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EXHIBIT 10.56
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$62,000,000
PARTICIPATION AGREEMENT
PHASE IV
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
BANQUE NATIONALE DE PARIS,
(A "PARTICIPANT")
EFFECTIVE AS OF DECEMBER ___, 1999
(NETWORK APPLIANCE, INC. - PHASE IV)
(SUNNYVALE, SANTA CLARA COUNTY, CALIFORNIA PROPERTY)
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TABLE OF CONTENTS
Page
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RECITALS.....................................................................................1
AGREEMENTS...................................................................................1
1.0 DEFINITIONS..........................................................................1
1.1. Bank Specific Charges.........................................................1
1.2. Common Definitions and Provisions Agreements..................................2
1.3. Critical Event................................................................2
1.4. Deposit Taker.................................................................2
1.5. Deposit Taker Losses..........................................................2
1.6. Direct Payments...............................................................2
1.7. Distributable Payment.........................................................2
1.8. Late Payment Rate.............................................................2
1.9. Leases........................................................................2
1.10. Majority......................................................................2
1.11. Net Cash Flow.................................................................2
1.12. Net Sales Proceeds............................................................2
1.13. Operative Documents...........................................................3
1.14. Participants..................................................................3
1.15. Participation Agreement Supplement............................................3
1.16. Participation Amount..........................................................3
1.17. Percentage....................................................................4
1.18. Pledge Agreements.............................................................4
1.19. Property......................................................................4
1.20. Protective Advances...........................................................4
1.21. Purchase Agreements...........................................................4
2.0 PAYMENTS FROM BNPLC TO EACH PARTICIPANT..............................................4
2.1. Payments Computed by Reference to Net Cash Flow and Net Sales Proceeds.......4
2.2. Payments Computed by Reference to Bank Specific Charges.......................4
2.3. [Intentionally deleted].......................................................4
2.4. [Intentionally deleted].......................................................4
2.5. Timing; Manner of Payment.....................................................4
2.6. Meaning of Actually Received..................................................5
3.0 PAYMENTS FROM THE PARTICIPANTS TO BNPLC..............................................5
3.1. Initial Funding Advance.......................................................5
3.2. [Intentionally deleted].......................................................5
3.3. Protective Advances...........................................................5
3.3.1. General................................................................5
3.3.2. Exceptions.............................................................6
3.4. Method of Payment.............................................................6
4.0 OTHER ADJUSTMENTS, DEDUCTIONS AND INVESTMENTS........................................6
4.1. [Intentionally deleted].......................................................6
4.2. Setoff........................................................................6
4.3. [Intentionally deleted].......................................................6
4.4. Sharing of Payments...........................................................6
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4.5. Withholding Taxes.............................................................7
4.6. Order of Application..........................................................7
4.7. Investments Pending Dispute Resolution; Overnight Investments.................7
5.0 NATURE OF THIS AGREEMENT.............................................................8
5.1. No Conveyance.................................................................8
5.2. Not a Partnership, Etc........................................................8
6.0 AMENDMENTS; WAIVERS; EXERCISE OF RIGHTS AND REMEDIES AGAINST NAI.....................9
6.1. Limitations...................................................................9
6.2. General......................................................................11
6.3. Conflicts and Purchase Agreements Defaults...................................11
6.4. Refusal to Give Consents; Failure to Fund; Failure of a Deposit Taker to
Satisfy Minimum Ratings......................................................11
7.0 REQUIRED REPAYMENTS.................................................................12
8.0 NAI INFORMATION; INDEPENDENT ANALYSIS...............................................12
9.0 PERFORMANCE THROUGH REPRESENTATIVES.................................................12
10.0 DUTY OF CARE........................................................................12
11.0 REPRESENTATIONS BY EACH PARTICIPANT.................................................13
11.1. Nature of this Agreement.....................................................13
11.2. No Default or Violation......................................................13
11.3. No Suits.....................................................................13
11.4. Organization.................................................................13
11.5. Enforceability...............................................................13
11.6. No Funding With Plan Assets..................................................13
12.0 REPRESENTATIONS BY BNPLC............................................................14
12.1. No Default or Violation......................................................14
12.2. No Suits.....................................................................14
12.3. Organization.................................................................14
12.4. Enforceability...............................................................14
12.5. Liens Removable by BNPLC.....................................................14
12.6. BNPLC's Status as a Subsidiary of a Bank Holding Company.....................14
13.0 ASSIGNMENTS.........................................................................14
13.1. By the Participants Generally................................................14
13.2. By BNPLC.....................................................................15
13.3. Execution of Participation Agreement Supplements.............................15
13.4. Regulation A.................................................................15
13.5. Costs........................................................................15
14.0 GOVERNING LAW; SUBMISSION TO PROCESS; WAIVER OF JURY TRIAL..........................15
15.0 TERMINATION.........................................................................16
16.0 MISCELLANEOUS.......................................................................16
16.1. Reliance by Others...........................................................16
16.2. Waivers, Etc.................................................................16
16.3. Severability.................................................................16
16.4. Notices......................................................................16
16.5. Construction.................................................................17
16.6. Headings.....................................................................17
16.7. Entire Agreement.............................................................17
16.8. Further Assurances...........................................................17
16.9. Impairment of Operative Documents............................................17
16.10. Books and Records............................................................18
16.11. Definition of Knowledge......................................................18
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16.12. Attorneys' Fees..............................................................18
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Exhibits and Schedules
Schedule 1.................................................Names and Addresses of Participants
Exhibit A..............................................Participation Agreement Supplement Form
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PARTICIPATION AGREEMENT
This Agreement (this "AGREEMENT") is made as of December ___, 1999, by and
between BNP LEASING CORPORATION ("BNPLC"), a Delaware corporation, and the
Participants (as defined below).
RECITALS:
A. BNPLC and Network Appliance, Inc. ("NAI") have entered into the
following agreements, each dated as of December ___, 1999, relating to the
Improvements: a Lease Agreement (Phase IV - Improvements) (the "PHASE IV
IMPROVEMENTS LEASE"); a Purchase Agreement (Phase IV - Improvements) (the "PHASE
IV IMPROVEMENTS PURCHASE AGREEMENT"); a Common Definitions and Provisions
Agreement (Phase IV - Improvements) (the "PHASE IV IMPROVEMENTS CDPA"); and a
Closing Certificate and Agreement (the "CLOSING CERTIFICATE"). Also, BNPLC, NAI,
the Participants and Banque Nationale de Paris, in its capacity as agent for
BNPLC and the Participants (in such capacity, "AGENT") have entered into a
Pledge Agreement (Phase IV - Improvements) dated as of December ___, 1999 (the
"PHASE IV IMPROVEMENTS PLEDGE AGREEMENT").
B. BNPLC and NAI have also entered into the following agreements, each
dated as of December ___, 1999, relating to the Land: a Lease Agreement (Phase
IV - Land) (the "PHASE IV LAND LEASE"); a Purchase Agreement (Phase IV - Land)
(the "PHASE IV LAND PURCHASE Agreement"); a Common Definitions and Provisions
Agreement (Phase IV - Land) (the "PHASE IV LAND CDPA"); and the Closing
Certificate. Also, BNPLC, NAI, the Participants and Agent have entered into a
Pledge Agreement (Phase IV - Land) dated as of December ___, 1999 (the "PHASE IV
LAND PLEDGE AGREEMENT").
C. By this Agreement, the parties desire to evidence the Participants'
agreement to participate with BNPLC in certain of the risks and rewards to BNPLC
of the aforementioned agreements, which participation is to be accomplished
through the exchange of promises to make payments computed by reference to the
sums paid or received by BNPLC from time to time with respect to the
aforementioned agreements, all as more particularly provided below.
AGREEMENTS
NOW, THEREFORE, BNPLC and the Participants hereby agree as follows:
1.0 DEFINITIONS. As used herein, capitalized terms defined above shall have the
meanings assigned to them above; capitalized terms that are defined in one, but
not both, of the Phase IV Improvements CDPA and the Phase IV Land CDPA and that
are used but not defined herein shall have the respective meanings assigned to
them in the Phase IV Improvements CDPA or Phase IV Land CDPA, as applicable;
capitalized terms that are defined in both of the Phase IV Improvements CDPA and
the Phase IV Land CDPA and that are and used but not defined herein shall have
the respective meanings assigned to them in the Phase IV Improvements CDPA and
the Phase IV Land CDPA (provided, if the meaning assigned to any such
capitalized term in the Phase IV Improvements CDPA is different than the meaning
assigned to it in the Phase IV Land CDPA, the term will be construed broadly for
purposes of this Agreement to include anything that would fall within one or
both of the definitions of the term in the Phase IV Improvements CDPA and the
Phase IV Land CDPA); and, the following capitalized terms shall have the
following meanings:
1.1. "BANK SPECIFIC CHARGES" means payments made to BNPLC by or on behalf
of NAI for the account of a Participant or any other Interested Party under
subparagraph 5(c)(i) or 5(c)(ii) of the Leases or
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as Upfront Syndication Fees. Bank Specific Charges include, for example,
payments made to compensate a Participant for an increase in costs related to
advances made by the Participant hereunder and attributable to a Banking Rules
Change after the Effective Date.
1.2. "COMMON DEFINITIONS AND PROVISIONS AGREEMENTS" means the Phase IV
Improvements CDPA and the Phase IV Land CDPA.
1.3. "CRITICAL EVENT" means any of the following:
1.3.1. any failure by NAI to purchase BNPLC's interest in the Property
or to cause an Applicable Purchaser to purchase BNPLC's interest in the
Property when required under the Purchase Agreements; or
1.3.2. any failure by NAI to pay Base Rent which continues for 10
days.
1.4. "DEPOSIT TAKER" shall have the meaning assigned to it in the Pledge
Agreements.
1.5. "DEPOSIT TAKER LOSSES" shall have the meaning assigned to it in the
Pledge Agreements.
1.6. "DIRECT PAYMENTS", like the phrase "Direct Payments to Participants"
under the Purchase Agreements, means the amounts paid or required to be paid
directly to Participants on the Designated Sale Date as provided in Section 6.2
of the Pledge Agreements at the direction of and for NAI by Agent from all or
any part of the Collateral described therein.
1.7. "DISTRIBUTABLE PAYMENT" means any payment ACTUALLY RECEIVED by BNPLC
under the Leases or other Operative Documents as (or in satisfaction of NAI's
obligations for) any of the following or interest on past due amounts thereof:
Base Rent; Qualified Prepayments; Bank Specific Charges; a Supplemental Payment;
or Net Sales Proceeds.
1.8. "LATE PAYMENT RATE" means (a) for each day (other than as set forth in
clause (b) of this sentence) the Fed Funds Rate or (b) for the purpose of
computing interest on past due payments for each day following the fifth day
after such payments first became due, a rate of two percent (2%) per annum in
excess of the Prime Rate then in effect; provided, the Late Payment Rate shall
not, notwithstanding anything to the contrary herein contained, exceed the
maximum rate of interest permitted by applicable law.
1.9. "LEASES" means the Phase IV Improvements Lease and the Phase IV Land
Lease.
1.10. "MAJORITY" means, at the time any determination thereof is required,
any of the Participants and BNPLC, the aggregate Percentages of which equal or
exceed sixty-seven percent (67%) of the Percentages of BNPLC and of all the
Participants then entitled to vote under Section 6.1.
1.11. "NET CASH FLOW" means payments made to BNPLC under the Leases or
other Operative Documents as (or in satisfaction of NAI's obligations for) Base
Rent, Qualified Prepayments, any Supplemental Payment or any interest on past
due Base Rent, Qualified Prepayments or a Supplemental Payment.
1.12. "NET SALES PROCEEDS" means payments made to BNPLC under the Purchase
Agreements as (or in satisfaction of NAI's or an Applicable Purchaser's
obligations for) the purchase price for BNPLC's interest in Property or in
Escrowed Proceeds; but less and excluding (x) any such payments applied by
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BNPLC to pay, or received by BNPLC as reimbursement for, bona fide costs of a
sale under the Purchase Agreements, and (y) any excess sales proceeds received
from an Applicable Purchaser that BNPLC is required by Paragraph 1(A)(2)(b) or
2(D) of the Purchase Agreements to pay over to NAI. Further, if BNPLC does not
sell the Property to NAI or an Applicable Purchaser pursuant to the Purchase
Agreements, then "NET SALES PROCEEDS" shall also include the excess, if any, of:
1.12.1. all rents and sales, condemnation and insurance proceeds
ACTUALLY RECEIVED by BNPLC (other than sales proceeds paid or to be paid by
BNPLC to NAI pursuant to Paragraph 2(D) of the Purchase Agreements) from
any sale or lease after the Designated Sale Date of any interest in, or
because of any subsequent taking or damage to, the Property; over
1.12.2. the sum of (i) all costs of collecting the rents and proceeds
described in the preceding clause 1.12.1, plus (ii) all ad valorem taxes,
insurance premiums and other Losses of every kind suffered or incurred by
BNPLC with respect to the ownership, operation or maintenance of the
Property.
However, for purposes of computing any excess described in the preceding
sentence, costs described in clause 1.12.2 shall not include BNPLC's general
overhead costs or any Protective Advances for which the Participants have
already paid BNPLC their respective Percentages thereof as required by Section
3.3.
1.13. "OPERATIVE DOCUMENTS" means all of Operative Documents under and as
defined in the Phase IV Improvements CDPA and Operative Documents under and as
defined in the Phase IV Land CDPA. The term Operative Documents includes the
Phase IV Improvements Lease, the Phase IV Improvements Purchase Agreement, the
Phase IV Improvements Pledge Agreement, the Phase IV Improvements CDPA, the
Closing Certificate, the Phase IV Land Lease, the Phase IV Land Purchase
Agreement, the Phase IV Land Pledge Agreement, and the Phase IV Land CDPA.
1.14. "PARTICIPANTS" means Banque Nationale de Paris and any other
financial institutions which may hereafter become parties to (i) this Agreement
(by joining with BNPLC in completing and executing a Participation Agreement
Supplement) and (ii) the Pledge Agreements, in each case pursuant to a Permitted
Transfer.
1.15. "PARTICIPATION AGREEMENT SUPPLEMENT" means a Participation Agreement
Supplement in substantially the form attached hereto as Exhibit A, completed and
executed by BNPLC and a Participant, adding the Participant as a party to this
Agreement, changing a Participant's Percentage or removing a Participant as a
party to this Agreement.
1.16. "PARTICIPATION AMOUNT" of BNPLC or any Participant means the
outstanding balance from time to time of the total investment made by BNPLC
under the Operative Documents or by the applicable Participant hereunder. The
Participation Amount of BNPLC and each Participant will be comparable to its
share of the outstanding principal balance that would be due from NAI from time
to time if BNPLC had made a loan (and the Participants had participated in the
loan) to NAI for NAI's acquisition of the Land and the Improvements as provided
in the Operative Documents, instead of BNPLC's having acquired the Property
itself and having leased the same to NAI as provided in the Operative Documents.
Absent a failure by any Participant to make a payment required by Section 3.2 or
some other unexpected contingency, it is expected that (a) the Participation
Amounts of BNPLC and the Participants will always be in proportion to their
respective Percentages set forth in SCHEDULE 1, and (b) the total Participation
Amounts of BNPLC and all Participants during the Term of the Leases shall equal
the Stipulated Loss Value computed from time to time under the Leases.
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1.17. "PERCENTAGE" of each Participant means, subject to change as provided
in Section 4.1 and to change by a Participation Agreement Supplement, the
percentage designated as the Participant's "Percentage" in SCHEDULE 1.
"PERCENTAGE" of BNPLC means a percentage that, at the time a determination of
such Percentage is required hereunder, is equal to 100% less the sum of the
Percentages of all the Participants.
1.18. "PLEDGE AGREEMENTS" means the Phase IV Improvements Pledge Agreement
and the Phase IV Land Pledge Agreement.
1.19. "PROPERTY" means all real and personal property covered from time to
time by the Phase IV Improvements Lease and the Phase IV Land Lease.
1.20. "PROTECTIVE ADVANCES" shall mean any payments (including payments to
attorneys, accountants, experts and other advisors) made by or on behalf of
BNPLC at any time or from time to time because of, arising out of or related to,
in whole or in part: (1) the Property or the protection, preservation, operation
or ownership thereof; (2) any of the Operative Documents or the transactions
contemplated therein; or (3) BNPLC's status as a party to any of the Operative
Documents or anything done by BNPLC to enforce the obligations of NAI under the
Operative Documents (whether done upon BNPLC's own initiative or upon the
direction of the Majority). Protective Advances will include any and all
payments made by or on behalf of BNPLC for which NAI is obligated to indemnify
or reimburse BNPLC by Paragraph 5(c) of the Leases.
1.21. "PURCHASE AGREEMENTS" means the Phase IV Improvements Purchase
Agreement and, from and the Phase IV Land Purchase Agreement.
2.0 PAYMENTS FROM BNPLC TO EACH PARTICIPANT.
2.1. Payments Computed by Reference to Net Cash Flow and Net Sales
Proceeds. Upon the ACTUAL RECEIPT of any Net Cash Flow, Net Sales Proceeds or
interest thereon, BNPLC will pay each Participant an amount equal to such
Participant's Percentage times such Net Cash Flow, Net Sales Proceeds or
interest, as the case may be.
2.2. Payments Computed by Reference to Bank Specific Charges. If BNPLC
ACTUALLY RECEIVES any Bank Specific Charges (or interest thereon) for the
account of a particular Participant, then BNPLC promises to promptly make a
payment to such Participant equal to such Bank Specific Charges (or interest
thereon). If requested by any Participant, BNPLC shall make a demand upon NAI
for payment of any Bank Specific Charges due for the account of such
Participant.
2.3. [Intentionally deleted]
2.4. [Intentionally deleted]
2.5. Timing; Manner of Payment. Each payment required of BNPLC by this
Article 2 shall be made prior to 12:00 noon, San Francisco time, on the same day
that BNPLC actually receives the corresponding Distributable Payment (in good
funds), if BNPLC's receipt of the corresponding Distributable Payment occurs
prior to 12:00 noon, San Francisco time; if, however, BNPLC's receipt of the
Distributable Payment (in good funds) occurs on any day after 12:00 noon, San
Francisco time, the payments required from BNPLC to the Participants shall not
be due until 12:00 noon, San Francisco time, on the next Business Day. All
payments from BNPLC to the Participants shall be by transfer of federal funds
pursuant to the wiring instructions set forth in SCHEDULE 1. Each payment owing
to a Participant by BNPLC shall bear interest from the date it is due until it
is paid by BNPLC at the Late Payment Rate
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calculated on the basis of a 360-day year. Any payment by BNPLC to a Participant
after the time of day specified herein for such payment shall be deemed not paid
until the next following Business Day for purposes of this Agreement.
2.6. Meaning of Actually Received. As used herein with respect to payments,
"actually received" and words of like effect shall include not only payments
made directly from NAI or any Applicable Purchaser, but also amounts paid by
others on NAI's behalf, amounts realized by way of setoff, amounts realized upon
the disposition of collateral under the Pledge Agreement and any other documents
that may be given from time to time to secure NAI's obligations under Leases or
Purchase Agreements (net of the costs of disposition and further net of any
amounts that must be returned to NAI or any third party having an interest in
such collateral), and the fair market value of any property or services accepted
in lieu of a cash payment (though it is understood that nothing herein contained
shall require BNPLC to accept property or services in lieu of a cash payment
required by the Operative Documents and that BNPLC will not agree to accept
property or services in lieu of any cash Distributable Payment without the
Participants' prior written consent). Such phrase shall not, however, include
amounts received by BNPLC from any of the Participants or from any affiliate of
BNPLC unless the context otherwise indicates. In the event of any reduction in
Net Sales Proceeds "actually received" by BNPLC (as described in the preceding
sentences) because of a reduction in the Break Even Price attributable to any
Direct Payments or Deposit Taker Losses, BNPLC will be deemed for purposes of
this Agreement to have received additional Net Sales Proceeds from NAI equal to
such reduction. In such event, however, BNPLC will be entitled to a credit
against the payments that would otherwise be required to any Participant
hereunder equal to the aggregate amount, if any, of (1) Direct Payments which
are ACTUALLY RECEIVED by such Participant, and (2) Deposit Taker Losses with
respect to any Deposit Taker for such Participant.
3.0 PAYMENTS FROM THE PARTICIPANTS TO BNPLC.
3.1. Initial Funding Advance. Each of the original Participants joining in
the execution of this Agreement promises to pay to BNPLC an initial payment as
set forth below such Participant's name on SCHEDULE 1, equal to the
Participant's Percentage times the sum of the Initial Funding Advances under and
as defined in the Leases. BNPLC shall have no obligation hereunder to any of the
original Participants that fails to pay such initial payment. Such initial
payment shall be due no later than 12:00 noon, San Francisco time, on the date
hereof.
3.2. [Intentionally deleted].
3.3. Protective Advances.
3.3.1. General. If NAI fails to pay or reimburse any Protective
Advance to BNPLC within ten days after BNPLC makes a demand or request
therefor, BNPLC may notify the Participants of such failure. Promptly after
receipt of any such notice, each Participant shall pay to BNPLC an amount
equal to such Participant's Percentage times the Protective Advance
described in the notice, EVEN IF THE PROTECTIVE ADVANCE WOULD NOT HAVE BEEN
PAID BUT FOR ANY ACTUAL OR ALLEGED NEGLIGENCE OF BNPLC OR ITS AFFILIATES OR
REPRESENTATIVES AND EVEN IF THE PROTECTIVE ADVANCE WOULD NOT HAVE BEEN PAID
BUT FOR ANY ENVIRONMENTAL LOSSES OR OTHER MATTERS OR CIRCUMSTANCES FOR
WHICH BNPLC MAY BE STRICTLY LIABLE. After any Participant has paid its
respective Percentage times the Protective Advance to BNPLC, BNPLC shall be
obligated to pay to such Participant an amount equal to its Adjusted
Percentage (as defined below) times any subsequent Excess Reimbursement (as
defined below) or interest thereon ACTUALLY RECEIVED by BNPLC from NAI for
the Protective Advance. As used in this Agreement the "ADJUSTED
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PERCENTAGE" of any Participant shall equal (i) such Participant's
Percentage, divided by (ii) the sum of BNPLC's Percentage and the
Percentages of all Participants who have paid BNPLC their respective shares
of the Protective Advance at issue. As used in this Agreement, the term
"EXCESS REIMBURSEMENT" shall mean, for the Protective Advance at issue,
amounts reimbursed or paid by NAI to or on behalf of BNPLC on account of
such Protective Advance in excess of (i) such Protective Advance, times
(ii) the Percentages of any Participants that have not paid BNPLC their
respective Percentages of such Protective Advance.
3.3.2. Exceptions. Notwithstanding the foregoing, no Participant shall
be required to make any payment pursuant to this Section 3.3 related to a
Protective Advance that (1) consists of a payment of Excluded Taxes, or (2)
is paid only because of a transfer or assignment by BNPLC of its right to
receive Distributable Payments or its rights and interests in and to the
Property, the Operative Documents or this Agreement to BNPLC's Affiliates.
Further, nothing in this Section 3.3 shall be construed to require a
payment by a Participant for that portion or percentage, if any, of a
Protective Advance required only because of (and attributed by any
applicable principles of comparative fault to): (a) conduct of BNPLC or a
Representative of BNPLC that has been determined to constitute gross
negligence or wilful misconduct in or as a necessary element of a final
judgment rendered against BNPLC or such Representative by a court with
jurisdiction to make such determination; (b) any representation made by
BNPLC in the Operative Documents that is false in any material respect and
that BNPLC knew was false at the time of BNPLC's execution of the Operative
Documents; or (c) Liens Removable by BNPLC. As used in this Agreement,
"gross negligence" of BNPLC shall not include any negligent failure of
BNPLC to act when the duty to act would not have been imposed but for
BNPLC's status as owner of the Property or as a party to the Operative
Documents.
3.4. Method of Payment. All payments made by the Participants to BNPLC
shall be made by transfer of federal funds to BNPLC pursuant to the wiring
instructions for BNPLC set forth on SCHEDULE 1. Each payment owing to BNPLC by
any Participant shall be payable to BNPLC on the date specified herein or, if
not specified, on demand and shall bear interest from the date due until the
date paid by the Participant at the Late Payment Rate calculated on the basis of
a 360-day year. Any payment by a Participant to BNPLC after the time of day
specified herein for such payment shall be deemed not paid until the next
following Business Day for purposes of this Agreement.
4.0 OTHER ADJUSTMENTS, DEDUCTIONS AND INVESTMENTS.
4.1. [Intentionally deleted]
4.2. Setoff. In the event that one party to this Agreement has failed to
pay to a second party hereto any amount when due hereunder, the second party may
deduct such amount and interest thereon at the Late Payment Rate from any
payments due from it under this Agreement to the first party. Without
limitation, BNPLC may setoff amounts owed to it by any Defaulting Participant
against any termination fee payable to such Defaulting Participant pursuant to
Section 6.4 below if BNPLC shall elect to reduce such Defaulting Participant's
Percentage to zero as provided in Section 6.4.
4.3. [Intentionally deleted]
4.4. Sharing of Payments. Each Participant agrees that if for any reason it
shall obtain a payment made by or for NAI that reduces any Distributable
Payment, and if such payment will cause such Participant to receive more than it
would have received had such payment been made instead to BNPLC and generated
the payments by BNPLC contemplated in this Agreement, then (1) such Participant
shall promptly purchase interests in the rights of other parties to this
Agreement as necessary to cause BNPLC
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and all Participants to share payments as they otherwise would have done under
this Agreement, and (2) such other adjustments shall be made from time to time
as shall be equitable to ensure that BNPLC and all Participants share all
payments of (or that operate to reduce) Distributable Payments as they otherwise
would have done under this Agreement. If, however, the payment received by the
purchasing Participant or any part thereof is later recovered from the
purchasing Participant, the purchase provided for in this Section shall be
rescinded, and the price paid by the purchasing Participant to other parties
shall be repaid by them to the purchasing Participant to the extent of such
recovery. Also, if the purchasing Participant is required by court order to pay
interest on the payment so recovered, then amounts repaid to the purchasing
Participant by the other parties will be repaid with interest, computed in the
same manner as the interest required by the court order. Nothing in this Section
shall in any way affect the right of BNPLC or any Participant to obtain payment
(whether by exercise of rights of banker's lien, set-off or counterclaim or
otherwise) of indebtedness or obligations other than those established by this
Agreement or any of the Operative Documents.
4.5. Withholding Taxes. BNPLC may deduct any United States withholding tax
required on payments to a Participant hereunder from such payments, and the
Participant shall reimburse BNPLC for any such taxes BNPLC is required to pay
and that BNPLC has not deducted. If BNPLC is uncertain whether United States
withholding tax is required, BNPLC may, after notice to the applicable
Participant, deduct the withholding tax except during any period when BNPLC is
excused from such withholding because of the Participant's delivery to BNPLC of
(i) a statement in duplicate conforming to the requirements of United States
Treasury Regulation Section 1.1441-5(b) or (ii) two duly completed copies of
Internal Revenue Service Form W-8BEN or any successor form thereto ("FORM
W-8BEN") relating to the Participant and claiming complete exemption from
withholding tax on all amounts to be received by the Participant pursuant to
this Agreement or (iii) a valid United States Internal Revenue Service Form
W-8EC1 or any successor form thereto ("FORM W-8EC1") relating to the Participant
and claiming complete exemption from withholding tax on all amounts to be
received by the Participant pursuant to this Agreement. Any Participant shall,
if requested by BNPLC, deliver to BNPLC subsequent statements with respect to
such Treasury Regulation or two additional copies of Form W-8BEN or Form W-8EC1,
or the applicable replacement forms, on or before the date that any prior such
delivered statements or forms expire or become obsolete. If any such statement
or form delivered by a Participant to BNPLC becomes invalid or inapplicable as
to such Participant, such Participant shall promptly inform BNPLC. The
obligations of each Participant pursuant to this Section 4.5 shall survive the
termination of this Agreement.
4.6. Order of Application. For purposes of this Agreement, BNPLC shall be
entitled, but not required, to apply any payments received from NAI under the
Operative Documents to satisfy (1) NAI's obligation to pay or reimburse
Protective Advances (and interest thereon), if any, and (2) costs incurred by
BNPLC because of any sale under the Purchase Agreements, before applying such
payments to satisfy NAI's other obligations, regardless of how NAI may have
designated such payments.
4.7. Investments Pending Dispute Resolution; Overnight Investments.
Whenever BNPLC in good faith determines that it does not have all information
needed to determine how payments to the Participants must be made on account of
any Distributable Payments, or whenever BNPLC in good faith determines that
there is any dispute among the Participants about payments which must be made on
account of Distributable Payments, BNPLC may choose to defer the payments to
Participants which are the subject of such missing information or dispute.
However, to minimize any such deferral, BNPLC shall attempt diligently to obtain
any missing information needed to determine how payments to the Participants
must be made. Also, pending any such deferral, or if BNPLC is otherwise required
to invest funds pending distribution to the Participants, BNPLC shall endeavor
to invest the payments at issue. In addition, if BNPLC receives any
Distributable Payment after 12:00 noon, San Francisco time, on any day and will
not make payments to Participants in connection therewith until the next
Business Day pursuant to Section 2.5,
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then BNPLC shall endeavor to invest such payments overnight; provided that BNPLC
shall have no liability to the Participants if BNPLC is unable to make such
investments. Investments by BNPLC shall be in the overnight federal funds market
pending distribution, and the interest earned on each dollar of principal so
invested shall be paid to the Person entitled to receive such dollar of
principal when the principal is paid to such Person.
5.0 NATURE OF THIS AGREEMENT.
5.1. No Conveyance. THIS AGREEMENT IS INTENDED TO CREATE CONTRACTUAL RIGHTS
IN FAVOR OF EACH PARTICIPANT TO RECEIVE PAYMENTS FROM BNPLC, BUT IT IS NOT
INTENDED TO CONVEY OR ASSIGN TO THE PARTICIPANTS ANY INTEREST IN THE PROPERTY OR
IN THE OPERATIVE DOCUMENTS OR IN THE PAYMENTS TO BE MADE TO BNPLC THEREUNDER. IN
NO EVENT SHALL ANY PARTICIPANT EXERCISE OR ATTEMPT TO EXERCISE ANY RIGHT OR
REMEDY OF BNPLC UNDER THE OPERATIVE DOCUMENTS. NOTHING IN THIS AGREEMENT SHALL
BE CONSTRUED TO GRANT TO THE PARTICIPANTS ANY RIGHT TO ENFORCE NAI'S OBLIGATIONS
UNDER THE OPERATIVE DOCUMENTS OR TO COLLECT DIRECTLY FROM NAI ANY PAYMENTS DUE
FROM NAI THEREUNDER. ALTHOUGH BNPLC'S OBLIGATIONS FOR PAYMENTS TO THE
PARTICIPANTS HEREUNDER SHALL BE COMPUTED BY REFERENCE TO FUNDS ACTUALLY RECEIVED
AS DISTRIBUTABLE PAYMENTS, THIS AGREEMENT SHALL NOT BE CONSTRUED AS AN
ASSIGNMENT OF DISTRIBUTABLE PAYMENTS THEMSELVES OR ANY INTEREST THEREIN, IT
BEING UNDERSTOOD THAT (WITHOUT LIMITING OR EXPANDING THE DOLLAR AMOUNT OF SUCH
OBLIGATIONS) BNPLC MAY SATISFY SUCH OBLIGATIONS FROM OTHER FUNDS AVAILABLE TO
IT, THEREBY RESERVING DISTRIBUTABLE PAYMENTS FOR PAYMENT TO OTHER CREDITORS OR
FOR OTHER PURPOSES, AS BNPLC SHALL DETERMINE IN ITS SOLE DISCRETION.
5.2. Not a Partnership, Etc. NEITHER THE EXECUTION OF THIS AGREEMENT, NOR
THE SHARING OF RISKS AND REWARDS UNDER THE OPERATIVE DOCUMENTS, NOR ANY
AGREEMENT TO SHARE IN PROFITS OR LOSSES ARISING AS A RESULT OF THE TRANSACTIONS
CONTEMPLATED THEREBY, IS INTENDED TO BE OR TO CREATE, AND THE FOREGOING SHALL BE
CONSTRUED NOT TO BE OR TO CREATE ANY PARTNERSHIP, JOINT VENTURE, OR OTHER JOINT
ENTERPRISE BETWEEN BNPLC AND ANY PARTICIPANT. NEITHER THE EXECUTION OF THIS
AGREEMENT NOR THE MANAGEMENT AND ADMINISTRATION OF THE OPERATIVE DOCUMENTS AND
THE RELATED DOCUMENTS BY BNPLC, NOR ANY OTHER RIGHT, DUTY OR OBLIGATION OF BNPLC
UNDER OR PURSUANT TO THIS AGREEMENT IS INTENDED TO BE OR TO CREATE ANY FIDUCIARY
RELATIONSHIP BETWEEN BNPLC AND ANY PARTICIPANT.
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6.0 AMENDMENTS; WAIVERS; EXERCISE OF RIGHTS AND REMEDIES AGAINST NAI.
6.1. Limitations. Subject to Section 6.3, but notwithstanding anything else
to the contrary in this Agreement:
6.1.1. BNPLC shall not:
6.1.1.1. without the prior written consent of the Participants,
execute any waiver, modification or amendment of the Operative
Documents that would: (1) increase the amounts the Participants may be
required to pay to BNPLC hereunder; or (2) reduce or postpone (or
reasonably be expected to reduce or postpone) any payments that any
Participant would, but for such modification or amendment, be expected
to receive from BNPLC hereunder (including any extension of the Term
of the Leases); (3) excuse or diminish NAI's obligations to provide
Collateral under the Pledge Agreements during any "Mandatory
Collateral Period" (as described in Part III of Schedule 1 attached to
the Leases); or (4) except as otherwise expressly permitted by the
Operative Documents, release BNPLC's interest in all or a substantial
part of the Property or release any security interest in Collateral
pledged under the Pledge Agreements; or
6.1.1.2. without the prior written consent of a Majority, execute
any other waiver, modification or amendment of the Operative
Documents, except a waiver, modification or amendment that NAI
requests pursuant to express provisions of the Operative Documents and
that BNPLC believes in good faith it must execute to satisfy the
requirements of the Operative Documents; or
6.1.1.3. over the written objection of a Majority, affirmatively
elect a Voluntary Retention of the Property pursuant to subparagraph
1(A)(2)(a) of the Purchase Agreements.
However, this subsection 6.1.1 shall not limit BNPLC's right to forebear
from exercising rights against NAI to the extent BNPLC shall determine in
good faith that such forbearance is appropriate and is permitted by the
following subsections in this Section 6.1. Upon the direction of the
Majority, BNPLC shall execute any waiver, modification or amendment of the
Operative Documents requested by NAI; provided, that: (A) the waiver,
modification or amendment is not prohibited by the forgoing provisions of
this Agreement, (B) the waiver, modification or amendment does not (1)
increase the amount BNPLC may be required to pay to NAI or anyone else, or
(2) reduce or postpone (and cannot reasonably be expected to reduce or
postpone) any payments that BNPLC would, but for such modification or
amendment, be expected to receive, or (3) release BNPLC's interest in all
or a substantial part of the Property; and (C) BNPLC is not excused from
executing the waiver, modification or amendment by Section 6.3.
6.1.2. BNPLC will, with reasonable promptness, provide the
Participants with copies of all default notices it sends or receives under
the Operative Documents and notify the Participants of any Event of Default
under the Leases or Critical Event of which BNPLC is actually aware and of
any other matters known to BNPLC which, in BNPLC's reasonable judgment, are
likely to materially affect the payments any Participant will be required
to make or be entitled to receive under this Agreement, but BNPLC will not
in any event be liable to any Participant for BNPLC's failure to do so
unless such failure constitutes gross negligence or wilful misconduct on
the part of BNPLC.
6.1.3. Before taking possession of the Property because of any breach
by NAI of the Operative Documents, filing any lawsuit against NAI,
exercising foreclosure or offset rights against the
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Collateral under the Pledge Agreements, or exercising termination rights
provided in subparagraph 1(c) of the Leases or subparagraph 4(B) of the
Purchase Agreements, or if requested in writing by any Participant at any
time when a Critical Event has occurred and is continuing, BNPLC shall call
a meeting with the Participants to discuss what action by BNPLC, if any, is
appropriate under the Operative Documents and what direction, if any, a
Majority may give to BNPLC. Such meeting shall be scheduled during regular
business hours in the offices of Banque Nationale de Paris, San Francisco,
or another appropriate location in San Francisco, California, not earlier
than five and not later than twenty Business Days after BNPLC's receipt of
the written request from any Participant. BNPLC shall attempt in good faith
and with reasonable diligence to comply with the direction of a Majority
if, when a Critical Event or an Event of Default have occurred and be
continuing, a Majority shall direct BNPLC in writing to do any one or more
of the following, as applicable under the circumstances: (a) send any
default notices required before a Critical Event can become an Event of
Default, (b) bring a lawsuit against NAI to enforce the Operative
Documents, or (c) exercise termination rights provided in subparagraph 1(c)
of the Leases or subparagraph 4(B) of the Purchase Agreements. However, if
BNPLC is not a member of the Majority voting pursuant to this subsection
6.1.3 in favor of any such action, then BNPLC may require that it first
receive the written agreement (in form reasonably acceptable to BNPLC) of
the members of the Majority so voting to indemnify BNPLC from and against
all costs, liabilities and claims that may be incurred by or asserted
against BNPLC because of the action the Majority directs BNPLC to take. In
no event shall any Participant instigate any suit or other action directly
against NAI with respect to the Operative Documents or the Property, even
if the Participant would, but for this Agreement, be entitled to do so as a
party or third party beneficiary under the Operative Documents or
otherwise.
6.1.4. In the event NAI or an Applicable Purchaser fails to purchase
the Property on the Designated Sale Date when required to do so pursuant to
the Purchase Agreements, BNPLC shall, unless the Participants shall
otherwise agree in writing, bring suit against NAI to enforce the Operative
Documents in such form as shall be recommended by reputable counsel no
later than sixty days after the expiration of any applicable cure or grace
period given NAI by the express terms of the Purchase Agreements, and
thereafter BNPLC shall prosecute the suit with reasonable diligence in
accordance with the advice of reputable counsel. If BNPLC acquires the
interests of NAI in any of the Property as a result of such suit or
otherwise, BNPLC shall thereafter proceed with reasonable diligence to sell
the Property in a commercially reasonable manner to one or more bona fide
third party purchasers and shall in any event have consummated the sale of
the entire Property (through a single sale of the entire property or a
series of sales of parts) within five years following the date BNPLC
recovers possession of the Property at the best price or prices BNPLC
believes are reasonably attainable within such time. Further, after the
Designated Sale Date and prior to BNPLC's sale of the entire Property,
BNPLC shall retain a property management company experienced in the area
where the Property is located to manage the operation of the Property and
pursue the leasing of any completed improvements which are part of the
Property. BNPLC shall not retain an Affiliate of BNPLC to act as the
property manager except under a bona fide, arms-length management contract
containing commercially reasonable terms. Further, after the Designated
Sale Date and until BNPLC sells the Property, BNPLC shall (i) endeavor in
good faith to maintain, or shall obtain the agreement of one or more
tenants to maintain, the Property in good order and repair, (ii) procure
and maintain casualty insurance against risks customarily insured against
by owners of comparable properties, in amounts sufficient to eliminate the
effects of coinsurance, (iii) keep and allow the Participants to review
accurate books and records covering the operation of the Property, and (iv)
pay prior to delinquency all taxes and assessments lawfully levied against
the Property.
Notwithstanding the foregoing, any Participants that have failed to fund any
amount due hereunder, and that have not corrected such failure within five
Business Days after being notified thereof, shall have no
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voting or consent rights under this Section 6.1 and no rights to require BNPLC
to call a meeting pursuant to subsection 6.1.3 until such failure is corrected.
6.2. General. Subject to the limitations set forth in Section 6.1:
6.2.1. BNPLC shall have the exclusive right to take any action and to
exercise any available powers, rights and remedies to enforce the
obligations of NAI under the Operative Documents, or to refrain from taking
any such action or exercising any such power, right or remedy.
6.2.2. BNPLC shall be entitled to (i) give any consent, waiver or
approval requested by NAI with respect to any construction or other
approval contemplated in the Leases or (ii) waive or consent to any adverse
title claims affecting the Property, provided that, in either case, BNPLC
believes in good faith that such action will not have a material adverse
effect upon NAI's obligations or ability to make the payments required
under the Operative Documents or upon the rights and remedies, taken as
whole, of BNPLC under the Operative Documents or of the Participants'
hereunder.
6.3. Conflicts and Purchase Agreements Defaults. Notwithstanding anything
to the contrary herein contained, BNPLC shall be entitled, even over the
objection of any Participant or the Majority, (A) to take any action recommended
in writing by reputable counsel and believed in good faith by BNPLC to be
required of BNPLC by the Operative Documents or any law, rule or regulation to
which BNPLC is subject, (B) to refrain from taking any action if BNPLC believes
in good faith that the action is prohibited by the Operative Documents or any
law, rule or regulation to which BNPLC is subject, and if reputable counsel
recommends in writing that BNPLC refrain from taking the action, and (C) after
notice to the Participants, to bring and prosecute a suit against NAI in the
form recommended by and in accordance with advice of reputable counsel at any
time when a breach of the Operative Documents by NAI shall have put BNPLC (or
any of its officers or employees) at risk of criminal prosecution or significant
liability to third parties or at any time after NAI or an Applicable Purchaser
fails to purchase the Property on the Designated Sale Date pursuant to the
Purchase Agreements. (If, however, BNPLC takes any action or refrains from
taking any action over the objection of a Majority pursuant to the preceding
sentence, BNPLC must provide the Majority a written explanation (including a
copy of a supporting written recommendation of counsel) of the basis for BNPLC's
conclusion that taking the action, or refraining from taking the action, is
permitted by the preceding sentence.) Further, nothing herein contained shall be
construed to require BNPLC to agree to modify the Operative Documents or to take
any action or refrain from taking any action in any manner that could increase
BNPLC's liability to NAI or others, that could reduce or postpone payments to
which BNPLC is entitled thereunder, or that could reduce the scope and coverage
of the indemnities provided for BNPLC's benefit therein.
6.4. Refusal to Give Consents; Failure to Fund; Failure of a Deposit Taker
to Satisfy Minimum Ratings. If any Participant declines to consent to any
amendment, modification, waiver, release or consent for which the Participant's
consent is requested or required by reason of this Agreement, or if any
Participant fails to pay any amount owed by it hereunder, or if the Deposit
Taker for any Participant shall cease to be a Qualified Deposit Taker (as
defined in the Pledge Agreement), BNPLC shall have the right, but not the
obligation and without limiting any other remedy of BNPLC, to reduce such
Participant's Percentage to zero and to terminate such Participant's rights to
receive any further payments under Article 2 of this Agreement by paying to such
Participant a termination fee equal to the total amount it would be entitled to
receive from BNPLC hereunder if the date of such payment were the Designated
Sale Date and on such date NAI had itself purchased BNPLC's interest in the
Property pursuant to and in accordance with the Purchase Agreements. No
Participant's rights to receive payments equal to such Participant's Adjusted
Percentage of any Excess Reimbursement of a Protective Advance or interest
thereon as provided in Section 3.3 shall be impaired or affected by any
termination contemplated in this Section 6.4; accordingly,
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BNPLC shall not, as a condition to such a termination, be required to reimburse
a Participant for any payments the Participant has made in connection with
Protective Advances pursuant to Section 3.3.
7.0 REQUIRED REPAYMENTS. Each Participant shall repay to BNPLC, upon written
request or demand by BNPLC (i) any sums paid by BNPLC to such Participant under
this Agreement from, or that were computed by reference to, any Distributable
Payment or other amounts which BNPLC shall be required to return or pay over to
another party, whether pursuant to any bankruptcy or insolvency law or
proceeding or otherwise and (ii) any interest or other amount that BNPLC is also
required to pay to another party with respect to such sums. Such repayment by a
Participant shall not constitute a release of such Participant's right to
receive payments from BNPLC hereunder upon BNPLC's receipt of any such
Distributable Payment or other amount (or any interest thereon) that BNPLC may
later recover.
8.0 NAI INFORMATION; INDEPENDENT ANALYSIS. Prior to the execution of this
Agreement, BNPLC has provided to the Participants copies of the executed
Operative Documents and of various certificates, legal opinions and other
documents delivered to BNPLC by or on behalf of NAI with the Operative
Documents. In the future, BNPLC shall provide (A) to all Participants copies of
all amendments of the Operative Documents and certificates and legal opinions,
if any, delivered by or on behalf of NAI in connection therewith, and (B) to any
Participant, as reasonably required to comply with a specific, reasonable
written request for information made by the Participant, copies of other
information readily available to BNPLC concerning NAI or Guarantor and the
transactions contemplated in the Operative Documents. However, BNPLC shall not
be liable for its failure to provide the Participants any of the foregoing
documents unless such failure constitutes gross negligence or wilful misconduct
on BNPLC's part. Each Participant has entered into this Agreement without
reliance upon representations made outside this Agreement by BNPLC or by any
Affiliate, agent or attorney of BNPLC and only after independently reviewing
such documents, independently making such inspections, independently consulting
with counsel and independently collecting and verifying such information, as the
Participant determined to be necessary or appropriate. Without limiting the
foregoing, each Participant has independently reviewed the Operative Documents
and independently made such inquiries and investigations of NAI and the Property
as the Participant determined to be necessary or appropriate before executing
this Agreement.
9.0 PERFORMANCE THROUGH REPRESENTATIVES. BNPLC may perform any of its duties
hereunder by or through officers, directors, employees, attorneys or agents
(collectively, "REPRESENTATIVES"), and BNPLC and its Representatives shall be
entitled to rely, and shall be fully protected in relying, upon any
communication or document believed by it or them to be genuine and correct and
to have been signed or made by the proper Person and, with respect to legal
matters, upon the opinion of counsel selected by BNPLC. The Participants
acknowledge that Banque Nationale de Paris shall be entitled to act as agent for
BNPLC with respect to the administration of this Agreement, and to the extent it
does so, it shall be a Representative of BNPLC hereunder.
10.0 DUTY OF CARE. NEITHER BNPLC NOR ANY OF ITS REPRESENTATIVES SHALL BE LIABLE
OR RESPONSIBLE TO ANY PARTICIPANT OR ANY OTHER PERSON FOR ANY ACTION TAKEN OR
OMITTED TO BE TAKEN BY BNPLC OR ANY OF ITS REPRESENTATIVES UNDER THIS AGREEMENT
OR THE OPERATIVE DOCUMENTS OR OTHERWISE (EVEN IF NEGLIGENT OR RELATED TO A
MATTER FOR WHICH BNPLC OR ANY OF ITS REPRESENTATIVES MAY OTHERWISE BE STRICTLY
LIABLE); provided, this provision will not excuse BNPLC from liability for
failing to make timely payments required of BNPLC to the Participants by the
express provisions of Article 2 or Section 3.3 or from liability for actions
taken or omitted to be taken by BNPLC which constitute gross negligence or
wilful misconduct. Without limiting the generality of the foregoing, BNPLC (1)
may consult with legal counsel (including counsel for NAI), independent public
accountants and other experts selected by it and shall not be liable for any
action
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taken or omitted to be taken in good faith by it in accordance with the advice
of such counsel, accountants or experts; (2) makes no warranty or representation
to the Participants except as provided in Article 12 and shall not be
responsible to the Participants for any statements, warranties or
representations made in or in connection with the Operative Documents; (3) shall
not have any duty to the Participants to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of the
Operative Documents or to inspect the Property or the books and records of NAI;
(4) shall not be responsible to the Participants for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Operative Documents or any instrument or document furnished in connection
therewith; (5) may rely upon the representations and warranties of NAI and the
Participants in exercising its powers hereunder unless BNPLC shall have actual
knowledge that such representations and warranties are untrue; and (6) shall
incur no liability under or in respect of the Operative Documents by acting upon
any notice, consent, certificate or other instrument or writing (including any
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper Person or Persons.
11.0 REPRESENTATIONS BY EACH PARTICIPANT. Each Participant represents that as of
the date it became a party to this Agreement:
11.1. Nature of this Agreement. It is the type of financial institution set
forth under its name in SCHEDULE 1, or in the Participation Agreement Schedule
which made it a party to this Agreement, and it is entering into this Agreement
for its own account in respect of a commercial transaction made in ordinary
course of its business and not with a view to or in connection with any
subparticipation, sale or distribution to any Person (other than its
Affiliates). Such Participant does not consider the acceptance of the risk
participation hereunder to constitute the "purchase" or "sale" of a "security"
within the meaning of any federal or state securities statute or law, or any
rule or regulations under any of the foregoing.
11.2. No Default or Violation. To such Participant's knowledge, the
execution, delivery and performance of this Agreement do not and will not
contravene, result in a breach of or constitute a default under any material
contract or agreement to which the Participant is a party or by which the
Participant is bound and do not violate or contravene any law, order, decree,
rule or regulation to which the Participant is subject.
11.3. No Suits. To such Participant's knowledge, there are no judicial or
administrative actions, suits or proceedings involving the validity,
enforceability or priority of this Agreement and no such suits or proceedings
are threatened.
11.4. Organization. Such Participant is duly incorporated and legally
existing under the laws of jurisdiction indicated in SCHEDULE 1 or in the
Participation Agreement Schedule which made it a party to this Agreement. Such
Participant has all requisite power and all material governmental certificates
of authority, licenses, permits, qualifications and other documentation
necessary to perform its obligations under this Agreement.
11.5. Enforceability. This Agreement constitutes a legal, valid and binding
obligation of such Participant, enforceable in accordance with its terms,
subject to bankruptcy and other laws affecting creditors' rights generally and
general equitable principles. The execution and delivery of, and performance
under, this Agreement are within such Participant's powers and have been duly
authorized by all requisite action and are not in contravention of the powers of
the charter or other corporate papers of the Participant.
11.6. No Funding With Plan Assets. Such Participant has not and will not
provide advances required by this Participant from the assets of any employee
benefit plan (or its related trust).
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12.0 REPRESENTATIONS BY BNPLC. BNPLC represents to each Participant, as of the
date such Participant became a party to this Agreement, that:
12.1. No Default or Violation. To BNPLC's knowledge, its execution,
delivery and performance of this Agreement and the Operative Documents do not
contravene, result in a breach of or constitute a default under any material
contract or agreement to which BNPLC is a party or by which BNPLC is bound and
do not violate or contravene any law, order, decree, rule or regulation to which
BNPLC is subject.
12.2. No Suits. To BNPLC's knowledge, there are no judicial or
administrative actions, suits or proceedings involving the validity,
enforceability or priority of this Agreement and no such suits or proceedings
are threatened.
12.3. Organization. BNPLC is duly incorporated and legally existing under
the laws of Delaware and is duly qualified to do business in the State of
California. BNPLC has all requisite power and all material governmental
certificates of authority, licenses, permits, qualifications and other
documentation necessary to perform its obligations under this Agreement. BNPLC
has obtained or will obtain, at NAI's expense pursuant to the provisions of the
Leases, all requisite power and all material governmental certificates of
authority, licenses, permits, qualifications and other documentation necessary
to own and lease the Property and to perform its obligations under the Operative
Documents.
12.4. Enforceability. This Agreement and the Operative Documents constitute
legal, valid and binding obligations of BNPLC, enforceable in accordance with
their respective terms, subject to bankruptcy and other laws affecting
creditors' rights generally and general equitable principles. BNPLC's execution
and delivery of, and performance under, this Agreement and the Operative
Documents are within BNPLC's powers and have been duly authorized by all
requisite action and are not in contravention of the powers of the charter,
by-laws or other corporate papers of BNPLC; provided, BNPLC makes no
representation or warranty that conditions imposed by any state or local
Applicable Laws to the purchase, ownership, lease or operation of the Property
have been satisfied.
12.5. Liens Removable by BNPLC. BNPLC shall not create or permit any Liens
Removable by BNPLC not claimed by, through or under any of the Participants
(other than BNPLC's Affiliates), without NAI's consent.
12.6. BNPLC's Status as a Subsidiary of a Bank Holding Company. As of the
effective date of this Agreement, BNPLC is a "subsidiary" of a "bank holding
company" (as those terms are defined in Chapter 17 of Title 12 of the United
States Code).
13.0 ASSIGNMENTS.
13.1. By the Participants Generally. Except as expressly provided below, no
Participant shall assign or attempt to assign any interest in or rights under
this Agreement without the prior written consent of BNPLC, which consent shall
not be unreasonably withheld so long as the Participant requesting the approval
is not in default hereunder; provided, this provision shall not prevent a
Participant from transferring its rights hereunder to its Affiliates or to any
other Participants who are already parties to this Agreement. Notwithstanding
any permitted assignment by a Participant, if the assignment is to any Person
that does not qualify as a "Participant" for purposes of the Leases itself
(which, as more particularly provided in the definition of Participant in the
Common Definitions and Provisions Agreements, may require the written approval
of such Person by NAI), then such Participant's obligations under this Agreement
shall remain unchanged, such Participant shall remain primarily responsible for
the performance of its obligations hereunder, and BNPLC may continue to deal
solely and directly with such
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Participant in connection with all rights and obligations under this Agreement.
In the event, however, of a permitted assignment by a Participant to a Person
that does qualify as a "Participant" for purposes of the Leases itself,
accomplished by the execution of appropriate Participation Agreement Supplements
as herein provided, the assigning Participant shall not be liable for any
failure by the assignee to fulfill the obligations assumed hereunder by the
assignee by reason of such assignment.
13.2. By BNPLC. Except as expressly provided herein, BNPLC shall not assign
or attempt to assign any rights under or interest in the Operative Documents or
this Agreement or any interest in the Property without the Participants' prior
written consent, which consent shall not be unreasonably withheld. By a
Participation Agreement Supplement, BNPLC may, without the prior written consent
of any other Participant, assign participations in the Operative Documents or
the payments required to BNPLC thereunder to any then existing Participant and
to other financial institutions or Affiliates of financial institutions approved
by NAI; provided, that the assignment of participations by BNPLC shall not
reduce the Percentage of BNPLC (or any Affiliate of BNPLC that may become the
owner of BNPLC's interest in the Property) to less than three percent (3%). In
addition, BNPLC may assign its right to receive Distributable Payments and its
rights and interests in and to the Property, the Operative Documents and this
Agreement to Affiliates of BNPLC that do not become Participants; provided,
however, that BNPLC's obligations under this Agreement shall remain unchanged,
BNPLC shall remain primarily responsible for the performance of its obligations
hereunder, and all Distributable Payments received by any such Affiliates as
assignee of BNPLC shall, for purposes of computing payments required to any
Participant hereunder, be considered as received by BNPLC. In addition, BNPLC
shall be permitted to transfer any rights or interests as BNPLC shall believe in
good faith to be necessary to satisfy the Operative Documents or Applicable
Laws.
13.3. Execution of Participation Agreement Supplements. Promptly after the
execution of a Participation Agreement Supplement by BNPLC and any Participant,
BNPLC will provide a copy thereof to all other Participants, but the other
Participants need not join in or approve the Participation Agreement Supplement
for it to be effective.
13.4. Regulation A. Notwithstanding Sections 13.1 or 13.2, a Participant
may assign and pledge all or any portion of its rights under this Agreement to
any Federal Reserve Bank as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any Operating Circulars
issued by such Federal Reserve Bank.
13.5. Costs. Each Participant shall pay all costs incurred by BNPLC in
connection with any permitted assignment by or through such Participant,
including, but not limited to, reasonable fees and disbursements of its counsel,
and any transfer taxes or other taxes assessed because of such assignment which
NAI is not required to pay under the Leases.
14.0 GOVERNING LAW; SUBMISSION TO PROCESS; WAIVER OF JURY TRIAL. THIS AGREEMENT
SHALL BE DEEMED A CONTRACT MADE UNDER THE LAWS OF THE STATE OF CALIFORNIA AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF CALIFORNIA AND THE LAWS OF THE UNITED STATES OF AMERICA, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS. EACH OF BNPLC AND THE PARTICIPANTS
HEREBY IRREVOCABLY SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE
AND THE FEDERAL COURTS SITTING IN SAN FRANCISCO, CALIFORNIA, AND AGREES AND
CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING
RELATING TO THIS AGREEMENT BY ANY MEANS ALLOWED UNDER CALIFORNIA OR FEDERAL LAW.
EACH OF BNPLC AND THE PARTICIPANTS HEREBY WAIVES AND AGREES NOT TO
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ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, THAT ANY SUCH PROCEEDING
WHICH IS BROUGHT IN A COURT IN SAN FRANCISCO, CALIFORNIA IS BROUGHT IN AN
INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS IMPROPER. EACH OF BNPLC AND THE
PARTICIPANTS, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A
JURY TRIAL OF ANY DISPUTE RELATING TO THIS AGREEMENT AND AGREES THAT ANY SUCH
DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
15.0 TERMINATION. This Agreement shall terminate on the first date on which all
obligations of NAI under the Operative Documents shall have been indefeasibly
paid or otherwise satisfied or excused, BNPLC shall have ceased to have any
rights in the Property and each party hereto shall have fully performed its
obligations hereunder to the other parties hereto. The agreements of BNPLC and
the Participants in Section 3.3 (which concerns payments by Participants of
their respective Percentages of Protective Advances) shall survive the
termination of this Agreement. Following any sale of the Property by BNPLC
pursuant to the Purchase Agreements and the payment to any Participant of all
amounts payable to such Participant hereunder (including, without limitation,
such Participant's Percentage of all Net Sales Proceeds payable by NAI and any
Applicable Purchaser on the Designated Sale Date), such Participant will execute
and deliver such a quitclaim and release (in recordable form) to NAI or any
Applicable Purchaser.
16.0 MISCELLANEOUS.
16.1. Reliance by Others. None of the provisions of this Agreement shall
inure to the benefit of any Person other than the Participants and BNPLC and
BNPLC's Representatives; consequently, no Person other than the Participants and
BNPLC shall be entitled to rely upon or raise as a defense, in any manner
whatsoever, the failure of any Participant or BNPLC to comply with the
provisions of this Agreement. None of the Participants nor BNPLC shall incur any
liability to any other Person for any act of omission of another.
Notwithstanding the foregoing, however, NAI shall be a third party
beneficiary of the representations of each Participant in Section 11, of the
limitations upon each Participant's right to assign in Section 13.1, of each
Participant's agreements concerning choice of law and other matters in Section
14, and of each Participant's agreement to provided a release and quitclaim of
the Property pursuant to the last sentence of Section 15. As a third party
beneficiary of the obligations of the Participants specified in the preceding
sentence, NAI shall have standing to bring a claim against any Participant in
NAI's own name if that Participant breaches such obligations. Further, BNPLC may
assign to NAI any claims it may have against a Participant because of the
Participant's breach of any of the provisions referenced in this paragraph or
because of any adverse title claim made against the Property by, through or
under the Participant.
16.2. Waivers, Etc. No delay or omission by any party to exercise any right
under this Agreement shall impair any such right, nor shall it be construed to
be a waiver thereof. No waiver of any single breach or default under this
Agreement shall be deemed a waiver of any other breach or default. Any waiver,
consent, or approval under this Agreement must be in writing to be effective.
16.3. Severability. The illegality or unenforceability of any provision of
this Agreement shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement.
16.4. Notices. All notices, demands, approvals, consents and other
communications to be made hereunder to or by the parties hereto must, to be
effective for purpose of this Agreement, be in writing. Notices, demands and
other communications required or permitted hereunder are to be sent to the
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22
addresses set forth in Schedule 1 to this Agreement and shall be given by any of
the following means: (A) personal service, with proof of delivery or attempted
delivery retained; (B) electronic communication, whether by telex, telegram or
telecopying (if confirmed in writing sent by United States first class mail,
return receipt requested); or (C) registered or certified first class mail,
return receipt requested. Such addresses may be changed by notice to the other
parties given in the same manner as provided above. Any notice or other
communication sent pursuant to clause (A) or (C) hereof shall be deemed received
(whether or not actually received) upon first attempted delivery at the proper
notice address on any Business Day between 9:00 A.M. and 5:00 P.M., and any
notice or other communication sent pursuant to clause (B) hereof shall be deemed
received upon dispatch by electronic means.
16.5. Construction. Words of any gender used in this Agreement shall be
held and construed to include any other gender, and words in the singular number
shall be held to include the plural and vice versa, unless the context otherwise
requires. References herein to Articles, Sections, subsections or other
subdivisions shall refer to the corresponding Articles, Sections, subsections or
subdivisions of this Agreement, unless specific reference is made to another
document or instrument. References herein to any Schedule or Exhibit shall refer
to the corresponding Schedule or Exhibit attached hereto, which shall be made a
part hereof by such reference. All capitalized terms used in this Agreement
which refer to other documents shall be deemed to refer to such other documents
as they may be renewed, extended, supplemented, amended or otherwise modified
from time to time, provided such documents are not renewed, extended or modified
in breach of any provision contained herein or therein or, in the case of any
other document to which BNPLC is a party or of which BNPLC is an intended
beneficiary, without the consent of BNPLC. All accounting terms used but not
specifically defined herein shall be construed in accordance with GAAP. The
words "THIS AGREEMENT", "HEREIN", "HEREOF", "HEREBY", "HEREUNDER" and words of
similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular subdivision unless expressly so limited. The phrases
"THIS ARTICLE" and "THIS SECTION" and "THIS SUBSECTION" and similar phrases used
herein refer only to the Articles, Sections or subsections hereof in which the
phrase occurs. As used herein the word "OR" is not exclusive. As used herein the
words "INCLUDE", "INCLUDING" and similar terms shall be construed as if followed
by "without limitation to".
16.6. Headings. The Article and Section headings contained in this
Agreement are for convenience only and shall in no way enlarge or limit the
scope or meaning of the various and several provisions hereof.
16.7. Entire Agreement. This Agreement (a) embodies the entire agreement
between the parties, supersedes all prior agreements and understandings between
the parties, if any, relating to the subject matter hereof, and may be amended
only by an instrument in writing executed by an authorized representative of
each party to be bound by such amendment, and (b) has been executed in a number
of identical counterparts, each of which shall be deemed an original for all
purposes and all of which constitute, collectively, one agreement or
certificate; but, in making proof of this Agreement it shall not be necessary to
produce or account for more than one such counterpart signed by each party
thereto.
16.8. Further Assurances. Subject to any restriction in the Operative
Documents, each of BNPLC and the Participants will promptly execute and deliver
all further instruments and documents and take all further action as any of them
may reasonably request in order to evidence the agreements made hereunder and
otherwise to effect the purposes of this Agreement.
16.9. Impairment of Operative Documents. Nothing herein contained
(including the provisions governing the application of payments in Section 4.6
and the provisions authorizing assignments by BNPLC in Section 13.2) shall
impair or modify NAI's rights under the Operative Documents.
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23
16.10. Books and Records. BNPLC shall keep accurate books and records in
which full, true and correct entries shall be promptly made as to all payments
made and received concerning the Property and will permit all such books and
records (excluding any information that would otherwise be protected by BNPLC's
attorney client privilege) to be inspected and copied by the Participants and
their duly accredited representatives at all times during reasonable business
hours after five Business Days advance notice. This Section shall not be
construed as requiring BNPLC to regularly maintain separate books and records
relating exclusively to the Property; provided, however, that upon reasonable
request, BNPLC shall, at the requesting Participant's expense, construct or
abstract from its regularly maintained books and records information required by
this Section relating to the Property.
16.11. Definition of Knowledge. Representations and warranties made in this
Agreement but limited to the "knowledge" of BNPLC or any Participant, as the
case may be, shall be limited to the present actual knowledge of the officers or
other employees of such party primarily responsible for reviewing and
negotiating this Agreement. Also, as used herein with respect to the existence
of any facts or circumstances after the date of this Agreement, "knowledge" of
BNPLC or a Participant, as the case may be, shall be limited to the present
actual knowledge at the time in question of the officers or other employees of
such party primarily responsible for administering this Agreement. However, none
of the officers or employees of any party to this Agreement shall be personally
liable for any representations or warranties made herein or for taking or
failing to take any action required hereby.
16.12. Attorneys' Fees. If any party to this Agreement commences any legal
action or other proceeding against another party hereto to enforce any of the
terms of this Agreement, or because of any breach of the other party or dispute
hereunder, the successful or prevailing party shall be entitled to recover from
the nonprevailing party all Attorneys' Fees incurred in connection therewith,
whether or not such controversy, claim or dispute is prosecuted to a final
judgment. Any such Attorneys' Fees incurred by any party in enforcing a judgment
in its favor under this Agreement shall be recoverable separately from such
judgment, and the obligation for such Attorneys' Fees is intended to be
severable from other provisions of this Agreement and not to be merged into any
such judgment.
[The signature pages follow.]
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24
IN WITNESS WHEREOF, BNPLC and the Participants whose signatures appear
below have caused this Participation Agreement to be executed by their
respective, duly authorized representatives, as of the date first above written.
"BNPLC"
BNP LEASING CORPORATION
By:
---------------------------------
Lloyd G. Cox, Vice President
25
[Continuation of signature pages to Participation Agreement effective as of
December ___, 1999]
"PARTICIPANT"
BANQUE NATIONALE DE PARIS
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
26
SCHEDULE 1 - Page 1
A. BNPLC: BNP LEASING CORPORATION,
a Delaware corporation
1. Amount Retained: $1,860,000
2. Initial Percentage: 3%
3. Address for Notices:
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Telephone: (972) 788-9191
Facsimile: (972) 788-9140
4. Payment Instructions:
Federal Reserve Bank of New York
ABA 026007689 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/
/Ref/ Network Appliance/Sunnyvale Synthetic Leases/Phase IV
5. Operations Contact:
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Telephone: (972) 788-9191
Facsimile: (972) 788-9140
27
SCHEDULE 1 - Page 2
B. Participant: BANQUE NATIONALE DE PARIS,
a banking corporation organized under the laws
of France
1. Amount of Participation: $60,140,000
2. Percentage: 97%
3. Address for Notices:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, CA 94104
Attention: Rafael Lumanlan or Gavin Holles
Telephone: (415) 956-0707
Facsimile: (415) 296-8954
4. Payment Instructions:
Federal Reserve Bank of New York
ABA 026007689 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/
/Ref/ Network Appliance/Sunnyvale Synthetic Leases/Phase IV
5. Operations Contact:
George Fung
Banque Nationale de Paris
180 Montgomery Street
San Francisco, CA 94104
Telephone: (415) 956-0707
Facsimile: (415) 956-4230
6. "Initial Payment" Due from
Participant to BNPLC: An amount equal to ninety-seven percent
(97%) of initial funding advanced under
the Leases.
28
EXHIBIT A
SUPPLEMENT TO PARTICIPATION AGREEMENT
[ , ]
---------- ----
BNP Leasing Corporation
- --------------------
- --------------------
- --------------------
Reference is made to the Participation Agreement dated as of December ___,
1999 (as heretofore amended, the "PARTICIPATION AGREEMENT") between BNP Leasing
Corporation ("BNPLC"), Banque Nationale de Paris and other financial
institutions which are from time to time Participants under and as defined in
such Participation Agreement (collectively, the "PARTICIPANTS"). Unless
otherwise defined herein, all capitalized terms used in this Supplement have the
respective meanings given to those terms in the Participation Agreement.
[NOTE: THE NEXT TWO PARAGRAPHS, AND THE ADDENDUM TO SCHEDULE 1 ATTACHED TO THIS
EXHIBIT, WILL BE INCLUDED ONLY AS PART OF A SUPPLEMENT THAT ADDS A NEW
PARTICIPANT UNDER THE PARTICIPATION AGREEMENT:
The undersigned hereby certifies to BNPLC that the undersigned has become a
party to the Pledge Agreements by executing a supplement as provided therein,
and that NAI has approved of the undersigned as a party to the Pledge Agreements
by executing and returning that supplement.
The undersigned, by executing and delivering this Supplement to BNPLC,
hereby agrees to become a party to the Participation Agreement as a Participant
and agrees to be bound by all of the terms thereof applicable to Participants.
The undersigned hereby agrees that its Percentage under the Participation
Agreement shall be ___________ percent (____%), effective as of the date of this
letter. Contemporaneously with the execution of this letter, the undersigned is
paying to BNPLC the sum of $_____________ in consideration of the rights it is
acquiring as a Participant under the Participation Agreement with the foregoing
Percentages.
Schedule 1 attached to the Participation Agreement is amended by the
addition of an Addendum (concerning the undersigned) in the form attached to
this Supplement.]
[NOTE: THE NEXT PARAGRAPH WILL BE INCLUDED ONLY IN A SUPPLEMENT THAT REDUCES AN
EXISTING PARTICIPANT'S PERCENTAGE UNDER THE PARTICIPATION AGREEMENT:
In consideration of the payment of $____________ to the undersigned, the
receipt and sufficiency of which is hereby acknowledged by the undersigned, the
undersigned hereby agrees that its Percentage under the Participation Agreement
is reduced to ___________ percent (____%), effective as of the date of this
letter.]
[NOTE: THE NEXT PARAGRAPH WILL BE INCLUDED ONLY IN A SUPPLEMENT THAT INCREASES
AN EXISTING PARTICIPANT'S PERCENTAGE UNDER THE PARTICIPATION AGREEMENT:
29
The undersigned hereby agrees that its Percentage under the Participation
Agreement is increased to ___________ percent (____%), effective as of the date
of this letter. Contemporaneously with the execution of this letter, the
undersigned is paying BNPLC the sum of $_____________ in consideration of such
increase.]
IN WITNESS WHEREOF, the undersigned has executed this Supplement as of the
day and year indicated above.
[NAME]
By:
---------------------------------
Printed Name:
Title:
Accepted and agreed:
BNP LEASING CORPORATION
By:
--------------------------------
Printed Name:
Title:
30
ADDENDUM TO SCHEDULE 1
Participant:
1. Amount of Participation: $
2. Percentage: ___%
3. Address for Notices:
Attention:
Telephone:
Facsimile:
4. Payment Instructions:
Bank:
Account:
Account No.:
ABA No.:
Reference:
5. Operations Contact:
Attention:
Telephone:
Facsimile:
Exhibit A - Page 3