exv10w3



 






Exhibit 10.3




CLOSING CERTIFICATE

AND AGREEMENT




BETWEEN




NETWORK APPLIANCE, INC.

(“NAI”)




AND




BNP PARIBAS LEASING CORPORATION

(“BNPPLC”)




December 15, 2005




 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	1 Representations, Covenants and Acknowledgments of NAI Concerning the Property
	 	 	2	 
	(A) Prior Inspections and Investigations Concerning the Property
	 	 	2	 
	(B) Title
	 	 	2	 
	(C) Compliance with Covenants and Laws
	 	 	2	 
	 
	 	 	 	 
	2 Representations and Covenants by NAI
	 	 	2	 
	(A) Concerning NAI and the Operative Documents
	 	 	2	 
	(1) Entity Status
	 	 	2	 
	(2) Authority
	 	 	2	 
	(3) Solvency
	 	 	3	 
	(4) Financial Reports
	 	 	3	 
	(5) Pending Legal Proceedings
	 	 	3	 
	(6) No Default or Violation
	 	 	3	 
	(7) Use of Proceeds
	 	 	4	 
	(8) Enforceability
	 	 	4	 
	(9) Pari Passu
	 	 	4	 
	(10) Conduct of Business and Maintenance of Existence
	 	 	4	 
	(11)
Investment Company Act, etc.
	 	 	4	 
	(12) Not a Foreign Person
	 	 	4	 
	(13) ERISA
	 	 	5	 
	(14) Compliance With Laws
	 	 	5	 
	(15) Payment of Taxes Generally
	 	 	5	 
	(16) Maintenance of Insurance Generally
	 	 	5	 
	(17)
Franchises, Licenses, etc.
	 	 	6	 
	(18)
Patents, Trademarks, etc.
	 	 	6	 
	(19) Labor
	 	 	6	 
	(20) Title to Properties Generally
	 	 	6	 
	(21) Books and Records
	 	 	7	 

	(B)  Further Assurances 
	 	 	7	 
	(C) Syndication
	 	 	7	 
	(D) Financial Statements; Required Notices; Certificates
	 	 	7	 
	 
	 	 	 	 
	3 Financial Covenants and Negative Covenants of NAI
	 	 	10	 
	(B)  Financial Covenants 
	 	 	11	 
	(1)Minimum Unencumbered Cash and Short Term Investments
	 	 	11	 
	(2)Maximum Leverage Ratio
	 	 	11	 
	(C)  Negative Covenants 
	 	 	11	 
	(1)Negative Pledge
	 	 	12	 
	(2)Transactions with Affiliates
	 	 	14	 
	(3)Capital Expenditures
	 	 	14	 
	(4)Merger, Consolidation, Transfer of Assets
	 	 	14	 






 









 






TABLE OF CONTENTS

(Continued)




	 	 	 	 	 
	 	 	Page
	(5) Change in Nature of Business
	 	 	14	 
	(6) Multiemployer ERISA Plans
	 	 	14	 
	(7) Prohibited ERISA Transaction
	 	 	14	 
	 
	 	 	 	 
	4 Limited Representations and Covenants of BNPPLC
	 	 	14	 
	(A) Concerning Accounting Matters
	 	 	14	 
	(B) Other Limited Representations
	 	 	17	 
	(1) Entity Status
	 	 	17	 
	(2) Authority
	 	 	17	 
	(3) Solvency
	 	 	17	 
	(4) Pending Legal Proceedings
	 	 	18	 
	(5) No Default or Violation
	 	 	18	 
	(6) Enforceability
	 	 	18	 
	(7) Conduct of Business and Maintenance of Existence
	 	 	18	 
	(8) Not a Foreign Person
	 	 	18	 
	(C) Further Assurances
	 	 	19	 
	(D) Actions Permitted by NAI Without BNPPLC’s Consent
	 	 	22	 
	(E) Waiver of Landlord’s Liens
	 	 	22	 
	(F) Estoppel Letters
	 	 	23	 
	(G) No Implied Representations or Promises by BNPPLC
	 	 	23	 
	 
	 	 	 	 
	5 Usury Savings Provision
	 	 	23	 
	 
	 	 	 	 
	6 Obligations of NAI Under Other Operative Documents Not Limited by this Certificate
	 	 	24	 
	 
	 	 	 	 
	7 Obligations of NAI Hereunder Not Limited by Other Operative Documents
	 	 	24	 
	 
	 	 	 	 
	8 Waiver of Jury Trial
	 	 	25	 






(ii)









 






TABLE OF CONTENTS

(Continued)




Exhibits and Schedules




	 	 	 
	Exhibit A

	 	Legal Description
	 
	 	 
	Exhibit B

	 	Permitted Encumbrances
	 
	 	 
	Exhibit C

	 	Quarterly Certificate
	 
	 	 
	Exhibit D

	 	Certificate to be Provided by BNPPLC Re: Accounting






(iii)









 






CLOSING CERTIFICATE AND AGREEMENT




     This CLOSING CERTIFICATE AND AGREEMENT (this “Certificate”), dated as of
December 15, 2005 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION
(“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.



RECITALS




     Contemporaneously with the execution of this Certificate, BNPPLC and NAI are executing a
Common Definitions and Provisions Agreement dated as of the Effective Date (the “Common Definitions
and Provisions Agreement”), which by this reference is incorporated into and made a part of this
Certificate for all purposes. As used in this Certificate, capitalized terms defined in the Common
Definitions and Provisions Agreement and not otherwise defined in this Certificate are intended to
have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.



     Also contemporaneously with this Certificate, BNPPLC is executing and accepting a Ground Lease
from NAI (the “Ground Lease”), pursuant to which BNPPLC is acquiring a leasehold estate in the Land
described in Exhibit A and any existing Improvements on the Land.



     Also contemporaneously with this Certificate, BNPPLC and NAI are executing a Construction
Management Agreement (the"Construction Management Agreement”) and a Lease Agreement (the “Lease”).
Pursuant to the Construction Management Agreement, BNPPLC is agreeing to provide funding for the
construction of new Improvements. When the term of the Lease commences, the Lease will cover all
Improvements on the Land described in Exhibit A.



     Also contemporaneously with this Certificate, BNPPLC and NAI are executing a Purchase
Agreement (the “Purchase Agreement”), pursuant to which NAI may purchase or arrange for the
purchase of the Property and BNPPLC may collect a Supplemental Payment from NAI sufficient to cover
all or a substantial portion of the Lease Balance not otherwise repaid to BNPPLC from the proceeds
of any sale of the Property.



     As a condition to BNPPLC’s execution of the other Operative Documents, BNPPLC requires the
representations and covenants of NAI set out below.



AGREEMENTS




     In consideration of the premises and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:


1 Representations, Covenants and Acknowledgments 




 









 







of NAI Concerning the Property. To induce BNPPLC to enter into the Ground Lease, and to
enter into this Certificate and the other Operative Documents, NAI represents, covenants and
acknowledges as follows:




     (A) Prior Inspections and Investigations Concerning the Property. NAI has
thoroughly inspected, investigated and evaluated the condition of and title to the Property and
Applicable Laws which will govern the construction, use and operation of the Property required or
permitted by the Operative Documents, as necessary to make the representations concerning the
Property set forth in this Certificate and other Operative Documents.



     (B) Title. Good and indefeasible title to the Land and any existing Improvements
thereon is currently vested in NAI, subject only to the rights of BNPPLC under the Ground Lease,
the Permitted Encumbrances and any Liens Removable by BNPPLC. So long as NAI has any rights under
the Construction Management Agreement, the Lease or the Purchase Agreement, NAI will not permit any
Person to acquire rights of the landlord under the Ground Lease other than NAI itself or a
corporation that controls, is controlled by or under common control with NAI.



     (C) Compliance with Covenants and Laws. The construction contemplated by the
Construction Management Agreement and use of the Property permitted by the Lease complies, or will
comply after NAI obtains readily available permits (either as the construction manager under the
Construction Management Agreement or as the tenant under the Lease), in all material respects with
all Applicable Laws. NAI has obtained or can and will promptly obtain all utility, building, health
and operating permits required by any governmental authority or municipality having jurisdiction
over the Property for the construction contemplated in the Construction Management Agreement and
the use of the Property permitted by the Lease.


2 Representations and Covenants by NAI. NAI also represents and covenants to
BNPPLC as follows:




     (A) Concerning NAI and the Operative Documents.




     (1)Entity Status. NAI is a corporation duly incorporated and validly existing in the State
of Delaware and is authorized to do business in and is in good standing under the laws of
California.




     (2)Authority. The Constituent Documents of NAI permit the execution, delivery and
performance of the Operative Documents by NAI, and all actions and approvals necessary to
bind NAI under the Operative Documents have been taken and obtained. Without limiting the
foregoing, the Operative Documents will be binding upon NAI when signed on behalf of NAI by
Steven Gomo, Chief Financial Officer of NAI.



Closing Certificate and Agreement — Page 2




 









 









NAI has all requisite power and all
governmental certificates of authority, licenses, permits and qualifications to carry on
its business as now conducted and contemplated to be conducted and to perform the Operative
Documents.




     (3)
Solvency. NAI is not “insolvent” on the Effective Date (that is, the sum of NAI’s
absolute and contingent liabilities — including the obligations of NAI under the Operative
Documents — does not exceed the fair market value of NAI’s assets), and NAI has no
outstanding liens, suits, garnishments or court actions which could render NAI insolvent or
bankrupt. NAI’s capital is adequate for the businesses in which NAI is engaged and intends
to be engaged. NAI has not incurred (whether by the Operative Documents or otherwise), nor
does NAI intend to incur or believe that it will incur, debts which will be beyond its
ability to pay as such debts mature. No petition or answer has been filed by or, to NAI’s
knowledge, against NAI in bankruptcy or other legal proceedings that seeks an assignment
for the benefit of creditors, the appointment of a receiver, trustee, custodian or
liquidator with respect to NAI or any significant portion of NAI’s property, a
reorganization, arrangement, rearrangement, composition, extension, liquidation or
dissolution of NAI or similar relief under the federal Bankruptcy Code or any state law.




     (4)
Financial Reports. All reports, financial statements and other data furnished by NAI to
BNPPLC in connection with the agreements set forth in the Operative Documents are true and
correct in all material respects and do not omit to state any fact or circumstance
necessary to make the statements contained therein not misleading. No material adverse
change has occurred since the dates of such reports, statements and other data in the
financial condition of NAI.




     (5)
Pending Legal Proceedings. No judicial or administrative investigations, actions, suits
or proceedings are pending or, to the knowledge of NAI, threatened against or affecting NAI
by or before any court or other Governmental Authority that have or could reasonably be
expected to have a Material Adverse Effect. NAI is not in default with respect to any
order, writ, injunction, decree or demand of any court or other Governmental Authority in a
manner that has or could reasonably be expected to have a Material Adverse Effect.




     (6)
No Default or Violation. The execution and performance by NAI of the Operative Documents
do not and will not contravene or result in a breach of or default under any other
agreement to which NAI is a party or by which NAI is bound or which affects any assets of
NAI. Such execution and performance by NAI do not contravene any law, order, decree, rule
or regulation to which NAI is subject. Further, such execution and performance by NAI will
not result in the creation or imposition of (or the obligation to create or impose) any
lien, charge or encumbrance on, or security interest in,



Closing Certificate and Agreement — Page 3




 









 






any property of NAI pursuant to
the provisions of any such other agreement.




     (7) Use of Proceeds. In no event will the funds from any Funding Advance be used directly or
indirectly for personal, family, household or agricultural purposes or for the purpose,
whether immediate, incidental or ultimate, of purchasing, acquiring or carrying any “margin
stock” or any “margin securities” (as such terms are defined in Regulation U promulgated by
the Board of Governors of the Federal Reserve System) or to extend credit to others
directly or indirectly for the purpose of purchasing or carrying any such margin stock or
margin securities. NAI represents that NAI is not engaged principally, or as one of NAI’s
important activities, in the business of extending credit to others for the purpose of
purchasing or carrying such margin stock or margin securities.




     (8) Enforceability. The Operative Documents constitute the legal, valid and binding
obligations of NAI enforceable in accordance with their terms, subject to the effect of
bankruptcy, insolvency, reorganization, receivership and other similar laws affecting the
rights of creditors generally.




     (9) Pari Passu. The claims of BNPPLC against NAI under the Operative Documents rank at least
pari passu with the claims of all its other unsecured creditors, except those whose claims
are preferred solely by any laws of general application having effect in relation to
bankruptcy, insolvency, liquidation or other similar events.




     (10) Conduct of Business and Maintenance of Existence. So long as any obligations of NAI
under the Operative Documents remain outstanding, NAI will continue to engage in business
of the same general type as now conducted by it and will preserve, renew and keep in full
force and effect its corporate existence and its rights, privileges and franchises
necessary or desirable in the normal conduct of business.




     (11) Investment Company Act, etc. NAI is not and will not become, by reason of the Operative
Documents or any business or transactions in which it participates voluntarily, (a) an
“investment company” or a company “controlled” by an “investment company” (as each of the
quoted terms is defined or used in the Investment Company Act of 1940, as amended), or (b)
subject to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, or any foreign, federal or local statute or regulation limiting NAI’s ability to
incur or guarantee indebtedness or obligations, or to pledge its assets to secure
indebtedness or obligations, as contemplated by any of the Operative Documents.




     (12) Not a Foreign Person. NAI is not a “foreign person” within the meaning of Sections 1445
and 7701 of the Code (i.e. NAI is not a non-resident alien, foreign corporation, foreign
partnership, foreign trust or foreign estate as those terms are defined



Closing Certificate and Agreement — Page 4




 









 









in the Code and
regulations promulgated thereunder).




     (13) ERISA. NAI is not and will not become an “employee benefit plan” (as defined in Section
3(3) of ERISA) which is subject to Title I of ERISA. The assets of NAI do not and will not
in the future constitute “plan assets” of one or more such plans within the meaning of 29
C.F.R. Section 2510.3-101. NAI is not and will not become a “governmental plan” within the
meaning of Section 3(32) of ERISA. Transactions by or with NAI are not subject to state
statutes regulating investments of and fiduciary obligations with respect to governmental
plans. No ERISA Termination Event has occurred with respect to any Plan, and NAI and its
Subsidiaries are in compliance with ERISA. Neither NAI nor any of its Subsidiaries is
required to contribute to, or has any other absolute or contingent liability in respect of,
any Multiemployer Plan. As of the Effective Date no “accumulated funding deficiency” (as
defined in Section 412(a) of the Code) exists with respect to any Plan, whether or not
waived by the Secretary of the Treasury or his delegate, and there are no Unfunded Benefit
Liabilities with respect to any Plan.




     (14)
Compliance With Laws. NAI and its Subsidiaries comply and will comply with all
Applicable Laws (including environmental laws and ERISA and the rules and regulations
thereunder), except when the necessity of compliance is contested in good faith by
appropriate proceedings which do not have and could not reasonably be expected to have a
Material Adverse Effect. Neither NAI nor its Subsidiaries have received any notice
asserting or describing a material failure on the part of NAI or any Subsidiary to comply
with Applicable Laws, other than failures that have been fully rectified by NAI or the
Subsidiary, as the case may be, in a manner approved or accepted by Governmental
Authorities responsible for the enforcement of the Applicable Laws.




     (15)
Payment of Taxes Generally. Except when the failure to do so does not have and could
not reasonably be expected to have a Material Adverse Effect (taking into account any
appropriate contest of taxes), NAI and its Subsidiaries have filed and will file all tax
declarations, reports and returns which are required by (and in the form required by)
Applicable Laws and have paid and will pay all taxes or other charges shown to be due and
payable on such declarations, reports and returns and all assessments made against it or
its assets by any Governmental Authority; and no liens have been filed or established by
any Governmental Authority against NAI or its assets or against any Subsidiary or its
assets to secure the payment of taxes or assessments that are past due or claimed to be
past due.




     (16)
Maintenance of Insurance Generally. Except when the failure to do so does not have and
could not reasonably be expected to have a Material Adverse Effect, NAI and its
Subsidiaries have maintained and will maintain insurance with respect to its



Closing Certificate and Agreement — Page 5




 









 









properties and
businesses, with financially sound and reputable insurers, having coverages against losses
or damages of the kinds customarily insured against by reputable companies in the same or
similar businesses, such insurance being the types, and in amounts no less than the
amounts, which are customary for such companies under similar circumstances.




     (17)
Franchises, Licenses, etc. Except when the failure to do so does not have and could not
reasonably be expected to have a Material Adverse Effect, NAI and its Subsidiaries have and
comply with, and will have and will comply with, all franchises, certificates, licenses,
permits and other authorizations from Governmental Authorities that are necessary for the
ownership, maintenance and operation of its properties and assets.




     (18)
Patents, Trademarks, etc. Except when the failure to do so does not have and could not
reasonably be expected to have a Material Adverse Effect, NAI and its Subsidiaries have and
will have and maintain in full force and effect all patents, trademarks, service marks,
trade names, copyrights, licenses and other such rights, free from burdensome restrictions,
which are necessary for the operation of its businesses. Without limiting the foregoing, to
the knowledge of NAI, no product, process, method, service or other item presently sold by
or employed by NAI or any Subsidiary in connection with its business as presently conducted
infringes any patents, trademark, service mark, trade name, copyright, license or other
right owned by any other Person. No claim or litigation is presently pending, or to the
knowledge of NAI, threatened against or affecting NAI or any Subsidiary that contests its
right to sell or use any such product, process, method, substance or other item and that
has or could reasonably be expected to have a Material Adverse Effect.




     (19)
Labor. Neither NAI nor any of its Subsidiaries has experienced strikes, labor disputes,
slow downs or work stoppages due to labor disagreements that currently have or could
reasonably be expected to have a Material Adverse Effect, and to the knowledge of NAI there
are no such strikes, disputes, slow downs or work stoppages threatened against it or
against any Subsidiary. The hours worked and payment made to employees of NAI and its
Subsidiaries have not been in violation in any material respect of the Fair Labor Standards
Act or any other Applicable Laws dealing with such matters. All material payments due on
account of wages or employee health and welfare insurance and other benefits from NAI or
from any Subsidiary have been paid or accrued as liabilities on its books.




     (20)
Title to Properties Generally. Except when the failure to do so does not have and could
not reasonably be expected to have a Material Adverse Effect, NAI and its Subsidiaries have
and will have and maintain good and indefeasible fee simple title to or



Closing Certificate and Agreement — Page 6




 









 









valid leasehold
interests in all of its real property and good title to or a valid leasehold interest in
all of its other material assets, as such properties and assets are reflected in the most
recent financial statements delivered to BNPPLC, other than properties or assets disposed
of in the ordinary course of business since such date; subject, however, in the case of the
Property to Permitted Encumbrances and Liens created by the Operative Documents. NAI enjoys
peaceful and undisturbed possession under all of its leases.




     (21)
Books and Records. NAI will keep proper books of record and account, containing
complete and accurate entries of all its financial and business transactions.



     (B) Further Assurances. NAI will, upon the reasonable request of BNPPLC, (i)
execute, acknowledge, deliver and record or file such further instruments and do such further acts
as may be necessary, desirable or proper to carry out more effectively the purposes of the
Operative Documents and to subject to any of the Operative Documents any property intended by the
terms thereof to be covered thereby, including specifically, but without limitation, any renewals,
additions, substitutions, replacements or appurtenances to the Property; (ii) execute, acknowledge,
deliver, procure and record or file any document or instrument deemed advisable by BNPPLC to
protect its rights in and to the Property against the rights or interests of third persons; and
(iii) provide such certificates, documents, reports, information, affidavits and other instruments
and do such further acts as may be necessary, desirable or proper in the reasonable determination
of BNPPLC to enable BNPPLC to comply with the requirements or requests of any agency or authority
having jurisdiction over it.



     (C) Syndication. Without limiting the foregoing, NAI will cooperate with BNPPLC
as reasonably required to allow BNPPLC to induce banks not affiliated with BNPPLC to become
Participants. Such cooperation will include the execution of any modification proposed by BNPPLC to
any of the Operative Documents at the request of a prospective Participant; subject, however, to
the conditions that (i) in no event will NAI be required to approve or accept an increase in the
Spread or other modifications that change the economics of the transactions contemplated by the
Operative Documents to NAI, and (ii) in other respects the form and substance of any such
modification agreement must not reasonably objectionable to NAI.



     (D) Financial Statements; Required Notices; Certificates. Prior to the Completion
Date and throughout the Term of the Lease, NAI will deliver to BNPPLC and to each Participant of
which NAI has been notified:




     (1)
as soon as available and in any event within 45 days after the end of each of the first
three fiscal quarters of each fiscal year of NAI, the unaudited consolidated balance sheet
of NAI and its Subsidiaries as of the end of such quarter and consolidated unaudited
statements of income, stockholders’ equity and cash flow of NAI and its Subsidiaries for
the period commencing at the end of the previous fiscal year and ending



Closing Certificate and Agreement — Page 7




 









 









with the end of
such quarter, setting forth in comparative form figures for the corresponding period in the
preceding fiscal year, in the case of such statements of income, stockholders’ equity and
cash flow, and figures for the preceding fiscal year in the case of such balance sheet, all
in reasonable detail, in accordance with GAAP, and certified in a manner acceptable to
BNPPLC by a Responsible Financial Officer of NAI (subject to normal year-end adjustments);
provided, that so long as NAI is a company subject to the periodic reporting requirements
of Section 12 of the Securities Exchange Act of 1934, as amended, NAI will be deemed to
have satisfied its obligations under this clause (1) if NAI delivers to BNPPLC the same
quarterly reports, certified by a Responsible Financial Officer of NAI (subject to year-end
adjustments), that NAI delivers to its shareholders;




     (2)
as soon as available and in any event within ninety days after the end of each fiscal
year of NAI, the consolidated balance sheet of NAI and its Subsidiaries as of the end of
such fiscal year and consolidated statements of income, stockholders’ equity and cash flow
of NAI and its Subsidiaries for the period commencing at the end of the previous fiscal
year and ending with the end of such fiscal year, setting forth in comparative form figures
for the preceding fiscal year, all in reasonable detail, in accordance with GAAP, and
certified in a manner acceptable to BNPPLC by independent public accountants of recognized
national standing reasonably acceptable to BNPPLC; provided, that so long as NAI is a
company subject to the periodic reporting requirements of Section 12 of the Securities
Exchange Act of 1934, as amended, NAI will be deemed to have satisfied its obligations
under this clause (ii) if NAI delivers to BNPPLC the same annual report and report and
opinion of accountants that NAI delivers to its shareholders;




     (3)
in each case if requested in writing by BNPPLC, together with the financial statements
furnished in accordance with subparagraph 2(D)(1) and 2(D)(2), a certificate of a
Responsible Financial Officer of NAI in the form of certificate attached hereto as
Exhibit C (a) representing that no Event of Default or material Default by NAI has
occurred (or, if an Event of Default or material Default by NAI has occurred, stating the
nature thereof and the action which NAI has taken or proposes to take to rectify it), (b)
stating that the representations and warranties by NAI contained herein are true and
complete in all material respects on and as of the date of such certificate as though made
on and as of such date, and (c) setting forth calculations which show whether NAI is
complying with financial covenants set forth in subparagraph 3(B);




     (4)
as soon as possible and in any event within five days after the occurrence of each Event
of Default or material Default known to a Responsible Financial Officer of NAI, a statement
of NAI setting forth details of such Event of Default or material Default and the action
which NAI has taken and proposes to take with respect thereto;



Closing Certificate and Agreement — Page 8




 









 









     (5)
promptly after the sending or filing thereof, copies of all such financial statements,
proxy statements, notices and reports which NAI or any Subsidiary sends to its public
stockholders, and copies of all reports and registration statements (without exhibits)
which NAI or any Subsidiary files with the Securities and Exchange Commission (or any
governmental body or agency succeeding to the functions of the Securities and Exchange
Commission) or any national securities exchange;




     (6)
as soon as practicable and in any event within thirty days after a Responsible Financial
Officer of NAI knows or has reason to know that any ERISA Termination Event with respect to
any Plan has occurred, a statement of a Responsible Financial Officer of NAI describing
such ERISA Termination Event and the action, if any, which NAI proposes to take with
respect thereto;




     (7)
upon request by BNPPLC, a statement in writing certifying that the Operative Documents
are unmodified and in full effect (or, if there have been modifications, that the Operative
Documents are in full effect as modified, and setting forth such modifications) and either
stating that no default exists under the Operative Documents or specifying each such
default; it being intended that any such statement by NAI may be relied upon by any
prospective purchaser or mortgagee of the Property or any prospective Participant; and




     (8)
such other information respecting the condition or operations, financial or otherwise,
of NAI, of its Subsidiaries or of the Property as BNPPLC or BNPPLC’s Parent or any
Participant through BNPPLC may from time to time reasonably request.


Reports and financial statements required to be delivered pursuant to paragraphs (1), (2) and (5)
of this subparagraph 2(D) shall be deemed to have been delivered on the date on which such reports,
or reports containing such financial statements, are posted for downloading (in a “PDF” or other
readily available format) on one of NAI’s internet websites at www.netapp.com or
www.investors.netapp.com or on the SEC’s internet website at www.sec.gov; provided, however, that
after being posted they remain available for downloading at the applicable website for at least 90
days.



BNPPLC is hereby authorized to deliver a copy of any information or certificate delivered to it
pursuant to this subparagraph 2(D) to any Participant and to any regulatory body having
jurisdiction over BNPPLC, BNPPLC’s Parent or any Participant that requires or requests it.




     (E) Omissions. None of NAI’s representations in the Operative Documents or in any
other document, certificate or written statement furnished to BNPPLC by or on behalf of NAI
contains any untrue statement of a material fact or omits a material fact necessary in order to
make the statements contained herein or therein (when taken in their entireties) not misleading.



Closing Certificate and Agreement — Page 9




 









 







3 Financial Covenants and Negative Covenants of NAI. NAI
represents and covenants as follows:




     (A) Definitions. As used in this Agreement:




     “Adjusted EBITDA” means, for any accounting period, the net income (or net loss) of NAI and
its Subsidiaries (determined on a consolidated basis), plus without duplication and
to the extent reflected as a charge in the statement of such consolidated net income for
such period, the sum of (a) income tax expense, (b) interest expense, (c) depreciation and
amortization expense, (d) amortization of intangibles and organization costs, (e) non-cash
amortization of deferred stock compensation, (f) non-cash expenses related to stock-based
compensation, (g) non-cash in-process research and development expense and (h) any
extraordinary or non-recurring non-cash expenses or losses (including, whether or not
otherwise includable as a separate item in the statement of such consolidated net income
for such period, non-cash losses on sales of assets outside the ordinary course of
business), minus (x) to the extent included in the statement of such consolidated
net income for such period, (i) interest income, (ii) any extraordinary or non-recurring
non-cash income or gains (including, whether or not otherwise includable as a separate item
in the statement of such consolidated net income for such period, gains on sales of assets
outside the ordinary course of business), (iii) income tax credits (to the extent not
netted from income tax expense) and (iv) any other non-cash income, and (y) any cash
payments made during such period in respect of items described in clause (e) above
subsequent to the fiscal quarter in which the relevant non-cash expenses or losses were
reflected as a charge in the statement of consolidated net income, all as determined on a
consolidated basis.




     “NAI/Company” means NAI or any of its Subsidiaries.




     “Rolling Four Quarter Period” means a period of four consecutive fiscal quarters of NAI.




     “Total Debt” means, without duplication, the following (each, unless otherwise noted,
determined in accordance with GAAP):




     (a) all obligations of any NAI/Company evidenced by notes, bonds, debentures or
other similar instruments and all other obligations of any NAI/Company for borrowed
money (including obligations to repurchase receivables or other assets sold with
recourse);




     (b) all obligations of any NAI/Company for the deferred purchase



Closing Certificate and Agreement — Page 10




 









 









price of property
or services (including obligations under letters of credit or other credit
facilities which secure or finance such purchase price, and the capitalized amount
reported for income tax purposes with respect to obligations under “synthetic”
leases, but excluding accounts payable for property or services or the deferred
purchase price of property to the extent due within one year of the applicable
determination of Total Debt);




     (c) all obligations of any NAI/Company under conditional sale or other title
retention agreements with respect to property (other than inventory) acquired by
the NAI/Company (but limited in amount to the value of such property if the rights
and remedies of the seller or lender under such agreement in the event of default
are limited solely to the repossession or sale of such property);




     (d) all obligations of any NAI/Company as lessee under or with respect to capital
leases;




     (e) all guaranty obligations of any NAI/Company with respect to the indebtedness of
any other person, and all other contingent obligations of any NAI/Company; and




     (f) all obligations of other persons of the types described in clauses (a) through
(e) preceding to the extent secured by (or for which any holder of such obligations
has an existing right, contingent or otherwise, to be secured by) any Lien on any
property (including accounts and contract rights) of any NAI/Company, even though
the NAI/Company has not assumed or become liable for the payment of such
obligations.



     (B) Financial Covenants. NAI covenants that it shall not, at any time prior to
the Completion Date and so long thereafter as the Lease continues in effect, suffer or permit:




     (1) Minimum Unencumbered Cash and Short Term Investments. The sum (without duplication of
any item) of the unrestricted cash, unencumbered short term cash investments and
unencumbered marketable securities classified as short term investments according to GAAP
of NAI and its Subsidiaries (determined on a consolidated basis) to be less than
$300,000,000.




     (2)
Maximum Leverage Ratio. The ratio of (a) Total Debt as of the end of any Rolling Four
Quarter Period, to (b) Adjusted EBITDA for such Rolling Four Quarter Period, to be more
than 1.50 to 1.00.



     (C) Negative Covenants. NAI will not, without the prior consent of BNPPLC in each



Closing Certificate and Agreement — Page 11




 









 







case, do or permit any of its Subsidiaries to do any of the following: Without limiting NAI’s
obligations under the other provisions of the Operative Documents, during the Term, NAI shall not,
without the prior written consent of BNPPLC in each case:





     (1) Negative Pledge. Create, incur, assume or suffer to exist, or permit any of its
Consolidated Subsidiaries to create, incur, assume or suffer to exist, any Lien, upon or
with respect to any of its properties, now owned or hereafter acquired, provided that the
following shall be permitted except to the extent that they would encumber any interest in
the Property in violation of other provisions of the Operative Documents:




     (a) Liens for taxes or assessments or other government charges or levies if not yet
due and payable or if they are being contested in good faith by appropriate
proceedings and for which appropriate reserves are maintained;




     (b)
Liens imposed by law, such as mechanic’s, materialmen’s, landlord’s,
warehousemen’s and carrier’s Liens, and other similar Liens, securing obligations
incurred in the ordinary course of business which are not past due for more than
thirty (30) days, or which are being contested in good faith by appropriate
proceedings and for which appropriate reserves have been established;




     (c)
Liens under workmen’s compensation, unemployment insurance, social security or
similar laws (other than ERISA);




     (d)
Liens, deposits or pledges to secure the performance of bids, tenders, contracts
(other than contracts for the payment of money), leases, public or statutory
obligations, surety, stay, appeal, indemnity, performance or other similar bonds,
or other similar obligations arising in the ordinary course of business;




     (e) judgment and other similar Liens against assets other than the Property or any
part thereof in an aggregate amount not in excess of $25,000,000 arising in
connection with court proceedings; provided that the execution or other enforcement
of such Liens is effectively stayed and the claims secured thereby are being
actively contested in good faith by appropriate proceedings;




     (f) easements, rights-of-way, restrictions and other similar encumbrances which, in
the aggregate, do not materially interfere with the occupation, use and enjoyment
by NAI or any such Consolidated Subsidiary of the property or assets encumbered
thereby in the normal course of its business or materially impair the value of the
property subject thereto;



Closing Certificate and Agreement — Page 12




 









 









     (g)
Liens securing obligations of such a Consolidated Subsidiary to NAI or to
another such Consolidated Subsidiary;




     (h) Liens not otherwise permitted by this subparagraph 3(C)(1) (and not encumbering
the Property) incurred in connection with the incurrence of additional Indebtedness
or asserted to secure Unfunded Benefit Liabilities, provided that (a) the sum of
the aggregate principal amount of all outstanding obligations secured by Liens
incurred pursuant to this clause shall not at any time exceed ten percent (10%) of
NAI consolidated net worth (determined in accordance with GAAP); and (b) such Liens
do not constitute Liens against NAI’s interest in any material Subsidiary or
blanket Liens against all or substantially all of the inventory, receivables,
general intangibles or equipment of NAI or of any material Subsidiary of NAI (for
purposes of this clause, a “material Subsidiary” means any subsidiary whose assets
represent a substantial part of the total assets of NAI and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP); and




     (i)
Permitted Encumbrances;




     (j)
Liens created by the Operative Documents or other documents being executed or
accepted by BNPPLC in connection with the Operative Documents; and




     (k)
Liens on property existing at the time of acquisition of such property or to
secure the payment of all or any part of the purchase price of such property or any
addition thereto or to secure any indebtedness incurred at the time of, or within
120 days after the acquisition of such property or any addition thereto for the
purpose of financing all or any part of the purchase price thereof (provided such
liens are limited to such property or additions thereto)




     (l)
in the event a corporation is merged into NAI or a Subsidiary of NAI or becomes
a Subsidiary of NAI after the Effective Date, Liens on the property or shares of
capital stock of such corporation existing at the time of such merger or at the
time the corporation became a Subsidiary of NAI as the case may be;




     (m)
Liens incurred in connection with any renewals, extensions or refundings of any
Debt secured by Liens described in the preceding clauses of this subparagraph (1),
provided that there is no increase in the aggregate principal amount of Debt
secured thereby from that which was outstanding as of the date of



Closing Certificate and Agreement — Page 13




 









 









such renewal,
extension or refunding and no additional property is encumbered; and




     (n)
Liens incurred to secure Indebtedness incurred no later than June 30, 2006 to
fund expenditures by NAI made to comply with or generate tax savings under the
American Job Creations Act of 2004.




     (2)
Transactions with Affiliates. Enter into or permit any Subsidiary of NAI to enter into
any material transactions (including, without limitation, the purchase, sale or exchange of
property or the rendering of any service) with any Affiliates of NAI except on terms (1)
that would not cause or result in a Default by NAI under the financial covenants set forth
in Part II of this Schedule, and (2) that are no less favorable to NAI or the
relevant Subsidiary than those that would have been obtained in a comparable transaction on
an arm’s length basis from an unrelated Person.




     (3)
Capital Expenditures. Make any additional investment in fixed assets in any fiscal year
in excess of an aggregate of twenty percent (20%) of NAI’s total assets as of the end of
the prior fiscal year.




     (4)
Merger, Consolidation, Transfer of Assets. Merge into or consolidate with any other
entity (unless NAI is the surviving entity and remains in compliance of all provisions of
the Operative Documents); or make any substantial change in the nature of NAI’s business as
conducted as of the date hereof; or sell, lease, transfer or otherwise dispose of all or a
substantial or material portion of NAI’s assets except in the ordinary course of its
business.




     (5)
Change in Nature of Business. Make or do anything that would result in a material change
in the nature of the business NAI and its Subsidiaries, taken as whole, as carried on at
the Effective Date.




     (6)
Multiemployer ERISA Plans. Incur any obligation to contribute to any “multiemployer
plan” as defined in Section 4001 of ERISA.




     (7)
Prohibited ERISA Transaction. Enter into any transaction which would cause any of the
Operative Documents or any related documents executed or accepted by BNPPLC (or any
exercise of BNPPLC’s rights hereunder or thereunder) to constitute a non-exempt prohibited
transaction under ERISA.


4 Limited Representations and Covenants of BNPPLC




     (A) Concerning Accounting Matters.



Closing Certificate and Agreement — Page 14




 









 









     (1)
To permit NAI to determine the appropriate accounting for NAI’s relationship with BNPPLC
under FASB Interpretation No. 46, Consolidation of Variable Interest Entities (“FIN 46”),
BNPPLC represents that to the knowledge of BNPPLC the fair value of the Property and of
other properties, if any, leased to NAI by BNPPLC (collectively, whether one or more, the
“Properties Leased to NAI”) are, as of the Effective Date, less than half of the total of
the fair values of all assets of BNPPLC, excluding any assets of BNPPLC held within a silo.
Further, none of the Properties Leased to NAI are, as of the Effective Date, held within a
silo. Consistent with the directions of NAI (based upon the current interpretation of FIN
46 by NAI and its auditors), and for purposes of this representation only:




	 	•	 	“held within a silo” means, with respect to any
asset or group of assets leased by BNPPLC to a
single lessee or group of affiliated lessees,
that BNPPLC has obtained funds equal to or in
excess of 95% of the fair value of the leased
asset or group of assets to acquire or maintain
its investment in such asset or group of assets
through non-recourse financing or other
contractual arrangements (such as targeted equity
or bank participations), the effect of which is
to leave such asset or group of assets (or
proceeds thereof) as the only significant asset
or assets of BNPPLC at risk for the repayment of
such funds;
	 
	 	•	 	“fair value” means, with respect to any asset,
the amount for which the asset could be bought or
sold in a current transaction negotiated at arms
length between willing parties (that is, other
than in a forced or liquidation sale);
	 
	 	•	 	with respect to the Properties Leased to NAI
(regardless of how BNPPLC accounts for the leases
of the Properties Leased to NAI), and with
respect to other assets that are subject to
leases accounted for by BNPPLC as operating
leases pursuant to Financial Accounting Standards
Board Statement 13 (“FAS 13”), fair value is
determined without regard to residual value
guarantees, remarketing agreements, non-recourse
financings, purchase options or other contractual
arrangements, whether made by BNPPLC with NAI or
with other parties, that might otherwise impact
the fair value of such assets;
	 
	 	•	 	with respect to assets, other than Properties
Leased to NAI, that are subject to leases
accounted for by BNPPLC as leveraged leases
pursuant to FAS 13, fair value is determined on a
gross basis prior





Closing Certificate and Agreement — Page 15




 









 









to the application of leveraged
lease accounting, recognizing that equity
investments made by BNPPLC in its assets subject
to leveraged lease accounting should be grossed
up in applying this test (however, equity
investments made by BNPPLC through another legal
entity should not be so grossed up in applying
this test);




	 	•	 	with respect to assets, other than Properties
Leased to NAI, that are subject to leases
accounted for by BNPPLC as direct financing
leases pursuant to FAS 13, fair value is
determined as the sum of the fair values
(considering current interest rates at which
similar loans would be made to borrowers with
similar credit ratings and for the same remaining
maturities) of the corresponding finance lease
receivables and related unguaranteed residual
values.






     (2) BNPPLC also represents that BNPPLC’s Parent is, as of the Effective Date, including
BNPPLC as a consolidated subsidiary in the audited financial statements issued by BNPPLC’s
Parent.




     (3) BNPPLC covenants that, as reasonably requested by NAI from time to time with respect to
any accounting period during which the Lease is or was in effect, BNPPLC will provide to
NAI confirmation of facts concerning BNPPLC and its assets as necessary to permit NAI to
determine the proper accounting for the Lease (including updates of the facts set forth in
clauses (1) and (2) above); except that BNPPLC will not be required by this provision to
(w) provide any information that is not in the possession or control of BNPPLC or its
Affiliates, (x) disclose the specific terms and conditions of its leases or other
transactions with other parties or the names of such parties, (y) make disclosures
prohibited by any law applicable to BNPPLC or BNPPLC’s Parent, or (z) disclose any other
information that is protected from disclosure by confidentiality provisions in favor of
such other parties or would be protected if their agreements with BNPPLC contained
confidentiality provisions similar in scope and substance to any confidentiality provisions
set forth in the Operative Documents for the benefit of NAI or its Affiliates. BNPPLC will
represent that information provided by it pursuant to this clause is true and complete in
all material respects, but only to the knowledge of BNPPLC as of the date it is provided,
utilizing the form of the certificate attached hereto as Exhibit D (signed by an
officer of BNPPLC), which certificate will be provided periodically by BNPPLC within five
business days of reasonable written request therefor by NAI as provided above, or such
longer period of time as may be reasonably necessary under the circumstances in order for
BNPPLC to confirm such information.




     (4) Although the representations required of BNPPLC by this subparagraph



Closing Certificate and Agreement — Page 16




 









 









are intended to
cover facts, it is understood and agreed (consistent with subparagraph 4(C) of the
Lease) that BNPPLC has not made and will not make any representation or warranty as to the
proper accounting by NAI or its Affiliates of the Lease or as to other accounting
conclusions.




(B) Other Limited Representations. BNPPLC represents that:




     (1)
Entity Status. BNPPLC is a corporation duly incorporated, validly existing and in good
standing under the laws of Delaware.




     (2)
Authority. The Constituent Documents of BNPPLC permit the execution, delivery and
performance of the Operative Documents by BNPPLC, and all actions and approvals necessary
to bind BNPPLC under the Operative Documents have been taken and obtained. Without limiting
the foregoing, the Operative Documents will be binding upon BNPPLC when signed on behalf of
BNPPLC by Lloyd G. Cox, Managing Director of BNPPLC. BNPPLC has all requisite power and all
governmental certificates of authority, licenses, permits and qualifications to carry on
its business as now conducted and contemplated to be conducted and to perform the Operative
Documents, except that BNPPLC makes no representation as to whether it has obtained
governmental certificates of authority, licenses, permits, qualifications or other
documentation required by state or local Applicable Laws. With regard to any such state or
local requirements, NAI may require that BNPPLC obtain a specific governmental certificates
of authority, licenses, permits, qualifications or other documentation pursuant to
subparagraph 4(C), subject to the conditions set forth in that subparagraph.




     (3)
Solvency. BNPPLC is not “insolvent” on the Effective Date (that is, the sum of BNPPLC’s
absolute and contingent liabilities — including the obligations of BNPPLC under the
Operative Documents — does not exceed the fair market value of BNPPLC’s assets), and BNPPLC
has no outstanding liens, suits, garnishments or court actions which could render BNPPLC
insolvent or bankrupt. BNPPLC’s capital is adequate for the businesses in which BNPPLC is
engaged and intends to be engaged. BNPPLC has not incurred (whether by the Operative
Documents or otherwise), nor does BNPPLC intend to incur or believe that it will incur,
debts which will be beyond its ability to pay as such debts mature. No petition or answer
has been filed by or, to BNPPLC’s knowledge, against BNPPLC in bankruptcy or other legal
proceedings that seeks an assignment for the benefit of creditors, the appointment of a
receiver, trustee, custodian or liquidator with respect to BNPPLC or any significant
portion of BNPPLC’s property, a reorganization, arrangement, rearrangement, composition,
extension, liquidation or dissolution of BNPPLC or similar relief under the federal
Bankruptcy Code or any state law. (As used in the Operative Documents, “BNPPLC’s knowledge”
and words of like effect mean the present actual knowledge of Lloyd G. Cox and Barry



Closing Certificate and Agreement — Page 17




 









 






Mendelsohn, the current officers of BNPPLC having primary responsibility for the
negotiation of the Operative Documents.)




     (4)
Pending Legal Proceedings. No judicial or administrative investigations, actions, suits
or proceedings are pending or, to the knowledge of BNPPLC, threatened against or affecting
BNPPLC by or before any court or other Governmental Authority. BNPPLC is not in default
with respect to any order, writ, injunction, decree or demand of any court or other
Governmental Authority in a manner that has or could reasonably be expected to have a a
material adverse effect on BNPPLC or its ability to perform its obligations under the
Operative Documents.




     (5)
No Default or Violation. The execution and performance by BNPPLC of the Operative
Documents do not and will not contravene or result in a breach of or default under any
other agreement to which BNPPLC is a party or by which BNPPLC is bound or which affects any
assets of BNPPLC. Such execution and performance by BNPPLC do not contravene any law,
order, decree, rule or regulation to which BNPPLC is subject. Further, such execution and
performance by BNPPLC will not result in the creation or imposition of (or the obligation
to create or impose) any lien, charge or encumbrance on, or security interest in, any
property of BNPPLC pursuant to the provisions of any such other agreement.




     (6)
Enforceability. The Operative Documents constitute the legal, valid and binding
obligations of BNPPLC enforceable in accordance with their terms, subject to the effect of
bankruptcy, insolvency, reorganization, receivership and other similar laws affecting the
rights of creditors generally.




     (7)
Conduct of Business and Maintenance of Existence. So long as any of the Operative
Documents remains in force, BNPPLC will continue to engage in business of the same general
type as now conducted by it and will preserve, renew and keep in full force and effect its
corporate existence and its rights, privileges and franchises necessary or desirable in the
normal conduct of business.




     (8)
Not a Foreign Person. BNPPLC is not a “foreign person” within the meaning of Sections
1445 and 7701 of the Code (i.e. BNPPLC is not a non-resident alien, foreign corporation,
foreign partnership, foreign trust or foreign estate as those terms are defined in the Code
and regulations promulgated thereunder).


Notwithstanding the foregoing, however or any other provision herein or in other Operative
Documents to the contrary, it is understood that NAI is not relying upon BNPPLC for any evaluation
of California or local Applicable Laws upon the transactions contemplated in the Operative
Documents, and BNPPLC makes no representation and will not make any




Closing Certificate and Agreement — Page 18




 









 







representation that conditions
imposed by zoning ordinances or other state or local Applicable Laws to the purchase, ownership,
lease or operation of the Property have been satisfied.




     (C) Further Assurances. Prior to the Completion Date and during the Term of the
Lease BNPPLC will take any action reasonably requested by NAI to facilitate the construction
contemplated by the Construction Management Agreement or the use of the Property permitted by the
Lease or the establishment of a commercial condominium regime that
includes the Property (a “Condominium Regime”); subject, however, to the following terms and conditions:




     (1)
This subparagraph 4(C) will not impose upon BNPPLC the obligation to take any action
that can be taken by NAI, NAI’s Affiliates or anyone else other than BNPPLC as the lessee
under the Ground Lease or the owner of the Property.




     (2)
BNPPLC will not be required by this subparagraph 4(C) to incur any expense or make any
payment to another Person unless (a) BNPPLC has received funds from NAI, in excess of any
other amounts due from NAI under any of the Operative Documents, sufficient to cover the
expense or make the payment or (b) the request by NAI which will result in such expense or
payment is made before the Completion Date and BNPPLC can include such expense or payment
in the Outstanding Construction Allowance for purposes of the Construction Management
Agreement.




     (3)
BNPPLC will have no obligations whatsoever under this subparagraph 4(C) at any time
after a 97-10/Event or when a Default or an Event of Default has occurred and is
continuing.




     (4)
NAI must request any action to be taken by BNPPLC pursuant to this subparagraph 4(C),
and such request must be specific and in writing, if required by BNPPLC at the time the
request is made.




     (5)
No action may be required of BNPPLC pursuant to this subparagraph 4(C) that could
constitute a violation of any Applicable Laws or compromise or constitute a waiver of
BNPPLC’s rights under other provisions of this Certificate or any of the other Operative
Documents or that for any other reason is reasonably objectionable to BNPPLC.



     The actions BNPPLC will take pursuant to this subparagraph 4(C) if reasonably requested by NAI
will include, subject to the conditions listed in the proviso above, executing or consenting to, or
exercising or assisting NAI to exercise rights under any: (I) grant of easements, licenses, rights
of way, and other rights in the nature of easements encumbering the Land or the Improvements, (II)
release, relocation or termination of easements, licenses, rights of way or other rights in the
nature of easements which are for the benefit of the Land or Improvements or



Closing Certificate and Agreement — Page 19




 









 








any portion thereof,
(III) dedication or transfer of portions of the Land not improved with a building, for road,
highway or other public purposes, (IV) agreements (other than with NAI or its Affiliates) for the
use and maintenance of common areas, for reciprocal rights of parking, ingress and egress and
amendments to any covenants and restrictions affecting the Land or any portion thereof, (V)
documents required to create or administer a governmental special benefit district or assessment
district for public improvements and collection of special assessments, (VI) instruments necessary
or desirable for the exercise or enforcement of rights or performance of obligations under any
Permitted Encumbrance or any contract, permit, license, franchise or other right included within
the term “Property”, (VII) modifications of Permitted Encumbrances, (VIII) permit applications or
other documents required to accommodate the Construction Project, (IX) confirmations of NAI’s
rights under any particular provisions of the Operative Documents which NAI may wish to provide to
a third party, (X) tract or parcel map subdividing the Land into lots or parcels, or (XI)
condominium documents (e.g., a condominium declaration or map) meeting the requirements of
Applicable Laws to establish a Condominium Regime. However, the determination of whether any such
action is reasonably requested or reasonably objectionable to BNPPLC may depend in whole or in part
upon the extent to which the requested action may result in a lien to secure payment or performance
obligations against BNPPLC’s interest in the Property, may cause the value of the Property to be
less than the Lease Balance after any Qualified Prepayments that may result from such action are
taken into account, or may impose upon BNPPLC any present or future obligations greater than the
obligations BNPPLC is willing to accept, taking into consideration the indemnifications provided by
NAI under the Construction Management Agreement or the Lease, as applicable.




     In addition, with respect to any request made by NAI to facilitate a relocation of any
easements, the following will be relevant to the determination of whether the request is
reasonable:




     (i)
whether material encroachments will result from the relocation, and whether title to the
land over or under which any such easement is to be relocated is encumbered by Liens other
than those which are Fully Subordinated or Removable or which otherwise constitute
Permitted Encumbrances;




     (ii)
whether the relocation will result in any interruption of access or services provided
to the Property which is likely to extend beyond the Designated Sale Date (it being
understood, however, that any such interruption which is not likely to extend beyond the
Designated Sale Date will not be a reason for BNPPLC to decline the request); and




     (iii)
whether the relocation is to be accomplished in a manner that will not, when the
relocation is complete, result in a material adverse change in the access to or services
provided to the Improvements or the Land.



Closing Certificate and Agreement — Page 20




 









 








     With respect to any request made by NAI to facilitate the establishment of a Condominium
Regime, the following will be relevant to the determination of whether the request is reasonable:




     (1)
whether the Condominium Regime will create one or more distinct condominium units that
include all significant Improvements constructed or to be constructed by NAI for BNPPLC
pursuant to the Construction Management Agreement and only such Improvements (whether one
or more, the “Applicable Units”);




     (2)
whether NAI is willing to amend the Operative Documents by amendments in form and
substance acceptable to BNPPLC (the “Anticipated Amendments”) as necessary to ensure that:




     (A)the Property will include of the Applicable Units, together with all access,
parking or other property rights (whether exclusive or nonexclusive) that will be
created as appurtenances to the Applicable Units by the Condominium Regime
(“Appurtenant Condo Rights”); and




     (B)the land leased to BNPPLC pursuant to the Ground Lease will include and be
limited to the land (if any) over which exclusive possession and control must
reasonably be vested in the owner of the Applicable Units to preserve the value and
utility of the Applicable Units to such owner, taking into account Appurtenant
Condo Rights;




     (3)
whether the request itself (if granted) or the proposed Condominium Regime is likely to
have any material adverse impact on the value or utility of the Property, taken as a whole,
after giving effect to the Anticipated Amendments and taking into account Appurtenant Condo
Rights; and




     (4)
whether the request itself (if granted) or the Condominium Regime will materially limit,
or give NAI or its Affiliates discretionary control over, the rights of BNPPLC and its
successors and assigns to use or lease, sell or otherwise transfer the Applicable Units in
the event NAI declines for any reason to purchase the Property on the Designated Sale Date
pursuant to the Purchase Agreement.



     Any and all Losses incurred by BNPPLC because of any action taken after the Completion Date
pursuant to this subparagraph 4(C) will be covered by the indemnifications of BNPPLC set forth in
Construction Management Agreement or in the Lease. Further, for purposes of such indemnification,
any such action taken by BNPPLC will be deemed to have been made at the request of NAI if made
pursuant to any request of counsel to or any officer of NAI (or with their knowledge, and without
their objection) in connection with the execution or



Closing Certificate and Agreement — Page 21




 









 







administration of the Lease or the other
Operative Documents.




     (D) Actions Permitted by NAI Without BNPPLC’s Consent. No refusal by BNPPLC to
execute or join in the execution of any agreement, application or other document requested by NAI
pursuant to the preceding subparagraph 4(C) will prevent NAI from itself executing such agreement,
application or other document, so long as NAI is not purporting to act for BNPPLC and does not
thereby create or expand any obligations or restrictions that encumber BNPPLC’s title to the
Property. Further, subject to the other terms and conditions of the Lease and other Operative
Documents, NAI may do any of the following in NAI’s own name and to the exclusion of BNPPLC before
and during the Term of the Lease, so long as no 97-10/Event has occurred and no Default or Event of
Default has occurred and is continuing, and provided NAI is not purporting to act for BNPPLC and
does not thereby create or expand any obligations or restrictions that encumber BNPPLC’s title to
the Property:




     (1)
perform obligations arising under and exercise and enforce the rights of NAI or the
owner of the Property under the Permitted Encumbrances;




     (2)
perform obligations arising under and exercise and enforce the rights of NAI or the
owner of the Property with respect to any other contracts or documents (such as building
permits) included within the Personal Property; and




     (3)
recover and retain any monetary damages or other benefit inuring to NAI or the owner of
the Property through the enforcement of any rights, contracts or other documents included
within the Personal Property (including the Permitted Encumbrances); provided, that to the
extent any such monetary damages may become payable as compensation for an adverse impact
on value of the Property, the rights of BNPPLC and NAI under the other Operative Documents
with respect to the collection and application of such monetary damages will be the same as
for condemnation proceeds payable because of a taking of all or any part of the Property.



     (E) Waiver of Landlord’s Liens. BNPPLC waives any security interest, statutory
landlord’s lien or other interest BNPPLC may have in or against computer equipment and other
tangible personal property placed on the Land from time to time that NAI or its Affiliates own or
lease from other lessors; however, BNPPLC does not waive its interest in or rights with respect to
equipment or other property included within the “Property” as described in Paragraph 7 of
the Lease. Although computer equipment or other tangible personal property may be “bolted down” or
otherwise firmly affixed to Improvements, it will not by reason thereof become part of the
Improvements if it can be removed without causing structural or other material damage to the
Improvements and without rendering HVAC or other major building systems inoperative and if it does
not otherwise constitute “Property” as provided in Paragraph 7 of the Lease.



Closing Certificate and Agreement — Page 22




 









 








     Without limiting the foregoing, BNPPLC acknowledges that NAI may obtain financing from other
parties for inventory, furnishings, equipment, machinery and other personal property that is
located in or about the Improvements, but that is not included in or integral to the Property, and
to secure such financing NAI may grant a security interest under the California Uniform Commercial
Code in such inventory, furnishings, equipment, machinery and other personal property. Further,
BNPPLC acknowledges that the lenders providing such financing may require confirmation from BNPPLC
of its agreements concerning landlord’s liens and other matters set forth in this subparagraph
4(E), and NAI may obtain such confirmation in any statement required of BNPPLC by the next
subparagraph.



     (F) Estoppel Letters. Upon thirty days written request by NAI at any time and
from time to time prior to the Designated Sale Date, BNPPLC must provide a statement in writing
certifying that the Operative Documents are unmodified and in full effect (or, if there have been
modifications, that the Operative Documents are in full effect as modified, and setting forth such
modifications), certifying the dates to which the Base Rent payable by NAI under the Lease has been
paid, stating whether BNPPLC is aware of any default by NAI that may exist under the Operative
Documents and confirming BNPPLC’s agreements concerning landlord’s liens and other matters set
forth in subparagraph 4(E). Any such statement by BNPPLC may be relied upon by anyone with whom NAI
may intend to enter into an agreement for construction of the Improvements or other significant
agreements concerning the Property.



     (G) No Implied Representations or Promises by BNPPLC. NAI acknowledges and
agrees that neither BNPPLC nor its representatives or agents have made any representations or
promises with respect to the Property or the transactions contemplated in the Operative Documents
except as expressly set forth in the Operative Documents, and no rights, easements or licenses are
being acquired by NAI from BNPPLC by implication or otherwise, except as expressly set forth in the
other Operative Documents.


5 Usury Savings Provision. Notwithstanding anything to the contrary in any of the
Operative Documents, BNPPLC does not intend to contract for, charge or collect any amount of money
from NAI that constitutes interest in excess of the maximum nonusurious rate of interest, if any,
allowed by applicable usury laws (the “Maximum Rate”). BNPPLC and NAI agree that it is their intent
in the execution of the Lease, the Purchase Agreement and other Operative Documents to contract in
strict compliance with applicable usury laws, if any. In furtherance thereof, BNPPLC and NAI
stipulate and agree that none of the provisions of the Lease, the Purchase Agreement or the other
Operative Documents shall ever be construed to create a contract requiring compensation for the
use, forbearance or detention of money at a rate in excess of the Maximum Rate, and the provisions
of this paragraph shall control over all other provisions of this Certificate or other Operative
Documents which may be in apparent conflict herewith. All interest paid or agreed to be paid by NAI
to BNPPLC shall, to the extent permitted by applicable




Closing Certificate and Agreement — Page 23




 









 







usury laws, be amortized, prorated,
allocated, and spread throughout the period that any principal upon which such interest accrues is
expected to be outstanding (including without limitation any renewal or extension of the term of
the Lease) so that the amount of interest included in such payments does not exceed the maximum
nonusurious amount permitted by applicable usury laws. If the Designated Sale Date is accelerated
and as a result thereof amounts paid by NAI to BNPPLC as interest are determined to exceed the
interest that would have accrued at the Maximum Rate for the period prior to the Designated Sale
Date, then BNPPLC shall, at its option, either refund to NAI the amount of such excess or credit
such excess as a Qualified Prepayment (and thus reduce the Lease Balance and other amounts, the
determination of which depend upon Qualified Prepayments credited to NAI) and thereby shall render
inapplicable any and all penalties of any kind provided by applicable usury laws as a result of
such excess interest. If BNPPLC receives money (or anything else) that is determined to constitute
interest and that would, but for this provision, increase the effective interest rate received by
BNPPLC under or in connection with the Operative Documents to a rate in excess of the Maximum Rate,
then the amount determined to constitute interest in excess of the maximum nonusurious interest
shall, immediately following such determination, be returned to NAI or be credited as a Qualified
Prepayment, in which event any and all penalties of any kind under applicable usury law shall be
inapplicable. If BNPPLC does not actually receive, but shall contract for, request or demand, a
payment of money (or anything else) which is determined to constitute interest and to increase the
effective interest rate contracted for or charged to a rate in excess of the Maximum Rate, BNPPLC
shall be entitled, following such determination, to waive or rescind the contractual claim, request
or demand for the amount determined to exceed the Maximum Rate, in which event any and all
penalties of any kind under applicable usury law shall be inapplicable. If at any time NAI should
have reason to believe that the transactions evidenced by the Operative Documents are in fact
usurious, NAI shall promptly give BNPPLC notice of such condition, after which BNPPLC shall have
ninety days in which to make appropriate refund or other adjustment in order to correct such
condition if it in fact exists.



6 Obligations of NAI Under Other Operative Documents Not Limited by this
Certificate. Except as provided above in Paragraph 5, nothing contained in this Certificate
will limit, modify or otherwise affect any of NAI’s obligations under the other Operative
Documents. Subject to Paragraph 5, those obligations are intended to be separate, independent and
in addition to, and not in lieu of, those established by this Certificate.



7 Obligations of NAI Hereunder Not Limited by Other Operative Documents.
Recognizing that but for this Certificate (including the representations of NAI set forth in
Paragraph 1) BNPPLC would not acquire the Property or enter into the other Operative Documents, NAI
agrees that BNPPLC’s rights for any breach of this Certificate (including a breach of such
representations) will not be limited by any provision of the other Operative Documents that would
limit NAI’s liability thereunder.




Closing Certificate and Agreement — Page 24




 









 







8 Waiver of Jury Trial. By its execution of this Certificate, each of NAI and
BNPPLC hereby waives its respective rights to a jury trial of any claim or cause of action based
upon or arising out of the Operative Documents or any of them or any other document or dealings
between them relating to the Property. The scope of this waiver is intended to be
all-encompassing of any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including contract claims, tort claims, breach of duty claims,
and all other common law and statutory claims. This waiver is a material inducement to each of
BNPPLC and NAI as they enter into a business relationship; each has already relied on the waiver in
entering into the Operative Documents; and each will continue to rely on the waiver in their
related future dealings. NAI and BNPPLC, each having reviewed this waiver with its legal counsel,
knowingly and voluntarily waives its jury trial rights following consultation with legal counsel.
This waiver is irrevocable, meaning that it may not be modified either orally or in writing,
and the waiver will apply to any subsequent amendments, renewals, supplements or modifications to
each of the Operative Documents or to any other documents or agreements relating to the
Property. In the event of litigation, this Certificate may be filed as a written consent to a
trial by the court.




[The signature pages follow.]




Closing Certificate and Agreement — Page 25




 









 








     IN WITNESS WHEREOF, this Closing Certificate and Agreement is executed to be effective as of
December 15, 2005.



	 	 	 	 	 
	 	BNP PARIBAS LEASING CORPORATION, a 

Delaware corporation

 	 
	 	By:  	/s/  Lloyd
G. Cox	 
	 	 	Lloyd G. Cox, Managing Director 	 
	 	 	 	 
	 



Closing Certificate and Agreement — Signature Page




 









 










     [Continuation of signature pages for Closing Certificate and Agreement dated as of December 15,
2005]



	 	 	 	 	 
	 	NETWORK APPLIANCE, INC., a Delaware 

corporation

 	 
	 	By:  	/s/  Steven
Gomo	 
	 	 	Steven Gomo, Chief Financial Officer 	 
	 	 	 	 
	 



Closing Certificate and Agreement — Signature Page




 









 








Exhibit A




Legal Description



Parcel 1, as shown on that certain Parcel Map which filed for record in the office of the recorder
of the County of Santa Clara, State of California on July 7, 1994, in Book 657 of Parcel Maps, Page
9.




APN: 110-32-6


ARB: 110-3-x65



TOGETHER WITH, easements appurtenant to Parcel 1 as described in Exhibit A attached to the
Ground Lease.




 









 








Exhibit B




Permitted Encumbrances



1. TAXES for the fiscal year 2005-2006, a lien not yet due or payable.



2. THE LIEN of supplemental taxes, if any, assessed pursuant to Chapter 3.5 commencing with
Section 75 of the California Revenue and Taxation Code, resulting from changes of ownership or
completion of construction on or after the date hereof.



3. EASEMENT for the purposes stated herein and incidents thereto




	 	 	 	 	 
	 

	 	Purpose
	 	: Slope Easement
	 
	 

	 	In favor of
	 	: City of Sunnyvale
	 
	 

	 	Recorded
	 	: October 9, 1964 in Book 6695, page 430, Official Records
	 
	 

	 	Affects
	 	: Easterly 18 feet, as shown on a survey plat entitled
ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated
December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.





4. EASEMENT for the purposes stated herein and incidents thereto




	 	 	 	 	 
	 

	 	Purpose
	 	: Public utilities easement
	 
	 

	 	In favor of
	 	: City of Sunnyvale
	 
	 

	 	Recorded
	 	: October 9, 1964 in Book 6695, page 450, Official Records
	 
	 

	 	Affects
	 	: Easterly 7 feet, as shown on a survey plat entitled
ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated
December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.





5. Covenants, Conditions and Restrictions in the Declaration of Protective Covenants -
Moffett Industrial Park No. 2) recorded December 23, 1971 in Book 9640, page 443, Official Records;
which provide that a violation thereof shall not defeat or render invalid the lien of any Mortgage
or Deed of Trust made in good faith and for value. Said Covenants, Conditions and Restrictions do
not provide for reversion of title in the event of a breach thereof. Restrictions, if any, based
upon race, color, religion, sex, handicap, familial status, or national origin are deleted, unless
and only to the extent that said covenant (a) is exempt under Chapter 42, Section 3607, of the
United States Code, or (b) related to handicap but does not discriminate against handicapped
persons.




     ASSIGNMENT AND ASSUMPTION of the rights, powers, duties, obligations, and reservations of
Moffett Park Associates, in favor of The Prudential Insurance Company of America, recorded February
8, 1977 in Book C583, page 685, Official Records.



 









 




6. EASEMENT for the purposes stated herein and incidents thereto




	 	 	 	 	 
	 

	 	Purpose
	 	: Public utilities
	 
	 

	 	Granted to
	 	: City of Sunnyvale
	 
	 

	 	Recorded
	 	: November 16, 1976 in Book C414, page 105, Official Records
	 
	 

	 	Affects
	 	: Southerly 10 feet, as shown on a survey plat entitled
ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated
December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.





7. LIMITATIONS, covenants, restrictions, reservations, exceptions or terms, but deleting
any covenant, condition or restriction indicating a preference, limitation or discrimination based
on race, color, religion, sex, handicap, familial status, or national origin to the extent such
covenants, conditions or restrictions violate 42 USC 3604(c), contained in the document recorded
February 5, 1980 in Book F122, page 460, Official Records.




Exhibit B to Closing Certificate and Agreement — Page 2




 









 








Exhibit C




Quarterly Certificate




BNP Paribas Leasing Corporation

12201 Merit Drive, Suite 860

Dallas, Texas 75251

Attention: Lloyd G. Cox, Managing Director




Gentlemen:




     This Certificate is furnished pursuant to subparagraph 2(D)(3) of the Closing Certificate and
Agreement dated as of December 15, 2005 between Network Appliance, Inc. and BNP Paribas Leasing
Corporation(as amended, the “Closing Certificate”). Terms defined in the Closing Certificate and
used but not otherwise defined in this Certificate are intended to have the respective meanings
ascribed to them in the Closing Certificate.



     The undersigned, being a Responsible Financial Officer of Network Appliance, Inc., represents
and certifies the following to BNP Paribas Leasing Corporation:




     (a)
No Event of Default or material Default by NAI has occurred except as follows:




[If an Event of Default or material Default by NAI has occurred,
insert a description of the nature thereof and the action which
NAI has taken or proposes to take to rectify it; otherwise, insert
the word “none”.]




     (b)
The representations and warranties by NAI in the Closing Certificate are true and
complete in all material respects on and as of the date of this Certificate as though made
on and as of such date.




     (c)
the calculations set forth in the attachment to this Certificate, which show whether NAI
is complying with financial covenants set forth in subparagraph 3(B) of the Closing
Certificate based upon the most recent information available, are true and complete.


Executed this ___day of ___, 20___.




[INSERT SIGNATURE BLOCK FOR A

RESPONSIBLE
FINANCIAL OFFICER]




 









 









Exhibit D




Certificate of BNPPLC Re: Accounting




Network Appliance, Inc.

7301 Kit Creek Road

Research Triangle Park, NC 27709

Attention: Ingemar Lanevi




Gentlemen:




     This certificate is furnished pursuant to subparagraph 4(A) of the Closing Certificate and
Agreement (Indiana Property) dated as of February 10, 2005 between BNP Paribas Leasing Corporation
and Network Appliances, Inc. (as amended, the “Closing Certificate”). Terms defined in the Closing
Certificate and used but not otherwise defined in this certificate are intended to have the
respective meanings ascribed to them in the Closing Certificate.



     BNP Paribas Leasing Corporation (“ BNPPLC”) certifies that the following are true and complete
in all material respects, but only to the knowledge of BNPPLC as of the date hereof:



     (A) The facts disclosed in any financial statements or other documents listed in the
Annex attached to this certificate were (as of their respective dates) true and complete in
all material respects. Copies of such statements or other documents were provided by or behalf of
BNPPLC to NAI prior to the date hereof to permit NAI to determine the appropriate accounting for
NAI’s relationship with BNPPLC under FASB Interpretation No. 46, Consolidation of Variable Interest
Entities (“FIN 46”).



     (B) The fair value of the Property and of other properties, if any, leased to NAI by
BNPPLC (collectively, whether one or more, the “Properties Leased to NAI”) are, as of the date
hereof, less than half of the total of the fair values of all assets of BNPPLC, excluding any
assets of BNPPLC which are held within a silo. Further, none of the Properties Leased to NAI are,
as of the date hereof, held within a silo.



     Although the representations required of BNPPLC by this certificate are intended to cover
facts, it is understood and agreed (consistent with subparagraph 4(C) of the Lease) that
BNPPLC has not made and will not make any representation or warranty as to the proper accounting by
NAI or its Affiliates of the Lease or other Operative Documents or as to other accounting
conclusions.



 









 




Executed this                      day of                                         , 20                    .




	 	 	 	 	 
	 	BNP PARIBAS LEASING
CORPORATION, a
 Delaware corporation

 	 
	 	By:  	 	 
	 	 	Lloyd G. Cox, Managing Director 	 
	 	 	 	 
	 



Exhibit D to Closing Certificate and Agreement — Page 2