Substance Activity that occurs or is
alleged to have occurred on or prior to the Environmental Cutoff Date; or (iv)
any claim, demand, cause of action or investigation, or any action or other
proceeding, whether meritorious or not, brought or asserted against any
Interested Party which directly or indirectly relates to, arises from, is based
on, or results from any of the matters described in clauses (i), (ii), or (iii)
of this definition or any allegation of any such matters. For purposes of
determining whether Losses constitute "Environmental Losses," as the term is
used in the Improvements Lease, any actual or alleged Hazardous Substance
Activity or violation of Environmental Laws relating to the Property will be
presumed to have occurred prior to the Environmental Cutoff Date unless NAI
establishes by clear and convincing evidence to the contrary that the relevant
Hazardous Substance Activity or violation of Environmental Laws did not occur or
commence prior to the Environmental Cutoff Date.
"ENVIRONMENTAL REPORTS" means collectively the following reports (whether
one or more), which were provided by NAI to BNPLC prior to the Effective Date:
Phase I dated March 1997 by Hygeienetics Environmental Services, Inc.; Phase I
dated June 1998 by Dames & Xxxxx; and, an Asbestos Containing Material Survey
conducted in 1989 by Vesar, Inc.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA AFFILIATE" means any Person who for purposes of Title IV of ERISA is
a member of NAI's controlled group, or under common control with NAI, within the
meaning of Section 414 of the Internal Revenue Code, and the regulations
promulgated and rulings issued thereunder.
"ESCROWED PROCEEDS" means, subject to the exclusions specified in the next
sentence, any money that is received by BNPLC from time to time during the Term
(and any interest earned thereon) from any party (1) under any property
insurance policy as a result of damage to the Property, (2) as compensation for
any restriction imposed by any governmental authority upon the use or
development of the Property or for the condemnation of the Property or any
portion thereof, (3) because of any judgment, decree or award for physical
damage to the Property or (4) as compensation under any title insurance policy
or otherwise as a result of any title defect or claimed title defect with
respect to the Property; provided, however, in determining the amount of
"Escrowed Proceeds" there shall be deducted all expenses and costs of every
type, kind and nature (including Attorneys' Fees) incurred by BNPLC to collect
such proceeds. Notwithstanding the foregoing,"Escrowed Proceeds" will not
include (A) any payment to BNPLC by a Participant or an Affiliate of BNPLC that
is made to compensate BNPLC for the Participant's or Affiliate's share of any
Losses BNPLC may incur as a result of any of the events described in the
preceding clauses (1) through (4), (B) any money or proceeds that have been
applied as a Qualified Prepayment or to pay any Breakage Costs or other costs
incurred in connection with a Qualified Prepayment, (C) any money or proceeds
that, after no less than ten days notice to NAI, BNPLC returns or pays to a
third party because of BNPLC's good faith belief that such return or payment is
required by law, (D) any money or proceeds paid by BNPLC to NAI or offset
against any amount owed by NAI, or (E) any money or proceeds used by BNPLC in
accordance with the Improvements Lease for repairs or the restoration of the
Property or to obtain development rights or the release of restrictions that
will inure to the benefit of future owners or occupants of the Property. Until
Escrowed Proceeds are paid to NAI pursuant to Paragraph of the Improvements
Lease, transferred to a purchaser under the Purchase Agreement as therein
provided or applied as a Qualified
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 12
72
Prepayment or as otherwise described in the preceding sentence, BNPLC shall keep
the same deposited in one or more interest bearing accounts, and all interest
earned on such account shall be added to and made a part of Escrowed Proceeds.
"ESTABLISHED MISCONDUCT" of a Person means, and is limited to: (1) if the
Person is bound by the Operative Documents or the Participation Agreement, a
breach by such Person of the express provisions of the Operative Documents or
the Participation Agreement, as applicable, that continues beyond any period for
cure provided therein, and (2) conduct of such Person or its Affiliates that has
been determined to constitute wilful misconduct or Active Negligence in or as a
necessary element of a final judgment rendered against such Person by a court
with jurisdiction to make such determination. Established Misconduct of one
Interested Party shall not be attributed to a second Interested Party unless the
second Interested Party is an Affiliate of the first. Negligence which does not
constitute Active Negligence shall not in any event constitute Established
Misconduct. For purposes of this definition,"conduct of a Person" will include
(1) the conduct of an employee of that Person, but only to the extent that the
employee is acting within the scope of his employment by that Person, as
determined in or as a necessary element of a final judgment rendered against
such Person by a court with jurisdiction to make such determination, and (2) the
conduct of an agent of that Person (such as an independent environmental
consultant engaged by that Person), but only to the extent that the agent is, as
determined in or as a necessary element of a final judgment rendered against
such Person by a court with jurisdiction to make such determination, (x) acting
within the scope of the authority granted to him by such Person, (y) not acting
with the consent or approval of or under the direction of NAI or NAI's
Affiliates, employees or agents, and (z) not acting in good faith to mitigate
Losses that such Person may suffer because of a breach or repudiation by NAI of
the Improvements Lease or the Purchase Documents.
"EUROCURRENCY LIABILITIES" shall have the meaning assigned to it in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR RATE RESERVE PERCENTAGE" means, for purposes of determining the
Effective Rate for any Construction Period or Base Rent Period, the reserve
percentage applicable two Business Days before the first day of such period
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) for BNPLC's Parent with respect to liabilities or deposits
consisting of or including Eurocurrency Liabilities (or with respect to any
other category or liabilities by reference to which LIBOR is determined) having
a term comparable to such period.
"EVENT OF DEFAULT" shall have the meaning assigned to it in subparagraph 17
of the Improvements Lease.
"EXCLUDED TAXES" means (1) all federal, state and local income taxes upon
Base Rent, Administrative Agency Fees, the Underwriting Fee, Commitment Fees,
any interest paid to BNPLC or any Participant pursuant to subparagraph 3.(j) of
the Improvements Lease, and any additional compensation claimed by BNPLC
pursuant to subparagraph 5.(b)(ii) of the Improvements Lease; (2) any transfer
or change of ownership taxes assessed because of BNPLC's transfer or conveyance
to any third party of any rights or interest in the Improvements Lease, the
Purchase Agreement or the Property (other than any such taxes assessed because
of any Permitted Transfer under clauses (1), (3), (4), (5), (6) or (7) of the
definition of Permitted Transfer in this Agreement), (3) all federal, state and
local income taxes upon any amounts paid as reimbursement for or to satisfy
Losses incurred by BNPLC or any Participant to the extent such taxes are offset
by a corresponding reduction of BNPLC's or the applicable Participant's income
taxes because of BNPLC's or such Participant's deduction of the reimbursed
Losses from its taxable income or because of any tax credits attributable
thereto. If, however, a change in Applicable Laws after the Effective Date
results in an increase in such taxes for any reason other than an increase in
the applicable tax rates (e.g., a disallowance of deductions that would
otherwise be available against payments described in clause (A) of this
definition), then for purposes of the Operative Documents, the term" Excluded
Taxes" will not include the increase in such taxes attributable to the change.
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 13
73
"EXISTING CONTRACTS" means the Option Agreement and Ground Lease covering
the Land between NAI and Seller, both dated June 11, 1998.
"FAILED COLLATERAL TEST DATE" shall have the meaning indicated in Part
III of Schedule 1 attached to the Improvements Lease.
"FED FUNDS RATE" means, for any period, a fluctuating interest rate
(expressed as a per annum rate and rounded upwards, if necessary, to the next
1/16 of 1%) equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rates are not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by BNPLC's Parent from three Federal funds brokers of
recognized standing selected by BNPLC's Parent. All determinations of the Fed
Funds Rate by BNPLC's Parent shall, in the absence of clear and demonstrable
error, be binding and conclusive upon NAI.
"FOCB NOTICE" shall have the meaning assigned to it in subparagraph 5(B)(1)
of the Construction Management Agreement.
"FUNDED CONSTRUCTION ALLOWANCE" means on any day the Outstanding
Construction Allowance on that day, including all Construction Advances and
Carrying Costs added to the Outstanding Construction Allowance on or prior to
that day, plus the amount of any Qualified Prepayments deducted on or prior to
that day in the calculation of such Outstanding Construction Allowance, less any
Voluntary NAI Construction Contributions added on or prior to that day in the
calculation of such Qualified Prepayments.
"FUNDING ADVANCES" means (1) the Initial Funding Advance and (2) all future
advances made by BNPLC's Parent or any other Participant to or on behalf of
BNPLC to allow BNPLC to provide the Construction Allowance.
"FUTURE WORK" shall have the meaning assigned to it in subparagraph
2(C)(2)(b) of the Construction Management Agreement.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, applied on a basis consistent with
those used in the preparation of the financial statements referred to in
subparagraph 13.(a) of the Improvements Lease (except for changes with which
NAI's independent public accountants concur).
"HAZARDOUS SUBSTANCE" means (i) any chemical, compound, material, mixture
or substance that is now or hereafter defined or listed in, regulated under, or
otherwise classified pursuant to, any Environmental Laws as a "hazardous
substance,""hazardous material,""hazardous waste,""extremely hazardous waste or
substance,""infectious waste,"" toxic substance,""toxic pollutant," or any other
formulation intended to define, list or classify substances by reason of
deleterious properties, including ignitability, corrosiveness, reactivity,
carcinogenicity, toxicity or reproductive toxicity; (ii) petroleum, any fraction
of petroleum, natural gas, natural gas liquids, liquified natural gas, synthetic
gas usable for fuel (or mixtures of natural gas and such synthetic gas), and ash
produced by a resource recovery facility utilizing a municipal solid waste
stream, and drilling fluids, produced waters and other wastes associated with
the exploration, development or production of crude oil, natural gas or
geothermal resources; (iii) asbestos and any asbestos containing material; and
(v) any other material that, because of its
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 14
74
quantity, concentration or physical or chemical characteristics, poses a
significant present or potential hazard to human health or safety or to the
environment if released into the workplace or the environment.
"HAZARDOUS SUBSTANCE ACTIVITY" means any actual, proposed or threatened
use, storage, holding, release (including any spilling, leaking, leaching,
pumping, pouring, emitting, emptying, dumping, disposing into the environment,
and the continuing migration into or through soil, surface water, groundwater or
any body of water), discharge, deposit, placement, generation, processing,
construction, treatment, abatement, removal, disposal, disposition, handling or
transportation of any Hazardous Substance from, under, in, into or on the
Property, including the movement or migration of any Hazardous Substance from
surrounding property, surface water, groundwater or any body of water under, in,
into or onto the Property and any resulting residual Hazardous Substance
contamination in, on or under the Property."HAZARDOUS SUBSTANCE ACTIVITY" also
means any existence of Hazardous Substances on the Property that would cause the
Property or the owner or operator thereof to be in violation of, or that would
subject the Property to any remedial obligations under, any Environmental Laws,
including CERCLA and RCRA, assuming disclosure to the applicable governmental
authorities of all relevant facts, conditions and circumstances pertaining to
the Property.
"IMPOSITIONS" means all sales, excise, ad valorem, gross receipts,
business, transfer, stamp, occupancy, rental and other taxes, levies, fees,
charges, surcharges, assessments or penalties which arise out of or are
attributable to the Improvements Lease or which are imposed upon BNPLC or the
Property because of the ownership, leasing, occupancy, sale or operation of the
Property, or any part thereof or interest therein, or relating to or required to
be paid by any of the Permitted Encumbrances or the Development Documents,
excluding only Excluded Taxes."IMPOSITIONS" shall include real estate taxes
imposed because of a change of use or ownership of the Property on or prior to
the date of any sale by BNPLC pursuant to the Purchase Agreement.
"IMPROVEMENTS" means any and all (1) buildings and other real property
improvements now or hereafter erected on the Land, and (2) equipment (e.g., HVAC
systems, elevators and plumbing fixtures) attached to the buildings or other
real property improvements, the removal of which would cause structural or other
material damage to the buildings or other real property improvements or would
materially and adversely affect the value or use of the buildings or other real
property improvements.
"IMPROVEMENTS LEASE" means the Lease Agreement (Phase III - Improvements")
dated as of June 16, 1999 between BNPLC, as landlord, and NAI, as tenant,
pursuant to which NAI has agreed to lease BNPLC's interest in the Property, as
such Lease Agreement may be extended, supplemented, amended, restated or
otherwise modified from time to time in accordance with its terms.
"INITIAL FUNDING ADVANCE" means the advance made by BNPLC's Parent
(directly or through one or more of its Affiliates) to or on behalf of BNPLC on
or prior to the Effective Date to cover the cost of BNPLC's acquisition of the
Property and certain Transaction Expenses and other amounts described in this
definition. The amount of the Initial Funding Advance may be confirmed by a
separate closing certificate executed by NAI as of the Effective Date. To the
extent that BNPLC does not itself use the entire Initial Funding Advance to pay
Transaction Expenses incurred by BNPLC, the remainder thereof will be advanced
to NAI, with the understanding that NAI shall use any such amount advanced for
one or more of the following purposes: (1) the payment or reimbursement of
Transaction Expenses incurred by NAI; (2) the payment or reimbursement of
expenses incurred by NAI in connection with the Construction Project, including
the planning, design, engineering, construction and permitting of thereof; (3)
the maintenance of the Property; or (4) the payment of Rents next due.
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 15
75
"INTERESTED PARTY" means each of (1) BNPLC, its Affiliates and its
successors and assigns as to the Property or any part thereof or any interest
therein, (2) BNPLC's Parent, and (3) any other Participants and their permitted
successors and assigns under the Participation Agreement; provided, however,
none of the following shall constitute an Interested Party: (a) any Person to
whom BNPLC may transfer an interest in the Property by a conveyance that is not
a Permitted Transfer and others that cannot lawfully claim an interest in the
Property except through or under such a transfer by BNPLC, (b) NAI or any Person
that cannot lawfully claim an interest in the Property except through or under a
conveyance from NAI, or (c) any Applicable Purchaser under the Purchase
Agreement and any Person that cannot lawfully claim an interest in the Property
except through or under a conveyance from such Applicable Purchaser.
"ISSUE 97-1 NON-PERFORMANCE-RELATED SUBJECTIVE EVENT OF DEFAULT" means an
Event of Default that is unrelated to the Property or the use or maintenance
thereof and that results solely from (A) a breach by NAI of a provision in any
Operative Document, the occurrence of which breach cannot be objectively
determined, or (B) any other event described in subparagraph 17.(e) of the
Improvements Lease, the occurrence of which event cannot be objectively
determined. For example, an Event of Default under subparagraph 17.(e) of the
Improvements Lease resulting solely from a failure of NAI to"generally" pay its
debts as such debts become due (in contrast to a failure of NAI to pay Rent to
BNPLC as it becomes due under the Improvements Lease) would constitute an Issue
97-1 Non-performance-related Subjective Event of Default. In no event, however,
will the term"Issue 97-1 Non-performance-related Subjective Event of Default"
include an Event of Default resulting from (1) a failure of NAI to make any
payment required to BNPLC under the Operative Documents, (2) a breach by NAI of
the provisions set forth in Schedule 1 attached to the Improvements Lease (which
set forth financial covenants), (3) any failure of NAI to use, maintain and
insure the Property in accordance with the requirements of the Improvements
Lease, or (4) any failure of NAI to pay the full amount of any Supplemental
Payment on the Designated Sale Date as required by the Purchase Agreement.
Except as provided in subparagraph 1(A)(2)(c)(i) of the Purchase Agreement, the
characterization of any Event of Default as an Issue 97-1
Non-performance-related Subjective Event of Default will not affect the rights
or remedies available to BNPLC because of the Event of Default.
"ISSUE 97-10 ELECTION" means any of the following elections by NAI: (1) an
election to terminate the Construction Management Agreement as provided in
subparagraph 5(D) thereof; and (2) an election to terminate NAI's Initial
Remarketing Rights and Obligations as provided in subparagraph 4(B) of the
Purchase Agreement.
"ISSUE 97-10 PREPAYMENT" means a payment to BNPLC, required by subparagraph
3.(h) of the Improvements Lease or by subparagraphs 4(B) or 4(C) of the Purchase
Agreement, equal in each case to (A) the Maximum Permitted Prepayment, computed
as of the date on which the payment becomes due, less (B) the accreted value of
any prior payments actually received by BNPLC from NAI constituting Issue 97-10
Prepayments or Voluntary NAI Construction Contributions. For purposes of the
preceding sentence," accreted value" of a payment shall mean the amount of the
payment plus an amount equal to the interest that would have accrued on the
payment if it bore interest at the Effective Rate.
"LAND" means the land covered by the land described in Exhibit A attached
to the Closing Certificate, the Improvements Lease and the Purchase Agreement.
"LANDLORD'S ELECTION TO CONTINUE CONSTRUCTION" shall have the meaning
assigned to it in subparagraph 6.(e) of the Improvements Lease.
"LIBOR" means, for purposes of determining the Effective Rate for each
Construction Period or Base Rent Period, the rate determined by BNPLC's Parent
to be the average rate of interest per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) of the rates at which deposits of dollars are offered or
available to BNPLC's Parent in the London interbank
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 16
76
market at approximately 11:00 a.m. (London time) on the second Business Day
preceding the first day of such period. BNPLC shall instruct BNPLC's Parent to
consider deposits, for purposes of making the determination described in the
preceding sentence, that are offered: (i) for delivery on the first day of such
Construction Period or Base Rent Period, as the case may be, (ii) in an amount
equal or comparable to the total (projected on the applicable date of
determination by BNPLC's Parent) Stipulated Loss Value on the first day of such
period, and (iii) for a time equal or comparable to the length of such period.
If BNPLC's Parent so chooses, it may determine LIBOR for any period by reference
to the rate reported by the British Banker's Association on Page 3750 of the
Telerate Service at approximately 11:00 a.m. (London time) on the second
Business Day preceding the first day of such period. If for any reason BNPLC's
Parent determines that it is impossible or unreasonably difficult to determine
LIBOR with respect to a given Construction Period or Base Rent Period in
accordance with the foregoing, or if BNPLC's Parent shall determine that it is
unlawful (or any central bank or governmental authority shall assert that it is
unlawful) for BNPLC, BNPLC's Parent or any Participant to provide or maintain
Funding Advances during any Construction Period or Base Rent Period for which
Carrying Costs or Base Rent is computed by reference to LIBOR, then"LIBOR" for
that period shall equal the Base Rate for that period. All determinations of
LIBOR by BNPLC's Parent shall, in the absence of clear and demonstrable error,
be binding and conclusive upon NAI.
"LIBOR PERIOD ELECTION" for any Base Rent Period means a period of one
month, three months or six months as designated by NAI at least five Business
Days prior to the commencement of such Base Rent Period by a notice given to
BNPLC in the form of Exhibit C attached to the Improvements Lease. (For purposes
of the Improvements Lease a LIBOR Period Election for any Base Rent Period shall
also be considered the LIBOR Period Election in effect on the Base Rent
Commencement Date or Base Rent Date upon which such Base Rent Period begins.)
Any LIBOR Period Election so designated by NAI shall remain in effect for the
entire Base Rent Period specified in NAI's notice to BNPLC (provided such Base
Rent Period commences at least ten Business Days after BNPLC's receipt of the
notice) and for all subsequent Base Rent Periods until a new designation becomes
effective in accordance with the provisions set forth in this definition.
Notwithstanding the foregoing, however: (1) NAI shall not be entitled to
designate a LIBOR Period Election that would cause a Base Rent Period to extend
beyond the end of the scheduled Term; (2) changes in the LIBOR Period Election
shall become effective only upon the commencement of a new Base Rent Period; (3)
for each Base Rent Period that occurs within any Mandatory Collateral Period,
the LIBOR Period Election shall be one month; (4) no LIBOR Period Election
designated by NAI hereunder shall be different than the LIBOR Period Election
specified under (and as defined in) the Other Common Definitions and Provisions
Agreement; and (5) if NAI fails to make a LIBOR Period Election consistent with
the foregoing requirements for any Base Rent Period, or if an Event of Default
shall have occurred and be continuing on the third Business Day preceding the
commencement of any Base Rent Period, the LIBOR Period Election for such Base
Rent Period shall be deemed to be one month.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any agreement to sell receivables with recourse, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction). In addition, for purposes of subparagraph A.(8) of Part IV of
Schedule 1 attached to the Improvements Lease,"Lien" includes any Liens under
ERISA relating to Unfunded Benefit Liabilities of which NAI is required to
notify BNPLC under subparagraph of the Improvements Lease (irrespective of
whether NAI actually notifies BNPLC as required thereunder).
"LIENS REMOVABLE BY BNPLC" means, and is limited to, Liens encumbering the
Property that are asserted (1) other than as contemplated in the Operative
Documents, by BNPLC itself, (2) by third parties lawfully claiming through or
under BNPLC (which for purposes of the Improvements Lease shall include any
judgment liens established against the Property because of a judgment rendered
against BNPLC and shall also include any liens established against the Property
to secure
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 17
77
past due Excluded Taxes), or (3) by third parties lawfully claiming under a deed
or other instrument duly executed by BNPLC; provided, however, Liens Removable
by BNPLC shall not include (A) any Permitted Encumbrances or Development
Documents (regardless of whether claimed through or under BNPLC), (B) the
Operative Documents or any other document executed by BNPLC with the knowledge
of (and without objection by) NAI's counsel contemporaneously with the execution
and delivery of the Operative Documents, (C) Liens which are neither lawfully
claimed through or under BNPLC (as described above) nor claimed under a deed or
other instrument duly executed by BNPLC, (D) Liens claimed by NAI or claimed
through or under a conveyance made by NAI, (E) Liens arising because of BNPLC's
compliance with Applicable Law, the Operative Documents, Permitted Encumbrances,
the Development Documents or any written request made by NAI, (F) Liens securing
the payment of property taxes or other amounts assessed against the Property by
any governmental authority, other than to secure the payment of past due
Excluded Taxes or to secure damages caused by (and attributed by any applicable
principles of comparative fault to) BNPLC's own Established Misconduct, (G)
Liens resulting from or arising in connection with any breach by NAI of the
Operative Documents; or (H) Liens resulting from or arising in connection with
any Permitted Transfer that occurs more than thirty days after any Designated
Sale Date upon which, for any reason, NAI or an Affiliate of NAI or any
Applicable Purchaser shall not purchase BNPLC's interest in the Property
pursuant to the Purchase Agreement for a cash price to BNPLC (when taken
together with any Supplemental Payment made by NAI pursuant to Paragraph 1(A)(2)
of the Purchase Agreement, in the case of a purchase by an Applicable Purchaser)
equal to the Break Even Price.
"LOSSES" means the following: any and all losses, liabilities, damages
(whether actual, consequential, punitive or otherwise denominated), demands,
claims, administrative or legal proceedings, actions, judgments, causes of
action, assessments, fines, penalties, costs and expenses (including Attorneys'
Fees and the fees of outside accountants and environmental consultants), of any
and every kind or character, foreseeable and unforeseeable, liquidated and
contingent, proximate and remote.
"MANDATORY COLLATERAL PERIOD" shall have the meaning assigned to it in Part
I of Schedule 1 attached to the Improvements Lease and to the Pledge Agreement.
"MATERIAL ENVIRONMENTAL COMMUNICATION" means a communication between NAI or
its agents and a regulatory agency or third party, which causes, or potentially
could cause (whether by implementation of or response to said communication), a
material change in the scope, duration, or nature of any Remedial Work.
"MAXIMUM CONSTRUCTION ALLOWANCE" means an amount computed as follows:
(1) Prior to any Advance Date that occurs after BNPLC's acquisition of
the fee interest in the Land as provided in the Agreement to Lease and
after BNPLC and NAI execute the Other Lease and all other Phase III Land
Documents under and as defined in the Agreement to Lease, the Maximum
Construction Allowance will equal to $48,000,000, less the sum of the Total
Land Commitment under and defined in the Agreement to Lease and the Initial
Funding Advance under and as defined in this Agreement.
(2) On and after any Advance Date that occurs after BNPLC's
acquisition of the fee interest in the Land as provided in the Agreement to
Lease and after BNPLC and NAI execute the Other Lease and all other Phase
III Land Documents under and as defined in the Agreement to Lease, the
Maximum Construction Allowance will equal to $48,000,000, less the sum of
the Initial Funding Advance under and defined in the Other Common
Definitions and Provisions Agreement and the Initial Funding Advance under
and as defined in this Agreement.
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 18
78
"MAXIMUM PERMITTED TERMINATION FEES" shall have the meaning indicated in
subparagraph 1(A)(2)(b) of the Construction Management Agreement.
"MAXIMUM PERMITTED PREPAYMENT" as of any date means the amount equal to the
lesser of the following:
(1) eighty-nine and nine-tenths of one percent (89.9%) of the
aggregate of (i) all Project Costs paid or incurred on or prior to such
date, plus (ii) ninety-seven percent (97%) of (a) Carrying Costs added to
the Outstanding Construction Allowance on or prior to such date, and (b)
Commitment Fees reimbursed pursuant to the Construction Management
Agreement on or prior to such date, plus (iii) any Upfront Syndication Fees
paid to Participants pursuant to the Closing Certificate and Agreement and
reimbursed pursuant to the Construction Management Agreement on or prior to
such date; or
(2) eighty-nine and nine-tenths of one percent (89.9%) of Stipulated
Loss Value on such date.
"MAXIMUM REMARKETING OBLIGATION" shall have the meaning indicated in
subparagraph 1(A)(2)(c) of the Purchase Agreement.
"MINIMUM EXTENDED REMARKETING PRICE" shall have the meaning assigned to it
in subparagraph 2(B) of the Purchase Agreement.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section 3(37)
of ERISA to which contributions have been made by NAI or any ERISA Affiliate
during the preceding six years and which is covered by Title IV of ERISA.
"NAI" means Network Appliance, Inc., a California corporation.
"NAI'S EXTENDED REMARKETING PERIOD" shall have the meaning assigned to it
in subparagraph 2(A) of the Purchase Agreement.
"NAI'S EXTENDED REMARKETING RIGHT" shall have the meaning assigned to it in
subparagraph 2(A) of the Purchase Agreement.
"NAI'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS" shall have the meaning
assigned to it in subparagraph 1(A)(2) of the Purchase Agreement.
"NORMAL TENANT IMPROVEMENTS" shall have the meaning assigned to it in
subparagraph 3(A) of the Construction Management Agreement.
"NOTICE OF NAI'S INTENT TO TERMINATE" shall have the meaning assigned to it
in subparagraph 5(D) of the Construction Management Agreement.
"OPERATIVE DOCUMENTS" means the Closing Certificate, the Improvements
Lease, the Construction Management Agreement, the Purchase Agreement, the Pledge
Agreement and this Common Definitions and Provisions Agreement (Phase III -
Improvements).
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 19
79
"OTHER COMMON DEFINITIONS AND PROVISIONS AGREEMENT" means the Common
Definitions and Provisions Agreement (Phase III - Land), to be executed as
described in the Agreement to Lease, between BNPLC and NAI, as such Common
Definitions and Provisions Agreement may be extended, supplemented, amended,
restated or otherwise modified from time to time in accordance with its terms.
(For purposes of the Operative Documents, until the Other Common Definitions and
Provisions Agreement is executed as provided in the Agreement to Lease, all
references to the Other Common Definitions and Provisions Agreement in the
Operative Documents will be deemed references to the form of Common Definitions
and Provisions Agreement (Phase III - Land) attached the Agreement to Lease,
except when a contrary intent is indicated by the context of the reference.)
"OTHER LEASE AGREEMENT" means the Lease Agreement (Phase III - Land), to be
executed as described in the Agreement to Lease, between BNPLC and NAI, as such
Lease Agreement may be extended, supplemented, amended, restated or otherwise
modified from time to time in accordance with its terms. (For purposes of the
Operative Documents, until the Other Lease Agreement is executed as provided in
the Agreement to Lease, all references to the Other Lease Agreement in the
Operative Documents will be deemed references to the form of Lease Agreement
(Phase III - Land) attached the Agreement to Lease, except when a contrary
intent is indicated by the context of the reference.)
"OTHER PURCHASE AGREEMENT" means the Purchase Agreement (Phase III - Land),
to be executed as described in the Agreement to Lease, between BNPLC and NAI, as
such Purchase Agreement may be extended, supplemented, amended, restated or
otherwise modified from time to time in accordance with its terms. (For purposes
of the Operative Documents, until the Other Purchase Agreement is executed as
provided in the Agreement to Lease, all references to the Other Purchase
Agreement in the Operative Documents will be deemed references to the form of
Purchase Agreement (Phase III - Land) attached the Agreement to Lease, except
when a contrary intent is indicated by the context of the reference.)
"OUTSTANDING CONSTRUCTION ALLOWANCE" shall have the meaning assigned to it
in subparagraph of the Improvements Lease.
"PARTICIPANT" means BNPLC's Parent and any other Person that, upon becoming
a party to the Participation Agreement and the Pledge Agreement by executing
supplements as contemplated therein, agrees from time to time to participate in
all or some of the risks and rewards to BNPLC of the Improvements Lease and the
Purchase Documents. As of the Effective Date, the only Participant is BNPLC's
Parent, but BNPLC may agree after the Effective Date to share in risks and
rewards of the Improvements Lease and the Purchase Documents with other
Participants. However, no Person other than BNPLC's Parent and its Affiliates
shall qualify as a Participant for purposes of the Operative Documents or other
agreements concerning the Property to which NAI is a party unless such Person,
during the continuance of an Event of Default or otherwise with NAI's prior
written approval (which approval will not be unreasonably withheld), became a
party to the Pledge Agreement and to the Participation Agreement by executing
supplements to those agreements as contemplated therein.
"PARTICIPATION AGREEMENT" means the Participation Agreement between BNPLC
and BNPLC's Parent dated as of the Effective Date, pursuant to which BNPLC's
Parent has agreed to participate in the risks and rewards to BNPLC of the
Improvements Lease and the other Operative Documents, as such Participation
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms. It is understood, however, that
because the Participation Agreement expressly makes NAI a third party
beneficiary of the Participant's obligations thereunder to make advances to
BNPLC in connection with Construction Advances under the Construction Management
Agreement, NAI's consent will be required to any amendment of the Participation
Agreement that purports to limit or excuse such obligations.
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 20
80
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"PERIOD" means a Construction Period or a Base Rent Period, as the context
requires.
"PERMITTED ENCUMBRANCES" means (i) the encumbrances and other matters
affecting the Property that are set forth in Exhibit B attached to the Closing
Certificate, (ii) any easement agreement or other document affecting title to
the Property executed by BNPLC at the request of or with the consent of NAI
(including the Other Lease Agreement, the Other Purchase Agreement and all
documents executed by BNPLC pursuant to the Agreement to Lease or the Other
Purchase Agreement), (iii) any ground lease executed pursuant to the Other
Purchase Agreement, (iv) any Liens securing the payment of Impositions which are
not delinquent or claimed to be delinquent or which are being contested in
accordance with subparagraph 5.(a) of the Improvements Lease, and (iv)
mechanics' and materialmen's liens for amounts not past due or claimed to be
past due or which are being contested in accordance with subparagraph 11.(c) of
the Improvements Lease.
"PERMITTED HAZARDOUS SUBSTANCE USE" means the use, generation, storage and
offsite disposal of Permitted Hazardous Substances in strict accordance with
applicable Environmental Laws and with due care given the nature of the
Hazardous Substances involved; provided, the scope and nature of such use,
generation, storage and disposal shall not:
(1) exceed that reasonably required for the construction of the
Construction Project in accordance with the Improvements Lease and the
Construction Management Agreement or for the operation of the Property for
the purposes expressly permitted under subparagraph 2.(a) of the
Improvements Lease; or
(2) include any disposal, discharge or other release of Hazardous
Substances from the Property in any manner that might allow such substances
to reach surface water or groundwater, except (i) through a lawful and
properly authorized discharge (A) to a publicly owned treatment works or
(B) with rainwater or storm water runoff in accordance with Applicable Laws
and any permits obtained by NAI that govern such runoff; or (ii) any such
disposal, discharge or other release of Hazardous Substances for which no
permits are required and which are not otherwise regulated under applicable
Environmental Laws.
Further, notwithstanding anything to the contrary herein contained, Permitted
Hazardous Substance Use shall not include any use of the Property in a manner
that requires a RCRA treatment, storage or disposal permit, including a
landfill, incinerator or other waste disposal facility.
"PERMITTED HAZARDOUS SUBSTANCES" means Hazardous Substances used and
reasonably required for the construction of the Construction Project or for the
use of the Property by NAI and its permitted subtenants and assigns for the
purposes expressly permitted by subparagraph 2.(a) of the Improvements Lease, in
either case in strict compliance with all Environmental Laws and with due care
given the nature of the Hazardous Substances involved. Without limiting the
generality of the foregoing, Permitted Hazardous Substances shall include usual
and customary office, laboratory and janitorial products.
"PERMITTED TRANSFER" means any one or more of the following: (1) the
creation or conveyance by BNPLC of rights and interests in favor of any
Participant pursuant to the Participation Agreement; (2) the creation or
conveyance of rights and interests in favor of or to Banque Nationale de Paris
(through its San Xxxxxxxxx Xxxxxx or otherwise), as BNPLC's Parent, or any other
Qualified Affiliate of BNPLC, provided that NAI must be notified before any such
conveyance to Banque Nationale de Paris or another Qualified Affiliate of (A)
any interest in the Property or any portion thereof by an assignment or other
document which will be recorded in the real property records of San Mateo
County, California or (B) BNPLC's entire interest in
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 21
81
the Land and the Property; (3) any assignment or conveyance by BNPLC or its
permitted successors or assigns to any present or future Participant of any lien
or security interest against the Property (in contrast to a conveyance of
BNPLC's fee estate in the Land and Improvements) or of any interest in Rent,
payments required by or under the Purchase Documents or payments to be generated
from the Property after the Term, provided that such assignment or conveyance is
made expressly subject to the rights of NAI under the Operative Documents; (4)
any agreement to exercise or refrain from exercising rights or remedies under
the Operative Documents made by BNPLC with any present or future Participant;
(5) any assignment or conveyance by BNPLC requested by NAI or required by any
Permitted Encumbrance, by the Purchase Agreement, by the Existing Contract, by
any other Development Contract or by Applicable Laws; or (6) any assignment or
conveyance after a Designated Sale Date on which NAI shall not have purchased or
caused an Applicable Purchaser to purchase BNPLC's interest in the Property and,
if applicable, after the expiration of the thirty day cure period specified in
Paragraph 4(D) of the Purchase Agreement.
"PERSON" means an individual, a corporation, a partnership, an
unincorporated organization, an association, a joint stock company, a joint
venture, a trust, an estate, a government or agency or political subdivision
thereof or other entity, whether acting in an individual, fiduciary or other
capacity.
"PERSONAL PROPERTY" shall have the meaning assigned to it on page 2 of the
Improvements Lease.
"PLAN" means any employee benefit or other plan established or maintained,
or to which contributions have been made, by NAI or any ERISA Affiliate of NAI
during the preceding six years and which is covered by Title IV of ERISA, other
than a Multiemployer Plan.
"PLEDGE AGREEMENT" means the Pledge Agreement (Phase III - Improvements)
dated as of the date hereof between BNPLC and NAI, pursuant to which NAI may
pledge certificates of deposit as security for NAI's obligations under the
Purchase Agreement (and for the corresponding obligations of BNPLC to the
Participants under the Participation Agreement), as such Pledge Agreement may be
extended, supplemented, amended, restated or otherwise modified from time to
time in accordance with its terms.
"PRE-COMMENCEMENT CASUALTY" shall have the meaning assigned to it in
subparagraph 1(A)(2)(a) of the Construction Management Agreement.
"PREEMPTIVE NOTICE" shall have the meaning assigned to it in subparagraph
5(B)(2) of the Construction Management Agreement.
"PRIME RATE" means the prime interest rate or equivalent charged by BNPLC's
Parent in the United States of America as announced or published by BNPLC's
Parent from time to time, which need not be the lowest interest rate charged by
BNPLC's Parent. If for any reason BNPLC's Parent does not announce or publish a
prime rate or equivalent, the prime rate or equivalent announced or published by
either CitiBank, N.A. or any New York branch or office of Credit Commercial de
France as selected by BNPLC shall be used to compute the rate describe in the
preceding sentence. The prime rate or equivalent announced or published by such
bank need not be the lowest rate charged by it. The Prime Rate may change from
time to time after the Effective Date without notice to NAI as of the effective
time of each change in rates described in this definition.
"PRIOR WORK" shall have the meaning assigned to it in subparagraph
2(C)(2)(b) of the Construction Management Agreement.
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 22
82
"PROJECT COSTS" means the following:
(a) costs incurred for the Work (as defined in the Construction
Management Agreement), including not only hard costs incurred for the new
Improvements described in Exhibit attached to the Construction Management
Agreement, but also the following costs to the extent reasonably incurred
in connection with the Construction Project:
o soft costs, such as architectural fees, engineering fees and fees
and costs paid in connection with obtaining project permits and
approvals required by governmental authorities or the Development
Documents,
o site preparation costs, and
o costs of offsite and other public improvements required as
conditions of governmental approvals for the Construction
Project;
(b) costs incurred to maintain insurance required by (and consistent
with the requirements of) the Improvements Lease prior to the Base Rent
Commencement Date, and costs of repairing any damage to the Improvements by
fire or other casualty prior to the Base Rent Commencement Date, to the
extent such cost is not covered by insurance proceeds made available to NAI
as provided in the Improvements Lease;
(c) a fraction of the cost of any title insurance policy or binder
provided to BNPLC in connection with its acquisition of the Land and
Improvements, the numerator of which fraction is the difference computed by
subtracting the price paid by BNPLC for the Land from the maximum dollar
amount of coverage provided by the title insurance, and the denominator of
which fraction is equal to such maximum dollar amount of coverage;
(d) Impositions that have accrued or become due under the Improvements
Lease prior to the Base Rent Commencement Date; and
(e) cancellation or termination fees or other compensation payable by
NAI or BNPLC pursuant to any contract concerning the Construction Project
made by NAI or BNPLC with any general contractor, architect, engineer or
other third party because of any election by NAI or BNPLC to cancel or
terminate such contract.
Project Costs will include costs incurred by BNPLC to continue or complete
the Construction Project after any Landlord's Election to Continue Construction
as provided in subparagraph 6.(e) of the Improvements Lease.
"PROJECTED COST OVERRUNS" shall have the meaning assigned to it in
subparagraph 4(A) of the Construction Management Agreement.
"PROPERTY" means the Personal Property and the Real Property, collectively.
The fee interest in the Land itself will not be included in the Property.
However, prior to a Closing under and as defined in the Agreement to Lease, when
the Other Lease Agreement is executed and all right, title and interest of BNPLC
in the Land shall be encompassed within the term" Property" as used in the Other
Lease Agreement and the Other Purchase Agreement, if BNPLC should acquire any
right, title and interest in and to the Land (for example, a option to purchase
the Land by the acceptance of an assignment of the Existing Contracts from NAI
under the Agreement to Lease) such right, title and interest of BNPLC shall be
encompassed within the term" Property" as such term is used in the Operative
Documents.
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 23
83
"PURCHASE AGREEMENT" means the Purchase Agreement (Phase III -
Improvements) dated as of May 3, 1999 between BNPLC and NAI, as such Purchase
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
"PURCHASE DOCUMENTS" means collectively (1) the Purchase Agreement, (2) the
Memorandum of Purchase Agreement executed by BNPLC and NAI as of the Effective
Date and recorded to provide notice of the Purchase Agreement; and (3) the
Pledge Agreement and all financing statements, notices, acknowledgments and
certificates of deposit executed or delivered from time to time by NAI, BNPLC or
the other parties to the Pledge Agreement pursuant to and as expressly provided
therein.
"PURCHASE OPTION" shall have the meaning assigned to it in subparagraph
1(A)(1) of the Purchase Agreement.
"QUALIFIED AFFILIATE" means any Person that is one hundred percent (100%)
owned, directly or indirectly, by Banque Nationale de Paris or any successor of
such bank; provided, that such Person can make (and has in writing made) the
same representations to NAI that BNPLC has made in Paragraphs 3(D) and 3(E) of
the Closing Certificate; and, provided, further, that such Person is not
insolvent.
"QUALIFIED PREPAYMENTS" means (A) any Issue 97-10 Prepayments received by
BNPLC, (B) any Voluntary NAI Construction Contributions received by BNPLC
pursuant to subparagraph 4(C) of the Construction Management Agreement, and (C)
any payments received by BNPLC from time to time during the Term (1) under any
property insurance policy as a result of damage to the Property, (2) as
compensation for any restriction placed upon the use or development of the
Property or for the condemnation of the Property or any portion thereof, (3)
because of any judgment, decree or award for injury or damage to the Property or
(4) under any title insurance policy or otherwise as a result of any title
defect or claimed title defect with respect to the Property; provided, however,
that (x) in determining the amount of" Qualified Prepayments", there shall be
deducted all expenses and costs of every kind, type and nature (including taxes,
Breakage Costs and Attorneys' Fees) incurred by BNPLC with respect to the
collection or application of such payments, (y)" Qualified Prepayments" shall
not include any payment to BNPLC by a Participant or an Affiliate of BNPLC that
is made to compensate BNPLC for the Participant's or Affiliate's share of any
Losses BNPLC may incur as a result of any of the events described in the
preceding clauses (1) through (4) and (z)"Qualified Prepayments" shall not
include any payments received by BNPLC that BNPLC has paid or is obligated to
pay to NAI for the restoration or repair of the Property or that BNPLC is
holding as Escrowed Proceeds pursuant to Paragraph 10 of the Improvements Lease
or any other provision of the Improvements Lease. For purposes of computing the
total Qualified Prepayments (and other amounts dependent upon Qualified
Prepayments, such as Stipulated Loss Value and the Outstanding Construction
Allowance) paid to or received by BNPLC as of any date, payments described in
the preceding clauses (1) through (4) will be considered as Escrowed Proceeds,
not Qualified Prepayments, until they are actually applied as Qualified
Prepayments by BNPLC as provided in the Paragraph 10 of the Improvements Lease.
"REAL PROPERTY" shall have the meaning assigned to it on page 1 of the
Improvements Lease.
"REIMBURSABLE CONSTRUCTION-PERIOD COSTS" shall have the meaning assigned to
it in Paragraph 2 of the Construction Management Agreement.
"REMEDIAL WORK" means any investigation, monitoring, clean-up, containment,
remediation, removal, payment of response costs, or restoration work and the
preparation and implementation of any closure or other required remedial plans
that any governmental agency or political subdivision requires or approves (or
could reasonably be expected to require if it
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 24
84
was aware of all relevant circumstances concerning the Property), whether by
judicial order or otherwise, because of the presence of or suspected presence of
Hazardous Substances in, on, under or about the Property or because of any prior
Hazardous Substance Activity. Without limiting the generality of the foregoing,
Remedial Work also means any obligations imposed upon or undertaken by NAI
pursuant to Development Documents or any recommendations or proposals made
therein.
"RENT" means the Base Rent and all Additional Rent.
"RESIDUAL RISK PERCENTAGE" means fifteen percent (15%).
"RESPONSIBLE FINANCIAL OFFICER" means the chief financial officer, the
controller, the treasurer or the assistant treasurer of NAI.
"SALE CLOSING DOCUMENTS" shall have the meaning assigned to it in
subparagraph 1(C) of the Purchase Agreement.
"SCOPE CHANGE" shall have the meaning assigned to it in subparagraph
1(A)(1)(b) of the Construction Management Agreement.
"SECURED SPREAD" means thirty basis points (30/100 of 1%); provided,
however, that for purposes of calculating the Base Rent for any period
commencing on a Failed Collateral Test Date and continuing through the next
Collateral Test Date (under and as defined in Schedule 1 attached to the Lease)
that does not constitute a Failed Collateral Test Date, the Secured Spread shall
equal one-half of the Unsecured Spread.
"SELLER" means 000 Xxxx Xxxxx Associates, L.P., a California limited
partnership.
"STIPULATED LOSS VALUE" as of any date means the amount equal to the sum of
the Initial Funding Advance, plus the sum of all Construction Advances and
Carrying Costs added to the Outstanding Construction Allowance on or prior to
such date, minus all funds actually received by BNPLC and applied as Qualified
Prepayments on or prior to such date. Under no circumstances will any payment of
Base Rent, the Arrangement Fee, the Upfront Syndication Fees, the Underwriting
Fee, Administrative Agency Fees or Commitment Fees reduce Stipulated Loss Value.
"SUBSIDIARY" means, with respect to any Person, any Affiliate of which at
least a majority of the securities or other ownership interests having ordinary
voting power then exercisable for the election of directors or other persons
performing similar functions are at the time owned directly or indirectly by
such Person.
"SUPPLEMENTAL PAYMENT" shall have the meaning assigned to it in
subparagraph 1(A)(2)(c) of the Purchase Agreement.
"TERM" shall have the meaning assigned to it in subparagraph 1.(a) of the
Improvements Lease.
"THIRD PARTY CONTRACT" shall have the meaning assigned to it in
subparagraph 1(A)(2)(b) of the Construction Management Agreement.
"THIRD PARTY PRICE" shall have the meaning assigned to it in subparagraph
1(A)(2) of the Purchase Agreement.
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 25
85
"THIRD PARTY SALE NOTICE" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"THIRD PARTY SALE PROPOSAL" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"THIRD PARTY TARGET PRICE" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"TRANSACTION EXPENSES" means costs incurred in connection with the
preparation and negotiation of the Operative Documents and related documents and
the consummation of the transactions contemplated therein.
"UNDERWRITING FEE" shall have the meaning assigned to it in subparagraph of
the Improvements Lease.
"UNFUNDED BENEFIT LIABILITIES" means, with respect to any Plan or
Multiemployer Plan, the amount (if any) by which the present value of all
benefit liabilities (within the meaning of Section 4001(a)(16) of ERISA) under
the Plan or Multiemployer Plan exceeds the market value of all Plan or
Multiemployer assets allocable to such benefit liabilities, as determined on the
most recent valuation date of the Plan or Multiemployer Plan and in accordance
with the provisions of ERISA for calculating the potential liability of NAI or
any ERISA Affiliate of NAI under Title IV of ERISA.
"UNSECURED SPREAD" means, for each Construction Period or any period
beginning on and including the Base Rent Commencement Date or a Base Rent Date
and ending on but not including the next Base Rent Date, the amount established
as described below in this definition on the date (in this definition, the
"SPREAD TEST DATE") that is two Business Days prior to such period by reference
to the ratio calculated by dividing (1) Adjusted EBIT for the then latest
Rolling Four Quarters Period that ended prior to (and for which NAI has reported
earnings as necessary to compute Adjusted EBIT) into (2) the total Debt of NAI
and its Subsidiaries (determined on a consolidated basis) as of the end of such
Rolling Four Quarters Period. The Unsecured Spread shall be established at the
Level in the pricing grid below which corresponds to such ratio; provided, that:
(a) for any period commencing on or prior to the first Business Day of
January, 2000, the Unsecured Spread will be the amount indicated for Level
III in the pricing grid below;
(b) promptly after earnings are reported by NAI for the latest quarter
in any Rolling Four Quarters Period, NAI must notify BNPLC of any resulting
change in the Unsecured Spread under this definition, and no reduction in
the Unsecured Spread from one period to the next will be effective for
purposes of the Operative Documents unless, prior to the Spread Test Date
for the next period, NAI shall have provided BNPLC with a written notice
setting forth and certifying the calculation under this definition that
justifies the reduction; and
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 26
86
(c) notwithstanding anything to the contrary in this definition, on
any date when an Event of Default has occurred and is continuing, the
Unsecured Spread shall equal the Default Rate less the Effective Rate.
================================================================================
LEVELS RATIO OF TOTAL DEBT TO ADJUSTED EBIT UNSECURED SPREAD
--------------------------------------------------------------------------------
Level I less than 0.5 125.0 basis points
--------------------------------------------------------------------------------
Level II greater than or equal to 0.5, but less than 1.0 137.5 basis points
--------------------------------------------------------------------------------
Level III greater than or equal to 1.0, but less than 1.5 150.0 basis points
--------------------------------------------------------------------------------
Level IV greater than or equal to 1.5, but less than 2.0 175.0 basis points
--------------------------------------------------------------------------------
Level V greater than or equal to 2.0 200.0 basis points
================================================================================
All determinations of the Unsecured Spread by BNPLC shall, in the absence of
clear and demonstrable error, be binding and conclusive for purposes of the
Improvements Lease. Further BNPLC may, but shall not be required, to rely on the
determination of the Unsecured Spread set forth in any notice delivered by NAI
as described above in clause (b) of this definition.
"UPFRONT SYNDICATION FEES" shall have the meaning assigned to it in
subparagraph 2(M) of the Closing Certificate and Agreement.
"VOLUNTARY NAI CONSTRUCTION CONTRIBUTIONS" shall have the meaning assigned
to it in subparagraph 4(C) of the Construction Management Agreement.
"VOLUNTARY RETENTION OF THE PROPERTY" means an affirmative election made by
BNPLC to keep the Property pursuant to, and under the circumstances described
in, the second sentence of subparagraph 1(A)(2)(a) of the Purchase Agreement.
"WORK" shall have the meaning assigned to it in subparagraph 1(A)(2)(a) of
the Construction Management Agreement.
ARTICLE II - RULES OF INTERPRETATION
THE FOLLOWING PROVISIONS WILL APPLY TO AND GOVERN THE INTERPRETATION OF
EACH OF THE OPERATIVE DOCUMENTS:
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 27
87
1. NOTICES. The provision of any Operative Document, or of any Applicable Laws
with reference to the sending, mailing or delivery of any notice or demand under
any Operative Document or with reference to the making of any payment required
under any Operative Document, shall be deemed to be complied with when and if
the following steps are taken:
(i) All Rent and other amounts required to be paid by NAI to BNPLC shall
be paid to BNPLC in immediately available funds by wire transfer to: 1.
Federal Reserve Bank of New York
ABA 000000000 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/ 14334000176
/Ref/ NAI Sunnyvale Synthetic Improvements Lease
or at such other place and in such other manner as BNPLC may designate in a
notice to NAI.
(ii) All Collateral required to be paid by NAI to the Agent shall be paid
in immediately available funds by wire transfer to:
Federal Reserve Bank of New York
ABA 000000000 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/ 14334000176
/Ref/ NAI Collateral Payment
or at such other place and in such other manner as Agent may designate in a
notice to NAI.
(iii) All advances paid to NAI by BNPLC under the Construction Management
Agreement or in connection therewith shall be paid to NAI in immediately
available funds at such place and in such manner as NAI may reasonably
designate from time to time by notice to BNPLC signed by a Responsible
Financial Officer of NAI.
(iv) All notices, demands, approvals, consents and other communications to
be made under any Operative Document to or by the parties thereto must, to
be effective for purpose of such Operative Document, be in writing.
Notices, demands and other communications required or permitted under any
Operative Document are to be sent to the addresses set forth below (or in
the case of communications to Participants, at the addresses set forth in
Schedule 1 to the Participation Agreement) and shall be given by any of the
following means: (A) personal service, with proof of delivery or attempted
delivery retained; (B) electronic communication, whether by telex, telegram
or telecopying (if confirmed in writing sent by United States first class
mail, return receipt requested); or (C) registered or certified first class
mail, return receipt requested. Such addresses may be changed by notice to
the other parties given in the same manner as provided above. Any notice or
other communication sent pursuant to clause (A) or (B) hereof shall be
deemed received upon such personal service or upon dispatch by electronic
means, and, if sent pursuant to clause (C) shall be deemed received five
days following deposit in the mail.
Address of BNPLC:
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 28
88
BNP Leasing Corporation
00000 Xxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxx
Telecopy: (000) 000-0000
With a copy to:
Banque Nationale de Paris, San Francisco
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telecopy: (000) 000-0000
And for draw requests and funding notices, with a copy to:
Banque Nationale de Paris, San Francisco
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxx
Telecopy: (000) 000-0000
Address of NAI:
Network Appliance, Inc.
Attn: Xxxxxx Xxxxxxxx
0000 Xxx Xxxxxx Xxxxxxxxxx
Xxxxx Xxxxx, XX 00000
Telecopy: (000) 000-0000
2. SEVERABILITY. If any term or provision of any Operative Document or the
application thereof shall to any extent be held by a court of competent
jurisdiction to be invalid and unenforceable, the remainder of such document, or
the application of such term or provision other than to the extent to which it
is invalid or unenforceable, shall not be affected thereby.
3. NO MERGER. There shall be no merger of the Improvements Lease or of the
leasehold estate created by the Improvements Lease with any other interest in
the Property by reason of the fact that the same person may acquire or hold,
directly or indirectly, the Improvements Lease or the leasehold estate created
hereby and any other interest in the Property, unless all Persons with an
interest in the Property that would be adversely affected by any such merger
specifically agree in writing that such a merger shall occur. There shall be no
merger of the Purchase Agreement or of the purchase options or obligations
created by the Purchase Agreement with any other interest in the Property by
reason of the
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 29
89
fact that the same person may acquire or hold, directly or indirectly, the
Improvements Lease or the leasehold estate created hereby and any other interest
in the Property, unless all Persons with an interest in the Property that would
be adversely affected by any such merger specifically agree in writing that such
a merger shall occur.
4. NO IMPLIED WAIVER. The failure of BNPLC or NAI to insist at any time upon
the strict performance of any covenant or agreement or to exercise any option,
right, power or remedy contained in any Operative Document shall not be
construed as a waiver or a relinquishment thereof for the future. The failure of
Agent to insist at any time upon the strict performance of any covenant or
agreement or to exercise any option, right, power or remedy contained in the
Pledge Agreement shall not be construed as a waiver or a relinquishment thereof
for the future. The waiver of or redress for any breach of any Operative
Document by any party thereto shall not prevent a similar subsequent act from
constituting a violation. Any express waiver of any provision of any Operative
Document shall affect only the term or condition specified in such waiver and
only for the time and in the manner specifically stated therein. No waiver by
any party to any Operative Document of any provision therein shall be deemed to
have been made unless expressed in writing and signed by the party to be bound
by the waiver. A receipt by BNPLC of any Rent with knowledge of the breach by
NAI of any covenant or agreement contained in the Improvements Lease or any
other Operative Document shall not be deemed a waiver of such breach. A receipt
by Agent of any Collateral or other payment under the Pledge Agreement with
knowledge of the breach by NAI of any covenant or agreement contained in the
Pledge Agreement shall not be deemed a waiver of such breach.
5. ENTIRE AND ONLY AGREEMENTS. The Operative Documents supersede any prior
negotiations and agreements between BNPLC, Agent and NAI concerning the Property
or the Collateral, and no amendment or modification of any Operative Document
shall be binding or valid unless expressed in a writing executed by all parties
to such Operative Document.
6. BINDING EFFECT . Except to the extent, if any, expressly provided to the
contrary in any Operative Document with respect to assignments thereof, all of
the covenants, agreements, terms and conditions to be observed and performed by
the parties to the Operative Documents shall be applicable to and binding upon
their respective successors and, to the extent assignment is permitted
thereunder, their respective assigns.
7. TIME IS OF THE ESSENCE. Time is of the essence as to all obligations of NAI
and BNPLC and all notices required of NAI and BNPLC under the Operative
Documents.
8. GOVERNING LAW. Each Operative Document shall be governed by and construed
in accordance with the laws of the State of California without regard to
conflict or choice of laws (subject, however, in the case of the Pledge
Agreement to any contrary provisions of the" UCC," as defined in the Pledge
Agreement).
9. PARAGRAPH HEADINGS. The paragraph and section headings contained in the
Operative Documents are for convenience only and shall in no way enlarge or
limit the scope or meaning of the various and several provisions thereof.
10. NEGOTIATED DOCUMENTS. All the parties to each Operative Document and their
counsel have reviewed and revised or requested revisions to such Operative
Document, and the usual rule of construction that any ambiguities are to be
resolved against the drafting party shall not apply to the construction or
interpretation of any Operative Documents or any amendments thereof.
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 30
90
11. TERMS NOT EXPRESSLY DEFINED IN AN OPERATIVE DOCUMENT. As used in any
Operative Document, a capitalized term that is not defined therein or in this
Common Definitions and Provisions Agreement (Phase III - Improvements), but is
defined in another Operative Document, shall have the meaning ascribed to it in
the other Operative Document.
12. OTHER TERMS AND REFERENCES. Words of any gender used in each Operative
Document shall be held and construed to include any other gender, and words in
the singular number shall be held to include the plural and vice versa, unless
the context otherwise requires. References in any Operative Document to
Paragraphs, subparagraphs, Sections, subsections or other subdivisions shall
refer to the corresponding Paragraphs, subparagraphs, Sections, subsections or
subdivisions of that Operative Document, unless specific reference is made to
another document or instrument. References in any Operative Document to any
Schedule or Exhibit shall refer to the corresponding Schedule or Exhibit
attached to that Operative Document, which shall be made a part thereof by such
reference. All capitalized terms used in each Operative Document which refer to
other documents shall be deemed to refer to such other documents as they may be
renewed, extended, supplemented, amended or otherwise modified from time to
time, provided such documents are not renewed, extended or modified in breach of
any provision contained in the Operative Documents or, in the case of any other
document to which BNPLC is a party or of which BNPLC is an intended beneficiary,
without the consent of BNPLC. All accounting terms used but not specifically
defined in any Operative Document shall be construed in accordance with GAAP.
The words "this [Agreement]", "herein", "hereof", "hereby", "hereunder" and
words of similar import when used in each Operative Document refer to that
Operative Document as a whole and not to any particular subdivision unless
expressly so limited. The phrases "this Paragraph", "this subparagraph", "this
Section", "this subsection" and similar phrases used in any operative document
refer only to the Paragraph, subparagraph, Section, subsection or other
subdivision described in which the phrase occurs. As used in the Operative
Documents the word "or" is not exclusive. As used in the Operative Documents,
the words "include", "including" and similar terms shall be construed as if
followed by "without limitation to".
13. EXECUTION IN COUNTERPARTS. To facilitate execution, each Operative
Document may be executed in as many identical counterparts as may be required.
It shall not be necessary that the signature of, or on behalf of, each party, or
that the signature of all persons required to bind any party, appear on each
counterpart. All counterparts, taken together, shall collectively constitute a
single instrument. It shall not be necessary in making proof of any Operative
Document to produce or account for more than a single counterpart containing the
respective signatures of, or on behalf of, each of the parties hereto. Any
signature page to any counterpart may be detached from such counterpart without
impairing the legal effect of the signatures thereon and thereafter attached to
another counterpart identical thereto except having attached to it additional
signature pages.
14. NOT A PARTNERSHIP, ETC. NOTHING IN ANY OPERATIVE DOCUMENT IS INTENDED TO
CREATE ANY PARTNERSHIP, JOINT VENTURE, OR OTHER JOINT ENTERPRISE BETWEEN BNPLC
AND NAI. NEITHER THE EXECUTION OF ANY OPERATIVE DOCUMENT NOR THE ADMINISTRATION
THEREOF OR OTHER DOCUMENTS REFERENCED HEREIN BY BNPLC, NOR ANY OTHER RIGHT, DUTY
OR OBLIGATION OF BNPLC UNDER OR PURSUANT TO ANY OPERATIVE DOCUMENT IS INTENDED
TO BE OR TO CREATE ANY FIDUCIARY OBLIGATIONS OF BNPLC TO NAI.
[The signature pages follows.]
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 31
91
IN WITNESS WHEREOF, NAI and BNPLC have caused this Common Definitions and
Provisions Agreement (Phase III - Improvements) to be executed as of June 16,
1999.
"NAI"
NETWORK APPLIANCE, INC.
By:
-----------------------------
Name:
------------------------
Title:
-------------------
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 32
92
[Continuation of signature pages to Common Definitions and Provisions Agreement
(Phase III - Improvements) dated to be effective June 16, 1999]
"BNPLC"
BNP LEASING CORPORATION
By:
----------------------------------
Xxxxx Xxxxxx, Vice President
Common Definitions and Provisions Agreement
(Phase III - Improvements) - Page 33
