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EXHIBIT 10.9
$48,000,000
LEASE AGREEMENT
(Improvements)
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
EXTREME NETWORKS, INC.
("Extreme")
June 1, 2000
(Santa Clara, California)
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[Improvements]
TABLE OF CONTENTS
Page
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1. Term..................................................................................................... 2
(a) Scheduled Term...................................................................................... 2
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(b) Election by Extreme to Terminate After Accelerating the Designated Sale Date........................ 2
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(c) Extension of the Term............................................................................... 3
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2. Use and Condition of the Property........................................................................ 3
(a) Use................................................................................................. 3
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(b) Condition of the Property........................................................................... 4
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(c) Consideration for and Scope of Waiver............................................................... 4
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3. Rent..................................................................................................... 4
(a) Base Rent Generally................................................................................. 4
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(b) Impact of Collateral Upon Formulas.................................................................. 5
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(c) Calculation of and Due Dates for Base Rent.......................................................... 5
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(i) Determination of Payment Due Dates, Generally................................................ 5
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(ii) Special Adjustments to Base Rent Payment Dates and Periods................................... 6
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(iii) Base Rent Formula for Periods During Which The Collateral Percentage is 100%................. 6
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(iv) Base Rent Formula for Periods During Which The Collateral Percentage is Less Than 100%....... 7
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(d) Additional Rent..................................................................................... 8
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(e) Arrangement Fee..................................................................................... 8
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(f) Administrative Agency Fees.......................................................................... 8
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(g) No Demand or Setoff................................................................................. 8
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(h) Default Interest and Order of Application........................................................... 8
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4. Nature of this Agreement................................................................................. 8
(a) "Net" Lease Generally............................................................................... 8
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(b) No Termination...................................................................................... 8
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(c) Tax Reporting....................................................................................... 9
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(d) Characterization of this Improvements Lease......................................................... 10
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5. Payment of Executory Costs and Losses Related to the Property............................................ 10
(a) Impositions......................................................................................... 10
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(b) Increased Costs; Capital Adequacy Charges........................................................... 11
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(c) Extreme's Payment of Other Losses; General Indemnification.......................................... 12
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(d) Exceptions and Qualifications to Indemnities........................................................ 13
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6. Initial Renovations...................................................................................... 14
(a) Funds Advanced to Extreme From the Initial Funding Advance.......................................... 14
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(b) Quality and Timing of the Initial Renovations....................................................... 14
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(c) Control of Work..................................................................................... 14
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(d) Adequacy of Drawings, Specifications and Budgets.................................................... 14
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[Improvements]
(e) Existing Condition of the Land and Improvements..................................................... 15
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(f) Clean Up............................................................................................ 15
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(g) No Damage for Delays................................................................................ 15
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(h) No Fee For Construction Management.................................................................. 15
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7. Status of Property Acquired With Funds Provided by BNPLC................................................. 15
8. Environmental............................................................................................ 16
(a) Environmental Covenants by Extreme.................................................................. 16
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(b) Right of BNPLC to do Remedial Work Not Performed by Extreme......................................... 16
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(c) Environmental Inspections and Reviews............................................................... 17
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(d) Communications Regarding Environmental Matters...................................................... 17
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9. Insurance Required and Condemnation...................................................................... 18
(a) Liability Insurance................................................................................. 18
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(b) Property Insurance.................................................................................. 18
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(c) Failure to Obtain Insurance......................................................................... 19
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(d) Condemnation........................................................................................ 19
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10. Application of Insurance and Condemnation Proceeds....................................................... 19
(a) Collection and Application of Insurance and Condemnation Proceeds Generally......................... 19
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(b) Advances of Escrowed Proceeds to Extreme............................................................ 20
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(c) Application of Escrowed Proceeds as a Qualified Prepayment.......................................... 20
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(d) Special Provisions Applicable After Completion of Initial Renovations............................... 20
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(e) Special Provisions Applicable After an Event of Default............................................. 20
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(f) Extreme's Obligation to Restore..................................................................... 21
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(g) Takings of All or Substantially All of the Property................................................. 21
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11. Additional Representations, Warranties and Covenants of Extreme Concerning the Property.................. 21
(a) Compliance with Covenants and Laws.................................................................. 21
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(b) Operation of the Property........................................................................... 21
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(c) Debts for Construction, Maintenance, Operation or Development....................................... 22
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(d) Repair, Maintenance, Alterations and Additions...................................................... 23
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(e) Permitted Encumbrances and Development Documents.................................................... 23
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(f) Books and Records Concerning the Property........................................................... 23
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12. Financial Covenants, Reporting Covenants and Other Covenants Incorporated
by Reference to Schedule 1............................................................................... 24
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13. Assignment and Subletting by Extreme..................................................................... 24
(a) BNPLC's Consent Required............................................................................ 24
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(b) Standard for BNPLC's Consent to Assignments and Certain Other Matters............................... 24
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(c) Consent Not a Waiver................................................................................ 24
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14. Assignment by BNPLC...................................................................................... 24
(a) Restrictions on Transfers........................................................................... 24
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(b) Effect of Permitted Transfer or other Assignment by BNPLC........................................... 25
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15. BNPLC's Right of Access.................................................................................. 25
[Improvements]
16. Events of Default....................................................................................... 26
17. Remedies................................................................................................ 28
(a) Basic Remedies..................................................................................... 28
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(b) Notice Required So Long As the Purchase Option and Extreme's Initial Remarketing
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Rights and Obligations Continue Under the Purchase Agreement....................................... 29
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(c) Enforceability..................................................................................... 30
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(d) Remedies Cumulative................................................................................ 30
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18. Default by BNPLC........................................................................................ 30
19. Quiet Enjoyment......................................................................................... 30
20. Surrender Upon Termination.............................................................................. 31
21. Holding Over by Extreme................................................................................. 31
22. Independent Obligations Evidenced by the Other Operative Documents...................................... 31
[Improvements]
Exhibits and Schedules
Exhibit A.......................... Legal Description
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Exhibit B.......................... Insurance Requirements
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Exhibit C.......................... LIBOR Period Election Form
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Schedule 1......................... Financial Covenants and Other Requirements
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[Improvements]
(IV)
LEASE AGREEMENT
(IMPROVEMENTS)
This LEASE AGREEMENT (IMPROVEMENTS) (this "Improvements Lease") is made
and dated as of June 1, 2000 (the "Effective Date") by and between BNP LEASING
CORPORATION, a Delaware corporation ("BNPLC"), and EXTREME NETWORKS, INC., a
Delaware corporation ("Extreme").
RECITALS
Contemporaneously with the execution of this Improvements Lease, BNPLC
and Extreme are executing a Common Definitions and Provisions Agreement
(Improvements) dated as of the Effective Date (the "Common Definitions and
Provisions Agreement (Improvements)"), which by this reference is incorporated
into and made a part of this Improvements Lease for all purposes. As used in
this Improvements Lease, capitalized terms defined in the Common Definitions and
Provisions Agreement (Improvements) and not otherwise defined in this
Improvements Lease are intended to have the respective meanings assigned to them
in the Common Definitions and Provisions Agreement (Improvements).
Pursuant to the Acquisition Contract, which covers the Land described
in Exhibit A, BNPLC is acquiring the Land and any appurtenances thereto and all
existing Improvements thereon from Seller contemporaneously with the execution
of this Improvements Lease.
In anticipation of BNPLC's acquisition of the Land and the existing
Improvements thereon under the Acquisition Contract, BNPLC and Extreme have
reached agreement as to the terms and conditions upon which BNPLC is willing to
lease the existing Improvements and the Improvements to be constructed on the
Land as hereinafter provided, and by this Improvements Lease BNPLC and Extreme
desire to evidence such agreement.
GRANTING CLAUSES
BNPLC does hereby LEASE, DEMISE and LET unto Extreme for the term
hereinafter set forth all right, title and interest of BNPLC, now owned or
hereafter acquired, in and to:
(1) any and all Improvements; and
(2) all easements and other rights appurtenant to the
Improvements, whether now owned or hereafter acquired by BNPLC.
BNPLC's interest in all property described in clauses (1) and (2) above are
hereinafter referred to collectively as the "Real Property". The Real Property
does not include the Land itself, it being understood that the Other Lease
Agreement constitutes a separate lease of the Land and the appurtenances
thereto, and only the Land and the appurtenances thereto, from BNPLC to Extreme.
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 Acquisition Contract or acquired by BNPLC pursuant to Paragraph 7
below, BNPLC also hereby grants and assigns to Extreme 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:
[Improvements]
(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;
(b) the benefits, if any, conferred upon the owner of the Real
Property by the Permitted Encumbrances (including the right to receive
rents under and to otherwise enforce the Premises Leases) and
Development Documents; and
(c) any permits, licenses, franchises, certificates, and other
rights and privileges against third parties related to the Real
Property.
Such rights and interests of BNPLC, whether now existing or hereafter arising,
are hereinafter collectively called the "Personal Property". The Real Property
and the Personal Property are hereinafter sometimes collectively called the
"Property."
However, the leasehold estate conveyed hereby and Extreme's rights
hereunder are expressly made subject and subordinate to the terms and conditions
of this Improvements Lease, the Premises Leases and all other Permitted
Encumbrances, and to any other claims or encumbrances not constituting Liens
Removable by BNPLC.
GENERAL TERMS AND CONDITIONS
The Property is leased by BNPLC to Extreme and is accepted and is to be
used and possessed by Extreme upon and subject to the following terms and
conditions:
1 TERM.
(a) Scheduled Term. The term of this Improvements Lease (the
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"Term") shall commence on and include the Effective Date, and end on the first
Business Day of July, 2005, unless sooner terminated as expressly herein
provided.
(b) Election by Extreme to Terminate After Accelerating the
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Designated Sale Date. Extreme shall be entitled to accelerate the Designated
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Sale Date (and thus accelerate the purchase of BNPLC's interest in the Property
by Extreme 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
(Improvements). In the event, because of Extreme'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, Extreme may terminate this Improvements
Lease on or after the Designated Sale Date; provided, however, as a condition to
any such termination by Extreme, Extreme must have done the following prior to
the termination:
(i) purchased or caused an Applicable Purchaser to purchase the
Property pursuant to the Purchase Agreement and satisfied all of
Extreme's other obligations under the Purchase Agreement;
(ii) paid to BNPLC all Base Rent and all other Rent due on or
before or accrued through the Designated Sale Date; and
(iii) paid any Breakage Costs caused by BNPLC's sale of the
Property pursuant to the Purchase Agreement.
[Improvements]
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(c) Extension of the Term. The Term may be extended at the option of
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Extreme 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 one hundred eighty days prior to the commencement of any such
extension, BNPLC and Extreme 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 (Improvements), and (2) an adjustment to the Rent that Extreme 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 Extreme, each in its sole and absolute
discretion; (B) no Event of Default shall have occurred and be continuing at the
time of Extreme's exercise of its option to extend; (C) prior to any such
extension, Extreme must have completed any Initial Renovations which it has
elected to undertake as described in Paragraph 6; and (D) immediately prior to
any such extension, this Improvements Lease must remain in effect. With respect
to the condition that BNPLC and Extreme must have agreed upon the Rent required
for any extension of the Term, neither Extreme nor BNPLC is willing to submit
itself to a risk of liability or loss of rights hereunder for being judged
unreasonable. Accordingly, both Extreme 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 Extreme 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
Extreme 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
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Documents and the terms hereof, Extreme may use and occupy the Property during
the Term, but only for the following purposes and other lawful purposes
incidental thereto:
(i) the making of Initial Renovations as described in Paragraph 6;
(ii) administrative and office space;
(iii) research and development, production, assembly, distribution
and warehousing, in each case of products that are of substantially the
same type and character as those regularly sold by Extreme in the ordinary
course of its business as of the Effective Date;
(iv) cafeteria, library and other support facilities that Extreme
may provide to its employees; and
(vi) other lawful purposes (including research and development or
production of products that are not of substantially the same type and
character as those regularly sold by Extreme in the ordinary course of its
business as of the Effective Date) approved in advance and in writing by
BNPLC, which approval will not be unreasonably withheld (but Extreme
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 Extreme's compliance with the requirements of this Improvements
Lease or other Operative Documents).
[Improvements]
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Nothing in this subparagraph will prevent a tenant under a Premises Lease,
executed prior to the Effective Date, from using the space covered thereby
for purposes expressly authorized by the terms and conditions of such
Premises Lease.
(b) Condition of the Property. Extreme acknowledges that it has
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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. Extreme 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 19. 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, BNPLC shall not be
required to furnish to Extreme 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
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subparagraph 2.(b) above have been negotiated by BNPLC and Extreme 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 Extreme during the Term because of the definition
of Personal Property and Property above.
3 RENT.
(a) Base Rent Generally. On each Base Rent Date through the end of
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the Term, Extreme shall pay BNPLC rent ("Base Rent"), calculated as provided
below. 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 each
Base Rent Date, BNPLC shall notify Extreme in writing of the amount of each
installment of Base Rent that will be required on that date, calculated as
provided below. Any failure by BNPLC to so notify Extreme, however, shall not
constitute a waiver of BNPLC's right to payment, but absent such notice Extreme
shall not be in default hereunder for any underpayment resulting therefrom if
Extreme, 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
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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 Deposit
Rate. BNPLC has agreed to such reduction to provide Extreme with the economic
equivalent of interest on such Collateral, and in return Extreme has agreed to
the provisions of the Pledge Agreement that excuse the actual payment of
interest on the Accounts. By incorporating such reduction of Base Rent into the
formulas below, and by providing for noninterest bearing Accounts in the Pledge
Agreement, an unnecessary and cumbersome periodic exchange of equal payments
will be avoided. It is not, however, the intent of BNPLC or Extreme to
understate Base Rent or interest for financial reporting purposes. Accordingly,
for purposes of any financial reports that this Improvements Lease requires of
[Improvements]
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Extreme from time to time, Extreme 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 Deposit Rate.
(c) Calculation of and Due Dates for Base Rent. Payments of Base
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Rent shall be calculated and become due as follows:
(i) Determination of Payment Due Dates, Generally.
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a0 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.
b0 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.
c0 For Base Rent Periods subject to a LIBOR Period Election
of nine months, Base Rent shall be payable in three 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, with the second installment
becoming due on the first Business Day of the sixth calendar month
following the commencement of such Base Rent Period, and with the
third installment becoming due on the Base Rent Date upon which the
Base Rent Period ends.
d0 For Base Rent Periods subject to a LIBOR Period Election
of twelve months, Base Rent shall be payable in four 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, with the second installment
becoming due on the first Business Day of the sixth calendar month
following the commencement of such Base Rent Period, with the third
installment becoming due on the first Business Day of the ninth
calendar month following the commencement of such Base Rent Period,
and with the fourth installment becoming due on the Base Rent Date
upon which the Base Rent Period ends.
(ii) Special Adjustments to Base Rent Payment Dates and Periods.
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Notwithstanding the foregoing:
a0 Any Base Rent Period that begins before, and does not
otherwise end before, the first Business Day of the first calendar
month following a Failed Collateral Test Date shall end upon but not
include such first Business Day, and such first Business Day shall
constitute a Base Rent Date, upon which Extreme must pay all accrued,
unpaid Base Rent for the Base Rent Period just ended.
b0 In addition to Base Rent due on a the first Business Day
of the first calendar month following a Failed Collateral Test Date,
Extreme must pay the Breakage Costs, if any, resulting from any early
ending of a Base Rent Period pursuant to the preceding clause
3.(c)(ii)a).
[Improvements]
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c0 If Extreme 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.
(iii) Base Rent Formula for Periods During Which The Collateral
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Percentage is 100%. Each installment of Base Rent payable for any Base Rent
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Period during which the Collateral Percentage is one hundred percent (100%)
shall equal:
. Stipulated Loss Value on the first day of such Base Rent
Period, times
. the sum of (a) the Secured Spread and (b) the Effective
Rate/Deposit Rate Difference for the period from and
including the preceding Base Rent Date to but not including
the Base Rent Date upon which the installment is due, times
. the number of days in the period from and including the
preceding Base Rent Date to but not including the Base Rent
Date upon which the installment is due, divided by
. three hundred sixty.
Assume, only for the purpose of illustration: that the Collateral
Percentage for a hypothetical Base Rent Period is one hundred percent (100%);
that prior to the first day of such Base Rent Period Qualified Prepayments have
been received by BNPLC, leaving a Stipulated Loss Value of $15,000,000; that the
sum of the Secured Spread and the Effective Rate/Deposit Rate Difference is
forty-two and one-half basis points (42.5/100 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:
$15,000,000 x .425% x 30/360 = $5312.50
(iv) Base Rent Formula for Periods During Which The Collateral
Percentage is Less Than 100%. Each installment of Base Rent payable for any Base
Rent Period during which the Collateral Percentage is less than one hundred
percent (100%) shall equal:
. Stipulated Loss Value on the first day of such Base Rent
Period, times
. the sum of:
(A) the product of:
(1) the Collateral Percentage for such Base Rent
Period, times
(2) the sum of (a) the Secured Spread and (b) the
Effective Rate/Deposit Rate Difference 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
[Improvements]
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(B) the product of:
(1) one minus the Collateral Percentage for such
Base Rent Period, times
(2) the sum of (a) the Effective Rate with
respect to such Base Rent Period, plus (b)
the Unsecured Spread for the period from and
including the preceding Base Rent Date to but
not including the Base Rent Date upon which
the installment is due, times
. the number of days in the period from and including the preceding
Base Rent Date to but not including the Base Rent Date upon which
the installment is due, divided by
. three hundred sixty.
Assume, only for the purpose of illustration: that the Collateral
Percentage for a hypothetical Base Rent Period is fifty-five percent (55%);
that prior to the first day of such Base Rent Period Qualified Prepayments
have been received by BNPLC, leaving a Stipulated Loss Value of
$15,000,000; that the Effective Rate for the Base Rent Period is 6%; that
the sum of the Secured Spread and the Effective Rate/Deposit Rate
Difference is forty-two and one-half basis points (42.5/100 of 1%); that
upon the commencement of such Base Rent Period the Unsecured Spread is two
hundred twenty-five basis points (225/100 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:
$15,000,000 x {(55% x .425%) + ([1 - 55%] x [6% + 2.25%])} x 30/360 =
$49,328.12
(d) Additional Rent. All amounts which Extreme is required to pay to
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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
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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 April 20, 2000 from BNPLC to
Extreme.
(f) Administrative Agency Fees. Upon execution and delivery of this
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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 April 20, 2000 from BNPLC to Extreme. Also, on each anniversary of the date
hereof, Extreme 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 April 20, 2000 from BNPLC to Extreme.
[Improvements]
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(g) No Demand or Setoff. Except as expressly provided herein,
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Extreme shall pay all Rent without notice or demand and without counterclaim,
deduction, setoff or defense.
(h) Default Interest and Order of Application. All Rent shall bear
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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 Extreme 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
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subparagraph 5.(d) below, it is the intention of BNPLC and Extreme that Base
Rent, the Arrangement Fees, Administrative Agency Fees, Upfront Syndication Fees
and other payments herein specified shall be absolutely net to BNPLC and that
Extreme 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.
(b) No Termination. Except as expressly provided in this Improvements
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Lease itself, this Improvements Lease shall not terminate, nor shall Extreme
have any right to terminate this Improvements Lease, nor shall Extreme be
entitled to any abatement of the Rent, nor shall the obligations of Extreme
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 Extreme'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 Extreme or of anyone claiming through or under
Extreme, (v) any default on the part of BNPLC under this Improvements Lease or
under any other agreement to which BNPLC and Extreme 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, (viii) any breach by Seller of the Acquisition
Contract or other agreements or promises or representations made in connection
with the Acquisition Contract, (ix) any breach of a Premises Lease by any lessee
thereunder, or (x) any other cause whether similar or dissimilar to the
foregoing. It is the intention of the parties hereto that the obligations of
Extreme hereunder shall be separate and independent of the covenants and
agreements of BNPLC, that Base Rent and all other sums payable by Extreme
hereunder shall continue to be payable in all events and that the obligations of
Extreme 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, Extreme
waives to the extent permitted by Applicable Laws, except as otherwise expressly
provided herein, all rights to which Extreme 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.
[Improvements]
-8-
However, nothing in this subparagraph 4.(b) shall be construed as a
waiver by Extreme of any right Extreme 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 18: (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 15.(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 Extreme 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
Extreme in writing of such challenge and consider in good faith any reasonable
suggestions by Extreme about an appropriate response. In any event, Extreme
shall (subject only to the limitations set forth in this subparagraph) indemnify
and hold harmless BNPLC from and against all liabilities, costs, additional
taxes (other than Excluded Taxes) and other expenses that may arise or become
due because of such challenge or because of any resulting recharacterization
required by the Internal Revenue Service, including any additional taxes that
may become due upon any sale under the Purchase Agreement to the extent (if any)
that such additional taxes are not offset by tax savings resulting from
additional depreciation deductions or other tax benefits to BNPLC of the
recharacterization. If BNPLC receives a written notice of any challenge by the
Internal Revenue Service that BNPLC believes will be covered by this Paragraph,
then BNPLC shall promptly furnish a copy of such notice to Extreme. The failure
to so provide a copy of the notice to Extreme shall not excuse Extreme from its
obligations under this Paragraph; provided, that if none of the officers of
Extreme and none of the employees of Extreme responsible for tax matters are
aware of the challenge described in the notice and such failure by BNPLC renders
unavailable defenses that Extreme might otherwise assert, or precludes actions
that Extreme might otherwise take, to minimize its obligations hereunder, then
Extreme 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
Extreme 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 Extreme 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 Extreme had been
promptly provided with a copy of the notice, then Extreme 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 Extreme 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, Extreme
acknowledges that Extreme 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, Extreme 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, Extreme cannot equitably deny that this
Improvements Lease and the Purchase Agreement should be construed and enforced
in accordance with their respective terms,
[Improvements]
-9-
rather than as a mortgage or other security device, in any action brought by
BNPLC to enforce this Improvements Lease or the Purchase Agreement.
5 Payment of Executory Costs and Losses Related to the Property.
(a) Impositions. Subject only to the exceptions listed in
-----------
subparagraph 5.(d) below, Extreme 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, Extreme shall furnish
BNPLC with receipts showing payment of all Impositions prior to the applicable
delinquency date therefor.
Notwithstanding the foregoing, Extreme may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted
Imposition, and pending such contest Extreme shall not be deemed in default
under any of the provisions of this Improvements Lease because of the Imposition
if (1) Extreme diligently prosecutes such contest to completion in a manner
reasonably satisfactory to BNPLC, and (2) Extreme 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 Extreme 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, Extreme or an Affiliate of Extreme 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 Extreme pursuant to Paragraph 1(A)(2) of the Purchase Agreement, in the
-----------------
case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
(b) Increased Costs; Capital Adequacy Charges. Subject only to the
-----------------------------------------
exceptions listed in subparagraph 5.(d) below:
(i) If after the Effective Date there shall be any increase in the
cost to BNPLC's Parent or any other Participant agreeing to make or making,
funding or maintaining advances to BNPLC in connection with the Property
because of any Banking Rules Change, then Extreme 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 Extreme by BNPLC's Parent or the other
Participant, shall be conclusive and binding upon Extreme, absent clear and
demonstrable error.
(ii) BNPLC's Parent or any other Participant may demand additional
payments ("Capital Adequacy Charges") if BNPLC's Parent or the other
Participant determines that any Banking Rules Change affects the amount of
capital to be maintained by it and that the amount of such capital is
increased by or based upon the existence of advances made or to be made to
BNPLC to permit BNPLC to maintain BNPLC's investment in the Property. To
the extent that BNPLC's Parent or another Participant demands Capital
Adequacy Charges as compensation for the additional capital requirements
reasonably allocable to such investment or advances, Extreme 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
[Improvements]
-10-
Extreme 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 above 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) Notwithstanding the foregoing provisions of this
subparagraph 5.(b), Extreme shall not be obligated pay any claim for
compensation pursuant to this subparagraph 5.(b) arising or accruing more
than six months prior to the date Extreme is notified that BNPLC or a
Participant intends to make the claim; provided, however, that Extreme
shall not be excused by this subparagraph from providing such compensation
for any period during which notice on behalf of BNPLC or the Participant,
as the case may be, could not be provided because of the retroactive
application of the statute, regulation or other basis for the claim.
(iv) Any amount required to be paid by Extreme under this
subparagraph 5.(b) shall be due fifteen days after a notice requesting such
payment is received by Extreme.
(c) Extreme's Payment of Other Losses; General Indemnification.
----------------------------------------------------------
Subject only to the exceptions listed in subparagraph 5.(d) below:
(i) All Losses (including Environmental Losses) asserted against
or incurred or suffered by BNPLC or other Interested Parties at any time
and from time to time by reason of, in connection with or arising out of
(A) their ownership or alleged ownership of any interest in the Property or
the Rents, (B) the use and operation of the Property, (C) the negotiation,
administration or enforcement of the Operative Documents, (D) the making of
Funding Advances, (E) any construction undertaken by Extreme or others on
its behalf on or about the Property, (F) any Premises Lease, (G) the breach
by Extreme of this Improvements Lease or any other document executed by
Extreme in connection herewith, (H) any failure of the Property or Extreme
itself to comply with Applicable Laws, (I) Permitted Encumbrances, (J)
Hazardous Substance Activities, including those occurring prior to
Effective Date, (K) any obligations under the Acquisition Contract that
survive the closing under the Acquisition Contract, or (L) any bodily or
personal injury or death or property damage occurring in or upon or in the
vicinity of the Property through any cause whatsoever, shall be paid by
Extreme, and Extreme shall indemnify and defend BNPLC and other Interested
Parties from and against all such Losses.
(ii) THE INDEMNITIES AND RELEASES PROVIDED HEREIN FOR THE BENEFIT
OF BNPLC AND OTHER INTERESTED PARTIES, INCLUDING THE INDEMNITY SET FORTH IN
----- - -
THE PRECEDING SUBPARAGRAPH 5.(c)(i), SHALL APPLY EVEN IF AND WHEN THE
SUBJECT MATTERS OF THE INDEMNITIES AND RELEASES ARE CAUSED BY OR ARISE OUT
OF THE NEGLIGENCE OR STRICT LIABILITY OF BNPLC OR ANOTHER INTERESTED PARTY.
----- - -
FURTHER, SUCH INDEMNITIES AND RELEASES WILL APPLY EVEN IF INSURANCE
OBTAINED BY EXTREME OR REQUIRED OF EXTREME BY THIS IMPROVEMENTS LEASE OR
- -
OTHER OPERATIVE DOCUMENTS IS NOT ADEQUATE TO COVER LOSSES AGAINST OR FOR
- - -
WHICH THE INDEMNITIES AND RELEASES ARE
[Improvements]
-11-
PROVIDED. EXTREME'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 Extreme shall be responsible
pursuant to this subparagraph 5.(c) will include appraisal fees, filing and
recording fees, inspection fees, survey fees, taxes, brokerage fees and
commissions, abstract fees, title policy fees, Uniform Commercial Code
search fees, escrow fees and Attorneys' Fees incurred by BNPLC with respect
to the Property, whether such costs and expenses are incurred at the time
of execution of this Improvements Lease or at any time during the Term.
(iv) Extreme's obligations under this subparagraph 5.(c) shall
survive the termination or expiration of this Improvements Lease. Any
amount to be paid by Extreme under this subparagraph 5.(c) shall be due
fifteen days after a notice requesting such payment is received by Extreme.
(v) If an Interested Party notifies Extreme of any claim or
proceeding included in, or any investigation or allegation concerning,
Losses for which Extreme is responsible pursuant to this subparagraph
5.(c), Extreme 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 Extreme, but reasonably
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 Extreme 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 Extreme, 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 Extreme
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 Extreme 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 Extreme,
which consent will not be unreasonably withheld) the claim, proceeding,
investigation or allegation at Extreme's expense using counsel selected by
the Interested Party. Moreover, if any such failure by Extreme continues
for forty-five days or more after Extreme 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 Extreme's consent and without releasing Extreme from any
obligations to the Interested Party under this subparagraph 5.(c).
(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 Extreme to pay or reimburse (w) any costs or expenses incurred
by any Interested Party (including BNPLC or any transferee of BNPLC) to
accomplish any Permitted Transfers described in clauses (1), (2), (3), (4)
or (6) of the definition thereof in the Common Definitions and Provisions
Agreement (Improvements), (x) Excluded Taxes, (y) Losses
[Improvements]
-12-
incurred or suffered by any 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 in connection with the execution of the Participation Agreement or
Pledge Agreement by Participants (or supplements making them parties
thereto) or in connection with any negotiation or due diligence
Participants 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 Stipulated Loss
Value and the Break Even Price (as applicable) or to collect Base Rent, a
Supplemental Payment and other amounts, the calculation of which depends
upon Stipulated Loss Value or the Break Even Price, BNPLC acknowledges and
agrees that nothing in subparagraph 4.(a) or the preceding subparagraphs of
this Paragraph 5 shall be construed to require Extreme to pay or reimburse
an Interested Party for costs paid by BNPLC with the proceeds of the
Initial Funding Advance as part of the Transaction Expenses.
Further, if an Interested Party receives a written notice of Losses that
such Interested Party believes are covered by the indemnity in subparagraph
5.(c)(i), then such Interested Party will be expected to promptly furnish a
copy of such notice to Extreme. The failure to so provide a copy of the
notice to Extreme shall not excuse Extreme from its obligations under
subparagraph 5.(c)(i); provided, that if Extreme is unaware of the matters
described in the notice and such failure renders unavailable defenses that
Extreme might otherwise assert, or precludes actions that Extreme might
otherwise take, to minimize its obligations, then Extreme 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 Extreme with a copy of a notice of an obligation covered by the
indemnity set out in subparagraph 5.(c)(i) and Extreme 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 Extreme had
been promptly provided with a copy of the notice, then Extreme will be
excused from any obligation to BNPLC (or any Affiliate of BNPLC) to pay the
excess.
6 Initial Renovations.
(a) Funds Advanced to Extreme From the Initial Funding Advance. As
----------------------------------------------------------
provided in the definition of Initial Funding Advance in the Common Definitions
and Provisions Agreement, the Initial Funding Advance includes a sum paid to
Extreme, which Extreme will expend for BNPLC, to cover the cost of renovating,
remodeling, improving and furnishing existing Improvements as described
generally in Schedule 2 (collectively, the "Initial Renovations"). The Initial
Renovations shall become and remain part of the Improvements and owned by BNPLC
as provided herein. To the extent, if any, that funds received by Extreme from
the Initial Funding Advance for the Initial Renovations exceed the actual cost
thereof, such excess shall for the benefit of BNPLC be paid by Extreme to BNPLC
(with a notice designating such payment as a Qualified Prepayment made pursuant
to this subparagraph) no later than the first day of the first Base Rent Period
to commence after the first anniversary of the Effective Date.
(b) Quality and Timing of the Initial Renovations. Any Initial
---------------------------------------------
Renovations that Extreme elects to undertake must be completed by Extreme no
later than the first anniversary of the Effective Date (a) in a safe and good
and workmanlike manner, (b) in accordance with Applicable Laws, (c) in
compliance with (i) the other provisions of this Lease, (ii) the material
provisions of the Permitted Encumbrances and (iii) the material provisions of
the Development Documents, and (d) in a manner that, upon completion and taken
as a whole, enhances the value of the Property by an amount commensurate with
the funds from the Initial Funding Advance used by Extreme to pay the cost
thereof.
[Improvements]
-13-
(c) Control of Work. Subject to the other terms and conditions
---------------
set forth in this Lease, Extreme shall have the sole right to initiate and
control all Initial Renovations undertaken by it, including the means, methods,
sequences and procedures implemented to accomplish the design and construction
involved in making the Initial Renovations.
(d) Adequacy of Drawings, Specifications and Budgets. BNPLC has
------------------------------------------------
made and will make no representations as to the adequacy of any budgets, site
plans, renderings, plans, drawings or specifications for the Initial
Renovations, and no modification of any such budgets, site plans, renderings,
plans, drawings or specifications that may be required from time to time will
entitle Extreme to any adjustment in the amount that has been paid to Extreme as
described in the definition of Initial Funding Advance in the Common Definitions
and Provisions Agreement.
(e) Existing Condition of the Land and Improvements. Extreme is
-----------------------------------------------
familiar with the conditions of the Land and any existing Improvements on the
Land. Extreme shall have no claim for damages against BNPLC or for any
additional payment from BNPLC by reason of any condition (concealed or
otherwise) of or affecting the Land or Improvements.
(f Clean Up. Upon the completion of all such work, Extreme will
--------
remove all waste material and rubbish from and about the Land, as well as all
tools, construction equipment, machinery and surplus materials. Extreme will
keep the Land and the Improvements thereon in a reasonably safe and sightly
condition as such work progresses.
(g No Damage for Delays. Extreme shall have no claim for
--------------------
damages against BNPLC or for any additional payment from BNPLC by reason of any
delay in the work required to accomplish the Initial Renovations. Nor shall
Extreme have any claim for an extension of the deadline specified in
subparagraph 6.(b) for completing any Initial Renovations because of any such
period of delay, unless, however, such delay has been caused by BNPLC's
intentional interference with such work. In the event (and only to the extent)
that any such intentional interference by BNPLC continues after Extreme provides
written notice to cease, Extreme shall be entitled to an extension of such
deadline. BNPLC's exercise of its rights and remedies permitted under this Lease
or the other Operative Documents will not be construed as intentional
interference with Extreme's performance of any such work.
(h No Fee For Construction Management. Extreme shall have no
----------------------------------
claim for any fee or other compensation or for any reimbursement of internal
administrative or overhead expenses of Extreme by reason of the Initial
Renovations (or any other services provided by Extreme under this Lease or other
Operative Documents), it being understood that Extreme is executing this Lease
in consideration of the rights expressly granted to it herein. Further, for
purposes of calculating any Qualified Prepayment that Extreme must make as
described in subparagraph 6.(a), no such fee or other compensation or internal
administrative or overhead expenses of Extreme shall be included in the actual
costs of any Initial Renovations.
7. Status of Property Acquired With Funds Provided by BNPLC. All
Improvements constructed during the term of this Improvements Lease shall be
owned by BNPLC and shall constitute "Property" covered by this Improvements
Lease. Further, to the extent heretofore or hereafter acquired (in whole or in
part) with any portion of the Initial Funding Advance or with other funds for
which Extreme has received or hereafter receives reimbursement from the Initial
Funding Advance, all furnishings, furniture, chattels, permits, licenses,
franchises, certificates and other personal property of whatever nature shall
have been acquired on behalf of BNPLC by Extreme, shall be owned by BNPLC and
shall constitute "Property" covered by this Improvements
[Improvements]
-14-
Lease, as shall all renewals or replacements of or substitutions for any such
Property. Extreme shall not authorize or permit the transfer of title to the
Improvements or to any other such Property to pass through Extreme or Extreme's
Affiliates before it is transferred to BNPLC from contractors, suppliers,
vendors or other third Persons. Nothing herein shall constitute authorization of
Extreme, as agent, to bind BNPLC to any construction contract or other agreement
with a third Person, but any construction contract or other agreement executed
by Extreme 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, Extreme 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 Extreme 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 Extreme. Extreme covenants that:
----------------------------------
(i Extreme shall not conduct or permit others to
conduct Hazardous Substance Activities, except Permitted Hazardous
Substance Use and Remedial Work.
(ii Extreme 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, Extreme 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, Extreme shall retain
independent environmental consultants acceptable to BNPLC to evaluate any
significant new information generated during Extreme's implementation of
the Remedial Work and to discuss with Extreme whether such new information
indicates the need for any additional measures that Extreme should take to
protect the health and safety of persons (including employees, contractors
and subcontractors and their employees) or to protect the environment.
Extreme 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.
(b Right of BNPLC to do Remedial Work Not Performed by Extreme.
-----------------------------------------------------------
If Extreme'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 Extreme to
BNPLC. As used in this subparagraph, "Environmental Cure Period" means the
period ending on the earlier of: (1) one hundred eighty days after Extreme 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
[Improvements]
-15-
BNPLC or any of its directors, officers or employees because of such breach, or
(4) any Designated Sale Date upon which, for any reason, Extreme or an Affiliate
of Extreme 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 Extreme 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 environmental report
prepared by Extreme or to conduct BNPLC's own investigation to confirm whether
Extreme is complying with the requirements of this Paragraph 8. Extreme grants
to BNPLC and to BNPLC's agents, employees, consultants and contractors the right
to enter upon the Property during reasonable hours and after reasonable notice
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. Extreme shall promptly
reimburse BNPLC for the fees of its environmental consultants and the costs of
any such inspections and tests; provided, however, BNPLC's right to such
reimbursement shall be limited to the following circumstances: (1) a breach of
this Paragraph 8 by Extreme shall, in fact, have occurred or an Event of Default
shall have occurred and be continuing at the time BNPLC engages the consultants
or first initiates the inspections and tests; (2) BNPLC shall have engaged the
consultants or undertaken the tests and inspections to establish the condition
of the Property just prior to any conveyance of the Property pursuant to the
Option Agreement or to the expiration of this Improvements Lease; (3) BNPLC
shall have engaged the consultants or undertaken the inspections and tests to
satisfy any regulatory requirements applicable to BNPLC or its Affiliates; or
(4) BNPLC shall have engaged the consultants or undertaken the tests because
BNPLC was notified of a violation of Environmental Laws concerning the Property
by any governmental authority or owner of other land in the vicinity of the
Land.
(d Communications Regarding Environmental Matters.
----------------------------------------------
(i Extreme shall immediately advise BNPLC of (1) any
discovery of any event or circumstance which would render any of the
representations of Extreme herein or in the Closing Certificate
concerning environmental matters materially inaccurate or misleading
if made at the time of such discovery and assuming that Extreme was
aware of all relevant facts, (2) any Remedial Work (or change in
Remedial Work) required or undertaken by Extreme 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) Extreme'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 Extreme to comply with Environmental Laws affecting the
Property by any governmental authority responsible for enforcing
Environmental Laws. In such event, Extreme 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 Extreme proposes to take with respect thereto, if any, to bring
the Property into compliance with Environmental Laws or to correct any
breach by Extreme of this Paragraph 8, including any proposed Remedial
Work, the estimated cost and time of completion, the name of the
contractor and a copy of the construction contract, if any, and such
additional data, instruments, documents, agreements or other materials
or information as BNPLC may request.
(ii Extreme 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
[Improvements]
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(i). Extreme shall also provide BNPLC with copies of any
correspondence from third Persons which threaten litigation over any
significant failure or alleged significant failure of Extreme to
maintain or operate the Property in accordance with Environmental
Laws.
(iii Prior to Extreme's submission of a Material
Environmental Communication to any governmental or regulatory agency
or third party, Extreme shall, to the extent practicable, deliver to
BNPLC a draft of the proposed submission (together with the proposed
date of submission), and in good faith assess and consider any
comments of BNPLC regarding the same. Promptly after BNPLC's request,
Extreme 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 Extreme not to modify the
submission in accordance with comments of BNPLC.
9. Insurance Required and Condemnation.
(a Liability Insurance. Throughout the Term Extreme 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. Extreme 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 Extreme 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. Extreme
---------
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 Extreme after notice from BNPLC,
(ii) each insurance company concerned is hereby authorized and directed to make
payment for such loss directly to BNPLC for application as required by Paragraph
10, and (iii) BNPLC may settle, adjust or compromise any and all claims for
loss, damage or destruction under any policy or policies of insurance (provided,
that if any such claim is for less than $500,000, if no Event of Default shall
have occurred and be continuing, Extreme shall have the right to settle, adjust
or compromise the claim as Extreme deems appropriate; and, provided further,
that so long as no Event of Default shall have occurred and be continuing, BNPLC
must provide Extreme with at least forty-five days notice of BNPLC's intention
to settle any such claim before settling it unless Extreme shall already have
approved of the settlement by BNPLC). If any casualty shall result in damage to
or loss or destruction of the Property, Extreme shall give immediate notice
thereof to BNPLC and Paragraph 10 shall apply.
(c Failure to Obtain Insurance. If Extreme 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 Extreme has failed to obtain or for which Extreme has not
provided the required confirmation and, without limiting BNPLC's other remedies
under the circumstances, BNPLC may require Extreme 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
Extreme.
[Improvements]
-17-
(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. Extreme shall, at its expense, diligently prosecute any such
proceedings and shall consult with BNPLC, its attorneys and experts and
cooperate with them as requested in the carrying on or defense of any such
proceedings. All proceeds of condemnation awards or proceeds of sale in lieu of
condemnation with respect to the Property and all judgments, decrees and awards
for injury or damage to the Property shall be paid to BNPLC as Escrowed
Proceeds, and all such proceeds will be applied as provided in Paragraph 10.
BNPLC is hereby authorized, in the name of Extreme, at any time when an Event of
Default shall have occurred and be continuing, or otherwise with Extreme'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.
10. Application of Insurance and Condemnation Proceeds.
(a Collection and Application of Insurance and Condemnation
--------------------------------------------------------
Proceeds Generally. This Paragraph 10 shall govern the application of proceeds
- ------------------
received by BNPLC or Extreme 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 Extreme), (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. Except as provided in subparagraph
10.(d), Extreme will promptly pay over to BNPLC any insurance, condemnation or
other proceeds covered by this Paragraph 10 which Extreme may receive from any
insurer, condemning authority or other third party. All proceeds covered by this
Paragraph 10, including those received by BNPLC from Extreme 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 Extreme 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 Extreme. Except as
----------------------------------------
otherwise provided below in this Paragraph 10, BNPLC shall advance all Remaining
Proceeds held by it as Escrowed Proceeds to reimburse Extreme for the actual
out-of-pocket cost to Extreme 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 Extreme with such terms, conditions and requirements as may be
reasonably
[Improvements]
-18-
imposed by BNPLC. In no event, however, shall BNPLC be required to pay Escrowed
Proceeds to Extreme in excess of the actual out-of-pocket cost to Extreme of the
applicable repair or restoration, as evidenced by invoices or other
documentation satisfactory to BNPLC, it being understood that BNPLC may retain
and apply any such excess as a Qualified Prepayment.
(c Application of Escrowed Proceeds as a Qualified Prepayment.
----------------------------------------------------------
Provided that Extreme has completed any Initial Renovations which Extreme elects
to undertake 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 Extreme; however, if such a
notice from Extreme 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 the last day of a Base
Rent Period, 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 Extreme will reimburse BNPLC upon
request for any such Breakage Costs that BNPLC incurs but does not deduct.
(d Special Provisions Applicable After Completion of Initial
---------------------------------------------------------
Renovations. If, after Extreme has completed any Initial Renovations which
- -----------
Extreme elects to undertake, any taking by condemnation of any portion of the
Property or any casualty resulting in the diminution, destruction, demolition or
damage to any portion of the Property shall (in the good faith judgment of
BNPLC) reduce the then current "AS IS" market value by less than $500,000 and
(in the good faith estimation of BNPLC) be unlikely to result in Remaining
Proceeds of more than $500,000, and if no Event of Default shall have occurred
and be continuing, then BNPLC will, upon Extreme's request, instruct the
condemning authority or insurer, as applicable, to pay the Remaining Proceeds
resulting therefrom directly to Extreme. Extreme shall apply any such Remaining
Proceeds to the repair or restoration of the Property to a safe and secure
condition and to a value of no less than the value before taking or casualty.
(e Special Provisions Applicable After an Event of Default.
-------------------------------------------------------
Notwithstanding the foregoing, when any Event of Default shall have occurred and
be continuing, BNPLC shall be entitled to receive and collect all insurance,
condemnation or other proceeds governed by this Paragraph 10 and to apply all
Remaining Proceeds, when and to the extent deemed appropriate by BNPLC in its
sole discretion, either (A) to the reimbursement of Extreme or BNPLC for the
out-of-pocket cost of repairing or restoring the Property, or (B) as Qualified
Prepayments.
(f Extreme's Obligation to Restore. Regardless of the adequacy
-------------------------------
of any Remaining Proceeds available to Extreme hereunder, and notwithstanding
other provisions of this Improvements Lease to the contrary, if the Property is
damaged by fire or other casualty or less than all or substantially all of the
Property is taken by condemnation, Extreme must:
(i promptly restore or improve the Property or the remainder
thereof to a value no less than Stipulated Loss Value and to a
reasonably safe and sightly condition; or
(ii promptly restore the Property to a reasonably safe and
sightly condition and pay to BNPLC for application as a Qualified
Prepayment the amount (if any), as determined by BNPLC, needed to
reduce Stipulated Loss Value to no more than the then current "AS IS"
market value of the Property or remainder thereof.
[Improvements]
-19-
(g Takings of All or Substantially All of the Property. In the
---------------------------------------------------
event of any taking of all or substantially all of the Property, BNPLC shall be
entitled to apply all Remaining Proceeds as a Qualified Prepayment. In addition,
if Stipulated Loss Value immediately prior to any such taking exceeds the sum of
the Remaining Proceeds resulting from such a condemnation, then BNPLC shall be
entitled to recover the excess from Extreme 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 (ii) 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 Extreme
Concerning the Property. Extreme 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 Extreme
obtains available permits as the tenant under this Improvements Lease, in all
material respects with all Applicable Laws. Extreme 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, Extreme 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 Extreme does not promptly
correct any failure of the Property to comply with Applicable Laws that is the
subject of a written notice given to Extreme or BNPLC by any governmental
authority, then for purposes of the preceding sentence, Extreme 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, Extreme shall not use or occupy, or
allow the use or occupancy of, the Property in any manner which violates any
Applicable Law or which constitutes a public or private nuisance or which makes
void, voidable or cancelable any insurance then in force with respect thereto.
During the Term, to the extent that any of the following would, individually or
in the aggregate, materially and adversely affect the value of the Property or
the use of the Property for purposes permitted by this Improvements Lease,
Extreme 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 during the Term (A) a
change in the zoning or other Applicable Laws affecting the permitted use or
development of the Property shall occur that (in BNPLC's good faith judgment)
reduces the value of the Property, or (B) conditions or circumstances on or
about the Property are discovered (such as the presence of an endangered
species) which substantially impede development and thereby (in BNPLC's good
faith judgment) reduce the value of the Property, then Extreme shall upon demand
pay BNPLC an amount equal to such reduction (as determined by BNPLC in good
faith) for application as a Qualified Prepayment. Extreme shall not permit any
drilling or exploration for, or extraction, removal or production of, minerals
from the surface or subsurface of the Property, and Extreme shall not do
anything that could reasonably be expected to significantly reduce the market
value of the Property. If Extreme receives a notice or claim from any federal,
state or other governmental authority that the Property is not in compliance
with any Applicable Law, or that any action may be taken against BNPLC because
the Property does not comply with any Applicable Law, Extreme shall promptly
furnish a copy of such notice or claim to BNPLC.
[Improvements]
-20-
Notwithstanding the foregoing, Extreme 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 Extreme
shall not be deemed in default hereunder because of the violation of such
Applicable Law, if Extreme diligently prosecutes such contest to completion in a
manner reasonably satisfactory to BNPLC, and if Extreme 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 Extreme and any claims
asserted against BNPLC or the Property because of such violation must be paid by
Extreme, 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, Extreme or an Affiliate of Extreme 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 Extreme 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. Extreme 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 Extreme to remove
Liens Removable by BNPLC.
Notwithstanding the foregoing, Extreme 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 Extreme 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, Extreme 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) Extreme diligently prosecutes such contest to completion in a
manner reasonably satisfactory to BNPLC, and (3) Extreme 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 Extreme 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, Extreme or an Affiliate of Extreme 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 Extreme 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. Extreme
----------------------------------------------
shall keep the Property in good order, operating condition and appearance and
shall cause all necessary repairs, renewals and replacements to be promptly
made. Extreme will not allow any of the Property to be materially misused,
abused or wasted, and Extreme shall promptly replace any worn-out fixtures and
Personal Property with fixtures and Personal Property comparable to the replaced
items when new. Except as required in connection with Initial Renovations made
in accordance with Paragraph 6, Extreme 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 Extreme by fixtures or Personal
Property of equal suitability and value, free and clear of any lien or security
interest (and for purposes of
[Improvements]
-21-
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 Extreme 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. Without limiting the foregoing, Extreme will notify BNPLC
before making any significant alterations to the Improvements after the
completion of any Initial Renovations which Extreme elects to undertake.
(e Permitted Encumbrances and Development Documents. Extreme
------------------------------------------------
shall during the Term comply with and will cause to be performed all of the
covenants, agreements and obligations imposed upon the owner of any interest in
the Property by the Permitted Encumbrances (including the Premises Leases) or
the Development Documents. Without limiting the foregoing, Extreme 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, Extreme 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 Extreme 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. Extreme shall
-----------------------------------------
keep books and records that are accurate and complete in all material respects
for the Property and, subject to Paragraph 15.(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 Extreme to regularly maintain separate books and
records relating exclusively to the Property; provided, however, that upon
request, Extreme shall construct or abstract from its regularly maintained books
and records information required by this subparagraph relating to the Property.
12. Financial Covenants, Reporting Covenants and Other Covenants
Incorporated by Reference to Schedule 1. Throughout the Term of this
----------
Improvements Lease, Extreme shall comply with the requirements of Schedule 1
----------
attached hereto.
13. Assignment and Subletting by Extreme.
(a BNPLC's Consent Required. Without the prior consent of
------------------------
BNPLC, Extreme shall not assign, transfer, mortgage, pledge or hypothecate this
Improvements Lease or any interest of Extreme hereunder and shall not sublet all
or any part of the Property, by operation of law or otherwise; provided, that
subject to subparagraph 13.(c) below, (I) this provision shall not be construed
to prohibit any Premises Lease described in the Common Definitions and
Provisions Agreement (Improvements) or any transfer or sublease by a lessee
thereunder which is authorized by any Premises Lease, and (II) if (and after)
Extreme completes Initial Renovations, and so long as no Event of Default has
occurred and is continuing: (1) Extreme shall be entitled to sublet no more than
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 Extreme 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) Extreme shall be
entitled to assign or transfer this Improvements Lease or any interest of
Extreme hereunder to an Affiliate of Extreme if both Extreme and its Affiliate
confirm their joint and several liability hereunder by written notice given to
BNPLC.
(b Standard for BNPLC's Consent to Assignments and Certain
-------------------------------------------------------
Other Matters. Consents and approvals of BNPLC which are required by this
- -------------
Paragraph 13 will not be unreasonably withheld or delayed, but
[Improvements]
-21-
Extreme 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 Extreme'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 Extreme'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 Extreme from liability hereunder;
and any such consent shall apply only to the specific transaction thereby
authorized and shall not relieve Extreme 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 Extreme
hereunder.
14. 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 Extreme, which
consent Extreme 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,
Extreme shall not be required to compensate BNPLC or any such assignee for the
withholding tax. If, in breach of this subparagraph, BNPLC transfers 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 14.(a), BNPLC sells or otherwise transfers
the Property and assigns to the transferee all of BNPLC's rights under this
Improvements Lease and under the other Operative Documents, and if the
transferee expressly assumes all of BNPLC's obligations under this Improvements
Lease and under the other Operative Documents, then BNPLC shall thereby be
released from any obligations arising after such assumption under this
Improvements Lease or under the other Operative Documents, and Extreme shall
look solely to each successor in interest of BNPLC for performance of such
obligations. (As used in this subparagraph, "Operative Documents" is intended to
mean not only the Operative Documents as defined in the Common Definitions and
Provisions Agreement (Improvements), but also the Operative Documents as defined
in the Other Common Definitions and Provisions Agreement.)
15. BNPLC's Right of Access.
(a During the Term, BNPLC and BNPLC's representatives may
(subject to subparagraphs 15.(c) and 15.(d)) enter the Property at any
reasonable time after five Business Days advance written notice to Extreme 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 Extreme
has complied with the requirements of this Improvements Lease or the other
Operative Documents.
(b If Extreme 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 Extreme is required by this
[Improvements]
-23-
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 Extreme to BNPLC. Further, BNPLC, upon making such payment, shall be
subrogated to all of the rights of the person, corporation or body politic
receiving such payment. But nothing herein shall imply any duty upon the part of
BNPLC to do any work which under any provision of this Improvements Lease
Extreme may be required to perform, and the performance thereof by BNPLC shall
not constitute a waiver of Extreme'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 Extreme or the subtenants or invitees of Extreme 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 Extreme under this Improvements
Lease shall not thereby be excused in any manner.
(c Extreme 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 Extreme's
intellectual property, trade secrets and other confidential information of value
to Extreme about, among other things, Extreme'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 Extreme have any obligation to disclose to BNPLC or any
other party any proprietary information of Extreme (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.
(d So long as Extreme remains in possession of the Property, BNPLC
or BNPLC's representative will, before making any inspection or performing any
work on the Property authorized by this Improvements Lease, if then requested to
do so by Extreme to maintain Extreme's security: (i) sign in at Extreme's
security or information desk if Extreme has such a desk on the premises, (ii)
wear a visitor's badge or other reasonable identification, (iii) permit an
employee of Extreme to observe such inspection or work, and (iv) comply with
other similar reasonable nondiscriminatory security requirements of Extreme that
do not, individually or in the aggregate, significantly interfere with
inspections or work of BNPLC authorized by this Improvements Lease.
16. Events of Default. Each of the following events shall be an "Event of
Default" by Extreme under this Improvements Lease:
[Improvements]
-24-
(a Extreme shall fail to pay when due any installment of Rent due
hereunder and such failure shall continue for three (3) Business Days after
Extreme is notified in writing thereof.
(b Extreme shall fail to cause any representation or warranty of
Extreme contained herein or in the Closing Certificate that was false or
misleading in any material respect when made to be made true and not misleading
(other than as described in the other clauses of this Paragraph 16), or Extreme
shall fail to comply with any term, provision or covenant of this Improvements
Lease or of the Closing Certificate (other than as described in the other
clauses of this Paragraph 16), and in either case shall not cure such failure
prior to the earlier of (A) thirty days after written notice thereof is sent to
Extreme 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 Extreme
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) Extreme 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 Extreme shall abandon the Property.
(d Extreme or any Subsidiary shall fail to make any payment or
payments of principal, premium or interest, of Debt of Extreme described in the
next sentence when due (taking into consideration the time Extreme 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 (Improvements)) of Extreme or any of its
Subsidiaries now existing or arising in the future (1) payable to any Interested
Party, or (2) payable to any other Person and with respect to which $5,000,000
or more is actually due and payable because of acceleration or otherwise.
(e Extreme: (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 $5,000,000 in the aggregate shall be rendered against Extreme
and such judgments, decrees or orders shall continue unsatisfied and in effect
for a period of thirty consecutive days without Extreme'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 Extreme concerning the satisfaction or other
discharge of the same. (For purposes of this provision, no judgment, decree or
order will be considered "final" until Extreme's right to appeal, if any, shall
have expired or been exhausted.)
[Improvements]
-25-
(g Extreme 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 Extreme contained in subparagraphs 2(A) - (K)
of the Closing Certificate shall be false or misleading in any material respect.
(i Extreme shall fail to pay the full amount of any Supplemental
Payment required by the Purchase Agreement on the Designated Sale Date.
(j Extreme shall fail to comply with any term, provision or
condition of the Pledge Agreement after the expiration of any applicable notice
and cure period set forth in the Pledge Agreement.
17. Remedies.
(a Basic Remedies. At any time after an Event of Default and
--------------
after BNPLC has given any notice required by subparagraph 17.(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 17.(a)), to exercise any one
or more of the following remedies:
(i By notice to Extreme, BNPLC may terminate Extreme'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 Extreme's right to possession if Extreme fails
to cure the default within the time specified in the notice.
(ii Upon termination of Extreme's right to possession and
without further demand or notice, BNPLC may re-enter the Property in
any manner not prohibited by Applicable Law and take possession of all
improvements, additions, alterations, equipment and fixtures thereon
and remove any persons in possession thereof. Any property in the
Improvements may be removed and stored in a warehouse or elsewhere at
the expense and risk of and for the account of Extreme.
(iii) Upon termination of Extreme's right to possession,
this Improvements Lease shall terminate and BNPLC may recover from
Extreme:
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 Extreme 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 Extreme proves could be reasonably avoided; and
d) Any other amount necessary to compensate
BNPLC for all the detriment proximately caused by Extreme's
failure to perform Extreme's obligations under this Improvements
Lease or which in the ordinary course of things would be likely
to result therefrom, including the
[Improvements]
-26-
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
Extreme's failure to perform Extreme's obligations under the
other Operative Documents.
The "worth at the time of award" of the amounts referred to in
subparagraph 17.(a)(iii)a) and subparagraph 17.(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
17.(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 Extreme has breached
this Improvements Lease and abandoned the Property, this Improvements
Lease shall continue in effect for so long as BNPLC does not terminate
Extreme'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.
Extreme's right to possession shall not be deemed to have been
terminated by BNPLC except pursuant to subparagraph 17.(a)(i) hereof.
The following shall not constitute a termination of Extreme's right to
possession:
a) Acts of maintenance or preservation or efforts to
relet the Property;
b) The appointment of a receiver upon the initiative
of BNPLC to protect BNPLC's interest under this Improvements
Lease; or
c) Reasonable withholding of consent to an assignment
or subletting, or terminating a subletting or assignment by
Extreme.
(b) Notice Required So Long As the Purchase Option and Extreme's
------------------------------------------------------------
Initial Remarketing Rights and Obligations Continue Under the Purchase
- ----------------------------------------------------------------------
Agreement. So long as Extreme remains in possession of the Property and there
- ---------
has been no termination of the Purchase Option and Extreme's Initial Remarketing
Rights and Obligations as provided Paragraph 4 of the Purchase Agreement,
-----------
BNPLC's right to exercise remedies provided in subparagraph 17.(a) will be
subject to the condition precedent that BNPLC shall have notified Extreme, at a
time when an Event of Default shall have occurred and be continuing, of BNPLC's
intent to exercise remedies provided in subparagraph 17.(a) at least sixty days
prior to exercising the remedies. The condition precedent is intended to provide
Extreme with an opportunity to exercise the Purchase Option or Extreme's Initial
Remarketing Rights and Obligations before losing possession of the Property
pursuant to subparagraph 17.(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 17.(a) at any time after the earlier of (i) sixty days after BNPLC
has given such a notice to Extreme, (ii) any date upon which Extreme
relinquishes possession of the Property, or (iii) any termination of the
Purchase Option and Extreme's Initial Remarketing Rights and Obligations.
[Improvements]
-27-
(c) Enforceability. This Paragraph 17 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 Extreme, 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 Extreme 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 17.(b) as a condition precedent to any
acceleration of the Designated Sale Date or to taking any action to enforce the
Purchase Documents.
18. 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 Extreme specifying such default and specifying what
action Extreme believes is necessary to cure the default. If Extreme 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 Extreme shall
be entitled to an award against BNPLC for the monetary damages proximately
caused to Extreme by such default.
Notwithstanding the foregoing, BNPLC's right to cure as provided in this
Paragraph 18 will not in any event extend the time within which BNPLC must
remove Liens Removable by BNPLC as required by Paragraph 19 beyond the
Designated Sale Date.
19. Quiet Enjoyment. Provided Extreme 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 Extreme hereunder, BNPLC shall not during the Term disturb Extreme'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 Extreme for any monetary damages proximately caused thereby, but
as more specifically provided in subparagraph 4.(b) above, no such breach shall
entitle Extreme to terminate this Improvements Lease or excuse Extreme from its
obligation to pay Rent.
20. Surrender Upon Termination. Unless Extreme 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,
[Improvements]
-28-
Extreme shall, upon the termination of Extreme's right to occupancy, surrender
to BNPLC the Property, including Improvements constructed by Extreme 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
Extreme in a good and workmanlike manner in accordance with all Applicable Laws.
Any movable furniture or movable personal property belonging to Extreme or any
party claiming under Extreme, 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 Extreme's risk and
expense.
Nothing in this Paragraph 20 will be construed to require Extreme to
surrender the Property to BNPLC during the continuation of any breach by BNPLC
of any obligation it has under the Purchase Agreement to convey the Property to
Extreme or an Applicable Purchaser.
21. Holding Over by Extreme. Should Extreme 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 Extreme hereunder. No
payments of money by Extreme 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 Extreme.
22. Independent Obligations Evidenced by the Other Operative Documents.
Extreme acknowledges and agrees that nothing contained in this Improvements
Lease shall limit, modify or otherwise affect any of Extreme's obligations under
the other Operative Documents, which obligations are intended to be separate,
independent and in addition to, and not in lieu of, the obligations set forth
herein. In the event of any inconsistency between the express terms and
provisions of the Purchase Documents and the express terms and provisions of
this Improvements Lease, the express terms and provisions of the Purchase
Documents shall control. In the event of any inconsistency between the express
terms and provisions of the Closing Certificate and the express terms and
provisions of this Improvements Lease, the express terms and provisions of this
Improvements Lease shall control; provided, nothing herein will limit or impair
Extreme's obligations under the Closing Certificate following any expiration of
termination of this Improvements Lease.
[The signature pages follow.]
[Improvements]
-29-
IN WITNESS WHEREOF, Extreme and BNPLC have caused this Lease Agreement
(Improvements) to be executed as of June 1, 2000.
"Extreme"
EXTREME NETWORKS, INC.
By: _________________________________
Name:____________________________
Title:___________________________
[Continuation of signature pages to Lease Agreement (Improvements) dated to be
effective June 1, 2000]
"BNPLC"
BNP LEASING CORPORATION
By: _________________________________
Lloyd G. Cox, Vice President
Exhibit A
---------
Legal Description
All that certain real property situated in the City of Santa Clara, County of
Santa Clara, State of California, described as follows:
Being a portion of that certain 24.740 acre parcel as shown on that certain
Record of Survey filed in Book 447 of Maps, at Page 33, Santa Clara County
Records, described as follows:
Beginning at the Northwest corner of said 24.740 acre parcel; thence from said
point of beginning along the Northerly line of said 24.470 acre parcel N. 89
degrees 25 minutes 00 seconds E. 995.17 feet; thence leaving said Northerly
lines S. 0 degrees 10 minutes 00 seconds W. 705.02 feet to a point in the
Southerly line of said 24.740 acre parcel; thence along said Southerly line the
following courses: S. 89 degrees 25 minutes 00 seconds W. 181.82 feet; S. 2.00
feet and S. 89 degrees 25 minutes 00 seconds W. 760.70 feet; thence leaving said
Southerly line along a tangent curve to the right, with a radius of 50.00 feet,
through a central angle of 90 degrees 34 minutes 33 seconds for an arc length of
79.4 feet to a point in the Westerly line of said 24.470 acre parcel; thence
along said Westerly line N. 0 degrees 00 minutes 27 seconds W. 656.49 feet to
the point of beginning.
Exhibit B
---------
Insurance Requirements
I. LIABILITY INSURANCE:
A. Extreme must maintain commercial general liability ("CGL") insurance
on an occurrence basis, affording immediate protection to the limit of not less
than $20,000,000 combined single limit for bodily and personal injury, death and
property damage in respect of any one occurrence. The CGL insurance must be
primary to, and shall receive no contribution from, any insurance policies or
self-insurance programs otherwise afforded to or available to the Interested
Parties, collectively or individually. Further, the CGL insurance must include
blanket contractual liability coverage which insures contractual liability under
the indemnifications set forth in this Improvements Lease (though such coverage
or the amount thereof shall in no way limit such indemnifications).
B. Any deductible or self-insured retention applicable to the CGL
insurance shall not exceed $500,000.
C. The forms of insurance policies (including endorsements) used to
provide the CGL insurance required by this Improvements Lease, and the insurance
company or companies providing the CGL insurance, must be acceptable to BNPLC.
BNPLC shall have the right from time to time and at any time to review and
approve such policy forms (including endorsements) and the insurance company or
companies providing the insurance. Without limiting the generality of the
foregoing, BNPLC may reasonably require (and unless and until Extreme 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) 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
(Improvements) between Extreme Networks, Inc. and BNP
Leasing Corporation dated June 1, 2000)"; and
(b) provisions entitling BNPLC to 30 days' notice from the
insurer prior to any cancellation 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.
[Improvements]
II. PROPERTY INSURANCE:
A. Extreme must maintain property insurance in "special form" (including
theft) or against "all risks," providing the broadest available coverage for all
Improvements (as defined in the Common Provisions and Definitions Agreement) and
equipment included in the Property, on a blanket basis if multiple buildings are
involved, with no exclusions for vandalism, malicious mischief, or sprinkler
leakage and 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.
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, Extreme will be responsible for determining the amount of property
insurance to be maintained from time to time, but Extreme 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 $500,000.
D. The property insurance shall cover not only the value of Extreme'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
Extreme 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: Extreme'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 (Improvements) between Extreme
Networks, Inc. and BNP Leasing Corporation dated June 1,
2000)";
(b) that Extreme'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
Extreme or any other beneficiary or insured; and
Exhibit B - Page 2
[Improvements]
(d) that BNPLC must be notified at least thirty days prior to
any cancellation of insurance coverage.
III. OTHER INSURANCE RELATED REQUIREMENTS:
A. BNPLC must be notified in writing immediately by Extreme of claims
against Extreme that might cause a reduction below seventy-five percent (75%) of
any aggregate limit of any policy.
B. Extreme's property insurance must be evidenced by ACORD form 27
"Evidence of Property Insurance" completed and interlineated in a manner
satisfactory to BNPLC to show compliance with the requirements of this Exhibit.
Copies of endorsements to the property insurance must be attached to such form.
C. Extreme's CGL insurance must be evidenced by ACORD form 25
"Certificate of Insurance" completed and interlineated in a manner satisfactory
to BNPLC to show compliance with the requirements of this Exhibit. Copies of
endorsements to the CGL insurance must be attached to such form.
D. Such evidence of required insurance must be delivered upon execution
of this Improvements Lease and new certificate or evidence of insurance must be
delivered no later than 10 days prior to expiration of existing policy.
E. Extreme shall not cancel, fail to renew, or make or permit any
material reduction in any of the policies or certificates described in this
Exhibit without the prior written consent of BNPLC. The certificates (ACORD
forms 27 and 25) described in this Exhibit must contain the following express
provision:
"This is to certify that the policies of insurance described herein have
been issued to the insured Extreme Networks, Inc. for whom this certificate
is executed and are in force at this time. In the event of cancellation of
coverage affecting the certificate holder, at least thirty 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. Extreme shall provide copies, certified as complete and correct by an
authorized agent of the applicable insurer, of all insurance policies required
by this Exhibit within ten days after receipt of a request for such copies from
BNPLC.
Exhibit B - Page 3
[Improvements]
Exhibit C
---------
Notice of LIBOR Period Election
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Re: Lease Agreement (Improvements) and Lease Agreement (Land), both dated
as of June 1, 2000, and both between Extreme Networks, 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 ______________, 20___.
Extreme Networks, Inc.
Name:_________________________________
Title:________________________________
[cc all Participants]
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FINANCIAL COVENANTS
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