Agreement Of Assignment Of Lease

DEFINED TERMS


EFFECTIVE DATE: September 3, 1999


ASSIGNEE: NETWORK APPLIANCE, INC.,
a California corporation


ASSIGNEE'S ADDRESS: 495 Java Drive
Sunnyvale, California 94089
Attention: Mr. Thom Bryant
Telephone: (408) 822-6175
Facsimile: (408) 822-4411


ASSIGNOR: LOCKHEED MARTIN CORPORATION,
a Maryland corporation


ASSIGNOR'S ADDRESS: c/o LMC Properties, Inc.
100 S. Charles Street, Suite 1400
Baltimore, Maryland 21201
Attn: Ms. Terri E. Beattie
Telephone: (410) 468-1009
Facsimile: (410) 468-1078


LEASEHOLD INTEREST AND OTHER PROPERTY: See Section 1.1.


ASSIGNMENT FEE: Ten Million Dollars ($10,000,000)


DEPOSIT: Two Million Dollars ($2,000,000)


DUE DILIGENCE PERIOD: See Section 4.1.1.


TITLE COMPANY and ESCROW First American Title Guaranty Company HOLDER: 1737 North First Street
San Jose, California 95112


CLOSING DATE: See Section 5.


CLOSING COST ALLOCATIONS:


- ASSIGNEE: ESCROW FEES 50%
RECORDING FEES 100%


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- ASSIGNOR: ESCROW FEES 50%
RECORDING FEES 0%


BROKER: None


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TABLE OF CONTENTS


1. Assignment of Leasehold Interest and Other Property..................................1
1.1 Lease.........................................................................1
1.2 Intangible Property...........................................................1


2. Assignment Fee.......................................................................1
2.1 Assignment Fee Deposit........................................................1
2.2 Cash at Closing...............................................................2


3. Assignor's Due Diligence Deliveries..................................................2


4. Conditions Precedent.................................................................2
4.1 Assignee's Conditions.........................................................2
4.2 Assignor's Conditions.........................................................3
4.3 Failure or Waiver of Conditions Precedent.....................................4


5. Close of Escrow......................................................................4
5.1 Assignor's Deliveries into Escrow.............................................4
5.2 Assignee's Deliveries into Escrow.............................................5
5.3 Assignor's Deliveries Outside of Escrow.......................................5
5.4 Escrow Holder's Duties........................................................6
5.5 Holdover......................................................................6


6. Covenants, Representations and Warranties............................................6
6.1 Assignor's Covenants..........................................................6
6.2 Assignor's Representations and Warranties.....................................7


7. Closing Adjustments and Prorations...................................................8
7.1 Closing Costs.................................................................8
7.2 Utilities.....................................................................9
7.3 Calculations for Closing......................................................9


8. LIQUIDATED DAMAGES...................................................................9


9. Default by Assignor.................................................................10


10. Miscellaneous.......................................................................10
10.1 Brokerage Commissions........................................................10
10.2 No Liability.................................................................10
10.3 Time of the Essence..........................................................10
10.4 Notices......................................................................10
10.5 Marketing....................................................................11
10.6 Attorneys' Fees..............................................................11


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10.7 Successors and Assigns.......................................................11
10.8 Confidentiality..............................................................11
10.9 Captions.....................................................................11
10.10 Exhibits.....................................................................11
10.11 Binding Effect...............................................................11
10.12 Construction.................................................................12
10.13 Counterparts.................................................................12
10.14 Further Assurances...........................................................12
10.15 Governing Law................................................................12
10.16 Entire Agreement.............................................................12
10.17 Waiver of Jury Trial.........................................................12


Exhibits: A - Consent and Estoppel Certificate
B - Assignment of Lease
C - Bill of Sale
D - Assignment of Intangible Property
E - Closing Certificate
F - Access Agreement


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AGREEMENT OF ASSIGNMENT OF LEASE


THIS AGREEMENT OF ASSIGNMENT OF LEASE, dated as of September 3, 1999 (the "Effective Date"), is entered between Lockheed Martin Corporation, a Maryland corporation, successor-in-interest to Ford Aerospace & Communications Corporation ("Assignor") and Network Appliance, Inc., a California corporation ("Assignee"), who, for valuable consideration received, agree as follows:


1. ASSIGNMENT OF LEASEHOLD INTEREST AND OTHER PROPERTY. Assignor agrees to sell to Assignee, and Assignee agrees to purchase from Assignor, on the terms hereafter stated all of Assignor's right, title and interest in the following described property (collectively, the "Property"):


1.1 Lease. All of Assignor's right, title and interest, as tenant (the "Leasehold Interest"), in that certain Lease (the "Lease") dated May 5, 1978, as amended by Lease Amendment One dated May 5, 1978, Lease Amendment Two dated June 6, 1988, Lease Amendment Three dated September 24, 1993 and all other amendments thereto, and entered into between TriNet Essential Facilities XII, Inc., a Maryland corporation ("Landlord"), as successor-in-interest to The Prudential Insurance Company of America, and Assignor, as successor-in-interest to Ford Aerospace & Communications Corporation, pursuant to which Landlord leases to Assignor all of that certain real property (the "Real Property") located at 1260 Crossman Avenue in Sunnyvale, California and more particularly described in the Lease; and


1.2 Intangible Property. Any and all intangible personal property owned by Assignor and arising out of or in connection with the ownership of the Leasehold Interest or operation of the Property, including the right to use the permits and certificates of occupancy issued by Federal, state or local municipal authorities relating to the use, maintenance, occupancy or operation of the Property, all plans, specifications and drawings relating to the construction of the improvements, all warranties, guaranties or sureties with respect thereto, any unpaid award for damage to the Property and any proceeds of insurance or claim or cause of action for damage, loss or injury of or to the Property and all service, equipment, maintenance, construction and employment agreements (collectively the "Service Contracts") with respect to the Real Property and entered into by Assignor (collectively, the "Intangible Property").


2. ASSIGNMENT FEE. Subject to the closing adjustments and prorations hereafter described, Assignee shall pay to Assignor the amount of Ten Million Dollars ($10,000,000) (the "Assignment Fee") for the Property, in the following manner:


2.1 Assignment Fee Deposit. Within two (2) business days after Assignee's and Assignor's execution of this Agreement, Assignee shall deposit with First American Title Guaranty Company ("Escrow Holder") cash in an amount equal to Two Million Dollars ($2,000,000) (the "Deposit"). Escrow Holder shall place such funds in an interest-bearing account. (The Deposit and all interest earned thereon shall hereinafter collectively be referred to as the "Assignment Fee Deposit.") Upon expiration of the Due Diligence Period (defined below), the Assignment Fee Deposit shall become nonrefundable but


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shall remain with Escrow Holder until the earlier of: (i) Close of Escrow; (ii) the release to Assignor of such Assignment Fee Deposit in accordance with the terms hereof because of a Assignee default; or (iii) immediately upon Assignee's delivery of notice to Assignor that Assignee will not consummate the transaction contemplated hereunder. Following expiration of the Due Diligence Period, the Assignment Fee Deposit shall be returned to Assignee if and only if the transaction contemplated hereunder fails to close because of a default by Assignor or a default by Landlord under the Real Property Purchase Agreement. Upon the Close of Escrow (as hereinafter defined), the Assignment Fee Deposit shall be applied against the Assignment Fee.


2.2 Cash at Closing. On or before the Close of Escrow, Assignee shall deposit with Escrow Holder by federal wire transfer or cashier's check cash in an amount equal to the Assignment Fee, minus the Assignment Fee Deposit (the "Cash Payment"), plus or minus the closing adjustments and prorations.


3. ASSIGNOR'S DUE DILIGENCE DELIVERIES. Assignor shall deliver to Assignee no later than five (5) days after the Effective Date the following documents (the "Due Diligence Materials"), ownership of which shall be deemed transferred from Assignor to Assignee upon the Close of Escrow: (i) all leases, subleases, service agreements, maintenance agreements and other contracts relating to the ownership, operation, use and maintenance of the Property, including the Lease, (ii) any and all environmental reports or studies with respect to the Improvements or the Real Property and any and all reports or studies regarding the physical condition of the Improvements in the possession of Assignor, and (iii) any and all surveys of the Real Property which were prepared by or are in the possession or control of Assignor.


4. CONDITIONS PRECEDENT.


4.1 Assignee's Conditions. Assignee's obligation to accept an assignment of the Leasehold Interest in the Property shall be subject to and contingent upon the satisfaction or written waiver of the following conditions precedent:


4.1.1 Due Diligence Period. Assignee's inspection and approval during the Due Diligence Period of all Due Diligence Materials, all records and files of Assignor relating to the Property, and all physical, environmental, legal and any other matters relating to the Property (including zoning, land use and similar public agency or governmental conditions or approvals with respect to the ownership, operation and use of the Property) as Assignee may, in Assignee's sole discretion, elect to investigate. As used in this Agreement, the term "Due Diligence Period" shall mean the period commencing on the Effective Date and ending at 5:00 P.M. Pacific Standard Time on the thirtieth (30th) day after the Effective Date of this Agreement.


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4.1.1.1 Physical Inspection. During the Due Diligence Period, Assignee shall be permitted to make complete physical, environmental, legal and other inspections of the Property and to make and remove copies of any and all records and files regarding the Property; provided, however, that in no event shall Assignor be required to provide Assignee with access to or copies of proprietary or government-classified documents. Assignor shall allow Assignee access to the Property in accordance with the terms and provisions of the Access Agreement attached hereto as Exhibit F.


4.1.2 Consent; Estoppel. Assignee's receipt and approval, on or before the Close of Escrow, of a Consent and Estoppel Certificate executed by Landlord in the form attached hereto as Exhibit A (the "Consent and Estoppel Certificate");


4.1.3 Covenants; Representations. Assignor's performance of each and every covenant required to be performed by Assignor hereunder, and the truth and correctness of each of Assignor's representations and warranties as set forth in Section 6.2.


4.1.4 Change in Representations or Warranties. Assignee shall have approved any material (in Assignee's judgment) change to Assignor's representations and warranties reflected in the Closing Certificate (as defined in Section 5.1.7). Assignee shall have two (2) business days following receipt of said certificate to approve or disapprove any such changes (and if necessary, the Close of Escrow shall be extended by the number of days necessary to give Assignee this full two (2) business day period).


4.1.5 Change in Condition. There shall have been no material adverse changes in the physical condition of the Property.


4.1.6 Real Property Purchase Agreement. Assignee and Landlord have negotiated and executed a purchase and sale agreement (the "Real Property Purchase Agreement") pursuant to which Landlord has agreed to sell Landlord's fee interest in the Real Property to Assignee. All conditions and contingencies under the Real Property Purchase Agreement between Landlord and Assignee shall have been satisfied in accordance with the terms thereof. At the Close of Escrow, Landlord shall simultaneously transfer title to the Real Property to Assignee pursuant to the terms of the Real Property Purchase Agreement.


4.2 Assignor's Conditions. Assignor's obligation to assign the Leasehold Interest in the Property shall be subject to and contingent upon satisfaction or written waiver of the following conditions precedent:


4.2.1 Other Property. Upon mutual execution of this Agreement and of the Real Property Purchase Agreement, Assignee shall terminate any and all other negotiations and contracts for the purchase of real property being considered by Assignee as an alternative to the Real Property. During the Due Diligence Period, Assignee shall not enter into any new contract for the purchase of real property as an alternative to the Real Property.


4.2.2 Real Property Purchase. Assignee shall have obtained the fee interest to the Real Property; provided, however, that Assignee's failure to consummate the


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transaction pursuant to which Assignee acquires title to the Real Property shall not result in the return of the Assignment Fee Deposit to Assignee.


4.2.3 Assignee's Fulfillment of Conditions. Assignor's obligation to sell the Property shall be subject to and contingent upon Assignee's performance of each and every covenant required to be performed by Assignee hereunder and the truth and correctness of each of Assignee's representations and warranties, as set forth in Section 6.3.


4.3 Failure or Waiver of Conditions Precedent. In the event any of the conditions set forth above in Sections 4.1 and 4.2 are not fulfilled, waived or deemed waived (for any reason other than a default by either Assignee or Assignor hereunder), this Agreement shall terminate and all rights and obligations hereunder of each party shall be at an end. Assignee or Assignor may elect, at any time or times on or before the date specified for the satisfaction of the condition, to waive in writing the benefit of any of their respective conditions set forth in Section 4.1 or Section 4.2 above, as applicable. Assignee's failure to notify Assignor in writing of the satisfaction of the condition set forth in Section 4.1.1 on or before the date specified for satisfaction shall be deemed to constitute a failure of such condition. In any event, Assignee's and Assignor's consent to the Close of Escrow shall waive any remaining unfulfilled conditions (but such waiver shall not be deemed to waive any subsequently discovered breach of any representation, warranty or covenant made by either party to this Agreement.)


5. CLOSE OF ESCROW. Concurrently herewith, Assignor and Assignee shall open an escrow (the "Escrow") with Escrow Holder for the assignment contemplated by this Agreement. Assignee and Assignor agree that such Escrow shall be closed and the assignment shall be consummated (the "Close of Escrow") on March 1, 2000 (the "Closing Date"), in the following manner:


5.1 Assignor's Deliveries into Escrow. Prior to the Close of Escrow, Assignor shall deliver into Escrow the following (all documents shall be duly executed by Assignor and shall be acknowledged where required):


5.1.1 Assignment of Lease. An Assignment and Assumption of Lease ("Assignment of Lease") in the form of Exhibit B attached hereto;


5.1.2 Bill of Sale. A bill of sale (the "Bill of Sale") with respect to the Personal Property in the form of Exhibit C, attached hereto;


5.1.3 Assignment of Intangible Property. A duplicate original of an assignment of Assignor's interest in the Intangible Property (the "Assignment of Intangible Property") in the form of Exhibit D, attached hereto;


5.1.4 Lease. Assignor shall use commercially reasonable efforts to locate and to provide to Assignee a true, correct and complete original copy of the Lease; provided, however, that if no such original can be located, Assignor shall provide a fully-executed, correct and complete copy of the Lease to Assignee;


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5.1.5 Consent and Estoppel. A fully-executed Consent and Estoppel Certificate;


5.1.6 Closing Certificate. A certificate (the "Closing Certificate") in the form attached hereto as Exhibit E, which certificate shall incorporate each representation and warranty of Assignor set forth in Section 6.2, and which certifies that each such representation and warranty is true as of the Close of Escrow, or sets forth the reason that any such representation or warranty is not true;


5.1.7 Escrow Instructions. Assignor's written escrow instructions to close Escrow in accordance with the terms of this Agreement; and


5.1.8 Formation Documents. Resolutions, authorizations, bylaws or other corporate and/or partnership documents or agreements relating to Assignor and its shareholders as shall be required by Escrow Holder to close the transaction contemplated hereunder.


5.2 Assignee's Deliveries into Escrow. Prior to the Close of Escrow, Assignee shall deliver into Escrow the following:


5.2.1 Cash Payment. The Cash Payment plus or minus closing adjustments and prorations;


5.2.2 Documents. Duplicate originals, duly executed by Assignee, of the Assignment of Lease and Assignment of Intangible Property; and


5.2.3 Escrow Instructions. Assignee's written instructions to close Escrow in accordance with the terms of this Agreement.


5.3 Assignor's Deliveries Outside of Escrow. Upon or before the Close of Escrow, Assignor shall deliver or shall have previously delivered to Assignee the following items:


5.3.1 Service Contracts. Ink-signed originals of those Service Contracts that have not been terminated by Assignee on or before the Close of Escrow, or, if Assignor does not possess the same, then the best copies of such contracts available to Assignor, together with an affidavit of Assignor that such copies constitute true, correct and complete copies of such contracts;


5.3.2 Licenses, Permits and Approvals. Originals of all government ...