Document:

exv10w50

 

Exhibit 10.50

	

GROUND
LEASE

BETWEEN

NETWORK
APPLIANCE, INC.

(“NAI”)

AND

BNP PARIBAS LEASING CORPORATION

(“BNPPLC”)

December 14, 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	RECITALS	 	 	1	 
	GRANTING CLAUSES	 	 	1	 
	GENERAL TERMS AND CONDITIONS	 	 	3	 
	 
	 	 	 	 	 	 
	1
	 	Additional Definitions	 	 	3	 
	 
	 	          “Contingent Purchase Option”	 	 	3	 
	 
	 	          “Fair Rental Value”	 	 	3	 
	 
	 	          “Ground Lease Default”	 	 	3	 
	 
	 	          “Ground Lease Rent”	 	 	3	 
	 
	 	          “Ground Lease Term”	 	 	3	 
	 
	 	          “Leasehold Mortgage”	 	 	3	 
	 
	 	          “Leasehold Mortgagee”	 	 	4	 
	 
	 	          “Turnover Date”	 	 	4	 
	 
	 	 	 	 	 	 
	2
	 	Ground Lease Term and Early Termination	 	 	4	 
	 
	 	 	 	 	 	 
	3
	 	Ground Lease Rent	 	 	4	 
	 
	 	 	 	 	 	 
	4
	 	Receipt and Application of Insurance and Condemnation Proceeds	 	 	4	 
	 
	 	 	 	 	 	 
	5
	 	No Lease Termination	 	 	5	 
	 
	 	 	 	 	 	 
	6
	 	The Lease and Other Operative Documents	 	 	5	 
	 
	 	 	 	 	 	 
	7
	 	Use of Leased Property	 	 	5	 
	 
	 	 	 	 	 	 
	8
	 	Assignment and Subletting; Pass Through of BNPPLC’s Liability Insurance and Indemnity Rights	 	 	6	 
	 
	 	 	 	 	 	 
	9
	 	Estoppel Certificate	 	 	6	 
	 
	 	 	 	 	 	 
	10
	 	Leasehold Mortgages	 	 	7	 
	 
	 	 	 	 	 	 
	11
	 	Other Representations, Warranties and Covenants of NAI	 	 	9	 
	 
	 	(A)     Condition of the Property	 	 	9	 
	 
	 	(B)     Environmental Representations	 	 	10	 
	 
	 	(C)     Current Status of Title to the Land	 	 	10	 
	 
	 	(D)     Intentionally Deleted	 	 	10	 
	 
	 	(E)     Title to Improvements	 	 	10	 
	 
	 	(F)     Defense of Adverse Title Claims	 	 	11	 
	 
	 	(G)     Prohibition Against Consensual Liens on the Leased Property	 	 	12	 
	 
	 	(H)     Compliance With Permitted Encumbrances	 	 	12	 

 

 

TABLE OF CONTENTS

(Continued)

	 	 	 	 	 	 	 
	 
	 		 	Page	 
	 
	 	(I)      Compliance With Laws	 	 	12	 
	 
	 	(J)      Modification of Permitted Encumbrances	 	 	12	 
	 
	 	(K)     Performance and Preservation of the Permitted Encumbrances for the Benefit of BNPPLC	 	 	13	 
	 
	 	(L)     Cooperation by NAI and its Affiliates	 	 	13	 
	 
	 	(M)    Omissions	 	 	14	 
	 
	 	(N)     Insurance and Casualty	 	 	14	 
	 
	 	(O)     Condemnation	 	 	14	 
	 
	 	(P)     Further Assurances	 	 	15	 
	 
	 	 	 	 	 	 
	12
	 	Ground Lease Defaults	 	 	15	 
	 
	 	(A)      Definition of Ground Lease Default	 	 	15	 
	 
	 	(B)      Remedy	 	 	15	 
	 
	 	 	 	 	 	 
	13
	 	Quiet Enjoyment	 	 	16	 
	 
	 	 	 	 	 	 
	14
	 	Option to Purchase	 	 	16	 
	 
	 	 	 	 	 	 
	15
	 	Miscellaneous	 	 	16	 
	 
	 	(A)      No Merger	 	 	16	 
	 
	 	(B)      Recording; Memorandum of Lease	 	 	16	 

Exhibits and Schedules

	 	 	 	 	 
	Exhibit A
	 	Legal Description
	 
	 	 	 	 
	Exhibit B
	 	Permitted Encumbrances List
	 
	 	 	 	 
	Exhibit C
	 	Contingent Purchase Option
	 
	 	 	 	 
	Exhibit D
	 	Determination of Fair Value

(ii)

 

GROUND LEASE

          This GROUND LEASE (this “Ground Lease”), dated as of December 14, 2006 (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 Ground Lease, 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
Ground Lease for all purposes. As used in this Ground Lease, capitalized terms defined in the
Common Definitions and Provisions Agreement and not otherwise defined in this Ground Lease are
intended to have the respective meanings assigned to them in the Common Definitions and Provisions
Agreement.

          At the request of NAI, and to facilitate the transactions contemplated in the other Operative
Documents, BNPPLC is executing this Ground Lease to acquire from NAI a leasehold estate of 50 years
in the Land described in Exhibit A attached hereto (the “Land”) and any existing
Improvements on the Land.

          Also contemporaneously with this Ground Lease, 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.

          Pursuant to a Purchase Agreement dated as of the Effective Date (the “Purchase Agreement”)
between BNPPLC and NAI, NAI will have the right to purchase, among other things, BNPPLC’s leasehold
estate under this Ground Lease on and subject to the terms and conditions set forth therein.

GRANTING CLAUSES

          In consideration of the rent to be paid and the covenants and agreements to be performed by
BNPPLC, as hereinafter set forth, NAI does hereby LEASE, DEMISE and LET unto BNPPLC for the term
hereinafter set forth the Land, together with:

          (A)       all easements and rights-of-way now owned or hereafter acquired by NAI for use in
connection with the Land or any Improvements constructed thereon or as a means of access
thereto and any and all easements and rights appurtenant to the Land; and

 

 

          (B)       all right, title and interest of NAI, now owned or hereafter acquired, in and to
(A) any land lying within the right-of-way of any street, open or proposed, adjoining the
Land, (B) any and all sidewalks and alleys adjacent to the Land and (C) any strips and gores
between the Land and abutting land not owned by NAI.

The Land and all of the property described in items (1) and (2) above are hereinafter referred to
collectively as the “Real Property”.

          To the extent, but only to the extent, that assignable rights or interests in, to or under the
following have been or will be acquired by NAI as the owner of any interest in the Real Property,
NAI also hereby grants and assigns to BNPPLC for the term of this Ground Lease the right to use and
enjoy (and, in the case of contract rights, to enforce) such rights or interests of NAI:

          (A)      the Permitted Encumbrances; and

          (B)      any general intangibles, permits, licenses, franchises, certificates, and other
rights and privileges related to the Real Property that BNPPLC (rather than NAI) would have
acquired if BNPPLC had itself acquired the fee estate in the Real Property (excluding,
however, the rights and privileges of NAI under this Ground Lease, the Construction
Management Agreement, the Lease, the Purchase Agreement and any other Operative Documents).

Such rights and interests of NAI, whether now existing or hereafter arising, are hereinafter
collectively called the “Personal Property”. The Real Property and the Personal Property are
hereinafter sometimes collectively called the “Leased Property.” The Leased Property and all
Improvements on the Land now or in the future (whether such Improvements are owned by BNPPLC or
NAI) are hereinafter sometimes called the “Improved Property”.

          However, the leasehold estate conveyed hereby and BNPPLC’s rights hereunder are expressly made
subject and subordinate to the Permitted Encumbrances listed on Exhibit B.

          Further, so long as any of the other Operative Documents remain in force, the rights
and obligations of NAI and BNPPLC hereunder will be subject to any contrary provisions therein,
including provisions in the Construction Management Agreement and the Lease that govern the
collection and application of condemnation and insurance proceeds in the event of any taking of or
damage to the Improved Property.

      

Ground Lease — Page 2

 

 

GENERAL TERMS AND CONDITIONS

          The Leased Property is leased by NAI to BNPPLC and is accepted and is to be used and possessed
by BNPPLC upon and subject to the following terms, provisions, covenants, agreements and
conditions:

1       Additional Definitions. As used in this Ground Lease, capitalized terms defined above
have the respective meanings assigned to them above; as indicated above, capitalized terms that are
defined in the Common Definitions and Provisions Agreement and that are used but not otherwise
defined have the respective meanings assigned to them in the Common Definitions and Provisions
Agreement; and, the following terms have the following respective meanings:

          “Contingent Purchase Option” means the option granted BNPPLC by NAI as provided in
Exhibit C attached to this Ground Lease.

          “Fair Rental Value” means (and all appraisers and other persons involved in the
determination of the Fair Rental Value will be so advised) the annual rent, as determined in
accordance with Exhibit D, that would be agreed upon between a willing tenant, under
no compulsion to lease, and a willing landlord, under no compulsion to lease, for
unimproved land (including appurtenances) comparable in size and location to the
Land, exclusive of any Improvements but assuming that there is no higher and better use for
such land than as a site for improvements of comparable size and utility to the
Improvements, at the time a determination is required under this Ground Lease and taking
into consideration the condition of the Land, the encumbrances affecting the title to the
Land and all applicable zoning, land use approvals and other governmental permits relating
to the Land at the time of such determination.

          “Ground Lease Default” has the meaning assigned to it in subparagraph 13(A) below.

          “Ground Lease Rent” means the rent payable by BNPPLC pursuant to Paragraph 3 below.

          “Ground Lease Term” has the meaning assigned to it in Paragraph 2 below.

          “Leasehold Mortgage” means any mortgage, deed of trust (with or without a private power
of sale), security agreement or assignment executed by BNPPLC to secure an obligation to
repay borrowed money or other voluntary obligations, which covers BNPPLC’s leasehold estate
hereunder or any part thereof or any rents or other charges to be paid to BNPPLC pursuant to
any sublease.

      

Ground Lease — Page 3

 

 

          “Leasehold Mortgagee” means any lender or other beneficiary of a Leasehold Mortgage
that has notified NAI of the existence such Leasehold Mortgage and of its address to which
notices should be delivered.

          “Turnover Date” means the day which is thirty days after any Designated Sale Date upon
which, for any reason whatsoever, NAI does not purchase the Improved Property from BNPPLC
pursuant to the Purchase Agreement.

2       Ground Lease Term and Early Termination. The term of this Ground Lease (herein
called the “Ground Lease Term”) will commence on and include the Effective Date and end on the last
Business Day which falls on or prior to the fiftieth (50th) anniversary of the Effective Date.
However, subject to the prior approval of any Leasehold Mortgagee, BNPPLC will have the right to
terminate this Ground Lease by giving a notice to NAI stating that BNPPLC unequivocally elects to
terminate effective as of a date specified in such notice, which may be any date more than thirty
days after the notice and after the expiration or termination of the Lease pursuant to its terms.

3       Ground Lease Rent. The rent required by this Ground Lease (herein called “Ground
Lease Rent”) will equal the Fair Rental Value, determined as provided in Exhibit D, and be
paid as follows:

          Prior to the Completion Date, BNPPLC must pay Ground Lease Rent to NAI on the first Business
Day of every calendar month for the preceding month. Consistent with the agreement of the parties
in Exhibit D that the initial Fair Rental Value is $600,000 per annum, each such monthly
payment will be in the amount of $50,000 prior to the Completion Date. (Notwithstanding the
forgoing, if agreed by the parties for administrative convenience, BNPPLC will prepay all or a
portion of the Ground Lease Rent expected to accrue prior to the Completion Date, rather than pay
it monthly on the first Business Day of each month.)

          After the Completion Date, Ground Lease Rent will be paid annually in arrears on each
anniversary of the Effective Date. So long as the Lease continues, each such payment by BNPPLC
may be offset against the reimbursement for such payment required of NAI by the Lease. After the
Lease expires or terminates, however, BNPPLC’s obligation for the payment of Ground Lease will
continue so long as this Ground Lease continues, on and subject to the terms and conditions set
forth herein.

4       Receipt and Application of Insurance and Condemnation Proceeds. All insurance and
condemnation proceeds payable with respect to any damage to or taking of the Leased Property will
be payable to and become the property of BNPPLC; provided, however, NAI will be entitled to receive
condemnation proceeds awarded for the value of NAI’s remainder interest in the Land exclusive of
the Improvements. BNPPLC is authorized to take all action

      

Ground Lease — Page 4

 

 

necessary on behalf of both BNPPLC and
NAI (as lessor under this Ground Lease) to collect insurance and condemnation proceeds.

5       No Lease Termination. Except as expressly provided herein, this Ground Lease will
not terminate, nor will NAI have any right to terminate this Ground Lease nor will the obligations
of NAI under this Ground Lease be excused, for any reason whatsoever, including without limitation
any of the following: (i) any damage to or the destruction of all or any part of the Leased
Property from whatever cause, (ii) the taking of the Leased Property or any portion thereof by
eminent domain or otherwise for any reason, (iii) any default on the part of BNPPLC under this
Ground Lease or under any other agreement to which NAI and BNPPLC are parties, or (iv) any other
cause whether similar or dissimilar to the foregoing, any existing or future law to the contrary
notwithstanding. Notwithstanding the foregoing, after any purchase by NAI of BNPPLC’s interest in
the Improved Property pursuant to the Purchase Agreement and payment to BNPPLC of the purchase
price required by the Purchase Agreement and all other sums dues under any of the other Operative
Documents, NAI (as the holder of both the lessor’s and lessee’s interests hereunder) may elect to
terminate this Ground Lease; and after a purchase by BNPPLC of the Land because of BNPPLC exercise
of the Contingent Purchase Option, BNPPLC (as the holder of both the lessor’s and lessee’s
interests hereunder) may elect to terminate this Ground Lease. It is the intention of the parties
hereto that the obligations of NAI hereunder will be separate and independent of the covenants and
agreements of BNPPLC. However, nothing in this Paragraph will be construed as a waiver by NAI of
any right NAI may have at law or in equity to recover monetary damages for any default under this
Ground Lease by BNPPLC.

6       The Lease and Other Operative Documents. Nothing contained in this Ground Lease will
limit, modify or otherwise affect any of NAI’s or BNPPLC’s respective rights and obligations under
the other Operative Documents, which rights and obligations are intended to be separate,
independent and in addition to, and not in lieu of, the obligations established by this Ground
Lease. In the event of any inconsistency between the terms and provisions of the other Operative
Documents and the terms and provisions of this Ground Lease, the terms and provisions of the other
Operative Documents will control.

7       Use of Leased Property. Subject to the Permitted Encumbrances and the terms hereof,
BNPPLC may use and occupy the Leased Property for any purpose permitted by Applicable Laws and may
construct, modify, renovate, replace and remove any Improvements on the Land from time to time,
subject only to the constraints that Applicable Laws would impose upon the owner of the Land if the
owner were constructing, modifying, renovating, replacing or removing Improvements. To afford NAI
an opportunity to file a notice of nonresponsibility pursuant to California Civil Code § 3094,
BNPPLC will, before commencing the construction any major Improvements upon the Land after the
Turnover Date, endeavor to notify NAI that BNPPLC intends to commence such construction; provided,
however, BNPPLC will have no liability for its failure to provide such a notice.

      

Ground Lease — Page 5

 

 

8       Assignment and Subletting; Pass Through of BNPPLC’s Liability Insurance and Indemnity
Rights. BNPPLC may sublet or assign this Ground Lease without the consent of NAI or any of
its Affiliates, subject only to limitations set forth in the Lease for the benefit of NAI so long
as those limitations remain in force.

          To the extent that BNPPLC may from time to time after the Turnover Date require any subtenant
to agree to maintain liability insurance against claims of third parties and agree to make BNPPLC
an additional or named insured under such insurance, BNPPLC will also require the subtenant to
agree to make NAI an additional or named insured. However, BNPPLC will have no liability to NAI
for a breach by the subtenant of any such agreements, and to the extent that BNPPLC’s rights as an
additional or named insured are subject to exceptions or limitations concerning BNPPLC’s own acts
or omissions or the acts or omissions of anyone other than the subtenant, so too may NAI’s rights
as an additional or named insured be subject to exceptions or limitations concerning NAI’s own acts
or omissions or the acts or omissions of anyone other than the subtenant.

          To the extent that BNPPLC may itself from time to time after the Turnover Date maintain
liability insurance against claims of third parties which may arise because of any occurrence on or
alleged to have occurred on or about the Leased Property, BNPPLC will cause NAI to be an additional
or named insured under such insurance, provided NAI pays or reimburses BNPPLC for any additional
insurance premium required to have NAI made an insured.

          To the extent that BNPPLC may from time to time after the Turnover Date require any subtenant
to agree to indemnify BNPPLC against Environmental Losses or other Losses concerning the Leased
Property, BNPPLC will also require the subtenant to agree to indemnify NAI. However, BNPPLC will
have no liability to NAI for a breach by the subtenant of any such agreement, and to the extent
that BNPPLC’s rights as an indemnitee of the subtenant are subject to exceptions or limitations
concerning BNPPLC’s own acts or omissions or the acts or omissions of anyone other than the
subtenant, so too may NAI’s rights as an indemnitee be subject to exceptions or limitations
concerning NAI’s own acts or omissions or the acts or omissions of anyone other than the subtenant.

9       Estoppel Certificate. NAI and BNPPLC will from time to time, within ten days after
receipt of request by the other party hereto, deliver a statement in writing to such other party or
other Person(s) designated by such party certifying:

          (A)       that this Ground Lease is unmodified and in full force and effect (or if modified that this
Ground Lease as so modified is in full force and effect);

          (B)       that to the knowledge of the party providing such certificate, the other party has

      

Ground Lease — Page 6

 

 

not
previously assigned or hypothecated its rights or interests under this Ground Lease, except as is
described in such statement with as much specificity as the party so certifying is able to provide;

          (C)       the term of this Ground Lease and the Ground Lease Rent then in effect and any additional
charges;

          (D)       that to the knowledge of the party providing such certificate, the other party is not in
default under any provision of this Ground Lease (or if in default, the nature thereof in detail)
and, in any certificate provided by NAI, a statement as to any outstanding obligations on the part
of NAI or BNPPLC; and

          (E)       in any certificate provided by NAI, such other factual matters concerning the Leased
Property or BNPPLC’s rights and obligations under this Ground Lease as are requested by BNPPLC.

NAI’s failure to deliver such statement within such time will constitute an admission by NAI (i)
that this Ground Lease is in full force and effect, without modification except as may be
represented by BNPPLC, and (ii) that there are no uncured defaults in BNPPLC’s performance
hereunder.

10       Leasehold Mortgages.

          (A)       By Leasehold Mortgage BNPPLC may encumber BNPPLC’s leasehold estate in the Leased Property
created by this Ground Lease and BNPPLC’s rights and interests in buildings, fixtures, equipment
and improvements situated on the Land and rents, issues, profits, revenues and other income to be
derived by BNPPLC from the Leased Property. However, prior to the Turnover Date, a Leasehold
Mortgage will be permitted hereunder only if it constitutes a Permitted Transfer and only if it is
made expressly subject to the rights of NAI under the other Operative Documents.

          (B)       Any Leasehold Mortgagee or other party, including any corporation formed by a Leasehold
Mortgagee, may become the legal owner of the leasehold estate created by this Ground Lease and of
BNPPLC’s rights and interests in the improvements, equipment, fixtures and other property assigned
as additional security pursuant to a Leasehold Mortgage, by foreclosure of a Leasehold Mortgage or
as a result of the assignment or conveyance in lieu of foreclosure. Further, any such Leasehold
Mortgagee or other party may itself, after becoming the legal owner and holder of the leasehold
estate created by this Ground Lease, or of any improvements, equipment, fixtures and other property
assigned as additional security pursuant to a Leasehold Mortgage, convey or pledge the same without
the consent of NAI.

      

Ground Lease — Page 7

 

 

          (C)       NAI must serve notice of any default by BNPPLC hereunder upon any Leasehold Mortgagee for
which NAI has received written notification from BNPPLC of the Leasehold Mortgagee’s address for
such notice. No notice of a default by BNPPLC will be deemed effective until it is so served. Any
Leasehold Mortgagee will have the right to correct or cure any such default within the same period
of time after receipt of such notice as is given to BNPPLC under this Ground Lease to correct or
cure defaults, plus an additional period of thirty days thereafter. NAI will accept performance by
any Leasehold Mortgagee of any covenant, condition or agreement on BNPPLC’s part to be performed
hereunder with the same force and effect as though performed by BNPPLC.

          (D)       If this Ground Lease should terminate by reason of a disaffirmance or rejection of this
Ground Lease by BNPPLC or any receiver, liquidator or trustee for the property of BNPPLC, or by any
governmental authority which had taken possession of the business or property of BNPPLC by reason
of the insolvency or alleged insolvency of BNPPLC, then:

          (1)       NAI must give notice thereof to each Leasehold Mortgagee for which NAI has received
written notification from BNPPLC of the Leasehold Mortgagee’s address for such notice; and
upon request of any Leasehold Mortgagee made within sixty days after NAI has given such
notice, NAI must enter into a new ground lease of the Leased Property with such Leasehold
Mortgagee for the remainder of the Ground Lease Term, at the same Ground Lease Rent and on
the same terms and conditions (including subparagraph 11(E)) as are contained in this Ground
Lease (a “New Ground Lease”).

          (2)       The estate of the Leasehold Mortgagee, as lessee under the New Ground Lease, will
have priority equal to the estate of BNPPLC hereunder. That is, there will be no charge,
lien or burden upon the Leased Property prior to or superior to the estate granted by such
New Ground Lease which was not prior to or superior to the estate of BNPPLC under this
Ground Lease as of the date immediately preceding the termination of this Ground Lease. To
the extent, however, that the other Operative Documents are in effect at the time of
execution of such New Ground Lease, the New Ground Lease will be made expressly subject to
the other Operative Documents.

          (3)       Notwithstanding the foregoing, if NAI receives requests to enter into a New Ground
Lease from more than one Leasehold Mortgagee because of the expiration or termination of
this Ground Lease, NAI will be required to enter into only one New Ground Lease, and the New
Ground Lease will be to the requesting Leasehold Mortgagee who holds the highest priority
lien or interest in BNPPLC’s leasehold estate in the Land. If the liens or security
interests of two or more such requesting Leasehold Mortgagees which shared the highest
priority just prior to the termination of this Ground Lease, the New Ground Lease will name
all such Leasehold Mortgagees as co-tenants thereunder.

      

Ground Lease — Page 8

 

 

          (E)       If BNPPLC has agreed with any Leasehold Mortgagee that such Leasehold Mortgagee’s consent
will be required to any modification or early termination of this Ground Lease by BNPPLC, and if
NAI has been notified in writing of such agreement, such consent will be required for such
Leasehold Mortgagee to be bound by any such modification or early termination of this Ground Lease.

          (F)       No Leasehold Mortgagee will assume any liability under this Ground Lease either by virtue
of its Leasehold Mortgage or by any subsequent receipt or collection of rents or profits generated
from the Leased Property, unless and until the Leasehold Mortgagee acquires BNPPLC’s leasehold
estate in the Leased Property at foreclosure or by deed in lieu of foreclosure.

          (G)       Although the foregoing provisions concerning Leasehold Mortgages and Leasehold Mortgagees
will be self operative, NAI agrees to include, in addition to the items specified in Paragraph 9,
confirmation of the foregoing with respect to any Leasehold Mortgagee or prospective Leasehold
Mortgagee in any statement delivered to such Leasehold Mortgagee which is provided to a pursuant to
Paragraph 9.

11       Other Representations, Warranties and Covenants of NAI. NAI represents, warrants and
covenants as follows:

          (A)       Condition of the Property. The Land described in Exhibit A is the same as
the land described in the Title Policy and as shown on the plat included as part of the survey
prepared by December 2, 1999, prepared by Kier & Wright, Job No. 97208-16 (the “Survey”), which
survey was delivered to BNPPLC at the request of NAI. All material improvements on the Land as of
the Effective Date are as shown on the Survey, and except as shown on the Survey there are no
easements or encroachments encumbering or affecting the Improved Property. No part of the Land is
within a flood plain as designated by any governmental authority. Existing Improvements, if any,
are free from latent or patent defects or deficiencies that, either individually or in the
aggregate, could materially and adversely affect the use or occupancy of the Improved Property as
permitted by the Lease or could reasonably be anticipated to cause injury or death to any person.
When the construction contemplated by the Construction Management Agreement is complete in
accordance with plans approved as described therein, the Improved Property and use thereof
permitted by the Lease will comply in all material respects with all Applicable Laws, including
laws regarding access and use by disabled persons and local zoning ordinances. Adequate provision
has been made (or can be made at a cost that is reasonable in connection with future development of
the Land) for the Land to be served by electric, gas, storm and sanitary sewers, sanitary water
supply, telephone and other utilities required for the use thereof. All streets, alleys and
easements necessary to serve the Improved Property for the construction contemplated by the
Construction Management Agreement or uses permitted by the

      

Ground Lease — Page 9

 

 

Lease have been completed and are
serviceable or will be completed and made serviceable as part of the construction contemplated by
the Construction Management Agreement. No extraordinary circumstances (including any use of the
Land as a habitat for endangered species) exist that would materially and adversely affect such
construction or uses of the Improved Property. The Improvements, when constructed as contemplated
in the Construction Management Agreement, will be useable for their intended purpose without the
need to obtain any additional easements, rights-of-way or concessions from any third party or
parties.

          (B)       Environmental Representations. Except as otherwise disclosed in the Environmental
Report, to the knowledge of NAI: (i) no Hazardous Substances Activity has occurred prior to the
Effective Date; (ii) no owner or operator of the Improved Property has reported or been required to
report any release of any Hazardous Substances on or from the Leased Property pursuant to any
Environmental Law; and (iii) no owner or operator of the Leased Property has received from any
federal, state or local governmental authority any warning, citation, notice of violation or other
communication regarding a suspected or known release or discharge of Hazardous Substances on or
from the Leased Property or regarding a suspected or known violation of Environmental Laws
concerning the Leased Property. Further, NAI represents, to its knowledge, that the Environmental
Report taken as a whole is not misleading or inaccurate in any material respect.

          (C)       Current Status of Title to the Land. NAI holds good and indefeasible title to the
Land, free and clear of all liens and encumbrances, other than the Permitted Encumbrances and any
Liens Removable by BNPPLC.

          (D)       Intentionally Deleted.

          (E)       Title to Improvements. The leasehold estate created in favor of BNPPLC by this
Ground Lease will extend to and include the rights to use and enjoy any and all Improvements of
whatever nature at any time and from time to time located on the Land. Thus, throughout the term
of this Ground Lease, BNPPLC and its sublessees, assignees, licensees and concessionaires will be
entitled to use and enjoy such Improvements — to the exclusion of NAI as the lessor hereunder, but
subject to NAI’s rights under the Operative Documents (including the Lease) so long as they remain
in effect — as if the lessee hereunder was the owner of the Improvements. Further, although any
Improvements which remain on the Land when this Ground Lease expires or is terminated will revert
to NAI, it is also understood and agreed that the lessee hereunder may at any time and from time to
time — after NAI ceases to have possession of the Leased Property pursuant to the Construction
Management Agreement or as tenant under the Lease and prior to the expiration or termination of
this Ground Lease — remove all or any Improvements from the Land without the consent of NAI and
without any obligation to NAI or its Affiliates to provide compensation or to construct other
Improvements on or about the Land. Any Improvements removed as provided in the preceding sentence
will be considered severed from the Land and

      

Ground Lease — Page 10

 

 

thereupon become personal property of the lessee
hereunder.

          (F)       Defense of Adverse Title Claims. If any encumbrance or title defect whatsoever
affecting the Improved Property, other than Permitted Encumbrances or Liens Removable by BNPPLC, is
claimed or discovered (including Liens against any part of or interest in the Improved Property
which are not Fully Subordinated or Removable) or if any legal proceedings are instituted with
respect to any such claimed or discovered encumbrance or title defect, NAI must give prompt notice
thereof to BNPPLC and at NAI’s own cost and expense will promptly remove any such encumbrance and
cure any such defect and will take all necessary and proper steps for the defense of any such legal
proceedings, including the employment of counsel, the prosecution or defense of litigation and the
release or discharge of all adverse claims. If NAI fails to promptly remove any encumbrance or
cure any title defect as required by the preceding sentence, BNPPLC (whether or not named as a
party to legal proceedings with respect thereto) may take such additional steps as in its judgment
may be necessary or proper to remove such encumbrance or cure such defect or for the defense of any
such attack or legal proceedings or the protection of BNPPLC’s leasehold or other interest in the
Improved Property, including the employment of counsel, the prosecution or defense of litigation,
the compromise or discharge of any adverse claims made with respect to the Improved Property, the
removal of prior liens or security interests, and all expenses (including Attorneys’ Fees) so
incurred of every kind and character will be a demand obligation owing by NAI.

          For purposes of this subparagraph 11(B), NAI will be deemed to be acting promptly to remove
any encumbrance or to cure any title defect, other than a Lien which NAI or any of its Affiliates
has granted or authorized, so long as NAI is in good faith by appropriate proceedings contesting
the validity and applicability of the encumbrance or defect, and pending such contest NAI will not
be deemed in default under this subparagraph because of the encumbrance or defect, provided that
NAI must satisfy the following conditions and requirements:

          (1)       NAI must diligently prosecute the contest to completion in a manner reasonably
satisfactory to BNPPLC.

          (2)       NAI must immediately remove the encumbrance or cure the defect upon a final
determination by a court of competent jurisdiction that it is valid and applicable to the
Improved Property.

          (3)       NAI must in any event conclude the contest and remove the encumbrance or cure the
defect and pay any claims asserted against BNPPLC or the Improved Property because of such
encumbrance or defect, all prior to (i) the date any criminal charges may be brought against
BNPPLC or any of its directors, officers or employees because of such encumbrance or defect
or (ii) the date any action is taken or threatened against BNPPLC or any property owned by
BNPPLC (including BNPPLC’s leasehold estate under this

      

Ground Lease — Page 11

 

 

Ground Lease) by any governmental
authority or any other Person who has or claims rights superior to BNPPLC because of the
encumbrance or defect. Also, with respect to a contest of any encumbrance or defect
discovered or claimed before the Designated Sale Date, NAI must conclude the contest and
remove the encumbrance or cure the defect and pay any claims asserted against BNPPLC or the
Improved Property because of such encumbrance or defect, all prior to the Designated Sale
Date, unless on the Designated Sale Date NAI or an Affiliate of NAI or any Applicable
Purchaser purchases the Improved Property pursuant to the Purchase Agreement for a net price
to BNPPLC (when taken together with any additional payments made by NAI pursuant to
Paragraph 1(a)(ii) of the Purchase Agreement, in the case of a purchase by an Applicable
Purchaser) equal to the Lease Balance.

          (G)       Prohibition Against Consensual Liens on the Leased Property. NAI will not, without
the prior consent of BNPPLC, create, place or authorize, or through any act or failure to act,
acquiesce in the placing of, any deed of trust, mortgage or other Lien, whether statutory,
constitutional or contractual against or covering the Land or Improvements or any part thereof
(other than Permitted Encumbrances and Liens Removable by BNPPLC). It is understood and agreed,
however, that any Liens which are Fully Subordinated or Removable will constitute Permitted
Encumbrances and thus will not be prohibited by this provision.

          (H)       Compliance With Permitted Encumbrances. NAI must comply with and cause to be
performed all of the covenants, agreements and obligations imposed upon NAI or the owner of the
Leased Property by the Permitted Encumbrances.

          (I)       Compliance With Laws. Without limiting the foregoing, the use of the Improved
Property permitted by the Lease complies, or will comply after readily available permits are
obtained, in all material respects with all Applicable Laws.

          (J)       Modification of Permitted Encumbrances. NAI will not create any new Permitted
Encumbrance or enter into, initiate, approve or consent to any modification of any Permitted
Encumbrance that would create or expand or purport to create or expand obligations or restrictions
which would encumber the Leased Property or any Improvements constructed thereon without the prior
consent of BNPPLC; provided, this provision will not limit any right of
the NAI Parties to modify any Lien that is Fully Subordinated or Removable and will remain Fully
Subordinated or Removable after the modification. Whether BNPPLC must give any such consent
requested by NAI prior to the Designated Sale Date will be governed by subparagraph 4(C) of
the Closing Certificate.

      

Ground Lease — Page 12

 

 

          (K)       Performance and Preservation of the Permitted Encumbrances for the Benefit of
BNPPLC. Not only prior to the expiration or termination of other Operative Documents, but
thereafter throughout the term of this Ground Lease, NAI must comply with and perform the
obligations imposed by the Permitted Encumbrances upon NAI or upon any owner of the Land and do
whatever is required to preserve the rights and benefits conferred or intended to be conferred by
the Permitted Encumbrances, as necessary to prevent any claim against or forfeiture of any of the
Improved Property and to facilitate the construction and use of any Improvements on the Land after
the Turnover Date by BNPPLC and its successors, assigns and subtenants under this Ground Lease.
Further, NAI hereby agrees for itself and its Affiliates, as the owner of the Land and any other
land now owned or hereafter acquired by NAI or its Affiliates, which is encumbered or benefitted by
the Permitted Encumbrances, to assume liability for and to indemnify BNPPLC and other Interested
Parties and to defend and hold them harmless from and against all Losses (including Losses caused
by any decline in the value of the Leased Property or of the Improvements) that they would not have
incurred or suffered but for:

          (1)       any breach by NAI of its obligations under the preceding sentence,

          (2)       any termination of any benefit to the owner, users or occupants of the Land or
Improvements conferred by the Permitted Encumbrances if NAI agreed to the termination or the
termination resulted from a breach of any Permitted Encumbrance by NAI or its Affiliates, or

          (3)       any restrictions imposed by or asserted under any Permitted Encumbrance upon any
transfer after (but only after) the Turnover Date by BNPPLC of any interests it may then
have in the Leased Property or in any Improvements.

NAI’s obligations under this subparagraph 11(K) will be binding upon any successor or assign of NAI
or its Affiliates with respect to the Land and other properties encumbered or benefitted by the
Permitted Encumbrances, and such obligations will survive any sale of NAI’s interest in the Leased
Property to BNPPLC because of BNPPLC’s exercise of the Contingent Purchase Option.

          (L)       Cooperation by NAI and its Affiliates.

          (1)       After the Turnover Date, if neither NAI nor an Applicable Purchaser has purchased
BNPPLC’s interest in the Improved Property pursuant to the Purchase Agreement, and if a use
of the Improved Property by BNPPLC or any new Improvements or any removal or modification of
Improvements proposed by BNPPLC would violate any Permitted Encumbrance or Applicable Law
unless NAI or any of its Affiliates, as an owner of adjacent land or otherwise, gave its
consent or approval thereto or agreed to join in a modification of a Permitted Encumbrance,
then NAI must give and cause its Affiliates to give such consent or approval or join in such
modification.

      

Ground Lease — Page 13

 

 

          (2)       After the Turnover Date, if neither NAI nor an Applicable Purchaser has purchased
BNPPLC’s interest in the Improved Property pursuant to the Purchase Agreement, and if any
Permitted Encumbrance or Applicable Law requires the consent or approval of NAI or any of
its Affiliates or of the city or county in which the Improved Property is located or of any
other Person to an assignment of any interest in the Improved Property by BNPPLC or by any
of its successors or assigns, NAI will without charge give and cause its Affiliates to give
such consent or approval and will cooperate in any way reasonably requested by BNPPLC to
assist BNPPLC to obtain such consent or approval from the city, county or other Person.

          (3)       NAI’s obligations under this subparagraph 11(L) will be binding upon any successor
or assign of NAI or its Affiliates with respect to the Land and other properties encumbered
or benefitted by the Permitted Encumbrances, and such obligations will survive (a) any sale
of the Improved Property by BNPPLC, other than to NAI or an Applicable Purchaser under the
Purchase Agreement, for the benefit of BNPPLC’s assignees, and (b) any sale of NAI’s
interest in the Leased Property to BNPPLC because of BNPPLC’s exercise of the Contingent
Purchase Option.

          (M)       Omissions. None of NAI’s representations or warranties contained in this Ground
Lease 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.

          (N)       Insurance and Casualty. In the event any of the Leased Property is destroyed or
damaged by fire, explosion, windstorm, hail or by any other casualty against which insurance is
maintained or required hereunder, (i) BNPPLC may make proof of loss, (ii) each insurance company
concerned is hereby authorized and directed to make payment for such loss directly to BNPPLC for
application as required by Paragraph 4, and (iii) BNPPLC’s consent must be obtained for any
settlement, adjustment or compromise of any claims for loss, damage or destruction under any policy
or policies of insurance.

          (O)       Condemnation. All proceeds of condemnation awards or proceeds of sale in lieu of
condemnation with respect to the Leased Property and all judgments, decrees and awards for injury
or damage to the Leased Property will be paid to BNPPLC and applied as provided in Paragraph 4
above. BNPPLC is hereby authorized, in the name of NAI, to execute and deliver valid acquittances
for, and to appeal from, any such judgment, decree or award concerning condemnation of any of the
Leased Property. BNPPLC will not be, in any event or circumstances, liable or responsible for
failure to collect, or to exercise diligence in the collection of, any such proceeds, judgments,
decrees or awards.

      

Ground Lease — Page 14

 

 

          (P)       Further Assurances. NAI must, on request of BNPPLC, (i) promptly correct any
defect, error or omission which may be discovered in the contents of this Ground Lease or in any
other instrument executed in connection herewith or in the execution or acknowledgment thereof;
(ii) 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 this Ground Lease and to subject to this Ground Lease any property intended by the
terms hereof to be covered hereby including specifically, but without limitation, any renewals,
additions, substitutions, replacements or appurtenances to the Leased Property; (iii) execute,
acknowledge, deliver, procure and record or file any document or instrument deemed advisable by
BNPPLC to protect BNPPLC’s rights in and to the Leased Property against the rights or interests of
third persons; and (iv) 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 or any Leasehold Mortgagee to comply with the
requirements or requests of any agency or authority having jurisdiction over them.

12       Ground Lease Defaults.

          (A)       Definition of Ground Lease Default. Each of the following events will be deemed to
be a “Ground Lease Default” by BNPPLC under this Ground Lease:

          (1)       A failure by BNPPLC to pay when due any installment of Ground Lease Rent due
hereunder if such failure continues for sixty days after BNPPLC receives notice thereof.

          (2)       A failure by BNPPLC to comply with any term, provision or covenant of this Ground
Lease (other than as described in the other clauses of this subparagraph 13(A)) if such
failure is not cured prior to the earlier of (A) ninety days after notice thereof is sent to
BNPPLC, or (B) the date any writ or order is issued for the levy or sale of any property
owned by NAI or its Affiliates (including the leasehold created by this Ground Lease)
because of such failure or any criminal action is instituted against BNPPLC or any of its
directors, officers or employees because of such failure; provided, however, that so long as
no such writ or order is issued and no such criminal actions is instituted, if such failure
is susceptible of cure but cannot with reasonable diligence be cured within such ninety day
period, and if BNPPLC has promptly commenced to cure the same and thereafter prosecutes the
curing thereof with reasonable diligence, the period within which such failure may be cured
will be extended for such further period as is necessary to complete the cure.

          (B)       Remedy. Upon the occurrence of a Ground Lease Default which is not cured within
any applicable period expressly permitted by subparagraph 13(A), NAI’s sole and exclusive remedies
will be to sue BNPPLC for the collection of any amount due under this

      

Ground Lease — Page 15

 

 

Ground Lease, to sue for the
specific enforcement of BNPPLC’s obligations hereunder, or to enjoin the continuation of the Ground
Lease Default, provided, however, no limitation of NAI’s remedies contained herein will prevent NAI
from exercising rights expressly provided in other Operative Documents or from recovering any
reasonable costs NAI may incur to mitigate its damages by curing a Ground Lease Default that BNPPLC
has failed to cure itself (so long as the cure by NAI is pursued in a lawful manner and the costs
NAI seeks to recover do not exceed the actual damages to be mitigated). NAI may not terminate this
Ground Lease or BNPPLC’s right to possession under this Ground Lease, except as expressly provided
in the Operative Documents. Any judgment which NAI may obtain against BNPPLC for amounts due under
this
Ground Lease may be collected only through resort of a judgement lien against BNPPLC’s interest in
the Leased Property and any Improvements. BNPPLC will have no personal liability for the payment
amounts due under this or for the performance of any obligations of BNPPLC under this Ground Lease.

13       Quiet Enjoyment. NAI warrants that neither it nor any third party lawfully claiming
any right or interest in the Leased Property will, during the Ground Lease Term, disturb BNPPLC’s
peaceable and quiet enjoyment of the Leased Property; however, such enjoyment will be subject to
the terms, provisions, covenants, agreements and conditions of this Ground Lease and those
Permitted Encumbrances which are listed on Exhibit B.

14       Option to Purchase. Subject to the terms and conditions set forth in Exhibit
C, BNPPLC (and any assignee of BNPPLC’s entire interest in the Leased Property, but not any
subtenant or assignee of a lesser interest) will have the option, and NAI hereby grants to BNPPLC
such option, to purchase NAI’s interest in the Leased Property.

15       Miscellaneous.

          (A)       No Merger. There will be no merger of this Ground Lease or of the leasehold estate
hereby created with the fee or any other estate in the Leased Property or any part thereof by
reason of the fact that the same person may acquire or hold, directly or indirectly, this Ground
Lease or the leasehold estate hereby created or any interest in this Ground Lease or in such
leasehold estate as well as the fee or any other estate in the Leased Property or any interest in
such fee or other estate, unless all parties with an interest in the Leased Property that would be
adversely affected by any such merger specifically agree in writing that such a merger has
occurred.

          (B)       Recording; Memorandum of Lease. Either party may record this Ground Lease in the
real property records of Santa Clara County, California. If NAI and BNPPLC decide not to record
this Ground Lease, they will execute a memorandum of this Ground Lease in recordable form which
will be filed in the real property records of Santa Clara County, California.

      

Ground Lease — Page 16

 

 

16       Certain Remedies Cumulative. No right or remedy herein conferred upon or reserved to
BNPPLC is intended to be exclusive of any other right or remedy BNPPLC has with respect to the
Improved Property, and each and every right and remedy of BNPPLC will be cumulative and in addition
to any other right or remedy given to it under this Ground Lease or now or hereafter existing in
its favor at law or in equity. In addition to other remedies available under this Ground Lease,
either party will be entitled, to the extent permitted by applicable law, to a decree compelling
performance of any of the other party’s agreements hereunder.

17       Attorneys’ Fees and Legal Expenses. If BNPPLC commences any legal action or other
proceeding because of any breach of this Ground Lease by NAI, BNPPLC may recover all Attorneys’
Fees incurred by it in connection therewith from NAI, whether or not such controversy, claim or
dispute is prosecuted to a final judgment. Any Attorneys’ Fees incurred by BNPPLC in enforcing a
judgment in its favor under this Ground Lease will be recoverable separately from such judgment,
and the obligation for such Attorneys’ Fees is intended to be
severable from other provisions of this Ground Lease and not to be merged into any such judgment.

18       Successors and Assigns. The terms, provisions, covenants and conditions of this
Ground Lease will be binding upon NAI and BNPPLC and their respective permitted successors and
assigns and will inure to the benefit of NAI and BNPPLC and all permitted transferees, mortgagees,
successors and assignees of NAI and BNPPLC with respect to the Leased Property; except that (A)
BNPPLC will not assign this Ground Lease or any rights hereunder except pursuant to a Permitted
Transfer, and (C) NAI will not assign this Ground Lease or any rights hereunder prior to the
Turnover Date without the prior written consent of BNPPLC.

[The signature pages follow.]

      

Ground Lease — Page 17

 

 

     IN WITNESS WHEREOF, this Ground Lease is executed on the date of acknowledgment before a
notary indicated below to be effective as of December 14, 2006.

	 	 	 	 	 
	 	BNP PARIBAS LEASING
CORPORATION, a 

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

	 	 	 	 	 	 	 
	STATE OF TEXAS

	 	 	)	 	 	 
	 

	 	 	)	 	 	SS
	COUNTY OF DALLAS

	 	 	)	 	 	 

On December 14, 2006, before me Catherine L. Granger, a Notary Public in and for the County and
State aforesaid, personally appeared Lloyd G. Cox, Managing Director of BNP Paribas Leasing
Corporation, who is personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and acknowledged to me that
he/she executed the same in his/her authorized capacity and that by his/her signature on such
instrument the person, or the entity upon behalf of which the person acted, executed the
instrument.

WITNESS, my hand and official seal.

/s/ Catherine L. Granger          

 

Ground Lease — Signature Page

 

 

[Continuation of signature pages for Ground Lease, executed on the date of acknowledgment before a
notary indicated below to be effective as of December 14, 2006]

	 	 	 	 	 
	 	NETWORK APPLIANCE, INC., a Delaware corporation

 	 
	 	By:  	/s/      Ingemar Lanevi
 	 
	 	 	Ingemar Lanevi, Vice President and Corporate Treasurer 	 
	 	 	 	 
	 

	 	 	 	 	 	 	 
	STATE OF NORTH CAROLINA

	 	 	)	 	 	 
	 

	 	 	)	 	 	SS
	COUNTY OF WAKE

	 	 	)	 	 	 

On December 14th, 2006, before me Edward E. Benton Jr., a Notary Public in and for the County and
State aforesaid, personally appeared Ingemar Lanevi, Vice President and Corporate Treasurer of
Network Appliance, Inc., who is personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her
signature on such instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.

WITNESS, my hand and official seal.

/s/ Edward E. Benton Jr.          

 

Ground Lease — Signature Page

 

 

Exhibit A

Legal Description

Proposed Parcel 8, and (except to the extent within a different platted Parcel as currently shown
in the Map Records of the County of Santa Clara, California) proposed Parcel 12, and the Additional
Leased Premises as defined below, (collectively, the “2006 Ground Lease Premises”) as shown on that
certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by
Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which
has received preliminary approval from the City of Sunnyvale, California, but not yet been filed
for record in the office of the recorder of the County of Santa Clara, State of California. As
used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded
in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A
(consisting of 30.46 Acres, more or less) on the Tentative Map. The southern boundary of the
Additional Leased Premises is a line that runs North 75 degrees, 07 minutes, 58 seconds equidistant
from the southern boundary of Parcel 8 and the northern boundary of Parcel 7, both as shown on the
Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as
the eastern boundary of Common Lot A, as shown on the Tentative Map. The western boundary of the
Additional Leased Premises runs along the same line as the western boundary of Parcel 8 and Parcel
7, as shown on the Tentative Map. The northern boundary of the Additional Leased Premises runs
along the center of an existing or proposed driveway which is situated between Parcel 8 and Parcel
9, as shown on the Tentative Map.

TOGETHER WITH, easements appurtenant to the 2006 Ground Lease Premises (the “Appurtenant
Easements”) under, over and across adjacent parcels (“Adjacent Parcels”) which are owned by NAI for
the purposes described below and on and subject to the express terms and conditions set forth
below:

The Appurtenant Easements will be for the following purposes:

     1. The use, maintenance, repair, replacement expansion of utility lines under, over and
across the Adjacent Parcels and related equipment (including lines or equipment for water,
sanitary sewer, electricity, phone and gas) (collectively, the “Utility Lines”) to serve
improvements constructed from time to time on the 2006 Ground Lease Premises.

     2. Access and parking over and in paved driveways and parking lots or garages now or
hereafter located on the Adjacent Parcels (“Driveways and Parking Areas”).

     3. The encroachment, support, maintenance, repair and replacement of any buildings
constructed on Parcel 8 as shown on the Tentative Map during the period that BNPPLC owns or
leases Parcel 8.

The Appurtenant Easements will be subject to the following terms and conditions:

 

 

     A. The Appurtenant Easements for Utility Lines will be limited to:

     (1) those Utility Lines, if any, existing on the first date upon which any
instrument is recorded which gives notice of the Appurtenant Easements;

     (2) those Utility Lines, if any, constructed by or at the request of NAI
itself;

     (3) any other Utility Lines reasonably necessary for the use of improvements
constructed by NAI (whether constructed for BNPPLC or otherwise) on the 2006 Ground
Lease Premises (and in the case of Utility Lines permitted only because of this
clause (3), such Utility Lines must be installed in a location that does not run
through or under any then existing building or structured garage on the Adjacent
Parcels); and

     (4) replacements (including replacements that may increase utility capacity)
for any Utility Lines permitted under the preceding clauses (1) through (3).

     B. Any Utility Line on any Adjacent Parcel may be relocated to another location on the
same Adjacent Parcel by the owner of such parcel and at its sole cost and expense, so long
as the relocation is done in a good and workmanlike manner that does not and will not impose
any significant or unexpected interruption of utility services or additional costs upon the
owner or occupants of the 2006 Ground Lease Premises.

     C. The use of Driveways and Parking Areas by the owner of the 2006 Ground Lease
Premises and its tenants and other invitees will not exceed that reasonably required to
provide buildings constructed on the 2006 Ground Lease Premises with parking that both (i)
meets local zoning and other legal requirements, and (ii) when taken together with any
permanent, concrete parking spaces from time to time constructed on the 2006 Ground Lease
Premises, provides at least 632 parking spaces for buildings on the 2006 Ground Lease
Premises and also causes the parking ratio for buildings on the 2006 Ground Lease Premises
to be not less than 1 parking space per 333 square feet of interior building floor area
(collectively, the “Minimum Parking Requirements”). However, for purposes of computing the
Minimum Parking Requirements, parking spaces from time to time constructed on the 2006
Ground Lease Premises which are made available for parking by owners or occupants of any
Adjacent Parcel pursuant to any easement which encumbers the 2006 Ground Lease Premises (or
any leasehold estate therein) will be treated as if they did not exist. In other words, any
such parking spaces available to owners or occupants of Adjacent Parcels will not be
included in the numbers of parking spaces considered as available to owners or occupants of
the 2006 Ground Lease Premises to satisfy the Minimum Parking Requirements.

 

Exhibit A to Ground Lease — Page 2

 

 

     D. NAI and its successors and assigns as the owners of Adjacent Parcels will
always maintain a number of parking spaces on the Adjacent Parcels which is no less
than the sum of (1) the spaces required to meet Minimum Parking Requirements for buildings
on the 2006 Ground Lease Premises, and (2) the spaces required to satisfy zoning or other
parking requirements for other buildings on or served by parking on the Adjacent Parcels.

     E. The Appurtenant Easement for parking on Adjacent Parcels will be subject to the
following condition subsequent: If a sufficient number of permanent, concrete parking spaces
in parking lots or structured garages are constructed on the 2006 Ground Lease Premises to
satisfy Minimum Parking Requirements (computed as described above) without the need for
additional parking spaces on Adjacent Parcels, then the owners of Adjacent Parcels may
terminate such parking easement by notice to the owner of the 2006 Ground Lease Premises and
by recording a copy of such notice in the real property deed records. (This provision will
not, however, be construed to require the construction of such lots or garages on the 2006
Ground Lease Premises.)

     F. Notwithstanding the foregoing, at any time when BNPPLC or any successor of BNPPLC
owns or leases all or any part of the land shown on the Tentative Map as Parcel 7 and
adjacent parking lots, driveways and other areas within Common Lot A (collectively, the
“2005 Ground Lease Premises”), BNPPLC may, at its sole option, cause the 2005 Ground Lease
Premises to be released from all or any of the Appurtenant Easements. Notwithstanding any
such release, the Appurtenant Easements will continue as to Adjacent Parcels other than the
2005 Ground Lease Premises. BNPPLC may exercise such option by written notice recorded in
the real property records of Santa Clara County, California.

 

Exhibit A to Ground Lease — Page 3

 

 

 

Exhibit A to Ground Lease — Page 4

 

 

Exhibit B

Permitted Encumbrances

     The leasehold and other interests in the Land hereby conveyed by NAI are conveyed subject to
the following matters to the extent the same are still valid and in force:

1. TAXES for the fiscal year 2006-2007, 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

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

: 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 Ground Lease — Page 2

 

 

Exhibit C

CONTINGENT PURCHASE OPTION

     Subject to the terms of this Exhibit, BNPPLC shall have an option (the “Option”) to buy NAI’
fee interest in the Leased Property at any time during the term of this Ground Lease after (but
only after) any breach by NAI under the Purchase Agreement, provided NAI does not cure the breach
within any time permitted for cure by the express provisions of the Purchase Agreement, for a
purchase price (the “Option Price”) to NAI equal to fair market value.

     For the purposes of this Exhibit, “fair market value” means (and all appraisers and other
persons involved in the determination of the Option Price will be so advised) the price that would
be agreed upon between a willing buyer, under no compulsion to buy, and a willing seller, under no
compulsion to sell, for unimproved land comparable in size and location to the Land,
exclusive of any Improvements but assuming that there is no higher and better use for such land
than as a site for improvements of comparable size and utility to the Improvements, at the time of
BNPPLC’s exercise of the Option and taking into consideration the condition of the Land, the
encumbrances affecting the title to the Land and all applicable zoning, land use approvals and
other governmental permits relating to the Land at the time of the exercise of the Option.

     If BNPPLC exercises the Option, which BNPPLC may do by notifying NAI that BNPPLC has elected
to buy NAI’ interest in the Leased Property as provided herein, then:

     (1) To the extent, if any, required as a condition imposed by law to the conveyance of
the fee interest in the Leased Property to BNPPLC, NAI shall promptly at its expense do
whatever is necessary and possible (including, without limitation, cooperating with BNPPLC
in seeking any zoning variances requested by BNPPLC) to obtain approvals of a new Parcel Map
or lot line adjustments. Should it be determined that it is not possible to satisfy any
such condition imposed by law, neither NAI nor BNPPLC shall be required to consummate any
purchase pursuant to this Exhibit, and this Ground Lease will continue as if BNPPLC had not
exercised the Option.

     (2) Upon BNPPLC’s tender of the Option Price to NAI, NAI will convey good and
indefeasible title to the fee estate in the Land and its interest in all other Leased
Property to BNPPLC by general warranty deed and assignment subject only to the Permitted
Encumbrances, to any claims of BNPPLC or Liens Removable by BNPPLC, and (to the extent still
in force) to the Lease and the Purchase Agreement.

     (3) BNPPLC’s obligation to close the purchase shall be subject to the following
terms and conditions, all of which are for the benefit of BNPPLC: (1) BNPPLC shall have
been furnished with evidence satisfactory to BNPPLC that NAI can convey title as required by
the preceding subparagraph; (2) nothing shall have occurred or been discovered after BNPPLC
exercised the Option that could significantly and adversely affect title to the Leased
Property or BNPPLC’s use thereof, (3) all of the representations
of NAI in this Ground Lease shall continue to be true as if made effective

 

 

on the date of the closing and, with respect to any such representations which may be limited to the
knowledge of NAI or any of NAI’ representatives, would continue to be true on the date of
the closing if all relevant facts and circumstances were known to NAI and such
representatives, and (4) BNPPLC shall have been tendered the deed and other documents which
are described in this Exhibit as documents to be delivered to BNPPLC at the closing of
BNPPLC’s purchase.

     (4) Closing of the purchase will be scheduled on the first Business Day following
thirty days after the Option Price is established in accordance with the terms and
conditions of this Exhibit and after any approvals described in subparagraph (a) above are
obtained, and prior to closing BNPPLC’s occupancy of the Leased Property shall continue to
be subject to the terms and conditions of this Ground Lease, including the terms setting
forth BNPPLC’s obligation to pay rent. Closing shall take place at the offices of any title
insurance company reasonably selected by BNPPLC to insure title under the title insurance
policy described below.

     (5) Any transfer taxes or notices or registrations required by law in connection with
the sale contemplated by this Exhibit will be the responsibility of NAI.

     (6) NAI will deliver a certificate of nonforeign status to BNPPLC at closing as needed
to comply with the provisions of the U.S. Foreign Investors Real Property Tax Act (FIRPTA)
or any comparable federal, state or local law in effect at the time.

     (7) NAI will also pay for and deliver to BNPPLC at the closing an owner’s title
insurance policy in the full amount of the Option Price, issued by a title insurance company
designated by BNPPLC (or written confirmation from the title company that it is then
prepared to issue such a policy), and subject only to standard printed exceptions which the
title insurance company refuses to delete or modify in a manner acceptable to BNPPLC and to
Permitted Encumbrances.

     (8) NAI shall also deliver at the closing all other documents or things reasonably
required to be delivered to BNPPLC or by the title insurance company to evidence NAI’
ability to transfer the Leased Property to BNPPLC.

     If NAI and BNPPLC do not otherwise agree upon the amount of the Option Price within twenty
days after BNPPLC exercises the Option, the Option Price shall be determined in accordance with the
following procedure:

     (a) NAI and BNPPLC shall each appoint a real estate appraiser who is
familiar with properties in the vicinity of the Land and who has not previously
acted for either party. Each party will make the appointment no later than ten days
after receipt of notice from the other party that the appraisal process

 

Exhibit C to Ground Lease — Page 2

 

 

described in this Exhibit has been invoked. The agreement of the two appraisers as
to the Option Price will be binding upon NAI and BNPPLC. If the two appraisers
cannot agree upon the Option Price within ten days following their appointment, they
shall within another ten days agree upon a third real estate appraiser. Immediately
thereafter, each of the first two appraisers will submit his best estimate of the
appropriate Option Price (together with a written report supporting such estimate)
to the third appraiser and the third appraiser will choose between the two
estimates. The estimate of Option Price chosen by the third appraiser as the
closest to the prevailing monthly fair market value will be binding upon NAI and
BNPPLC. Notification in writing of the Option Price shall be made to NAI and BNPPLC
within fifteen days following the selection of the third appraiser.

     (b) If appraisers must be selected under the procedure set out above and either
BNPPLC or NAI fails to appoint an appraiser or fails to notify the other party of
such appointment within fifteen days after receipt of notice that the prescribed
time for appointing the appraisers has passed, then the other party’s appraiser will
determine the Option Price. All appraisers selected for the appraisal process set
out in this Exhibit will be disinterested, reputable, qualified real estate
appraisers with the designation of MAI or equivalent and with at least 5 years
experience in appraising properties comparable in Santa Clara County, California to
the Land.

     (c) If a third appraiser must be chosen under the procedure set out above, he
will be chosen on the basis of objectivity and competence, not on the basis of his
relationship with the other appraisers or the parties to this Ground Lease, and the
first two appraisers will be so advised. Although the first two appraisers will be
instructed to attempt in good faith to agree upon the third appraiser, if for any
reason they cannot agree within the prescribed time, either NAI and BNPPLC may
require the first two appraisers to immediately submit its top choice for the third
appraiser to the then highest ranking officer of the Dallas, Texas Bar Association
who will agree to help and who has no attorney/client or other significant
relationship to either NAI or BNPPLC. Such officer will have complete discretion to
select the most objective and competent third appraiser from between the choice of
each of the first two appraisers, and will do so within ten days after such choices
are submitted to him.

     (d) Either NAI or BNPPLC may notify the appraiser selected by the other
party to demand the submission of an estimate of Option Price or a choice of a third
appraiser as required under the procedure described above; and if the submission of
such an estimate or choice is required but the other party’s appraiser fails to
comply with the demand within fifteen days after receipt of such notice,

 

Exhibit C to Ground Lease — Page 3

 

 

then the Option Price or choice of the third appraiser, as the case may be,
selected by the other appraiser (i.e., the notifying party’s appraiser) will be
binding upon NAI and BNPPLC.

     (e) NAI and BNPPLC shall each bear the expense of the appraiser appointed by
it, and the expense of the third appraiser and of any officer of the Dallas, Texas
Bar Association who participates in the appraisal process described above will be
shared equally by NAI and BNPPLC.

 

Exhibit C to Ground Lease — Page 4

 

 

Exhibit D

DETERMINATION OF FAIR RENTAL VALUE

     Each annual payment of Ground Lease Rent will equal the Fair Rental Value, computed as of the
most recent Rental Determination Date when such payment becomes due. As used in this Exhibit,
“Rental Determination Date” means the (1) the Effective Date, (2) the earliest anniversary of the
Effective Date to follow the Turnover Date by more than thirty days, and (3) after the second
Rental Determination Date described in clause (2), each fifth anniversary of the preceding Rental
Determination Date.

     As of the Effective Date (i.e., the first Rental Determination Date), the parties have agreed
that Fair Rental Value is the dollar amount set forth in Paragraph 3 of this Ground Lease.

     If NAI and BNPPLC have not agreed upon Fair Rental Value as of any subsequent Rental
Determination Date within one hundred eighty days after the such date, then Fair Rental Value will
be determined as follows:

     (a) NAI and BNPPLC shall each appoint a real estate appraiser who is familiar with
rental values for properties in the vicinity of the Land and who has not previously acted
for either party. Each party will make the appointment no later than ten days after receipt
of notice from the other party that the appraisal process described in this Exhibit has been
invoked. The agreement of the two appraisers as to Fair Rental Value will be binding upon
NAI and BNPPLC. If the two appraisers cannot agree upon the Fair Rental Value within ten
days following their appointment, they shall within another ten days agree upon a third real
estate appraiser. Immediately thereafter, each of the first two appraisers will submit his
best estimate of the appropriate Fair Rental Value (together with a written report
supporting such estimate) to the third appraiser and the third appraiser will choose between
the two estimates. The estimate of Fair Rental Value chosen by the third appraiser as the
closest to the prevailing annual fair rental value will be binding upon NAI and BNPPLC.
Notification in writing of this estimate shall be made to NAI and BNPPLC within fifteen days
following the selection of the third appraiser.

     (b) If appraisers must be selected under the procedure set out above and either BNPPLC
or NAI fails to appoint an appraiser or fails to notify the other party of such appointment
within fifteen days after receipt of notice that the prescribed time for appointing the
appraisers has passed, then the other party’s appraiser will determine the Fair Rental
Value. All appraisers selected for the appraisal process set out in this Exhibit will be
disinterested, reputable, qualified real estate appraisers with the designation of MAI or
equivalent and with at least 5 years experience in appraising properties in Santa Clara
County, California comparable to the Land.

     (c) If a third appraiser must be chosen under the procedure set out above, he or she
will be chosen on the basis of objectivity and competence, not on the basis of his

 

 

relationship with the other appraisers or the parties to this Ground Lease, and the first
two appraisers will be so advised. Although the first two appraisers will be instructed to
attempt in good faith to agree upon the third appraiser, if for any reason they cannot agree
within the prescribed time, either NAI and BNPPLC may require the first two appraisers to
immediately submit its top choice for the third appraiser to the then highest ranking
officer of the Dallas, Texas Bar Association who will agree to help and who has no
attorney/client or other significant relationship to either NAI or BNPPLC. Such officer
will have complete discretion to select the most objective and competent third appraiser
from between the choice of each of the first two appraisers, and will do so within twenty
days after such choices are submitted to him.

     (d) Either NAI or BNPPLC may notify the appraiser selected by the other party to demand
the submission of an estimate of Fair Rental Value or a choice of a third appraiser as
required under the procedure described above; and if the submission of such an estimate or
choice is required but the other party’s appraiser fails to comply with the demand within
fifteen days after receipt of such notice, then the Fair Rental Value or choice of the third
appraiser, as the case may be, selected by the other appraiser (i.e., the notifying party’s
appraiser) will be binding upon NAI and BNPPLC.

     (e) NAI and BNPPLC shall each bear the expense of the appraiser appointed by it, and
the expense of the third appraiser and of any officer of the Dallas, Texas Bar Association
who participates in the appraisal process described above will be shared equally by NAI and
BNPPLC.

 

Exhibit D to Ground Lease — Page 2exv10w53

 

Exhibit 10.53

December 6, 2006

Network Appliance, Inc.

495 East Java Drive

Sunnyvale, California 94089

Telephone (408) 822-6000

Ladies and Gentlemen:

     This master confirmation (“Master Confirmation”) dated as of December 6, 2006, is intended to
supplement the terms and provisions of certain transactions (each, a “Transaction”) entered into
from time to time between J.P. Morgan Securities Inc., as agent for JPMorgan Chase Bank, National
Association, London Branch (“Seller”) and Network Appliance, Inc., a Delaware corporation
(“Purchaser”). This Master Confirmation, taken alone, is neither a commitment by either party to
enter into any Transaction nor evidence of a Transaction. The terms of any particular Transaction
shall be set forth in a Supplemental Confirmation in the form of Exhibit A hereto, which references
this Master Confirmation (the “Supplemental Confirmation”). This Master Confirmation and each
Supplemental Confirmation together shall constitute a “Master Confirmation” as referred to in the
Agreement specified below.

     This Master Confirmation and each Supplemental Confirmation evidence a complete binding
agreement between the Purchaser and Seller as to the subject matter and terms of each Transaction
to which this Master Confirmation and the related Supplemental Confirmation relate and shall
supersede all prior or contemporaneous written or oral communications with respect thereto.

     This Master Confirmation shall supplement, form a part of, and be subject to an agreement in
the form of the 2002 ISDA Master Agreement (the “Agreement”) as if the Seller and the Purchaser had
executed an agreement in such form (but without any Schedule except for the election of the laws of
the State of New York as the governing law) on the Execution Date set forth on any Supplemental
Confirmation. The parties hereby agree that no Transaction other than the Transaction to which this
Master Confirmation relates shall be governed by the Agreement.

     All provisions contained or incorporated by reference in the Agreement shall govern this
Master Confirmation and each Supplemental Confirmation relating to a Transaction except as
expressly modified herein or in the related Supplemental Confirmation. If, in relation to any
Transaction to which this Master Confirmation and related Supplemental Confirmation relate, there
is any inconsistency between the Agreement, this Master Confirmation and any Supplemental
Confirmation, the following will prevail for purposes of such Transaction in the order of
precedence indicated: (i) such Supplemental Confirmation; (ii) this Master Confirmation; and (iii)
the Agreement.

JPMorgan Chase Bank, National Association

Organised under the laws of the United States as a National Banking Association.

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

Registered as a branch in England & Wales branch No. BR000746. Registered

Branch Office 125 London Wall, London EC2Y 5AJ

Authorised and regulated by the Financial Services Authority

 

 

ARTICLE 1

Definitions

     Section 1.01 Definitions. As used in this Master Confirmation, the following terms shall have
the following meanings:

     “10b-18 VWAP” means, (A) for any Trading Day described in clause (x) of the definition of
Trading Day hereunder, the volume-weighted average price at which the Common Stock trades as
reported in the composite transactions for the principal United States securities exchange on which
such Common Stock is then listed (or, if applicable, the Successor Exchange on which the Common
Stock has been listed in accordance with Section 7.01(c)), on such Trading Day, excluding (i)
trades that do not settle regular way, (ii) opening (regular way) reported trades in the
consolidated system on such Trading Day, (iii) trades that occur in the last ten minutes before the
scheduled close of trading on the Exchange on such Trading Day and ten minutes before the scheduled
close of the primary trading in the market where the trade is effected, and (iv) trades on such
Trading Day that do not satisfy the requirements of Rule 10b-18(b)(3), as determined in good faith
by the Calculation Agent, or (B) for any Trading Day that is described in clause (y) of the
definition of Trading Day hereunder, an amount determined in good faith by the Calculation Agent as
10b-18 VWAP. The Purchaser acknowledges that the Seller may refer to the Bloomberg Page “NTAP UQ
<Equity> AQR SEC” (or any successor thereto), in its reasonable judgment, for such Trading
Day to determine the 10b-18 VWAP.

     “Additional Termination Event” has the meaning set forth in Section 7.01(a).

     “Agreement” has the meaning set forth in the third paragraph of this Master Confirmation.

     “Affected Party” has the meaning set forth in Section 14 of the Agreement.

     “Affected Transaction” has the meaning set forth in Section 14 of the Agreement.

     “Affiliated Purchaser” means any “affiliated purchaser” (as such term is defined in Rule
10b-18) of the Purchaser.

     “Alternative Termination Delivery Unit” means (i) in the case of a Termination Event (other
than a Merger Event or Nationalization) or Event of Default (as defined in the Agreement), one
share of Common Stock and (ii) in the case of a Merger Event or Nationalization, a unit consisting
of the number or amount of each type of property received by a holder of one share of Common Stock
in such Merger Event or Nationalization; provided that if such Merger Event involves a choice of
consideration to be received by holders of the Common Stock, an Alternative Termination Delivery
Unit shall be deemed to include the amount of cash received by a holder who had elected to receive
the maximum possible amount of cash as consideration for his shares.

     “Averaging Period” means the period of consecutive Trading Days from and including the first
Trading Day following the Hedging Completion Date to and including the Valuation Completion Date.

     “Bankruptcy Code” has the meaning set forth in Section 9.07.

     “Business Day” means any day on which the Exchange is open for trading.

     “Calculation Agent” means JPMorgan Chase Bank, National Association.

2

 

     “Common Stock” has the meaning set forth in Section 2.01.

     “Communications Procedures” has the meaning set forth in Annex A hereto.

     “Contract Period” means the period commencing on and including the Execution Date and ending
on and including the date all payments or deliveries of shares of Common Stock pursuant to Article
3 or Section 7.03 have been made.

     “Default Notice Day” has the meaning set forth in Section 7.02(a).

     “De-Listing” has the meaning set forth in Section 7.01(c).

     “Disrupted Day” means a Scheduled Trading Day during the Contract Period that, as a result of
the definition of Trading Day (whether because of a suspension of transactions pursuant to Section
4.02 of this Master Confirmation or otherwise), is not a Trading Day.

     “Early Termination Date” has the meaning set forth in Section 14 of the Agreement.

     “Event of Default” has the meaning set forth in Section 14 of the Agreement.

     “Exchange” means the NASDAQ National Market.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Execution Date” has the meaning set forth in Section 2.01.

     “Expiration Date” means the first Scheduled Trading Day following the number of days following
the Hedging Period as set forth on the applicable Supplemental Confirmation under the heading
“Number of Days in Averaging Period” (the “Scheduled Expiration Date”); provided, however, if any
Scheduled Trading Day during the Contract Period is a Disrupted Day, then the Expiration Date shall
be extended by one Scheduled Trading Day for each such Disrupted Day; provided, further, if more
than eight Scheduled Trading Days during the Contract Period are Disrupted Days, then on the eighth
Scheduled Trading Day following the Scheduled Expiration Date, if a Valuation Completion Date has
not yet occurred, an Additional Termination Event shall occur in respect of which the Purchaser is
the sole Affected Party and a Transaction is the sole Affected Transaction.

     “Extraordinary Cash Dividend” means the per share cash dividend or distribution, or a portion
thereof, declared by the Purchaser on shares of Common Stock that is classified by the board of
directors of the Purchaser as an “extraordinary” dividend.

     “Hedging Completion Date” means the Trading Day on which the Seller completes the
establishment of its initial hedge position with respect to a Transaction.

     “Hedging Price” means the volume weighted average of the per share prices at which the Seller
(or an affiliate of the Seller) purchases shares of Common Stock during the Hedging Period to
establish Seller’s initial hedge position with respect to a Transaction.

     “Hedging Period” has the meaning set forth in Section 2.04(a).

     “Indemnified Person” has the meaning set forth in Section 9.02.

3

 

     “Indemnifying Party” has the meaning set forth in Section 9.02.

     “Initial Payment Date” means the first Business Day immediately following the Execution Date.

     “Master Confirmation” has the meaning set forth in the first paragraph of this letter
agreement.

     “Merger Event” has the meaning set forth in Section 7.01(d).

     “Minimum Delivery Number” means the number of shares of Common Stock, rounded down to the
nearest integer, equal to (A) the Purchase Price divided by (B) the Upside Threshold.

     “Nationalization” has the meaning set forth in Section 7.01(e).

     “Obligations” has the meaning set forth in Section 9.02.

     “Purchase Price” has the meaning set forth in Section 2.01.

     “Purchaser” has the meaning set forth in the first paragraph of this Master Confirmation.

     “Regulation M” means Regulation M under the Exchange Act.

     “Rule 10b-18” means Rule 10b-18 promulgated under the Exchange Act (or any successor rule
thereto).

     “Scheduled Trading Day” means any day on which each national securities exchange on
which any securities of the Purchaser are traded is scheduled to be open for trading for their
respective regular trading sessions.

     “SEC” means the Securities and Exchange Commission.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Seller” has the meaning set forth in the first paragraph hereto.

     “Seller Termination Share Purchase Period” has the meaning set forth in Section 7.03.

     “Share De-listing Event” has the meaning set forth in Section 7.01(c).

     “Successor Exchange” has the meaning set forth in Section 7.01(c).

     “Supplemental Confirmation” has the meaning set forth in the first paragraph of this Master
Agreement.

     “Termination Amount” has the meaning set forth in Section 7.02(a).

     “Termination Event” has the meaning set forth in Section 14 of the Agreement.

     “Termination Price” means the value of an Alternative Termination Delivery Unit to the Seller,
as determined by the Calculation Agent.

4

 

     “Trading Day” means (x) any Scheduled Trading Day (i) during which trading of any securities
of the Purchaser on any national securities exchange has not been suspended, (ii) during which
there has not been, in the Seller’s reasonable judgment, a material limitation in the trading of
Common Stock or any options contract or futures contract related to the Common Stock, and (iii)
during which there has been no suspension pursuant to Section 4.02 of this Master Confirmation, or
(y) any day that, notwithstanding the occurrence of events contemplated in clauses (i), (ii) and
(iii) of this definition, the Calculation Agent determines to be a Trading Day.

     “Transaction” has the meaning set forth in the first paragraph of this Master Confirmation.

     “Upside Threshold” means, subject to the proviso contained in Section 2.04(b), such percent of
the Hedging Price as set forth in the applicable Supplemental Confirmation under the heading
“Upside Threshold Percent.”

     “Upside Threshold Percent” shall mean the percent set forth in the applicable Supplemental
Confirmation under the heading “Upside Threshold Percent.”

     “Valuation Completion Date” means the Trading Day, during the period commencing on the tenth
(10th) Business Day following the Hedging Completion Date and ending on and including
the Expiration Date, specified as such by the Seller, in its sole judgment, by delivering a notice
designating such Trading Day as a Valuation Completion Date by the close of business on the
Business Day immediately following such Business Day; provided, however, that if the Seller fails
to validly designate the Valuation Completion Date prior to the Expiration Date, the Valuation
Completion Date shall be the Expiration Date.

     “Valuation Number” has the meaning set forth in Section 3.01(b) of this Master Confirmation.

     “Valuation Price Adjustment Amount” shall mean the dollar amount set forth on the applicable
Supplemental Confirmation representing the discount from the average of the 10b-18 VWAPs for all
Trading Days in the Averaging Period.

     “VWAP Termination Price” shall be the price per share set forth on the applicable Supplemental
Confirmation under the heading “VWAP Termination Price.”

ARTICLE 2

purchase of the stock

     Section 2.01 Purchase of the Stock. Subject to the terms and conditions of this Master
Confirmation, the Purchaser agrees to purchase from the Seller, and the Seller agrees to sell to
the Purchaser, on such date as set forth on the applicable Supplemental Confirmation under the
heading “Execution Date” or on such other Business Day as the Purchaser and the Seller shall
otherwise agree (the “Execution Date”), a number of shares of the Purchaser’s common stock, par
value $0.001 per share (“Common Stock”), for an aggregate purchase price equal to such dollar
amount as set forth on the applicable Supplemental Confirmation under the heading “Purchase Price”
(the “Purchase Price”). The number of shares of Common Stock purchased by the Purchaser hereunder
shall be determined in accordance with the terms of this Master Confirmation.

     Section 2.02 Initial Payments. On the Initial Payment Date, the Purchaser shall pay an amount
equal to the Purchase Price to the Seller.

5

 

     Section 2.03 Conditions to Seller’s Obligations. The Seller’s obligations under this
Agreement are subject to the conditions that (a) the representations and warranties made by the
Purchaser in this Agreement shall be true and correct as of the date hereof and the Initial Payment
and (b) the Seller shall have received an opinion of the counsel for the Purchaser, as of the date
of this Master Confirmation, substantially to the effect set forth in Exhibit D.

     Section 2.04 Hedging Period. (a) On each Trading Day beginning on the first Trading Day
immediately following the Initial Payment Date and ending on the Hedging Completion Date, an
affiliate of the Seller shall effect, for the account of the Seller, purchases of shares of Common
Stock to establish Seller’s initial position to hedge the Seller’s price and market risk in
connection with a Transaction (the period of consecutive Trading Days on which such purchases for a
Transaction are effected being collectively referred to as the “Hedging Period” for a Transaction).

          (b) At the conclusion of the Hedging Period, based on the amounts and prices at which an
affiliate of the Seller effects purchases of shares of Common Stock during the Hedging Period to
establish Seller’s initial hedge position in connection with a Transaction, the Calculation Agent
shall determine the Hedging Price, the Upside Threshold and the Minimum Delivery Number for a
Transaction.

          (c) On the first Business Day following the Hedging Completion Date, in addition to satisfying
its obligations under Section 3.01(a), the Seller shall deliver to the Purchaser a pricing
supplement to the applicable Supplemental Confirmation, substantially in the form of Exhibit B
attached hereto, setting forth the Hedging Price, the Upside Threshold, the Minimum Delivery Number
and the first day of the Averaging Period for such Transaction.

ARTICLE 3

Share Deliveries

     Section 3.01 Delivery of Shares. (a) On the first Business Day immediately following the
Hedging Completion Date, the Seller shall deliver to the Purchaser the number of shares of Common
Stock equal to the Minimum Delivery Number.

          (b) On the third Business Day immediately following the Valuation Completion Date, the Seller
shall deliver to the Purchaser the number of shares of Common Stock equal to (i) the number of
shares of Common Stock, rounded down to the nearest integer, equal to (x) the Purchase Price
divided by (y) the average of the 10b-18 VWAPs for all Trading Days in the Averaging Period minus
the dollar amount set forth on the applicable Supplemental Confirmation under the heading
“Valuation Price Adjustment Amount.” (collectively, the “Valuation Number”), minus (ii) the Minimum
Delivery Number; provided, however, that if the Valuation Number is less than the Minimum Delivery
Number, the Valuation Number shall be equal to such Minimum Delivery Number.

          (c) Delivery pursuant to this Article 3 shall be effected in accordance with the Seller’s
customary procedures.

ARTICLE 4

Market Transactions

     Section 4.01 Transactions by the Seller. (a) The parties agree and acknowledge that:

6

 

               (i) During the Hedging Period, the Averaging Period and any Seller Termination Share
Purchase Period, the Seller (or its agent or affiliate) may effect transactions in shares of
Common Stock in connection with this Master Confirmation. The timing of such transactions by
the Seller, the price paid or received per share of Common Stock pursuant to such transactions
and the manner in which such transactions are made, including without limitation whether such
transactions are made on any securities exchange or privately, shall be within the sole judgment
of the Seller; provided that the Seller shall use good faith efforts to make all purchases of
Common Stock in a manner that would comply with the limitations set forth in clauses (b)(2),
(b)(3), (b)(4) and (c) of Rule 10b-18 as if such rule were applicable to such purchases.

               (ii) The Purchaser shall, at least one day prior to the first day of the Hedging Period,
the Averaging Period or the Seller Termination Share Purchase Period, notify the Seller of the
total number of shares of Common Stock purchased in Rule 10b-18 purchases of blocks pursuant to
the once-a-week block exception set forth in Rule 10b-18(b)(4) by or for the Purchaser or any of
its Affiliated Purchasers during each of the four calendar weeks preceding such day and during
the calendar week in which such day occurs (“Rule 10b-18 purchase” and “blocks” each being used
as defined in Rule 10b-18), which notice shall be substantially in the form set forth as Exhibit
C hereto.

          (b) The Purchaser acknowledges and agrees that (i) all transactions effected pursuant to
Section 4.01 hereunder shall be made in the Seller’s sole judgment and for the Seller’s own account
and (ii) the Purchaser does not have, and shall not attempt to exercise, any influence over how,
when or whether to effect such transactions, including, without limitation, the price paid or
received per share of Common Stock pursuant to such transactions whether such transactions are made
on any securities exchange or privately. It is the intent of the Seller and the Purchaser that all
Transactions comply with the requirements of Rule 10b5-1(c) of the Exchange Act and that this
Master Confirmation and any Supplemental Confirmation shall be interpreted to comply with the
requirements of Rule 10b5-1(c) (1)(i)(B) and the Seller shall take no action that results in the
Transaction not so complying with such requirements.

          (c) Notwithstanding anything to the contrary in this Master Confirmation or any Supplemental
Confirmation, the Purchaser acknowledges and agrees that, on any day, the Seller shall not be
obligated to deliver or receive any shares of Common Stock to or from the Purchaser and the
Purchaser shall not be entitled to receive any shares of Common Stock from the Seller on such day,
to the extent (but only to the extent) that after such transactions the Seller’s ultimate parent
entity would directly or indirectly beneficially own (as such term is defined for purposes of
Section 13(d) of the Exchange Act) at any time on such day in excess of 4.99% of the outstanding
shares of Common Stock. Any purported receipt or delivery of shares of Common Stock shall be void
and have no effect to the extent (but only to the extent) that after any receipt or delivery of
such shares of Common Stock the Seller’s ultimate parent entity would directly or indirectly so
beneficially own in excess of 4.99% of the outstanding shares of Common Stock. If, on any day, any
delivery or receipt of shares of Common Stock by the Seller is not effected, in whole or in part,
as a result of this provision, the Seller’s and Purchaser’s respective obligations to make or
accept such receipt or delivery shall not be extinguished and such receipt or delivery shall be
effected over time as promptly as the Seller determines, in the reasonable determination of the
Seller, that after such receipt or delivery its ultimate parent entity would not directly or
indirectly beneficially own in excess of 4.99% of the outstanding shares of Common Stock.

     Section 4.02 Suspension of Transactions in Common Stock. (a) If the Seller, in its sole
judgment, reasonably determines that it is appropriate with regard to any legal, regulatory or self
-regulatory requirements or related policies and procedures (whether or not such requirements,
policies or procedures are imposed by law or have been voluntarily adopted by the Seller) for the
Seller to refrain

7

 

from effecting transactions in Common Stock on any Business Day during the Contract Period or
to effect such transactions on such Business Day at a volume lower than that otherwise effected by
the Seller hereunder, the Seller (or its agent or affiliate) shall not effect transactions in
shares of Common Stock with respect to any Transaction on such day or effect such transactions at a
volume reasonably determined by the Seller in its sole judgment; provided that if the Seller
decides to effect any transaction hereunder at such lower volume, the Calculation Agent shall be
entitled to make appropriate adjustments to the term of such Transaction under Section 8.02 to
reflect the effect of such diminished volume. The Seller shall notify the Purchaser of the
exercise of the Seller’s rights pursuant to this Section 4.02(a) upon such exercise and shall
subsequently notify the Purchaser on the day the Seller believes that the Seller may resume
purchasing or selling or purchasing at the volume level anticipated at the outset of such
Transaction, as applicable, Common Stock. The Seller shall not be obligated to communicate to the
Purchaser the reason for the Seller’s exercise of its rights pursuant to this Section 4.02(a).

          (b) The Purchaser agrees that, during the Contract Period, neither the Purchaser nor any of
its affiliates or agents shall make any distribution (as defined in Regulation M) of Common Stock,
or any security for which the Common Stock is a reference security (as defined in Regulation M) or
take any other action that would, in the view of the Seller, preclude purchases by the Seller of
the Common Stock or cause the Seller to violate any law, rule or regulation with respect to such
purchases.

     Section 4.03 Purchases of Common Stock by the Purchaser. Without the prior written consent of
the Seller, the Purchaser shall not, and shall cause its affiliates and affiliated purchasers (each
as defined in Rule 10b-18) not to, directly or indirectly (including, without limitation, by means
of a derivative instrument) purchase, offer to purchase, place any bid or limit order that would
effect a purchase of, or commence any tender offer relating to, any shares of Common Stock (or
equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a
depository share) or any security convertible into or exchangeable for shares of Common Stock
during the Contract Period.

ARTICLE 5

Representations, Warranties And Agreements

     Section 5.01 Repeated Representations, Warranties and Agreements of the Purchaser. The
Purchaser represents and warrants to, and agrees with, the Seller, (i) on the date hereof, (ii) on
any Execution Date and (iii) on any date on which the Purchaser elects to receive any delivery or
payment pursuant to this Master Confirmation or any Supplemental Confirmation, that:

          (a) Disclosure; Compliance with Laws. The reports and other documents filed by the Purchaser
with the SEC pursuant to the Exchange Act when considered as a whole (with the more recent such
reports and documents deemed to amend inconsistent statements contained in any earlier such reports
and documents), do not contain any untrue statement of a material fact or any omission of a
material fact required to be stated therein or necessary to make the statements therein, in the
light of the circumstances in which they were made, not misleading. The Purchaser is not in
possession of any material nonpublic information regarding the Purchaser or the Common Stock.

          (b) Rule 10b5-1. The Purchaser acknowledges that (i) the Purchaser does not have, and shall
not attempt to exercise, any influence over how, when or whether to effect purchases of Common
Stock by the Seller (or its agent or affiliate) in connection with this Master Confirmation or any
Supplemental Confirmation and (ii) the Purchaser is entering into the Agreement, this Master
Confirmation and any Supplemental Confirmation in good faith and not as part of a plan or scheme to
evade compliance with federal securities laws including, without limitation, Rule 10b-5 promulgated
under the Exchange Act. The Purchaser also acknowledges and agrees that any amendment,
modification,

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waiver or termination of this Master Confirmation or any Supplemental Confirmation must be
effected in accordance with the requirements for the amendment or termination of a “plan” as
defined in Rule 10b5-1(c) under the Exchange Act. Without limiting the generality of the
foregoing, any such amendment, modification, waiver or termination shall be made in good faith and
not as part of a plan or scheme to evade the prohibitions of Rule 10b-5 under the Exchange Act, and
no amendment, modification or waiver shall be made at any time at which the Purchaser or any
officer or director of the Purchaser is aware of any material nonpublic information regarding the
Purchaser or the Common Stock.

          (c) No Facilitation of Distribution. The Purchaser is not entering into this Master
Confirmation or any Supplemental Confirmation to facilitate a distribution of the Common Stock (or
any security convertible into or exchangeable for Common Stock) or in connection with a future
issuance of securities.

          (d) No Manipulation. The Purchaser is not entering into this Master Confirmation or any
Supplemental Confirmation to create actual or apparent trading activity in the Common Stock (or any
security convertible into or exchangeable for Common Stock) or to manipulate the price of the
Common Stock (or any security convertible into or exchangeable for Common Stock).

          (e) Regulation M. The Purchaser is not engaged in a distribution, as such term is used in
Regulation M, that would preclude purchases by the Purchaser or the Seller of the Common Stock or
cause the Seller to violate any law, rule or regulation with respect to such purchases.

          (f) Board Authorization. The Purchaser is entering into this Master Confirmation and any
Supplemental Confirmation in connection with its share repurchase program, which was approved by
its board of directors and publicly disclosed, solely for the purposes stated in such board
resolution and public disclosure. There is no internal policy of the Purchaser, whether written or
oral, that would prohibit the Purchaser from entering into any aspect of the Transactions
contemplated hereby or thereby, including, but not limited to, the purchases of shares of Common
Stock to be made pursuant hereto or thereto.

          (g) Due Authorization and Good Standing. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware. This Master
Confirmation has been duly authorized, executed and delivered by the Purchaser and (assuming due
authorization, execution and delivery thereof by the Seller) constitutes a valid and legally
binding obligation of the Purchaser. The Purchaser has all corporate power to enter into this
Master Confirmation and any Supplemental Confirmation and to consummate the transactions
contemplated hereby and thereby and to purchase the Common Stock in accordance with the terms
hereof and thereof.

          (h) Certain Transactions. There has not been any public announcement (as defined in Rule
165(f) under the Securities Act) of any merger, acquisition, or similar transaction involving a
recapitalization relating to the Purchaser that would fall within the scope of Rule
10b-18(a)(13)(iv).

          (i) Solvency. The assets of the Purchaser at their fair valuation exceed the liabilities of
the Purchaser, including contingent liabilities; the capital of the Purchaser is adequate to
conduct the business of the Purchaser and the Purchaser has the ability to pay its debts and
obligations as such debts mature and does not intend to, or does not believe that it will, incur
debt beyond its ability to pay as such debts mature.

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          (j) Required Filings. The Purchaser has made, and will use its best efforts to make, all
filings required to be made by it with the SEC, any securities exchange or any other regulatory
body with respect to the Transactions contemplated hereby.

          (k) No Conflict. The execution and delivery by the Purchaser of, and the performance by the
Purchaser of its obligations under, this Master Confirmation and any Supplemental Confirmation, as
applicable, and the consummation of the transactions herein or therein contemplated do not conflict
with or violate (i) any provision of the certificate of incorporation, by-laws or other
constitutive documents of the Purchaser, (ii) any statute or order, rule, regulation or judgment of
any court or governmental agency or body having jurisdiction over the Purchaser or any of its
subsidiaries or any of their respective assets or (iii) any contractual restriction binding on or
affecting the Purchaser or any of its subsidiaries or any of its assets.

          (l) Consents. All governmental and other consents that are required to have been obtained by
the Purchaser with respect to performance, execution and delivery of this Master Confirmation or
any Supplemental Confirmation, as applicable, have been obtained and are in full force and effect
and all conditions of any such consents have been complied with.

          (m) Investment Company Act. The Purchaser is not and, after giving effect to the transactions
contemplated in this Master Confirmation or any Supplemental Confirmation, as applicable, will not
be required to register as an “investment company” as such term is defined in the Investment
Company Act of 1940, as amended.

          (n) Commodity Exchange Act. The Purchaser is an “eligible contract participant,” as such term
is defined in Section 1(a)(12) of the Commodity Exchange Act, as amended.

     Section 5.02 Additional Representations, Warranties and Agreements. The Purchaser and the
Seller represent and warrant to, and agree with, each other that:

          (a) Exempt Transaction. Each party acknowledges that all Transactions pursuant to this Master
Confirmation or any Supplemental Confirmation are intended to be exempt from registration under the
Securities, by virtue of Section 4(2) thereof and the provisions of Regulation D promulgated
thereunder (“Regulation D”). Accordingly, each party represents and warrants to the other that (i)
it has the financial ability to bear the economic risk of its investment in each Transaction and is
able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is
defined under Regulation D, (iii) it will purchase each Transaction for investment and not with a
view to the distribution or resale thereof in a manner that would violate the Securities Act, and
(iv) the disposition of each Transaction is restricted under this Master Confirmation, the
Securities Act and state securities laws.

          (b) Agency. Each party acknowledges that J.P. Morgan Securities Inc., an affiliate of the
Seller (“JPMSI”) has acted solely as agent on behalf of the Seller in effecting this Master
Confirmation and any Supplemental Confirmation. Each party acknowledges that JPMSI shall have no
liability to either party under this Master Confirmation or any Supplemental Confirmation. JPMSI is
authorized to act as agent for the Seller.

          (c) Non-Reliance. Each party has entered into this Master Confirmation solely in reliance on
its own judgment. Neither party has any fiduciary obligation to the other party relating to this
Master Confirmation nor any Transactions contemplated hereby. In addition, neither party has held
itself out as advising, or has held out any of its employees or agents as having the authority to
advise, the other party as to whether or not the other party should enter into this Master
Confirmation nor any Transactions

10

 

contemplated hereby, any subsequent actions relating to this Master Confirmation or any other
matters relating to this Master Confirmation. Neither party shall have any responsibility or
liability whatsoever in respect of any advice of this nature given, or views expressed, by it or
any such persons to the other party relating to Master Confirmation nor any Transactions
contemplated hereby, whether or not such advice is given or such views are expressed at the request
of the other party. The Purchaser has conducted its own analysis of the legal, accounting, tax and
other implications of this Master Confirmation and the Transactions contemplated hereby and
consulted such advisors, accountants and counsel as it has deemed necessary.

     Section 5.03 Representations and Warranties of the Seller. The Seller represents and warrants
to the Purchaser that:

          (a) Due Authorization. This Master Confirmation has been duly authorized, executed and
delivered by the Seller and (assuming due authorization, execution and delivery thereof by the
Purchaser) constitutes a valid and legally binding obligation of the Seller. The Seller has all
corporate power to enter into this Master Confirmation and any Supplemental Confirmation, as
applicable, and to consummate the transactions contemplated hereby and to deliver the Common Stock
in accordance with the terms hereof or thereof.

          (b) Right to Transfer. The Seller will, on the first Business Day immediately following the
Hedging Completion Date, have the free and unqualified right to transfer the Number of Shares of
Common Stock to be delivered by the Seller pursuant to Section 2.01(a) hereof, free and clear of
any security interest, mortgage, pledge, lien, charge, claim, equity or encumbrance of any kind.

ARTICLE 6

Additional Covenants

     Section 6.01 Purchaser’s Further Assurances. The Purchaser hereby agrees with the Seller that
the Purchaser shall cooperate with the Seller, and execute and deliver, or use its best efforts to
cause to be executed and delivered, all such other instruments, and to obtain all consents,
approvals or authorizations of any person, and take all such other actions as the Seller may
reasonably request from time to time, consistent with the terms of this Master Confirmation, in
order to effectuate the purposes of this Master Confirmation and the Transactions contemplated
hereby.

     Section 6.02 Purchaser’s Hedging Transactions. The Purchaser hereby agrees with the Seller
that the Purchaser shall not, during the Contract Period, enter into or alter any corresponding or
hedging transaction or position with respect to the Common Stock (including, without limitation,
with respect to any securities convertible or exchangeable into the Common Stock) and agrees not to
alter or deviate from the terms of this Master Confirmation.

     Section 6.03 No Communications. The Purchaser hereby agrees with the Seller that the Purchaser
shall not, directly or indirectly, communicate any information relating to the Common Stock or a
Transaction (including any notices required by Section 6.04) to any employee of the Seller or J.P.
Morgan Securities Inc., other than as set forth in the Communications Procedures attached as Annex
A hereto.

     Section 6.04 Notice of Certain Transactions. If at any time during the Contract Period, the
Purchaser makes, or expects to be made, or has made, any public announcement (as defined in Rule
165(f) under the Securities Act) of any merger, acquisition, or similar transaction involving a
recapitalization relating to the Purchaser (other than any such transaction in which the
consideration

11

 

consists solely of cash and there is no valuation period, or as to which the completion of
such transaction or the completion of the vote by target shareholders has occurred), then the
Purchaser shall (i) notify the Seller prior to the opening of trading in the Common Stock on any
day on which the Purchaser makes, or expects to be made, or has made any such public announcement,
(ii) notify the Seller promptly following any such announcement (or, if later, prior to the opening
of trading in the Common Stock on the first day of any Seller Termination Share Payment Period)
that such announcement has been made and (iii) promptly deliver to the Seller following the making
of any such announcement (or, if later, prior to the opening of trading in the Common Stock on the
first day of any Seller Termination Share Payment Period), a certificate indicating (A) the
Purchaser’s average daily Rule 10b-18 purchases (as defined in Rule 10b-18) during the three full
calendar months preceding the date of such announcement and (B) the Purchaser’s block purchases (as
defined in Rule 10b-18) effected pursuant to paragraph (b)(4) of Rule 10b-18 during the three full
calendar months preceding the date of such announcement. In addition, the Purchaser shall promptly
notify the Seller of the earlier to occur of the completion of such transaction and the completion
of the vote by target shareholders. Accordingly, the Company acknowledges that its actions in
relation to any such announcement or transaction must comply with the standards set forth in
Section 6.03.

ARTICLE 7

Termination

     Section 7.01 Additional Termination Events. (a) An Additional Termination Event shall occur
in respect of which the Purchaser is the sole Affected Party and a Transaction is the sole Affected
Transaction if, on any day, the Seller reasonably determines, in its sole judgment, that it is
unable to establish, re-establish or maintain in an economically efficient manner any hedging
transactions reasonably necessary in the normal course of such party’s business of hedging the
price and market risk of entering into and performing under a Transaction, due to market
illiquidity, illegality, lack of availability of hedging transaction market participants or any
other factor.

          (b) An Additional Termination Event shall occur in respect of which the Purchaser is the sole
Affected Party and a Transaction is the sole Affected Transaction if (i) a Share De-listing Event
occurs; (ii) a Merger Event occurs; (iii) a Nationalization occurs, (iv) any event described in
Section 8.02 occurs with respect to which, the Calculation Agent determines in its sole judgment,
that it is impracticable to effect any adjustment contemplated by Section 8.02 in order to preserve
the fair value of the Transaction to the Seller, (v) the 10b-18 VWAP on any Trading Day following
the Execution Date shall have been less than such dollar amount set forth on the applicable
Supplemental Confirmation under the heading “VWAP Termination Price” (subject to adjustment under
Section 8.02) or (vi) an event described in paragraph III of Annex A occurs.

          (c) A “Share De-listing Event” means that at any time during the Contract Period, the Common
Stock ceases to be listed, traded or publicly quoted on the Exchange for any reason (other than a
Merger Event, a “De-Listing”) and are not immediately re-listed, traded or quoted as of the date of
such de-listing, on another U.S. national securities exchange or a U.S. automated interdealer
quotation system (a “Successor Exchange”), provided that it shall not constitute an Additional
Termination Event if the Common Stock is immediately re-listed on a Successor Exchange upon its
De-Listing from the Exchange, and the Successor Exchange shall be deemed to be the Exchange for all
purposes. In addition, in such event, the Seller shall make any commercially reasonable adjustments
it deems necessary to the terms of the Transaction.

          (d) A “Merger Event” means the public announcement, including any public announcement as
defined in Rule 165(f) of the Securities Act (by the Purchaser or otherwise) at any time

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during the Contract Period of any (i) planned recapitalization, reclassification or change of
the Common Stock that will, if consummated, result in a transfer of more than 20% of the
outstanding shares of Common Stock, (ii) planned consolidation, amalgamation, merger or similar
transaction of the Purchaser with or into another entity (other than a consolidation, amalgamation
or merger in which the Purchaser will be the continuing entity and which does not result in any
such recapitalization, reclassification or change of more than 20% of such shares outstanding),
(iii) other takeover offer for the shares of Common Stock that is aimed at resulting in a transfer
of more than 20% of such shares of Common Stock (other than such shares owned or controlled by the
offeror) or (iv) irrevocable commitment to any of the foregoing.

          (e) A “Nationalization” means that all or substantially all of the outstanding shares of
Common Stock or assets of the Purchaser are nationalized, expropriated or are otherwise required to
be transferred to any governmental agency, authority or entity.

     Section 7.02 Consequences of Additional Termination Events. (a) In the event of the occurrence
or effective designation of an Early Termination Date under the Agreement, in lieu of payment of
the amount payable in respect of a Transaction pursuant to Sections 6(d) and 6(e) of the Agreement
(the “Termination Amount”), the Seller shall be obligated to deliver to the Purchaser the
Alternative Termination Delivery Units pursuant to Section 7.03, unless the Purchaser elects cash
settlement (which election shall be binding), as set forth in Section 7.02(b), and notifies the
Seller of such election by delivery of written notice to the Seller on the Business Day immediately
following the Purchaser’s receipt of a notice (as required by Section 6(d) of the Agreement
following the designation of an Early Termination Date in respect of such Transaction or in respect
of all transactions under the Agreement) setting forth the amounts payable by the Seller with
respect to such Early Termination Date (the date of such delivery, the “Default Notice Day”);
provided that the Purchaser’s election to receive the Alternative Termination Delivery Units
pursuant to Section 7.03 shall not be valid and cash settlement shall apply if the representations
and warranties made by the Purchaser to the Seller in Section 5.01 are not true and correct as of
the date the Seller makes such election, as if made on such date.

          (b) If cash settlement applies in respect of an Early Termination Date, Section 6 of the
Agreement shall apply.

     Section 7.03 Alternative Termination Settlement. Subject to Section 7.02(a), unless the
Purchaser elects cash settlement pursuant to Section 7.02(b), (i) the Seller shall, beginning on
the first Trading Day following the Default Notice Day and ending when the Seller shall have
satisfied its obligations under this clause (the “Seller Termination Share Purchase Period”),
purchase (subject to the provisions of Section 4.01 and Section 4.02 hereof) a number of
Alternative Termination Delivery Units equal to (A) the Termination Amount divided by (B) the
Termination Price; and (ii) the Seller shall deliver such Alternative Termination Delivery Units to
the Purchaser on the settlement dates relating to such purchases.

     Section 7.04 Notice of Default. If an Event of Default occurs in respect of the Purchaser, the
Purchaser will, promptly upon becoming aware of it, notify the Seller specifying the nature of such
Event of Default.

ARTICLE 8

Adjustments

     Section 8.01 Cash Dividends. If the Purchaser declares any Extraordinary Cash Dividend that
has a record date during the Contract Period, then prior to or on the date on which such
Extraordinary

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Cash Dividend is paid by the Purchaser to holders of record, the Purchaser shall pay to the
Seller an amount in cash equal to the product of (i) the amount of such Extraordinary Cash Dividend
and (ii) the theoretical short delta number of shares, as determined by the Calculation Agent,
required for the Seller to hedge its exposure to a Transaction.

     Section 8.02 Dilution Adjustments. If (x) any corporate event occurs involving the Purchaser
or the Common Stock (other than an Extraordinary Cash Dividend but including, without limitation,
other cash dividends, a spin-off, a stock split, stock or other dividend or distribution,
reorganization, rights offering or recapitalization or any other event having a dilutive or
concentrative effect on the Common Stock), or (y) as a result of the definition of Trading Day
(whether because of a suspension of transactions pursuant to Section 4.02 or otherwise), any day
that would otherwise be a Trading Day during the Contract Period is not a Trading Day or on such
Trading Day, pursuant to Section 4.02, the Seller effects transactions with respect to shares of
Common Stock at a volume lower than originally anticipated with respect to a Transaction or (z) as
a result of market conditions, the Seller incurs additional costs in connection with maintaining
its hedge position with respect to a Transaction (including, without limitation, the insufficient
availability of stock lenders willing and able to lend shares of Common Stock with a borrow cost
not significantly greater than the cost as of the date hereof and otherwise on terms consistent
with those as of the date hereof), then in any such case, the Calculation Agent shall make
corresponding adjustments with respect to any one or more of the Upside Threshold, the Minimum
Delivery Number and any other variable or term relevant to the terms of the Transaction, as the
Calculation Agent determines appropriate to preserve the fair value of the Transaction to the
Seller, and shall determine the effective date of such adjustment.

ARTICLE 9

miscellaneous

     Section 9.01 Successors and Assigns. All covenants and agreements in this Master Confirmation
or any Supplemental Confirmation made by or on behalf of either of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns of the parties hereto whether so
expressed or not.

     Section 9.02 Purchaser Indemnification. The Purchaser (the “Indemnifying Party”) agrees to
indemnify and hold harmless the Seller and its officers, directors, employees, affiliates,
advisors, agents and controlling persons (each, an “Indemnified Person”) from and against any and
all losses, claims, damages and liabilities, joint or several (collectively, “Obligations”), to
which an Indemnified Person may become subject arising out of or in connection with this Master
Confirmation or any Supplemental Confirmation or any claim, litigation, investigation or proceeding
relating thereto, regardless of whether any of such Indemnified Person is a party thereto, and to
reimburse, within 30 days, upon written request, each such Indemnified Person for any reasonable
legal or other expenses incurred in connection with investigating, preparation for, providing
evidence for or defending any of the foregoing, provided, however, that the Indemnifying Party
shall not have any liability to any Indemnified Person to the extent that such Obligations (i) are
finally determined by a court of competent jurisdiction to have resulted from the gross negligence
or willful misconduct of such Indemnified Person (and in such case, such Indemnified Person shall
promptly return to the Indemnifying Party any amounts previously expended by the Indemnifying Party
hereunder) or (ii) are trading losses incurred by the Seller as part of its purchases or sales of
shares of Common Stock pursuant to this Master Confirmation or any Supplemental Confirmation
(unless the Purchaser has breached any agreement, term or covenant herein).

     Section 9.03 Assignment and Transfer. Notwithstanding the Agreement, the Seller may assign any
of its rights or duties hereunder to any one or more of its affiliates without the prior written
consent of

14

 

the Purchaser. Notwithstanding any other provision in this Master Confirmation or any
Supplemental Confirmation to the contrary requiring or allowing Seller to purchase, sell, receive
or deliver any shares of Common Stock or other securities to or from the Purchaser, Seller may
designate any of its affiliates to purchase, sell, receive or deliver such shares of Common Stock
or other securities and otherwise to perform the Seller’s obligations in respect of a Transaction
and any such designee may assume such obligations. The Seller shall be discharged of its
obligations to the Purchaser to the extent of any such performance.

     Section 9.04 Calculation Agent. All determinations made by the Calculation Agent shall be made
in good faith and in a commercially reasonable manner. Following any calculation by the Calculation
Agent hereunder, upon a prior written request by the Purchaser, the Calculation Agent will provide
to the Purchaser by e-mail to the e-mail address provided by the Purchaser in such a prior written
request a report (in a commonly used file format for the storage and manipulation of financial
data) displaying in reasonable detail the basis for such calculation.

     Section 9.05 Confidentiality. The Seller and the Purchaser hereby agree not to issue any press
release, articles, advertising, publicity or other matter relating to this Master Confirmation, any
Supplemental Confirmation or any Transaction or mentioning or implying the name of the parties
hereto or thereto or the subject matter hereof or thereto, except as may be required by law, and
then only after providing the other party with an opportunity to review and comment thereon.
Notwithstanding the foregoing, there is no limitation on (i) disclosure of the tax treatment or any
fact that may be relevant to understanding the purported or claimed Federal income tax treatment of
any Transaction or (ii) the filing of this Master Confirmation or any Supplemental Confirmation by
the Purchaser with the SEC. The foregoing does not constitute an authorization to disclose the
identity of any existing or future party to a Transaction or their representatives or, except
relating to any disclosure of the tax structure or tax treatment, any specific pricing terms or
commercial or financial information. The Purchaser hereby agrees to use reasonable efforts to seek
confidential treatment under Rule 406 of the Securities Act for any pricing terms contained in any
Supplemental Confirmation filed by the Purchaser with the SEC.

     Section 9.06 Unenforceability and Invalidity. To the extent permitted by law, the
unenforceability or invalidity of any provision or provisions of this Master Confirmation or any
Supplemental Confirmation shall not render any other provision or provisions herein or therein
contained unenforceable or invalid.

     Section 9.07 Securities Contract. The parties hereto agree and acknowledge as of the date
hereof that (i) the Seller is a “financial institution” within the meaning of Section 101(22) of
Title 11 of the United States Code (the “Bankruptcy Code”) and (ii) this Master Confirmation and
any Supplemental Confirmation shall be deemed a “securities contract,” as such term is defined i n
Section 741(7) of the Bankruptcy Code, entitled to the protection of Sections 362(b)(6) and 555 of
the Bankruptcy Code.

     Section 9.08 No Collateral, Netting or Setoff. Notwithstanding any provision of the Agreement,
or any other agreement between the parties, to the contrary, the obligations of the Purchaser
hereunder are not secured by any collateral. Obligations under a Transaction shall not be netted,
recouped or set off (including pursuant to Section 6 of the Agreement) against any other
obligations of the parties, whether arising under the Agreement, this Master Confirmation or any
Supplemental Confirmation, under any other agreement between the parties hereto, by operation of
law or otherwise, and no other obligations of the parties shall be netted, recouped or set off
(including pursuant to Section 6 of the Agreement) against obligations under such Transaction,
whether arising under the Agreement, this Master Confirmation, any Supplemental Confirmation, under
any other agreement between the parties hereto, by

15

 

operation of law or otherwise, and each party hereby waives any such right of setoff, netting
or recoupment.

     Section 9.09 Notices. Unless otherwise specified herein, any notice, the delivery of which is
expressly provided for in this Master Confirmation or any Supplemental Confirmation, may be made by
telephone, to be confirmed in writing to the address below. Changes to the information below must
be made in writing.

	 	 	 	 	 
	 

	 	(a)
	 	If to the Purchaser:
	 

	 	 	 	Network Appliance, Inc.
	 

	 	 	 	7301 Kit Creek Road
	 

	 	 	 	P.O. Box 13917
	 

	 	 	 	Research Triangle Park, NC 27709
	 

	 	 	 	Attn: Ingemar Lanevi, VP and Corporate Treasurer
	 

	 	 	 	Telephone: 919-476-5750
	 

	 	 	 	Facsimile:
	 
	 	 	 	 
	 

	 	 	 	(b) If to the Seller:
	 

	 	 	 	JPMorgan Chase Bank, National Association
	 

	 	 	 	c/o J.P. Morgan Securities Inc.
	 

	 	 	 	277 Park Avenue
	 

	 	 	 	New York, NY 10172
	 

	 	 	 	Attention: Eric Stefanik
	 

	 	 	 	Title: Operations Analyst
	 

	 	 	 	EDG Corporate Marketing
	 

	 	 	 	Telephone No: (212) 622-5814
	 

	 	 	 	Facsimile No: (212) 622-8534

16

 

     Please confirm that the foregoing correctly sets forth the terms of our agreement by executing
the copy of this Master Confirmation enclosed for that purpose and returning it to us.

	 	 	 	 	 
	 	Yours sincerely,

J.P. MORGAN SECURITIES INC., as agent for

JPMorgan Chase Bank, National Association,

London Branch

 	 
	 	By:  	/s/ Jason M. Wood	 
	 	 	Name:  	Jason M. Wood	 
	 	 	Title:  	Vice President	 
	 

	 	 	 	 	 
	Confirmed as of the date first	 	 
	above written:	 	 
	 
	 	 	 	 
	NETWORK APPLIANCE, INC.	 	 
	 
	 	 	 	 
	By:
	 	/s/ Steven J. Gomo	 	 
	 

	 	 

Name:  Steven J. Gomo
	 	 
	 

	 	Title:    Executive Vice
President of Finance and Chief Financial Officer

JPMorgan Chase Bank, National Association

Organised under the laws of the United States as a National Banking Association.

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

Registered as a branch in England & Wales branch No. BR000746. Registered

Branch Office 125 London Wall, London EC2Y 5AJ

Authorised and regulated by the Financial Services Authority

 

 

ANNEX A

COMMUNICATIONS PROCEDURES

December 6, 2006                    

I. Introduction

     Network Appliance, Inc., a Delaware corporation (“Counterparty”) and J.P. Morgan Securities
Inc., as agent for JPMorgan Chase Bank, National Association, London Branch (“JPMorgan”) have
adopted these communications procedures (the “Communications Procedures”) in connection with
entering into the Master Confirmation (the “Master Confirmation”) dated as of December 6, 2006
between JPMorgan and Counterparty relating to the sale by JPMorgan to Counterparty of common stock,
par value $0.001 per share, or security entitlements in respect thereof (the “Common Stock”) of the
Counterparty. These Communications Procedures supplement, form part of, and are subject to the
Master Confirmation.

II. Communications Rules 

     1. From the date hereof until the end of the Contract Period, neither Counterparty, nor any
Employee of Counterparty, nor any Designee of Counterparty shall (a) engage in any Program Related
Communication with any Personnel, other than any of the Permitted Contact, or (b) in any event
disclose any Material Non-Public Information to any Personnel, other than any of the Permitted
Contacts, and

     2. Subject to the preceding provision, the Counterparty, any Employee of Counterparty and any
Designee of Counterparty may at any time engage in any Non-Program Related Communication.

III. Termination 

     If, in the sole judgment of any Personnel or any affiliate or Employee of JPMorgan
participating in any Communication with Counterparty or any Designee of Counterparty, such
Communication would not be permitted by these Communications Procedures, such Personnel or such
affiliate or Employee of JPMorgan shall immediately terminate such Communication. In such case, or
if such Personnel or such affiliate or Employee of JPMorgan determines following completion of any
Communication with Counterparty, or any Designee of Counterparty, that such Communication was not
permitted by these Communications Procedures, such Personnel or such affiliate or Employee of
JPMorgan shall promptly consult with his or her supervisors and with counsel for JPMorgan regarding
such Communication. If, in the reasonable judgment of JPMorgan’s counsel following such
consultation, there is more than an insignificant risk that such Communication could materially
jeopardize the availability of the affirmative defenses provided in Rule 10b5-1 under the 1934 Act
with respect to any ongoing or contemplated activities of JPMorgan or its affiliates in respect of
the Master Confirmation, it shall be an Additional Termination Event with respect to the Master
Confirmation.

IV. Definitions 

     Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to
them in the Master Confirmation. As used herein, the following words and phrases shall have the
following meanings:

Exh. D-1

 

 

     “Communication” means any contact or communication (whether written, electronic, oral or
otherwise) between Counterparty, any Employee of Counterparty or one or more Designees of
Counterparty, on the one hand, and JPMorgan or any of its affiliates or Employees, on the other
hand.

     “Designee” means a person designated, in writing or orally, by Counterparty to communicate
with JPMorgan on behalf of Counterparty.

     “Employee” means, with respect to any entity, any owner, principal, officer, director,
employee or other agent or representative of such entity, and any affiliate of any of such owner,
principal, officer, director, employee, agent or representative.

     “Material Non-Public Information” means information relating to the Counterparty or the Common
Stock that (a) has not been widely disseminated by wire service, in one or more newspapers of
general circulation, by communication from the Counterparty to its shareholders or in a press
release, or contained in a public filing made by the Counterparty with the Securities and Exchange
Commission and (b) a reasonable investor might consider to be of importance in making an investment
decision to buy, sell or hold shares of Common Stock. For the avoidance of doubt and solely by way
of illustration, information should be presumed “material” if it relates to such matters as
dividend increases or decreases, earnings estimates, changes in previously released earnings
estimates, significant expansion or curtailment of operations, a significant increase or decline of
orders, significant merger or acquisition proposals or agreements, significant new products or
discoveries, extraordinary borrowing, major litigation, liquidity problems, extraordinary
management developments, purchase or sale of substantial assets and similar matters.

     “Non-Program Related Communication” means any Communication other than a Program Related
Communication.

     “Permitted Contact” Mr. David Aidelson, Ms. Bernadette Barnard, Mr. Elliot Chalom, Mr. Santosh
Nabar, Mr. James Rothschild, Mr. James F. Smith, Ms. Fabienne Wilmes and Mr. Jason Wood and any of
the persons designated from time to time in writing by the Counterparty or by a Permitted Contact.

     “Personnel” means Reuben Jacob, Gaurav Arora and any other Employee of the public side of the
Equity Derivatives Group or the Special Equities Group of J.P. Morgan Chase & Co.; provided that
JPMorgan may amend the list of Personnel by delivering a revised list of Personnel to Counterparty.

     “Program Related Communication” means any Communication the subject matter of which relates to
the Master Confirmation or any Transaction under the Master Confirmation or any activities of Agent
(or any of its affiliates) in respect of the Master Confirmation or any Transaction under the
Master Confirmation.

2

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