Exhibit 10.40
AMENDED AND RESTATED
CONSTRUCTION AGREEMENT
(BUILDING 8)
BETWEEN
NETWORK APPLIANCE, INC.
(“NAI”)
AND
BNP PARIBAS LEASING CORPORATION
(“BNPPLC”)
November 29, 2007
 

 

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TABLE OF CONTENTS

              Page  
ENGAGEMENT AND AUTHORIZATION
    1  
 
       
GENERAL TERMS AND CONDITIONS
    2  
 
       
1 Additional definitions
    2  
“97-10/Maximum Permitted Prepayment”
    2  
“97-10/Meltdown Event”
    2  
“97-10/Prepayment”
    3  
“97-10/Project Costs”
    3  
“97-10/Pronouncement”
    4  
“NAI’s Estimate of Force Majeure Delays”
    4  
“NAI’s Estimate of Force Majeure Excess Costs”
    4  
“Accrued Construction Period Interest Expense”
    4  
“Administrative Fee”
    5  
“Affiliate’s Contract”
    5  
“Arrangement Fee”
    5  
“Capital Adequacy Charges”
    5  
“Carrying Costs”
    5  
“Commitment Fee Rate”
    5  
“Commitment Fees”
    6  
“Complete Taking”
    7  
“Completion Date”
    7  
“Completion Notice”
    7  
“Construction Advances”
    7  
“Construction Advance Request”
    7  
“Construction Allowance”
    7  
“Construction Budget”
    7  
“Construction Project”
    7  
“Covered Construction Period Losses”
    8  
“Defective Work”
    8  
“FOCB Notice”
    8  
“Force Majeure Event”
    8  
“Funded Construction Allowance”
    8  
“Future Work”
    9  
“Ground Lease Rents”
    9  
“Increased Cost Charges”
    9  
“Increased Commitment”
    9  
“Increased Funding Commitment”
    9  
“Increased Time Commitment”
    9  
“Initial Advance”
    9  

 

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TABLE OF CONTENTS
(Continued)

              Page  
“Maximum Construction Allowance”
    9  
“Notice of NAI’s Intent to Terminate”
    9  
“Notice of NAI’s Intent to Terminate Because of a Force Majeure Event”
    9  
“Notice of Termination by NAI”
    9  
“Outstanding Construction Allowance”
    9  
“Owner’s Election to Continue Construction”
    9  
“Pre-lease Casualty”
    9  
“Pre-lease Force Majeure Delays”
    10  
“Pre-lease Force Majeure Event”
    10  
“Pre-lease Force Majeure Event Notice”
    10  
“Pre-lease Force Majeure Excess Costs”
    10  
“Pre-lease Force Majeure Losses”
    10  
“Prior Work”
    11  
“Projected Cost Overruns”
    11  
“Reimbursable Construction Period Costs”
    11  
“Remaining Proceeds”
    12  
“Scope Change”
    12  
“Target Completion Date”
    12  
“Termination of NAI’s Work”
    12  
“Third Party Contract”
    12  
“Third Party Contract/Termination Fees”
    12  
“Timing or Budget Shortfall”
    12  
“Upfront Fees”
    13  
“Work”
    13  
“Work/Suspension Event”
    13  
“Work/Suspension Notice”
    14  
“Work/Suspension Period”
    14  
 
       
2 Construction and Management of the Property by NAI
    14  
(A) The Construction Project
    14  
(1) Construction Approvals by BNPPLC
    14  
(a) Preconstruction Approvals by BNPPLC
    14  
(b) Approval of Scope Changes
    14  
(2) NAI’s Right to Possession and to Control Construction
    15  
(a) Performance of the Work
    15  
(b) Third Party Contracts
    16  
(c) Adequacy of Drawings, Specifications and Budgets
    16  
(d) Existing Condition of the Land and Improvements
    16  

(ii) 

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TABLE OF CONTENTS
(Continued)

              Page  
(e) Correction of Defective Work
    16  
(f) Clean Up
    17  
(g) No Damage for Delays
    17  
(h) No Fee For Construction Management
    17  
(3) Quality of Work
    17  
(B) Completion Notice
    17  
(C) Status of Property Acquired With BNPPLC’s Funds
    18  
(D) Insurance
    18  
(1) Liability Insurance
    18  
(2) Property Insurance
    19  
(3) Failure of NAI to Obtain Insurance
    19  
(4) Waiver of Subrogation
    19  
(E) Condemnation
    20  
(F) Additional Representations, Warranties and Covenants of NAI Concerning the
Property
    20  
(1) Payment of Local Impositions
    20  
(2) Operation and Maintenance
    21  
(3) Debts for Construction, Maintenance, Operation or Development
    22  
(4) Permitted Encumbrances and the Ground Lease
    22  
(5) Books and Records Concerning the Property
    22  
(G) BNPPLC’s Right of Access
    23  
(1) Access Generally
    23  
(2) Failure of NAI to Perform
    23  
 
       
3 Amounts to be Added to the Lease Balance (in Addition to Construction
Advances)
    24  
(A) Initial Advance
    24  
(B) Carrying Costs
    25  
(C) Commitment Fees
    25  
(D) Future Administrative Fees and Out-of-Pocket Costs
    26  
(E) Increased Cost Charges and Capital Adequacy Charges
    26  
(F) Ground Lease Payments
    27  
 
       
4 Construction Advances
    27  
(A) Costs Subject to Reimbursement Through Construction Advances
    27  
(B) Exclusions From Reimbursable Construction Period Costs
    29  
(C) Conditions to NAI’s Right to Receive Construction Advances
    29  
(1) Construction Advance Requests
    29  
(2) Amount of the Advances
    30  
(a) The Maximum Construction Allowance
    30  

(iii) 

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TABLE OF CONTENTS
(Continued)

              Page  
(b) Costs Previously Incurred by NAI
    30  
(c) Limits During any Work/Suspension Period
    31  
(d) Restrictions Imposed for Administrative Convenience
    31  
(3) No Advances After Certain Dates
    31  
(D) Breakage Costs for Construction Advances Requested But Not Taken
    31  
(E) No Third Party Beneficiaries
    32  
(F) No Waiver
    32  
 
       
  5 Application of Insurance and Condemnation Proceeds
    32  
(A) Collection and Application Generally
    32  
(B) Advances of Escrowed Proceeds to NAI
    33  
(C) Status of Escrowed Proceeds After Commencement of the Term of the Lease
    33  
(D) Special Provisions Applicable After a 97-10/Meltdown Event or Event of
Default
    33  
(E) NAI’s Obligation to Restore
    33  
(F) Special Provisions Concerning a Complete Taking
    34  
 
       
  6 Notice of Cost Overruns and Pre-lease Force Majeure Events
    34  
(A) Notice of Projected Cost Overruns
    34  
(B) Pre-lease Force Majeure Event Events and Notices
    34  
 
       
  7 Suspension and Termination of NAI’s Work
    34  
(A) Rights and Obligations During a Work/Suspension Period
    34  
(B) NAI’s Election to Terminate NAI’s Work
    34  
(C) BNPPLC’s Election to Terminate NAI’s Work
    38  
(D) Surviving Rights and Obligations
    38  
(E) Cooperation After a Termination of NAI’s Work
    38  
 
       
  8 Continuation of Construction by BNPPLC
    40  
(A) Owner’s Election to Continue Construction
    40  
(1) Take Control of the Property
    40  
(2) Continuation of Construction
    40  
(3) Arrange for Turnkey Construction
    41  
(4) Suspension or Termination of Construction by BNPPLC
    41  
(B) Powers Coupled With an Interest
    42  
 
       
  9 NAI’s Obligation for 97-10/Prepayments
    42  
 
       
10 Indemnity for Covered Construction Period Losses
    43  

(iv) 

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TABLE OF CONTENTS
(Continued)

              Page  
(A) Covenant to Indemnify Against Covered Construction Period Losses
    43  
(B) Certain Losses Included or Excluded
    44  
(1) Back to Back Claims by Participants Against BNPPLC
    44  
(2) Environmental
    45  
(3) Failure to Maintain a Safe Work Site
    45  
(4) Failure to Complete Construction
    46  
(5) Fraud
    46  
(6) Excluded Taxes and Established Misconduct
    46  
(C) Express Negligence Protection
    46  
(D) Survival of Indemnity
    47  
(E) Due Date for Indemnity Payments
    47  
(F) Order of Application of Payments
    47  
(G) Defense of BNPPLC
    47  
(1) Assumption of Defense
    47  
(2) Indemnity Not Contingent
    47  
(H) Notice of Claims
    48  
(I) Withholding of Consent to Settlements Proposed by NAI
    48  
(J) Settlements Without the Prior Consent of NAI
    48  
(1) Election to Pay Reasonable Settlement Costs in Lieu of Actual
    48  
(2) Conditions to Election
    49  
(3) Indemnity Survives Settlement
    49  
(K) No Authority to Admit Wrongdoing on the Part of NAI
    49  
(L) Refunds of Covered Construction Period Losses Paid by NAI
    50  
(1) Payment by BNPPLC After Refund
    50  
(2) Meaning of Refund
    50  
(3) Conditions to Payment
    51  
 
       
11 Characterization of Operative Documents; Remedies
    51  
(A) Characterization of Operative Documents
    51  
(1) Confirmation of Lien and Security Interest Granted in the Lease
    51  
(2) Foreclosure Remedies
    51  
(B) Notice Required So Long As the Purchase Option Continues Under the Purchase
Agreement
    52  
(C) Remedies Cumulative
    52  
(D) Third Party Estoppels
    53  
 
       
12 Amendment and Restatement of Prior Construction Agreement
    53  

(v) 

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TABLE OF CONTENTS
(Continued)
Exhibits and Schedules

      Exhibit A  
Legal Description
   
 
Exhibit B  
Description of the Construction Project and Budget
   
 
Exhibit C  
Construction Advance Request Form
   
 
Exhibit D  
Pre-lease Force Majeure Event Notice
   
 
Exhibit E  
Notice of Termination by NAI’s Work
   
 
Exhibit F  
Notice of NAI’s Intent to Terminate
   
 
Exhibit G  
Notice of Increased Funding Commitment by BNPPLC
   
 
Exhibit H  
Notice of Increased Time Commitment by BNPPLC
   
 
Exhibit I  
Notice of Rescission of NAI’s Intent to Terminate
   
 
Exhibit J  
Form of Contractor Estoppel
   
 
Exhibit K  
Form of Design Professional Estoppel

(vi) 

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AMENDED AND RESTATED
CONSTRUCTION AGREEMENT
(BUILDING 8)
     This AMENDED AND RESTATED CONSTRUCTION AGREEMENT (BUILDING 8) (this
“Agreement”), dated as of November 29, 2007 (the “Effective Date”), is made by
and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation,
and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Agreement, BNPPLC and NAI are
executing an Amended and Restated Common Definitions and Provisions Agreement
(Building 8) dated as of the Effective Date (the “Common Definitions and
Provisions Agreement”), which by this reference is incorporated into and made a
part of this Agreement for all purposes. As used in this Agreement, capitalized
terms defined in the Common Definitions and Provisions Agreement and not
otherwise defined in this Agreement are intended to have the respective meanings
assigned to them in the Common Definitions and Provisions Agreement.
     At the request of NAI and to facilitate the transaction contemplated in the
other Operative Documents, contemporaneously with this Agreement BNPPLC is
executing and accepting an Amended and Restated Ground Lease (Building 8) from
NAI (the “Ground Lease”), pursuant to which BNPPLC is acquiring a leasehold
estate in the Land described in Exhibit A and any existing Improvements on such
Land.
     Also contemporaneously with this Agreement, BNPPLC and NAI are executing an
Amended and Restated Lease Agreement (Building 8) (the “Lease”), pursuant to
which the parties expect that NAI will lease the Improvements on the Land
described in Exhibit A from BNPPLC for a lease term that will commence on the
Completion Date (as defined below).
     In anticipation of the construction of new or additional Improvements for
NAI’s use pursuant to the Lease, BNPPLC and NAI have agreed upon the terms and
conditions upon which BNPPLC is willing to authorize NAI to arrange and manage
such construction and upon which BNPPLC is willing to provide funds for such
construction, and by this Agreement BNPPLC and NAI desire to evidence such
agreement.
ENGAGEMENT AND AUTHORIZATION
     Subject to the terms and conditions set forth in this Agreement, BNPPLC
does hereby engage and authorize NAI — and NAI does hereby accept such
engagement and authorization, as an independent contractor for BNPPLC — to
construct the Construction Project on the Land and to

 

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manage such construction for BNPPLC. As more particularly provided in
subparagraph 2(A)(2) below, NAI will take possession and control of the Land and
all Improvements on the Land to accomplish such construction. However, the
rights and authority granted to NAI by this Agreement are expressly made subject
and subordinate to the terms and condition hereinafter set forth and to the
Ground Lease, to the Permitted Encumbrances and to any other claims or
encumbrances affecting the Land or the Property that may be asserted by third
parties other than Liens Removable by BNPPLC.
GENERAL TERMS AND CONDITIONS
1 Additional definitions. As used in this Agreement, capitalized terms defined
above will have the respective meanings assigned to them above; as indicated
above, capitalized terms that are defined in the Common Definitions and
Provisions Agreement and that are used but not defined herein will have the
respective meanings assigned to them in the Common Definitions and Provisions
Agreement; and, the following terms will have the following respective meanings:
“97-10/Maximum Permitted Prepayment” as of any date means the amount equal to
eighty-nine and nine-tenths of one percent (89.9%) of the aggregate of all
97-10/Project Costs paid or incurred on or prior to such date.
“97-10/Meltdown Event” means any of the following:
     (a) NAI gives a Notice of NAI’s Intent to Terminate and thereafter (i)
fails to rescind the same as described in subparagraph 7(B)(7) within ten days
after BNPPLC responds with any Increased Commitment, or (ii) gives a Notice of
Termination by NAI as provided in subparagraph 7(B)(1); or
     (b) NAI gives a notice to terminate its Supplemental Payment Obligation
under the Purchase Agreement as described in subparagraph 6(B) of the Purchase
Agreement; or
     (c) BNPPLC gives notice to NAI as described in subparagraph 7(C) to cause a
Termination of NAI’s Work; or
     (d) NAI fails for any reason whatsoever to substantially complete the
Construction Project and give a Completion Notice to BNPPLC prior to the Target
Completion Date; or
Amended and Restated Construction Agreement (Building 8) – Page 2

 

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     (e) for any reason whatsoever (including the accrual of Carrying Costs),
the Funded Construction Allowance exceeds the Maximum Construction Allowance.
“97-10/Prepayment” means any payment to BNPPLC required by Paragraph 9, which in
each case will equal (A) the 97-10/Maximum Permitted Prepayment, computed as of
the date on which the payment becomes due, less (B) the sum of (1) the accreted
value of any prior payments actually received by BNPPLC from NAI constituting
97-10/Prepayments, and (2) amounts (if any) then owed by BNPPLC to NAI pursuant
to this Agreement as reimbursements for Reimbursable Construction Period Costs
paid by NAI and not theretofore reimbursed. For purposes of the preceding
sentence, “accreted value” of a payment means the amount of the payment plus an
amount equal to the interest that would have accrued on the payment if it bore
interest at the Effective Rate plus the Spread.
“97-10/Project Costs” means the following:
     (a) costs incurred for the Work, including not only hard costs incurred for
the new Improvements described in Exhibit B, but also the following costs to the
extent reasonably incurred in connection with the Construction Project:

  •   soft costs, such as architectural fees, engineering fees and fees and
costs paid in connection with obtaining project permits and approvals required
by governmental authorities or any Permitted Encumbrance,     •   site
preparation costs, and     •   costs of offsite and other public improvements
required as conditions of governmental approvals for the Construction Project or
required by any Permitted Encumbrances;

     (b) costs incurred to maintain insurance required by (and consistent with
the requirements of) this Agreement prior to the Completion Date;
     (c) Local Impositions that have accrued or become due prior to the
Completion Date;
     (d) Accrued Construction Period Interest Expense; and
     (e) any costs in addition to those described in clauses (a) through (d)
preceding that GAAP (as it exists on the Effective Date) would allow BNPPLC to
Amended and Restated Construction Agreement (Building 8) – Page 3

 

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capitalize as part of the cost of the Property or that the 97-10/Pronouncement
would allow BNPPLC to characterize as project costs, including: (1) cancellation
or termination fees or other compensation payable by NAI or BNPPLC pursuant to
any contract concerning the Construction Project made by NAI or BNPPLC with any
general contractor, architect, engineer or other third party because of any
election by NAI or BNPPLC to cancel or terminate such contract, and (2) any
costs that BNPPLC incurs and is allowed to capitalize to continue or complete
the Construction Project after any Owner’s Election to Continue Construction as
provided in subparagraph 8(A).
However, notwithstanding the foregoing, 97-10/Project Costs will not include
Pre-lease Force Majeure Losses, Administrative Fees, the Arrangement Fee or any
legal fees which are included in Transaction Expenses.
It is understood that 97-10/Project Costs will include all amounts paid,
reimbursed or accrued prior to the Effective Date and included in the Initial
Lease Balance that would qualify as 97-10/Project Costs under and as defined in
the Prior Construction Agreement. However, it is also understood that
97-10/Project Costs will not include any costs that were paid, reimbursed or
accrued prior to the Effective Date, but excluded from 97-10/Project Costs
according to the definition thereof in the Prior Construction Agreement. For
example, 97-10/Project Costs will not include the fee described and defined as
an Arrangement Fee in the Prior Construction Agreement.
“97-10/Pronouncement” means the pronouncement issued by the Emerging Issues Task
Force of the Financial Accounting Standards Board in 1998 titled “EITF 97-10:
The Effect of Lessee Involvement in Asset Construction”, which provides that
certain kinds of involvement by a lessee in pre-lease commencement construction
will cause the lessee to be considered as the owner of the leased property
during the construction period and then will require application of the
appropriate sale and leaseback accounting rules.
“NAI’s Estimate of Force Majeure Delays” has the meaning indicated in
subparagraph 7(B)(4).
“NAI’s Estimate of Force Majeure Excess Costs” has the meaning indicated in
subparagraph 7(B)(3).
“Accrued Construction Period Interest Expense” means interest that has accrued
and that BNPPLC has paid or is obligated to pay on Funding Advances for any
period prior to the Completion Date. Such interest will include a percentage,
equal to the aggregate Percentages of all Participants (under and as defined in
the Participation Agreement), of Carrying Costs and Commitment Fees that accrue
after the execution of any Participation Agreement and that are added to the
Outstanding Construction Allowance as provided in
Amended and Restated Construction Agreement (Building 8) – Page 4

 

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this Agreement, it being understood that the additional amounts BNPPLC must pay
to the Participants under the Participation Agreement because of the accrual of
Carrying Costs and Commitment Fees effectively constitute construction period
interest on advances the Participants make to BNPPLC under the Participation
Agreement. Accrued Construction Period Interest Expense will also include any
interest and other finance charges that accrue prior to the Completion Date
because of Funding Advances provided to BNPPLC by BNPPLC’s Parent in the form of
loans, regardless of whether BNPPLC’s obligation in respect of such loans is
limited to BNPPLC’s interest in the Property. However, any such interest and
other finance charges accruing on Funding Advances provided by BNPPLC’s Parent
and included in Accrued Construction Period Interest Expense will not exceed the
Carrying Costs attributable to the portion of the Lease Balance funded or
maintained by such Funding Advances. Further, Accrued Construction Period
Interest will not include any portion of Carrying Costs included in Pre-lease
Force Majeure Losses (as set forth in the definition thereof below) or interest
or finance charges that BNPPLC must pay to the Participants under the
Participation Agreement because of the accrual of such portion of Carrying
Costs.
“Administrative Fee” has the meanings indicated in subparagraph 3(A) and
subparagraph 3(D).
“Affiliate’s Contract” has the meaning indicated in subparagraph 2(A)(2)(b)2).
“Arrangement Fee” has the meaning indicated in subparagraph 3(A).
“Capital Adequacy Charges” has the meaning indicated in subparagraph 3(E)(1).
“Carrying Costs” has the meaning indicated in subparagraph 3(B).
“Commitment Fee Rate” means, for each Construction Period, the amount
established as of the date (in this definition, the “CFR Test Date”) that is two
Business Days prior to such period by reference to the pricing grid below, based
upon the ratio calculated by dividing (1) Consolidated EBITDA for the then
latest Rolling Four Quarters Period that ended prior to (and for which NAI has
reported earnings as necessary to compute Consolidated EBITDA) into (2) the
Consolidated Debt for Borrowed Money as of the end of such Rolling Four Quarters
Period. In each case, the Commitment Fee Rate will be established at the Level
in the pricing grid below which corresponds to such ratio; provided, that:
     (a) promptly after earnings are reported by NAI for the latest quarter in
any Rolling Four Quarters Period, NAI must notify BNPPLC of any resulting change
in the Commitment Fee Rate under this definition, and no reduction in the
Amended and Restated Construction Agreement (Building 8) – Page 5

 

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Commitment Fee Rate from one period to the next will be effective for purposes
of this Agreement unless, prior to the CFR Test Date for the next period, NAI
shall have provided BNPPLC with a written notice setting forth and certifying
the calculation under this definition that justifies the reduction; and
     (b) if Commitment Fees are understated during any Construction Period
because of any misstatement, subsequently discovered, of Consolidated EBITDA or
Consolidated Debt for Borrowed Money, BNPPLC will be entitled to add to the
Outstanding Construction Allowance or (after the Completion Date) collect from
NAI all additional amounts that would have been added to the Outstanding
Construction Allowance hereunder or expected to be paid under the other
Operative Documents but for the misstatement, together with interest on each
such additional amount computed at the Default Rate from the date it would have
been included in the Outstanding Construction Allowance or expected to be paid
to the date it is actually added or paid.

              Ratio of Consolidated Debt for         Borrowed Money to    
Levels   Consolidated EBITDA   Spread
Level I
  less than 0.5   6.0 basis points
 
       
Level II
  greater than or equal to 0.5, but less than 1.0   7.0 basis points
 
       
Level III
  greater than or equal to 1.0, but less than 1.5   8.0 basis points
 
       
Level IV
  greater than or equal to 1.5, but less than 2.0   10.0 basis point
 
       
Level V
  greater than or equal to 2.0   15.0 basis points

All determinations of the Commitment Fee Rate by BNPPLC will, in the absence of
clear and demonstrable error, be binding and conclusive for purposes of this
Agreement. Further BNPPLC may, but will not be required, to rely on the
determination of the Commitment Fee Rate set forth in any notice delivered by
NAI as described above in clause (a) of this definition.
“Commitment Fees” has the meaning indicated in subparagraph 3(C).
Amended and Restated Construction Agreement (Building 8) – Page 6

 

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“Complete Taking” means a taking by eminent domain prior to the Completion Date
over NAI’s objection of all of the Land or the Property, or so much thereof as
to make it impossible to complete the Construction Project for its intended uses
on the Land regardless of any Scope Changes BNPPLC may be willing to approve or
any Increased Commitment that BNPPLC may be willing to provide.
“Completion Date” means the date upon which NAI gives the notice to BNPPLC which
is required by subparagraph 2(B), after having substantially completed the
Construction Project and having obtained any certificate of occupancy or other
permit (temporary or permanent) required for the commencement of NAI’s use of
the Improvements.
“Completion Notice” means the notice required by subparagraph 2(B) from NAI to
BNPPLC, advising BNPPLC that NAI has substantially completed construction of the
Construction Project and has obtained any certificate of occupancy or other
permit (temporary or permanent) required for the commencement of NAI’s use of
the Improvements.
“Construction Advances” means (1) actual advances of funds made by or on behalf
of BNPPLC to or on behalf of NAI as provided in Paragraph 4, which sets forth
NAI’s rights to receive advances for Reimbursable Construction Period Costs, and
(2) other amounts paid or incurred by BNPPLC that subparagraph 8(A) or other
provisions of this Agreement allow BNPPLC to characterize as Construction
Advances. The term “Construction Advances” will not, however, include advances
of insurance proceeds, condemnation proceeds or other Escrowed Proceeds to pay
or reimburse costs of repairs or restoration.
“Construction Advance Request” has the meaning indicated in subparagraph
4(C)(1).
“Construction Allowance” means the allowance to be provided by BNPPLC for the
design and construction of the Construction Project, against which and from
which Carrying Costs, Construction Advances and other amounts will be or may be
charged and paid as provided in various provisions of this Agreement (including
Paragraphs 3, 4 and 8).
“Construction Budget” means the budget for the Construction Project set forth in
Exhibit B.
“Construction Project” means the new buildings or other substantial Improvements
to be constructed, or the alteration of existing Improvements, as described
generally in Exhibit B.
Amended and Restated Construction Agreement (Building 8) – Page 7

 

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“Covered Construction Period Losses” has the meaning indicated in subparagraph
10(A).
“Defective Work” has the meaning indicated in subparagraph 2(A)(2)(e).
“FOCB Notice” means a notice from BNPPLC to NAI advising NAI of any of the
following events or circumstances, and also advising NAI that because of any of
the following events or circumstances BNPPLC will be entitled to make the
election described in subparagraph 7(C), which will constitute a Termination of
NAI’s Work and a 97-10/Meltdown Event:
     (1) NAI has taken action to cancel or terminate or reduce the coverage
available to BNPPLC under the builder’s risk insurance obtained for the
Construction Project as required by this Agreement, or NAI has otherwise failed
to maintain any insurance or to provide insurance certificates to BNPPLC as
required by this Agreement and not cured such failure within ten days after
receiving notice thereof, or
     (2) NAI has given any Pre-lease Force Majeure Event Notice to BNPPLC, or
     (3) an Event of Default has occurred and is continuing; or
     (4) a Work/Suspension Event has occurred and continued for more than thirty
consecutive days after NAI’s receipt of a Work/Suspension Notice advising NAI of
such Work/Suspension Event, and subsequent to such thirty day period the
Work/Suspension Event has not been rectified by NAI.
“Force Majeure Event” means (A) any taking of any part of the Property by
eminent domain prior to the Completion Date, and (B) any damage to the
Improvements or disruption of the Work that occurs prior to the Completion Date
and that is caused by fire or acts of God (such as flood, lightning, earthquake
or hurricane), war, strikes and other labor disputes, or riot or similar civil
disturbance, but only to the extent such damage or disruption (i) is beyond the
control of and not caused in whole or in part by negligence, illegal acts or
willful misconduct on the part of NAI or of its employees or of any other party
acting under NAI’s control or with the approval or authorization of NAI, and
(ii) could not have been avoided or overcome by the exercise of due diligence or
reasonable foresight on the part of NAI or of any other such party.
“Funded Construction Allowance” means on any day the Outstanding Construction
Allowance on that day, including all Construction Advances and Carrying Costs
added to the Outstanding Construction Allowance on or prior to that day, plus
the amount of any Qualified Prepayments deducted on or prior to that day in the
calculation of such
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Outstanding Construction Allowance.
“Future Work” has the meaning indicated in subparagraph 4(C)(2)(b).
“Ground Lease Rents” has the meaning indicated in subparagraph 3(F).
“Increased Cost Charges” has the meaning indicated in subparagraph 3(E)(1).
“Increased Commitment” has the meaning indicated in subparagraph 7(B)(6).
“Increased Funding Commitment” has the meaning indicated in subparagraph
7(B)(6)(a).
“Increased Time Commitment” has the meaning indicated in subparagraph
7(B)(6)(b).
“Initial Advance” has the meaning indicated in subparagraph 3(A).
“Maximum Construction Allowance” means an amount equal to the difference
computed by subtracting both the Initial Lease Balance and the Initial Advance
from $65,000,000, as such amount may be increased from time to time by any
Increased Funding Commitment made by BNPPLC as provided in subparagraph 7(B)(6).
“Notice of NAI’s Intent to Terminate” has the meaning indicated in subparagraph
7(B)(2).
“Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” has the
meaning indicated in subparagraph 7(B)(5).
“Notice of Termination by NAI” has the meaning indicated in subparagraph
7(B)(1).
“Outstanding Construction Allowance” means, as of any date, the difference (but
not less than zero) of (A) the total Construction Advances made by or on behalf
of BNPPLC on or prior to such date in question, plus (B) all Carrying Costs,
Commitment Fees, Administrative Fees, Increased Cost Charges and Capital
Adequacy Charges added on or prior to the date as provided in Paragraph 3, less
(C) any funds received and applied as Qualified Prepayments on or prior to such
date.
“Owner’s Election to Continue Construction” has the meaning indicated in
subparagraph 8(A).
“Pre-lease Casualty” has the meaning indicated in subparagraph 2(A)(2)(a).
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“Pre-lease Force Majeure Delays” means delays in the completion of the Work to
the extent (but only to the extent) caused solely by a Pre-lease Force Majeure
Event.
“Pre-lease Force Majeure Event” means a Force Majeure Event that occurs prior to
the Completion Date; provided, however, that if NAI does not notify BNPPLC of
any such Force Majeure Event by the delivery of a Pre-lease Force Majeure Event
Notice within thirty days after the Force Majeure Event first occurs or
commences, then such Force Majeure Event will not qualify as a “Pre-lease Force
Majeure Event” for purposes of this Agreement or the other Operative Documents.
“Pre-lease Force Majeure Event Notice” has the meaning indicated in subparagraph
6(B).
“Pre-lease Force Majeure Excess Costs” means the amount (if any) by which the
increases in the costs of the Work resulting directly and solely from a
Pre-lease Force Majeure Event (such as, for example, the costs of repairing
damage to the Improvements caused by a Pre-lease Force Majeure Event) exceed the
amounts available to pay or reimburse NAI for such increased costs. Amounts
available to pay or reimburse such increased costs will include (a) insurance
proceeds or any recovery from a third party (including any Escrowed Proceeds
held by BNPPLC), and (b) any part of the Construction Allowance (including any
unused contingency amount in the Construction Budget) not used or needed to
cover other Reimbursable Construction Period Costs.
“Pre-lease Force Majeure Losses” means any of the following Losses that BNPPLC
suffers by reason of any taking or damage to the Improvements which constitutes
a Pre-lease Force Majeure Event:
     (a) the costs of repairing any such damage to the extent that such costs
have, as of the date of any required determination of Pre-lease Force Majeure
Losses, been paid or reimbursed from a Construction Advance (and thus are
included in the Lease Balance as of that date), to be distinguished from costs
of repairs paid or reimbursed from insurance proceeds or from any recovery from
a third party;
     (b) any diminution in the value of the Improvements resulting from any such
taking or resulting from any such damage that has not, as of the date of the
required determination of Pre-lease Force Majeure Losses, been repaired;
     (c) any increase in the total amount of Carrying Costs, Commitment Fees,
Administrative Fees, Increased Cost Charges, Capital Adequacy Charges and Ground
Lease Rents (and any other amounts) added to the Lease Balance as
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provided in Paragraph 3 solely by reason of Pre-lease Force Majeure Delays; and
     (d) to the extent not already included in the increase described in the
preceding clause, all increases in Carrying Costs that are attributable to the
amounts included in Pre-lease Force Majeure Losses pursuant to the preceding
clause (a);
but in each case such amounts will constitute Pre-lease Force Majeure Losses
only to the extent, if any, that they are not offset by condemnation or
insurance proceeds which are (1) paid by reason of such Pre-lease Force Majeure
Event (including insurance proceeds paid to compensate BNPPLC or NAI for
increased financing costs, the lost time value of BNPPLC’s investment in the
Project or business interruption) and (2) applied as a Qualified Prepayment to
reduce the Lease Balance.
Also, for purposes of this definition, the diminution in the value of the
Improvements, as described in the preceding clause (b), because of any damage
that constitutes a Pre-lease Force Majeure Event will not exceed the amount
thereof estimated in good faith by any independent appraiser or insurance
adjuster engaged by BNPPLC to determine such amount after BNPPLC has received a
Pre-lease Force Majeure Event Notice as provided in subparagraph 6(B), nor will
it exceed the cost of repairing the damage as estimated in good faith by any
such independent insurance adjuster or as indicated by any bona fide written bid
to make the repairs that BNPPLC obtains from a reputable contractor capable of
making the repairs.
“Prior Work” has the meaning indicated in subparagraph 4(C)(2)(b).
“Projected Cost Overruns” means the excess (if any), calculated as of the date
of each Construction Advance Request, of (1) the total of projected Reimbursable
Construction Period Costs yet to be incurred or for which NAI has yet to be
reimbursed hereunder (including projected Reimbursable Construction Period Costs
for Future Work), over (2) the balance of the remaining Construction Allowance
then projected to be available to cover such costs. The balance of the remaining
Construction Allowance then projected to be available will equal: (i) the amount
(if any) by which the Maximum Construction Allowance exceeds the Funded
Construction Allowance, plus (ii) any Escrowed Proceeds then available or
expected to be available to cover costs of repairs and restoration that NAI will
perform as part of the Work after a casualty or condemnation, less (iii) all
projected future Carrying Costs, Commitment Fees, Administrative Fees and other
amounts to be added to the Outstanding Construction Allowance as provided in
Paragraph 3.
“Reimbursable Construction Period Costs” has the meaning indicated in
subparagraph 4(A).
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“Remaining Proceeds” has the meaning indicated in subparagraph 5(A).
“Scope Change” means a change to the Construction Project that, if implemented,
will make the quality, function or capacity of the Improvements “materially
different” (as defined below in this subparagraph) than as described or inferred
by the site plan or plans and renderings referenced in Exhibit B. The term
“Scope Change” is not intended to include the mere refinement, correction or
detailing of the site plan, plans or renderings submitted to BNPPLC by NAI. As
used in this definition, a “material difference” means a difference that could
reasonably be expected to (a) cause the Lease Balance to exceed the fair market
value of the Property when the Construction Project is completed and all
Construction Advances required in connection therewith have been funded, or
significantly increase any such excess, (b) change the general character of the
Improvements from that needed to accommodate the uses to be permitted by
subparagraph 2(A) of the Lease, or (c) cause or exacerbate Projected Cost
Overruns.
“Target Completion Date” means January 31, 2009, as such date may be extended
from time to time by any Increased Time Commitment made by BNPPLC as provided in
subparagraph 7(B)(6)(b).
“Termination of NAI’s Work” means a termination of NAI’s rights and obligations
to continue the Work because of an election to terminate made by NAI pursuant to
subparagraph 7(B) or because of an election by BNPPLC made pursuant to
subparagraph 7(C).
“Third Party Contract” has the meaning indicated in subparagraph 2(A)(2)(b)1).
“Third Party Contract/Termination Fees” means any amounts, however denominated,
for which NAI will be obligated under a Third Party Contract as a result of any
election or decision by NAI to terminate such Third Party Contract, including
demobilization costs; provided, however, amounts payable only by reason of Prior
Work as of the date of any such termination will not be characterized as Third
Party Contract/Termination Fees. If NAI reserves an absolute express right in a
Third Party Contract to terminate such contract at any time, without cause, for
a specified U.S. dollar amount, such amount will constitute a Third Party
Contract/Termination Fee. If no such right is reserved in a Third Party
Contract, the amount of damages that NAI is required to pay (in addition to
payments required for Prior Work) upon a repudiation of the Third Party Contract
by NAI will qualify as a “Third Party Contract/Termination Fee” applicable to
such contract for purposes of this Agreement.
“Timing or Budget Shortfall” means that, as of any time prior to the Completion
Date, (i) the remaining available Construction Allowance will not be sufficient
to cover
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Reimbursable Construction Period Costs yet to be paid or reimbursed from
Construction Advances (x) because the cost of the Work exceeds budgeted
expectations (resulting in Projected Cost Overruns) through no fault of NAI or
its employees or any other party acting under NAI’s control or with the approval
or authorization of NAI, (y) because of any Pre-lease Force Majeure Event or
(z) because NAI can no longer satisfy conditions to BNPPLC’s obligation to
provide further Construction Advances, or (ii) the Work will not be
substantially completed prior to the Target Completion Date through no fault of
NAI or its employees or any other party acting under NAI’s control or with the
approval or authorization of NAI. As used in this definition with respect to any
party, the term “fault” will not include inadequate estimation of time or
dollars unless shown to be caused by the negligence or wilful misconduct of that
party.
“Upfront Fees” has the meaning indicated in subparagraph 3(A).
“Work” has the meaning indicated in subparagraph 2(A)(2)(a), and it includes all
work and services, labor and materials provided by or on behalf of the Prior
Construction Agreement.
“Work/Suspension Event” means any of the following:
     (1) Projected Cost Overruns have become more likely than not, in BNPPLC’s
good faith judgment (taking into account any notices or Construction Draw
Requests from NAI indicating that a Pre-lease Force Majeure Event may result in
Projected Cost Overruns), and BNPPLC has notified NAI of such judgement and the
reasons therefor.
     (2) Delays in the Work (including any delays resulting from damage to the
Property by fire or other casualty or from any taking of any part of the
Property by condemnation) have made it substantially unlikely, in BNPPLC’s good
faith judgment, that NAI will be able to complete the Construction Project in
accordance with the requirements of this Agreement prior to the Target
Completion Date using only the funds available to NAI under this Agreement, and
BNPPLC has notified NAI of such judgement and the reasons therefor.
     (3) BNPPLC has requested with respect to any Construction Advance, but NAI
has failed to provide within thirty days after receipt of the request:
(1) invoices, requests for payment from contractors and other evidence
reasonably establishing that the costs and expenses for which NAI has requested
or is requesting reimbursement constitute actual Reimbursable Construction
Period Costs, and (2) canceled checks, lien waivers or other evidence reasonably
establishing that all prior Construction Advances paid to NAI have been used by
NAI to pay the Reimbursable Construction Period Costs for which the prior
advances were requested and made.
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“Work/Suspension Notice” means a notice from BNPPLC to NAI advising NAI of any
event or circumstances that constitute a Work/Suspension Event and advising NAI
that (1) before the Work/Suspension Event is rectified BNPPLC may limit
Construction Advances to NAI as permitted by this Agreement, and (2) unless NAI
does rectify the Work/Suspension Event within thirty days after NAI’s receipt of
such notice, BNPPLC may elect to send an FOCB Notice in anticipation of a
Termination of NAI’s Work.
“Work/Suspension Period” means any period (1) beginning with the date of any
Work/Suspension Notice, FOCB Notice or Notice of NAI’s Intent to Terminate, and
(2) ending on the earlier of (a) the first date upon which (i) no
Work/Suspension Events are continuing, (ii) all previous FOCB Notices and
Notices of NAI’s Intent to Terminate (if any) have been rescinded, and (iii) no
97-10/Meltdown Events have occurred, or (b) the effective date of any
Termination of NAI’s Work as described in subparagraph 7(B) or subparagraph
7(C).
2 Construction and Management of the Property by NAI.
     (A) The Construction Project.
     (1) Construction Approvals by BNPPLC.
     (a) Preconstruction Approvals by BNPPLC. NAI has submitted and obtained
BNPPLC’s approval of the site plan and descriptions of the Construction Project
referenced in Exhibit B. Also set forth in Exhibit B is a general description of
the Construction Project. The Construction Project, as constructed by NAI
pursuant to this Agreement, and all construction contracts and other agreements
executed or adopted by NAI in connection therewith, must not be inconsistent in
any material respect with the plans or other items referenced in Exhibit B,
except to the extent otherwise provided by any Scope Change approved by BNPPLC
and except as otherwise provided in subparagraph 8(A) if BNPPLC should make an
Owner’s Election to Continue Construction after any Termination of NAI’s Work.
     (b) Approval of Scope Changes. Before making a Scope Change, NAI must
provide to BNPPLC a reasonably detailed written description of the Scope Change,
a revised Construction Budget and a copy of any changes to the drawings, plans
and specifications for the Improvements required in connection therewith, all of
which must be approved in writing by BNPPLC before the Scope Change is
implemented. After receiving such items, BNPPLC will endeavor in good faith to
respond promptly (and in any event no later than thirty days after such receipt)
to any request by NAI for approval of the Scope Change. BNPPLC
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will not, however, be liable for any failure to provide a prompt response.
Further, BNPPLC’s approval will not in any event constitute a waiver of
subparagraph 2(A)(3) or of any other provision of this Agreement or other
Operative Documents.
     (2) NAI’s Right to Possession and to Control Construction. Subject to the
terms and conditions set forth in this Agreement, and prior to any Termination
of NAI’s Work as provided in subparagraphs 7(B) and 7(C), NAI will have
possession of the Land and all Improvements on the Land to the exclusion of
BNPPLC and will have the sole right to control and the sole responsibility for
the design and construction of the Construction Project, including the means,
methods, sequences and procedures implemented to accomplish such design and
construction. Although title to all Improvements will vest in BNPPLC (as more
particularly provided in subparagraph 2(C)), BNPPLC’s obligation with respect to
the Construction Project will be limited to the making of advances under and
subject to the conditions set forth in this Agreement. Without limiting the
foregoing, NAI acknowledges and agrees that:
     (a) Performance of the Work. Except as provided in subparagraphs 7(A) and
7(D), NAI must, using its best skill and judgment and in an expeditious and
economical manner not inconsistent with the interests of BNPPLC, perform or
cause to be performed all work required, and must provide or cause to be
provided all supplies and materials required, to design and complete
construction of the Construction Project (collectively, the “Work”) no later
than the Target Completion Date. The Work will include obtaining all necessary
building permits and other governmental approvals required in connection with
the design and construction of the Construction Project, or required in
connection with the use and occupancy thereof (e.g., certificates of occupancy).
The Work will also include any repairs or restoration required because of damage
to Improvements by fire or other casualty prior to the Completion Date (a
“Pre-lease Casualty”); provided, however, the cost of any such repairs or
restoration will be subject to reimbursement not only through Construction
Advances made to NAI on and subject to the terms and conditions of this
Agreement, but also through the application of Escrowed Proceeds as provided in
Paragraph 5; and, provided further, like other Work, any such repairs and
restoration to be provided by NAI will be subject to subparagraphs 7(A) and
7(B), which establish certain rights of NAI to suspend or discontinue any Work.
NAI will carefully schedule and supervise all Work, will check all materials and
services used in connection with all Work and will keep full and detailed
accounts as may be necessary to document expenditures made or expenses incurred
for the Work.
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     (b) Third Party Contracts.
     1) NAI will not enter into any construction contract or other agreement
with a third party concerning the Work or the Construction Project (a “Third
Party Contract”) in the name of BNPPLC or otherwise purport to bind BNPPLC to
any obligation to any third party.
     2) In any Third Party Contract between NAI and any of its Affiliates (an
“Affiliate’s Contract”) NAI must reserve the right to terminate such contract at
any time, without cause, and without subjecting NAI to liability for any Third
Party Contract/Termination Fee. Further, NAI must not enter into any Affiliate’s
Contract that obligates NAI to pay more than would be required under an
arms-length contract or that would require NAI to pay its Affiliate any amount
in excess of the sum of actual, out-of-pocket direct costs and internal labor
costs incurred by the Affiliate to perform such contract.
     (c) Adequacy of Drawings, Specifications and Budgets. BNPPLC has not made
and will not make any representations as to the adequacy of the Construction
Budget or any other budget or any site plans, renderings, plans, drawings or
specifications for the Construction Project, and no modification of any such
budgets, site plans, renderings, plans, drawings or specifications that may be
required from time to time will entitle NAI to any adjustment in the
Construction Allowance.
     (d) Existing Condition of the Land and Improvements. NAI is familiar with
the conditions of the Land and any existing Improvements on the Land. NAI will
have no claim for damages against BNPPLC or for an increase in the Construction
Allowance or for an extension of the deadline specified in subparagraph
2(A)(2)(a) for completing the Work by reason of any condition (concealed or
otherwise) of or affecting the Land or Improvements.
     (e) Correction of Defective Work. NAI will promptly correct all Work
performed prior to any Termination of NAI’s Work that does not comply with the
requirements of this Agreement for any reason other than a Pre-lease Casualty
(“Defective Work”). If NAI fails to correct any Defective Work or fails to carry
out Work in accordance with this Agreement, BNPPLC may (but will not be required
to) order NAI to stop all Work until the cause for such failure has been
eliminated.
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     (f) Clean Up. Upon the completion of all Work, NAI will remove all waste
material and rubbish from and about the Land, as well as all tools, construction
equipment, machinery and surplus materials. NAI will keep the Land and the
Improvements thereon in a reasonably safe and sightly condition as Work
progresses.
     (g) No Damage for Delays. NAI will have no claim for damages against BNPPLC
or for an increase in the Construction Allowance by reason of any delay in the
performance of any Work. Nor will NAI have any claim for an extension of the
deadline specified in subparagraph 2(A)(2)(a) for completing the Work because of
any such period of delay, except that (i) in the case of any Pre-lease Force
Majeure Delays, NAI will have certain rights as set forth in subparagraph 7(B)
and other provisions of this Agreement, and (ii) in the event of intentional
interference with the Work by BNPPLC itself for which NAI provides written
notice to cease, NAI will be entitled to an extension of the deadline specified
in subparagraph 2(A)(2)(a) as needed because of any delays resulting from such
intentional interference. It is also understood that any such intentional
interference by BNPPLC will constitute a Force Majeure Event. In no event,
however, will BNPPLC’s exercise of its rights and remedies permitted under this
Agreement or the other Operative Documents be construed as intentional
interference with NAI’s performance of any Work; and thus neither BNPPLC’s
exercise of its right to withhold Construction Advances at any time when NAI has
failed to satisfy all conditions herein to such advances, nor BNPPLC’s exercise
of its right to terminate Work by NAI as provided in subparagraph 7(C), be
considered as intentional interference with the Work or a Pre-lease Force
Majeure Event.
     (h) No Fee For Construction Management. NAI will have no claim under this
Agreement for any fee or other compensation or for any reimbursement of internal
administrative or overhead expenses (other than the out-of-pocket overhead
expenses properly included in the Construction Budget, if any), it being
understood that NAI is executing this Agreement in consideration of the rights
expressly granted to it herein and in the other Operative Documents.
     (3) Quality of Work. NAI will cause the Work undertaken and administered by
it pursuant to this Agreement to be performed (a) in a safe and good and
workmanlike manner, (b) in accordance with Applicable Laws, and (c) in
compliance with the provisions of this Agreement and the material provisions of
the Permitted Encumbrances.
     (B) Completion Notice. Within fifteen Business Days after NAI substantially
completes construction of the Construction Project and obtains any certificate
of occupancy or
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other permit (temporary or permanent) required by Applicable Laws for the
commencement of NAI’s use and occupancy of the Improvements, NAI must provide a
notice (a “Completion Notice”) to BNPPLC, advising BNPPLC thereof, and thereby
establish the Completion Date. For purposes of this Agreement and the other
Operative Documents, BNPPLC will be entitled to rely without investigation upon
any such notice given by NAI as evidence that NAI has, in fact, substantially
completed the Construction Project and has obtained any certificate of occupancy
or other permit (temporary or permanent) required for the commencement of NAI’s
use of the Improvements, and after giving any such notice NAI will be estopped
from later claiming that the Completion Date has not occurred.
     (C) Status of Property Acquired With BNPPLC’s Funds. All Improvements
constructed on the Land as provided in this Agreement or the Prior Construction
Agreement will constitute “Property” for purposes of the Lease and other
Operative Documents. Further, to the extent heretofore or hereafter acquired (in
whole or in part) with funds previously advanced by BNPPLC under the Prior
Construction Agreement or with any portion of the Initial Advance or with any
Construction Advances or with other funds for which NAI receives reimbursement
from such funds previously advanced, the Initial Advance or Construction
Advances, all furnishings, furniture, chattels, permits, licenses, franchises,
certificates and other personal property of whatever nature will be considered
as having been acquired on behalf of BNPPLC by NAI and will constitute
“Property” for purposes of the Lease and other Operative Documents, as will all
renewals or replacements of or substitutions for any such Property. The parties
intend that title to the Improvements and to any other such Property will vest
in BNPPLC without passing through NAI or NAI’s Affiliates before it is
transferred to BNPPLC from contractors, suppliers, vendors or other third
Persons, but with the understanding that all such Property will be accepted by
BNPPLC subject to the terms and conditions of the other Operative Documents,
including subparagraph 4(C)(1) of the Lease (concerning the characterization of
the Lease and other Operative Documents for tax and certain other purposes).
Although nothing herein constitutes authorization of NAI by BNPPLC to bind
BNPPLC to any construction contract or other agreement with a third Person, any
construction contract or other agreement executed by NAI for the acquisition or
construction of Improvements or other components of the Property may, as NAI
deems appropriate, provide for the direct transfer of title to BNPPLC as
described in the preceding sentence.
     (D) Insurance.
     (1) Liability Insurance. Throughout the period prior to any Termination of
NAI’s Work, NAI must 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 Minimum Insurance Requirements, which are
set forth in an exhibit to the Common Definitions and Provisions Agreement. NAI
must deliver and maintain with
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BNPPLC for each liability insurance policy required by this Agreement 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 Minimum Insurance Requirements.
     (2) Property Insurance. Throughout the period prior to any Termination of
NAI’s Work, NAI must also 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 Minimum
Insurance Requirements. NAI must deliver and maintain with BNPPLC for each
property insurance policy required by this Agreement 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
Minimum Insurance Requirements. If any of the Property is destroyed or damaged
by fire, explosion, windstorm, hail or by any other casualty against which
insurance has been required hereunder, (i) BNPPLC may, but will not be obligated
to, make proof of loss if not made promptly by NAI after notice from BNPPLC,
(ii) each insurance company concerned is hereby authorized and directed to make
payment for such loss directly to BNPPLC for application as required by
Paragraph 5, and (iii) BNPPLC may settle, adjust or compromise any and all
claims for loss, damage or destruction under any policy or policies of insurance
(provided, that so long as no 97-10/Meltdown Event has occurred and no Event of
Default has occurred and is continuing, BNPPLC must provide NAI with at least
forty-five days notice of BNPPLC’s intention to settle any such claim before
settling it unless NAI has already approved of the settlement by BNPPLC). BNPPLC
will not in any event or circumstances be liable or responsible for failure to
collect, or to exercise diligence in the collection of, any insurance proceeds.
If any casualty results in damage to or loss or destruction of the Property, NAI
must give prompt notice thereof to BNPPLC and Paragraph 5 will apply.
     (3) Failure of NAI to Obtain Insurance. If NAI fails to obtain any
insurance or to provide confirmation of any insurance as required by this
Agreement, BNPPLC will be entitled (but not required) to obtain the insurance
that NAI has failed to obtain or for which NAI has not provided the required
confirmation and, without limiting BNPPLC’s other remedies under the
circumstances, BNPPLC may charge the cost of such insurance against the
Construction Allowance as if it were a Construction Advance paid to NAI as
hereinafter provided.
     (4) Waiver of Subrogation. NAI, for itself and for any Person claiming
through it (including any insurance company claiming by way of subrogation),
waives any and every claim which arises or may arise in its favor against BNPPLC
or any other Interested Party for any and all Losses, to the extent that NAI is
compensated by
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insurance or would be compensated by the insurance policies contemplated in this
Agreement, but for any deductible or self-insured retention maintained under
such insurance or but for a failure of NAI to maintain the insurance as required
by this Agreement. NAI agrees to have such insurance policies properly endorsed
so as to make them valid notwithstanding this waiver, if such endorsement is
required to prevent a loss of insurance.
     (E) 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 must
promptly notify the other (provided, however, BNPPLC will have no liability for
its failure to provide such notice) of the pendency of such proceedings. Prior
to any Termination of NAI’s Work, NAI must, if requested by BNPPLC, diligently
prosecute any such proceedings and consult with BNPPLC, its attorneys and
experts and cooperate with them as reasonably 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 will be paid to BNPPLC
as Escrowed Proceeds, and all such proceeds will be applied as provided in
Paragraph 5. BNPPLC is hereby authorized, in its own name or in the name of NAI
or in the name of both, to settle and deliver valid acquittances for, or to
challenge and to appeal from, any such judgment, decree or award concerning
condemnation of any of the Property (provided, that so long as no 97-10/Meltdown
Event has occurred and no Event of Default has occurred and is continuing,
BNPPLC must provide NAI with at least forty-five days notice of BNPPLC’s
intention to settle any such claim before settling it unless NAI has already
approved of the settlement by BNPPLC). BNPPLC will not in any event or
circumstances be liable or responsible for failure to collect, or to exercise
diligence in the collection of, any such proceeds, judgments, decrees or awards.
     (F) Additional Representations, Warranties and Covenants of NAI Concerning
the Property. Without limiting the rights granted to NAI by other provisions of
this Agreement to be reimbursed from Construction Advances for the cost of
complying with the following, NAI represents, warrants and covenants as follows:
     (1) Payment of Local Impositions. Throughout the period prior to any
Termination of NAI’s Work, NAI must pay or cause to be paid prior to delinquency
all ad valorem taxes assessed against the Property and other Local Impositions.
If requested by BNPPLC from time to time, NAI will furnish BNPPLC with receipts
or other appropriate evidence showing payment of all Local Impositions prior to
the applicable delinquency date therefor.
Notwithstanding the foregoing, NAI may in good faith, by appropriate
proceedings,
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contest the validity, applicability or amount of any asserted Local Imposition,
and pending such contest NAI will not be deemed in default under any of the
provisions of this Agreement because of the Local Imposition if (1) NAI
diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPPLC, and (2) NAI promptly causes to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all costs,
penalties and interest thereon, promptly after such judgment becomes final;
provided, however, in any event each such contest must be concluded and the
contested Local Impositions must be paid by NAI prior to the earlier of (i) the
date that any criminal prosecution is instituted or overtly threatened against
BNPPLC 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 BNPPLC (including the Property) may be seized or sold or any
other action is taken or overtly threatened against BNPPLC or against any
property owned or leased by BNPPLC because of the nonpayment thereof, or
(iii) any Designated Sale Date upon which, for any reason, NAI or an Affiliate
of NAI or any Applicable Purchaser does not purchase BNPPLC’s interest in the
Property pursuant to the Purchase Agreement for a price to BNPPLC (when taken
together with any Supplemental Payment paid by NAI pursuant to the Purchase
Agreement, in the case of a purchase by an Applicable Purchaser) equal to the
Break Even Price.
     (2) Operation and Maintenance. Throughout the period prior to any
Termination of NAI’s Work, NAI must operate and maintain the Property in a good
and workmanlike manner and in compliance with Applicable Laws in all material
respects and pay or cause to be paid all fees or charges of any kind in
connection therewith. (If NAI does not promptly correct any failure of the
Property to comply with Applicable Laws that is the subject of a written
complaint or demand for corrective action given by any Governmental Authority to
NAI, or to BNPPLC and forwarded by it to NAI, then for purposes of the preceding
sentence, NAI will be considered not to have maintained the Property “in
compliance with all Applicable Laws in all material respects” whether or not the
noncompliance would be material in the absence of the complaint or demand.) NAI
must 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. Without limiting the generality of the foregoing,
NAI must not conduct or permit others to conduct Hazardous Substance Activities
on the Property, except Permitted Hazardous Substance Use and Remedial Work; and
NAI must not discharge or permit the discharge of anything (including Permitted
Hazardous Substances) on or from the Property that would require any permit
under applicable Environmental Laws, other than (1) storm water runoff, (2) fume
hood emissions, (3) waste water discharges through a publicly owned treatment
works, (4) discharges that are a necessary part of any Remedial Work, and
(5) other similar discharges consistent with the definition of Permitted
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Hazardous Substance Use which do not significantly increase the risk of
Environmental Losses to BNPPLC, in each case in strict compliance with
Environmental Laws. To the extent that any of the following would, individually
or in the aggregate, increase the likelihood of a 97-10/Meltdown Event or
materially and adversely affect the value of the Property or the use of the
Property for purposes permitted by this Agreement, NAI must not, without
BNPPLC’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. NAI will not cause or permit any drilling or
exploration for, or extraction, removal or production of, minerals from the
surface or subsurface of the Property, and NAI must not do anything that could
reasonably be expected to significantly reduce the market value of the Property.
If NAI 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 BNPPLC because the Property does not comply
with any Applicable Law, NAI must promptly furnish a copy of such notice or
claim to BNPPLC.
     (3) Debts for Construction, Maintenance, Operation or Development. NAI must
promptly pay or cause to be paid all debts and liabilities incurred by it or its
contractors or subcontractors in the construction, maintenance, operation or
development of the Property. Such debts and liabilities will include those
incurred for labor, material and equipment and all debts and charges for
utilities servicing the Property.
     (4) Permitted Encumbrances and the Ground Lease. NAI must 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 or the Ground Lease throughout the period prior to any Termination
of NAI’s Work. NAI must not, without the prior consent of BNPPLC, create any new
Permitted Encumbrance or enter into, initiate, approve or consent to any
modification of any Permitted Encumbrance that would create or expand or purport
to create or expand obligations or restrictions encumbering BNPPLC’s interest in
the Property. (Whether BNPPLC must give any such consent requested by NAI prior
to the Completion Date will be governed by subparagraph 4(C) of the Closing
Certificate.)
     (5) Books and Records Concerning the Property. NAI must keep books and
records that are accurate and complete in all material respects for NAI’s
construction and management of the Property as contemplated in this Agreement
and must 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)
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to be inspected and copied by BNPPLC.
     (G) BNPPLC’s Right of Access.
     (1) Access Generally. BNPPLC and BNPPLC’s representatives may enter the
Property at any time for the purpose of making inspections or performing any
work BNPPLC is authorized to undertake by the next subparagraph or for the
purpose confirming whether NAI has complied with the requirements of this
Agreement or the other Operative Documents. However, prior to any Termination of
NAI’s Work, BNPPLC or BNPPLC’s representative will, before making any entry upon
the Property or performing any work on the Property authorized by this
Agreement, do the following
     (a) BNPPLC will give NAI at least 24 hours notice, unless BNPPLC believes
in good faith that an emergency may exist or a Default has occurred and is
continuing, because of which significant damage to the Property or other
significant Losses may be sustained if BNPPLC delays entry to the Property; and
     (b) if then requested to do so by NAI in order to maintain NAI’s security,
BNPPLC or its representative will: (i) sign in at NAI’s security or information
desk if NAI has such a desk on the premises, (ii) wear a visitor’s badge or
other reasonable identification, (iii) permit an employee of NAI to observe such
inspection or work, and (iv) comply with other similar reasonable
nondiscriminatory security requirements of NAI that do not, individually or in
the aggregate, significantly interfere with inspections or work of BNPPLC
authorized by this Agreement.
     (2) Failure of NAI to Perform. If NAI fails to perform any act or to take
any action required of it by this Agreement or other Operative Documents, or to
pay any money which NAI is required by this Agreement or other Operative
Documents to pay, and if such failure or action constitutes an Event of Default
or renders BNPPLC or any director, officer, employee or Affiliate of BNPPLC at
risk of criminal prosecution or renders BNPPLC’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, BNPPLC may,
perform or cause to be performed such act or take such action or pay such money.
(To the extent that expenses so incurred by BNPPLC, or money so paid by BNPPLC,
qualify as a Covered Construction Period Losses, NAI must pay the same to BNPPLC
upon demand. If any such expenses incurred or money paid do not qualify as
Covered Construction Period Losses, but do constitute 97-10/Project Costs,
BNPPLC may treat them as Construction Advances hereunder. To the extent that any
such expenses incurred or money paid do not qualify as Covered Construction
Period Losses and do constitute 97-10/Project Costs, they will be included —
with interest — in the
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Balance of Unpaid Covered Construction Period Losses under and as defined in the
Purchase Agreement.) Further, BNPPLC, upon making such payment, will be
subrogated to all of the rights of the person, corporation or body politic
receiving such payment. But nothing herein will imply any duty upon the part of
BNPPLC to do any work which, under any provision of this Agreement or otherwise,
NAI may be required to perform, and the performance thereof by BNPPLC will not
constitute a waiver of NAI’s default. BNPPLC may during the progress of any such
work permitted by BNPPLC hereunder on or in the Property keep and store upon the
Property all necessary materials, tools, and equipment. BNPPLC will not in any
event be liable for inconvenience, annoyance, disturbance, loss of business, or
other damage to NAI or the subtenants or invitees of NAI by reason of BNPPLC’s
performance of any such work, or on account of bringing materials, supplies and
equipment into or through the Property during the course of such work, and the
obligations of NAI under this Agreement and the other Operative Documents will
not thereby be excused in any manner.
3 Amounts to be Added to the Lease Balance (in Addition to Construction
Advances).
     (A) Initial Advance. Upon execution and delivery of this Agreement by
BNPPLC, an advance (the “Initial Advance”) will be made by BNPPLC to cover the
cost of certain Transaction Expenses and other amounts described in this
subparagraph. The amount of the Initial Advance, which will be included in the
Lease Balance, may be confirmed by a separate closing certificate executed by
NAI as of the Effective Date. An arrangement fee (the “Arrangement Fee”), an
initial administrative agency fee (an “Administrative Fee”) and upfront fees
(the “Upfront Fees”) will all be paid from the Initial Advance (and thus be
included in the Lease Balance) in the amounts provided in the Closing Letter. To
the extent that BNPPLC does not itself use the entire the Initial Advance to pay
such fees and Transaction Expenses incurred by BNPPLC, the remainder thereof
will be advanced to NAI, with the understanding that NAI will use any such
amount advanced for one or more of the following purposes: (1) the payment or
reimbursement of Transaction Expenses incurred by NAI and all “soft costs”
incurred by NAI in connection with the planning, design, engineering,
construction and permitting of the Construction Project; (2) the maintenance of
the Property; or (3) the payment of other amounts due pursuant to the Operative
Documents. (Before executing the separate closing certificate to confirm the
Initial Advance, NAI will make a reasonable effort to determine all prior
expenses incurred by it as described in clause (1) of the preceding sentence and
to request an Initial Advance sufficient in amount to cover all such expenses in
addition to the Arrangement Fee, the initial Administrative Fee, the Upfront
Fees and all Transaction Expenses incurred by BNPPLC. However, no failure by NAI
to identify and include all such expenses in the amount of the requested Initial
Advance will preclude NAI from requesting reimbursement for the same through a
subsequent Construction Advance as provided in Paragraph 4. Reimbursable
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Construction Period Costs to be paid or reimbursed pursuant to Paragraph 4 will
not be limited to those incurred after the Effective Date.)
     (B) Carrying Costs. For each Construction Period certain charges (“Carrying
Costs”) will accrue and be added to the Outstanding Construction Allowance on
the last day of such Construction Period (i.e., generally on the Advance Date
upon which such Construction Period ends). If, however, for any reason the Lease
Balance (and thus the Outstanding Construction Allowance included as a component
thereof) must be determined as of any date between Advance Dates, the
Outstanding Construction Allowance determined on such date will include not only
Carrying Costs added on or before the immediately preceding Advance Date
computed as described below, but also Carrying Costs accruing on and after such
preceding Advance Date to but not including the date in question. Carrying Costs
accruing for any Construction Period will be equal to:

  •   the amount equal on the first day of such Construction Period to the Lease
Balance, times     •   the sum of the Effective Rate and the Spread for such
Construction Period, times     •   a fraction, the numerator of which is the
number of days in such Construction Period and the denominator of which is three
hundred sixty.

     (C) Commitment Fees. For each Construction Period additional charges
(“Commitment Fees”) will accrue and be added to the Outstanding Construction
Allowance on the last day of such Construction Period (i.e., generally on the
Advance Date upon which such Construction Period ends). If, however, for any
reason the Lease Balance (and thus the Outstanding Construction Allowance
included as a component thereof) must be determined as of any date between
Advance Dates, the Outstanding Construction Allowance determined on such date
will include not only Commitment Fees added on or before the immediately
preceding Advance Date computed as described below, but also Commitment Fees
accruing on and after such preceding Advance Date to but not including the date
in question. Commitment Fees for each Construction Period will be computed as
follows:

  •   the Commitment Fee Rate for such Construction Period, times an amount
equal to:         (1) the Maximum Construction Allowance, less         (2) the
Funded Construction Allowance on the first day of such Construction Period;
times

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  •   the number of days in such Construction Period; divided by     •   three
hundred sixty.

     (D) Future Administrative Fees and Out-of-Pocket Costs. If the Completion
Date does not occur prior to the first anniversary of the Effective Date, then
on each anniversary of the Effective Date prior to the Completion Date, an
administrative agency fee (also, an “Administrative Fee”) will be added to the
Outstanding Construction Allowance by BNPPLC in the amount provided in the
Closing Letter. Also, to the extent that BNPPLC incurs any out-of-pocket costs
prior to the Completion Date with respect to the administration of or
performance of its obligations under this Agreement or other Operative Documents
(e.g., any rents required by the Ground Lease and any Attorneys’ Fees or other
costs incurred to evaluate lien releases and other information submitted by NAI
with requests for Construction Advances), BNPPLC may add such costs to the
Outstanding Construction Allowance from time to time.
     (E) Increased Cost Charges and Capital Adequacy Charges.
     (1) If after the Effective Date there is any increase in the cost to
BNPPLC’s Parent or any Participant agreeing to make or making, funding or
maintaining advances to BNPPLC in connection with the Property because of any
Banking Rules Change, then BNPPLC may agree or become obligated to pay to
BNPPLC’s Parent or such Participant, as the case may be, additional amounts
(“Increased Cost Charges”) sufficient to compensate BNPPLC’s Parent or the
Participant for such increased costs. Any Increased Cost Charges paid by BNPPLC
or for which BNPPLC becomes obligated to pay, prior to the Completion Date, will
be added to the Outstanding Construction Allowance by BNPPLC.
     (2) BNPPLC’s Parent or any Participant may demand additional payments
(“Capital Adequacy Charges”) if BNPPLC’s Parent or the 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 BNPPLC to permit BNPPLC to maintain
BNPPLC’s investment in the Property or to make Construction Advances. To the
extent that BNPPLC’s Parent or a Participant demands Capital Adequacy Charges as
compensation for the additional capital requirements reasonably allocable to
such investment or advances, and BNPPLC pays or becomes obligated to pay to
BNPPLC’s Parent or the Participant the amount so demanded prior to the
Completion Date, such amount will also be added to the Outstanding Construction
Allowance by BNPPLC.
     (3) Notwithstanding the foregoing provisions of this subparagraph 3(E), the
Outstanding Construction Allowance will not be increased by Increased Cost
Charges or
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Capital Adequacy Charges that arise or accrue (a) as a result of any change in
the rating assigned to BNPPLC by rating agencies or bank regulators in regard to
BNPPLC’s creditworthiness, record keeping or failure to comply with Applicable
Laws (including U.S. banking regulations applicable to subsidiaries of a bank
holding company), or (b) more than nine months prior to the date NAI is notified
of the intent of BNPPLC’s Parent or a Participant to make a claim for such
charges; provided, that if the Banking Rules Change which results in a claim for
compensation is retroactive, then the nine month period will be extended to
include the period of the retroactive effect of such Banking Rules Change.
Further, BNPPLC will cause BNPPLC’s Parent and any Participant that is an
Affiliate of BNPPLC to use commercially reasonable efforts to reduce or
eliminate any claim for compensation pursuant to this subparagraph 3(E),
including a change in the office of BNPPLC’s Parent or such Participant through
which it provides and maintains Funding Advances if such change will avoid the
need for, or reduce the amount of, such compensation and will not, in the
reasonable judgment of BNPPLC’s Parent or such Participant, be otherwise
disadvantageous to it. It is understood that NAI may also request similar
commercial reasonable efforts on the part of any Participant that is not an
Affiliate of BNPPLC, but if a claim for additional compensation by any such
Participant is not eliminated or waived, then NAI may request that BNPPLC
replace such Participant under the Participation Agreement.
     (F) Ground Lease Payments. All rentals payable by BNPPLC under the Ground
Lease prior to the Completion Date (“Ground Lease Rents”) will be added to the
Outstanding Construction Allowance by BNPPLC on the date paid.
4 Construction Advances.
     (A) Costs Subject to Reimbursement Through Construction Advances. Subject
to the terms and conditions set forth herein, NAI will be entitled to a
Construction Allowance, from which BNPPLC will make Construction Advances on
Advance Dates from time to time to pay or reimburse NAI for the following costs
(“Reimbursable Construction Period Costs”) to the extent the following costs
have not yet been paid or reimbursed from advances by BNPPLC under the Prior
Construction Agreement and are not already included in Transaction Expenses paid
by BNPPLC from the Initial Advance:
     (1) the actual costs and expenses incurred or paid by NAI for the
preparation, negotiation and execution of this Agreement and the other Operative
Documents;
     (2) costs of the Work, including not only hard costs incurred for the new
Improvements described in Exhibit B, but also the following costs to the extent
reasonably incurred in connection with the Construction Project:
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  •   soft costs payable to third parties (whether or not incurred prior to the
Effective Date), such as legal fees, architectural fees, engineering fees,
construction management fees, transaction management fees and fees and costs
paid in connection with obtaining project permits and approvals required by
governmental authorities or any of the Permitted Encumbrances,     •   site
preparation costs,     •   costs of offsite and other public improvements
required as conditions of governmental approvals for the Construction Project,
and     •   to the extent that funds from the Construction Allowance can be used
for such costs without causing Projected Cost Overruns, the costs of
constructing parking lots, driveways and other improvements on the land subject
to the Appurtenant Easements;

     (3) the cost of title insurance in favor of BNPPLC and of maintaining other
insurance required by (and consistent with the requirements of) this Agreement
prior to the Completion Date, and costs of repairing any damage to the
Improvements caused by a Pre-lease Casualty to the extent such costs are not
covered by Escrowed Proceeds made available to NAI as provided herein prior to
the Completion Date;
     (4) Local Impositions that accrue or become due prior to the Completion
Date;
     (5) reasonable and ordinary out-of-pocket costs of operating and
maintaining the Property prior to the Completion Date in accordance with the
requirements of this Agreement;
     (6) Third Party Contract/Termination Fees, not to exceed in the aggregate
ten percent (10%) of the Maximum Construction Allowance, payable by NAI in
connection with any Third Party Contract between NAI and a Person not an
Affiliate of NAI because of any election by NAI to cancel or terminate such
contract during a Work/Suspension Period; and
     (7) furniture, trade fixtures and equipment and other tenant improvements
to support NAI’s use and occupancy of the Property for the permitted uses
described in subparagraph 2(A) of the Lease, but that are not integral to or
affixed in such a manner as to become part of the Improvements, the aggregate
cost of which does not exceed ten percent (10%) of the Maximum Construction
Allowance; provided, that no Construction Advance for furniture and other items
described in this clause will be required of
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BNPPLC or requested by NAI before the Construction Project is substantially
complete and substantially all other Reimbursable Construction Period Costs have
been paid or reimbursed from Construction Advances.
     (B) Exclusions From Reimbursable Construction Period Costs. Notwithstanding
anything herein to the contrary, BNPPLC will not be required to make any
Construction Advance to pay or to reimburse or compensate NAI for Covered
Construction Period Losses paid by NAI as provided in subparagraph 10(A) or for
any of the following Losses which may be incurred by NAI or any other party:
     (1) Environmental Losses;
     (2) Losses that would not have been incurred but for any affirmative act
taken by NAI or by any of NAI’s contractors or subcontractors, which act is
contrary to the other terms and conditions of this Agreement or to the terms and
conditions of the other Operative Documents (e.g., undertaking a Scope Change
without prior authorization of BNPPLC);
     (3) Losses that would not have been incurred but for any fraud,
misapplication of Construction Advances or other funds, illegal acts or willful
misconduct on the part of NAI or its employees or of any other party acting
under NAI’s control or with the approval or authorization of NAI; and
     (4) Losses that would not have been incurred but for any bankruptcy
proceeding involving NAI as the debtor.
     (C) Conditions to NAI’s Right to Receive Construction Advances. BNPPLC’s
obligation to provide Construction Advances to NAI from time to time under this
Agreement will be subject to the following terms and conditions, all of which
terms and conditions are intended for the sole benefit of BNPPLC, and none of
which will limit in any way the right of BNPPLC to treat costs or expenditures
incurred or paid by or on behalf of BNPPLC as Construction Advances pursuant to
subparagraph 8(A):
     (1) Construction Advance Requests. NAI must make a written request (a
“Construction Advance Request”) for any Construction Advance, specifying the
amount of such advance, at least five Business Days prior to the Advance Date
upon which the advance is to be paid. To be effective for purposes of this
Agreement, a Construction Advance Request must be in substantially the form
attached as Exhibit C. NAI will not submit more than one Construction Advance
Request in any calendar month.
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     (2) Amount of the Advances.
     (a) The Maximum Construction Allowance. NAI will not be entitled to require
any Construction Advance that would cause the Funded Construction Allowance to
exceed the Maximum Construction Allowance or that would increase the amount of
any such excess.
     (b) Costs Previously Incurred by NAI. NAI will not be entitled to require
any Construction Advance that would cause the aggregate of all Construction
Advances to exceed the sum of:
     (i) Reimbursable Construction Period Costs that NAI has, to the reasonable
satisfaction of BNPPLC, substantiated as having been paid or incurred by NAI
other than for Work (e.g., Local Impositions), plus
     (ii) the Reimbursable Construction Period Costs that NAI has, to the
reasonable satisfaction of BNPPLC, substantiated as having been paid or incurred
for Prior Work as of the date of the Construction Advance Request in which NAI
requests the advance.
As used in this Agreement, “Prior Work” means all labor and services actually
performed, and all materials actually delivered to the construction site, as
part of the Work in accordance with this Agreement prior to the date in
question, and “Future Work” means labor and services performed or to be
performed, and materials delivered or to be delivered, as part of the Work on or
after the date in question. For purposes of this Agreement, NAI and BNPPLC
intend to allocate Reimbursable Construction Period Costs between Prior Work and
Future Work in a manner that is generally consistent with the allocations
expressed or implied in construction-related contracts negotiated in good faith
between NAI and third parties not affiliated with NAI (e.g., a construction
contractor engaged by NAI); however, in order to verify the amount of
Reimbursable Construction Period Costs actually paid or incurred by NAI and the
proper allocation thereof between Prior Work and Future Work, BNPPLC will be
entitled (but not required) to: (x) request, receive and review copies of such
agreements between NAI and third parties and of draw requests, budgets or other
supporting documents provided to NAI in connection with or pursuant to such
agreements as evidence of the allocations expressed or implied therein, (y) from
time to time engage one or more independent inspecting architects, certified
public accountants or other appropriate professional consultants and, absent
manifest error, rely without further investigation upon their reports and
recommendations, and (z) without waiving BNPPLC’s right to challenge or verify
allocations required with respect to future
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Construction Advances, rely without investigation upon the accuracy of NAI’s own
Construction Advance Requests.
     (c) Limits During any Work/Suspension Period. Without limiting the other
terms and conditions imposed by this Agreement for the benefit of BNPPLC with
respect all Construction Advances, BNPPLC will have no obligation to make any
Construction Advance during any Work/Suspension Period that would cause the
aggregate of all Construction Advances to exceed the sum of:
     (i) Reimbursable Construction Period Costs that NAI has, to the reasonable
satisfaction of BNPPLC, substantiated as having been paid or incurred by NAI
other than for Work (e.g., Local Impositions), plus
     (ii) the Reimbursable Construction Period Costs that NAI has, to the
reasonable satisfaction of BNPPLC, substantiated as having been paid or incurred
for Prior Work as of the date the Work/Suspension Period commenced.
For purposes of computing the limits described in this subparagraph 4(C)(2)(c),
Reimbursable Construction Period Costs “other than for Work” will include Third
Party Contract/Termination Fees that qualify as Reimbursable Construction Period
Costs pursuant to subparagraph 4(A)(6). However, as provided in subparagraph
4(A)(6), the amount of such Third Party Contract/Termination Fees subject to
reimbursement will not in any event exceed ten percent (10%) of the Maximum
Construction Allowance. If NAI fails to manage and administer Third Party
Contracts as necessary to ensure that NAI can (at any point in time) terminate
all such contracts without becoming liable for Third Party Contract/Termination
Fees in excess of ten percent (10%) of the Maximum Construction Allowance, then
the excess will be the responsibility of NAI.
     (d) Restrictions Imposed for Administrative Convenience. NAI will not
request any Construction Advance (other than the final Construction Advance NAI
intends to request) for an amount less than $1,000,000.
     (3) No Advances After Certain Dates. BNPPLC will have no obligation to make
any Construction Advance (x) after the last Advance Date, (y) on or after the
Designated Sale Date, or (z) on or after the effective date of any Termination
of NAI’s Work pursuant to subparagraph 7(B) or subparagraph 7(C).
     (D) Breakage Costs for Construction Advances Requested But Not Taken. If
NAI requests but thereafter declines to accept any Construction Advance, or if
NAI requests a
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Construction Advance that it is not permitted to take because of its failure to
satisfy any of the conditions specified in subparagraph 4(C), BNPPLC will be
entitled to add any resulting Breakage Costs to the Outstanding Construction
Allowance and the Lease Balance.
     (E) No Third Party Beneficiaries. No contractor or other third party will
be entitled to require BNPPLC to make advances as a third party beneficiary of
this Agreement, and nothing contained herein or in any of the other Operative
Documents will be construed as an agreement obligating BNPPLC to make advances
to anyone other than NAI itself.
     (F) No Waiver. No funding of Construction Advances and no failure of BNPPLC
to object to any Work proposed or performed by or for NAI will constitute a
waiver by BNPPLC of the requirements contained in this Agreement.
5 Application of Insurance and Condemnation Proceeds.
     (A) Collection and Application Generally. This Paragraph 5 will govern the
application of proceeds received by BNPPLC or NAI from any third party prior to
the commencement of the Term of the Lease (1) under any property insurance
policy as a result of damage to the Property (including proceeds payable under
any insurance policy covering the Property which is maintained by NAI), (2) as
compensation for any restriction placed upon the use or development of the
Property or for the condemnation of the Property or any portion thereof, or
(3) because of any judgment, decree or award for injury or damage to the
Property (e.g., damage resulting from a third party’s release of Hazardous
Materials onto the Property); excluding, however, any funds paid to BNPPLC by
BNPPLC’s Parent, by an Affiliate of BNPPLC or by any Participant that is made to
compensate BNPPLC for any Losses BNPPLC may suffer or incur in connection with
this Agreement or the Property. NAI will promptly pay over to BNPPLC any
insurance, condemnation or other proceeds covered by this Paragraph 5 which NAI
may receive from any insurer, condemning authority or other third party. All
proceeds covered by this Paragraph 5, including those received by BNPPLC from
NAI or third parties, will be applied as follows:
     (1) First, proceeds covered by this Paragraph 5 will be used to reimburse
BNPPLC for any reasonable costs and expenses, including Attorneys’ Fees, that
BNPPLC incurred to collect the proceeds.
     (2) Second, the proceeds remaining after such reimbursement to BNPPLC (the
“Remaining Proceeds”) will be applied, as hereinafter more particularly
provided, either as a Qualified Prepayment or to pay or reimburse NAI or BNPPLC
for the actual out-of-pocket costs of repairing or restoring the Property. Until
any Remaining Proceeds received by BNPPLC are applied by
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BNPPLC as a Qualified Prepayment or applied by BNPPLC to reimburse costs of
repairs to or restoration of the Property pursuant to this Paragraph 5, BNPPLC
will hold and maintain such Remaining Proceeds as Escrowed Proceeds in an
interest bearing account, and all interest earned on such account will be added
to and made a part of such Escrowed Proceeds.
     (B) Advances of Escrowed Proceeds to NAI. Except as otherwise provided
below in this Paragraph 5, BNPPLC will hold all such Escrowed Proceeds until
they are advanced to reimburse NAI for the actual out-of-pocket cost to NAI of
repairing or restoring the Property in accordance with the requirements of this
Agreement. BNPPLC will so advance the Escrowed Proceeds as the applicable repair
or restoration progresses and upon compliance by NAI with such conditions and
requirements as may be reasonably imposed by BNPPLC, including conditions and
requirements similar to those that set forth herein for the payment of
Construction Advances. In no event, however, will BNPPLC be required to pay
Escrowed Proceeds to NAI in excess of the actual out-of-pocket cost to NAI of
the applicable repair, restoration or replacement, as evidenced by invoices or
other documentation reasonably satisfactory to BNPPLC.
     (C) Status of Escrowed Proceeds After Commencement of the Term of the
Lease. Any Remaining Proceeds governed by this Paragraph 5 which BNPPLC is
continuing to hold as Escrowed Proceeds when the Term of the Lease commences
will be applied in accordance with the terms and conditions of the Lease as if
received by BNPPLC immediately after the Term commenced.
     (D) Special Provisions Applicable After a 97-10/Meltdown Event or Event of
Default. Notwithstanding the foregoing, after any 97-10/Meltdown Event and when
any Event of Default has occurred and is continuing, BNPPLC will be entitled to
receive and collect all insurance, condemnation or other proceeds governed by
this Paragraph 5 and to apply all Remaining Proceeds, when and in such order and
to such extent deemed appropriate by BNPPLC in its sole discretion, either
(A) to the reimbursement of NAI or BNPPLC for the out-of-pocket cost of
repairing or restoring the Property, or (B) as Qualified Prepayments.
     (E) NAI’s Obligation to Restore. Regardless of the adequacy of any
Remaining Proceeds available to NAI hereunder, if the Property is damaged by
fire or other casualty or any part of the Property is taken by condemnation, NAI
must to the maximum extent possible, as part of the Work, restore the Property
or the remainder thereof and continue construction of the Construction Project
on and subject to the terms and conditions set forth in this Agreement;
provided, however, like other Work, any such restoration and continuation of
construction by NAI will be subject to subparagraphs 7(A) and 7(B), which
establish certain rights of NAI to suspend or discontinue any Work; and,
provided further, any additional costs required to complete the Construction
Project resulting from such a casualty or taking prior to the Completion Date
will, to the extent not covered by Remaining Proceeds paid to NAI as provided
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herein, be subject to reimbursement by BNPPLC as Reimbursable Construction
Period Costs on the same terms and conditions that apply to reimbursements of
other costs of the Work hereunder.
     (F) Special Provisions Concerning a Complete Taking. NAI may react to any
threat of a Complete Taking from a governmental authority by exercising NAI’s
right to accelerate the Designated Sale Date (as provided in the definition
thereof) and by exercising the Purchase Option under the Purchase Agreement. By
so doing, NAI will put itself in a position to control condemnation proceedings
and to receive all proceeds of the Complete Taking. If, however, NAI does not
buy the Property pursuant to the Purchase Agreement prior to any Complete
Taking, then BNPPLC will be entitled to receive and retain all amounts paid for
the Property in connection with the Complete Taking, notwithstanding any
contrary provision herein or in the other Operative Documents and
notwithstanding that such proceeds may exceed the Lease Balance.
6 Notice of Cost Overruns and Pre-lease Force Majeure Events.
     (A) Notice of Projected Cost Overruns. If, at the time NAI submits any
Construction Advance Request, NAI believes for any reason (including any damage
to the Property by fire or other casualty or any taking of any part of the
Property by condemnation) that Projected Cost Overruns are more likely than not,
NAI must state such belief in the Construction Advance Request and, if NAI can
reasonably do so, NAI will estimate the approximate amount of such Projected
Cost Overruns.
     (B) Pre-lease Force Majeure Event Events and Notices. NAI may from time to
time provide a notice to BNPPLC in the form attached as Exhibit D (a “Pre-lease
Force Majeure Event Notice”), describing any Pre-lease Force Majeure Event that
has occurred or commenced within the 30 days prior to such notice and setting
forth NAI’s preliminary good faith estimate of any Pre-lease Force Majeure
Delays, Pre-lease Force Majeure Losses and Pre-lease Force Majeure Excess Costs
that are likely to result from such event. BNPPLC will have the option to
respond to any Pre-lease Force Majeure Event Notice with an FOCB Notice or,
alternatively and if applicable, with an Increased Commitment as provided in
subparagraph 7(B)(6).
7 Suspension and Termination of NAI’s Work.
     (A) Rights and Obligations During a Work/Suspension Period. During any
Work/Suspension Period, NAI will have the right to suspend the Work; however,
the obligations of NAI which are to survive any Termination of NAI’s Work as
provided in subparagraph 7(D) will continue and survive during any
Work/Suspension Period.
     (B) NAI’s Election to Terminate NAI’s Work. NAI may elect to terminate its
rights
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and obligations to continue Work at any time prior to the Completion Date if at
such time NAI believes in good faith that a Timing or Budget Shortfall exists.
To be effective, however, any such election by NAI must be made in accordance
with the following provisions:
     (1) Any such election by NAI to terminate its rights and obligations to
continue the Work must be made by notice to BNPPLC in the form of Exhibit E (a
“Notice of Termination by NAI”).
     (2) At least forty-five days before giving any such Notice of Termination
by NAI, NAI must give a notice of NAI’s intent to terminate to BNPPLC in the
form of Exhibit F (a “Notice of NAI’s Intent to Terminate”), and the Notice of
NAI’s Intent to Terminate must state the reasons, in NAI’s good faith
determination, for the Timing or Budget Shortfall.
     (3) Without limiting the forgoing, prior to giving any Notice of
Termination by NAI predicated upon NAI’s belief that the remaining available
Construction Allowance will not be sufficient only because of Pre-lease Force
Majeure Excess Costs incurred or anticipated as a result of a Pre-lease Force
Majeure Event, NAI must — after having notified BNPPLC of the such event by the
delivery of a Pre-lease Force Majeure Event Notice in accordance with
subparagraph 6(B) — expressly set forth such belief in the Notice of NAI’s
Intent to Terminate as indicated in Exhibit F. In any such Notice of NAI’s
Intent to Terminate, NAI must also specify its good faith estimate of the
Pre-lease Force Majeure Excess Costs likely to be incurred (“NAI’s Estimate of
Force Majeure Excess Costs”).
     (4) Similarly, prior to giving any Notice of Termination by NAI predicated
upon NAI’s belief that the Work will not be substantially complete before the
Target Completion Date only because of Pre-lease Force Majeure Delays resulting
from a Pre-lease Force Majeure Event, NAI must — after having notified BNPPLC of
such event by the delivery of a Pre-lease Force Majeure Event Notice in
accordance with subparagraph 6(B) — expressly set forth such belief in the
Notice of NAI’s Intent to Terminate as indicated in Exhibit F. In any such
Notice of NAI’s Intent to Terminate, NAI must also specify its good faith
estimate of the Pre-lease Force Majeure Delays likely to occur (“NAI’s Estimate
of Force Majeure Delays”).
     (5) As used herein, a “Notice of NAI’s Intent to Terminate Because of a
Force Majeure Event” means any Notice of NAI’s Intent to Terminate that sets
forth NAI’s belief, by the optional provisions contemplated in Exhibit F, that
either or both: (a) the remaining available Construction Allowance will not be
sufficient only because of Pre-lease Force Majeure Excess Costs incurred or
anticipated as a result of a Pre-lease Force Majeure Event, or (b) the Work will
not be substantially complete before the Target
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Completion Date only because of Pre-lease Force Majeure Delays resulting from a
Pre-lease Force Majeure Event. Should any Termination of NAI’s Work occur before
NAI sends a Notice of NAI’s Intent to Terminate Because of a Force Majeure Event
(in accordance with this subparagraph and in the form attached as Exhibit F),
such Termination of NAI’s Work will, for purposes of determining whether any
97-10/Prepayment may be required pursuant to Paragraph 9, be conclusively
presumed to have occurred for reasons other than a Pre-lease Force Majeure
Event.
     (6) After receipt of any Notice of NAI’s Intent to Terminate and before
receipt of a Notice of Termination by NAI, BNPPLC may, but will not be obligated
to, respond to NAI with certain commitments as follows (such a response being
hereinafter called an “Increased Commitment”):
     (a) In the case of a Notice of Intent to Terminate Because of a Force
Majeure Event which expresses NAI’s belief that the remaining available
Construction Allowance will not be sufficient only because of Pre-lease Force
Majeure Excess Costs, BNPPLC may respond with a written commitment to increase
the Construction Allowance (an “Increased Funding Commitment”) by an amount at
least equal to NAI’s Estimate of Force Majeure Excess Costs as set forth in such
Notice of NAI’s Intent to Terminate. Any such Increased Funding Commitment may
be in the form of Exhibit G.
     (b) In the case of a Notice of Intent to Terminate Because of a Force
Majeure Event which expresses NAI’s belief that the Work will not be
substantially complete before the Target Completion Date only because of
Pre-lease Force Majeure Delays, BNPPLC may respond with a written commitment to
extend the Target Completion Date (an “Increased Time Commitment”) by at least
the number of days included in NAI’s Estimate of Force Majeure Delays as set
forth in such Notice of NAI’s Intent to Terminate. Any such Increased Time
Commitment may be in the form of Exhibit H.
     (c) In the case of a Notice of Intent to Terminate Because of a Force
Majeure Event which expresses NAI’s belief that both (i) the remaining available
Construction Allowance will not be sufficient only because of Pre-lease Force
Majeure Excess Costs and (ii) the Work will not be substantially complete before
the Target Completion Date only because of Pre-lease Force Majeure Delays,
BNPPLC may respond with both an Increased Funding Commitment and an Increased
Time Commitment as provided in the preceding subparagraphs (a) and (b).
     (d) In the case of a Notice of Intent to Terminate which is not a Notice
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of Intent to Terminate Because of a Force Majeure Event (and thus not covered by
any of the preceding subparagraphs (a) through (c)), BNPPLC may require NAI to
promptly provide a good faith estimate of the minimum Increased Funding
Commitment or Increased Time Commitment (or both) reasonably required to
eliminate the reasons for NAI’s delivery of the Notice of Intent to Terminate.
After receipt of NAI’s good faith estimate, BNPPLC may respond with an Increased
Funding Commitment or Increased Time Commitment (or both) consistent with such
estimate.
     (7) If BNPPLC does respond to a Notice of NAI’s Intent to Terminate with an
Increased Commitment, NAI will be entitled to, and will not unreasonably refuse
to, rescind such Notice of NAI’s Intent to Terminate within ten days after
receipt of such Increased Commitment. To be effective, any such rescission must
be by notice to BNPPLC in the form of Exhibit I. In any event, except as
provided in the next subparagraph, the failure of NAI to so rescind any Notice
of NAI’s Intent to Terminate within ten days after receipt of the Increased
Commitment will, for purposes of determining whether any 97-10/Prepayment may be
required pursuant to Paragraph 9, create a conclusive presumption that any
Termination of NAI’s Work after the date of such response was made for reasons
other than a Pre-lease Force Majeure Event.
     (8) For the avoidance of doubt, BNPPLC acknowledges that NAI’s rescission
of any Notice of NAI’s Intent to Terminate (including any Notice of NAI’s Intent
to Terminate Because of a Force Majeure Event) after receipt of an Increased
Commitment as described in the preceding subsection will not preclude NAI from
subsequently exercising its rights under this subparagraph 7(B) in the event NAI
subsequently believes in good faith that a Timing or Budget Shortfall exists.
Thus, for example, if NAI rescinds a Notice of NAI’s Intent to Terminate Because
of a Force Majeure Event after receiving an Increased Commitment from BNPPLC,
but subsequently determines that such Increased Commitment is insufficient
(through no fault of NAI or its employees or any other party acting under NAI’s
control or with the approval or authorization of NAI) to rectify the Timing or
Budget Shortfall which caused NAI to send such notice, then NAI may deliver a
second Notice of NAI’s Intent to Terminate Because of a Force Majeure Event, and
in response thereto BNPPLC may elect to provide yet another Increased
Commitment. Moreover, such process may be repeated any number of times, in each
case without causing NAI to lose its right to subsequently invoke this
subparagraph 7(B) and send yet another Notice of NAI’s Intent to Terminate
(including another Notice of NAI’s Intent to Terminate Because of a Force
Majeure Event).
     (9) Notwithstanding the foregoing, in the event of a Complete Taking, NAI
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may deliver a Notice of NAI’s Intent to Terminate Because of a Force Majeure
Event that explains the futility of continuing with the Construction Project on
the Land regardless of any willingness of BNPPLC to approve or consider Scope
Changes or an Increased Commitment, and no offer by BNPPLC of an Increased
Commitment after a Complete Taking will preclude a “Termination of NAI’s Work
Because of a Pre-lease Force Majeure Event” for the purposes of determining
whether NAI must pay a 97-10/Prepayment pursuant to Paragraph 9.
     (C) BNPPLC’s Election to Terminate NAI’s Work. By notice to NAI BNPPLC may
elect to terminate NAI’s rights and obligations to continue the Work at any time
(i) more than thirty days after BNPPLC has given an FOCB Notice to NAI, or
(ii) after BNPPLC’s receipt of a Notice of NAI’s Intent to Terminate and before
an election by NAI to rescind the same as described in subparagraph 7(B)(7).
     (D) Surviving Rights and Obligations. Following any Termination of NAI’s
Work as provided in subparagraph 7(B) or in 7(C), NAI will have no obligation to
continue or complete any Work; however, no such Termination of NAI’s Work will
reduce or excuse the following rights and obligations of the parties, it being
intended that all such rights and obligations will survive and continue after
any Termination of NAI’s Work:
     (1) NAI’s obligations described in the next subparagraph 7(E);
     (2) the rights and obligations of NAI and BNPPLC under the Ground Lease;
     (3) the rights and obligations of NAI and BNPPLC under the Purchase
Agreement, other than NAI’s Supplemental Payment Obligation if it has been
terminated as provided in subparagraph 6(B) of the Purchase Agreement;
     (4) any obligations of NAI under the other Operative Documents by reason of
any misrepresentation or other act or omission of NAI that occurred prior to the
Termination of NAI’s Work or during any subsequent period in which NAI remains
in possession or control of the Construction Project; and
     (5) NAI’s obligations to indemnify BNPPLC as set forth in subparagraph
10(A).
     (E) Cooperation After a Termination of NAI’s Work. After any Termination of
NAI’s Work as provided in subparagraph 7(B) or subparagraph 7(C), NAI must
comply with the following terms and conditions, all of which will survive
notwithstanding any such termination:
     (1) NAI must promptly deliver copies to BNPPLC of all Third Party Contracts
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and purchase orders made by NAI in the performance of or in connection with the
Work, together with all plans, drawings, specifications, bonds and other
materials relating to the Work in NAI’s possession, including all papers and
documents relating to governmental permits, orders placed, bills and invoices,
lien releases and financial management under this Agreement. All such deliveries
must be made free and clear of any liens, security interests, or encumbrances,
except such as may be created by the Operative Documents.
     (2) Promptly after any request from BNPPLC made with respect to any Third
Party Contract, NAI must deliver a letter confirming: (i) whether NAI has
performed any act or executed any other instrument which invalidates or modifies
such contract in whole or in part (and, if so, the nature thereof); (ii) the
extent to which such contract is valid and subsisting and in full force and
effect; (iii) that, to NAI’s knowledge, there are no defaults or events of
default then existing under such contract and, to NAI’s knowledge, no event has
occurred which with the passage of time or the giving of notice, or both, would
constitute such a default or event of default (or, if there is a default or
potential default, the nature of such default in detail); (iv) whether the
services and construction contemplated by such contract are proceeding in a
satisfactory manner in all material respects (and if not, a detailed description
of all significant problems with the progress of the services or construction);
(v) in reasonable detail the then critical dates projected by NAI for work and
deliveries required by such contract; (vi) the total amount received by the
other party to such contract for work or services provided by the other party
through the date of the letter; (vii) NAI’s good faith estimate of the total
cost of completing the services and work contemplated under such contract as of
the date of the letter, together with any current draw or payment schedule for
the contract; and (viii) any other information BNPPLC may reasonably request to
allow it to decide what steps it should take concerning the contract within
BNPPLC’s rights under this Agreement and the other Operative Documents.
     (3) As and to the extent requested by BNPPLC, NAI will make every
reasonable effort (but without any obligation to incur any expense or liability
to do so, unless BNPPLC agrees to reimburse the same with reasonable promptness)
to secure any required consents or approvals for an assignment of any then
existing Third Party Contract to BNPPLC or its designee, upon terms satisfactory
to BNPPLC. To the extent assignable, any then existing Third Party Contract will
be assigned by NAI to BNPPLC upon request, without charge by NAI.
     (4) If NAI has canceled any Third Party Contract before and in anticipation
of a Termination of NAI’s Work, then as and to the extent requested by BNPPLC,
NAI must make every reasonable effort (but without any obligation to incur any
expense or liability to do so, unless BNPPLC agrees to reimburse the same with
reasonable promptness) to secure a reinstatement of such Third Party Contract in
favor of BNPPLC and upon terms
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     satisfactory to BNPPLC.
     (5) For a period not to exceed thirty days after the Termination of NAI’s
Work, NAI must take such steps as are reasonably necessary to preserve and
protect Work completed and in progress and to protect materials, equipment, and
supplies at the Property or in transit. Without regard to the conditions
applicable to other payments required of BNPPLC by this Agreement, BNPPLC must
with reasonable promptness reimburse any reasonable out-of-pocket expenses
incurred by NAI to comply with this subparagraph (5); however, BNPPLC may at any
time or from time to time by notice to NAI limit or terminate such
reimbursements as to expenses incurred after NAI’s receipt of such notice, and
thereafter NAI will be excused from any obligation to incur expenses that BNPPLC
may decline to reimburse.
8 Continuation of Construction by BNPPLC.
     (A) Owner’s Election to Continue Construction. Without limiting BNPPLC’s
other rights and remedies under this Agreement or the other Operative Documents,
and without terminating NAI’s surviving obligations under this Agreement or
NAI’s obligations under the other Operative Documents, after any Termination of
NAI’s Work as provided in subparagraph 7(B) or subparagraph 7(C), BNPPLC will be
entitled (but not obligated) to take whatever action it deems necessary or
appropriate by the use of legal proceedings or otherwise to continue or complete
the Construction Project in a manner not substantially inconsistent (to the
extent practicable under Applicable Laws) with the general description of the
Construction Project set forth in Exhibit B. (As used herein, “Owner’s Election
to Continue Construction” means any election by BNPPLC to continue or complete
the Construction Project pursuant to the preceding sentence.) After any Owner’s
Election to Continue Construction, BNPPLC may do any one or more of the
following pursuant to this subparagraph without further notice and regardless of
whether any breach of this Agreement by NAI is then continuing:
     (1) Take Control of the Property. BNPPLC may cause NAI and any contractors
or other parties on the Property to vacate the Property until the Construction
Project is complete or BNPPLC elects not to continue work on the Construction
Project.
     (2) Continuation of Construction. BNPPLC may perform or cause to be
performed any work to complete or continue the construction of the Construction
Project. In this regard, so long as work ordered or undertaken by BNPPLC is not
substantially inconsistent (to the extent practicable under Applicable Laws)
with the general description of the Construction Project set forth in Exhibit B
and the permitted use of the Property set forth in the Lease, BNPPLC will have
complete discretion to:
     (a) proceed with construction according to such plans and
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     specifications as BNPPLC may from time to time approve;
     (b) establish and extend construction deadlines as BNPPLC from time to time
deems appropriate, without obligation to adhere to any deadlines for
construction by NAI set forth in this Agreement;
     (c) hire, fire and replace architects, engineers, contractors, construction
managers and other consultants as BNPPLC from time to time deems appropriate,
without obligation to use, consider or compensate architects, engineers,
contractors, construction managers or other consultants previously selected or
engaged by NAI;
     (d) determine the compensation that any architect, engineer, contractor,
construction manager or other consultant engaged by BNPPLC will be paid, and the
terms and conditions that will govern the payment of such compensation
(including whether payment will be due in advance, over the course of
construction or on some other basis and including whether contracts will be let
on a fixed price basis, a cost plus a fee basis or some other basis), as BNPPLC
from time to time reasonably deems appropriate;
     (e) pay, settle or compromise existing or future bills and claims which are
or may be liens against the Property or as BNPPLC reasonably considers necessary
or desirable for the completion of the Construction Project or the removal of
any clouds on title to the Property;
     (f) prosecute and defend all actions or proceedings in connection with the
construction of the Construction Project;
     (g) select and change interior and exterior finishes for the Improvements
and landscaping as BNPPLC from time to time deems appropriate; and
     (h) generally do anything that NAI itself might have done if NAI had
satisfied or obtained BNPPLC’s waiver of the conditions specified therein.
     (3) Arrange for Turnkey Construction. Without limiting the generality of
the foregoing, BNPPLC may engage any contractor or real estate developer BNPPLC
believes to be reputable to take over and complete construction of the
Construction Project on a “turnkey” basis.
     (4) Suspension or Termination of Construction by BNPPLC. Notwithstanding
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any Owner’s Election to Continue Construction, BNPPLC may subsequently elect at
any time to suspend or terminate further construction without obligation to NAI.
For purposes of the Operative Documents (including the determination of the
Outstanding Construction Allowance, the Lease Balance and the Break Even Price),
after any Owner’s Election to Continue Construction, all costs and expenditures
incurred or paid by or on behalf of BNPPLC to complete or continue construction
as provided in this subparagraph 8(A) will be considered Construction Advances,
regardless of whether they cause the Funded Construction Allowance to exceed the
Maximum Construction Allowance. Further, as used in the preceding sentence,
“costs incurred” by BNPPLC will include costs that BNPPLC has become obligated
to pay to any third party that is not an Affiliate of BNPPLC (including any
construction contractor), even if the payments for which BNPPLC has become so
obligated constitute prepayments for work or services to be rendered after
payment and notwithstanding that BNPPLC’s obligations for the payments may be
conditioned upon matters beyond BNPPLC’s control. For example, even if a
construction contract between BNPPLC and a contractor excuses BNPPLC from making
further progress payments to the contractor upon NAI’s failure to make any
required 97-10/Prepayment under this Agreement, the obligation to make a
progress payment would nonetheless be “incurred” by BNPPLC, for purposes of
determining whether BNPPLC has incurred costs considered to be 97-10/Project
Costs and Construction Advances, when BNPPLC’s obligation to pay it became
subject only to NAI’s payment of a 97-10/Prepayment or other conditions beyond
BNPPLC’s control.
     (B) Powers Coupled With an Interest. BNPPLC’s rights under subparagraph
8(A) are intended to constitute powers coupled with an interest which cannot be
revoked.
9 NAI’s Obligation for 97-10/Prepayments. After any 97-10/Meltdown Event NAI
must make a 97-10/Prepayment to BNPPLC within three Business Days after receipt
from BNPPLC of any demand for such a payment. BNPPLC may demand
97-10/Prepayments pursuant to this Paragraph at any time and from time to time
(as 97-10/Project Costs increase) after a 97-10/Meltdown Event. NAI acknowledges
that it is undertaking the obligation to make 97-10/Prepayments as provided in
this Paragraph in consideration of the rights afforded to it by this Agreement,
but that such obligation is not contingent upon any exercise by NAI of such
rights or upon its rights under any other Operative Documents. If a
97-10/Meltdown Event does occur, NAI’s obligation to make 97-10/Prepayments as
provided in this Paragraph will survive any Termination of NAI’s Work.
Notwithstanding the foregoing provisions of this Paragraph 9, if (as provided in
subparagraph 7(B)) NAI effectively makes the election for a Termination of NAI’s
Work because of a Pre-lease Force Majeure Event that resulted in Pre-lease Force
Majeure Excess Costs or Pre-lease Force Majeure Delays, then NAI will be excused
from the obligation to make 97-10/Prepayments until such time (if ever) that
BNPPLC itself completes the Construction
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Project or causes it to be completed as BNPPLC is authorized to do by
subparagraph 8(A).
10 Indemnity for Covered Construction Period Losses.
     (A) Covenant to Indemnify Against Covered Construction Period Losses.
Subject to the qualifications in subparagraph 10(B), as directed by BNPPLC, NAI
must indemnify and defend BNPPLC from and against all of the following Losses
(“Covered Construction Period Losses”):
     (1) Losses suffered or incurred by BNPPLC, directly or indirectly, relating
to or arising out of, based on or as a result of any of the following which
occurs or is alleged to have occurred prior to any Termination of NAI’s Work:
(i) any Hazardous Substance Activity; (ii) any violation of any applicable
Environmental Laws relating to the Land or the Property or to the ownership,
use, occupancy or operation thereof; (iii) any investigation, inquiry, order,
hearing, action, or other proceeding by or before any governmental or
quasi-governmental agency or authority in connection with any Hazardous
Substance Activity; or (iv) any claim, demand, cause of action or investigation,
or any action or other proceeding, whether meritorious or not, brought or
asserted against BNPPLC which directly or indirectly relates to, arises from, is
based on, or results from any of the matters described in clauses (i), (ii), or
(iii) of this provision or any allegation of any such matters;
     (2) Losses incurred or suffered by BNPPLC that BNPPLC would not have
incurred or suffered but for any act or any omission of NAI or of any NAI’s
contractors or subcontractors during the period prior to any Termination of
NAI’s Work (as provided in subparagraphs 7(B) and 7(C)) or during any other
period that NAI remains in possession or control of the Construction Project
(including any failure by NAI to obtain or maintain insurance as required by
this Agreement during such periods; but excluding, however, as described below,
certain Losses consisting of claims related to any failure of NAI to complete
the Construction Project);
     (3) Losses incurred or suffered by BNPPLC that would not have been incurred
but for any fraud, misapplication of funds (including Construction Advances),
illegal acts, or willful misconduct on the part of NAI or its employees or of
any other party acting under NAI’s control or with the approval or authorization
of NAI; and
     (4) Losses incurred or suffered by BNPPLC that would not have been incurred
but for any bankruptcy proceeding involving NAI as the debtor.
NAI’s obligations under this indemnity will apply whether or not BNPPLC is also
indemnified as to the applicable Covered Construction Period Loss by any third
party (including another
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Interested Party) and whether or not the Covered Construction Period Loss arises
or accrues prior to the Effective Date. Further, in the event, for income tax
purposes, BNPPLC must include in its taxable income any payment or reimbursement
from NAI which is required by this indemnity (in this provision, the “Original
Indemnity Payment”), and yet BNPPLC is not entitled during the same taxable year
to a corresponding and equal deduction from its taxable income for the Covered
Construction Period Loss paid or reimbursed by such Original Indemnity Payment
(in this provision, the “Corresponding Loss”), then NAI must also pay to BNPPLC
on demand the additional amount (in this provision, the “Additional Indemnity
Payment”) needed to gross up the Original Indemnity Payment for any and all
resulting additional income taxes. That is, NAI must pay an Additional Indemnity
Payment as is needed so that the Corresponding Loss (computed net of the
reduction, if any, of BNPPLC’s income taxes because of credits or deductions
that are attributable to the BNPPLC’s payment or deemed payment of the
Corresponding Loss and that are recognized for tax purposes in the same taxable
year during which BNPPLC must recognize the Original Indemnity Payment as
income) will not exceed the difference computed by subtracting (i) all income
taxes (determined for this purpose based on the highest marginal income tax
rates charged to corporations by federal, state and local tax authorities, as
applicable, for the relevant period or periods) imposed because of the receipt
or constructive receipt of the Original Indemnity Payment and the Additional
Indemnity Payment, from (ii) the sum of the Original Indemnity Payment and the
Additional Indemnity Payment. (With regard to any payment or reimbursement of an
Original Indemnity Payment, “After Tax Basis” means that such payment or
reimbursement is or will be made together with the additional amount needed to
gross up such Original Indemnity Payment as described in this provision.)
     (B) Certain Losses Included or Excluded.
     (1) Back to Back Claims by Participants Against BNPPLC. Losses for which
BNPPLC is entitled to be indemnified as described in subparagraph 10(A) will
include claims made against BNPPLC by any Participant, and amounts (if any)
reimbursed by BNPPLC to any Participant, because of the following:
     (a) Losses suffered or incurred by such Participant, directly or
indirectly, relating to or arising out of any of the following which occurs or
is alleged to have occurred prior to any Termination of NAI’s Work: (i) any
Hazardous Substance Activity; (ii) any violation of any applicable Environmental
Laws relating to the Land or the Property or to the ownership, use, occupancy or
operation thereof; (iii) any investigation, inquiry, order, hearing, action, or
other proceeding by or before any governmental or quasi-governmental agency or
authority in connection with any Hazardous Substance Activity; or (iv) any
claim, demand, cause of action or investigation, or any action or other
proceeding, whether meritorious or not, brought or asserted against such
Participant which directly or indirectly relates to, arises from, is based on,
or results from any of the
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matters described in clauses (i), (ii), or (iii) of this provision or any
allegation of any such matters;
     (b) Losses incurred or suffered by such Participant that such Participant
would not have incurred or suffered but for any act or any omission of NAI or of
any NAI’s contractors or subcontractors during the period prior to any
Termination of NAI’s Work (as provided in subparagraphs 7(B) and 7(C)) or during
any other period that NAI remains in possession or control of the Construction
Project (including any failure by NAI to obtain or maintain insurance as
required by this Agreement during such periods; but excluding, however, as
described below, certain Losses consisting of claims related to any failure of
NAI to complete the Construction Project);
     (c) Losses incurred or suffered by such Participant that would not have
been incurred but for any fraud, misapplication of funds (including Construction
Advances), illegal acts, or willful misconduct on the part of NAI or its
employees or of any other party acting under NAI’s control or with the approval
or authorization of NAI; and
     (d) Losses incurred or suffered by such Participant that would not have
been incurred but for any bankruptcy proceeding involving NAI as the debtor.
     (2) Environmental. As used in clause (1) of the preceding subparagraph
10(A) and clause (a) of the preceding subparagraph 10(B)(1), “Losses” will not
include costs properly incurred in connection with the Work to prevent the
occurrence of a violation of Environmental Laws that did not previously exist.
(For example, Environmental Losses will not include the increase in costs
resulting from NAI’s installation of fire proofing materials other than asbestos
because of Environmental Laws that prohibit the use of asbestos.) However, any
costs to correct or answer for any violation of Environmental Laws that occurred
on or prior to the Effective Date or that NAI causes or permits to occur after
the Effective Date in connection with the Work or the Property will constitute
Environmental Losses. (Thus, for instance, if NAI releases Hazardous Materials
from the Property in a manner that contaminates ground water in violation of
Environmental Laws, the costs of correcting the contamination and any applicable
fines or penalties will constitute Environmental Losses for which NAI must
indemnify and defend BNPPLC pursuant to subparagraph 10(A).)
     (3) Failure to Maintain a Safe Work Site. If a third party asserts a claim
for damages against BNPPLC because of injuries the third party sustained while
on the Land as a result of NAI’s breach of its obligations under this Agreement
to keep the Land and the Improvements thereon in a reasonably safe condition as
Work progresses under NAI’s
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direction and control, then any such claim and other Losses resulting from such
claim will constitute Covered Construction Period Losses under clause (2) of
subparagraph 10(A). Also, if the third party asserts a claim for damages against
any Participant because of such injuries, and if the Participant requires BNPPLC
to reimburse the Participant’s Losses attributable to such claim, then such
reimbursement will constitute Covered Construction Period Losses under clause
(2) of subparagraph 10(A), consistent with understanding confirmed by clause
(b) of subparagraph 10(B)(1).
     (4) Failure to Complete Construction. Additional costs of construction may
result from NAI’s failure to complete the Construction Project if a Termination
of NAI’s Work occurs pursuant to subparagraphs 7(B) and 7(C). Nevertheless, it
is understood that a failure of NAI to complete the Construction Project
following any such Termination of NAI’s Work will not necessarily constitute a
breach of this Agreement, and clause (2) of subparagraph 10(A) will not include
any such additional costs of performing the Work or the cost to BNPPLC of
completing the Construction Project after the Termination of NAI’s Work. (To the
extent, however, that such costs qualify as 97-10/Project Costs, they may
increase the 97-10/Maximum Permitted Prepayment.)
     (5) Fraud. As used in clause (3) of subparagraph 10(A) and clause (c) of
subparagraph 10(B)(1), “fraud” or “willful misconduct” will include (i) any
deliberate decision by NAI to make a Scope Change without BNPPLC’s prior written
approval, (ii) any fraud or intentional misrepresentation by NAI, or its
vendors, contractors or subcontractors regarding NAI’s ongoing compliance with
the requirements of this Agreement, and (iii) the performance by NAI or its
vendors, contractors or subcontractors of Defective Work, with NAI’s knowledge
that it constitutes Defective Work, prior to any Termination of NAI’s Work as
provided in subparagraphs 7(B) and 7(C).
     (6) Excluded Taxes and Established Misconduct. Nothing in this Paragraph 10
or other provisions of this Agreement will be construed to require NAI to
reimburse or pay Excluded Taxes or Losses incurred or suffered by BNPPLC that
are proximately caused by (and attributed by any applicable principles of
comparative fault to) the Established Misconduct of BNPPLC.
     (C) Express Negligence Protection. Every release provided in this Agreement
for BNPPLC or any other Interested Party, and the indemnity provided for the
benefit of BNPPLC in the preceding subparagraph 10(A), will apply even if and
when the subject matters thereof are alleged to be caused by or to arise out of
the negligence or strict liability of BNPPLC or another Interested Party.
Further, all such releases and the indemnity will apply even if insurance
obtained by NAI or required of NAI by this Agreement is not adequate to cover
Losses against or for which the releases and the indemnity are provided
(although NAI’s liability for any failure to
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obtain insurance required by this Agreement will not be limited to Losses
against which indemnity is provided, it being understood that the parties have
agreed upon insurance requirements for reasons that extend beyond providing a
source of payment for Losses against which BNPPLC may be indemnified by NAI).
     (D) Survival of Indemnity. NAI’s obligations under this Paragraph 10 will
survive the termination or expiration of this Agreement and any Termination of
NAI’s Work with respect to Losses suffered by BNPPLC resulting or arising from
events or circumstances which existed or occurred or are alleged to have existed
or occurred prior to the Termination of NAI’s Work or during any subsequent
period in which NAI remains in possession or control of the Construction
Project, whether such Losses are asserted, suffered or paid before or after the
Termination of NAI’s Work.
     (E) Due Date for Indemnity Payments. Any amount to be paid by NAI under
this Paragraph 10 will be due fifteen days after a notice requesting such
payment is received by NAI. Any such amount not paid by NAI when first due will
bear interest at the Default Rate in effect from time to time from the date it
first became 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.
     (F) Order of Application of Payments. BNPPLC will be entitled to apply any
payments by or on behalf of NAI against NAI’s obligations under this
Paragraph 10 or against other amounts owing by NAI and then past due under any
of the other Operative Documents in the order the same became due or in such
other order as BNPPLC may elect.
     (G) Defense of BNPPLC.
     (1) Assumption of Defense. By notice to NAI BNPPLC may direct NAI to assume
on behalf of BNPPLC and to conduct with due diligence and in good faith the
defense of and the response to any claim, proceeding or investigation included
in or concerning any Covered Construction Period Loss. NAI must promptly comply
with any such direction using counsel selected by NAI and reasonably
satisfactory to BNPPLC to represent BNPPLC. In the event NAI fails to promptly
comply with any such direction from BNPPLC, BNPPLC may contest or settle the
claim, proceeding or investigation using counsel of its own selection at NAI’s
expense, subject only to subparagraph 10(I) if that subparagraph is applicable.
     (2) Indemnity Not Contingent. Also, although subparagraphs 10(I) and 10(J)
will apply to tort claims asserted against BNPPLC related to the Property, the
right of BNPPLC to be indemnified pursuant to subparagraph 10(A) for payments
made to satisfy governmental requirements (“Government Mandated Payments”)
(e.g., fines payable
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because of any release of Hazardous Materials from the Property) will not be
conditioned in any way upon NAI having consented to or approved of, or having
been provided with an opportunity to defend against or contest, such Government
Mandated Payments. In all cases, however, including those which may involve
Government Mandated Payments, the rights of BNPPLC to be indemnified will be
subject to subparagraph 10(K).
     (H) Notice of Claims. If BNPPLC receives a written notice of a claim for
taxes or a claim alleging a tort or other unlawful conduct that BNPPLC believes
is covered by the indemnity in subparagraph 10(A), then BNPPLC will be expected
to promptly furnish a copy of such notice to NAI. The failure to so provide a
copy of the notice will not excuse NAI from its obligations under subparagraph
10(A); except that if such failure continues for more than fifteen days after
the notice is received by BNPPLC and NAI is unaware of the matters described in
the notice, with the result that NAI is unable to assert defenses or to take
other actions which could minimize its obligations, then NAI will be excused
from its obligation to indemnify BNPPLC against the Covered Construction Period
Losses, if any, which would not have been incurred or suffered but for such
failure. For example, if BNPPLC fails to provide NAI with a copy of a notice of
an overdue tax obligation covered by the indemnity set out in subparagraph 10(A)
and NAI is not otherwise already aware of such obligation, and if as a result of
such failure BNPPLC becomes liable for penalties and interest covered by the
indemnity in excess of the penalties and interest that would have accrued if NAI
had been promptly provided with a copy of the notice, then NAI will be excused
from any obligation to BNPPLC (or any Affiliate of BNPPLC) to pay the excess.
     (I) Withholding of Consent to Settlements Proposed by NAI. With regard to
any tort claim against BNPPLC for which NAI undertakes to defend BNPPLC as
provided in subparagraph 10(G)(1), if BNPPLC unreasonably refuses to consent to
a settlement of the claim which is proposed by NAI and which will meet the
conditions listed in the next sentence, NAI’s liability for the cost of
continuing the defense and for any other amounts payable in respect of the claim
will be limited to the total cost for which the settlement proposed by NAI would
have been accomplished but for the unreasonable refusal to consent. Any such
settlement proposed by NAI must meet the following conditions: (A) at the time
of the settlement by NAI, NAI must pay all amounts required to release BNPPLC
and other affected Interested Parties (if any) and their property interests from
any further obligation for or liens securing the applicable claim and from any
interest, penalties and other related liabilities, and (B) the settlement or
compromise must not involve an admission of fraud or criminal wrongdoing or
result in some other material adverse consequence to BNPPLC or any other
Interested Party.
     (J) Settlements Without the Prior Consent of NAI.
     (1) Election to Pay Reasonable Settlement Costs in Lieu of Actual. Except
as otherwise provided in subparagraph 10(J)(2), if BNPPLC settles any tort claim
for which
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it is entitled to be indemnified by NAI without NAI’s consent, then NAI may, by
notice given to BNPPLC no later than ten days after NAI is notified of the
settlement, elect to pay Reasonable Settlement Costs to BNPPLC in lieu of a
payment or reimbursement of actual settlement costs. (With respect to any tort
claim asserted against BNPPLC, “Reasonable Settlement Costs” means the maximum
amount that a prudent Person in the position of BNPPLC, but able to pay any
amount, might reasonably agree to pay to settle the tort claim, taking into
account the nature and amount of the claim, the relevant facts and circumstances
known to BNPPLC at the time of settlement and the additional Attorneys Fees’ and
other costs of defending the claim which could be anticipated but for the
settlement.) After making an election to pay Reasonable Settlement Costs with
regard to a particular tort claim, NAI will have no right to rescind or revoke
the election, despite any subsequent determination that Reasonable Settlement
Costs exceed actual settlement costs. It is understood that Reasonable
Settlement Costs may be more or less than actual settlement costs and that a
final determination of Reasonable Settlement Costs may not be possible until
after NAI must decide between paying Reasonable Settlement Costs or paying
actual settlement costs.
     (2) Conditions to Election. Notwithstanding the foregoing, NAI will have no
right to elect to pay Reasonable Settlement Costs in lieu of actual settlement
costs if BNPPLC settles claims without NAI’s consent at any time when an Event
of Default has occurred and is continuing or after a failure by NAI to conduct
with due diligence and in good faith the defense of and the response to any
claim, proceeding or investigation as provided in subparagraph 10(G)(1).
     (3) Indemnity Survives Settlement. Except as provided in this subparagraph
10(J), no settlement by BNPPLC of any claim made against it will excuse NAI from
any obligation to indemnify BNPPLC against the settlement costs or other Covered
Construction Period Losses suffered by reason of, in connection with, arising
out of, or in any way related to such claim.
     (K) No Authority to Admit Wrongdoing on the Part of NAI. BNPPLC will not
under any circumstances have any authority to bind NAI to an admission of
wrongdoing or responsibility to any third party claimant with regard to matters
for which BNPPLC claims a right to indemnification from NAI under this
Agreement.
Further, nothing herein contained, including the foregoing provisions concerning
settlements by BNPPLC of indemnified Losses, will be construed as authorizing
BNPPLC to bind NAI to do or refrain from doing anything to satisfy a third party
claimant. If, for example, a claim is made by a Governmental Authority that NAI
must refrain from some particular conduct on or about the Land in order to
comply with Applicable Laws, BNPPLC cannot bind NAI (and will not purport to
bind NAI) to any agreement to refrain from such conduct or otherwise prevent NAI
from
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continuing to contest the claim by reason of any provision set forth herein.
Moreover, so long as this Agreement or the Lease continues, BNPPLC’s right to
settle any claim involving the Property will not include the right to bind NAI
to any agreement (including any consent decree proposed by any Governmental
Authority) which purports to prohibit, limit or impose conditions upon any use
of the Property by NAI without the prior written consent of NAI. In the case of
any proposed settlement of a claim asserted by a Governmental Authority against
BNPPLC, NAI will not unreasonably withhold such consent. However, for purposes
of determining whether it is reasonable for NAI to withhold such consent, any
diligent ongoing undertaking by NAI to contest such the claim on behalf of
BNPPLC will be relevant.
Subject to the foregoing provisions in this subparagraph 10(K), BNPPLC may agree
for itself (and only for itself) to act or refrain from doing anything as
demanded or requested by a third party claimant; provided, however, in no event
will such an agreement impede NAI from continuing to exercise its rights to
operate its business on the Property or elsewhere in any lawful manner deemed
appropriate by NAI, nor will any such agreement limit or impede NAI’s right to
contest claims raised by any third party claimants (including Governmental
Authorities) that NAI is not complying or has not complied with Applicable Laws.
     (L) Refunds of Covered Construction Period Losses Paid by NAI.
     (1) Payment by BNPPLC After Refund. If BNPPLC receives a refund of any
Covered Construction Period Losses paid, reimbursed or advanced by NAI pursuant
to subparagraph 10(A), BNPPLC will promptly pay to NAI the amount of such
refund, plus or minus any net tax benefits or detriments realized by BNPPLC as a
result of such refund and such payment to NAI; provided, that the amount payable
to NAI will not exceed the amount of the indemnity payment in respect of such
refunded Covered Construction Period Losses that was made by NAI. If it is
subsequently determined that BNPPLC was not entitled to such refund, the portion
of such refund that is repaid or recaptured will be treated as a Covered
Construction Period Loss for which NAI must indemnify BNPPLC pursuant to
subparagraph 10(A) without regard to subparagraph 10(B)(6). If, in connection
any such refund, BNPPLC also receives an amount representing interest on such
refund, BNPPLC will promptly pay to NAI the amount of such interest, plus or
minus any net tax benefits or detriments realized by BNPPLC as a result of the
receipt or accrual of such interest and as a result of the such payment to NAI;
provided, that BNPPLC will not be required to make any such payment in respect
of the interest (if any) that is fairly attributable to a period before NAI
paid, reimbursed or advanced the Covered Construction Period Losses refunded to
BNPPLC.
     (2) Meaning of Refund. With respect to Covered Construction Period Losses
incurred or suffered by BNPPLC and paid or reimbursed by NAI on an After Tax
Basis, if
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taxes of BNPPLC which are not subject to indemnification by NAI are reduced
because of such Losses (whether by reason of a deduction, credit or otherwise)
and such reduction was not taken into account in the calculation of the required
reimbursement or payment by NAI, then for purposes of this subparagraph 10(L)
such reduction will be considered a “refund”.
     (3) Conditions to Payment. Notwithstanding the foregoing, in no event will
BNPPLC be required to make any payment to NAI pursuant to this subparagraph
10(L) after any 97-10/Meltdown Event or when any Event of Default has occurred
and is continuing.
11 Characterization of Operative Documents; Remedies.
     (A) Characterization of Operative Documents.
     (1) Confirmation of Lien and Security Interest Granted in the Lease.
Reference is made to subparagraph 4(C) of the Lease, in which NAI and BNPPLC
have confirmed their intent that (A) for the purposes of determining the proper
accounting for the Lease by NAI, BNPPLC will be treated as the owner and
landlord of the Property and NAI will be treated as the tenant of the Property,
and (B) for income tax purposes and commercial law (including real estate and
bankruptcy law) and regulatory purposes, (1) the Lease and the other Operative
Documents (including this Agreement) will be treated as a financing arrangement,
(2) BNPPLC will be deemed a lender making loans to NAI in the principal amount
equal to the Lease Balance, which loans are secured by the Property, and (3) NAI
will be treated as the owner of the Property and will be entitled to all tax
benefits available to the owner of the Property. Consistent with such intent, by
the provisions set forth in Exhibit B to the Lease, NAI is granting to BNPPLC a
lien upon and mortgaging and warranting title to the leasehold estate in the
Land created by the Ground Lease and the Improvements and all rights, titles and
interests of NAI in and to other Property, WITH POWER OF SALE, to secure all
obligations (monetary or otherwise) of NAI arising under or in connection with
any of the Operative Documents (including this Agreement). NAI further confirms
and agrees that (i) its grant of a lien and security interest as set forth in
Exhibit B of the Lease is made as of the Effective Date, even though the Term of
the Lease will not commence before the Completion Date, and (ii) the security
interest granted in Exhibit B of the Lease will extend to and cover all Third
Party Contracts, now existing or made in the future.
     (2) Foreclosure Remedies. Even before the Completion Date, at any time when
an Event of Default has occurred and is continuing, BNPPLC may notify NAI of
BNPPLC’s intent to pursue remedies described in Exhibit B to the Lease, and at
any time thereafter, regardless of whether the Event of Default is continuing,
if NAI has not
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already purchased the Property or caused an Applicable Purchaser to purchase the
Property pursuant to the Purchase Agreement, (i) BNPPLC will have the power and
authority, to the extent provided by law, after proper notice and lapse of such
time as may be required by law, to sell or arrange for a sale to foreclose its
lien and security interest granted in Exhibit B to the Lease, and (ii) BNPPLC,
in lieu of or in addition to exercising any power of sale granted in Exhibit B
to the Lease, may proceed by a suit or suits in equity or at law for a
foreclosure or sale of the Property or for the specific performance of any
covenant or agreement herein contained or in aid of the execution of any power
herein granted, or for the appointment of a receiver pending any foreclosure or
sale of the Property, or for the enforcement of any other legal or equitable
remedy permitted by law.
     (B) Notice Required So Long As the Purchase Option Continues Under the
Purchase Agreement. Prior to the Designated Sale Date, so long as NAI remains in
possession of the Property and there has been no termination of the Purchase
Option as provided in Paragraph 6(B) of the Purchase Agreement, BNPPLC’s right
to complete any foreclosure sale as provided in subparagraph 11(A)(2) will be
subject to the condition precedent that BNPPLC has notified NAI, at a time when
an Event of Default has occurred and is continuing and no less than thirty days
prior to completing such a sale, of BNPPLC’s intent to do so. The condition
precedent is intended to provide NAI with an opportunity to exercise the
Purchase Option before losing possession of the Property because of a sale
authorized by subparagraph 11(A)(2). 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, BNPPLC may proceed immediately to complete a sale authorized by
subparagraph 11(A)(2) at any time after the earliest of (i) thirty days after
BNPPLC has given such a notice to NAI, (ii) any date upon which NAI relinquishes
possession of the Property, or (iii) any termination of the Purchase Option.
     (C) Remedies Cumulative. No right or remedy herein conferred upon or
reserved to BNPPLC is intended to be exclusive of any other right or remedy, and
each and every such right and remedy will be cumulative and in addition to any
other right or remedy given to BNPPLC under other Operative Documents (including
the right to accelerate the Designated Sale Date, as provided in the definition
thereof in the Common Definitions and Provisions Agreement, and the right, when
applicable, to exercise the Put Option as provided in subparagraph 3(B) of the
Purchase Agreement) or now or hereafter existing in favor of BNPPLC under
Applicable Laws. In addition to other remedies provided in this Agreement,
BNPPLC will 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
Agreement. Nothing contained in this Agreement will limit or prejudice the right
of BNPPLC to prove for and obtain in proceedings for bankruptcy or insolvency of
NAI by reason of the termination of this Agreement, 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
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to be proved, whether or not the amount be greater, equal to, or less than the
amount BNPPLC might recover under this Agreement. Without limiting the
generality of the foregoing, nothing contained herein will modify, limit or
impair any of the rights and remedies of BNPPLC under the Purchase Agreement,
including its right to exercise the Put Option provided in subparagraph 3(B) of
the Purchase Agreement if the conditions listed in subparagraph 3(B) of the
Purchase Agreement are satisfied; and BNPPLC will not be required to give the
thirty day notice described in subparagraph 11(B) as a condition precedent to
any acceleration of the Designated Sale Date or to taking any action to enforce
the Purchase Agreement
     (D) Third Party Estoppels. If requested by BNPPLC with respect to any
material construction contract between NAI and a third party contractor for any
part of the Work, NAI shall cause the contractor to execute and deliver to
BNPPLC an estoppel letter substantially in the form of Exhibit J. Similarly, if
requested by BNPPLC with respect to any material architectural or engineering
contract between NAI and a third party professional or firm for any part of the
Work, NAI shall cause the professional or firm thereunder to execute and deliver
to BNPPLC an estoppel letter substantially in the form of Exhibit K.
12 Amendment and Restatement of Prior Construction Agreement. This Agreement
amends, restates and replaces entirely the Prior Construction Agreement. Without
limiting the rights and obligations of NAI under this Agreement, NAI
acknowledges that any and all rights or interest of NAI in and to the Land or
other Property under the Prior Construction Agreement are now made subject to
the terms and conditions of this Agreement; and all rights and interests of
BNPPLC in and to the Land or other Property under the Prior Construction
Agreement are renewed and extended (rather than terminated) by this Agreement.
[The signature pages follow.]
Amended and Restated Construction Agreement (Building 8) – Page 53

 

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     IN WITNESS WHEREOF, this Amended and Restated Construction Agreement
(Building 8) is executed to be effective as of November 29, 2007.

                  BNP PARIBAS LEASING CORPORATION, a Delaware corporation    
 
           
 
  By:   /s/ Lloyd G. Cox     
 
     
 
Lloyd G. Cox, Managing Director    

Amended and Restated Construction Agreement (Building 8) – Signature Page

 

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[Continuation of signature pages for Amended and Restated Construction Agreement
(Building 8) dated as of November 29, 2007.]

                  NETWORK APPLIANCE, INC., a Delaware corporation    
 
           
 
  By:   /s/ Ingemar Lanevi     
 
     
 
Ingemar Lanevi, Vice President and Corporate Treasurer    

Amended and Restated Construction Agreement (Building 8) – Signature Page

 

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Exhibit A
Legal Description
Proposed Parcel 8, and (except to the extent within a different platted Parcel
as currently shown in the Map Records of the County of Santa Clara, California)
proposed Parcel 12, and the Additional Leased Premises as defined below,
(collectively, the “Building 8 Ground Lease Premises”) as shown on that certain
Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation
(“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part
hereof (the “Tentative Map”), which has received preliminary approval from the
City of Sunnyvale, California, but not yet been filed for record in the office
of the recorder of the County of Santa Clara, State of California. As used
herein, “Additional Leased Premises” means the parking lots, driveways and other
areas shaded in gray on the Tentative Map attached hereto within the larger area
designated as Common Lot A (consisting of 30.46 Acres, more or less) on the
Tentative Map. The southern boundary of the Additional Leased Premises is a line
that runs North 75 degrees, 07 minutes, 58 seconds equidistant from the southern
boundary of Parcel 8 and the northern boundary of Parcel 7, both as shown on the
Tentative Map. The eastern boundary of the Additional Leased Premises runs along
the same line as the eastern boundary of Common Lot A, as shown on the Tentative
Map. The western boundary of the Additional Leased Premises runs along the same
line as the western boundary of Parcel 8 and Parcel 7, as shown on the Tentative
Map. The northern boundary of the Additional Leased Premises runs along the
center of an existing or proposed driveway which is situated between Parcel 8
and Parcel 9, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 8 Ground Lease Premises as
described in Exhibit A attached to the Ground Lease.

 

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(MAP) [f38790f3879025.gif]
Exhibit A to Amended and Restated Construction Agreement (Building 8) – Page 2

 

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Exhibit B
Description of the Construction Project and Construction Budget
Subject to future Scope Changes, the Construction Project will be substantially
consistent with the following general description and with the site plan
attached as part of Exhibit A and the elevations attached to this Exhibit:
A new 5-story class A office building containing a total of approximately
189,500 square feet of gross building area and approximately 177,500 square feet
of net rentable area, including fixed building services and necessary land
improvements. The subject building once completed will be constructed with a
steel frame covered by GFRC (Glass Fiber Reinforced Concrete) walls, insulated
windows, and built-up asphalt roofs. The structure will be built on reinforced
concrete slab foundation with column footings and girders. Additionally the
subject will have a four-story parking garage containing approximately 660
parking spaces. Land improvements consisting mainly of paved parking area (206
parking spaces), parking lot lighting, and landscaping.
     All of the improvements will be suitable for uses contemplated in the Lease
and of a quality, when complete to be considered first class facilities for such
uses. The location of improvements, including appurtenant parking areas,
driveways and other facilities on the Land (or pursuant to appurtenant easements
described in Exhibit A to the Ground Lease) will be as shown in the Tentative
Parcel Map attached to and made a part of Exhibit A.
     The budget for the Construction Project is as shown on the attached pages.

 

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Construction Budget

              Cost  
Unallocated Costs
       
 
       
Carrying Costs
  $ 6,448,496  
Insurance
    237,120  
 
       
Building 8 Costs
       
 
       
Design & Engineering
    1,240,816  
Permits
    5,055,240  
Site & Shell Construction
    29,361,240  
Interior Construction
    21,818,719  
 
     
Subtotal
    48,476,016  
 
       
Garage C Costs
       
Design & Engineering
    739,900  
Permits
    195,771  
Site & Shell Construction
    8,799,378  
 
     
Subtotal
    9,735,049  
 
       
 
     
Total Project Cost
  $ 64,896,681  
 
     

Exhibit B to Amended and Restated Construction Agreement (Building 8) – Page 2

 

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(MAP) [f38790f3879026.gif]
Exhibit B to Amended and Restated Construction Agreement (Building 8) – Page 3

 

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(MAP) [f38790f3879027.gif]
Exhibit B to Amended and Restated Construction Agreement (Building 8) – Page 4

 

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Exhibit C
Construction Advance Request Form
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Construction Agreement (Building 8) dated as of
November 29, 2007 (the “Construction Agreement”), between Network Appliance,
Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation
(“BNPPLC”)
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Construction Agreement or in the Common Definitions and
Provisions Agreement referenced in the Construction Agreement. This letter
constitutes a Construction Advance Request, requesting a Construction Advance
of:
$                     ,
on the Advance Date that will occur on:
                    , 20                    .
     To induce BNPPLC to make such Construction Advance, NAI represents and
warrants as follows:
I. Calculation of limit imposed by Subparagraph 4(C)(2)(b) of the Construction
Agreement:

         
(1) NAI has paid or incurred bona fide Reimbursable Construction Period Costs
other than for Work (e.g., property taxes) of no less than
  $                       
 
       
(2) NAI has paid or incurred bona fide Reimbursable Construction Period Costs
for Prior Work of no less than
  $                       
 
       
(3) NAI has received prior Construction Advances of
  $                       

 

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     LIMIT (1 + 2 - 3)
  $                       

II. Projected Cost Overruns:
NAI [check one: ___does / ___does not ] believe that Projected Construction
Overruns are more likely than not. [If NAI does believe that Projected Cost
Overruns are more likely than not, and if NAI believes that the amount of such
Projected Construction Overruns can be reasonably estimated, NAI estimates the
same at $                    .]
III. Construction Advances Covering Pre-lease Force Majeure Losses:
Neither the Construction Advance requested by this letter nor prior Construction
Advances (if any) have been used or will be used to cover any costs of repairs
that constitute Pre-lease Force Majeure Losses, except as follows: (if there are
no exceptions, insert “No Exceptions")

     
 
   
 
   
 
   
 
   
 
   
 
   
 
   

IV. Absence of Certain Work/Suspension Events:
     A. The Construction Project is progressing without significant interruption
in a good and workmanlike manner and substantially in accordance with Applicable
Laws, with Permitted Encumbrances and with the requirements of the Construction
Agreement, except as follows: (if there are no exceptions, insert “No
Exceptions")

     
 
   
 
   
 
   
 
   
 
   
 
   
 
   

     B. If NAI has received notice of any Defective Work, NAI has promptly
corrected or is diligently pursuing the correction of such Defective Work,
except as follows: (if there are no exceptions, insert “No Exceptions")

     
 
   
 
   
 
   
 
   
 
   
 
   
 
   

Exhibit C to Amended and Restated Construction Agreement (Building 8) – Page 2

 

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                      NETWORK APPLIANCE, INC., a Delaware
corporation
 
               
 
  By:                          
 
      Name:        
 
      Title:  
 
   
 
         
 
   

Exhibit C to Amended and Restated Construction Agreement (Building 8) – Page 3

 

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Exhibit D
Pre-lease Force Majeure Event Notice
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Construction Agreement (Building 8) dated as of
November 29, 2007 (the “Construction Agreement”), between Network Appliance,
Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation
(“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Construction Agreement referenced above or in the Common
Definitions and Provisions Agreement referenced in the Construction Agreement.
     IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel
the ramifications of this notice under the Construction Agreement and other
Operative Documents.
     This letter constitutes a Pre-lease Force Majeure Event Notice, given as
provided in subparagraph 6(B) of the Construction Agreement to preserve the
right of NAI to assert the occurrence of a Pre-lease Force Majeure Event.
     NAI certifies to BNPPLC that the following Pre-lease Force Majeure Event
occurred or commenced on                     , 20___:
[INSERT DESCRIPTION OF EVENT HERE]
     NAI’s preliminary good faith estimate of the Pre-lease Force Majeure
Delays, of the Pre-lease Force Majeure Losses and of the Pre-lease Force Majeure
Excess Costs likely to result from such event are                      days,
$                     and $                    , respectively. Such amounts,
however, are only estimates.
     NAI acknowledges that after NAI gives this notice, BNPPLC may at any time
deliver an FOCB Notice to NAI as described in the Construction Agreement.

 

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                      NETWORK APPLIANCE, INC., a Delaware
corporation
 
               
 
  By:                          
 
      Name:        
 
      Title:  
 
   
 
         
 
   

Exhibit D to Amended and Restated Construction Agreement (Building 8) – Page 2

 

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Exhibit E
Notice of Termination of NAI’s Work
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Construction Agreement (Building 8) dated as of
November 29, 2007 (the “Construction Agreement”), between Network Appliance,
Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation
(“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Construction Agreement referenced above or in the Common
Definitions and Provisions Agreement referenced in the Construction Agreement.
     IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel
the ramifications of this notice under the Construction Agreement and other
Operative Documents.
     NAI has determined that the Construction Allowance to be provided to it
under the Construction Agreement will not be sufficient to cover all
Reimbursable Construction Period Costs yet to be paid or reimbursed from
Construction Advances for the reason or reasons set forth in the Notice of NAI’s
Intent to Terminate dated                     , 200___, previously delivered to
you as provided in subparagraph 7(B) of the Construction Agreement. That Notice
of NAI’s Intent to Terminate has not been rescinded by NAI.
     NAI hereby irrevocably and unconditionally elects to terminate its rights
and obligations to continue the Work under Construction Agreement effective as
of the date of this letter (which, as required by subparagraph 7(B) of the
Construction Agreement, is a date not less than forty-five days after the date
the aforementioned Notice of NAI’s Intent to Terminate). This notice constitutes
a “Notice of Termination by NAI” as described in subparagraph 7(B) of the
Construction Agreement.
     NAI also acknowledges that a 97-10/Meltdown Event has occurred under and as
defined in the Construction Agreement, and that BNPPLC is thus entitled to
demand and receive 97-10/Prepayments under and as provided in Paragraph 9 of the
Construction Agreement, unless the last sentence of Paragraph 9 excuses NAI from
paying the same.

 

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                      NETWORK APPLIANCE, INC., a Delaware
corporation    
 
               
 
  By:                          
 
      Name:        
 
      Title:  
 
   
 
               

Exhibit E to Amended and Restated Construction Agreement (Building 8) – Page 2

 

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Exhibit F
Notice of NAI’s Intent to Terminate
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Construction Agreement (Building 8) dated as of
November 29, 2007 (the “Construction Agreement”) between Network Appliance, Inc.
(“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”),
a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Construction Agreement referenced above or in the Common
Definitions and Provisions Agreement referenced in the Construction Agreement.
     IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel
the ramifications of this notice under the Construction Agreement and other
Operative Documents.
 
[DRAFTING NOTE: Unless this letter contains the alternative provisions set forth
below as being required after a Complete Taking in any “Notice of NAI’s Intent
to Terminate Because of a Force Majeure Event,” this letter must contain the
following paragraph and inserts following such paragraph as indicated:
     NAI has determined that the Construction Allowance to be provided to it
under the Construction Agreement will not be sufficient to cover all
Reimbursable Construction Period Costs yet to be paid or reimbursed from
Construction Advances, because:
[INSERT ANY ONE OR MORE OF THE FOLLOWING REASONS THAT APPLY: (1) THE COST OF THE
WORK EXCEEDS BUDGETED EXPECTATIONS (RESULTING IN PROJECTED COST OVERRUNS), (2) A
PRE-LEASE FORCE MAJEURE EVENT HAS OCCURRED, OR (3) NAI CAN NO LONGER SATISFY
CONDITIONS TO BNPPLC’S OBLIGATION TO PROVIDE CONSTRUCTION

 

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ADVANCES IN THE CONSTRUCTION AGREEMENT.]
 
     The purpose of this letter is to give notice to BNPPLC and Participants of
NAI’s intent to terminate NAI’s rights and obligations to perform Work under the
Construction Agreement. This letter constitutes a “Notice of NAI’s Intent to
Terminate” given pursuant to subparagraph 7(B) of the Construction Agreement. As
provided in that subparagraph, as a condition to any effective Termination of
NAI’s Work, NAI must deliver a subsequent notice of termination to BNPPLC and
Participants, no less than forty-five days after the date BNPPLC receives this
letter.
 
[DRAFTING NOTE: Unless this letter contains the alternative provisions set forth
below as being required for any “Notice of NAI’s Intent to Terminate Because of
a Force Majeure Event,” this letter must contain the following paragraph:
     The period running from the date of BNPPLC’s receipt of this letter to the
effective date of any actual Termination of NAI’s Work by NAI or BNPPLC will
constitute a Work/Suspension Period under the Construction Agreement. During
such period BNPPLC’s funding obligations will be limited and NAI may suspend the
Work to the extent so provided in the Construction Agreement. Moreover, NAI
acknowledges that the delivery of this Notice of Intent to Terminate is a
97-10/Meltdown Event. Therefore, after receipt of this notice BNPPLC will have
the rights to demand and receive 97-10/Prepayments from NAI as provided in
Paragraph 9 of the Construction Agreement.]
[DRAFTING NOTE: This letter will qualify as a “Notice of NAI’s Intent to
Terminate Because of a Force Majeure Event” only if NAI includes one of the
following alternative sets of provisions, as applicable.]
[ALTERNATIVE #1 (Applies only if there has been a Complete Taking):
     This letter constitutes a “Notice of NAI’s Intent to Terminate Because of a
Force Majeure Event” as defined in the Construction Agreement. A Complete Taking
has occurred. Thus, regardless of any Scope Changes BNPPLC may be willing to
approve or consider, and regardless of any Increased Commitment BNPPLC may be
willing to provide, it would be futile to continue the Construction Project on
the Land.
     NAI acknowledges and agrees that BNPPLC is entitled to all proceeds of the
taking of the Property and all such proceeds must be paid to BNPPLC. NAI has no
right and will not assert
Exhibit F to Amended and Restated Construction Agreement (Building 8) – Page 2

 

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any right to share in such proceeds. NAI agrees to cooperate with BNPPLC as
BNPPLC may from time to time request in order to maximize BNPPLC’s recovery of
such proceeds.]
[ALTERNATIVE #2 (applies in the event of a Pre-lease Force Majeure Event other
than a Complete Taking): Include the next (single sentence) paragraph, together
with one or both (as applicable) of the two paragraphs following the next
(single sentence) paragraph, and together with the remaining paragraphs after
those two paragraphs, all with blanks filled in appropriately:
     This letter constitutes a “Notice of NAI’s Intent to Terminate Because of a
Force Majeure Event” as defined in the Construction Agreement.
     NAI now believes that the remaining available Construction Allowance will
not be sufficient to cover all Reimbursable Construction Period Costs yet to be
paid or reimbursed from Construction Advances only because of Pre-lease Force
Majeure Excess Costs incurred or anticipated as a result of one or more
Pre-lease Force Majeure Events. BNPPLC has previously been notified of such
Pre-lease Force Majeure Event(s) by notice(s) dated                     , which
NAI delivered to BNPPLC in accordance with subparagraph 6(B) of the Construction
Agreement. NAI’s current good faith estimate of the Pre-lease Force Majeure
Excess Costs that are most likely to be incurred because of such Pre-lease Force
Majeure Event(s) is $                      .
     NAI now believes that the Work will not be substantially complete before
the Target Completion Date only because of Pre-lease Force Majeure Delays
resulting from one or more Pre-lease Force Majeure Events. BNPPLC has previously
been notified of such Pre-lease Force Majeure Event(s) by notice(s) dated
                    , which NAI delivered to BNPPLC in accordance with
subparagraph 6(B) of the Construction Agreement. NAI’s current good faith
estimate of the Pre-lease Force Majeure Delays that are most likely to occur
because of such Pre-lease Force Majeure Event(s) is                      days.
     Also be advised that, as provided in subparagraph 7(B) of the Construction
Agreement, BNPPLC is entitled to (but not obligated to) respond to this notice
with an Increased Commitment. Responding with an Increased Commitment will
result in a conclusive presumption (for purposes of calculating any
97-10/Prepayment required of NAI under the Purchase Agreement) that any
Termination of NAI’s Work is for reasons other than the Pre-lease Force Majeure
Events of which BNPPLC has previously been notified.
     In the event BNPPLC fails to respond with an Increased Commitment, the
failure may excuse NAI from the obligation to make a 97-10/Prepayment under
Paragraph 9 of the Construction Agreement notwithstanding any Termination of
NAI’s Work, which would constitute a very material adverse consequence to
BNPPLC. Moreover, the Construction Agreement grants to NAI a right to cause a
Termination of NAI’s Work at any time more than
Exhibit F to Amended and Restated Construction Agreement (Building 8) – Page 3

 

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forty-five days after giving this notice, provided that NAI continues to believe
that a Timing or Budget Shortfall exists at that time. Thus, if BNPPLC intends
to respond with an Increased Commitment, BNPPLC would be well advised to do so
before the expiration of such forty-five day period.]

                      NETWORK APPLIANCE, INC., a Delaware
corporation
 
               
 
  By:                          
 
      Name:        
 
               
 
      Title:        
 
         
 
   

Exhibit F to Amended and Restated Construction Agreement (Building 8) – Page 4

 

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Exhibit G
Notice of Increased Funding Commitment by BNPPLC
[Date]
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
Telecopy: (919) 476-5750
     Re: Amended and Restated Construction Agreement (Building 8) dated as of
November 29, 2007 (the “Construction Agreement”) between Network Appliance, Inc.
(“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”),
a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Construction Agreement or in the Common Definitions and
Provisions Agreement referenced in the Construction Agreement.
     NAI has delivered a notice to BNPPLC dated                     , 20___,
which by its terms expressed NAI’s intent that it constitute a “Notice of NAI’s
Intent to Terminate Because of a Force Majeure Event” as defined in the
Construction Agreement. In such notice, NAI advised BNPPLC of NAI’s intent to
terminate the Construction Agreement because of NAI’s belief that the
Construction Allowance to be provided to it under the Construction Agreement
will not be sufficient to cover all Reimbursable Construction Period Costs yet
to be paid or reimbursed from Construction Advances. Such notice also suggested
NAI’s belief that, but for the cost of repairing damage to the Improvements
caused by a Pre-lease Force Majeure Event, the remaining available Construction
Allowance would be sufficient. In addition, such notice set forth the amount of
$                     as NAI’s estimate of the Pre-lease Force Majeure Excess
Costs most likely to be incurred because of such Pre-lease Force Majeure Event.
     This response to such notice constitutes an Increased Funding Commitment.
BNPPLC hereby commits to increase the amount of the Construction Allowance by $
                    (the estimate given by NAI as described above). Such
commitment is made on and subject to all of the same terms and conditions set
forth in the Construction Agreement and other Operative Documents as being
applicable to the original Construction Allowance and to Construction Advances
required thereunder.
     Please note that, according to the Construction Agreement, NAI will have
ten days after the date of any Increased Commitment (which may be comprised of
this Increased Funding Commitment and any separate Increased Time Commitment
given contemporaneously herewith)

 

--------------------------------------------------------------------------------

 

within which NAI may rescind the aforementioned Notice of NAI’s Intent to
Terminate Because of a Force Majeure Event by a notice given in the form
prescribed by the Construction Agreement. Any failure of NAI to so rescind the
notice will constitute a 97-10/Meltdown Event under and as defined in the
Construction Agreement and will result in a conclusive presumption (for purposes
of calculating any 97-10/Prepayment required of NAI) that any Termination of
NAI’s Work occurred for reasons other than the Pre-lease Force Majeure Events of
which BNPPLC has previously been notified.

                      BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 
               
 
  By:                          
 
      Name:        
 
      Title:  
 
   
 
               

Exhibit G to Amended and Restated Construction Agreement (Building 8) – Page 2

 

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Exhibit H
Notice of Increased Time Commitment by BNPPLC
[Date]
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
Telecopy: (919) 476-5750
     Re: Amended and Restated Construction Agreement (Building 8) dated as of
November 29, 2007 (the “Construction Agreement”) between Network Appliance, Inc.
(“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”),
a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Construction Agreement or in the Common Definitions and
Provisions Agreement referenced in the Construction Agreement.
     NAI has delivered a notice to BNPPLC dated                     , 20___,
which by its terms expressed NAI’s intent that it constitute a “Notice of NAI’s
Intent to Terminate Because of a Force Majeure Event” as defined in the
Construction Agreement. In such notice, NAI advised BNPPLC of NAI’s intent to
elect a Termination of NAI’s Work because of NAI’s belief that the Work will not
be substantially complete prior to the Target Completion Date only because of
Pre-lease Force Majeure Delays. Such notice also expressed NAI’s belief that
Pre-lease Force Majeure Delays are likely to be                      days in the
aggregate.
     This response to such notice constitutes an Increased Time Commitment.
BNPPLC hereby commits to extend the Target Completion Date by
                     days (the estimate given by NAI as described above).
     Please note that, according to the Construction Agreement, NAI will have
ten days after the date of any Increased Commitment (which may be comprised of
this Increased Time Commitment and any separate Increased Funding Commitment
given contemporaneously herewith) within which NAI may rescind the
aforementioned Notice of NAI’s Intent to Terminate Because of a Force Majeure
Event by a notice given in the form prescribed by the Construction Agreement.
Any failure of NAI to so rescind the notice will constitute a 97-10/Meltdown
Event under and as defined in the Construction Agreement and will result in a
conclusive presumption (for purposes of calculating any 97-10/Prepayment
required of NAI) that any Termination of NAI’s Work occurred for reasons other
than the Pre-lease Force Majeure Events of which BNPPLC has previously been
notified.

 

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                      BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 
               
 
  By:                          
 
      Name:        
 
      Title:  
 
   
 
               

Exhibit H to Amended and Restated Construction Agreement (Building 8) – Page 2

 

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Exhibit I
Rescission of Notice of NAI’s Intent to Terminate
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Construction Agreement (Building 8) dated as of
November 29, 2007 (the “Construction Agreement”) between Network Appliance, Inc.
(“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”),
a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Construction Agreement referenced above or in the Common
Definitions and Provisions Agreement referenced in the Construction Agreement.
     NAI has delivered to BNPPLC a Notice of NAI’s Intent to Terminate dated
                    , 200___, and BNPPLC has responded with an Increased
Commitment as of                     , 200___. NAI hereby accepts the Increased
Commitment and, as provided in subparagraph 7(B) of the Construction Agreement,
rescinds such Notice of NAI’s Intent to Terminate.
     NAI acknowledges that, because of such rescission, NAI must, as a condition
precedent to any exercise of its remaining rights to terminate the Construction
Agreement pursuant to subparagraph 7(B) thereof, deliver another Notice of NAI’s
Intent to Terminate at least forty five days prior to the effective date of the
Termination of NAI’s Work.

                      NETWORK APPLIANCE, INC., a Delaware
corporation
 
               
 
  By:                          
 
      Name:        
 
               
 
      Title:        
 
         
 
   

 

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Exhibit J
Estoppel From Contractor
                    , 200__
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox

      Re:  
Assignment of Construction Contract

Ladies and Gentlemen:
     The undersigned hereby represents to BNP Paribas Leasing Corporation, a
Delaware corporation (“BNPPLC”), and covenants with BNPPLC as follows:
     1 The undersigned has entered into that certain [Construction Contract]
(the “Construction Contract”) by and between the undersigned and Network
Appliance, Inc. (“NAI”) dated                     , ___for the construction of
the improvements to be constructed as part of NAI’s Sunnyvale campus leased by
NAI (the “Improvements”) on the land described in the Building 8 Documents
described below (the “Land” and, together with the Improvements and any other
improvements now on or constructed in the future on the Land, the “Project”).
     2 The undersigned has been advised that, by an Amended and Restated Lease
Agreement (Building 8) and an Amended and Restated Construction Agreement
(Building 8), both dated as of November 29, 2007 (collectively, the “Building 8
Documents”), BNPPLC is leasing the Project to NAI and has agreed, subject to the
terms and conditions of the Building 8 Documents, to provide a construction
allowance for the design and construction of the Improvements. The undersigned
has also been advised that the Building 8 Documents expressly provide that third
parties (including the undersigned) are not intended as beneficiaries of the
Building 8 Documents and, thus, will have no standing to enforce any obligations
of NAI or BNPPLC under the Building 8 Documents, including any such obligation
that BNPPLC may have to provide the construction allowance. The undersigned
understands that the Building 8 Documents expressly provide that NAI is not
authorized to enter into any construction contract or other agreement with any
third party in the name of BNPPLC or to otherwise bind BNPPLC to any contract
with a third party.
     3 A complete and correct copy of the Construction Contract is attached to
this letter. The Construction Contract is in full force and effect and has not
been modified or amended, except as provided in any written modifications or
amendments which are also attached to this letter.

 

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BNP Paribas Leasing Corporation
                    , 200___
Page 2
     4 The undersigned has not sent or received any notice of default or any
other notice for the purpose of terminating the Construction Contract, nor does
the undesigned have knowledge of any existing circumstance or event which, but
for the elapse of time or otherwise, would constitute a default by the
undersigned or by NAI under the Construction Contract.
     The undersigned acknowledges and agrees that:
     a) Title to all Improvements shall, when constructed on the Land, pass
directly to BNPPLC, not to NAI. BNPPLC shall not, however, be liable for, and
the undersigned shall not assert, any claims, demands or liabilities against
BNPPLC arising under or in any way relating to the Construction Contract;
provided, this paragraph will not (1) be construed as a waiver of any statutory
mechanic’s or materialmen’s liens against the interests of NAI in and to the
Land or the improvements thereon that may otherwise exist or arise in favor of
the undersigned, or (2) prohibit the undersigned from asserting any claims or
making demands against BNPPLC under the Construction Contract if BNPPLC elects
in writing, pursuant to paragraph b) below, to assume the Construction Contract
in the event NAI’s right to possession of the Land is terminated, it being
understood that in the event of such an assumption BNPPLC shall be liable for
the unpaid balance of the contract sum due for the work of the undersigned,
payable pursuant to (and subject to the terms and conditions set forth for the
benefit of the owner in) the Construction Contract, but in no event shall BNPPLC
otherwise be personally liable for any acts or omissions on the part of NAI.
     b) Upon any termination of NAI’s right to possession of the Project under
the Building 8 Documents, including any eviction of NAI resulting from an Event
of Default (as defined in the Building 8 Documents), BNPPLC shall be entitled
(but not obligated), by notice to the undersigned and without the necessity of
the execution of any other document, to assume NAI’s rights and obligations
under the Construction Contract, cure any defaults by NAI thereunder and enforce
the Construction Contract and all rights of NAI thereunder. Within ten days of
receiving notice from BNPPLC that NAI’s right to possession has been terminated,
the undersigned shall send to BNPPLC a written estoppel letter stating: (i) that
the undersigned has not performed any act or executed any other instrument which
invalidates or modifies the Construction Contract in whole or in part (or, if
so, the nature of such modification); (ii) that the Construction Contract is
valid and subsisting and in full force and effect; (iii) that there are no
defaults or events of default then existing under the Construction Contract and
no event has occurred which with the passage of time or the giving of notice, or
both, would constitute such a default or event of default (or, if there is a
default, the nature of such default in detail); (iv) that the construction
contemplated by the Construction Contract is proceeding in a satisfactory
Exhibit J to Amended and Restated Construction Agreement (Building 8) – Page 2

 

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BNP Paribas Leasing Corporation
                    , 200___
Page 3
manner in all material respects (or if not, a detailed description of all
significant problems with the progress of construction); (v) a reasonably
detailed report of the then critical dates projected by the undersigned for work
and deliveries required to complete the Project; (vi) the total amount received
by the undersigned for construction through the date of the letter; (vii) the
estimated total cost of completing the undersigned’s work as of the date of the
letter, together with a current draw schedule; and (viii) any other information
BNPPLC may request to allow it to decide whether to assume the Construction
Contract. BNPPLC shall have seven days from receipt of such written certificate
containing all such requested information to decide whether to assume the
Construction Contract. If BNPPLC fails to assume the Construction Contract
within such time, the undersigned agrees that BNPPLC shall not be liable (and
the undersigned shall not assert or bring any action against BNPPLC, except to
enforce statutory lien rights, if any, of the undersigned against the Land or
improvements on the Land) for any damages or other amounts resulting from the
breach or termination of the Construction Contract or under any other theory of
liability of any kind or nature, but rather the undersigned shall look solely to
NAI (and statutory lien rights, if any, of the undersigned against the Land and
any improvements thereon) for the recovery of any such damages or other amounts.
     c) If BNPPLC notifies the undersigned that BNPPLC shall not assume the
Construction Contract pursuant to the preceding paragraph following the
termination of NAI’s right to possession of the Project under the Building 8
Documents, the undersigned shall immediately discontinue the work under the
Construction Contract and remove its personnel from the Project, and BNPPLC
shall be entitled to take exclusive possession of the Project. The undersigned
shall also, upon request by BNPPLC, deliver and assign to BNPPLC all plans and
specifications and other contract documents previously delivered to the
undersigned (except that the undersigned may keep an original set of the
Construction Contract and other contract documents executed by NAI), all other
material relating to the work which belongs to BNPPLC or NAI, and all papers and
documents relating to governmental permits, orders placed, bills and invoices,
lien releases and financial management under the Construction Contract.
Notwithstanding the undersigned’s receipt of any notice from BNPPLC that BNPPLC
declines to assume the Construction Contract, the undersigned shall for a period
not to exceed fifteen days after receipt of such notice take such steps, at
BNPPLC’s expense, as are reasonably necessary to preserve and protect work
completed and in progress and to protect materials, equipment and supplies at
the site or in transit.
     d) If the Construction Contract is terminated by NAI before BNPPLC is given
the opportunity to elect whether or not to assume the Construction Contract as
provided herein, BNPPLC shall nonetheless have the right hereunder to assume the
Construction Contract, as if it
Exhibit J to Amended and Restated Construction Agreement (Building 8) – Page 3

 

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BNP Paribas Leasing Corporation
                    , 200___
Page 4
had not been terminated, upon any termination of NAI’s right to possession of
the Project under the Building 8 Documents; provided, however, that if the work
of the undersigned under the Construction Contract has been disrupted because of
NAI’s termination of the Construction Contract, the undersigned shall be
entitled to an equitable adjustment to the price of the Construction Contract,
following any assumption thereof by BNPPLC, for the additional costs incurred by
the undersigned attributable to the disruption; and, provided further, that if
BNPPLC does assume the Construction Contract, BNPPLC shall receive a credit
against the price of the Construction Contract for any consideration paid to the
undersigned by NAI because of NAI’s prior termination of the Construction
Contract (whether such consideration is designated a termination fee, settlement
payment or otherwise).
     e) No action taken by BNPPLC or the undersigned with respect to the
Construction Contract shall prejudice any other rights or remedies of BNPPLC or
the undersigned provided by law, by the Building 8 Documents, by the
Construction Contract or otherwise against NAI.
     f) The undersigned agrees promptly to notify BNPPLC of any material default
or claimed material default by NAI under the Construction Contract of which the
undersigned is aware, describing with particularity the default and the action
the undersigned believes is necessary to cure the same. The undersigned will
send any such notice to BNPPLC prominently marked “URGENT - NOTICE OF NAI’S
DEFAULT UNDER CONSTRUCTION AGREEMENT WITH NETWORK APPLIANCE, INC. — SUNNYVALE,
CALIFORNIA” at the address specified for notice below (or at such other
addresses as BNPPLC shall designate in notice sent to the undersigned), by
certified or registered mail, return receipt requested. Following receipt of
such notice, the undersigned will permit BNPPLC or its designee to cure any such
default within the time period reasonably required for such cure, but in no
event less than thirty days. If it is necessary or helpful to take possession of
all or any portion of the Project to cure a default by NAI under the
Construction Contract, the time permitted by the undersigned for cure by BNPPLC
will include the time necessary to terminate NAI’s right to possession of the
Project and evict NAI, provided that BNPPLC commences the steps required to
exercise such right within sixty days after it is entitled to do so under the
terms of the Building 8 Documents and applicable law. If the undersigned incurs
additional costs due to the extension of the aforementioned cure period, the
undersigned shall be entitled to an equitable adjustment to the price of the
Construction Contract for such additional costs.
     g) Any notice or communication required or permitted hereunder shall be
given in writing, sent by (a) personal delivery or (b) expedited delivery
service with proof of delivery or (c) United States mail, postage prepaid,
registered or certified mail or (d) telegram, telex or
Exhibit J to Amended and Restated Construction Agreement (Building 8) – Page 4

 

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BNP Paribas Leasing Corporation
                    , 200___
Page 5
telecopy, addressed as follows:

         
To the undersigned:
       
 
         
 
       
 
 
 
   
 
       
 
       
 
  Telecopy: (___) ______-_________    
 
       
To BNPPLC:
  BNP Paribas Leasing Corporation    
 
  12201 Merit Drive, Suite 860    
 
  Dallas, Texas 75251    
 
  Attention: Lloyd G. Cox    
 
  Telecopy: (972) 788-9191    

A copy of any such notice or communication will also be sent to NAI by
(a) personal delivery or (b) expedited delivery service with proof of delivery
or (c) United States mail, postage prepaid, registered or certified mail or
(d) telegram, telex or telecopy, addressed as follows:

     
Address of NAI:
  Network Appliance, Inc.
 
  7301 Kit Creek Road
 
  Research Triangle Park, NC 27709
 
  Attention: Ingemar Lanevi
 
  Telecopy: (919) 476-5750  
With a copy to:
  Network Appliance, Inc.
 
  495 East Java Drive
Sunnyvale, California 94089
Attention: Mr. Thom Bryant
Telecopy: (408)-822-4463

     h) The undersigned acknowledges that it has all requisite authority to
execute this letter. The undersigned further acknowledges that BNPPLC has
requested this letter, and is relying on the truth and accuracy of the
representations made herein, in connection with BNPPLC’s decision to advance
funds for construction under the Building 8 Documents with NAI.
Exhibit J to Amended and Restated Construction Agreement (Building 8) – Page 5

 

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BNP Paribas Leasing Corporation
                    , 200___
Page 6

                      Very truly yours,
 
                     
 
               
 
  By:                          
 
      Name:        
 
      Title:  
 
   
 
               

     NAI joins in the execution of this letter solely for the purpose of
evidencing its consent hereto, including its consent to the provisions that
would allow, but not require, BNPPLC to assume the Construction Contract in the
event NAI is evicted from the Project.

                      Network Appliance, Inc.
 
               
 
  By:                          
 
      Name:        
 
      Title:  
 
   
 
               

Exhibit J to Amended and Restated Construction Agreement (Building 8) – Page 6

 

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Exhibit K
Estoppel From Design Professionals
                    , 200___
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox

      Re:  
Assignment of [Architect’s Agreement/Engineering Contract]

Ladies and Gentlemen:
     The undersigned hereby represents to BNP Paribas Leasing Corporation, a
Delaware corporation (“BNPPLC”), and covenants with BNPPLC as follows:
     1 The undersigned has entered into that certain [Architect’s
Agreement/Engineering Contract] (the “Agreement”) by and between the undersigned
and Network Appliance, Inc. (“NAI”) dated                     , ___ for the
[design/engineering] of the improvements to be constructed as part of NAI’s
Sunnyvale campus leased by NAI (the “Improvements”) on the land described in the
Building 8 Documents described below (the “Land” and, together with the
Improvements and any other improvements now on or constructed in the future on
the Land, the “Project”).
     2 The undersigned has been advised that, by an Amended and Restated Lease
Agreement (Building 8) and an Amended and Restated Construction Agreement
(Building 8), both dated as of November 29, 2007 (collectively, the “Building 8
Documents”), BNPPLC is leasing the Project to NAI and has agreed, subject to the
terms and conditions of the Building 8 Documents, to provide a construction
allowance for the design and construction of the Improvements. The undersigned
has also been advised that the Building 8 Documents expressly provide that third
parties (including the undersigned) are not intended as beneficiaries of the
Building 8 Documents and, thus, will have no standing to enforce any obligations
of NAI or BNPPLC under the Building 8 Documents, including any such obligation
that BNPPLC may have to provide the construction allowance. The undersigned
understands that the Building 8 Documents expressly provide that NAI is not
authorized to enter into any Agreement or other agreement with any third party
in the name of BNPPLC or to otherwise bind BNPPLC to any contract with a third
party.
     3 A complete and correct copy of the Agreement is attached to this letter.
The Agreement is in full force and effect and has not been modified or amended,
except as provided in any written modifications or amendments which are also
attached to this letter.

 

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BNP Paribas Leasing Corporation
                    , 200___
Page 2
     4 The undersigned has not sent or received any notice of default or any
other notice for the purpose of terminating the Agreement, nor does the
undesigned have knowledge of any existing circumstance or event which, but for
the elapse of time or otherwise, would constitute a default by the undersigned
or by NAI under the Agreement.
     The undersigned acknowledges and agrees that:
     a) BNPPLC shall not be liable for, and the undersigned shall not assert,
any claims, demands or liabilities against BNPPLC arising under or in any way
relating to the Agreement; provided, this paragraph will not (1) be construed as
a waiver of any statutory mechanic’s or materialmen’s liens against the
interests of NAI in and to the Land or the improvements thereon that may
otherwise exist or arise in favor of the undersigned, or (2) prohibit the
undersigned from asserting any claims or making demands against BNPPLC under the
Agreement if BNPPLC elects in writing, pursuant to paragraph b) below, to assume
the Agreement in the event NAI’s right to possession of the Land is terminated,
it being understood that in the event of such an assumption BNPPLC shall be
liable for the unpaid balance of the fees for services of the undersigned,
payable pursuant to (and subject to the terms and conditions set forth for the
benefit of the owner in) the Agreement, but in no event shall BNPPLC otherwise
be personally liable for any acts or omissions on the part of NAI.
     b) Upon any termination of NAI’s right to possession of the Project under
the Building 8 Documents, including any eviction of NAI resulting from an Event
of Default (as defined in the Building 8 Documents), BNPPLC shall be entitled
(but not obligated), by notice to the undersigned and without the necessity of
the execution of any other document, to assume NAI’s rights and obligations
under the Agreement, cure any defaults by NAI thereunder and enforce the
Agreement and all rights of NAI thereunder. Within ten days of receiving notice
from BNPPLC that NAI’s right to possession has been terminated, the undersigned
shall send to BNPPLC a written estoppel letter stating: (i) that the undersigned
has not performed any act or executed any other instrument which invalidates or
modifies the Agreement in whole or in part (or, if so, the nature of such
modification); (ii) that the Agreement is valid and subsisting and in full force
and effect; (iii) that there are no defaults or events of default then existing
under the Agreement and no event has occurred which with the passage of time or
the giving of notice, or both, would constitute such a default or event of
default (or, if there is a default, the nature of such default in detail);
(iv) that the services contemplated by the Agreement are proceeding in a
satisfactory manner in all material respects (or if not, a detailed description
of all significant problems with the progress of services); (v) a reasonably
detailed report of the then critical dates
Exhibit K to Amended and Restated Construction Agreement (Building 8) – Page 2

 

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BNP Paribas Leasing Corporation
                    , 200___
Page 3
projected by the undersigned for services required to complete the Project;
(vi) the total amount received by the undersigned for services through the date
of the letter; (vii) the estimated total cost of completing such services as of
the date of the letter, together with a current payment schedule; and (viii) any
other information BNPPLC may request to allow it to decide whether to assume the
Agreement. BNPPLC shall have seven days from receipt of such written certificate
containing all such requested information to decide whether to assume the
Agreement. If BNPPLC fails to assume the Agreement within such time, the
undersigned agrees that BNPPLC shall not be liable (and the undersigned shall
not assert or bring any action against BNPPLC or, except to enforce statutory
lien rights, if any, of the undersigned against the Land or improvements on the
Land) for any damages or other amounts resulting from the breach or termination
of the Agreement or under any other theory of liability of any kind or nature,
but rather the undersigned shall look solely to NAI (and statutory lien rights,
if any, of the undersigned against the Land and any improvements thereon) for
the recovery of any such damages or other amounts.
     c) If BNPPLC notifies the undersigned that BNPPLC shall not assume the
Agreement pursuant to the preceding paragraph following the termination of NAI’s
right to possession of the Project under the Building 8 Documents, the
undersigned shall immediately deliver and assign to BNPPLC the following:
(1) copies of all plans and specifications for the Project or any component
thereof previously generated by or delivered to the undersigned, (2) any other
contract documents previously delivered to the undersigned (except that the
undersigned may keep an original set of the Agreement and other contract
documents executed by NAI), (3) any other material relating to the services
provided under the Agreement, and (4) to the extent available to the undersigned
all papers and documents relating to governmental permits, orders placed, bills
and invoices, lien releases and financial management under the Agreement.
Notwithstanding the undersigned’s receipt of any notice from BNPPLC that BNPPLC
declines to assume the Agreement, the undersigned shall for a period not to
exceed thirty days after receipt of such notice take such steps, at BNPPLC’s
expense, as are reasonably necessary to preserve the utility and value of
services completed and in progress and to protect plans and specifications and
other materials described in the preceding sentence.
     d) If the Agreement is terminated by NAI before BNPPLC is given the
opportunity to elect whether or not to assume the Agreement as provided herein,
BNPPLC shall nonetheless have the right hereunder to assume the Agreement, as if
it had not been terminated, upon any termination of NAI’s right to possession of
the Project under the Building 8 Documents; provided, however, that if the
services of the undersigned under the Agreement has been disrupted because of
NAI’s termination of the Agreement, the undersigned shall be entitled to an
Exhibit K to Amended and Restated Construction Agreement (Building 8) – Page 3

 

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BNP Paribas Leasing Corporation
                    , 200___
Page 4
equitable adjustment to the price of the Agreement, following any assumption
thereof by BNPPLC, for the additional costs incurred by the undersigned
attributable to the disruption; and, provided further, that if BNPPLC does
assume the Agreement, BNPPLC shall receive a credit against the price of the
Agreement for any consideration paid to the undersigned by NAI because of NAI’s
prior termination of the Agreement (whether such consideration is designated a
termination fee, settlement payment or otherwise).
     e) No action taken by BNPPLC or the undersigned with respect to the
Agreement shall prejudice any other rights or remedies of BNPPLC or the
undersigned provided by law, by the Building 8 Documents, by the Agreement or
otherwise against NAI.
     f) The undersigned agrees promptly to notify BNPPLC of any material default
or claimed material default by NAI under the Agreement of which the undersigned
is aware, describing with particularity the default and the action the
undersigned believes is necessary to cure the same. The undersigned will send
any such notice to BNPPLC prominently marked “URGENT — NOTICE OF NAI’S DEFAULT
UNDER DESIGN AGREEMENT WITH NETWORK APPLIANCE, INC. — SUNNYVALE, CALIFORNIA” at
the address specified for notice below (or at such other addresses as BNPPLC
shall designate in notice sent to the undersigned), by certified or registered
mail, return receipt requested. Following receipt of such notice, the
undersigned will permit BNPPLC or its designee to cure any such default within
the time period reasonably required for such cure, but in no event less than
thirty days.
     g) Any notice or communication required or permitted hereunder shall be
given in writing, sent by (a) personal delivery or (b) expedited delivery
service with proof of delivery or (c) United States mail, postage prepaid,
registered or certified mail or (d) telegram, telex or telecopy, addressed as
follows:

         
To the undersigned:
 
 
   
 
       
 
       
 
         
 
 
 
   
 
  Telecopy: (___) _______-______    

Exhibit K to Amended and Restated Construction Agreement (Building 8) – Page 4

 

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BNP Paribas Leasing Corporation
                    , 200___
Page 5

      To BNPPLC:  
BNP Paribas Leasing Corporation
   
12201 Merit Drive, Suite 860
   
Dallas, Texas 75251
   
Attention: Lloyd G. Cox
   
Telecopy: (972) 788-9191

A copy of any such notice or communication will also be sent to NAI by
(a) personal delivery or (b) expedited delivery service with proof of delivery
or (c) United States mail, postage prepaid, registered or certified mail or
(d) telegram, telex or telecopy, addressed as follows:

      Address of NAI:  
Network Appliance, Inc.
   
7301 Kit Creek Road
   
Research Triangle Park, NC 27709
   
Attention: Ingemar Lanevi
   
Telecopy: (919) 476-5750
  With a copy to:  
Network Appliance, Inc.
   
495 East Java Drive
   
Sunnyvale, California 94089
   
Attention: Mr. Thom Bryant
   
Telecopy: (408)-822-4463

     h) The undersigned acknowledges that it has all requisite authority to
execute this letter. The undersigned further acknowledges that BNPPLC has
requested this letter, and is relying on the truth and accuracy of the
representations made herein, in connection with BNPPLC’s decision to advance
funds for design services under the Building 8 Documents with NAI.

                      Very truly yours,
 
                         
 
               
 
  By:                          
 
      Name:        
 
      Title:  
 
   
 
               

Exhibit K to Amended and Restated Construction Agreement (Building 8) – Page 5

 

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BNP Paribas Leasing Corporation
                    , 200___
Page 6
     NAI joins in the execution of this letter solely for the purpose of
evidencing its consent hereto, including its consent to the provisions that
would allow, but not require, BNPPLC to assume the Agreement in the event NAI is
evicted from the Project.

                      Network Appliance, Inc.    
 
               
 
  By:                          
 
      Name:        
 
      Title:  
 
   
 
         
 
   

Exhibit K to Amended and Restated Construction Agreement (Building 8) – Page 6