exv10w4



 





Exhibit 10.4




FOUNDRY NETWORKS, INC.




1999 DIRECTORS’ STOCK OPTION PLAN




(as amended by the Board of Directors at its April 19, 2007 Meeting)




     1. Purposes of the Plan. The purposes of this Directors’ Stock Option Plan are to
attract and retain the best available personnel for service as 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.



          All options granted hereunder shall be nonstatutory stock options.




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



          (a) “Board” means the Board of Directors of the Company.




          (b) “Change of Control” means a sale of all or substantially all of the Company’s
assets, or any merger or consolidation of the Company with or into another corporation other than a
merger or consolidation in which the holders of more than 50% of the shares of capital stock of the
Company outstanding immediately prior to such transaction continue to hold (either by the voting
securities remaining outstanding or by their being converted into voting securities of the
surviving entity) more than 50% of the total voting power represented by the voting securities of
the Company, or such surviving entity, outstanding immediately after such transaction.




          (c) “Code” means the Internal Revenue Code of 1986, as amended.




          (d) “Common Stock” means the Common Stock of the Company.




          (e) “Company” means Foundry Networks, Inc., a Delaware corporation.




          (f) “Continuous Status as a Director” means the absence of any interruption or
termination of service as a Director.




          (g) “Corporate Transaction” means a dissolution or liquidation of the Company, a sale
of all or substantially all of the Company’s assets, or a merger, consolidation or other capital
reorganization of the Company with or into another corporation.




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




          (i) “Employee” means any person, including any officer or Director, employed by the
Company or any Parent or Subsidiary of the Company. The payment of a director’s fee by the Company
shall not be sufficient in and of itself to constitute “employment” by the Company.




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




 









 





          (k) “Option” means a stock option granted pursuant to the Plan. All options shall be
nonstatutory stock options (i.e., options that are not intended to qualify as incentive stock
options under Section 422 of the Code).




          (l) “Optioned Stock” means the Common Stock subject to an Option.




          (m) “Optionee” means an Outside Director who receives an Option.




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




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




          (p) “Plan” means this 1999 Directors’ Stock Option Plan.




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




          (r) “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. Subject to the provisions of Section 11 of the Plan,
the maximum aggregate number of Shares which may be optioned and sold under the Plan is 3,350,000
Shares of Common Stock (the “Pool”). The Shares may be authorized, but unissued, or
reacquired Common Stock.



     If an Option should expire or become unexercisable for any reason without having been
exercised in full, the unpurchased Shares which were subject thereto shall, unless the Plan has
been terminated, become available for future grant under the Plan. In addition, any Shares of
Common Stock that are retained by the Company upon exercise of an Option in order to satisfy the
exercise price for such Option, or any withholding taxes due with respect to such exercise, shall
be treated as not issued and shall continue to be available under the Plan. If Shares that were
acquired upon exercise of an Option are subsequently repurchased by the Company, such Shares shall
not in any event be returned to the Plan and shall not become available for future grant under the
Plan.



     4. Administration of and Grants of Options under the Plan.



          (a) Administrator. Except as otherwise required herein, the Plan shall be
administered by the Board.




          (b) Procedure for Grants. All grants of Options hereunder shall be automatic and
nondiscretionary and shall be made strictly in accordance with the following provisions:




               (i) No person shall have any discretion to select which Outside Directors shall be granted
Options or to determine the number of Shares to be covered by Options granted to Outside Directors.



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               (ii) Each Outside Director shall be automatically granted an Option to purchase 100,000 Shares
(the “First Option”) on the date on which such person first becomes an Outside Director after the
effective date of this Plan, whether through election by the shareholders of the Company or
appointment by the Board of Directors to fill a vacancy.



               (iii) Each Outside Director, including an Outside Director who did not receive a First Option
grant, shall be automatically granted an Option to purchase 40,000 Shares (the “Subsequent Option”)
on the date of each Annual Meeting of the Company’s stockholders immediately following which such
Outside Director is serving on the Board, provided that, on such date, he or she shall have served
on the Board for at least six (6) months prior to the date of such Annual Meeting.



               (iv) Notwithstanding the provisions of subsections (ii) and (iii) hereof, in the event that a
grant would cause the number of Shares subject to outstanding Options plus the number of Shares
previously purchased upon exercise of Options to exceed the Pool, then each such automatic grant
shall be for that number of Shares determined by dividing the total number of Shares remaining
available for grant by the number of Outside Directors receiving an Option on the automatic grant
date. Any further grants shall then be deferred until such time, if any, as additional Shares
become available for grant under the Plan through action of 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.



               (v) Notwithstanding the provisions of subsections (ii) and (iii) hereof, any grant of an
Option made before the Company has obtained stockholder approval of the Plan in accordance with
Section 17 hereof shall be conditioned upon obtaining such stockholder approval of the Plan in
accordance with Section 17 hereof.



               (vii) The terms of each option granted hereunder shall be as follows:



                    (1) each option shall be exercisable only while the Outside Director remains a Director of the
Company, except as set forth in Section 9 below;



                    (2) the exercise price per Share shall be 100% of the fair market value per Share on the date
of grant of each option, determined in accordance with Section 8 hereof;



                    (3) each First Option shall become exercisable in installments cumulatively as to 25% of the
Shares subject to the option on the first anniversary of the date of grant of the option and as to
1/48th of the Shares subject to the option on each monthly anniversary of the date of
grant of the option thereafter; and



                    (4) each Subsequent Option shall become exercisable in installments cumulatively as to
1/24th of the Shares subject to the option on each monthly anniversary of the date of
grant of the option.



           (c) Powers of the Board. Subject to the provisions and restrictions of the Plan, the
Board shall have the authority, in its discretion: (i) to determine, upon review of



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relevant
information and in accordance with Section 8(b) of the Plan, the fair market value of the Common
Stock; (ii) to determine the exercise price per Share of Options to be granted, which exercise
price shall be determined in accordance with Section 8 of the Plan; (iii) to interpret the Plan;
(iv) to prescribe, amend and rescind rules and regulations relating to the Plan; (v) to authorize
any person to execute on behalf of the Company any instrument required to effectuate the grant of
an Option previously granted hereunder; and (vi) to make all other determinations deemed necessary
or advisable for the administration of the Plan.




               (d) Effect of Board’s Decision. All decisions, determinations and interpretations of
the Board shall be final and binding on all Optionees and any other holders of any Options granted
under the Plan.



               (e) Suspension or Termination of Option. If the Chief Executive Officer or his or her
designee reasonably believes that an Optionee has committed an act of misconduct, such officer may
suspend the Optionee’s right to exercise any option pending a determination by the Board (excluding
the Outside Director accused of such misconduct). If the Board (excluding the Outside Director
accused of such misconduct) determines an Optionee has committed an act of embezzlement, fraud,
dishonesty, nonpayment of an obligation owed to the Company, breach of fiduciary duty or deliberate
disregard of the Company rules resulting in loss, damage or injury to the Company, or if an
Optionee makes an unauthorized disclosure of any Company trade secret or confidential information,
engages in any conduct constituting unfair competition, induces any Company customer to breach a
contract with the Company or induces any principal for whom the Company acts as agent to terminate
such agency relationship, neither the Optionee nor his or her estate shall be entitled to exercise
any Option whatsoever. In making such determination, the Board of Directors (excluding the Outside
Director accused of such misconduct) shall act fairly and shall give the Optionee an opportunity to
appear and present evidence on Optionee’s behalf at a hearing before the Board or a committee of
the Board.



     5. Eligibility. Options may be granted only to Outside Directors. All Options shall
be automatically granted in accordance with the terms set forth in Section 4(b) above. An Outside
Director who has been granted an Option may, if he or she is otherwise eligible, be granted an
additional Option or Options in accordance with such provisions.



     The Plan shall not confer upon any Optionee any right with respect to continuation of service
as a Director or nomination to serve as a Director, nor shall it interfere in any way with any
rights which the Director or the Company may have to terminate his or her directorship at any time.



     6. Term of Plan; Effective Date. The Plan shall become effective on the effectiveness
of the registration statement under the Securities Act of 1933, as amended, relating to the
Company’s initial public offering of securities. It shall continue in effect for a term of ten
(10) years unless sooner terminated under Section 13 of the Plan.



     7. Term of Options. The term of each Option shall be ten (10) years from the date of
grant thereof unless an Option terminates sooner pursuant to Section 9 below.



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     8. Exercise Price and Consideration.



          (a) Exercise Price. The per Share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be 100% of the fair market value per Share on the date of grant of
the Option.




          (b) Fair Market Value. The fair market value shall be determined by the Board;
provided however that in the event the Common Stock is traded on the Nasdaq National Market or
listed on a stock exchange, the fair market value per Share shall be the closing sales price on
such system or exchange on the date of grant of the Option (or, in the event that the Common Stock
is not traded on such date, on the immediately preceding trading date), as reported in The Wall
Street Journal, or if there is a public market for the Common Stock but the Common Stock is not
traded on the Nasdaq National Market or listed on a stock exchange, the fair market value per Share
shall be the mean of the bid and asked prices of the Common Stock in the over-the-counter market on
the date of grant, as reported in The Wall Street Journal (or, if not so reported, as
otherwise reported by the National Association of Securities Dealers Automated Quotation (“Nasdaq”)
System).




          (c) Form of Consideration. The consideration to be paid for the Shares to be issued
upon exercise of an Option shall consist entirely of cash, check, other Shares of Common Stock
having a fair market value on the date of surrender equal to the aggregate exercise price of the
Shares as to which the Option shall be exercised (which, if acquired from the Company, shall have
been held for at least six months), or any combination of such methods of payment and/or any other
consideration or method of payment as shall be permitted under applicable corporate law.




     9. Exercise of Option.



          (a) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder
shall be exercisable at such times as are set forth in Section 4(b) above; provided however that no
Options shall be exercisable prior to stockholder approval of the Plan in accordance with Section
17 below has been obtained.




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



               An Option shall be deemed to be exercised when written notice of such exercise has been given
to the Company in accordance with the terms of the Option by the person entitled to exercise the
Option and full payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may consist of any consideration and method of payment
allowable under Section 8(c) of the Plan. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the Company) of the
stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights
as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of
the
Option. A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment will be made for a
dividend or other right for which the record



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date is prior to the date the stock certificate is
issued, except as provided in Section 11 of the Plan.




               Exercise of an Option in any manner shall 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. If an Outside Director ceases to
serve as a Director, he or she may, but only within ninety (90) days after the date he or she
ceases to be a Director of the Company, exercise his or her Option to the extent that he or she was
entitled to exercise it at the date of such termination. Notwithstanding the foregoing, in no
event may the Option be exercised after its term set forth in Section 7 has expired. To the extent
that such Outside Director was not entitled to exercise an Option at the date of such termination,
or does not exercise such Option (to the extent he or she was entitled to exercise) within the time
specified above, the Option shall terminate and the Shares underlying the unexercised portion of
the Option shall revert to the Plan.




          (c) Disability of Optionee. Notwithstanding Section 9(b) above, in the event a
Director is unable to continue his or her service as a Director with the Company as a result of his
or her total and permanent disability (as defined in Section 22(e)(3) of the Code), he or she may,
but only within twelve (12) months from the date of such termination, exercise his or her Option to
the extent he or she was entitled to exercise it at the date of such termination. Notwithstanding
the foregoing, in no event may the Option be exercised after its term set forth in Section 7 has
expired. To the extent that he or she was not entitled to exercise the Option at the date of
termination, or if he or she does not exercise such Option (to the extent he or she was entitled to
exercise) within the time specified above, the Option shall terminate and the Shares underlying the
unexercised portion of the Option shall revert to the Plan.




          (d) Death of Optionee. In the event of the death of an Optionee: (A) during the term
of the Option who is, at the time of his or her death, a Director of the Company and who shall have
been in Continuous Status as a Director since the date of grant of the Option, or (B) three (3)
months after the termination of Continuous Status as a Director, the Option may be exercised, at
any time within twelve (12) months following the date of death, by the Optionee’s estate or by a
person who acquired the right to exercise the Option by bequest or inheritance, but only to the
extent of the right to exercise that had accrued at the date of death or the date of termination,
as applicable. Notwithstanding the foregoing, in no event may the Option be exercised after its
term set forth in Section 7 has expired. To the extent that an Optionee was not entitled to
exercise the Option at the date of death or termination or if he or she does not exercise such
Option (to the extent he or she was entitled to exercise) within the time specified above, the
Option shall terminate and the Shares underlying the unexercised portion of the Option shall revert
to the Plan.




     10. Nontransferability of Options. The Option 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 or pursuant to a qualified domestic relations order (as defined by the Code or
the rules thereunder). The designation of a beneficiary by an Optionee does not constitute a



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transfer. An Option may be exercised during the lifetime of an Optionee only by the Optionee or a
transferee permitted by this Section.




     11. Adjustments Upon Changes in Capitalization; Corporate Transactions.



          (a) Adjustment. Subject to any required action by the stockholders of the Company,
the number of shares of Common Stock covered by each outstanding Option, the number of Shares of
Common Stock set forth in Sections 4(b)(ii), (iii) and (iv) above, and the number of Shares of
Common Stock which have been authorized for issuance under the Plan but as to which no Options have
yet been granted or which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per Share of Common Stock covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number of issued Shares of
Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock (including any such change in the number of Shares of Common
Stock effected in connection with a change in domicile of the Company) or any other increase or
decrease in the number of issued Shares of Common Stock effected without receipt of consideration
by the Company; provided however that conversion of any convertible securities of the Company shall
not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be
made by the Board, whose determination in that respect shall be final, binding and conclusive.
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, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common Stock subject to an
Option.




          (b) Corporate Transactions; Change of Control. In the event of a Corporate
Transaction, each outstanding Option shall be assumed or an equivalent option shall be substituted
by the successor corporation or a Parent or Subsidiary of such successor corporation, unless the
successor corporation does not agree to assume the outstanding Options or to substitute equivalent
options, in which case the Options shall terminate upon the consummation of the transaction,
provided however that in the event of a Change of Control, each Optionee shall have the right to
exercise his or her Option as to all of the Optioned Stock, including Shares as to which the Option
would not otherwise be exercisable, immediately prior to the consummation of such transaction.




          For purposes of this Section 11(b), an Option shall be considered assumed, without limitation,
if, at the time of issuance of the stock or other consideration upon such Corporate Transaction or
Change of Control, each Optionee would be entitled to receive upon exercise of an Option the same
number and kind of shares of stock or the same amount of property, cash or securities as the
Optionee would have been entitled to receive upon the occurrence of such transaction if the
Optionee had been, immediately prior to such transaction, the holder of the number of Shares of
Common Stock covered by the Option at such time (after giving effect to any adjustments in the
number of Shares covered by the Option as provided for in this Section 11); provided however that
if such consideration received in the transaction was not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the successor corporation,
provide for the
consideration to be received upon




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exercise of the Option to be solely common stock of the
successor corporation or its Parent equal to the Fair Market Value of the per Share consideration
received by holders of Common Stock in the transaction.




          (c) Certain Distributions. In the event of any distribution to the Company’s
stockholders of securities of any other entity or other assets (other than dividends payable in
cash or stock of the Company) without receipt of consideration by the Company, the Administrator
may, in its discretion, appropriately adjust the price per Share of Common Stock covered by each
outstanding Option to reflect the effect of such distribution.




     12. Time of Granting Options. The date of grant of an Option shall, for all purposes,
be the date determined in accordance with Section 4(b) hereof. Notice of the determination shall
be given to each Outside Director to whom an Option is so granted within a reasonable time after
the date of such grant.



     13. Amendment and Termination of the Plan.



          (a) Amendment and Termination. The Board may amend or terminate the Plan from time to
time in such respects as the Board may deem advisable; provided that, to the extent necessary and
desirable to comply with Rule 16b-3 under the Exchange Act (or any other applicable law or
regulation), the Company shall obtain approval of the stockholders of the Company to Plan
amendments to the extent and in the manner required by such law or regulation.




          (b) Effect of Amendment or Termination. Any such amendment or termination of the Plan
that would impair the rights of any Optionee shall not affect Options already granted to such
Optionee and such Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and the Board, which
agreement must be in writing and signed by the Optionee and the Company.




     14. Conditions Upon Issuance of Shares. Notwithstanding any other provision of the
Plan or any agreement entered into by the Company pursuant to the Plan, the Company shall not be
obligated, and shall have no liability for failure, to issue or deliver any Shares under the Plan
unless such issuance or delivery would comply with the legal requirements relating to the
administration of stock option plans under applicable U.S. state corporate laws, U.S. federal and
applicable state securities laws, the Code, any stock exchange or Nasdaq rules or regulations to
which the Company may be subject and the applicable laws of any other country or jurisdiction where
Options are granted under the Plan, as such laws, rules, regulations and requirements shall be in
place from time to time (the “Applicable Laws”). Such compliance shall be determined by
the Company in consultation with its legal counsel.



          As a condition to the exercise of an Option, the Company may require the person exercising
such Option 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 law.




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



     16. Option Agreement. Options shall be evidenced by written option agreements in such
form as the Board shall approve.



     17. Stockholder Approval. If required by the Applicable Laws, continuance of the Plan
shall be subject to approval by the stockholders of the Company. Such stockholder approval shall
be obtained in the manner and to the degree required under the Applicable Laws.




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FOUNDRY NETWORKS, INC.




1999 DIRECTORS’ STOCK OPTION PLAN




NOTICE OF STOCK OPTION GRANT




«Optionee»

«OptioneeAddress1»

«OptioneeAddress2»




        You have been granted an option to purchase Common Stock of Foundry Networks, Inc. (the
“Company”) as follows:



	 	 	 	 	 
	 

	 	Date of Grant
	 	«GrantDate»
	 
	 	 	 	 
	 

	 	Vesting Commencement Date
	 	«VestingStartDate»
	 
	 	 	 	 
	 

	 	Exercise Price per Share
	 	«ExercisePrice»
	 
	 	 	 	 
	 

	 	Total Number of Shares Granted
	 	«SharesGranted»
	 
	 	 	 	 
	 

	 	Total Exercise Price
	 	«TotalExercisePrice»
	 
	 	 	 	 
	 

	 	Expiration Date
	 	«ExpirDate»
	 
	 	 	 	 
	 

	 	Vesting Schedule:
	 	This Option shall become exercisable in accordance with the
following schedule: 25% of the Option Shares on the first anniversary of the Date of
Grant and 1/48th of the Option Shares on each monthly anniversary
thereafter, provided that Optionee continues to provide services to the Company.
	 
	 	 	 	 
	 

	 	Termination Period:
	 	This Option may be exercised for 90 days after termination of
Optionee’s Continuous Status as a Director, or such longer period as may be applicable
upon death or Disability of Optionee as provided in the Plan, but in no event later
than the Expiration Date as provided above.






 









 





     By your signature and the signature of the Company’s representative below, you and the Company
agree that this option is granted under and governed by the terms and conditions of the 1999
Directors’ Stock Option Plan and the Nonstatutory Stock Option Agreement, all of which are attached
and made a part of this document.



	 	 	 	 	 	 	 	 	 
	OPTIONEE:	 	 	 	FOUNDRY NETWORKS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

Signature

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	Print Name
	 	 	 	 	 	 	 	 







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FOUNDRY NETWORKS, INC.




NONSTATUTORY STOCK OPTION AGREEMENT




     1. Grant of Option. The Board of Directors of the Company hereby grants to the
Optionee named in the Notice of Stock Option Grant attached as Part I of this Agreement (the
“Optionee”), an option (the “Option”) to purchase a number of Shares, as set forth
in the Notice of Stock Option Grant, at the exercise price per share set forth in the Notice of
Stock Option Grant (the “Exercise Price”’), subject to the terms and conditions of the 1999
Directors’ Stock Option Plan (the “Plan”), which is incorporated herein by reference.
(Capitalized terms not defined herein shall have the meanings ascribed to such terms in the Plan.)
In the event of a conflict between the terms and conditions of the Plan and the terms and
conditions of this Nonstatutory Stock Option Agreement, the terms and conditions of the Plan shall
prevail.



     2. Exercise of Option.



          (a) Right to Exercise. This Option is exercisable during its term in accordance with
the Vesting Schedule set out in the Notice of Stock Option Grant and the applicable provisions of
the Plan and this Nonstatutory Stock Option Agreement. In the event of Optionee’s death,
disability or other termination of Optionee’s employment or consulting relationship, the
exercisability of the Option is governed by the applicable provisions of the Plan and this
Nonstatutory Stock Option Agreement.




          (b) Method of Exercise. This Option is exercisable by delivery of an exercise notice,
in the form attached as Exhibit A (the “Exercise Notice”), which shall 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 shall be
signed by the Optionee and shall be delivered in person or by certified mail to the Secretary of
the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price
as to all Exercised Shares. This Option shall be deemed to be exercised upon receipt by the
Company of such fully executed Exercise Notice accompanied by such aggregate Exercise Price.




          No Shares shall be issued pursuant to the exercise of this Option unless such issuance and
exercise complies with all relevant provisions of law and the requirements of any stock exchange or
quotation service upon which the Shares are then listed. Assuming such compliance, for income tax
purposes the Exercised Shares shall be considered transferred to the Optionee on the date the
Option is exercised with respect to such Exercised Shares.




     3. Method of Payment. Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:



          (a) cash;




 









 








          (b) check;




          (c) delivery of a properly executed exercise notice together with such other documentation as
the Administrator and the broker, if applicable, shall require to effect an exercise of the Option
and delivery to the Company of the sale or loan proceeds required to pay the exercise price; or




          (d) surrender of other Shares which (i) in the case of Shares acquired upon exercise of an
option, have been owned by the Optionee for more than six (6) months on the date of surrender, and
(ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.




     4. 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 or pursuant to a domestic
relations order (as defined by the Code or the rules thereunder) and may be exercised during the
lifetime of Optionee only by the Optionee or a transferee permitted by Section 10 of the Plan. The
terms of the Plan and this Nonstatutory Stock Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.



     5. Term of Option. This Option may be exercised only within the term set out in the
Notice of Stock Option Grant, and may be exercised during such term only in accordance with the
Plan and the terms of this Nonstatutory Stock Option Agreement.



     6. Tax Consequences. Set forth below is a brief summary of certain federal tax
consequences relating to this Option under the law in effect as of the date of grant. THIS SUMMARY
IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD
CONSULT HIS OR HER OWN TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.



          (a) Exercising the Option. Since this Option does not qualify as an incentive stock
option under Section 422 of the Code, the Optionee may incur regular federal income tax liability
upon exercise. The Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the fair market value of the Exercised
Shares on the date of exercise over their aggregate Exercise Price.




          (b) Disposition of Shares. If the Optionee holds the Option Shares for more than one
year, gain realized on disposition of the Shares will be treated as long-term capital gain for
federal income tax purposes. The long-term capital gain will be taxed for federal income tax
purposes at a maximum rate of 20 percent.




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     By your signature and the signature of the Company’s representative below, you and the Company
agree that this Option is granted under and governed by the terms and conditions of the Plan and
this Nonstatutory Stock Option Agreement. Optionee has reviewed the Plan and this Nonstatutory
Stock Option Agreement in their entirety, has had an opportunity to obtain the advice of counsel
prior to executing this Nonstatutory Stock Option Agreement and fully understands all provisions of
the Plan and Nonstatutory Stock Option Agreement. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator upon any questions
relating to the Plan and Nonstatutory Stock Option Agreement.



	 	 	 	 	 	 	 	 	 
	 	 	 	 	FOUNDRY NETWORKS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	«Optionee»
	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 





CONSENT OF SPOUSE




     The undersigned spouse of Optionee has read and hereby approves the terms and conditions of
the Plan and this Nonstatutory Stock Option Agreement. In consideration of the Company’s granting
his or her spouse the right to purchase Shares as set forth in the Plan and this Nonstatutory Stock
Option Agreement, the undersigned hereby agrees to be irrevocably bound by the terms and conditions
of the Plan and this Nonstatutory Stock Option Agreement and further agrees that any community
property interest shall be similarly bound. The undersigned hereby appoints the undersigned’s
spouse as attorney-in-fact for the undersigned with respect to any amendment or exercise of rights
under the Plan or this Nonstatutory Stock Option Agreement.



	 	 	 	 	 
	 

	 	 	 	 
	 

	 	Spouse of Optionee
	 	 






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EXHIBIT A




NOTICE OF EXERCISE




	 	 	 
	To:

	 	Foundry Networks, Inc.
	 
	 	 
	Attn:

	 	Stock Option Administrator
	 
	 	 
	Subject:

	 	Notice of Intention to Exercise Stock Option






     This is official notice that the undersigned (“Optionee”) intends to exercise
Optionee’s option to purchase
                     shares of Foundry Networks, Inc. Common Stock, under and
pursuant to the Company’s 1999 Directors’ Stock Option Plan and the Nonstatutory Stock Option
Agreement dated                     , as follows:



	 	 	 	 	 	 	 
	 

	 	Grant Number:
	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date of Purchase:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Number of Shares:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Purchase Price:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Method of Payment of	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Purchase Price:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Social Security No.:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	The shares should be issued as follows:	 	 






	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Signed:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 






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