exv10w6






Exhibit 10.6




BROCADE COMMUNICATIONS SYSTEMS, INC.




2009 DIRECTOR PLAN




     1. Purposes of the Plan. The purposes of this Plan are to attract and retain the best
available personnel for service as Outside Directors of the Company, to provide additional
incentive to the Outside Directors of the Company to serve as Directors, and to encourage their
continued service on the Board.



          The Plan permits the grant of options and restricted stock units. All options granted
hereunder will be nonstatutory stock options.



          Under the Plan the subsequent annual grants will be made on the date of the Company’s Annual
Meeting. The Plan will be effective as of its approval by stockholders of the Company at the
Company’s 2009 Annual Meeting.



     2. Definitions. As used herein, the following definitions will apply:



          (a) “Annual Meeting” means the Company’s annual meeting of stockholders.




          (b) “Applicable Laws” means the requirements relating to the administration of
equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the
Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the
applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under
the Plan.




          (c) “Award” means, individually or collectively, a grant under the Plan of Options or
Restricted Stock Units.




          (d) “Board” means the Board of Directors of the Company, or a duly authorized
committee of the Board of Directors of the Company.




          (e) “Change in Control” means the occurrence of any of the following events:




               (i) Change in Ownership of the Company. A change in the ownership of the Company
which occurs on the date that any one person, or more than one person acting as a group (“Person”),
acquires ownership of the stock of the Company that, together with the stock held by such Person,
constitutes more than 50% of the total voting power of the stock of the Company; or



               (ii) Change in Effective Control of the Company. If the Company has a class of
securities registered pursuant to Section 12 of the Exchange Act, a change in the effective control
of the Company which occurs on the date that a majority of members of the Board is replaced during
any 12 month period by Directors whose appointment or election is not endorsed by a majority of the
members of the Board prior to the date of the appointment or election. For purposes of this clause
(ii), if any Person is considered to be in effective control of the Company, the acquisition of
additional control of the Company by the same Person will not be considered a Change in Control; or



               (iii) Change in Ownership of a Substantial Portion of the Company’s Assets. A change
in the ownership of a substantial portion of the Company’s assets which occurs on the date that any
Person acquires (or has acquired during the 12 month period ending on the date of the most recent
acquisition by such person or persons) assets from the Company that have a total gross fair



 









 




market
value equal to or more than 50% of the total gross fair market value of all of the assets of the
Company immediately prior to such acquisition or acquisitions. For purposes of this subsection
(iii), gross fair
market value means the value of the assets of the Company, or the value of the assets being
disposed of, determined without regard to any liabilities associated with such assets.




               For purposes of this Section 2(e), persons will be considered to be acting as a group if they
are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of
stock, or similar business transaction with the Company.



               Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the
transaction qualifies as a change in control event within the meaning of Code Section 409A, as it
has been and may be amended from time to time, and any proposed or final Treasury Regulations and
Internal Revenue Service guidance that has been promulgated or may be promulgated thereunder from
time to time.



               Further and for the avoidance of doubt, a transaction will not constitute a Change in Control
if: (i) its sole purpose is to change the state of the Company’s incorporation, or (ii) its sole
purpose is to create a holding company that will be owned in substantially the same proportions by
the persons who held the Company’s securities immediately before such transaction.



          (f) “Code” means the Internal Revenue Code of 1986, as amended. Reference to a
specific section of the Code or Treasury Regulation thereunder will include such section or
regulation, any valid regulation or other official applicable guidance promulgated under such
section, and any comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.




          (g) “Common Stock” means the common stock of the Company.




          (h) “Company” means Brocade Communications Systems, Inc., a Delaware corporation, or
any successor thereto.




          (i) “Director” means a member of the Board.




          (j) “Disability” means total and permanent disability as defined in section 22(e)(3)
of the Code.




          (k) “Employee” means any person, including officers and Directors, employed by the
Company or any Parent or Subsidiary of the Company. Neither service as a Director nor the payment
of a Director’s fee by the Company will be sufficient to constitute “employment” by the Company.




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




          (m) “Fair Market Value” means, as of any date, the value of Common Stock determined as
follows:




               (i) If the Common Stock is listed on any established stock exchange or a national market
system, including without limitation the Nasdaq Global Market, the Nasdaq Global Select Market or
the Nasdaq Capital Market of The Nasdaq Stock Market, its fair market value will be the closing
sales price for such stock (or, if no closing sales price was reported on that date, as applicable,
on the last trading date such closing sales price was reported) as quoted on such exchange or



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system on the day of determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable;




               (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, its fair market value will be the mean between the high bid and low asked
prices for the Common Stock on the day of determination (or, if no bids and asks were reported on
that date, as applicable, on the last trading date such bids and asks were reported); or



               (iii) In the absence of an established market for the Common Stock, the fair market value
thereof will be determined in good faith by the Board.



          (n) “Inside Director” means a Director who is an Employee.




          (o) “Option” means a stock option granted pursuant to the Plan.




          (p) “Outside Director” means a Director who is not an Employee.




          (q) “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.




          (r) “Participant” means the holder of an outstanding Award.




          (s) “Plan” means this 2009 Director Plan.




          (t) “Restricted Stock Unit” or “RSU” means a bookkeeping entry representing an
amount equal to the Fair Market Value of one Share, and granted to a Participant pursuant to
Section 6 of the Plan. Each restricted stock unit represents an unfunded and unsecured obligation
of the Company.




          (u) “Share” means a share of the Common Stock, as adjusted in accordance with Section
14 of the Plan.




          (v) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing,
as defined in Section 424(f) of the Code.




     3. Stock Subject to the Plan.



          (a) Stock Subject to the Plan. Subject to the provisions of Section 14 of the Plan,
the maximum aggregate number of Shares that may be awarded under the Plan is 2,000,000 Shares (the
“Pool”), plus any Shares subject to stock options or similar awards granted under the Company’s
1999 Director Plan that expire or otherwise terminate without having been exercised in full and
Shares issued pursuant to awards granted under the Company’s 1999 Director Plan that are forfeited
to or repurchased by the Company, with the maximum number of Shares to be added to the Plan
pursuant to this clause equal to 870,000 Shares. The Shares may be authorized, but unissued, or
reacquired Common Stock.




          (b) Lapsed Awards. If an outstanding Award expires or becomes unexercisable without
having been exercised in full, or with respect to Restricted Stock Units, is forfeited to the
Company due to failure to vest, the unpurchased or forfeited Shares which were subject thereto will
become available for future grant or sale under the Plan (unless the Plan has terminated). Shares
that have actually been issued under the Plan will not be returned to the Plan and will not become
available for future distribution under the Plan. Shares used to pay the exercise price of an
Award or to satisfy the



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tax withholding obligations related to an Award will not become available
for future grant or sale under the Plan.




          (c) Full Value Awards. An Award of Restricted Stock Units will be counted against the
Pool as 1.56 Shares for every 1 Share subject to such Award. To the extent that an Award counted
as 1.56 Shares against the Pool at the time of grant pursuant to the preceding sentence is
forfeited or repurchased by the Company and returned to the Plan (e.g., upon Award termination),
the Plan will be credited with 1.56 Shares that will thereafter be available for future issuance
under the Plan.




     4. Options.



          (a)  Administration of Option Grants.




               (i) All grants of Options to Outside Directors under this Plan will be automatic and
nondiscretionary and will be made strictly in accordance with the following provisions; provided,
however, that the Board may, in its sole discretion, provide that certain Outside Directors are not
eligible to receive grants of Options for specified periods of time.



               (ii) No person will have any discretion to determine the number of Shares to be covered by
Options.



               (iii) In the event that any Option granted under the Plan would cause the number of Shares
subject to outstanding Options plus the number of Shares previously purchased under Options to
exceed the Pool, then the remaining Shares available for Option grant will be granted under Options
to the Outside Directors on a pro rata basis. No further grants will be made until such time, if
any, as additional Shares become available for grant under the Plan through action of the Board or
the stockholders to increase the number of Shares which may be issued under the Plan or through
cancellation or expiration of Options previously granted hereunder.



          (b) Prohibition Against Repricing. Subject to the provisions of Section 14 of the
Plan, the terms of any Option may not be amended to reduce the exercise price of outstanding
Options or cancel outstanding Options in exchange for cash, other Awards or Options with an
exercise price that is less than the exercise price of the original Option without stockholder
approval.




     5. Exercise of Options.



          (a) Procedure for Exercise of an Option; Rights as Stockholder.




               (i) Any Option granted hereunder will be exercisable at such times as are set forth in Section
7(a) or 8(a), as applicable; provided, however, that no Options will be exercisable until
stockholder approval of the Plan in accordance with Section 20 has been obtained.



               (ii) An Option may not be exercised for a fraction of a Share.



               (iii) An Option will be deemed to be exercised when the Company receives: (x) written or
electronic notice of exercise (in accordance with the terms of the Option) from the person entitled
to exercise the Option and (y) full payment for the Shares with respect to which the Option is
exercised (together with any applicable tax withholding). Full payment may consist of any
consideration and method of payment allowable under Section 12 of the Plan. Shares issued upon
exercise of an Option will be issued in the name of the Participant or, if requested by the
Participant, in



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the name of the Participant and his or her spouse. Until the Shares are issued (as
evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any other rights as a stockholder
will exist with respect to the Shares subject to any
Option, notwithstanding the exercise of the Option. The Company will issue (or cause to be
issued) such Shares promptly No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except as provided in Section
14 of the Plan.




               (iv) Exercise of an Option in any manner will result in a decrease in the number of Shares
which thereafter may be available, both for purposes of the Plan and for sale under the Option, by
the number of Shares as to which the Option is exercised.



          (b) Termination of Continuous Status as a Director. Subject to Section 14, in the
event an Participant’s status as a Director terminates (other than upon the Participant’s death or
Disability), the Participant may exercise his or her Option, but only within 3 months following the
date of such termination, and only to the extent that the Participant was entitled to exercise it
on the date of such termination (but in no event later than the expiration of its 7 year term). To
the extent that the Participant was not entitled to exercise an Option on the date of such
termination, and to the extent that the Participant does not exercise such Option (to the extent
otherwise so entitled) within the time specified herein, the Option will terminate.




          (c) Disability of Participant. In the event Participant’s status as a Director
terminates as a result of Disability, the Participant may exercise his or her Option, but only
within 12 months following the date of such termination, and only to the extent that the
Participant was entitled to exercise it on the date of such termination (but in no event later than
the expiration of its 7 year term). To the extent that the Participant was not entitled to
exercise an Option on the date of termination, or if he or she does not exercise such Option (to
the extent otherwise so entitled) within the time specified herein, the Option will terminate and
the Shares covered by such Option will revert to the Plan.




          (d) Death of Participant. If a Participant dies while still a Director, the
Participant’s estate or a person who acquired the right to exercise the Option by bequest or
inheritance may exercise the Option, but only within 12 months following the date of death, and
only to the extent that the Participant was entitled to exercise it on the date of death (but in no
event later than the expiration of its 7 year term). To the extent that the Participant was not
entitled to exercise an Option on the date of death, and to the extent that the Participant’s
estate or a person who acquired the right to exercise such Option does not exercise such Option (to
the extent otherwise so entitled) within the time specified herein, the Option will terminate and
the Shares covered by such Option will revert to the Plan.




     6. Restricted Stock Units.



          (a) Procedures for Grants.




               (i) All grants of Restricted Stock Units to Outside Directors under this Plan will be
automatic and nondiscretionary and will be made strictly in accordance with the following
provisions; provided, however, that the Board may, in its sole discretion, provide that certain
Outside Directors are not eligible to receive grants of Restricted Stock Units for specified
periods of time.



               (ii) No person will have any discretion to determine the number of Shares to be covered by
Restricted Stock Units.



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          (b) Form and Timing of Payment. Restricted Stock Units will be settled in Shares, on
a one unit for one Share basis. When Shares are paid to the Participant in payment for the
Restricted Stock Units, par value ($.001 per share) will be deemed paid by the Participant for each
Restricted Stock
Unit by services rendered by the Participant. Payment of earned Restricted Stock Units will be
made as soon as practicable after the date(s) determined by the Board but no later than March 15th
of the calendar year following the applicable vesting date.




          (c) Cancellation. On the date of Participant’s termination as a Director, all
unvested Restricted Stock Units will be forfeited to the Company.




          (d) Additional RSU Terms.




               (i) Company’s Obligation to Pay. Unless and until the Restricted Stock Units have vested in
the manner set forth above, the Participant will have no right to payment of such Restricted Stock
Units. Prior to actual payment of Shares upon the vesting of any Restricted Stock Units, such
Restricted Stock Units will represent an unsecured obligation. Payment of any vested Restricted
Stock Units will be made in whole Shares.



               (ii) Rights as Stockholder. Neither the Participant nor any person claiming under or through
the Participant will have any of the rights or privileges of a stockholder of the Company in
respect of any Shares deliverable hereunder unless and until certificates representing such Shares
(which may be in book entry form) will have been issued, recorded on the records of the Company or
its transfer agents or registrars, and delivered to the Participant (including through electronic
delivery to a brokerage account). After such issuance, recordation and delivery, the Participant
will have all the rights of a stockholder of the Company with respect to voting such Shares and
receipt of dividends and distributions on such Shares.



     7. First Awards.



          (a) First Option Grant. Each Outside Director will be automatically granted an Option
to purchase 50,000 shares (the “First Option”) on the date on which such person first becomes an
Outside Director, whether through election by the stockholders of the Company or appointment by the
Board to fill a vacancy; provided, however, that an Inside Director who ceases to be an Inside
Director but who remains a Director will not receive a First Option. The terms of a First Option
granted hereunder will be as follows:




               (i) the term of the First Option will be 7 years.



               (ii) the First Option will be exercisable only while the Outside Director remains a Director
of the Company, except as set forth in Sections 5 and 14.



               (iii) the exercise price per Share will be 100% of the Fair Market Value per Share on the date
of grant of the First Option.



               (iv) subject to Section 14, the First Option will become exercisable as to 1/3 of the Shares
subject to the First Option each anniversary following its date of grant, so as to become 100%
vested on the 3rd anniversary of the date of grant, provided that the Participant
continues to serve as a Director on such dates.



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          (b) First RSU Grant.




               (i) Grant. Each Outside Director will be automatically granted 15,000 Restricted
Stock Units (“First RSU”) on the date on which such person first becomes an Outside Director,
whether through election by the stockholders of the Company or appointment by the Board to fill a
vacancy; provided, however, that an Inside Director who ceases to be an Inside Director but who
remains a Director will not receive a First Option.



               (iii) Vesting. Subject to Section 14, the First RSU will vest and become payable as
to 1/3 of the Shares subject to the First RSU on the 1 year anniversary of the date of grant, and
as to 1/3 of the Shares subject to the First RSU at each anniversary thereafter, so that the First
RSU will be fully vested and become payable in full 3 years after its date of grant, provided that
the Participant continues to serve as a Director on such dates.



     8. Subsequent Awards.



          (a) Subsequent Option Grant. Subject to proration under Section 9 below, each Outside
Director will be automatically granted an Option to purchase 20,000 shares (“Subsequent Option”)
annually on the date of the Annual Meeting, provided that such Outside Director had served as an
Outside Director prior to such Annual Meeting and that he or she continues to be an Outside
Director at and immediately following such Annual Meeting. The terms of a Subsequent Option granted
hereunder will be as follows:




               (i) the term of the Subsequent Option will be 7 years.



               (ii) the Subsequent Option will be exercisable only while the Outside Director remains a
Director of the Company, except as set forth in Sections 5 and 14.



               (iii) the exercise price per Share will be 100% of the Fair Market Value per Share on the date
of grant of the Subsequent Option.



               (iv) subject to Section 14, the Subsequent Option will become exercisable as to 100% of the
Shares subject to the Subsequent Option on the earlier of the 1 year anniversary of the date of
grant or the next Annual Meeting, provided that the Participant continues to serve as a Director on
such date.



          (b) Subsequent RSU Grant.




               (i) Grant. Subject to proration under Section 9, each Outside Director will be
automatically granted 10,000 Restricted Stock Units (the “Subsequent RSU”) annually on the date of
the Annual Meeting, provided that such Outside Director had served as an Outside Director prior to
such Annual Meeting and that he or she continues to be an Outside Director at and immediately
following such Annual Meeting.



               (ii) Vesting. Subject to Section 14, the Subsequent RSU will vest and become payable
as to 100% of the Shares subject to the Subsequent RSU on the earlier of the 1 year anniversary of
the date of grant or the next Annual Meeting, provided that the Participant continues to serve as a
Director on such date.




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     9. Subsequent Award Pro Ration Policy for New Directors Appointed Before an Annual
Meeting. At the first (and only the first) Annual Meeting after an Outside Director
first becomes an Outside Director, such Outside Director will receive at such Annual Meeting, a
proportionate amount of the Subsequent Option and Subsequent RSU (in lieu of the full Subsequent
Option and Subsequent RSU) based on the date of such Outside Director’s appointment as follows:



          (a) Appointment on the date of the Annual Meeting, or after the date of the Annual Meeting but
prior to the end of the Company’s 2nd fiscal quarter of the fiscal year prior to the
fiscal year during which the Annual Meeting occurs: 100% of both the Subsequent Option and
Subsequent RSU.




          (b) Appointment in the Company’s 3rd fiscal quarter of the fiscal year prior to the
fiscal year during which the Annual Meeting occurs: 75% of both the Subsequent Option and
Subsequent RSU.




          (c) Appointment in the Company’s 4th fiscal quarter of the fiscal year prior to the
fiscal year during which the Annual Meeting occurs: 50% of both the Subsequent Option and
Subsequent RSU.




          (d) Appointment in the Company’s 1st fiscal quarter of the fiscal year during which
the Annual Meeting occurs: 25% of both the Subsequent Option and Subsequent RSU.




          (e) Appointment in the Company’s 2nd fiscal quarter of the fiscal year during which
the Annual Meeting occurs and before the Annual Meeting date for such fiscal year: 0% of both the
Subsequent Option and Subsequent RSU.




     10. Eligibility. Awards may be granted only to Outside Directors. All Options will
be automatically granted in accordance with the terms set forth in Section 4 here of. All
Restricted Stock Units will be granted in accordance with the terms set forth in Section 6.



          The Plan will not confer upon any Participant any right with respect to continuation of
service as a Director or nomination to serve as a Director, nor will it interfere in any way with
any rights which the Director or the Company may have to terminate the Director’s relationship with
the Company at any time.




     11. Term of Plan. This Plan is effective as of its approval by the stockholders of
the Company at the Company’s 2009 Annual Meeting as described in Section 20 of the Plan. It will
continue in effect until the tenth anniversary of the Plan’s initial effectiveness unless sooner
terminated under Section 15 of the Plan.



     12. Form of Consideration. The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, will consist of:



          (i)  cash;



          (ii)  check;



          (iii)  other Shares which have a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said Option will be exercised;



          (iv) net issue exercise, whereby Participant surrenders an Option at the principal office of
the Company (or such other office or agency as the Company may designate) together with a properly



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completed and executed exercise notice reflecting such election, in which event the Company
will issue to the Participant that number of Shares computed using the following formula:



	 	 	 	 	 
	 	 	
	 
	 	 	 	 
	Where:
	 	 	 	 
	 
	 	 	 	 
	 

	 	X =
	 	the number of Shares to be issued to Participant;
	 
	 	 	 	 
	 

	 	Y =
	 	the number of Shares subject to the Option or,
if only a portion of the Option is being exercised, the portion of the
Option being cancelled (at the date of such calculation);
	 
	 	 	 	 
	 

	 	A =
	 	the Fair Market Value of one Share (at the date of such calculation);
	 
	 	 	 	 
	 

	 	B =
	 	the exercise price per Share of the Option (as
adjusted to the date of the calculation);






          (v)  consideration received by the Company under a cashless exercise program implemented by
the Company in connection with the Plan; or




          (vi)  any combination of the foregoing methods of payment.




     13. Non-Transferability of Awards. Except as described in the Award Agreements,
Awards may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Participant, only by the Participant. Upon any attempt to sell, pledge, assign,
hypothecate, transfer or otherwise dispose of an Award, the Award immediately will become null
and void.



     14. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale.



          (a) Changes in Capitalization. Subject to any required action by the stockholders of
the Company, the number of Shares covered by each outstanding Award, the number of Shares which
have been authorized for issuance under the Plan but as to which no Awards have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an Award, as well as the
price per Share covered by each such outstanding Award will be proportionately adjusted for any
increase or decrease in the number of issued Shares resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock, or any other increase
or decrease in the number of issued Shares effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of the Company will not
be deemed to have been “effected without receipt of consideration”; provided, further, that the
number of Shares subject to subsequently granted First Options, Subsequent Options, First RSUs, and
Subsequent RSUs will not be proportionately adjusted. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities convertible into shares of
stock of any class, will affect, and no adjustment by reason thereof will be made with respect to,
the number or price of Shares subject to an Award.



          (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, to the extent that an Option has not been previously exercised or a
Restricted Stock Unit has not vested, it will terminate immediately prior to the consummation of
such proposed action.



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          (c) Change in Control.



               (i) In the event of a Change in Control, outstanding Awards may be assumed or equivalent
Awards may be substituted by the successor corporation or a Parent or Subsidiary thereof (the
“Successor Corporation”). If an Award is assumed or substituted for, the Award or equivalent award
will continue to be exercisable or vest as provided in Section 7 or 8, as applicable, for so long
as the Participant serves as a Director or a director of the Successor Corporation. Following such
assumption or substitution, if the Participant’s status as a Director or director of the Successor
Corporation, as applicable, is terminated other than upon a voluntary resignation by the
Participant, the Award or award will become fully exercisable, including as to Shares for which it
would not otherwise be exercisable. Thereafter, the Award or award will remain exercisable in
accordance with Sections 5(b) through (d) above.



               (ii) If the Successor Corporation does not assume an outstanding Option or substitute for it
an equivalent option, the Option will become fully vested and exercisable, including as to Shares
for which it would not otherwise be exercisable. In such event the Board will notify the
Participant that the Option will be fully exercisable for a period of 30 days from the date of such
notice, and upon the expiration of such period the Option will terminate. If the Successor
Corporation does not assume an outstanding grant of Restricted Stock Units or substitute for it an
equivalent award, the grant of Restricted Stock Units will vest immediately prior to the
consummation of the applicable transaction.



               (iii) For the purposes of this Section 14(c), an Award will be considered assumed if,
following the Change in Control, the Award confers the right to purchase or receive, for each Share
subject to the Award immediately prior to the Change in Control, the consideration (whether stock,
cash, or other securities or property) received in the Change in Control by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority of the outstanding
Shares). If such consideration received in the Change in Control is not solely common stock of the
successor corporation or its Parent, the Board may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the Option, or upon the payout of
a Restricted Stock Unit, for each Share subject to the Award, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share consideration
received by holders of Common Stock in the Change in Control.



     15. Amendment and Termination of the Plan.



          (a) Amendment and Termination. The Board may at any time amend, alter, suspend, or
discontinue the Plan, but no amendment, alteration, suspension, or discontinuation will be made
which would impair the rights of any Participant under any grant theretofore made, without his or
her consent. In addition, to the extent necessary and desirable to comply with Applicable Laws,
the Company will obtain stockholder approval of any Plan amendment in such a manner and to such a
degree as required.




          (b) Effect of Amendment or Termination. Any such amendment or termination of the Plan
will not affect Awards already granted and such Awards will remain in full force and effect as if
this Plan had not been amended or terminated.




     16. Time of Granting of Awards. The date of grant of an Award will, for all purposes,
be the date determined in accordance with Section 4 and 6.



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     17. Conditions Upon Issuance of Shares.



          (a) Shares will not be issued under any Award unless the issuance and delivery of such Shares
pursuant thereto, and in the case of an Option, the exercise of such Option, will comply with all
relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended,
the Exchange Act, the rules and regulations promulgated thereunder, state securities laws, and the
requirements of any stock exchange upon which the Shares may then be listed, and will be further
subject to the approval of counsel for the Company with respect to such compliance.




          (b) As a condition to the exercise of an Award, the Company may require the person exercising
such Award to represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or distribute such Shares,
if, in the opinion of counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.




          (c) Inability of the Company to obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, will relieve the Company of any liability in respect of the failure to
issue or sell such Shares as to which such requisite authority will not have been obtained.




     18. Reservation of Shares. The Company, during the term of this Plan, will at all
times reserve and keep available such number of Shares as will be sufficient to satisfy the
requirements of the Plan.



     19. Award Agreement. Awards will be evidenced by written award agreements in such
form as the Board will approve.



     20. Stockholder Approval. The Plan will be subject to approval by the stockholders of
the Company at the Company’s 2009 Annual Meeting. Such stockholder approval will be obtained in
the degree and manner required under Applicable Laws.



     21. No Guarantee of Continued Service. The Plan will not confer upon any Participant
any rights with respect to continuation of service as a Director or other service provider to the
Company or nomination to serve as a Director, nor will it interfere in any way with any rights
which the Director of the Company may have to terminate the Director’s relationship with the
Company at any time.




-11-











 





BROCADE COMMUNICATIONS SYSTEMS, INC.




DIRECTOR OPTION AGREEMENT




     Brocade Communications Systems, Inc., (the “Company”), has granted to [     ] (the
“Optionee”), an option to purchase a total of [     ] Shares of the Company’s Common Stock at
the price determined as provided herein, and in all respects subject to the terms, definitions and
provisions of the Company’s 2009 Director Plan (the “Plan”), which is incorporated herein by
reference. The terms defined in the Plan will have the same defined meanings herein.



     1. Nature of the Option. This Option is a nonstatutory option and is not intended to
qualify for any special tax benefits to the Optionee.



     2. Exercise Price. The Exercise Price is $                     for each Share.



     3. Exercise of Option. This Option will be exercisable during its term in accordance
with the provisions of Section 5 of the Plan as follows:



          (a) Right to Exercise.




               (i) This Option will become exercisable [VESTING SCHEDULE].



               (ii) This Option may not be exercised for a fraction of a Share.



               (iii) In the event of Optionee’s death, disability or other termination of service as a
Director, the exercisability of the Option is governed by Section 5 of the Plan.



          (b) Method of Exercise. This Option is exercisable by delivery of written or
electronic notice of exercise, in a form provided by the Stock Administrator of the Company (the
“Exercise Notice”), which will state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the “Exercised Shares”), and such other
representations and agreements as may be required by the Company pursuant to the provisions of the
Plan. The Exercise Notice will be completed by the Optionee and delivered to the Stock
Administrator of the Company. The Exercise Notice will be accompanied by payment of the aggregate
Exercise Price (together with any applicable tax withholdings) as to all Exercised Shares. This
Option will be deemed to be exercised upon receipt by the Company of such fully executed Exercise
Notice accompanied by such aggregate Exercise Price.




     4. Method of Payment. Payment of the exercise price will be by:



          (a) cash;




          (b) check;




          (c) other Shares which have a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said Option will be exercised;




          (d) net issue exercise, whereby Optionee surrenders an Option at the principal office of the
Company (or such other office or agency as the Company may designate)



 









 







together with a properly
completed and executed exercise notice reflecting such election, in which
event the Company will issue to the Optionee that number of Shares computed using the
following formula:








          Where:




               X = the number of Shares to be issued to Optionee;



               Y = the number of Shares subject to the Option or, if only a portion of the
Option is being exercised, the portion of the Option being cancelled (at the date of
such calculation);



               A = the Fair Market Value of one Share (at the date of such calculation);



               B = the exercise price per Share of the Option (as adjusted to the date of the
calculation);



          (e) consideration received by the Company under a cashless exercise program implemented by the
Company in connection with the Plan; or




          (f) any combination of the foregoing methods of payment.




     5. Restrictions on Exercise. This Option may not be exercised if the issuance of such
Shares upon such exercise or the method of payment of consideration for such Shares would
constitute a violation of any applicable federal or state securities or other law or regulations,
or if such issuance would not comply with the requirements of any stock exchange upon which the
Shares may then be listed. As a condition to the exercise of this Option, the Company may require
Optionee to make any representation and warranty to the Company as may be required by any
applicable law or regulation.



     6. Non-Transferability of Option. This Option may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by the Optionee. Notwithstanding the foregoing, Optionee may, in a
manner and in accordance with terms specified by the Stock Administrator of the Company, transfer
Options to Optionee’s spouse, former spouse or dependent pursuant to a court-approved domestic
relations order which relates to the provision of child support, alimony payments or marital
property rights. The terms of the Plan and this Option Agreement will be binding upon the
executors, administrators, heirs, successors and assigns of the Optionee.



     7. Term of Option. This Option may not be exercised more than seven (7) years from
the date of grant of this Option, and may be exercised during such period only in accordance with
the Plan and the terms of this Option.



 









 





DATE OF GRANT:       
                  
                




BROCADE COMMUNICATIONS SYSTEMS, INC.,

a Delaware corporation




By:          
                    
                    
                    
          



Optionee acknowledges receipt of a copy of the Plan, a copy of which is attached hereto, and
represents that he or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee hereby agrees to accept
as binding, conclusive and final all decisions or interpretations of the Board upon any questions
arising under the Plan.




Dated:               
                       
                       




               
                     
                   
                         

Optionee