exv10w81






Exhibit 10.81




NETWORK APPLIANCE, INC.

NOTICE OF GRANT OF STOCK OPTION — ISRAEL




     Network Appliance, Inc. (the “Corporation”) hereby grants to you (the “Optionee”) an option
(the “Option”) to purchase shares of the Common Stock of the Corporation. Subject to the
provisions of the Stock Option Agreement-Israel attached hereto as Exhibit A (the “Agreement”) and
of the Corporation’s 1999 Stock Option Plan and the Israeli addendum to such plan called “Appendix
A-Israel” (the “Plan”), the principal features of this Option are as follows:



     Optionee:





     «FIRST_NAME» «MIDDLE_NAME» «LAST_NAME»




     «ADDRESS_LINE_1»




     «ADDRESS_LINE_2»




     «ADDRESS_LINE_3»




     «CITY», «State» «Zip_Code»



     Grant Number: «NUM»



     Grant Date: «Option_Date»



     Vesting Commencement Date: «Vest_Base_Date»



     Exercise Price: «Option_Price» per share



     Number of Option Shares: «Shares_Granted» shares




     Expiration Date: «Expiration_Date_Period_1»



     Type of Option: «Long_Type» — Capital Gains Route Options under Section 102(b)(2)



     Exercise Schedule:




«Shares_Period_1» shares become exercisable on «Vest_Date_Period_1»




«Shares_Period_2» shares become exercisable in successive equal monthly installments on
the same day of the month as the Vesting Commencement Date (and if there is no
corresponding date, the last day of the month), upon Optionee’s completion of each
month of Service through «Vest_Date_Period_2»




     Vesting is subject to Optionee’s continuous Service through each applicable vesting date. In
no event shall the Option vest or become exercisable for any additional Option Shares after
Optionee’s cessation of Service.



     Optionee understands and agrees that the Option is granted subject to and in accordance with
all of the terms and conditions contained in this Notice, the Agreement and the Plan. A copy of
the Plan is available upon request made to the Corporate Secretary at the Corporation’s principal
offices. Optionee hereby acknowledges that the official prospectus for the Plan, which appears as
“1999 Plan Summary and Prospectus” is available on the Corporation’s internal web site at
http://finance-web.netapp.com/stock/ options.html and that the Agreement and the Plan Summary and
Prospectus are made a part of this Notice of Grant of Stock Option.



     Furthermore, Optionee hereby approves and agrees to all the aforesaid in this Notice, in the
Agreement and in the Trust Deed, and declares that he/she is familiar with the provisions of
Section 102 and the Capital Gains Route as defined in the Agreement). Optionee hereby undertakes
not to sell or transfer the Option Shares prior to the lapse of the Minimum Trust Period (as
defined in the Agreement), unless Optionee pays all taxes, which may arise in connection with such
sale and/or transfer.



     No Employment or Service Contract. Nothing in this Notice, the Agreement or in the
Plan shall confer upon Optionee any right to continue in Service for any period of specific
duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any
Parent or Subsidiary employing or retaining Optionee) or of Optionee, which rights are hereby
expressly reserved by each, to terminate Optionee’s Service at any time for any reason, with or
without cause.



     Definitions. All capitalized terms in this Notice shall have the meaning assigned to
them in this Notice or in the Agreement.



	 	 	 	 	 	 	 	 	 	 	 
	NETWORK APPLIANCE, INC.	 	 	 	OPTIONEE	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Gwen Mcdonald
	 	 
	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Senior Vice President, Human Resources
	 	 	 	 	 	«FIRST_NAME» «MIDDLE_NAME» «LAST_NAME»
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Date:                                         , 200                    






Attachment: 1999 Stock Option Plan Stock Option Agreement-Israel




 









 








NETWORK APPLIANCE, INC.




1999 STOCK OPTION PLAN

STOCK OPTION AGREEMENT — ISRAEL




RECITALS




     A. The Board has adopted the Plan for the purpose of retaining the services of selected
Employees, non-employee members of the Board (or the board of directors of any Parent or
Subsidiary) and consultants and other independent advisors who provide services to the Corporation
(or any Parent or Subsidiary).



     B. Optionee is to render valuable services to the Corporation (or a Parent or Subsidiary), and
this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in
connection with the Corporation’s grant of an option to Optionee.



     C. All capitalized terms in this Agreement shall have the meaning assigned to them in the
Appendix attached as Exhibit “A" hereto in the Corporation’s 1999 Stock Option Plan and in
the Israeli appendix to such plan.



          NOW, THEREFORE, it is hereby agreed as follows:





               1. Grant of Option.



               (a) The Corporation hereby grants to Optionee, as of the Grant Date, an option to purchase up
to the number of Option Shares specified in the Grant Notice. The Option Shares shall be
purchasable from time to time during the option term specified in Paragraph 4 at the Exercise
Price.



               (b) The option will be deposited with the Trustee, who will hold them in trust on Optionee’s
behalf, all as set forth in Section 3 below.




               2. Issuance to Trustee.



     The option is subject to the provisions of Section 102 of the Ordinance, as well as the 102
Rules, promulgated thereunder.



     Accordingly, the Corporation and its Israeli subsidiary elected the Capital Gains Route for
the purpose of the taxation of Optionee’s income from the option. In general, taxable income that
should be attributed to Optionee as a result of the grant of the option will be tax-free on the
date of grant, but will be taxed on the sale of Option Shares issued upon exercise of the options
or their Transfer. In accordance with the Capital Gains Route, if the option or the Option Shares
are held in trust by the Trustee for at least the Minimum Trust Period, gains derived from the sale
of Option Shares shall be classified as capital gains and taxed at a rate of only 25%. Except,
if applicable, for a benefit derived at the time of grant of the option, equal to the
difference between (a) the average closing price of the Corporation’s share of Common Stock on a
stock exchange during 30 trading days prior to the date of grant, and (b) the Exercise Price. Such
benefit shall be subject to tax at the time of sale of the Option Shares, or a Transfer, as
ordinary work income (i.e. at marginal tax rates (currently up to 48%) plus social security and
national health insurance payments).



     At the time of sale of the Option Shares or a Transfer, Optionee shall be subject to tax,
which will be calculated, in general, according to difference between (a) the market price (or the
actual sale price) of the Option Shares at such time, and (b) the Exercise Price1. Such tax shall
be withheld at source by the Corporation’s Israeli subsidiary, in accordance with the provisions of
the 102 Rules, and the transfer of Option Shares to Optionee is conditioned upon the payment of
such tax.



     Optionee shall not be entitled to sell the Option Shares or to execute a Transfer, prior to
the lapse of the Minimum Trust Period. Furthermore, any and all Rights, shall be deposited with the
Trustee and held thereby until the lapse of the Minimum Trust Period, and such Rights shall be
subject to the Capital Gains Route. Notwithstanding the aforesaid, Optionee may sell
Option Shares or Rights or execute a Transfer prior to the lapse of the Minimum Trust Period,
provided, however, that tax is withheld at source by the Corporation in accordance with the 102
Rules. In such case, Optionee’s gains shall be classified as ordinary income and
Optionee shall be subject to tax on such income at marginal tax rates (currently up to 48%)
plus social security and national health insurance payments.





 




			
	1	 	The above tax description is a general summary only and does not
refer to expenses involved with the exercise of the option and sale of Option
Shares or changes in the Israeli Consumer Price Index, which may impact the
final tax calculation.




2









 













OPTIONEE IS ADVISED TO CONSULT WITH OPTIONEE’S OWN TAX ADVISER WITH

RESPECT TO THE TAX CONSEQUENCES OF RECEIVING AND EXERCISNG THE OPTION OR OF

DISPOSING OPTIONEE’S OPTION SHARES.








                    3. Trust:



               To secure performance of tax law requirements, the option awarded to Optionee according to
this Agreement will be held in trust by the Trustee, who shall release them to Optionee only upon
full compliance with the legal requirements and the terms of the Plan. For this purpose, a Trust
Deed was signed between the Corporation’s Israeli subsidiary and the Trustee, a copy of which is
attached hereto as Exhibit “B”. The conditions of the Trust Deed apply to the option
awarded to Optionee; thus, Optionee is required to carefully read the provisions of the said Trust
Deed.




                    4. Option Term. This option shall have a maximum term of seven (7) years
measured from the Grant Date and shall accordingly expire at the close of business on the
Expiration Date, unless sooner terminated in accordance with Paragraph 7 or 8.




                    5. Limited Transferability.



               (a) This option shall be neither transferable nor assignable by Optionee other than by will or
the laws of inheritance following Optionee’s death and may be exercised, during Optionee’s
lifetime, only by Optionee




                    6. Dates of Exercise. This option shall become exercisable for the Option
Shares in one or more installments as specified in the Grant Notice. As the option
becomes exercisable for such installments, those installments shall accumulate, and the
option shall remain exercisable for the accumulated installments until the Expiration
Date or sooner termination of the option term under Paragraph 7 or 8.




                    7. Cessation of Service. The option term specified in Paragraph 4 shall
terminate (and this option shall cease to be outstanding) prior to the Expiration Date
should any of the following provisions become applicable:



               (a) Should Optionee cease to remain in Service for any reason (other than death, Permanent
Disability or Misconduct) while holding this option, then Optionee shall have a period of three (3)
months (commencing with the date of such cessation of Service) during which to exercise this
option, but in no event shall this option be exercisable at any time after the Expiration Date.



               (b) Should Optionee die while holding this option, then the personal representative of
Optionee’s estate or the person or persons to whom the option is transferred pursuant to Optionee’s
will or the laws of inheritance shall have the right to exercise this option. Any such right to
exercise this option shall lapse, and this option shall cease to be outstanding, upon the
earlier of (i) the expiration of the twelve (12)-month period measured from the date of
Optionee’s death or (ii) the Expiration Date.



               (c) Should Optionee cease Service by reason of Permanent Disability while holding this option,
then Optionee shall have a period of twelve (12) months (commencing with the date of such cessation
of Service) during which to exercise this option. In no event shall this option be exercisable at
any time after the Expiration Date.



               (d) During the limited period of post-Service exercisability, this option may not be exercised
in the aggregate for more than the number of Option Shares for which the option is exercisable at
the time of Optionee’s cessation of Service. Upon the expiration of such limited exercise period
or (if earlier) upon the Expiration Date, this option shall terminate and cease to be outstanding
for any exercisable Option Shares for which the option has not been exercised. However, this
option shall, immediately upon Optionee’s cessation of Service for any reason, terminate and cease
to be outstanding with respect to any Option Shares for which this option is not otherwise at that
time exercisable.



               (e) Should Optionee’s Service be terminated for Misconduct or should Optionee otherwise engage
in any Misconduct while this option is outstanding, then this option shall terminate immediately
and cease to remain outstanding.




                    8. Special Acceleration of Option.



               (a) This option, to the extent outstanding at the time of a Corporate Transaction but not
otherwise fully exercisable, shall automatically accelerate so that this option shall, immediately
prior to the effective date of such Corporate



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Transaction, become exercisable for all of the Option Shares at the time subject to this
option and may be exercised for any or all of those Option Shares as fully vested shares of Common
Stock. However, this option shall not become exercisable on such an accelerated basis, if and to
the extent: (i) this option is, in connection with the Corporate Transaction, to be assumed by the
successor corporation (or parent thereof) or (ii) this option is to be replaced with a cash
incentive program of the successor corporation which preserves the spread existing at the time of
the Corporate Transaction on any Option Shares for which this option is not otherwise at that time
exercisable (the excess of the Fair Market Value of those Option Shares over the aggregate Exercise
Price payable for such shares) and provides for subsequent payout in accordance with the same
option exercise/vesting schedule for those Option Shares set forth in the Grant Notice.




               (b) Immediately following the Corporate Transaction, this option shall terminate and cease to
be outstanding, except to the extent assumed by the successor corporation (or parent thereof) in
connection with the Corporate Transaction.



               (c) If this option is assumed in connection with a Corporate Transaction, then this option
shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the
number and class of securities which would have been issuable to Optionee in consummation of such
Corporate Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided
the aggregate Exercise Price shall remain the same.



               (d) This Agreement shall not in any way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.





                    9. Adjustment in Option Shares. Should any change be made to the Common
Stock by reason of any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Common Stock as a
class without the Corporation’s receipt of consideration, appropriate adjustments shall
be made to (i) the total number and/or class of securities subject to this option and
(ii) the Exercise Price in order to reflect such change and thereby preclude a dilution
or enlargement of benefits hereunder.




                    10. Shareholder Rights. The holder of this option shall not have any
shareholder rights with respect to the Option Shares until such person shall have
exercised the option, paid the Exercise Price and become a holder of record of the
purchased shares.




                    11. Manner of Exercising Option.



               (a) In order to exercise this option with respect to all or any part of the Option Shares for
which this option is at the time exercisable, Optionee (or any other person or persons exercising
the option) must take the following actions:




                    (i) Notify the Trustee (through the Corporation’s Stock Administration
Department), by delivering a “Notice of Exercise” (in the form attached hereto as
Exhibit “C”), that Optionee wishes to exercise the option into a certain
number of Option Shares (but not more than the number of Option Shares for which the
option is exercisable as of such date).




                    (ii) Pay the aggregate Exercise Price for the purchased shares in one or more of
the following forms:




                         (A) cash or check made payable to the Corporation;




                         (B) shares of Common Stock held by Optionee (or any other person or
persons exercising the option) for the requisite period necessary to avoid a
charge to the Corporation’s earnings for financial reporting purposes and
valued at Fair Market Value on the Exercise Date.




                         (C) through a special sale and remittance procedure pursuant to which
Optionee (or any other person or persons exercising the option) shall
concurrently provide irrevocable instructions (i) to the Trustee and to a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
Exercise Price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (ii) to the Corporation to deliver
the certificates for the purchased shares directly to



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such brokerage firm in order to complete the sale. Option Shares granted
pursuant to the Capital Gains Route shall be issued in the name of the Trustee
for the benefit of the Optionee.




Except to the extent the sale and remittance procedure is utilized in
connection with the option exercise, payment of the Exercise Price must
accompany the Notice of Exercise delivered to the Corporation in connection
with the option exercise.




                    (iii) Furnish to the Corporation appropriate documentation that the person or
persons exercising the option (if other than Optionee) have the right to exercise this
option.



               (b) As soon as practical after the Exercise Date, the Corporation shall issue to the Trustee
for the benefit of the Optionee (or any other person or persons exercising this option) a
certificate for the purchased Option Shares, with the appropriate legends affixed thereto.



               (c) In no event may this option be exercised for any fractional shares.



                    12. Compliance with Laws and Regulations.



               (a) The exercise of this option and the issuance of the Option Shares upon such exercise shall
be subject to compliance by the Corporation and Optionee with all the terms and conditions of the
Plan, this Agreement, the Trust Deed and applicable requirements of law relating thereto, including
the Capital Gains Route of Section 102, and with all applicable regulations of any stock exchange
(or the Nasdaq National Market, if applicable) on which the Common Stock may be listed for trading
at the time of such exercise and issuance.



               (b) The inability of the Corporation to obtain approval from any regulatory body having
authority deemed by the Corporation to be necessary to the lawful issuance and sale of any Common
Stock pursuant to this option shall relieve the Corporation of any liability with respect to the
non-issuance or sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such approvals.




                    13. Successors and Assigns. Except to the extent otherwise provided in
Paragraphs 5 and 8, the provisions of this Agreement shall inure to the benefit of, and
be binding upon, the Corporation and its successors and assigns and Optionee, Optionee’s
assigns, the legal representatives, heirs and legatees of Optionee’s estate and any
beneficiaries of this option designated by Optionee.




                    14. Notices. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed to the
Corporation at its principal corporate offices. Any notice required to be given or
delivered to Optionee shall be in writing and addressed to Optionee at the address
indicated on the Grant Notice. All notices shall be deemed effective upon personal
delivery or upon deposit in the U.S. mail, postage prepaid and properly addressed to the
party to be notified.




                    15. Construction. This Agreement and the option evidenced hereby are made
and granted pursuant to the Plan and are in all respects limited by and subject to the
terms of the Plan. All decisions of the Plan Administrator with respect to any question
or issue arising under the Plan or this Agreement shall be conclusive and binding on all
persons having an interest in this option.




                    16. Governing Law. The interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the State of California without resort to that
State’s conflict-of-laws rules, except to the extent that mandatory provisions of the law
of the State of Israel apply.




                    17. Excess Shares. If the Option Shares covered by this Agreement exceed,
as of the Grant Date, the number of shares of Common Stock which may without shareholder
approval be issued under the Plan, then this option shall be void with respect to those
excess shares, unless shareholder approval of an amendment sufficiently increasing the
number of shares of Common Stock issuable under the Plan is obtained in accordance with
the provisions of the Plan.




                    18. Leave of Absence. The following provisions shall apply upon Optionee’s
commencement of an authorized leave of absence:



5









 





               (a) If the leave of absence is protected by any statute such that re-employment upon
expiration of such protected leave is guaranteed, the Shares awarded by this Agreement that are
scheduled to vest shall be modified as follows:




                         (i) The vesting schedule in effect under the Grant Notice shall continue for a
period of up to twelve (12) weeks from the first day of the authorized leave. If
Optionee does not resume active Employee status within such twelve (12)-week period,
then no Service credit shall be given for the balance of the leave of absence, unless
applicable laws governing such statutory leave would require a longer vesting
continuance period, in which case vesting shall continue as provided in the Grant
Notice for such period required by such statute..



               (b) If the leave of absence is not protected by statute such that re-employment upon
expiration of such leave is not guaranteed by statute, the Shares awarded by this Agreement that
are scheduled to vest shall be modified as follows:




                         (i) The vesting schedule in effect under the Grant Notice shall be frozen as of
the first day of the authorized leave.




                         (ii) Should Optionee resume active Employee status within sixty (60) days after
the start date of the authorized leave, Optionee shall, for purposes of the vesting
schedule set forth in the Grant Notice, receive Service credit for the entire period
of such leave. If Optionee does not resume active Employee status within such sixty
(60)-day period, then no Service credit shall be given for the period of such leave.



               (c) In no event shall this option become exercisable for any additional options or otherwise
remain outstanding if Optionee does not resume Employee status prior to the Expiration Date of the
option term.



                    19. Reading the Plan:



     It is hereby clarified that reading this Agreement is not, and cannot be, a substitute for the
full and thorough reading of the Plan. The Plan and the Trust Deed include important details that
Optionee should know and understand. In any case of contradiction between the aforesaid in this
Agreement and the Plan, or in any case of dispute on any of the issues discussed in this Agreement,
the provisions of the Plan shall prevail.



6









 





Exhibit A




APPENDIX




          The following definitions shall be in effect under the Agreement:




     A. Agreement shall mean this Stock Option Agreement.



     B. Board shall mean the Corporation’s Board of Directors.



     C. Capital Gains Route means the capital gains route of Section 102(b)(2) of the
Ordinance.



     D. Common Stock shall mean shares of the Corporation’s common stock.



     E. Code shall mean the Internal Revenue Code of 1986, as amended.



     F. Corporate Transaction shall mean either of the following shareholder-approved
transactions to which the Corporation is a party:




               (i) a merger or consolidation in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation’s outstanding
securities are transferred to a person or persons different from the persons holding
those securities immediately prior to such transaction, or




               (ii) the sale, transfer or other disposition of all or substantially all of the
Corporation’s assets in complete liquidation or dissolution of the Corporation.



     G. Corporation shall mean Network Appliance, Inc., a Delaware corporation, and any
successor corporation to all or substantially all of the assets or voting stock of Network
Appliance, Inc. which shall by appropriate action adopt the Plan.



     H. Employee shall mean an individual who is in the employ of the Corporation (or any
Parent or Subsidiary), subject to the control and direction of the employer entity as to both the
work to be performed and the manner and method of performance.



     I. Exercise Date shall mean the date on which the option shall have been exercised in
accordance with Paragraph 9 of the Agreement.



     J. Exercise Price shall mean the exercise price per Option Share as specified in the
Grant Notice.



     K. Expiration Date shall mean the date on which the option expires as specified in the
Grant Notice.



     L. Fair Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:




               (i) If the Common Stock is at the time traded on the Nasdaq National Market, then
the Fair Market Value shall be deemed equal to the closing selling price per share of
Common Stock on the date in question, as the price is reported by the National
Association of Securities Dealers on the Nasdaq National Market and published in
The Wall Street Journal. If there is no closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists, or




               (ii) If the Common Stock is at the time listed on any Stock Exchange, then the
Fair Market Value shall be deemed equal to the closing selling price per share of
Common Stock on the date in question on the Stock Exchange determined by the Plan
Administrator to be the primary market for the Common Stock, as such price is
officially quoted in the composite tape of transactions on such exchange and published
in The Wall Street Journal. If there is no closing selling price for the
Common Stock on the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation exists.



     M. Grant Date shall mean the date of grant of the option as specified in the Grant
Notice.



     N. Grant Notice shall mean the Notice of Grant of Stock Option accompanying the
Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced
hereby.



A-1 









 





     O. Incentive Option shall mean an option which satisfies the requirements of Code
Section 422.



     P. Minimum Trust Period means the applicable period of time, required under Section
102, in order to enable Optionee enjoy favorable tax treatment (currently two years from the date
this letter is deposited with the Trustee, according to the Capital Gains Route).



     Q. Misconduct shall mean the commission of any act of fraud, embezzlement or
dishonesty by Optionee, any unauthorized use or disclosure by Optionee of confidential information
or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional
misconduct by Optionee adversely affecting the business or affairs of the Corporation (or any
Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be
inclusive of all the acts or omissions which the Corporation (or any Parent or Subsidiary) may
consider as grounds for the dismissal or discharge of Optionee or any other individual in the
Service of the Corporation (or any Parent or Subsidiary).



     R. Non-Statutory Option shall mean an option not intended to satisfy the requirements
of Code Section 422.



     S. Notice of Exercise shall mean the notice of exercise in the form attached hereto as
Exhibit I.



     T. Option Shares shall mean the number of shares of Common Stock subject to the option
as specified in the Grant Notice.



     U. Optionee shall mean the person to whom the option is granted as specified in the
Grant Notice.



     V. Ordinance shall mean the Israeli Income Tax Ordinance [New version], 1961.



     W. Parent shall mean any corporation (other than the Corporation) in an unbroken chain
of corporations ending with the Corporation, provided each corporation in the unbroken chain (other
than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the other corporations
in such chain.



     X. Permanent Disability shall mean the inability of Optionee to engage in any
substantial gainful activity by reason of any medically determinable physical or mental impairment
which is expected to result in death or has lasted or can be expected to last for a continuous
period of twelve (12) months or more.



     Y. Plan shall mean the Corporation’s 1999 Stock Option Plan and the “Appendix A —
Israel” attached thereto.



     Z. Plan Administrator shall mean either the Board or a committee of the Board acting
in its capacity as administrator of the Plan.



     AA. Rights means right issued in respect of the Option Shares, including bonus shares
but excluding cash dividends.



     BB. 102 Rules means the Income Tax Rules (Tax Relief in Issuance of Shares to Employees),
2003, that were promulgated under Section 102.



     CC. Section 102 shall mean Section 102 of the Ordinance.



     DD. Service shall mean Optionee’s performance of services for the Corporation (or any
Parent or Subsidiary) in the capacity of an Employee, a non-employee member of the board of
directors or a consultant or independent advisor.



     EE. Stock Exchange shall mean the American Stock Exchange or the New York Stock
Exchange.



     FF. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation, provided each corporation (other than the
last corporation) in the unbroken chain owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.



     GG. Transfer means a transfer of Option Shares from the Trustee to the Optionee.



     HH. Trustee shall mean a trustee approved by the income tax authorities for the purpose of the Plan.



A-2 









 





Exhibit B




Trust Deed









A-3 









 








-2-









A-4 









 








Exhibit C




Notice of Exercise




Date:                                         




	 	 	 
	To

	 	To
	G.L.E 102 Trusts

	 	Network Appliance, Inc.
	2 Weizmann St.

	 	495 E. Java Drive
	Tel Aviv 64239

	 	Sunnyvale, CA 94089






Dear Sirs,





Re: Network Appliance, Inc. (the “Corporation”)




I am the beneficiary of option (the “Option”) exercisable into
                     shares of Common Stock of
the Corporation (the “Option Shares”) that were granted to you on my behalf, and are held by you
according to Section 102 of the Income Tax Ordinance, pursuant to the Trust Deed that was signed
between yourself and the Corporation’s Israeli subsidiary, and according to the Corporation’s “1999
Stock Option Plan” and Israeli Appendix A.



I know that the vesting schedule of the option is as detailed in the “1999 Stock Option Plan -
Stock Option Agreement”, which was signed by me on                     .



I would like to exercise the option into                     Option Shares.



I hereby enclose the aggregate Exercise Price of the Option Shares, or, alternatively I choose to
utilize the special broker-dealer sale and remittance procedure specified in the Agreement to
effect the payment of the Exercise Price.




	 	 	 
	 

	 	Yours Truly,
	 
	 	 
	 

	 	Employee Name:
                                                            
 
	 
	 	 
	 

	 	Signature:
                                                            







 





Approval of Network Appliance, Inc.



We hereby confirm that                                          is entitled to exercise his option into                     
Option Shares (as defined in the Agreement).



We hereby confirm that the aggregate Exercise Price of the option in connection with the Option
Shares, in the amount of $                                         ($                     per Option Share) was paid to us directly by
Mr./Miss                                                             , or, alternatively, that the Exercise Price is to be paid to us
via the sale of Option Shares, through the broker.




	 	 	 	 	 
	 
	 	 	 
	 	 	
Network Appliance, Inc.

 	 
	 	 	 
	 	 	 
	 	 	 




A-5