EX-10.12 8 0008.txt FORM OF PLEDGE AGREEMENT (LAND) JUNE 1, 2000 ================================================================================ EXHIBIT 10.12 PLEDGE AGREEMENT (LAND) AMONG BNP LEASING CORPORATION ("BNPLC") BNP PARIBAS, AS AGENT ("Agent") EXTREME NETWORKS, INC. ("Extreme") AND PARTICIPANTS AS DESCRIBED HEREIN June 1, 2000 ================================================================================ TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS AND INTERPRETATION........................................................................... -1- Section 1.1 Capitalized Terms Used But Not Defined in This Agreement...................................... -1- -------------------------------------------------------- Section 1.2 Definitions................................................................................... -1- ----------- Account.......................................................................................... -1- Account Office................................................................................... -2- Agent............................................................................................ -2- BNPLC............................................................................................ -2- BNPLC's Corresponding Obligations to Participants................................................ -2- Cash Collateral.................................................................................. -2- Certificate of Deposit........................................................................... -2- Collateral....................................................................................... -2- Collateral Imbalance............................................................................. -2- Collateral Percentage............................................................................ -2- Default.......................................................................................... -3- Deposit Taker.................................................................................... -3- Deposit Taker Losses............................................................................. -3- Deposit Taker's Acknowledgment and Agreement..................................................... -3- Disqualified Deposit Taker....................................................................... -3- Event of Default................................................................................. -3- Extreme.......................................................................................... -4- Extreme's Purchase Agreement Obligations......................................................... -4- Initially Qualified Deposit Taker................................................................ -5- Lien............................................................................................. -5- Material Lease Default........................................................................... -5- Minimum Collateral Percentage.................................................................... -5- Minimum Collateral Value......................................................................... -6- Notice of Security Interest...................................................................... -6- Other Liable Party............................................................................... -6- Participants..................................................................................... -6- Participation Agreement.......................................................................... -6- Percentage....................................................................................... -6- Qualified Pledge................................................................................. -6- Secured Obligations.............................................................................. -6- Supplement....................................................................................... -6- Transaction Documents............................................................................ -6- Value............................................................................................ -7- Section 1.3 Attachments.................................................................................. -7- ----------- Section 1.4 Amendment of Defined Instruments............................................................. -7- -------------------------------- Section 1.5 References and Titles........................................................................ -7- --------------------- ARTICLE II SECURITY INTEREST....................................................................................... -7- Section 2.1 Pledge and Grant of Security Interest........................................................ -7- ------------------------------------- Section 2.2 Return of Collateral After the Secured Obligations are Satisfied in Full..................... -8- ------------------------------------------------------------------------ ARTICLE III DETERMINATION OF THE COLLATERAL PERCENTAGE............................................................. -8- Section 3.1 Determination of the Collateral Percentage Generally......................................... -8- ----------------------------------------------------
Section 3.2 Limitations on Extreme's Right to Lower the Collateral Percentage............................ -8- ----------------------------------------------------------------- Section 3.3 Minimum Collateral Percentages Dependent Upon the Adjusted EBITDAR Coverage Ratio............ -9- --------------------------------------------------------------------------------- ARTICLE IV PROVISIONS CONCERNING DEPOSIT TAKERS.................................................................. -9- Section 4.1 Qualification of Deposit Takers Generally.................................................... -9- ----------------------------------------- Section 4.2 Existing Deposit Takers...................................................................... -9- ----------------------- Section 4.3 Replacement of Participants Proposed by Extreme.............................................. -10- ----------------------------------------------- Section 4.4 Mandatory Substitution for Disqualified Deposit Takers....................................... -10- ------------------------------------------------------ Section 4.5 Voluntary Substitution of Deposit Takers..................................................... -10- ---------------------------------------- Section 4.6 Delivery of Notice of Security Interest by Extreme and Agent................................. -10- ------------------------------------------------------------ Section 4.7 Constructive Possession of Collateral........................................................ -11- ------------------------------------- Section 4.8 Attempted Setoff by Deposit Takers........................................................... -11- ---------------------------------- Section 4.9 Deposit Taker Losses......................................................................... -11- -------------------- Section 4.10 Losses Resulting from Failure of Deposit Taker to Comply with this Agreement................ -11- ---------------------------------------------------------------------------- ARTICLE V DELIVERY AND MAINTENANCE OF CASH COLLATERAL............................................................ -12- Section 5.1 Delivery of Funds by Extreme................................................................. -12- ---------------------------- Section 5.2 Transition Account........................................................................... -12- ------------------ Section 5.3 Allocation of Cash Collateral Among Deposit Takers........................................... -12- -------------------------------------------------- Section 5.4 Issuance and Redemption of Certificates of Deposit........................................... -13- -------------------------------------------------- Section 5.5 Status of the Accounts Under the Reserve Requirement Regulations............................. -13- ---------------------------------------------------------------- Section 5.6 Acknowledgment by Extreme that Requirements of this Agreement are Commercially Reasonable.... -13- ----------------------------------------------------------------------------------------- ARTICLE VI WITHDRAWAL OF CASH COLLATERAL......................................................................... -14- Section 6.1 Withdrawal of Collateral Prior to the Designated Sale Date................................... -14- ---------------------------------------------------------- Section 6.2 Withdrawal and Application of Cash Collateral to Reduce or Satisfy the Secured ------------------------------------------------------------------------------ Obligations to the Participants............................................................. -14- ------------------------------- Section 6.3 Withdrawal and Application of Cash Collateral to Reduce or Satisfy the Secured ------------------------------------------------------------------------------ Obligations to BNPLC........................................................................ -15- --------------------- Section 6.4 Withdrawal of Cash Collateral From Accounts Maintained by Disqualified Deposit Takers........ -15- ------------------------------------------------------------------------------------- ARTICLE VII REPRESENTATIONS AND COVENANTS OF Extreme............................................................. -15- Section 7.1 Representations of Extreme................................................................... -15- -------------------------- Section 7.2 Covenants of Extreme......................................................................... -16- -------------------- ARTICLE VIII AUTHORIZED ACTION BY AGENT......................................................................... -17- Section 8.1 Power of Attorney............................................................................ -17- ----------------- ARTICLE IX DEFAULT AND REMEDIES................................................................................. -18- Section 9.1 Remedies..................................................................................... -18- -------- ARTICLE X OTHER RECOURSE........................................................................................ -18- Section 10.1 Recovery Not Limited........................................................................ -18- -------------------- ARTICLE XI PROVISIONS CONCERNING AGENT........................................................................... -19- Section 11.1 Appointment and Authority................................................................... -19- ------------------------- Section 11.2 Exculpation, Agent's Reliance, Etc.......................................................... -19- ---------------------------------- Section 11.3 Participant's Credit Decisions.............................................................. -20- ------------------------------ Section 11.4 Indemnity................................................................................... -20- --------- Section 11.5 Agent's Rights as Participant and Deposit Taker............................................. -20- -----------------------------------------------
Section 11.6 Investments................................................................................. -20- ----------- Section 11.7 Benefit of Article XI....................................................................... -21- --------------------- Section 11.8 Resignation................................................................................. -21- ----------- ARTICLE XII MISCELLANEOUS........................................................................................ -21- Section 12.1 Provisions Incorporated From Other Operative Documents....................................... -21- ------------------------------------------------------ Section 12.2 Cumulative Rights, etc...................................................................... -21- ---------------------- Section 12.3 Survival of Agreements...................................................................... -21- ---------------------- Section 12.4 Other Liable Party.......................................................................... -22- ------------------ Section 12.5 Termination................................................................................. -22- -----------
Attachment 1.........................................................................Form of Certificate of Deposit Attachment 2..................................................................Supplement to Pledge Agreement (Land) Attachment 3.......................................Notice of Extreme's Election to Change the Collateral Percentage Attachment 4............................................................................Notice of Security Interest Attachment 5...............................................................................Examples of Calculations Attachment 6.....................................Notice of Extreme's Requirement to Withdraw Excess Cash Collateral Attachment 7.....................................Notice of Extreme's Requirement of Direct Payments to Participants Attachment 8.....................................Notice of Extreme's Requirement of Direct Payments to Participants Attachment 9........................................................Notice of Extreme's Requirement of a Withdrawal of Cash Collateral from a Disqualified Deposit Taker Schedule 1...............................................................Financial Covenants and Negative Covenants ----------
-iv- PLEDGE AGREEMENT (LAND) This PLEDGE AGREEMENT (LAND) (this "Agreement") is made as of June 1, 2000 (the "Effective Date"), by EXTREME NETWORKS, INC., a California corporation ("Extreme"); BNP LEASING CORPORATION, a Delaware corporation ("BNPLC"); BNP PARIBAS ("BNPLC's Parent"), as a "Participant"; and BNP PARIBAS, acting in its capacity as agent for BNPLC and the Participants (in such capacity, "Agent"). RECITALS -------- A. Extreme and BNPLC are parties to: (i) a Common Definitions and Provisions Agreement (Land) dated as of the Effective Date (the "Common Definitions and Provisions Agreement (Land)"); and (ii) a Purchase Agreement (Land) dated as of the Effective Date (the "Purchase Agreement"), pursuant to which Extreme has agreed to make a "Supplemental Payment" (as defined in the Common Definitions and Provisions Agreement (Land)), in consideration of the rights granted to Extreme by the Purchase Agreement. B. Pursuant to a Participation Agreement dated the date hereof (the "Participation Agreement"), BNPLC's Parent has agreed with BNPLC to participate in the risks and rewards to BNPLC of the Purchase Agreement and other Operative Documents (as defined in the Common Definitions and Provisions Agreement (Land)), and the parties to this Agreement anticipate that other financial institutions may become parties to the Participation Agreement as Participants, agreeing to participate in the risks and rewards to BNPLC of the Purchase Agreement and other Operative Documents. C. Extreme may from time to time deliver cash collateral for its obligations to BNPLC under the Purchase Agreement and for BNPLC's corresponding obligations to Participants under the Participation Agreement. This Agreement sets forth the terms and conditions governing such cash collateral. AGREEMENT --------- NOW, THEREFORE, in consideration of the above recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS AND INTERPRETATION Section 1.1 Capitalized Terms Used But Not Defined in This Agreement. All -------------------------------------------------------- capitalized terms used in this Agreement which are defined in Article I of the Common Definitions and Provisions Agreement (Land) and not otherwise defined herein shall have the same meanings herein as set forth in the Common Definitions and Provisions Agreement (Land). All terms used in this Agreement which are defined in the UCC and not otherwise defined herein shall have the same meanings herein as set forth therein, except where the context otherwise requires. Section 1.2 Definitions. When used in this Agreement, the following terms ----------- shall have the following respective meanings: "Account" shall mean any deposit account maintained by a Deposit Taker into which Cash Collateral may be deposited at any time, excluding the Transition Account. "Account Office" shall mean, with respect to any Account maintained by any Deposit Taker, the office of such Deposit Taker in California or New York at which such Account is maintained as specified in the applicable Deposit Taker's Acknowledgment and Agreement. "Agent" shall have the meaning given to that term in the introductory paragraph hereof. "BNPLC" shall have the meaning given to that term in the introductory paragraph hereof. "BNPLC's Corresponding Obligations to Participants" shall mean BNPLC's obligations under the Participation Agreement to pay Participants their respective Percentages of (or amounts equal to their respective Percentages of) sums "actually received by BNPLC" (as defined in the Participation Agreement) in satisfaction of Extreme's Purchase Agreement Obligations; provided, however, any modification of the Participation Agreement executed after the date hereof without Extreme's written consent shall not be considered for purposes of determining BNPLC's Corresponding Obligations to Participants under this Agreement. "Cash Collateral" shall mean (i) all money of Extreme which Extreme has delivered to Agent for deposit with a Deposit Taker pursuant to this Agreement, and (ii) any additional money delivered to Agent as Collateral pursuant to Section 4.9. "Certificate of Deposit" shall mean a certificate of deposit issued by a Deposit Taker as required by Section 5.4 below to evidence an Account into which Cash Collateral has been deposited pursuant to this Agreement. Each Certificate of Deposit shall be issued in an amount equal to the Value of the Account which it evidences and shall otherwise be in the form set forth as ATTACHMENT 1. ------------ "Collateral" shall have the meaning given to that term in Section 2.1 hereof. "Collateral Imbalance" shall mean on any date prior to the Designated Sale Date that the Value (without duplication) of Accounts maintained by and Certificates of Deposit issued by the Deposit Taker for any Participant (other than a Disqualified Deposit Taker) does not equal such Participant's Percentage, multiplied by the lesser of (1) the Minimum Collateral Value in effect on such date, or (2) the aggregate Value of all Collateral subject to this Agreement on such date. For purposes of determining whether a Collateral Imbalance exists, the Value of any Accounts maintained by a bank that is acting as Deposit Taker for two or more Participants will be deemed to be held for them in proportion to their respective Percentages, and the Value of any Accounts maintained by a bank as Deposit Taker for both a Participant and BNPLC (as in the case of BNPLC's Parent acting as Deposit Taker for itself, as a Participant, and for BNPLC) will be deemed to be held for the Participant only to the extent necessary to prevent or mitigate a Collateral Imbalance and otherwise for BNPLC. "Collateral Percentage" shall mean the percentage designated by Extreme in accordance with this Agreement from time to time, but never less than the Minimum Collateral Percentage established as provided in Part III of Schedule 1. ---------- "Default" means any Event of Default and any default, event or condition which would, with the giving of any requisite notices and the passage of any requisite periods of time, constitute an Event of Default. -2- "Deposit Taker" for BNPLC shall mean BNPLC's Parent and for each Participant shall mean the Participant itself; provided, that each of BNPLC and the Participants, for itself only, may from time to time designate another Deposit Taker as provided in Sections 4.4 and 4.5 below. "Deposit Taker Losses" shall mean the Value of any Cash Collateral delivered to a Deposit Taker, but that the Deposit Taker will not (because of the insolvency of the Deposit Taker, offsets by the Deposit Taker in violation of the Deposit Taker's Acknowledgment and Agreement, or otherwise) return to Extreme or return to Agent for disposition or application as provided herein or as required by applicable law. "Deposit Taker's Acknowledgment and Agreement" shall have the meaning given to that term in subsection 4.1.2 hereof. "Disqualified Deposit Taker" shall mean any Deposit Taker with whom Agent may decline to deposit Collateral pursuant to Section 4.1. "Event of Default" shall mean the occurrence of any of the following: (a) the failure by Extreme to pay all or any part of Extreme's Purchase Agreement Obligations when due, after giving effect to any applicable notice and grace periods expressly provided for in the Purchase Agreement; (b) the failure by Extreme to provide funds as and when required by Section 5.1 of this Agreement, if within seven Business Days after such failure commences Extreme does not (1) cure such failure by delivering the funds required by Section 5.1, and (2) pay to BNPLC as additional Rent under the Land Lease an amount equal to interest at the Default Rate (as defined in the Land Lease) on such funds for the period from which they were first due to the date of receipt by Agent; (c) the failure of the pledge or security interest contemplated herein in the Transition Account or any Account, Certificate of Deposit or Cash Collateral to be a Qualified Pledge (regardless of the characterization of the Transition Account or any Accounts, Certificates of Deposit or Cash Collateral as deposit accounts, instruments or general intangibles under the UCC), unless: (I) such failure would not exist but for a breach of this Agreement by Agent or a breach of a Deposit Taker's Acknowledgment and Agreement by a Deposit Taker, or (II) within five Business Days after Extreme becomes aware of such failure, Extreme shall (1) notify Agent, BNPLC and the Participants of such failure, and (2) cure such failure, and (3) to the extent required by Section 7.2.9, pay to BNPLC any additional Base Rent that has accrued under the Land Lease because of (or that would have accrued if BNPLC had been aware of) such failure, together with interest at the Default Rate on any such additional Base Rent; (d) the failure of any representation herein by Extreme to be true (other than a failure described in another clause of this definition of Event of Default), if such failure is not cured within thirty days after Extreme receives written notice thereof from Agent; -3- (e) the failure of any representation made by Extreme in subsection 7.1.1 to be true, if within fifteen (15) days after Extreme becomes aware of such failure, Extreme does not (1) notify Agent, BNPLC and the Participants of such failure, and (2) cure such failure, and (3) pay to BNPLC any additional Base Rent that has accrued under the Land Lease because of (or that would have accrued if BNPLC had been aware of) such failure, and (4) pay to BNPLC interest at the Default Rate on any such additional Base Rent; (f) the failure by Extreme timely and properly to observe, keep or perform any covenant, agreement, warranty or condition herein required to be observed, kept or performed (other than a failure described in another clause of this definition of Event of Default), if such failure is not cured within thirty days after Extreme receives written notice thereof from Agent; and (g) the failure by BNPLC to pay when due on or after the Designated Sale Date any of BNPLC's Corresponding Obligations to Participants, after giving effect to any applicable notice and grace periods expressly provided for in the Participation Agreement. Notwithstanding the foregoing, if ever the aggregate Value of Cash Collateral held by Agent and the Deposit Takers exceeds the Minimum ------- Collateral Value then in effect, a failure of the pledge or security interest contemplated herein in such excess Cash Collateral to be a valid, ----------- perfected, first priority pledge or security interest shall not constitute an Event of Default under this Agreement. Accordingly, to provide a cure as required to avoid an Event of Default under clauses (c) or (e) of this definition, Extreme could deliver additional Cash Collateral - the pledge of which or security interest in which created by this Agreement is a Qualified Pledge - sufficient in amount to cause the aggregate Value of the Cash Collateral then held by Agent and the Deposit Takers subject to a Qualified Pledge hereunder to equal or exceed the Minimum Collateral Value. "Extreme" shall have the meaning given to that term in the introductory paragraph hereof. "Extreme's Purchase Agreement Obligations" shall mean all of Extreme's obligations under the Purchase Agreement, including (i) Extreme's obligation to pay any Supplemental Payment as required under subparagraph ------------ 1(A) of the Purchase Agreement, and (ii) any damages incurred by BNPLC ---- because of (A) Extreme's breach of the Purchase Agreement or (B) the rejection by Extreme of the Purchase Agreement in any bankruptcy or insolvency proceeding. "Initially Qualified Deposit Taker" means (1) BNP PARIBAS, acting through any branch, office or agency that can lawfully maintain an Account as a Deposit Taker hereunder, and (2) any of the fifty largest (measured by total assets) U.S. banks, or one of the one hundred largest (measured by total assets) banks in the world, with debt ratings of at least (i) A- (in the case of long term debt) and A-1 (in the case of short term debt) or the equivalent thereof by Standard and Poor's Corporation, and (ii) A3 (in the case of long term debt) and P-2 (in the case of short term debt) or the equivalent thereof by Moody's Investor Service, Inc. The parties believe it improbable that the ratings systems used by Standard and Poor's Corporation and by Moody's Investor Service, Inc. will be discontinued or changed, but if such ratings systems are discontinued or changed, Extreme shall be entitled to select and use a comparable ratings systems as a substitute for the S&P Rating or the Moody Rating, as the case may be, for purposes of determining the status of any bank as an Initially Qualified Deposit Taker. "Lien" shall mean, with respect to any property or assets, any right or interest therein of a creditor to secure indebtedness of any kind which is owed to him or any other arrangement with such creditor which provides for the payment of such indebtedness out of such property or assets -4- or which allows him to have such indebtedness satisfied out of such property or assets prior to the general creditors of any owner thereof, including any lien, mortgage, security interest, pledge, deposit, production payment, rights of a vendor under any title retention or conditional sale agreement or lease substantially equivalent thereto, tax lien, mechanic's or materialman's lien, or any other charge or encumbrance for security purposes, whether arising by law or agreement or otherwise, but excluding any right of setoff which arises without agreement in the ordinary course of business. "Lien" also means any filed financing statement, any registration with an issuer of uncertificated securities, or any other arrangement which would serve to perfect a Lien described in the preceding sentence, regardless of whether such financing statement is filed, such registration is made, or such arrangement is undertaken before or after such Lien exists. "Material Lease Default" shall mean any of the following: (1) any "Event of Default" under and as defined in the Land Lease, including any such Event of Default consisting of a failure of Extreme to comply with the requirements of Schedule I attached to the ---------- Land Lease; and (2)(a) any failure of Extreme to make any payment required by and when first due under the Land Lease, regardless of whether any period provided in the Land Lease for the cure of such failure by Extreme shall have expired, and (b) any other default, event or condition which would, with the giving of any requisite notices and the passage of any requisite periods of time, constitute an "Event of Default" under and as defined in the Land Lease, if such other default, event or failure involves a material noncompliance with Applicable Law. (For purposes of this definition, "material" noncompliance with Applicable Law will include any noncompliance, the correction of which has been requested by a governmental authority, or because of which a threat of action against the Property or BNPLC has been asserted by a governmental authority.) "Minimum Collateral Percentage" shall mean the percentage established as such from time to time as described in Part III of Schedule 1. ---------- "Minimum Collateral Value" shall mean (1) as of the Designated Sale Date or any prior date, an amount equal to the Collateral Percentage multiplied by the Stipulated Loss Value determined as of that date in accordance with the Land Lease; and (2) as of any date after the Designated Sale Date, an amount equal to the Break Even Price plus any unpaid interest accrued on past due amounts payable pursuant to Paragraph 1(a) of the Purchase Agreement. "Notice of Security Interest" shall have the meaning given to that term in subsection 4.1.1 hereof. "Other Liable Party" shall mean any Person, other than Extreme, who may now or may at any time hereafter be primarily or secondarily liable for any of the Secured Obligations or who may now or may at any time hereafter have granted to Agent a pledge of or security interest in any of the Collateral. "Participants" shall mean BNPLC's Parent and any other financial institutions which may hereafter become parties to (i) this Agreement by completing, executing and delivering to Extreme and Agent a Supplement, and (ii) the Participation Agreement. "Participation Agreement" shall have the meaning given to such term in Recital B hereof. --------- -5- "Percentage" shall mean with respect to each Participant and the Deposit Taker for such Participant, such Participant's "Percentage" under and as defined in the Participation Agreement for purposes of computing such Participant's right thereunder to receive payments of (or amounts equal to a percentage of) any sales proceeds or Supplemental Payment received by BNPLC under the Purchase Agreement. Percentages may be adjusted from time to time as provided in the Participation Agreement or as provided in supplements thereto executed as provided in the Participation Agreement. "Qualified Pledge" means a pledge or security interest that constitutes a valid, perfected, first priority pledge or security interest. "Secured Obligations" shall mean and include both Extreme's Purchase Agreement Obligations and BNPLC's Corresponding Obligations to Participants. "Supplement" shall mean a supplement to this Agreement in the form of ATTACHMENT 2. ------------ "Transaction Documents" shall mean, collectively, this Agreement, the Land Lease, the Purchase Agreement and the Participation Agreement. "Transition Account" shall have the meaning given it in Section 5.2. "UCC" shall mean the Uniform Commercial Code as in effect in the State of California from time to time, and the Uniform Commercial Code as in effect in any other jurisdiction which governs the perfection or non- perfection of the pledge of and security interests in the Collateral created by this Agreement. "Value" shall mean with respect to any Account, Certificate of Deposit or Cash Collateral on any date, a dollar value determined as follows (without duplication): (a) cash shall be valued at its face amount on such date; (b) an Account shall be valued at the principal balance thereof on such date; and (c) a Certificate of Deposit shall be valued at the face amount thereof. Section 1.3 Attachments. All attachments to this Agreement are a part ----------- hereof for all purposes. Section 1.4 Amendment of Defined Instruments. Unless the context otherwise -------------------------------- requires or unless otherwise provided herein, references in this Agreement to a particular agreement, instrument or document (including references to the Land Lease, Purchase Agreement and Participation Agreement) also refer to and include all valid renewals, extensions, amendments, modifications, supplements or restatements of any such agreement, instrument or document; provided that nothing contained in this Section shall be construed to authorize any Person to execute or enter into any such renewal, extension, amendment, modification, supplement or restatement. Section 1.5 References and Titles. All references in this Agreement to --------------------- Attachments, Articles, Sections, subsections, and other subdivisions refer to the Attachments, Articles, Sections, subsections and other subdivisions of this Agreement unless expressly provided otherwise. Titles appearing at the -6- beginning of any subdivision are for convenience only and do not constitute any part of any such subdivision and shall be disregarded in construing the language contained in this Agreement. The words "this Agreement", "herein", "hereof", "hereby", "hereunder" and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The phrases "this Article," "this Section" and "this subsection" and similar phrases refer only to the Articles, Sections or subsections hereof in which the phrase occurs. The word "or" is not exclusive, and the word "including" (in all of its forms) means "including without limitation". Pronouns in masculine, feminine and neuter gender shall be construed to include any other gender, and words in the singular form shall be construed to include the plural and vice versa unless the context otherwise requires. ARTICLE II SECURITY INTEREST Section 2.1 Pledge and Grant of Security Interest. As security for the ------------------------------------- Secured Obligations, Extreme hereby pledges and assigns to Agent (for the ratable benefit of BNPLC and the Participants) and grants to Agent (for the ratable benefit of BNPLC and the Participants) a continuing security interest and lien in and against all right, title and interest of Extreme in and to the following property, whether now owned or hereafter acquired by Extreme (collectively and severally, the "Collateral"): (a) All Cash Collateral, all Accounts, the Transition Account and all Certificates of Deposit issued from time to time and general intangibles arising therefrom or relating thereto (however, "general intangibles" as used in this clause shall not include any general intangibles not related to Cash Collateral, Accounts, the Transition Account or Certificates of Deposit issued from time to time, and thus will not include, without limitation, any intellectual property of Extreme); and all documents, instruments and agreements evidencing the same; and all extensions, renewals, modifications and replacements of the foregoing; and any interest or other amounts payable in connection therewith; and (b) All proceeds of the foregoing (including whatever is receivable or received when Collateral or proceeds is invested, sold, collected, exchanged, returned, substituted or otherwise disposed of, whether such disposition is voluntary or involuntary, including rights to payment and return premiums and insurance proceeds under insurance with respect to any Collateral, and all rights to payment with respect to any cause of action affecting or relating to the Collateral). The pledge, assignment and grant of a security interest made by Extreme hereunder is for security of the Secured Obligations only; the parties to this Agreement do not intend that Extreme's delivery of the Collateral to Agent as herein provided will constitute an advance payment of any Secured Obligations or liquidated damages, nor do the parties intend that the Collateral increase the dollar amount of the Secured Obligations. Section 2.2 Return of Collateral After the Secured Obligations are ------------------------------------------------------ Satisfied in Full. If any proceeds of Collateral remain after all Secured ----------------- Obligations have been paid in full, Agent will deliver or direct the Deposit Takers to deliver such proceeds to Extreme or other Persons entitled thereto by law. ARTICLE III DETERMINATION OF THE COLLATERAL PERCENTAGE Section 3.1 Determination of the Collateral Percentage Generally. ---------------------------------------------------- Effective as of the date of this Agreement, and until a new Collateral Percentage becomes effective, the Collateral Percentage is 100%. Subject to the provisions of this Article III, Extreme may from time to time designate a new Collateral Percentage which is any multiple of 10% from 0% to 100% (i.e., 0%, 10%, 20%, 30%, etc.) by written notice delivered to Agent, BNPLC and the Participants in the form of ATTACHMENT 3. Any new Collateral Percentage so ------------ designated shall not become effective, however, until the commencement of the -7- next following Base Rent Period which is at least ten Business Days after the receipt of such notice by Agent, BNPLC and the Participants. Further, if Extreme provides more than one notice of a change in the Collateral Percentage to be effective on a the first day of a particular Base Rent Period, then the latest such notice from Extreme which satisfies the requirements of the preceding sentence (and of Sections 3.2 and 3.3) will control. Without limiting mandatory changes in the Collateral Percentage required by Section 3.3, in no event shall the Collateral Percentage be changed more often than once in any calendar quarter because of any election by Extreme to designate a new Collateral Percentage as provided in this Section. After any Collateral Percentage becomes effective as provided in this Article, it shall remain in effect until a different Collateral Percentage becomes effective as provided in this Article. Section 3.2 Limitations on Extreme's Right to Lower the Collateral ------------------------------------------------------ Percentage. Notwithstanding the foregoing, no designation by Extreme of a new ---------- Collateral Percentage will be effective to reduce the Collateral Percentage if the designation is given, or the reduction would otherwise become effective, on or after the Designated Sale Date or when any of the following shall have occurred and be continuing: 3.2.1 any Material Lease Default; 3.2.2 any Event of Default under and as defined in this Agreement; 3.2.3 any Default under and as defined in this Agreement -excluding, however, any such Default limited to a failure of Extreme described in clause (c) or clause (e) of the definition of Event of Default above, with respect to which the time for cure specified in clause (c) or clause (e), as applicable, has not expired. Section 3.3 Minimum Collateral Percentages Dependent Upon the Adjusted ---------------------------------------------------------- EBITDAR Coverage Ratio. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN ---------------------- CONTAINED, THE COLLATERAL PERCENTAGE SHALL NOT BE LESS THAN THE MINIMUM COLLATERAL PERCENTAGE ESTABLISHED FROM TIME TO TIME AS DESCRIBED IN PART III OF SCHEDULE 1. Accordingly, and because a new Base Rent Period will begin on the ---------- first Business Day of the first calendar month following any Failed Collateral Test Date as provided in subparagraph 3(c)(ii)a) of the Land Lease, Extreme ----------------------- shall be required by Section 5.1 to deliver additional Collateral on the first Business Day of the first calendar month after any Failed Collateral Test Date. ARTICLE IV PROVISIONS CONCERNING DEPOSIT TAKERS Section 4.1 Qualification of Deposit Takers Generally. Agent may decline ----------------------------------------- to deposit or maintain Collateral hereunder with any Person designated as a Deposit Taker, if such Person has failed to satisfy or no longer satisfies the following requirements: 4.1.1 Such Person must have received from Agent and Extreme a completed, executed Notice of Security Interest in the form of ATTACHMENT 4 ------------ (a "Notice of Security Interest") which specifically identifies any and all Accounts in which such Person shall hold Cash Collateral delivered to it pursuant to this Agreement and which designates Account Offices with respect to all such Accounts in New York or California. 4.1.2 Such Person must have executed the Acknowledgment and Agreement at the end of such Notice of Security Interest (the "Deposit Taker's Acknowledgment and Agreement") and returned the same to Agent. Further, such Person must have complied with the Deposit Taker's Acknowledgment and Agreement, and the representations set forth therein with respect to such Person must continue to be true and correct. -8- 4.1.3 Such Person must be a commercial bank, organized under the laws of the United States of America or a state thereof or under the laws of another country which is doing business in the United States of America; must be authorized to maintain deposit accounts for others through Account Offices in New York or California (as specified in the Deposit Taker's Acknowledgment and Agreement); and must be an Affiliate of BNPLC or the Participant for whom such Person will act as Deposit Taker or must have a combined capital, surplus and undivided profits of at least $500,000,000. 4.1.4 Such Person must have complied with the provisions in this Agreement applicable to Deposit Takers, including the provisions of Section 5.4 concerning the issuance and redemption of Certificates of Deposit. Section 4.2 Existing Deposit Takers. BNPLC's Parent (as Deposit Taker for ----------------------- itself and for BNPLC) has received a Notice of Security Agreement dated the Effective Date and has responded to such a notice with a Deposit Taker's Acknowledgment and Agreement dated the Effective Date, as contemplated in subsections 4.1.1 and 4.1.2. Section 4.3 Replacement of Participants Proposed by Extreme. So long as no ----------------------------------------------- Event of Default has occurred and is continuing, BNPLC shall not unreasonably withhold its approval for a substitution under the Participation Agreement of a new Participant proposed by Extreme for any Participant, the Deposit Taker for whom would no longer meet the requirements for an Initially Qualified Deposit Taker; provided, however, that (A) the proposed substitution can be accomplished without a release or breach by BNPLC of its rights and obligations under the Participation Agreement; (B) the new Participant will agree (by executing a Supplement and a supplement to the Participation Agreement as contemplated therein and by other agreements as may be reasonably required by BNPLC and Extreme) to become a party to the Participation Agreement and to this Agreement, to designate an Initially Qualified Deposit Taker as the Deposit Taker for it under this Agreement and to accept a Percentage under the Participation Agreement equal to the Percentage of the Participant to be replaced; (C) the new Participant (or Extreme) will provide the funds required to pay the termination fee by Section 6.4 of the Participation Agreement to accomplish the ----------- substitution; (D) Extreme (or the new Participant) agrees in writing to indemnify and defend BNPLC for any and all Losses incurred by BNPLC in connection with or because of the substitution, including the cost of preparing supplements to the Participation Agreement and this Agreement and including any cost of defending and paying any claim asserted by the Participant to be replaced because of the substitution (but not including any liability of BNPLC to such Participant for damages caused by BNPLC's bad faith or gross negligence in the performance of BNPLC's obligations under the Participation Agreement prior to the substitution); (E) the new Participant shall be a reputable financial institution having a net worth of no less than seven and one half percent (7.5%) of total assets and total assets of no less than $10,000,000,000.00 (all according to then recent audited financial statements); and (F) in no event will BNPLC be required to approve a substitution pursuant to this Section 4.3 which will replace a Participant that is an Affiliate of BNPLC. BNPLC shall attempt in good faith to assist (and cause BNPLC's Parent to attempt in good faith to assist) Extreme in identifying a new Participant that Extreme may propose to substitute for an existing Participant pursuant to this Section, as Extreme may reasonably request from time to time. However, in no event shall BNPLC itself, or any of its Affiliates, be required to take the Percentage of any Participant to be replaced. Section 4.4 Mandatory Substitution for Disqualified Deposit Takers. If any ------------------------------------------------------ Deposit Taker shall cease to satisfy the requirements set forth in Section 4.1, the party for whom such Disqualified Deposit Taker has been designated as Deposit Taker (i.e., BNPLC or the applicable Participant) shall promptly (1) provide notice thereof to Agent and Extreme, and (2) designate a substitute Deposit Taker and cause the substitute to satisfy the requirements set forth in Section 4.1. Pending the designation of the substitute and the satisfaction by it of the requirements set forth in Section 4.1, Agent may withdraw Collateral held by -9- the Disqualified Deposit Taker and deposit such Collateral with other Deposit Takers, subject to Section 5.3 below. Section 4.5 Voluntary Substitution of Deposit Takers. With the written ---------------------------------------- approval of Agent, which approval will not be unreasonably withheld, BNPLC or any Participant may at any time designate for itself a new Deposit Taker (in replacement of any prior Deposit Taker acting for it hereunder); provided, the Person so designated has satisfied the requirements set forth in Section 4.1; and, provided further, unless the designation of a new Deposit Taker is required by Section 4.4 to replace a Disqualified Deposit Taker, at the time of the replacement such Person must be an Initially Qualified Deposit Taker. Section 4.6 Delivery of Notice of Security Interest by Extreme and ------------------------------------------------------ Agent. To the extent required for the designation of a new Deposit Taker by ----- BNPLC or any Participant pursuant to Section 4.5, or to permit the substitution or replacement of a Deposit Taker for BNPLC or any Participant as provided in Sections 4.4 and 4.5, Extreme and Agent shall promptly execute and deliver any properly completed Notice of Security Interest requested by BNPLC or the applicable Participant. Section 4.7 Constructive Possession of Collateral. The possession by a ------------------------------------- Deposit Taker of any deposit accounts, money, instruments, chattel paper or other property constituting Collateral or evidencing Collateral shall be deemed to be possession by Agent or a person designated by Agent, for purposes of perfecting the security interest granted to Agent hereunder pursuant to the UCC or other Applicable Law; and notifications to a Deposit Taker by other Persons holding any such property, and Acknowledgments, receipts or confirmations from any such Persons delivered to a Deposit Taker, shall be deemed notifications to, or Acknowledgments, receipts or confirmations from, financial intermediaries, bailees or agents (as applicable) of such Deposit Taker for the benefit of Agent for the purposes of perfecting such security interests under Applicable Law. Section 4.8 Attempted Setoff by Deposit Takers. By delivery of a ---------------------------------- Deposit Taker's Acknowledgment and Agreement, each Deposit Taker shall be required to agree not to setoff or attempt a setoff, without in each case first -------------------------- obtaining the prior written authorization of Agent, Secured Obligations owed to -------------------------------------------------- it against any Collateral held by it from time to time. Further, by delivery of a Deposit Taker's Acknowledgment and Agreement, each Deposit Taker shall be required to agree not to setoff or attempt a setoff, without in each case first -------------------------- obtaining the prior written authorization of both Extreme and Agent, obligations ------------------------------------------------------------------- owed to it other than Secured Obligations against any Collateral held by it from time to time. Any Deposit Taker for BNPLC or a Participant shall not be permitted by BNPLC or the applicable Participant, as the case may be, to violate such agreements. However, Extreme acknowledges and agrees (without limiting its right to recover damages from a Deposit Taker that violates such agreements) that Agent shall not be responsible for, or be deemed to have taken any action against Extreme because of, any Deposit Taker's violation of such agreements; and, neither BNPLC nor any Participant shall be responsible for, or be deemed to have taken any action against Extreme because of, any violation of such agreements by a Deposit Taker for another party. Section 4.9 Deposit Taker Losses. Agent shall not be responsible for -------------------- any Deposit Taker Losses. However, Deposit Taker Losses with respect to a Deposit Taker for a particular Participant shall reduce the amount of BNPLC's Corresponding Obligations to Participants which are payable to such Participant as provided in Section 2.2 of the Participation Agreement. Further, when Deposit ----------- Taker Losses with respect to a Deposit Taker for a particular Participant are incurred in excess of the payments of Secured Obligations that such Participant would then have been entitled to receive under the Participation Agreement but for such Deposit Taker Losses, such Participant must immediately pay the excess to Agent as additional Collateral hereunder, failing which Extreme may recover any damages suffered by it because of the Deposit Taker Losses from such Deposit Taker or such Participant. -10- Section 4.10 Losses Resulting from Failure of Deposit Taker to Comply -------------------------------------------------------- with this Agreement. Any Participant, the Deposit Taker for whom has failed to ------------------- comply with the requirements of this Agreement or any Notices of Security Interest and any Deposit Taker's Acknowledgments and Agreements (the "Responsible Participant") must defend, indemnify, and hold harmless BNPLC, Agent and the other Participants from and against any Losses resulting from such failure. Without limiting the foregoing, if the failure of a Deposit Taker for a Responsible Participant to comply strictly with the terms of this Agreement (including, without limitation, the provisions of Section 5.4 concerning the issuance and redemption of Certificates of Deposit and the requirement that any cash deposits be held in a deposit account located in either New York or California) causes, in whole or in part, the security interest of Agent in the Collateral held by such Deposit Taker to be unperfected, then any and all Losses suffered as a result of such nonperfection shall be borne solely by the Responsible Participant and shall not be shared by BNPLC, Agent or the other Participants. ARTICLE V DELIVERY AND MAINTENANCE OF CASH COLLATERAL Section 5.1 Delivery of Funds by Extreme. On the first day of any Base ---------------------------- Rent Period, and on any other date designated in a notice given by Agent to Extreme at least three Business Days prior to the date so designated, Extreme must deliver to Agent, subject to the pledge and security interest created hereby, funds as Cash Collateral then needed (if any) to cause the Value of the Collateral to be no less than the Minimum Collateral Value. Each delivery of funds required by the preceding sentence must be received by Agent no later than 12:00 noon (San Francisco time) on the date it is required; if received after 12:00 noon it will be considered for purposes of the Improvements Lease as received on the next following Business Day. At least five Business Days prior to the first day of any Base Rent Period upon which it is expected that Extreme will be required to deliver additional funds pursuant to this Section, Extreme shall notify BNPLC, Agent and each of the Participants thereof and of the amount Extreme expects to deliver to Agent as Cash Collateral on the applicable Base Rent Date. In addition to required deliveries of Cash Collateral as provided in the foregoing provisions, Extreme may on any date (whether or not the first day of a Base Rent Period) deliver additional Cash Collateral to Agent as necessary to prevent any Default from becoming an Event of Default. Upon receipt of any funds delivered to it by Extreme as Cash Collateral, Agent shall immediately deposit the same with the Deposit Takers in accordance with the requirements of Sections 5.3 and 5.4 below. Section 5.2 Transition Account. Pending deposit in the Accounts or ------------------ other application as provided herein, all Cash Collateral received by Agent shall be credited to and held by Agent in an account (the "Transition Account") styled "Extreme Collateral Account, held for the benefit of BNP Leasing Corporation and the Participants," separate and apart from all other property and funds of Extreme or other Persons, and no other property or funds shall be deposited in the Transition Account. The books and records of Agent shall reflect that the Transition Account and all Cash Collateral on deposit therein are owned by Extreme, subject to a pledge and security interest in favor of Agent for the benefit of BNPLC and Participants. Section 5.3 Allocation of Cash Collateral Among Deposit Takers. Funds -------------------------------------------------- received by Agent from Extreme as Cash Collateral will be allocated for deposit among the Deposit Takers as follows: first, to the extent possible the funds will be allocated as required ----- to rectify and prevent any Collateral Imbalance; and second, the funds will be allocated to the Deposit Taker for BNPLC, ------ unless the Deposit Taker for BNPLC has become a Disqualified Deposit Taker, in which case the funds will be allocated to other Deposit Takers who are not Disqualified Deposit Takers as Agent deems appropriate. -11- Further, if for any reason a Collateral Imbalance is determined by Agent to exist, Agent shall, as required to rectify or mitigate the Collateral Imbalance, promptly reallocate Collateral among Deposit Takers by withdrawing Cash Collateral from some Accounts and redepositing it in other Accounts. (If any party to this Agreement believes that the Value of the Accounts held by a particular Deposit Taker causes a Collateral Imbalance to exist, that party will promptly notify BNPLC, Extreme and Agent.) Subject to the foregoing, and provided that Agent does not thereby create or exacerbate a Collateral Imbalance, Agent may withdraw and redeposit Cash Collateral in order to reallocate the same among Deposit Takers from time to time as Agent deems appropriate. For purposes of illustration only, examples of the allocations required by this Section are set forth in ATTACHMENT 5. ------------ Section 5.4 Issuance and Redemption of Certificates of Deposit. Upon -------------------------------------------------- the receipt of any deposit of Cash Collateral from Agent, each Deposit Taker shall issue a Certificate of Deposit evidencing the Account into which such deposit is made and deliver such Certificate of Deposit to Agent for the benefit of BNPLC and the Participants. Each Certificate of Deposit shall be issued in an amount equal to the Value of the Account which it evidences and shall otherwise be in the form set forth as ATTACHMENT 1 to this Agreement. Upon depositing any ------------ Cash Collateral into an Account that is already evidenced by an outstanding Certificate of Deposit, Agent will surrender the outstanding Certificate of Deposit, and in exchange the Deposit Taker receiving the deposit will issue a new Certificate of Deposit, evidencing the total amount of Cash Collateral in the Account after the deposit. A Deposit Taker that has issued a Certificate of Deposit may require the surrender of the Certificate of Deposit as a condition to a withdrawal from the Account evidenced thereby, including any withdrawal required or permitted by this Agreement. Upon surrender of a Certificate of Deposit in connection with a withdrawal of less than all of the Cash Collateral in the Account evidenced thereby, the applicable Deposit Taker will concurrently issue a new Certificate of Deposit to Agent, evidencing the balance of the Cash Collateral remaining on deposit in the Account after the withdrawal. Notwithstanding the foregoing, if any Certificate of Deposit held by Agent shall be destroyed, lost or stolen, the Deposit Taker that issued the Certificate, upon the written request of Agent, shall issue a new Certificate of Deposit to Agent in lieu of and in substitution for the Certificate of Deposit so destroyed, lost or stolen. However, as applicant for the substitute Certificate of Deposit, Agent must indemnify (at no cost to Extreme) the applicable Deposit Taker against any liability on the Certificate of Deposit destroyed, lost or stolen, and Agent shall furnish to the Deposit Taker an affidavit of an officer of Agent setting forth the fact of destruction, loss or theft and confirming the status of Agent as holder of the Certificate of Deposit immediately prior to the destruction, loss or theft. If any Certificate of Deposit held by Agent shall become mutilated, the Deposit Taker that issued the Certificate, upon the written request of Agent, shall issue a new Certificate of Deposit to Agent in exchange and substitution for the mutilated Certificate of Deposit. Agent shall hold all Certificates of Deposit for the benefit of BNPLC and the Participants, subject to the pledge and security interest created hereby. Section 5.5 Status of the Accounts Under the Reserve Requirement ---------------------------------------------------- Regulations. Deposit Takers shall be permitted to structure the Accounts as ----------- nonpersonal time deposits under 12 C.F.R., Part II, Chapter 204 (commonly known as "Regulation D"). Accordingly, each Deposit Taker may require at least seven days advance notice of any withdrawal or transfer of funds from Accounts it maintains and may limit the number of withdrawals or transfers from such Accounts to no more than six in any calendar month, notwithstanding anything to the contrary herein or in any deposit agreement that Extreme and any Deposit Taker may enter into with respect to any Account. As necessary to satisfy the seven days notice requirement with respect to withdrawals by Agent when required by Extreme pursuant to the provisions below, Agent shall notify Deposit Takers promptly after receipt of any notice from Extreme described in subsection 6.1.2 or 6.2.1 or in Section 6.3. Section 5.6 Acknowledgment by Extreme that Requirements of this --------------------------------------------------- Agreement are Commercially Reasonable. Extreme acknowledges and agrees that the ------------------------------------- requirements set forth herein concerning receipt, -12- deposit, withdrawal, allocation, application and distribution of Cash Collateral by Agent, including the requirements and time periods set forth in the next Article, are commercially reasonable. ARTICLE VI WITHDRAWAL OF CASH COLLATERAL Extreme may not withdraw Cash Collateral, except as follows: Section 6.1 Withdrawal of Collateral Prior to the Designated Sale Date. ---------------------------------------------------------- Extreme may require Agent to present Certificates of Deposit for payment and withdraw Cash Collateral from Accounts on any date prior to the Designated Sale Date and to deliver such Cash Collateral to Extreme (which delivery shall be free and clear of all liens and security interests hereunder); provided, however, that in each case: 6.1.1 Such withdrawal and delivery of the Cash Collateral to Extreme will not cause the Value of the remaining Collateral to be less than the Minimum Collateral Value. 6.1.2 by a notice in the form of ATTACHMENT 6, Extreme must give ------------ Agent, BNPLC and the Participants notice of the required withdrawal at least ten days prior to the date upon which the withdrawal is to occur. 6.1.3 No Default or Event of Default shall have occurred and be continuing at the time Extreme gives the notice required by the preceding subsection or on the date upon which the withdrawal is required. 6.1.4 Extreme must pay to Agent any and all costs incurred by Agent in connection with the withdrawal. 6.1.5 Agent shall determine the Accounts from which to make any withdrawal required by Extreme pursuant to this Section as necessary to prevent or mitigate any Collateral Imbalance. Section 6.2 Withdrawal and Application of Cash Collateral to Reduce or ---------------------------------------------------------- Satisfy the Secured Obligations to the Participants. To reduce the "Break Even --------------------------------------------------- Price" or "Supplemental Payment" required under (and as defined in) the Purchase Agreement (and, thus, to reduce the Secured Obligations), Extreme may require Agent to withdraw Cash Collateral then held by or for Agent pursuant to this Agreement on the Designated Sale Date and to deliver the same on the Designated Sale Date or on any date thereafter prior to an Event of Default (which delivery shall be free and clear of all liens and security interests hereunder) directly to the Participants in proportion to their respective rights to payment of BNPLC's Corresponding Obligations to Participants and for application thereto or the reduction thereof pursuant to Section 2.2 of the Participation Agreement; ----------- provided, that: 6.2.1 by a notice in the form of ATTACHMENT 7, Extreme must have ------------ notified Agent, BNPLC and each of the Participants of the required withdrawal and payment to Participants at least ten days prior to the date upon which it is to occur; 6.2.2 the required withdrawal shall be made as determined by Agent, first, from the Accounts maintained by the Deposit Takers for the Participants, and then (to the extent necessary) from the Accounts maintained by the Deposit Taker for BNPLC; and 6.2.3 in any event, no withdrawals or payments directly to Participants shall be required by this Section 6.2 (or permitted over the objection of BNPLC) in excess of those required to satisfy BNPLC's Corresponding Obligations to Participants or to reduce such obligations to zero under the Participation Agreement. -13- Section 6.3 Withdrawal and Application of Cash Collateral to Reduce or ---------------------------------------------------------- Satisfy the Secured Obligations to BNPLC. To satisfy Extreme's Purchase ---------------------------------------- Agreement Obligations, Extreme may require Agent to withdraw any Cash Collateral held by the Deposit Taker for BNPLC pursuant to this Agreement on the Designated Sale Date and to deliver the same on the Designated Sale Date or on any date thereafter prior to an Event of Default (which delivery shall be free and clear of all liens and security interests hereunder) directly to BNPLC as a payment on behalf of Extreme of amounts due under the Purchase Agreement; provided, that by a notice in the form of ATTACHMENT 8, Extreme must have notified Agent and BNPLC of the required withdrawal and payment to BNPLC at least ten days prior to the date upon which it is to occur. Section 6.4 Withdrawal of Cash Collateral From Accounts Maintained by --------------------------------------------------------- Disqualified Deposit Takers. Extreme may from time to time prior to the --------------------------- Designated Sale Date (regardless of the existence of any Default or Event of Default) require Agent to withdraw any or all Cash Collateral from any Account maintained by a Disqualified Deposit Taker and deposit it, still subject to the pledge and grant of security interest hereunder, with other Deposit Takers who are not Disqualified Deposit Takers (in accordance with the requirements of Sections 5.3 and 5.4) on any date prior to the Designated Sale Date; provided, that by a notice in the form of ATTACHMENT 9, Extreme must have notified Agent, BNPLC and each of the Participants of the required withdrawal at least ten days prior to the date upon which it is to occur. ARTICLE VII REPRESENTATIONS AND COVENANTS OF EXTREME Section 7.1 Representations of Extreme. Extreme represents to BNPLC, Agent -------------------------- and the Participants as follows: 7.1.1 Extreme is the legal and beneficial owner of the Collateral (or, in the case of after-acquired Collateral, at the time Extreme acquires rights in the Collateral, will be the legal and beneficial owner thereof). No other Person has (or, in the case of after-acquired Collateral, at the time Extreme acquires rights therein, will have) any right, title, claim or interest (by way of Lien, purchase option or otherwise) in, against or to the Collateral, except for rights created hereunder. 7.1.2 Agent has (or in the case of after-acquired Collateral, at the time Extreme acquires rights therein, will have) a valid, first priority, perfected pledge of and security interest in the Collateral, regardless of the characterization of the Collateral as deposit accounts, instruments or general intangibles under the UCC, but assuming that the representations of each Deposit Taker in its Deposit Taker's Acknowledgment and Agreement are true. 7.1.3 Extreme has delivered to Agent, together with all necessary stock powers, endorsements, assignments and other necessary instruments of transfer, the originals of all documents, instruments and agreements evidencing Accounts, Certificates of Deposit or Cash Collateral. 7.1.4 Extreme's chief executive office is located at the address of Extreme set forth in Article II of the Common Definitions and Provisions Agreement (Land) or at another address in California specified in a notice that Extreme has given to Agent as required by Section 7.2.4. 7.1.5 To the knowledge of Extreme, neither the ownership or the intended use of the Collateral by Extreme, nor the pledge of Accounts or the grant of the security interest by Extreme to Agent herein, nor the exercise by Agent of its rights or remedies hereunder, will (i) violate any provision of (a) Applicable Law, (b) the articles or certificate of incorporation, charter or bylaws of Extreme, or (c) any agreement, judgment, license, order or permit applicable to or binding upon Extreme, or (ii) result in or require the creation of any Lien, charge or encumbrance upon any -14- assets or properties of Extreme except as expressly contemplated in this Agreement. Except as expressly contemplated in this Agreement, to the knowledge of Extreme no consent, approval, authorization or order of, and no notice to or filing with any court, governmental authority or third party is required in connection with the pledge or grant by Extreme of the security interest contemplated herein or the exercise by Agent of its rights and remedies hereunder. Section 7.2 Covenants of Extreme. Extreme hereby agrees as follows: -------------------- 7.2.1 Extreme, at Extreme's expense, shall promptly procure, execute and deliver to Agent all documents, instruments and agreements and perform all acts which are necessary, or which Agent may reasonably request, to establish, maintain, preserve, protect and perfect the Collateral, the pledge thereof to Agent or the security interest granted to Agent therein and the first priority of such pledge or security interest or to enable Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the preceding sentence, Extreme shall (A) procure, execute and deliver to Agent all stock powers, endorsements, assignments, financing statements and other instruments of transfer requested by Agent, (B) deliver to Agent promptly upon receipt all originals of Collateral consisting of instruments, documents and chattel paper, (C) cause the security interest of Agent in any Collateral consisting of securities to be recorded or registered in the books of any financial intermediary or clearing corporation requested by Agent, and (D) reimburse Agent upon request for any legal opinion Agent may elect to obtain from a nationally recognized commercial law firm authorized to practice in New York concerning the enforceability, first priority and perfection of Agent's security interest in any Collateral maintained in New York, if BNPLC or any Participant should at any time elect to use a Deposit Taker that will maintain one or more Accounts in New York. 7.2.2 Extreme shall not use or consent to any use of any Collateral in violation of any provision of this Agreement or any other Transaction Document or any Applicable Law. 7.2.3 Extreme shall pay promptly when due all taxes and other governmental charges, all Liens and all other charges now or hereafter imposed upon, relating to or affecting any Collateral. 7.2.4 Without thirty days' prior written notice to Agent, Extreme shall not change Extreme's name or place of business (or, if Extreme has more than one place of business, its chief executive office). 7.2.5 Extreme shall appear in and defend, on behalf of Agent, any action or proceeding which may affect Extreme's title to or Agent's interest in the Collateral. 7.2.6 Subject to the express rights of Extreme under Article VI, Extreme shall not surrender or lose possession of (other than to Agent or a Deposit Taker pursuant hereto), sell, encumber, lease, rent, option, or otherwise dispose of or transfer any Collateral or right or interest therein, and Extreme shall keep the Collateral free of all Liens. 7.2.7 Extreme will not take any action which would in any manner impair the value or enforceability of Agent's pledge of or security interest in any Collateral, nor will Extreme fail to take any action which is required to prevent (and which Extreme knows is required to prevent) an impairment of the value or enforceability of Agent's pledge of or security interest in any Collateral. 7.2.8 Extreme shall pay (and shall indemnify and hold harmless Agent from and against) all Losses incurred by Agent in connection with or because of (A) the interest acquired by Agent in any Collateral pursuant to this Agreement, or (B) the negotiation or administration of this Agreement, whether such Losses are incurred at the time of execution of this Agreement or at any -15- time in the future. Costs and expenses included in such Losses may include, without limitation, all filing and recording fees, taxes, UCC search fees and Attorneys' Fees incurred by Agent with respect to the Collateral. 7.2.9 Without limiting the foregoing, within five Business Days after Extreme becomes aware of any failure of the pledge or security interest contemplated herein in the Transition Account or any Account, Certificate of Deposit or Cash Collateral to be a valid, perfected, first priority pledge or security interest (regardless of the characterization of the Transition Account or any Accounts, Certificates of Deposit or Cash Collateral as deposit accounts, instruments or general intangibles under the UCC), Extreme shall notify Agent, BNPLC and the Participants of such failure. In addition, if the failure would not exist but for Extreme's delivery of Cash Collateral to Agent subject to prior Liens or other claims by one or more third parties, or but for the grant by Extreme itself of any Lien or other interest in the Collateral to one or more third parties, then, in addition to any other remedies available to BNPLC or Agent under the circumstances, Extreme must pay to BNPLC any additional Base Rent that has accrued under the Land Lease because of (or that would have accrued if BNPLC had been aware of) the failure, together with interest at the Default Rate on any such additional Base Rent. ARTICLE VIII AUTHORIZED ACTION BY AGENT Section 8.1 Power of Attorney. Extreme hereby irrevocably appoints Agent as ----------------- Extreme's attorney-in-fact for the purpose of authorizing Agent to perform (but Agent shall not be obligated to and shall incur no liability to Extreme or any third party for failure to perform) any act which Extreme is obligated by this Agreement to perform, and to exercise, consistent with the other provisions of this Agreement, such rights and powers as Extreme might exercise with respect to the Collateral during any period in which a Default or Event of Default has occurred and is continuing, including the right to (a) collect by legal proceedings or otherwise and endorse, receive and receipt for all dividends, interest, payments, proceeds and other sums and property now or hereafter payable on or on account of the Collateral; (b) enter into any extension, reorganization, deposit, merger, consolidation or other agreement pertaining to, or deposit, surrender, accept, hold or apply other property in exchange for the Collateral; (c) insure, process, preserve and enforce the Collateral; (d) make any compromise or settlement, and take any action it deems advisable, with respect to the Collateral; (e) pay any indebtedness of Extreme relating to the Collateral; and (f) execute UCC financing statements and other documents, instruments and agreements required hereunder. Extreme agrees that such care as Agent gives to the safekeeping of its own property of like kind shall constitute reasonable care of the Collateral when in Agent's possession; provided, however, -------- ------- that Agent shall not be obligated to Extreme to give any notice or take any action to preserve rights against any other Person in connection with the Secured Obligations or with respect to the Collateral. ARTICLE IX DEFAULT AND REMEDIES Section 9.1 Remedies. In addition to all other rights and remedies granted -------- to Agent, BNPLC or the Participants by this Agreement, the Land Lease, the Purchase Agreement, the Participation Agreement, the UCC and other Applicable Laws, Agent may, upon the occurrence and during the continuance of any Event of Default, exercise any one or more of the following rights and remedies, all of which will be in furtherance of its rights as a secured party under the UCC: (a) Agent may collect, receive, appropriate or realize upon the Collateral or otherwise foreclose or enforce the pledge of or security interests in any or all Collateral in any manner permitted by Applicable Law or in this Agreement; and -16- (b) Agent may notify any or all Deposit Takers to pay all or any portion of the Collateral held by such Deposit Taker(s) directly to Agent. Agent shall distribute the proceeds of all Collateral received by Agent after the occurrence of an Event of Default to BNPLC and the Participants for application to the Secured Obligations. If any proceeds of Collateral remain after all Secured Obligations have been paid in full, Agent will deliver or direct the Deposit Takers to deliver such proceeds to Extreme or other Persons entitled thereto. In any case where notice of any sale or disposition of any Collateral is required, Extreme hereby agrees that seven (7) Business Days notice of such sale or disposition is reasonable. ARTICLE X OTHER RECOURSE Section 10.1 Recovery Not Limited. To the fullest extent permitted by -------------------- applicable law, Extreme waives any right to require that Agent, BNPLC or the Participants proceed against any other Person, exhaust any Collateral or other security for the Secured Obligations, or to have any Other Liable Party joined with Extreme in any suit arising out of the Secured Obligations or this Agreement, or pursue any other remedy in their power. Extreme waives any and all notice of acceptance of this Agreement. Extreme further waives notice of the creation, modification, rearrangement, renewal or extension for any period of any of the Secured Obligations of any Other Liable Party from time to time and any defense arising by reason of any disability or other defense of any Other Liable Party or by reason of the cessation from any cause whatsoever of the liability of any Other Liable Party. Until all of the Secured Obligations shall have been paid in full, Extreme shall have no right to subrogation, reimbursement, contribution or indemnity against any Other Liable Party and Extreme waives the right to enforce any remedy which Agent, BNPLC or any Participant has or may hereafter have against any Other Liable Party, and waives any benefit of and any right to participate in any other security whatsoever now or hereafter held by Agent, BNPLC or any Participant. Extreme authorizes Agent, BNPLC and the Participants, without notice or demand and without any reservation of rights against Extreme and without affecting Extreme's liability hereunder or on the Secured Obligations, from time to time to (a) take or hold any other property of any type from any other Person as security for the Secured Obligations, and exchange, enforce, waive and release any or all of such other property, (b) after any Event of Default, apply or require the application of the Collateral (in accordance with this Agreement) or such other property in any order they may determine and to direct the order or manner of sale thereof as they may determine, (c) renew, extend for any period, accelerate, modify, compromise, settle or release any of the obligations of any Other Liable Party with respect to any or all of the Secured Obligations or other security for the Secured Obligations, and (d) release or substitute any Other Liable Party. ARTICLE XI PROVISIONS CONCERNING AGENT In the event of any conflict between the following and other provisions in this Agreement, the following will control: Section 11.1 Appointment and Authority. BNPLC and each Participant hereby ------------------------- irrevocably authorizes Agent, and Agent hereby undertakes, to take all actions and to exercise such powers under this Agreement as are specifically delegated to Agent by the terms hereof, together with all other powers reasonably incidental thereto. The relationship of Agent to the Participants is only that of one commercial bank acting as collateral agent for others, and nothing herein shall be construed to constitute Agent a trustee or other fiduciary for any Participant or anyone claiming through or under a Participant nor to impose on Agent duties and obligations other than those expressly provided for in this Agreement. With respect to any matters not expressly provided for in this Agreement and any matters which this Agreement places within the discretion of Agent, Agent shall not be required to exercise any discretion or take any action, and it may request instructions from BNPLC and Participants with respect to any such matter, in -17- which case it shall be required to act or to refrain from acting (and shall be fully protected and free from liability to all Participants in so acting or refraining from acting) upon the instructions of the Majority, as defined in the Participation Agreement, including itself as a Participant and BNPLC; provided, however, that Agent shall not be required to take any action which exposes it to a risk of personal liability that it considers unreasonable or which is contrary to this Agreement or the other documents referenced herein or to Applicable Law. Section 11.2 Exculpation, Agent's Reliance, Etc. Neither Agent nor any of ---------------------------------- its directors, officers, agents, attorneys, or employees shall be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement, INCLUDING THEIR NEGLIGENCE OF ANY KIND, except that each shall be liable for its own gross negligence or willful misconduct. Without limiting the generality of the foregoing, Agent (1) may treat the rights of any Participant under its Participation Agreement as continuing until Agent receives written notice of the assignment or transfer of those rights in accordance with such Participation Agreement, signed by such Participant and in form satisfactory to Agent; (2) may consult with legal counsel (including counsel for Extreme), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts, unless the action taken or omitted constitutes misconduct; (3) makes no warranty or representation and shall not be responsible for any statements, warranties or representations made in or in connection with this Agreement or the other documents referenced herein; (4) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of the Transaction Documents on the part of any party thereto, or to inspect the property (including the books and records) of any party thereto; (5) shall not be responsible to any Participant for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of any Transaction Document or any instrument or document furnished in connection therewith; (6) may rely upon the representations and warranties of Extreme, Participants and Deposit Takers in exercising its powers hereunder; and (7) shall incur no liability under or in respect of the Transaction Documents by acting upon any notice, consent, certificate or other instrument or writing (including any telecopy, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper Person or Persons. Section 11.3 Participant's Credit Decisions. Each Participant acknowledges ------------------------------ that it has, independently and without reliance upon Agent or any other Participant, made its own analysis of Extreme and the transactions contemplated hereby and its own independent decision to enter into the Transaction Documents to which it is a party. Each Participant also acknowledges that it will, independently and without reliance upon Agent or any other Participant and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Transaction Documents. Section 11.4 Indemnity. Each Participant agrees to indemnify Agent (to the --------- extent not reimbursed by Extreme within ten days after demand) from and against such Participant's Percentage of any and all Losses of any kind or nature whatsoever which to any extent (in whole or in part) may be imposed on, incurred by, or asserted against Agent growing out of, resulting from or in any other way associated with any of the Collateral, the Transaction Documents and the transactions and events (including the enforcement thereof) at any time associated therewith or contemplated therein. THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LOSSES ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT, PROVIDED ONLY THAT NO PARTICIPANT SHALL BE OBLIGATED UNDER THIS SECTION TO INDEMNIFY AGENT FOR THAT PORTION, IF ANY, OF ANY LOSS WHICH IS PROXIMATELY CAUSED BY AGENT'S OWN INDIVIDUAL GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, AS DETERMINED IN A -18- FINAL JUDGMENT RENDERED AGAINST AGENT. Cumulative of the foregoing, each Participant agrees to reimburse Agent promptly upon demand for such Participant's Percentage share of any costs and expenses to be paid to Agent by Extreme hereunder to the extent that Agent is not timely reimbursed by Extreme as provided in subsection 7.2.8. As used in this Section the term "Agent" shall refer not only to the Person designated as such in the introductory paragraph of this Agreement, but also to each director, officer, agent, attorney, employee, representative and Affiliate of such Person. Section 11.5 Agent's Rights as Participant and Deposit Taker. In its ----------------------------------------------- capacity as a Participant, BNP PARIBAS shall have the same rights and obligations as any Participant and may exercise such rights as though it were not Agent. In its capacity as a Deposit Taker, BNP PARIBAS shall have the same rights and obligations as any Deposit Taker and may exercise such rights as though it were not Agent. BNP PARIBAS and any of its Affiliates may accept deposits from, lend money to, act as Trustee under indentures of, and generally engage in any kind of business with Extreme or its Affiliates, all as if BNP PARIBAS were not designated as the Agent hereunder and without any duty to account therefor to any other Participant. Section 11.6 Investments. Whenever Agent in good faith determines that it ----------- is uncertain about how to distribute any funds which it has received hereunder, or whenever Agent in good faith determines that there is any dispute among BNPLC and Participants about how such funds should be distributed, Agent may choose to defer distribution of the funds which are the subject of such uncertainty or dispute. If Agent in good faith believes that the uncertainty or dispute will not be promptly resolved, or if Agent is otherwise required to invest funds pending distribution, Agent shall invest such funds pending distribution, all interest on any such investment shall be distributed upon the distribution of such investment and in the same proportion and to the same Persons as such investment. All moneys received by Agent for distribution to BNPLC or Participants shall be held by Agent pending such distribution solely as Agent hereunder, and Agent shall have no equitable title to any portion thereof. Section 11.7 Benefit of Article XI. The provisions of this Article (other --------------------- than the following Section 11.8) are intended solely for the benefit of Agent, BNPLC and Participants, and Extreme shall not be entitled to rely on any such provision or assert any such provision in a claim or defense against Agent, BNPLC or any Participant. Agent, BNPLC and Participants may waive or amend such provisions as they desire without any notice to or consent of Extreme. Section 11.8 Resignation. Agent may resign at any time by giving written ----------- notice thereof to BNPLC, Participants and Extreme. Upon any such resignation the Majority (as defined in the Participation Agreement) shall have the right to appoint a successor Agent, subject to Extreme's consent, such consent not to be unreasonably withheld. A successor must be appointed for any retiring Agent, and such Agent's resignation shall become effective when such successor accepts such appointment. If, within thirty days after the date of the retiring Agent's resignation, no successor Agent has been appointed and has accepted such appointment, then the retiring Agent may appoint a successor Agent, which shall be a commercial bank organized or licensed to conduct a banking or trust business under the laws of the United States of America or of any state thereof. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent's resignation hereunder, the provisions of this Article 10.1 shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent. -19- ARTICLE XII MISCELLANEOUS Section 12.1 Provisions Incorporated From Other Operative Documents. ------------------------------------------------------ Reference is made to the Common Definitions and Provisions Agreement (Land), to the Purchase Agreement and to the Participation Agreement for a statement of the terms thereof. Without limiting the generality of the foregoing, the provisions of Article II of the Common Definitions and Provisions Agreement (Land) are incorporated into this Agreement for all purposes as if set forth in this Article. Section 12.2 Cumulative Rights, etc. Except as herein expressly provided to ---------------------- the contrary, the rights, powers and remedies of Agent, BNPLC and the Participants under this Agreement shall be in addition to all rights, powers and remedies given to them by virtue of any Applicable Law, any other Document or any other agreement, all of which rights, powers, and remedies shall be cumulative and may be exercised successively or concurrently without impairing their respective rights hereunder. Extreme waives any right to require Agent, BNPLC or any Participant to proceed against any Person or to exhaust any Collateral or to pursue any remedy in Agent's, BNPLC's or such Participant's power. Section 12.3 Survival of Agreements. All representations and warranties of ---------------------- Extreme herein, and all covenants and agreements herein shall survive the execution and delivery of this Agreement, the execution and delivery of any other Transaction Documents and the creation of the Secured Obligations and continue until terminated or released as provided herein. Section 12.4 Other Liable Party. Neither this Agreement nor the exercise by ------------------ Agent or the failure of Agent to exercise any right, power or remedy conferred herein or by law shall be construed as relieving any Other Liable Party from liability on the Secured Obligations or any deficiency thereon. This Agreement shall continue irrespective of the fact that the liability of any Other Liable Party may have ceased or irrespective of the validity or enforceability of any other agreement evidencing or securing the Secured Obligations to which Extreme or any Other Liable Party may be a party, and notwithstanding the reorganization, death, incapacity or bankruptcy of any Other Liable Party, or any other event or proceeding affecting any Other Liable Party. Section 12.5 Termination. Following the Designated Sale Date, upon ----------- satisfaction in full of all Secured Obligations and upon written request for the termination hereof delivered by Extreme to Agent, (i) this Agreement and the pledge and security interest created hereby shall terminate and all rights to the Collateral shall revert to Extreme and (ii) Agent will, upon Extreme's request and at Extreme's expense execute and deliver to Extreme such documents as Extreme shall reasonably request to evidence such termination and release. [The signature pages follow.] -20- IN WITNESS WHEREOF, Extreme, BNPLC, Agent and the Participants whose signatures appear below have caused this Agreement to be executed as of June 1, 2000. "Extreme" EXTREME NETWORKS, INC. By:_________________________ Name:____________________ Title:___________________ [Continuation of signature pages to Pledge Agreement (Land) dated to be effective June 1, 2000] "BNPLC" BNP LEASING CORPORATION By: ____________________________ Lloyd G. Cox, Vice President [Continuation of signature pages to Pledge Agreement (Land) dated to be effective June 1, 2000] "AGENT" BNP PARIBAS By:_______________________ Name:__________________ Title:_________________ "PARTICIPANT" BNP PARIBAS By:_______________________ Name:__________________ Title:_________________ ATTACHMENT 1 TO PLEDGE AGREEMENT ------------------- CERTIFICATE OF DEPOSIT (No. _________) [---------, -----] [NAME OF THE ISSUING DEPOSIT TAKER AND THE ADDRESS OF ITS APPLICABLE ACCOUNT OFFICE] Payable to the order of: BNP PARIBAS, as Agent under the Pledge Agreement (Land) dated June 1, 2000, among Extreme Networks, Inc., BNP Leasing Corporation, BNP PARIBAS and any other financial institutions which are from time to time Participants under such Pledge Agreement (Land) and BNP PARIBAS, acting in its capacity as agent for BNPLC and the Participants Dollars ------------------------------------------------------------------------------- in current funds, without interest, seven days after presentment of this certificate properly endorsed. The bank issuing this certificate acknowledges and certifies that on the date indicated above the payee deposited the dollar amount indicated above, and that such amount shall be payable as provided above. _________________________ Authorized Signature ATTACHMENT 2 TO PLEDGE AGREEMENT ------------------- SUPPLEMENT TO PLEDGE AGREEMENT ------------------------------ [----------, ----] BNP PARIBAS _______________________ _______________________ _______________________ Extreme Networks, Inc. _______________________ _______________________ _______________________ 1. Reference is made to the Pledge Agreement (Land) (the "Pledge Agreement") dated June 1, 2000 among Extreme Networks, Inc. ("Extreme"), BNP Leasing Corporation ("BNPLC"), BNP PARIBAS and any other financial institutions which are from time to time Participants under such Pledge Agreement (collectively, the "Participants") and BNP PARIBAS, acting in its capacity as agent for BNPLC and the Participants (in such capacity, "Agent"). Unless otherwise defined herein, all capitalized terms used in this Supplement have the respective meanings given to those terms in the Pledge Agreement. 2. The undersigned hereby certifies to Agent and Extreme that the undersigned has become a party to the Participation Agreement by executing a supplement as provided therein and that its Percentage thereunder is ______%. 3. The undersigned, by executing and delivering this Supplement to Extreme and Agent, hereby agrees to become a party to the Pledge Agreement and agrees to be bound by all of the terms thereof applicable to Participants. The Deposit Taker for the undersigned shall be _________________, until such time as another Deposit Taker for the undersigned shall be designated in accordance with Sections 4.4 or 4.5 of the Pledge Agreement. The undersigned certifies to Agent and Extreme that such Deposit Taker is an Initially Qualified Deposit Taker and satisfies the requirements for a Deposit Taker set forth in Section 4.1 of the Pledge Agreement. IN WITNESS WHEREOF, the undersigned has executed this Supplement as of the day and year indicated above. [__________________________________________] By:_________________________________________ Name:_________________________________ Title:________________________________ ATTACHMENT 3 TO PLEDGE AGREEMENT ------------------- NOTICE OF EXTREME'S ELECTION TO CHANGE THE COLLATERAL PERCENTAGE ---------------------------------------------------------------- [---------, -----] BNP PARIBAS [address of BNP] Re: Pledge Agreement (Land) (the "Pledge Agreement") dated June 1, 2000 among -- Extreme Networks, Inc., BNP Leasing Corporation, BNP PARIBAS and any other financial institutions which are from time to time Participants under such Pledge Agreement and BNP PARIBAS, acting in its capacity as agent for BNPLC and the Participants Gentlemen: Capitalized terms used in this letter are intended to have the meanings assigned to them in the Pledge Agreement referenced above. This letter constitutes notice to you, as Agent under the Pledge Agreement, that pursuant to Section 3.1 of the Pledge Agreement, Extreme elects to change the Collateral Percentage to: __________ percent (___%), on the following Base Rent Date (which will be the first day of a new Base Rent Period): ----------, ---- Extreme expects that multiplying the new Collateral Percentage specified above against Stipulated Loss Value of: ____________________________ Dollars ($__________), will result in an expected new Minimum Collateral Value of: ____________________________ Dollars ($__________). [NOTE: THE NEXT PARAGRAPH WILL BE INCLUDED ONLY IN A NOTICE OF AN INCREASE IN THE COLLATERAL PERCENTAGE, BECAUSE OF WHICH EXTREME WILL BE REQUIRED TO DELIVER ADDITIONAL CASH COLLATERAL TO SATISFY THE MINIMUM COLLATERAL VALUE REQUIREMENTS IN SECTION 5.1 OF THE PLEDGE AGREEMENT: Because of the increase in the Collateral Percentage which will result from this notice and the corresponding increase in the Minimum Collateral Value, Extreme will deliver additional Cash Collateral to you as required by Section 5.1 of the Pledge Agreement no later than 12:00 noon (San Francisco time) on the Base Rent Date specified above, in the amount of: ____________________________ Dollars ($__________).] To assure you that Extreme has satisfied the conditions to its right to change the Collateral Percentage as provided in this notice, and to induce you to rely upon this notice in discharging your responsibilities under the Pledge Agreement, Extreme certifies to you that: 1. Extreme is giving this notice to you, BNPLC and the Participants at least ten Business Days prior to the Base Rent Date specified above, and such Base Rent Date is the commencement of a Base Rent Period. 2. No Event of Default or other event or circumstance that would, pursuant to Section 3.2 of the Pledge Agreement, preclude Extreme from designating the new Collateral Percentage above has occurred and is continuing, and Extreme does not anticipate that on the Base Rent Date specified above there will have occurred and be continuing any such Event of Default or other event or circumstance. 3. The new Collateral Percentage specified by Extreme above is not less than the Minimum Collateral Percentage currently in effect. NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE STATEMENTS ABOVE ARE ----- NOT CORRECT. HOWEVER, WE ASK THAT YOU NOTIFY EXTREME IMMEDIATELY IF FOR ANY REASON YOU BELIEVE THIS NOTICE IS DEFECTIVE. EXTREME NETWORKS, INC. By:____________________________________ Name:_____________________________ Title:____________________________ [cc BNPLC and all Participants] -2- ATTACHMENT 4 TO PLEDGE AGREEMENT ------------------- NOTICE OF SECURITY INTEREST --------------------------- [---------, -----] [Name of Deposit Taker] [Address of Deposit Taker] 1. Reference is made to the Pledge Agreement (Land) (the "Pledge Agreement") dated June 1, 2000 among Extreme Networks, Inc. ("Extreme"), BNP Leasing Corporation ("BNPLC"), BNP PARIBAS and any other financial institutions which are from time to time Participants under such Pledge Agreement (collectively, the "Participants") and BNP PARIBAS, acting in its capacity as agent for BNPLC and the Participants (in such capacity, "Agent"). Unless otherwise defined herein, all capitalized terms used in this Notice have the respective meanings given to those terms in the Pledge Agreement. 2. Extreme has informed Agent that Extreme has established with the addressee of this Notice (the "Deposit Taker") the following non-interest bearing Account(s) to be maintained at the following Account Office(s): Account Account Account Type Office Number ------------ ------- ------- Time Deposit _______ _______ Time Deposit _______ _______ Time Deposit _______ _______ Extreme has further informed Agent that Extreme intends to maintain Cash Collateral in such Account(s), and that to evidence such Account(s) and the amount of Cash Collateral held therein from time to time, Extreme has authorized the Deposit Taker to issue Certificates of Deposit payable to the order of Agent as provided in the Pledge Agreement. 3. Extreme and Agent hereby notify Deposit Taker that, pursuant to the Pledge Agreement, Extreme has granted to Agent, for the ratable benefit of BNPLC and the Participants as security for the Secured Obligations, a pledge of and security interest in all Accounts and other Collateral maintained by Extreme with Deposit Taker, including the Account(s) described in Section 2 above. 4. In furtherance of such grant, Extreme and Agent hereby authorize and direct Deposit Taker to: (a) hold all Collateral for Agent and as Agent's bailee, separate and apart from all other property and funds of Extreme and all other Persons and to permit no other funds to be deposited or credited to the Account(s); (b) make a notation in its books and records of the interest of Agent in the Collateral and that the Account(s) and all deposits therein or sums credited thereto are subject to a pledge and security interest in favor of Agent; (c) issue and redeem Certificates of Deposit evidencing the Account(s), as directed by Agent pursuant to the Pledge Agreement; (d) take such other steps as Agent may reasonably request to record, maintain, validate and perfect its pledge of and security interest in the Collateral; and (e) upon receipt of notice from Agent that an Event of Default has occurred, transfer and deliver to Agent or its nominee, together with all necessary endorsements, all or such portion of the Collateral held by Deposit Taker as Agent shall direct; provided, however, that in connection therewith the Deposit Taker may require compliance by Agent with the provisions in Section 5.4 of the Pledge Agreement for redemption of any outstanding Certificates of Deposit which evidence the Account(s). 5. Extreme and Agent agree that (a) the possession by Deposit Taker of all money, instruments, chattel paper and other property constituting Collateral shall be deemed to be possession by Agent or a person designated by Agent, for purposes of perfecting the security interest granted to Agent hereunder pursuant to Section 9305, 8313 or 8213 of the UCC (as the case may be), and (b) -------------------------- notifications by Deposit Taker to other Persons holding any such property, and Acknowledgments, receipts or confirmations from such Persons delivered to Deposit Taker, shall be deemed notifications to, or Acknowledgments, receipts or confirmations from, financial intermediaries, bailees or agents (as applicable) of the Deposit Taker for the benefit of Agent for the purposes of perfecting such security interests under applicable law. 6. As contemplated by the Pledge Agreement, please acknowledge Deposit Taker's receipt of, and consent to, this notice and confirm the representations and agreements set forth in the Acknowledgment and Agreement attached hereto by executing the same and returning this letter to Agent. For your files, a copy of this letter is enclosed which you may retain. The authorizations and directions set forth herein may not be revoked or modified without the written consent of Agent. "AGENT" BNP PARIBAS By: _________________________________ Name:____________________________ Title:___________________________ "EXTREME" EXTREME NETWORKS, INC. By: ___________________________________ Name:______________________________ Title:_____________________________ -2- ACKNOWLEDGMENT AND AGREEMENT OF DEPOSIT TAKER Deposit Taker hereby acknowledges receipt of, and consents to, the above notice, acknowledges that it will hold the Collateral for Agent and as Agent's bailee, agrees to comply with the authorizations and directions set forth above and represents to and agrees with Extreme and Agent as follows: (a) Deposit Taker is a commercial bank, organized under the laws of the United States of America or a state thereof or under the laws of another country which is doing business in the United States of America. Deposit Taker is authorized to maintain deposit accounts for others through the Account Offices specified in the above notice, and Deposit Taker will not move the accounts described in the above notice to other offices without the prior written authorization of Agent and Extreme. (b) Deposit Taker has a combined capital, surplus and undivided profits of at least $500,000,000. (c) The information set forth above regarding the Account(s) is accurate. Such Account(s) is (are) currently open and Deposit Taker has no prior notice of any other pledge, security interest, Lien, adverse claim or interest in such Account(s). (d) Deposit Taker shall promptly notify Extreme and Agent if the representations made by Deposit Taker above cease to be true and correct. (e) Deposit Taker shall not (i) allow the withdrawal of funds from any Account by any Person other than Agent, or (ii) without in each case -------------------- first obtaining the prior written authorization of Agent, setoff or attempt -------------------------------------------------------- to setoff any Secured Obligations owed to Deposit Taker against any Collateral held from time to time by Deposit Taker, or (iii) without in ---------- each case first obtaining the prior written authorization of both Extreme ------------------------------------------------------------------------- and Agent, setoff or attempt to setoff any obligations owed to Deposit --------- Taker other than Secured Obligations, against any Collateral held from time to time by Deposit Taker. [__________________________________] By:_________________________________ Name:_________________________ Title:________________________ [Date] ATTACHMENT 5 TO PLEDGE AGREEMENT ------------------- EXAMPLES OF CALCULATIONS REQUIRED --------------------------------- TO AVOID A COLLATERAL IMBALANCE ------------------------------- The examples below are provided to illustrate the calculations required for allocations of Cash Collateral in a manner that will avoid a Collateral Imbalance. The examples are not intended to reflect actual numbers under this Agreement or actual Percentages of BNPLC or any of the Participants; nor are the examples intended to provide a formula for the allocations that would be appropriate in every case. The examples also reflect adjustments that would be appropriate if the Collateral Percentage were adjusted from time to time from and after the Effective Date. EXAMPLE NO. 1 Assumptions: ----------- 1. Two Participants ("Participant A" and "Participant B") are parties to the Participation Agreement with BNPLC. Participant A's Percentage is 50% and Participant B's Percentage is 45%, leaving BNPLC with a Percentage of 5%. 2. On the Effective Date, the Initial Funding Advance was $12,000,000, resulting in a Stipulated Loss Value of $12,000,000, allocable as follows: A. BNPLC's Parent (providing BNPLC's share) (5%)...................................... $ 600,000 B. Participant A (50%)................................................................ 6,000,000 C. Participant B (45%)................................................................ 5,400,000 ---------- TOTAL.............................................................................. $12,000,00
3. The Minimum Collateral Value on the Effective Date was $7,200,000 (reflecting a Collateral Percentage of 60% times Stipulated Loss Value). 4. On the Effective Date, Extreme had delivered to Agent Cash Collateral of $7,200,000, equal to the Minimum Collateral Value, as required by Section 5.1 of this Agreement. Allocation of Cash Collateral Required: To avoid a Collateral Imbalance under -------------------------------------- these assumptions, Agent would be required to allocate the $7,200,000 to the Deposit Takers for BNPLC and the Participants as follows: A. BNPLC's Deposit Taker (5% of Minimum Collateral Value)............................. $ 360,000 B. Participant A's Deposit Taker (50% of Minimum Collateral Value).................... 3,600,000 C. Participant B's Deposit Taker (45% of Minimum Collateral Value)................... 3,240,000 ------------ TOTAL.............................................................................. $ 7,200,000
EXAMPLE NO. 2 Assumptions: Assume the same facts as in Example No. 1, and in addition assume ----------- that: 1. Effective as of the first Base Rent Date, Extreme increased its Collateral Percentage from 60% to 80%, raising the Minimum Collateral Value to $9,600,000. Because of such increase, Extreme also delivered an additional $2,400,000 as Cash Collateral to Agent on the first Base Rent Date, bringing the total of all Cash Collateral delivered by Extreme to $9,600,000 as required by Section 5.1 of this Agreement. 2. Also effective as of the first Base Rent Date, a new Participant approved by Extreme ("Participant C") became a party to this Agreement and the Participation Agreement, taking a Percentage of 20%. Simultaneously, Participant A and Participant B entered into supplements to the Participation Agreement which reduced their Percentages to 40% and 35%, respectively. Allocation of Cash Collateral Required: To avoid a Collateral Imbalance under -------------------------------------- these assumptions, Agent would be required to allocate the Cash Collateral as required to leave the Deposit Takers for BNPLC and the Participants with the following amounts: A. BNPLC's Deposit Taker (5% of Minimum Collateral Value)................................. $ 480,000 B. Participant A's Deposit Taker (40% of Minimum Collateral Value)........................ 3,840,000 C. Participant B's Deposit Taker (35% of Minimum Collateral Value)........................ 3,360,000 D. Participant C's Deposit Taker (20% of Minimum Collateral Value)....................... 1,920,000 ---------- TOTAL.................................................................................. $9,600,000
Thus, to prevent a Collateral Imbalance, Agent would have to allocate the $2,400,000 of additional Cash Collateral it received on the first Base Rent Date as follows: A. BNPLC's Deposit Taker ($480,000 less $360,000 already on deposit) .................... $ 120,000 B. Participant A's Deposit Taker ($3,840,000 less $3,600,000 already on deposit)......... 240,000 C. Participant B's Deposit Taker ($3,360,000 less $3,240,000 already on deposit)......... 120,000 D. Participant C's Deposit Taker ($1,920,000 less $0 already on deposit)................ $1,920,000 ---------- TOTAL................................................................................. $2,400,000
EXAMPLE NO. 3 Assumptions: Assume the same facts as in Example No. 2, except that: ----------- ----------- 1. Instead of increasing its Collateral Percentage from 60% to 80%, Extreme increased its Collateral Percentage to 70% on the first Base Rent Date, raising the Minimum Collateral Value to $8,400,000. Because of such increase, Extreme delivered an additional $1,200,000 as additional Cash Collateral to Agent on the first Base Rent Date, bringing the total of all Cash Collateral delivered by Extreme to $8,400,000 as required by Section 5.1 of this Agreement. Allocation of Cash Collateral Required: To avoid a Collateral Imbalance under -------------------------------------- these assumptions, Agent would be required to allocate the Cash Collateral as required to leave the Deposit Takers for BNPLC and the Participants with the following amounts: A. BNPLC's Deposit Taker (5% of Minimum Collateral Value).............................. $ 420,000 B. Participant A's Deposit Taker (40% of Minimum Collateral Value)..................... 3,360,000 C. Participant B's Deposit Taker (35% of Minimum Collateral Value)..................... 2,940,000 D. Participant C's Deposit Taker (20% of Minimum Collateral Value).................... 1,680,000 ---------- TOTAL............................................................................... $8,400,000
-2- Thus, to prevent a Collateral Imbalance, Agent would have to allocate the $1,200,000 of additional Cash Collateral it received on the first Base Rent Date as follows: A. BNPLC's Deposit Taker ($420,000 less $360,000 already on deposit) ........................ $ 60,000 B. Participant A's Deposit Taker ($3,360,000 less $3,600,000 already on deposit)............. (240,000) C. Participant B's Deposit Taker ($2,940,000 less $3,240,000 already on deposit)............. (300,000) D. Participant C's Deposit Taker ($1,680,000 less $0 already on deposit).................... 1,680,000 ---------- TOTAL..................................................................................... $1,200,000
NOTE: THE NEGATIVE AMOUNTS (IN PARENTHESIS) ABOVE REPRESENT REQUIRED WITHDRAWALS ---- ----------- RATHER THAN DEPOSITS. AS EXAMPLE NO. 3 ILLUSTRATES, TO AVOID A COLLATERAL IMBALANCE AGENT MAY FROM TIME TO TIME HAVE TO WITHDRAW CASH COLLATERAL HELD BY THE DEPOSIT TAKER FOR ONE PARTICIPANT AND DEPOSIT IT IN AN ACCOUNT MAINTAINED BY A DEPOSIT TAKER FOR ANOTHER PARTICIPANT. -3- ATTACHMENT 6 TO PLEDGE AGREEMENT ------------------- NOTICE OF EXTREME'S REQUIREMENT TO ---------------------------------- WITHDRAW EXCESS CASH COLLATERAL ------------------------------- [_________, _____] BNP PARIBAS [address of BNP] Re: Pledge Agreement (Land) dated June 1, 2000 among Extreme Networks, -- Inc., BNP Leasing Corporation, BNP PARIBAS and any other financial institutions which are from time to time Participants under such Pledge Agreement (Land) and BNP PARIBAS, acting in its capacity as agent for BNPLC and the Participants Gentlemen: Capitalized terms used in this letter are intended to have the meanings assigned to them in the Pledge Agreement (Land) referenced above (the "Pledge Agreement"). This letter constitutes notice to you, as Agent under the Pledge Agreement, that pursuant to Section 6.1 of the Pledge Agreement, Extreme requires you to withdraw from the Accounts and return to Extreme the following amount: __________________ Dollars ($__________) on the following date: ----------, ---- To assure you that Extreme has satisfied the conditions to its right to require such withdrawal, and to induce you to comply with this notice, Extreme certifies to you that: 1. Your withdrawal and delivery of the amount specified above to Extreme will not cause the Value of the remaining Collateral to be less than the Minimum Collateral Value. After giving effect to such withdrawal, the Collateral remaining in the Accounts maintained by the Deposit Takers will be: __________________ Dollars ($__________), and the Minimum Collateral Value on the date specified above will equal: __________________ Dollars ($__________). Such Minimum Collateral Value equals the Collateral Percentage of: __________ percent (___%), times the Stipulated Loss Value of: __________________ Dollars ($__________). 2. Extreme is giving this notice to you, BNPLC and the Participants at least ten days prior to the date specified above. 3. No Default or Event of Default has occurred and is continuing as of the date of this notice, and Extreme does not anticipate that any Default or Event of Default will have occurred and be continuing on the date upon which the withdrawal is required. 4. Extreme agrees that you may determine the Accounts from which to make any withdrawal required by Extreme pursuant to this Section as necessary to prevent or mitigate any Collateral Imbalance. NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE STATEMENTS ---- ABOVE ARE NOT CORRECT OR IF THE DATE FOR WITHDRAWAL SPECIFIED ABOVE IS LESS THAN TEN DAYS AFTER YOUR RECEIPT OF THIS NOTICE. HOWEVER, WE ASK THAT YOU NOTIFY EXTREME IMMEDIATELY IF FOR ANY REASON YOU BELIEVE THIS NOTICE IS DEFECTIVE. -2- Please remember that the express terms of Certificates of Deposit issued pursuant to the Pledge Agreement require presentment of the Certificates of Deposit seven days before Cash Collateral is to be withdrawn from the Accounts they evidence. Accordingly, you must present Certificates of Deposit to Deposit Takers seven days prior to the withdrawal of Cash Collateral required by this notice. For your convenience, we have attached a letter as Annex 1 to this ------- notice that you might execute and send to Deposit Takers to advise them of your intent to withdraw and of your presentment of Certificates of Deposit as required in connection therewith. The attached letter also sets forth the amounts Extreme believes you must withdraw from each Account to avoid a Collateral Imbalance. EXTREME NETWORKS, INC. By: ______________________________ Name:_______________________ Title:______________________ [cc BNPLC and all Participants] -3- Annex 1 ------- TO EXTREME'S NOTICE OF REQUIREMENT TO ------------------------------------- WITHDRAW CASH EXCESS COLLATERAL ------------------------------- [_________, _____] Deposit Takers on the Attached Distribution List Re: Pledge Agreement (Land) dated June 1, 2000 among Extreme Networks, -- Inc., BNP Leasing Corporation, BNP PARIBAS and any other financial institutions which are from time to time Participants under such Pledge Agreement (Land) and BNP PARIBAS, acting in its capacity as agent for BNPLC and the Participants Gentlemen: Capitalized terms used in this letter are intended to have the meanings assigned to them in the Pledge Agreement (Land) referenced above (the "Pledge Agreement"). This letter constitutes notice from the undersigned, as Agent under the Pledge Agreement, that pursuant to Section 6.1 of the Pledge Agreement, Extreme requires Agent to withdraw from the Accounts and return to Extreme the amounts listed below on the following date: __________, ____ Accordingly, on such date, the undersigned intends to withdraw the following amounts from the following Accounts, and with this letter the undersigned is presenting Certificates of Deposit as required in connection with such withdrawal: Deposit Taker Account No. Amount 1.________________ ___________________ $________ 2.________________ ___________________ $________ 3.________________ ___________________ $________ 4.________________ ___________________ $________ TOTAL WITHDRAWALS: $======== BNP PARIBAS, AS AGENT By: ____________________________________ Name:_______________________________ Title:______________________________ [cc BNPLC and Extreme] -4- ATTACHMENT 7 TO PLEDGE AGREEMENT ------------------- NOTICE OF EXTREME'S REQUIREMENT OF ---------------------------------- DIRECT PAYMENTS TO PARTICIPANTS ------------------------------- [_________, _____] BNP PARIBAS [address of BNP] Re: Pledge Agreement (Land) dated June 1, 2000 among Extreme Networks, -- Inc., BNP Leasing Corporation, BNP PARIBAS and any other financial institutions which are from time to time Participants under such Pledge Agreement (Land) and BNP PARIBAS, acting in its capacity as agent for BNPLC and the Participants Gentlemen: Capitalized terms used in this letter are intended to have the meanings assigned to them in the Pledge Agreement (Land) referenced above (the "Pledge Agreement"). This letter constitutes notice to you, as Agent under the Pledge Agreement, that pursuant to Section 6.2 of the Pledge Agreement, Extreme requires you to withdraw from the Accounts and pay directly to the Participants (in proportion to their respective Percentages) the following amount: ____________________________ Dollars ($__________) on the following date (which, Extreme acknowledges, must be the Designated Sale Date or a date thereafter prior to an Event of Default): __________, ____ The amount specified above equals the following percentage (equal to the aggregate of all Participant's Percentages): ___________percent (___%), times the total of all Cash Collateral presently pledged under the Pledge Agreement: ____________________________ Dollars ($__________). To assure you that Extreme has satisfied the conditions to its right to require such withdrawal, and to induce you to comply with this notice, Extreme certifies to you that Extreme is giving this notice to you, BNPLC and the Participants at least ten days prior to the date of required withdrawal and payment specified above. Please remember that the express terms of Certificates of Deposit issued pursuant to the Pledge Agreement require presentment of the Certificates of Deposit seven days before Cash Collateral is to be withdrawn from the Accounts they evidence. Accordingly, you must present Certificates of Deposit to Deposit Takers seven days prior to the withdrawal of Cash Collateral required by this notice. For your convenience, we have attached a letter as Annex 1 to this ------- notice that you might execute and send to Deposit Takers to advise them of your intent to withdraw and of your presentment of Certificates of Deposit as required in connection therewith. The attached letter also sets forth the amounts Extreme believes you must withdraw from each Account to comply with subsection 6.2.2 of the Pledge Agreement. EXTREME NETWORKS, INC. By:______________________________________ Name:_______________________________ Title:______________________________ [cc BNPLC and all Participants] -2- Annex 1 ------- TO EXTREME'S NOTICE OF REQUIREMENT TO ------------------------------------- WITHDRAW CASH COLLATERAL FOR ---------------------------- DIRECT PAYMENTS TO PARTICIPANTS ------------------------------- [_________, _____] Deposit Takers on the Attached Distribution List Re: Pledge Agreement (Land) dated June 1, 2000 among Extreme Networks, -- Inc., BNP Leasing Corporation, BNP PARIBAS and any other financial institutions which are from time to time Participants under such Pledge Agreement (Land) and BNP PARIBAS, acting in its capacity as agent for BNPLC and the Participants Gentlemen: Capitalized terms used in this letter are intended to have the meanings assigned to them in the Pledge Agreement (Land) referenced above (the "Pledge Agreement"). This letter constitutes notice from the undersigned, as Agent under the Pledge Agreement, that pursuant to Section 6.2 of the Pledge Agreement, Extreme requires Agent to withdraw from the Accounts and pay to the Participants (in proportion to their respective Percentages) the amounts listed below on the following date: __________, ____ Accordingly, on such date, the undersigned intends to withdraw the following amounts from the following Accounts, and with this letter the undersigned is presenting Certificates of Deposit as required in connection with such withdrawal: Deposit Taker Account No. Amount 1._________________ __________________ $__________ 2._________________ __________________ $__________ 3._________________ __________________ $__________ 4._________________ __________________ $__________ TOTAL WITHDRAWALS: $========== BNP PARIBAS, AS AGENT By: __________________________________ Name:_____________________________ Title:____________________________ [cc BNPLC and Extreme] -3- ATTACHMENT 8 TO PLEDGE AGREEMENT ------------------- NOTICE OF EXTREME'S REQUIREMENT OF ---------------------------------- DIRECT PAYMENT TO BNPLC ----------------------- [_________, _____] BNP PARIBAS [address of BNP] Re: Pledge Agreement (Land) dated June 1, 2000 among Extreme Networks, -- Inc., BNP Leasing Corporation, BNP PARIBAS and any other financial institutions which are from time to time Participants under such Pledge Agreement (Land) and BNP PARIBAS, acting in its capacity as agent for BNPLC and the Participants Gentlemen: Capitalized terms used in this letter are intended to have the meanings assigned to them in the Pledge Agreement (Land) referenced above (the "Pledge Agreement"). This letter constitutes notice to you, as Agent under the Pledge Agreement, that pursuant to Section 6.3 of the Pledge Agreement, Extreme requires you to withdraw from the Account maintained by the Deposit Taker for BNPLC and pay directly to BNPLC on behalf of Extreme as a payment required by the Purchase Agreement the following amount: ____________________________ Dollars ($__________) on the following date (which, Extreme acknowledges, must be the Designated Sale Date or a date thereafter prior to an Event of Default): __________, ____ To assure you that Extreme has satisfied the conditions to its right to require such withdrawal, and to induce you to comply with this notice, Extreme certifies to you that Extreme is giving this notice to you and BNPLC at least ten days prior to the date of required withdrawal and payment specified above. Please remember that the express terms of Certificates of Deposit issued pursuant to the Pledge Agreement require presentment of the Certificates of Deposit seven days before Cash Collateral is to be withdrawn from the Accounts they evidence. Accordingly, you must present Certificates of Deposit to the Deposit Taker for BNPLC seven days prior to the withdrawal of Cash Collateral required by this notice. For your convenience, we have attached a letter as Annex 1 to this notice that you might execute and send to the Deposit ------- Taker for BNPLC to advise it of your intent to withdraw and of your presentment of Certificates of Deposit as required in connection therewith. The attached letter also sets forth the amount Extreme believes you must withdraw to comply with Section 6.3 of the Pledge Agreement. EXTREME NETWORKS, INC. By:________________________________ Name:________________________ Title:_______________________ [cc BNPLC] Annex 1 ------- TO EXTREME'S NOTICE OF REQUIREMENT OF ------------------------------------- DIRECT PAYMENT TO BNPLC ----------------------- [_________, _____] [Name of the Deposit Taker for BNPLC] [Address of such Deposit Taker] Re: Pledge Agreement (Land) dated June 1, 2000 among Extreme Networks, -- Inc., BNP Leasing Corporation, BNP PARIBAS and any other financial institutions which are from time to time Participants under such Pledge Agreement (Land) and BNP PARIBAS, acting in its capacity as agent for BNPLC and the Participants Gentlemen: Capitalized terms used in this letter are intended to have the meanings assigned to them in the Pledge Agreement (Land) referenced above (the "Pledge Agreement"). This letter constitutes notice from the undersigned, as Agent under the Pledge Agreement, that pursuant to Section 6.3 of the Pledge Agreement, Extreme requires Agent to withdraw from the Account maintained by you, as Deposit Taker for BNPLC, the sum of: ____________________________ Dollars ($__________) and pay the same to BNPLC as a payment required by the Purchase Agreement on the following date: __________, ____ Accordingly, on such date, the undersigned intends to withdraw such amount from the following Account maintained by you as Deposit Taker for BNPLC, and with this letter the undersigned is presenting Certificate(s) of Deposit as required in connection with such withdrawal. BNP PARIBAS, AS AGENT By: __________________________________ Name:_____________________________ Title:____________________________ [cc BNPLC and Extreme] -2- ATTACHMENT 9 TO PLEDGE AGREEMENT ------------------- NOTICE OF EXTREME'S REQUIREMENT OF A WITHDRAWAL ----------------------------------------------- OF CASH COLLATERAL FROM ----------------------- A DISQUALIFIED DEPOSIT TAKER ---------------------------- [_________, _____] BNP PARIBAS [address of BNP] Re: Pledge Agreement (Land) dated June 1, 2000 among Extreme Networks, -- Inc., BNP Leasing Corporation, BNP PARIBAS and any other financial institutions which are from time to time Participants under such Pledge Agreement (Land) and BNP PARIBAS, acting in its capacity as agent for BNPLC and the Participants Gentlemen: Capitalized terms used in this letter are intended to have the meanings assigned to them in the Pledge Agreement (Land) referenced above (the "Pledge Agreement"). This letter constitutes notice to you, as Agent under the Pledge Agreement, that pursuant to Section 6.4 of the Pledge Agreement, Extreme requires you to withdraw from the following Account maintained by the following Deposit Taker: Deposit Taker Account No. ----------------------- ------------------- Cash Collateral in the following amount: ______________________ Dollars ($__________) and to deposit such Cash Collateral with other Deposit Takers who are not Disqualified Deposit Takers no later than ten days after the date upon which you receive this notice. To assure you that Extreme has the right to require such withdrawal, and to induce you to comply with this notice, Extreme certifies to you that the Deposit Taker specified above has become a Disqualified Deposit Taker because it no longer satisfies the requirements listed in Section 4.1 of the Pledge Agreement. Specifically, such Deposit Taker no longer satisfies the following requirements: [EXTREME MUST INSERT HERE A DESCRIPTION OF WHICH REQUIREMENTS THE DEPOSIT TAKER NO LONGER SATISFIES AND HOW EXTREME HAS DETERMINED THAT THE REQUIREMENTS ARE NO LONGER SATISFIED, ALL IN SUFFICIENT DETAIL TO PERMIT THE PARTICIPANT FOR WHOM SUCH DEPOSIT TAKER HAS BEEN MAINTAINING AN ACCOUNT TO RESPOND IF IT BELIEVES THAT EXTREME IS IN ERROR.] Please remember that the express terms of Certificates of Deposit issued pursuant to the Pledge Agreement require presentment of the Certificates of Deposit seven days before Cash Collateral is to be withdrawn from the Accounts they evidence. Accordingly, you must present Certificates of Deposit to the Deposit Taker specified above seven days prior to the withdrawal of Cash Collateral required by this notice. For your convenience, we have attached a letter as Annex 1 to this notice that you might execute and send to such Deposit ------- Taker to advise it of your intent to withdraw and of your presentment of Certificates of Deposit as required in connection therewith. The attached letter also sets forth the amount Extreme believes you must withdraw to comply with Section 6.4 of the Pledge Agreement. EXTREME NETWORKS, INC. By:_________________________________ Name:__________________________ Title:_________________________ [cc BNPLC] -2- Annex 1 ------- TO EXTREME'S NOTICE OF REQUIREMENT OF A WITHDRAWAL -------------------------------------------------- OF CASH COLLATERAL FROM ----------------------- A DISQUALIFIED DEPOSIT TAKER ---------------------------- [_________, _____] [Name of the Deposit Taker for BNPLC] [Address of such Deposit Taker] Re: Pledge Agreement (Land) dated June 1, 2000 among Extreme Networks, -- Inc., BNP Leasing Corporation, BNP PARIBAS and any other financial institutions which are from time to time Participants under such Pledge Agreement (Land) and BNP PARIBAS, acting in its capacity as agent for BNPLC and the Participants Gentlemen: Capitalized terms used in this letter are intended to have the meanings assigned to them in the Pledge Agreement (Land) referenced above (the "Pledge Agreement"). This letter constitutes notice from the undersigned, as Agent under the Pledge Agreement, that pursuant to Section 6.4 of the Pledge Agreement, Extreme has advised Agent that you are a Disqualified Deposit Taker, and Extreme requires Agent to withdraw from the Account maintained by you, as a Deposit Taker under the Pledge Agreement, the sum of: ____________________________ Dollars ($__________) no later than the following date: __________, ____ Accordingly, on such date, the undersigned intends to withdraw such amount from the Account maintained by you as Deposit Taker (Account No. __________), and with this letter the undersigned is presenting Certificate(s) of Deposit as required in connection with such withdrawal. BNP PARIBAS, AS AGENT By: _______________________________ Name:__________________________ Title:_________________________ [cc BNPLC and Extreme] -3- Schedule 1 TO PLEDGE AGREEMENT ------------------- [IN PLACE OF THIS PAGE, SUBSTITUTE SCHEDULE 1 ATTACHED TO THE LEASE]