Document:

exv10w15

 

Exhibit 10.15

FOUNDRY NETWORKS, INC.

2006 STOCK INCENTIVE PLAN

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	SECTION 1.    INTRODUCTION	 	 	1	 
	SECTION 2.    DEFINITIONS	 	 	1	 
	 

	 	(a)
	 	“Affiliate”
	 	 	1	 
	 

	 	(b)
	 	“Award”
	 	 	1	 
	 

	 	(c)
	 	“Award Agreement”
	 	 	1	 
	 

	 	(d)
	 	“Board”
	 	 	1	 
	 

	 	(e)
	 	“Cashless Exercise”
	 	 	1	 
	 

	 	(f)
	 	“Cause”
	 	 	2	 
	 

	 	(g)
	 	“Change in Control”
	 	 	2	 
	 

	 	(h)
	 	“Code”
	 	 	2	 
	 

	 	(i)
	 	“Committee”
	 	 	2	 
	 

	 	(j)
	 	“Common Stock”
	 	 	3	 
	 

	 	(k)
	 	“Company”
	 	 	3	 
	 

	 	(l)
	 	“Consultant”
	 	 	3	 
	 

	 	(m)
	 	“Covered Employees”
	 	 	3	 
	 

	 	(n)
	 	“Director”
	 	 	3	 
	 

	 	(o)
	 	“Disability”
	 	 	3	 
	 

	 	(p)
	 	“Employee”
	 	 	3	 
	 

	 	(q)
	 	“Exchange Act”
	 	 	3	 
	 

	 	(r)
	 	“Exercise Price”
	 	 	3	 
	 

	 	(s)
	 	“Fair Market Value”
	 	 	3	 
	 

	 	(t)
	 	“Fiscal Year”
	 	 	4	 
	 

	 	(u)
	 	“Incentive Stock Option” or “ISO”
	 	 	4	 
	 

	 	(v)
	 	“Key Service Provider”
	 	 	4	 
	 

	 	(w)
	 	“Non-Employee Director”
	 	 	4	 
	 

	 	(x)
	 	“Nonstatutory Stock Option” or “NSO”
	 	 	4	 
	 

	 	(y)
	 	“Option”
	 	 	4	 
	 

	 	(z)
	 	“Optionee”
	 	 	4	 
	 

	 	(aa)
	 	“Parent”
	 	 	4	 
	 

	 	(bb)
	 	“Participant”
	 	 	4	 
	 

	 	(cc)
	 	“Performance Goals”
	 	 	4	 
	 

	 	(dd)
	 	“Performance Period”
	 	 	5	 

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	 	 	 	 	 	 	Page
	 

	 	(ee)
	 	“Plan”
	 	 	5	 
	 

	 	(ff)
	 	“Re-Price”
	 	 	5	 
	 

	 	(gg)
	 	“SAR Agreement”
	 	 	5	 
	 

	 	(hh)
	 	“SEC”
	 	 	5	 
	 

	 	(ii)
	 	“Section 16 Persons”
	 	 	5	 
	 

	 	(jj)
	 	“Securities Act”
	 	 	5	 
	 

	 	(kk)
	 	“Service”
	 	 	5	 
	 

	 	(ll)
	 	“Share”
	 	 	5	 
	 

	 	(mm)
	 	“Stock Appreciation Right” or “SAR”
	 	 	5	 
	 

	 	(nn)
	 	“Stock Grant”
	 	 	5	 
	 

	 	(oo)
	 	“Stock Grant Agreement”
	 	 	5	 
	 

	 	(pp)
	 	“Stock Option Agreement”
	 	 	6	 
	 

	 	(qq)
	 	“Stock Unit”
	 	 	6	 
	 

	 	(rr)
	 	“Stock Unit Agreement”
	 	 	6	 
	 

	 	(ss)
	 	“Subsidiary”
	 	 	6	 
	 

	 	(tt)
	 	“10-Percent Stockholder”
	 	 	6	 
	SECTION 3.       ADMINISTRATION	 	 	6	 
	 

	 	(a)
	 	Committee Composition
	 	 	6	 
	 

	 	(b)
	 	Authority of the Committee
	 	 	6	 
	 

	 	(c)
	 	Indemnification
	 	 	7	 
	SECTION 4.       GENERAL	 	 	8	 
	 

	 	(a)
	 	General Eligibility
	 	 	8	 
	 

	 	(b)
	 	Incentive Stock Options
	 	 	8	 
	 

	 	(c)
	 	Restrictions on Shares
	 	 	8	 
	 

	 	(d)
	 	Beneficiaries
	 	 	8	 
	 

	 	(e)
	 	Performance Conditions
	 	 	8	 
	 

	 	(f)
	 	No Rights as a Stockholder
	 	 	8	 
	 

	 	(g)
	 	Termination of Service
	 	 	8	 
	SECTION 5.       SHARES SUBJECT TO PLAN AND SHARE LIMITS	 	 	9	 
	 

	 	(a)
	 	Basic Limitation
	 	 	9	 
	 

	 	(b)
	 	Additional Shares
	 	 	9	 
	 

	 	(c)
	 	Dividend Equivalents
	 	 	9	 

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	 	 	 	 	 	 	Page
	 

	 	(d)
	 	Share Limits
	 	 	9	 
	 

	 	 	 	(i)Limits on Options
	 	 	9	 
	 

	 	 	 	(ii)Limits on SARs
	 	 	9	 
	 

	 	 	 	(iii)Limits on Stock Grants and Stock Units
	 	 	10	 
	SECTION 6.       TERMS AND CONDITIONS OF OPTIONS	 	 	10	 
	 

	 	(a)
	 	Stock Option Agreement
	 	 	10	 
	 

	 	(b)
	 	Number of Shares
	 	 	10	 
	 

	 	(c)
	 	Exercise Price
	 	 	10	 
	 

	 	(d)
	 	Exercisability and Term
	 	 	10	 
	 

	 	(e)
	 	Payment for Option Shares
	 	 	10	 
	 

	 	 	 	(i)Surrender of Stock
	 	 	10	 
	 

	 	 	 	(ii)Cashless Exercise
	 	 	10	 
	 

	 	 	 	(iii)Other Forms of Payment
	 	 	11	 
	 

	 	(f)
	 	Modifications or Assumption of Options
	 	 	11	 
	 

	 	(g)
	 	Assignment or Transfer of Options
	 	 	11	 
	SECTION 7.       TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS	 	 	11	 
	 

	 	(a)
	 	SAR Agreement
	 	 	11	 
	 

	 	(b)
	 	Number of Shares
	 	 	11	 
	 

	 	(c)
	 	Exercise Price
	 	 	12	 
	 

	 	(d)
	 	Exercisability and Term
	 	 	12	 
	 

	 	(e)
	 	Exercise of SARs
	 	 	12	 
	 

	 	(f)
	 	Modification or Assumption of SARs
	 	 	12	 
	 

	 	(g)
	 	Assignment or Transfer of SARs
	 	 	12	 
	SECTION 8.       TERMS AND CONDITIONS FOR STOCK GRANTS	 	 	13	 
	 

	 	(a)
	 	Time, Amount and Form of Awards
	 	 	13	 
	 

	 	(b)
	 	Stock Grant Agreement
	 	 	13	 
	 

	 	(c)
	 	Payment for Stock Grants
	 	 	13	 
	 

	 	(d)
	 	Vesting Conditions
	 	 	13	 
	 

	 	(e)
	 	Assignment or Transfer of Stock Grants
	 	 	13	 
	 

	 	(f)
	 	Voting and Dividend Rights
	 	 	13	 
	 

	 	(g)
	 	Modification or Assumption of Stock Grants
	 	 	14	 

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	SECTION 9.       TERMS AND CONDITIONS OF STOCK UNITS	 	 	14	 
	 

	 	(a)
	 	Stock Unit Agreement
	 	 	14	 
	 

	 	(b)
	 	Number of Shares
	 	 	14	 
	 

	 	(c)
	 	Payment for Awards
	 	 	14	 
	 

	 	(d)
	 	Vesting Conditions
	 	 	14	 
	 

	 	(e)
	 	Form and Time of Settlement of Stock Units
	 	 	14	 
	 

	 	(f)
	 	Voting and Dividend Rights
	 	 	14	 
	 

	 	(g)
	 	Creditors’ Rights
	 	 	15	 
	 

	 	(h)
	 	Modification or Assumption of Stock Units
	 	 	15	 
	 

	 	(i)
	 	Assignment or Transfer of Stock Units
	 	 	15	 
	SECTION 10.       PROTECTION AGAINST DILUTION	 	 	15	 
	 

	 	(a)
	 	Adjustments
	 	 	15	 
	 

	 	(b)
	 	Participant Rights
	 	 	16	 
	 

	 	(c)
	 	Fractional Shares
	 	 	16	 
	SECTION 11.       EFFECT OF A CHANGE IN CONTROL	 	 	16	 
	 

	 	(a)
	 	Change in Control
	 	 	16	 
	 

	 	(b)
	 	Acceleration
	 	 	16	 
	 

	 	(c)
	 	Dissolution
	 	 	16	 
	SECTION 12.       LIMITATIONS ON RIGHTS	 	 	16	 
	 

	 	(a)
	 	Participant Rights
	 	 	16	 
	 

	 	(b)
	 	Stockholders’ Rights
	 	 	17	 
	 

	 	(c)
	 	Regulatory Requirements
	 	 	17	 
	SECTION 13.       WITHHOLDING TAXES	 	 	17	 
	 

	 	(a)
	 	General
	 	 	17	 
	 

	 	(b)
	 	Share Withholding
	 	 	17	 
	SECTION 14.       DURATION AND AMENDMENTS	 	 	18	 
	 

	 	(a)
	 	Term of the Plan
	 	 	18	 
	 

	 	(b)
	 	Right to Amend or Terminate the Plan
	 	 	18	 

iv

 

FOUNDRY NETWORKS, INC.

2006 STOCK INCENTIVE PLAN

SECTION 1. INTRODUCTION.

On April 28, 2006, the Board adopted this Foundry Networks, Inc. 2006 Stock Incentive Plan,
which shall become effective upon its approval by the Company’s stockholders (the “Effective
Date”). If this Plan is approved by the Company’s stockholders, this Plan will supersede
the 1996 Stock Plan effective as of the Effective Date such that no further awards shall be
made under the 1996 Stock Plan on or after such date. However, this Plan will not, in any
way, affect awards under the 1996 Stock Plan that are outstanding as of the Effective Date.
If the Company’s stockholders do not approve this Plan, no Awards will be made under this
Plan and the 1996 Stock Plan will continue in effect in accordance with its terms.

The purpose of this Plan is to promote the long-term success of the Company and the creation
of stockholder value by offering Key Service Providers the opportunity to share in such
long-term success by acquiring a proprietary interest in the Company.

The Plan seeks to achieve this purpose by providing for discretionary long-term incentive
Awards in the form of Options (which may be Incentive Stock Options or Nonstatutory Stock
Options), Stock Appreciation Rights, Stock Grants and Stock Units.

The Plan shall be governed by, and construed in accordance with, the laws of the State of
California (except its choice-of-law provisions). Capitalized terms shall have the meaning
provided in Section 2 unless otherwise provided in this Plan or any related Award Agreement.

SECTION 2. DEFINITIONS.

(a) “Affiliate” means any entity other than a Subsidiary, if the Company and/or one or more
Subsidiaries own not less than 50% of such entity.

(b) “Award” means an Option, SAR, Stock Grant or Stock Unit.

(c) “Award Agreement” means any Stock Option Agreement, SAR Agreement, Stock Grant Agreement
or Stock Unit Agreement.

(d) “Board” means the Board of Directors of the Company, as constituted from time to time.

(e) “Cashless Exercise” means, to the extent that a Stock Option Agreement so provides and
as permitted by applicable law, a program approved by the Committee in which payment of the
aggregate Exercise Price and/or satisfaction of any applicable tax withholding obligations
may be made all or in part by delivery (on a form prescribed by

 

 

the Committee) of an irrevocable direction to a securities broker to sell Shares subject to
an Option and to deliver all or part of the sale proceeds to the Company.

(f) “Cause” means, except as may otherwise be provided in a Participant’s employment
agreement or Award Agreement, (i) Participant’s willful failure to perform his or her duties
and responsibilities to the Company or material violation of a written Company policy; (ii)
Participant’s commission of any act of fraud, embezzlement, dishonesty or any other willful
misconduct that has caused or is reasonably expected to result in material injury to the
Company; (iii) unauthorized use or disclosure by Participant of any proprietary information
or trade secrets of the Company or any other party to whom the Participant owes an
obligation of nondisclosure as a result of his or her relationship with the Company; or (iv)
Participant’s willful breach of any of his or her obligations under any written agreement or
covenant with the Company. The determination as to whether a Participant is being
terminated for Cause shall be made in good faith by the Committee and shall be conclusive
and binding on the Participant. The foregoing definition does not in any way limit the
Company’s ability to terminate a Participant’s Service at any time as provided in Section
12(a), and the term “Company” will be interpreted to include any Subsidiary, Parent,
Affiliate, or any successor thereto, if appropriate.

(g) “Change in Control” means the consummation of any of the following transactions:

(i) The sale of all or substantially all of the Company’s assets;

(ii) The merger of the Company with or into another corporation in which securities
possessing more than 50% of the total combined voting power of the Company are
transferred to a person or persons different from the persons holding those securities
immediately prior to such transaction; or

(iii) The acquisition, directly or indirectly, by any person or related group of persons
(other than the Company or a person that directly or indirectly controls, is controlled
by, or is under common control with, the Company) of beneficial ownership (within the
meaning of Rule 13d-3 of the Exchange Act) of securities of the Company representing
more than 50% of the total combined voting power of the Company’s then outstanding
securities pursuant to a tender or exchange offer made directly to the Company’s
stockholders which the Board does not recommend such stockholders accept.

A transaction shall not constitute a Change in Control if its sole purpose is to change
the state of the Company’s incorporation or 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 transactions.

(h) “Code” means the Internal Revenue Code of 1986, as amended, and the regulations and
interpretations promulgated thereunder.

(i) “Committee” means a committee described in Section 3.

2

 

(j) “Common Stock” means the Company’s common stock.

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

(l) “Consultant” means an individual who provides bona fide services to the Company, a
Parent, a Subsidiary or an Affiliate, other than as an Employee, Director or Non-Employee
Director.

(m) “Covered Employees” means those persons who are subject to the limitations of Code
Section 162(m).

(n) “Director” means a member of the Board who is also an Employee.

(o) “Disability” means that the Participant is classified as disabled under the long-term
disability policy of the Company or, if no such policy applies, the Participant is unable to
engage in any substantial gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than 12 months.

(p) “Employee” means any individual who is a common-law employee of the Company, a Parent, a
Subsidiary or an Affiliate.

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

(r) “Exercise Price” means, in the case of an Option, the amount for which a Share may be
purchased upon exercise of such Option, as specified in the applicable Stock Option
Agreement. “Exercise Price,” in the case of a SAR, means an amount, as specified in the
applicable SAR Agreement, which is subtracted from the Fair Market Value in determining the
amount payable upon exercise of such SAR.

(s) “Fair Market Value” means the market price of a Share as determined in good faith by the
Committee. Such determination shall be conclusive and binding on all persons. The Fair
Market Value shall be determined by the following:

(i) If the Shares are admitted to trading on any established national stock
exchange or market system, including without limitation the NASDAQ National
Market System, on the date in question, then the Fair Market Value shall be
equal to the closing sales price for such Shares as quoted on such national
exchange or system on such date; or

(ii) if the Shares are admitted to quotation on NASDAQ or are regularly
quoted by a recognized securities dealer but selling prices are not reported
on the date in question, then the Fair Market Value shall be equal to the
mean between the bid and asked prices of the Shares reported for such date.

In each case, the applicable price shall be the price reported in The Wall
Street Journal or such other source as the Committee deems reliable;

3

 

provided, however, that if there is no such reported price for the Shares
for the date in question, then the Fair Market Value shall be equal to the
price reported on the last preceding date for which such price exists. If
neither (i) or (ii) are applicable, then the Fair Market Value shall be
determined by the Committee in good faith on such basis as it deems
appropriate.

(t) “Fiscal Year” means the Company’s fiscal year.

(u) “Incentive Stock Option” or “ISO” means an incentive stock option described in Code
Section 422.

(v) “Key Service Provider” means an Employee, Director, Non-Employee Director or Consultant
who has been selected by the Committee to receive an Award under the Plan.

(w) “Non-Employee Director” means a member of the Board who is not an Employee.

(x) “Nonstatutory Stock Option” or “NSO” means a stock option that is not an ISO.

(y) “Option” means an ISO or NSO granted under the Plan entitling the Optionee to purchase
Shares.

(z) “Optionee” means an individual, estate or other entity that holds an Option.

(aa) “Parent” means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, if each of the corporations other than the Company
owns stock possessing 50% or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain. A corporation that attains the status of a
Parent on a date after the adoption of the Plan shall be considered a Parent commencing as
of such date.

(bb) “Participant” means an individual or estate or other entity that holds an Award.

(cc) “Performance Goals” means one or more objective measurable performance goals
established by the Committee with respect to a Performance Period based upon one or more
factors, including, but not limited to: (i) operating income; (ii) earnings before interest,
taxes, depreciation and amortization; (iii) earnings; (iv) cash flow; (v) market share; (vi)
sales or revenue; (vii) expenses; (viii) cost of goods sold; (ix) profit/loss or profit
margin; (x) working capital; (xi) return on equity or assets; (xii) earnings per share;
(xiii) economic value added; (xiv) price/earnings ratio; (xv) debt or debt-to-equity; (xvi)
accounts receivable; (xvii) writeoffs; (xviii) cash; (xix) assets; (xx) liquidity;
(xxi) operations; (xxii) intellectual property (e.g., patents); (xxiii) product development;
(xxiv) regulatory activity; (xxv) manufacturing, production or inventory; (xxvi) mergers
and acquisitions or divestitures; and/or (xxvii) financings, each with respect to the
Company and/or one or more of its Parent, Subsidiaries, Affiliates or operating units.
Awards issued to persons who are not Covered Employees may take into account other factors.

4

 

(dd) “Performance Period” means any period not exceeding 36 months as determined by the
Committee, in its sole discretion. The Committee may establish different Performance
Periods for different Participants, and the Committee may establish concurrent or
overlapping Performance Periods.

(ee) “Plan” means this Foundry Networks, Inc. 2006 Stock Incentive Plan as it may be amended
from time to time.

(ff) “Re-Price” means that the Company has lowered or reduced the Exercise Price of
outstanding Options and/or outstanding SARs for any Participant(s) in a manner described by
Item 402(i)(1) of SEC Regulation S-K (or its successor provision).

(gg) “SAR Agreement” means the agreement described in Section 7 evidencing a Stock
Appreciation Right.

(hh) “SEC” means the Securities and Exchange Commission.

(ii) “Section 16 Persons” means those officers, directors or other persons who are subject
to 16 of the Exchange Act.

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

(kk) “Service” means service as an Employee, Director, Non-Employee Director or Consultant.
A Participant’s Service does not terminate if he or she is an Employee and goes on a bona
fide leave of absence that was approved by the Company in writing and the terms of the leave
provide for continued service crediting, or when continued service crediting is required by
applicable law. However, for purposes of determining whether an Option is entitled to
continuing ISO status, an Employee’s Service will be treated as terminating 90 days after
such Employee went on leave, unless such Employee’s right to return to active work is
guaranteed by law or by a contract. Service terminates in any event when the approved leave
ends, unless such Employee immediately returns to active work. Further, unless otherwise
determined by the Committee, a Participant’s Service will not terminate merely because of a
change in the capacity in which the Participant provides service to the Company, a Parent,
Subsidiary or Affiliate, or a transfer between entities (the Company or any Parent,
Subsidiary, or Affiliate); provided that there is no interruption or other termination of
Service.

(ll) “Share” means one share of Common Stock.

(mm) “Stock Appreciation Right” or “SAR” means a stock appreciation right awarded under the
Plan.

(nn) “Stock Grant” means Shares awarded under the Plan.

(oo) “Stock Grant Agreement” means the agreement described in Section 8 evidencing a Stock
Grant.

5

 

(pp) “Stock Option Agreement” means the agreement described in Section 6 evidencing an
Option.

(qq) “Stock Unit” means a bookkeeping entry representing the equivalent of one Share awarded
under the Plan.

(rr) “Stock Unit Agreement” means the agreement described in Section 9 evidencing a Stock
Unit.

(ss) “Subsidiary” means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company, if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such chain. A
corporation that attains the status of a Subsidiary on a date after the adoption of the Plan
shall be considered a Subsidiary commencing as of such date.

(tt) “10-Percent Stockholder” means an individual who owns more than 10% of the total
combined voting power of all classes of outstanding stock of the Company, its Parent or any
of its Subsidiaries. In determining stock ownership, the attribution rules of Code Section
424(d) shall be applied.

SECTION 3. ADMINISTRATION.

(a) Committee Composition. The Board or a Committee appointed by the Board shall administer
the Plan. The Committee shall generally have membership composition which enables (i)
Awards to Section 16 Persons to qualify as exempt from liability under Section 16(b) of the
Exchange Act and (ii) Awards to Covered Employees to qualify as performance-based
compensation as provided under Code Section 162(m). However, the Board may also appoint one
or more separate Committees, each composed of one or more directors of the Company who need
not qualify under Rule 16b-3 or Code Section 162(m), that may administer the Plan with
respect to Key Service Providers who are not Section 16 Persons or Covered Employees,
respectively, may grant Awards under the Plan to such Key Service Providers and may
determine all terms of such Awards. Members of any such Committee shall serve for such
period of time as the Board may determine and shall be subject to removal by the Board at
any time. The Board may also at any time terminate the functions of the Committee and
reassume all powers and authority previously delegated to the Committee.

Notwithstanding the foregoing, the Board shall administer the Plan with respect to all
Awards granted to Non-Employee Directors.

The Board and any Committee appointed to administer the plan is referred to herein as the
“Committee”.

(b) Authority of the Committee. Subject to the provisions of the Plan, the Committee shall
have the full authority, in its sole discretion, to take any actions it deems necessary or
advisable for the administration of the Plan. Such actions shall include:

6

 

	 	(i)	 	selecting Key Service Providers who are to receive Awards under the
Plan;
	 
	 	(ii)	 	determining the type, number, vesting requirements and other features
and conditions of such Awards;
	 
	 	(iii)	 	amending any outstanding Awards;
	 
	 	(iv)	 	accelerating the vesting, or extending the post-termination exercise
term, of Awards at any time and under such terms and conditions as it deems
appropriate;
	 
	 	(v)	 	interpreting the Plan and any Award Agreement;
	 
	 	(vi)	 	correcting any defect, supplying any omission or reconciling any
inconsistency in the Plan or any Award Agreement;
	 
	 	(vii)	 	adopting such rules or guidelines as it deems appropriate to implement
the Plan;
	 
	 	(viii)	 	making all other decisions relating to the operation of the Plan; and
	 
	 	(ix)	 	adopting such plans or subplans as may be deemed necessary or
appropriate to provide for the participation by employees of the Company, its
Parent, Subsidiaries and Affiliates who reside outside of the U.S., which plans
and/or subplans shall be attached hereto as Appendices.

The Committee’s determinations under the Plan shall be final and binding on all persons.

(c) Indemnification. To the maximum extent permitted by applicable law, each member of the
Committee shall be indemnified and held harmless by the Company against and from (i) any
loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or
her in connection with or resulting from any claim, action, suit, or proceeding to which he
or she may be a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan or any Award Agreement, and (ii) from any and all amounts paid
by him or her in settlement thereof, with the Company’s approval, or paid by him or her in
satisfaction of any judgment in any such claim, action, suit, or proceeding against him or
her, provided he or she shall give the Company an opportunity, at its own expense, to handle
and defend the same before he or she undertakes to handle and defend it on his or her own
behalf. The foregoing right of indemnification shall not be exclusive of any other rights
of indemnification to which such persons may be entitled under the Company’s Articles of
Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any power
that the Company may have to indemnify them or hold them harmless.

7

 

SECTION 4. GENERAL.

(a) General Eligibility. Only Employees, Directors, Non-Employee Directors and Consultants
shall be eligible to participate in the Plan.

(b) Incentive Stock Options. Only Key Service Providers who are Employees of the Company, a
Parent or a Subsidiary shall be eligible for the grant of ISOs. In addition, a Key Service
Provider who is a 10-Percent Stockholder shall not be eligible for the grant of an ISO
unless the requirements set forth in Code Section 422(c)(5) are satisfied.

(c) Restrictions on Shares. Any Shares issued pursuant to an Award shall be subject to such
rights of repurchase, rights of first refusal and other transfer restrictions as the
Committee may determine, in its sole discretion. Such restrictions shall apply in addition
to any restrictions that may apply to holders of Shares generally and shall also comply to
the extent necessary with applicable law. In no event shall the Company be required to
issue fractional Shares under this Plan.

(d) Beneficiaries. Unless stated otherwise in an Award Agreement and then only to the
extent permitted by applicable law, a Participant may designate one or more beneficiaries
with respect to an Award by timely filing the prescribed form with the Company. A
beneficiary designation may be changed by filing the prescribed form with the Company at any
time before the Participant’s death. If no beneficiary was designated or if no designated
beneficiary survives the Participant, then after a Participant’s death any vested Award(s)
shall be transferred or distributed to the Participant’s estate.

(e) Performance Conditions. The Committee may, in its discretion, include performance
conditions in an Award. If performance conditions are included in Awards to Covered
Employees and such Awards are intended to qualify as “performance-based compensation” under
Code Section 162(m), then such Awards will be subject to the achievement of Performance
Goals with respect to a Performance Period established by the Committee. Such Awards shall
be granted and administered pursuant to the requirements of Code Section 162(m). Before any
Shares underlying an Award or any Award payments are released to a Covered Employee with
respect to a Performance Period, the Committee shall certify in writing that the Performance
Goals for such Performance Period have been satisfied. Awards with performance conditions
that are granted to Key Service Providers who are not Covered Employees need not comply with
the requirements of Code Section 162(m).

(f) No Rights as a Stockholder. A Participant, or a transferee of a Participant, shall have
no rights as a stockholder with respect to any Common Stock covered by an Award until such
person has satisfied all of the terms and conditions to receive such Common Stock, has
satisfied any applicable withholding or tax obligations relating to the Award and the Shares
have been issued (as evidenced by an appropriate entry on the books of the Company or a duly
authorized transfer agent of the Company).

(g) Termination of Service. Unless the applicable Award Agreement or, with respect to a
Participant who resides in the U.S., the applicable employment agreement provides

8

 

otherwise, the following rules shall govern the vesting, exercisability and term of
outstanding Awards held by a Participant in the event of termination of such Participant’s
Service (in all cases subject to the maximum term of the Option and/or SAR as applicable):
(i) upon termination of Service for any reason, all unvested portions of any outstanding
Awards shall be immediately forfeited without consideration and the vested portions of any
outstanding Stock Units shall be settled upon termination; (ii) if Service is terminated for
Cause, then all unexercised Options and/or SARs, unvested portions of Stock Units and
unvested portions of Stock Grants shall terminate and be forfeited immediately without
consideration; (iii) if Service is terminated for any reason other than for Cause, death or
Disability, then the vested portion of his or her then-outstanding Options and/or SARs may
be exercised by such Participant or his or her personal representative within 3 months after
the date of such termination; or (iv) if Service is terminated due to death or Disability,
the vested portion of his or her then-outstanding Options and/or SARs may be exercised
within 12 months after the date of such termination.

SECTION 5. SHARES SUBJECT TO PLAN AND SHARE LIMITS.

(a) Basic Limitation. The stock issuable under the Plan shall be authorized but unissued
Shares or treasury shares. The aggregate number of Shares reserved for Awards under the
Plan is 26,000,000 Shares, subject to adjustment pursuant to Section 10. Shares issued as
Stock Grants or pursuant to Stock Units will count against the Shares available for issuance
under the Plan as 2.3 Shares for every 1 Share issued in connection with the Award.

(b) Additional Shares. If Awards are forfeited or are terminated for any reason before
vesting or being exercised, then the Shares underlying such Awards shall again become
available for Awards under the Plan. SARs to be settled in Shares shall be counted in full
against the number of Shares available for issuance under the Plan, regardless of the number
of Shares issued upon settlement of the SARs. If Awards are settled in cash, the Shares
that would have been delivered had there been no cash settlement shall not be counted
against the Shares available for issuance under the Plan.

(c) Dividend Equivalents. Any dividend equivalents distributed under the Plan shall not
reduce the number of Shares available for Awards.

(d) Share Limits.

(i) Limits on Options. No Key Service Provider shall receive Options during any Fiscal
Year covering in excess of 3,000,000 Shares, subject to adjustment pursuant to Section
10. The aggregate maximum number of Shares that may be issued in connection with ISOs
shall be 26,000,000 Shares, subject to adjustment pursuant to Section 10.

(ii) Limits on SARs. No Key Service Provider shall receive SARs during any Fiscal Year
covering in excess of 3,000,000 Shares, subject to adjustment pursuant to Section 10.

9

 

(iii) Limits on Stock Grants and Stock Units. No Key Service Provider shall receive
Stock Grants or Stock Units during any Fiscal Year covering, in the aggregate, in excess
of 1,500,000 Shares, subject to adjustment pursuant to Section 10.

SECTION 6. TERMS AND CONDITIONS OF OPTIONS.

(a) Stock Option Agreement. Each Option granted under the Plan shall be evidenced and
governed exclusively by a Stock Option Agreement between the Optionee and the Company. Such
Option shall be subject to all applicable terms and conditions of the Plan and may be
subject to any other terms and conditions that are not inconsistent with the Plan and that
the Committee deems appropriate for inclusion in a Stock Option Agreement. The provisions
of the various Stock Option Agreements entered into under the Plan need not be identical.
The Stock Option Agreement shall specify whether the Option is an ISO or an NSO.

(b) Number of Shares. Each Stock Option Agreement shall specify the number of Shares that
are subject to the Option, which number is subject to adjustment in accordance with Section
10.

(c) Exercise Price. Each Stock Option Agreement shall specify the Option’s Exercise Price
which shall be established by the Committee and is subject to adjustment in accordance with
Section 10. The Exercise Price of an Option shall not be less than 100% of the Fair Market
Value (110% for an ISO granted to a 10-Percent Stockholder) on the date of grant.

(d) Exercisability and Term. Each Stock Option Agreement shall specify the date when all or
any installment of the Option is to become exercisable and may include performance
conditions or Performance Goals pursuant to Section 4(e). The Stock Option Agreement shall
also specify the maximum term of the Option; provided that the maximum term of an Option
shall in no event exceed 5 years from the date of grant. A Stock Option Agreement may
provide for accelerated vesting in the event of the Participant’s death, Disability or other
events. Notwithstanding any other provision of the Plan or the Stock Option Agreement, no
Option can be exercised after the expiration date provided in the applicable Stock Option
Agreement.

(e) Payment for Option Shares. The Exercise Price of an Option shall be paid in cash at the
time of exercise, except as follows and if so provided for in the applicable Stock Option
Agreement:

(i) Surrender of Stock. Payment of all or any part of the Exercise Price may be made
with Shares which have already been owned by the Optionee; provided that the Committee
may, in its sole discretion, require that Shares tendered for payment be previously held
by the Optionee for a minimum duration (e.g., to avoid financial accounting charges to
the Company’s earnings).

(ii) Cashless Exercise. Payment of all or a part of the Exercise Price may be made
through Cashless Exercise.

10

 

(iii) Other Forms of Payment. Payment may be made in any other form that is consistent
with applicable laws, regulations and rules and approved by the Committee.

In the case of an ISO granted under the Plan, except to the extent permitted by applicable
law, payment shall be made only pursuant to the express provisions of the applicable Stock
Option Agreement. In the case of an NSO granted under the Plan, the Committee may, in its
discretion at any time, accept payment in any form(s) described in this Section 6(e).

(f) Modifications or Assumption of Options. Within the limitations of the Plan, the
Committee may modify, extend or assume outstanding options or may accept the cancellation of
outstanding options (whether granted by the Company or by another issuer) in return for the
grant of new Options for the same or a different number of Shares and at the same or a
different Exercise Price. Notwithstanding the preceding sentence or anything to the
contrary, no modification of an Option shall, without the consent of the Optionee, impair
his or her rights or obligations under such Option and, unless there is approval by the
Company stockholders, the Committee may not Re-Price outstanding Options.

(g) Assignment or Transfer of Options. Except as otherwise provided in the applicable Stock
Option Agreement and then only to the extent such transfer is otherwise permitted by
applicable law and is not a transfer for value (unless such transfer for value is approved
in advance by the Company’s stockholders), no Option shall be transferable by the Optionee
other than by will or by the laws of descent and distribution. Except as otherwise provided
in the applicable Stock Option Agreement, an Option may be exercised during the lifetime of
the Optionee only or by the guardian or legal representative of the Optionee. No Option or
interest therein may be assigned, pledged or hypothecated by the Optionee during his or her
lifetime, whether by operation of law or otherwise, or be made subject to execution,
attachment or similar process.

SECTION 7. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.

(a) SAR Agreement. Each SAR granted under the Plan shall be evidenced by a SAR Agreement
between the Participant and the Company. Such SAR shall be subject to all applicable terms
of the Plan and may be subject to any other terms that are not inconsistent with the Plan.
A SAR Agreement may provide for a maximum limit on the amount of any payout notwithstanding
the Fair Market Value on the date of exercise of the SAR. The provisions of the various SAR
Agreements entered into under the Plan need not be identical. SARs may be granted in
consideration of a reduction in the Participant’s compensation.

(b) Number of Shares. Each SAR Agreement shall specify the number of Shares to which the
SAR pertains, which number is subject to adjustment in accordance with Section 10.

11

 

(c) Exercise Price. Each SAR Agreement shall specify the Exercise Price, which is subject
to adjustment in accordance with Section 10. A SAR Agreement may specify an Exercise Price
that varies in accordance with a predetermined formula while the SAR is outstanding. The
Exercise Price of a SAR shall not be less than 100% of the Fair Market Value on the date of
grant.

(d) Exercisability and Term. Each SAR Agreement shall specify the date when all or any
installment of the SAR is to become exercisable and may include performance conditions or
Performance Goals pursuant to Section 4(e). The SAR Agreement shall also specify the
maximum term of the SAR which shall not exceed 5 years from the date of grant. A SAR
Agreement may provide for accelerated exercisability in the event of the Participant’s
death, Disability or other events. SARs may be awarded in combination with Options or Stock
Grants, and such an Award shall provide that the SARs will not be exercisable unless the
related Options or Stock Grants are forfeited. A SAR may be included in an ISO only at the
time of grant but may be included in an NSO at the time of grant or at any subsequent time,
but not later than six months before the expiration of such NSO. Notwithstanding any other
provision of the Plan or the SAR Agreement, no SAR can be exercised after the expiration
date provided in the applicable SAR Agreement.

(e) Exercise of SARs. If, on the date when a SAR expires, the Exercise Price under such SAR
is less than the Fair Market Value on such date but any vested portion of such SAR has not
been exercised or surrendered, then such SAR shall automatically be deemed to be exercised
as of such date with respect to such vested portion. Upon exercise of a SAR, the
Participant (or any person having the right to exercise the SAR after Participant’s death)
shall receive from the Company (i) Shares, (ii) cash or (iii) any combination of Shares and
cash, as the Committee shall determine at the time of grant of the SAR, in its sole
discretion. The amount of cash and/or the Fair Market Value of Shares received upon
exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market
Value (on the date of surrender) of the Shares subject to the SARs exceeds the Exercise
Price of the Shares.

(f) Modification or Assumption of SARs. Within the limitations of the Plan, the Committee
may modify, extend or assume outstanding SARs or may accept the cancellation of outstanding
stock appreciation rights (including stock appreciation rights granted by another issuer) in
return for the grant of new SARs for the same or a different number of Shares and at the
same or a different Exercise Price. Notwithstanding the preceding sentence or anything to
the contrary, no modification of a SAR shall, without the consent of the Participant, impair
his or her rights or obligations under such SAR and, unless there is approval by the Company
stockholders, the Committee may not Re-Price outstanding SARs.

(g) Assignment or Transfer of SARs. Except as otherwise provided in the applicable SAR
Agreement and then only to the extent such transfer is otherwise permitted by applicable law
and is not a transfer for value (unless such transfer for value is approved in advance by
the Company’s stockholders), no SAR shall be transferable by the Participant other than by
will or by the laws of descent and distribution. Except as otherwise

12

 

provided in the
applicable SAR Agreement, a SAR may be exercised during the lifetime of the Participant only
or by the guardian or legal representative of the Participant. No SAR or interest therein
may be assigned, pledged or hypothecated by the Participant during his or her lifetime,
whether by operation of law or otherwise, or be made subject to execution, attachment or
similar process.

SECTION 8. TERMS AND CONDITIONS FOR STOCK GRANTS.

(a) Time, Amount and Form of Awards. Awards under this Section 8 may be granted in the form
of a Stock Grant. A Stock Grant may be awarded in combination with NSOs, and such an Award
may provide that the Stock Grant will be forfeited in the event that the related NSOs are
exercised.

(b) Stock Grant Agreement. Each Stock Grant awarded under the Plan shall be evidenced and
governed exclusively by a Stock Grant Agreement between the Participant and the Company.
Each Stock Grant shall be subject to all applicable terms and conditions of the Plan and may
be subject to any other terms and conditions that are not inconsistent with the Plan that
the Committee deems appropriate for inclusion in the applicable Stock Grant Agreement. The
provisions of the Stock Grant Agreements entered into under the Plan need not be identical.

(c) Payment for Stock Grants. Stock Grants may be issued with or without cash consideration
under the Plan.

(d) Vesting Conditions. Each Stock Grant may or may not be subject to vesting. Vesting
shall occur, in full or in installments, upon satisfaction of the conditions specified in
the Stock Grant Agreement which may include performance conditions or Performance Goals
pursuant to Section 4(e). A Stock Grant Agreement may provide for accelerated vesting in
the event of the Participant’s death, Disability, or other events.

(e) Assignment or Transfer of Stock Grants. Except as otherwise provided in the applicable
Stock Grant Agreement and then only to the extent such transfer is otherwise permitted by
applicable law and is not a transfer for value (unless such transfer for value is approved
in advance by the Company’s stockholders), no unvested Stock Grant shall be transferable
other than by will or by the laws of descent and distribution. Except as otherwise provided
in the applicable Stock Grant Agreement, no unvested Stock Grant or interest therein may be
anticipated, assigned, attached, garnished, optioned, transferred or made subject to any
creditor’s process, whether voluntarily, involuntarily or by operation of law. Any act in
violation of this Section 8(e) shall be void.

(f) Voting and Dividend Rights. The holder of a Stock Grant awarded under the Plan shall
have the same voting, dividend and other rights as the Company’s other stockholders. A
Stock Grant Agreement, however, may require that the holder of such Stock Grant invest any
cash dividends received in additional Shares subject to the Stock Grant. Such additional
Shares and any Shares received as a dividend pursuant to the Stock Grant shall be subject to
the same conditions and restrictions as the Stock Grant

13

 

with respect to which the dividends
were paid. Such additional Shares subject to the Stock Grant shall not reduce the number of
Shares available for issuance under Section 5.

(g) Modification or Assumption of Stock Grants. Within the limitations of the Plan, the
Committee may modify or assume outstanding Stock Grants or may accept the cancellation of
outstanding stock grants (including stock granted by another issuer) in return for the grant
of new Stock Grants for the same or a different number of Shares. Notwithstanding the
preceding sentence or anything to the contrary, no modification of a Stock Grant shall,
without the consent of the Participant, impair his or her rights or obligations under such
Stock Grant.

SECTION 9. TERMS AND CONDITIONS OF STOCK UNITS.

(a) Stock Unit Agreement. Each Stock Unit granted under the Plan shall be evidenced by a
Stock Unit Agreement between the Participant and the Company. Such Stock Units shall be
subject to all applicable terms of the Plan and may be subject to any other terms that are
not inconsistent with the Plan. The provisions of the various Stock Unit Agreements entered
into under the Plan need not be identical. Stock Units may be granted in consideration of a
reduction in the Participant’s other compensation.

(b) Number of Shares. Each Stock Unit Agreement shall specify the number of Shares to which
the Stock Unit pertains, which number is subject to adjustment in accordance with Section
10.

(c) Payment for Awards. To the extent that an Award is granted in the form of Stock Units,
no cash consideration shall be required of the Award recipients.

(d) Vesting Conditions. Each Stock Unit may or may not be subject to vesting. Vesting
shall occur, in full or in installments, upon satisfaction of the conditions specified in
the Stock Unit Agreement which may include performance conditions or Performance Goals
pursuant to Section 4(e). A Stock Unit Agreement may provide for accelerated vesting in the
event of the Participant’s death, Disability, or other events.

(e) Form and Time of Settlement of Stock Units. Settlement of vested Stock Units may be
made in the form of (a) cash, (b) Shares or (c) any combination of both, as determined by
the Committee at the time of the grant of the Stock Units, in its sole discretion. Methods
of converting Stock Units into cash may include (without limitation) a method based on the
average Fair Market Value of Shares over a series of trading days. Vested Stock Units may
be settled in a lump sum or in installments. The distribution may occur or commence when
the vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or
it may be deferred, in accordance with applicable law, to
any later date. The amount of a deferred distribution may be increased by an interest
factor or by dividend equivalents.

(f) Voting and Dividend Rights. The holders of Stock Units shall have no voting rights.
Prior to settlement or forfeiture, any Stock Unit awarded under the Plan may, at the
Committee’s discretion, carry with it a right to dividend equivalents. Such right

14

 

entitles
the holder to be credited with an amount equal to all cash dividends paid on one Share while
the Stock Unit is outstanding. Dividend equivalents may be converted into additional Stock
Units. Settlement of dividend equivalents may be made in the form of cash, in the form of
Shares, or in a combination of both. Prior to distribution, any dividend equivalents which
are not paid shall be subject to the same conditions and restrictions as the Stock Units to
which they attach.

(g) Creditors’ Rights. A holder of Stock Units shall have no rights other than those of a
general creditor of the Company. Stock Units represent an unfunded and unsecured obligation
of the Company, subject to the terms and conditions of the applicable Stock Unit Agreement.

(h) Modification or Assumption of Stock Units. Within the limitations of the Plan, the
Committee may modify or assume outstanding Stock Units or may accept the cancellation of
outstanding stock units (including stock units granted by another issuer) in return for the
grant of new Stock Units for the same or a different number of Shares. Notwithstanding the
preceding sentence or anything to the contrary, no modification of a Stock Unit shall,
without the consent of the Participant, impair his or her rights or obligations under such
Stock Unit.

(i) Assignment or Transfer of Stock Units. Except as provided in the applicable Stock Unit
Agreement and then only to the extent such transfer is otherwise permitted by applicable law
and is not a transfer for value (unless such transfer for value is approved in advance by
the Company’s stockholders), Stock Units shall not be transferable other than by will or by
the laws of descent and distribution. Except as otherwise provided in the applicable Stock
Unit Agreement, no Stock Unit or interest therein may be anticipated, assigned, attached,
garnished, optioned, transferred or made subject to any creditor’s process, whether
voluntarily, involuntarily or by operation of law. Any act in violation of this Section
9(i) shall be void.

SECTION 10. PROTECTION AGAINST DILUTION.

(a) Adjustments. In the event of a subdivision of the outstanding Shares, a declaration of
a dividend payable in Shares, a declaration of a dividend payable in a form other than
Shares in an amount that has a material effect on the price of Shares, a combination or
consolidation of the outstanding Shares (by reclassification or otherwise) into a lesser
number of Shares, a recapitalization, a spin-off or a similar occurrence, the Committee
shall make such adjustments as it, in its sole discretion, deems appropriate in one or more
of:

(i) the number of Shares and the kind of shares or securities available for future
Awards under Section 5;

(ii) the limits on Awards specified in Section 5;

(iii) the number of Shares and the kind of shares or securities covered by each
outstanding Award; or

15

 

(iv) the Exercise Price under each outstanding SAR or Option.

(b) Participant Rights. Except as provided in this Section 10, a Participant shall have no
rights by reason of any issue by the Company of stock of any class or securities convertible
into stock of any class, any subdivision or consolidation of shares of stock of any class,
the payment of any stock dividend or any other increase or decrease in the number of shares
of stock of any class. If by reason of an adjustment pursuant to this Section 10 a
Participant’s Award covers additional or different shares of stock or securities, then such
additional or different shares and the Award in respect thereof shall be subject to all of
the terms, conditions and restrictions which were applicable to the Award and the Shares
subject to the Award prior to such adjustment.

(c) Fractional Shares. Any adjustment of Shares pursuant to this Section 10 shall be
rounded down to the nearest whole number of Shares. Under no circumstances shall the
Company be required to authorize or issue fractional shares and no consideration shall be
provided as a result of any fractional shares not being issued or authorized.

SECTION 11. EFFECT OF A CHANGE IN CONTROL.

(a) Change in Control. In the event that the Company is a party to a Change in Control,
outstanding Awards shall be subject to the applicable agreement of merger or reorganization.
Such agreement may provide, without limitation, for the assumption of outstanding Awards by
the surviving corporation or its parent, for their continuation by the Company (if the
Company is a surviving corporation), for accelerated vesting or for their cancellation with
or without consideration, in all cases without the consent of the Participant.

(b) Acceleration. Notwithstanding the foregoing, the Committee may determine, at the time
of grant of an Award or thereafter, that such Award shall become vested and exercisable, in
full or in part, in the event that the Company is a party to a Change in Control.

(c) Dissolution. To the extent not previously exercised or settled, Options, SARs and Stock
Units shall terminate immediately prior to the dissolution or liquidation of the Company.

SECTION 12. LIMITATIONS ON RIGHTS.

(a) Participant Rights. A Participant’s rights, if any, in respect of or in connection with
any Award is derived solely from the discretionary decision of the Company to permit the
individual to participate in the Plan and to benefit from a discretionary Award. By
accepting an Award under the Plan, a Participant expressly acknowledges that there is no
obligation on the part of the Company to continue the Plan and/or grant any additional
Awards. Any Award granted hereunder is not intended to be compensation of a continuing or
recurring nature, or part of a Participant’s normal or expected compensation, and in no way
represents any portion of a Participant’s salary,

16

 

compensation, or other remuneration for
purposes of pension benefits, severance, redundancy, resignation or any other purpose.

Neither the Plan nor any Award granted under the Plan shall be deemed to give any individual
a right to remain an employee, consultant or director of the Company, a Parent, a Subsidiary
or an Affiliate. The Company and its Parent, Subsidiaries and Affiliates reserve the right
to terminate the Service of any person at any time, and for any reason, subject to
applicable laws, the Company’s Articles of Incorporation and Bylaws and any applicable
written employment agreement (if any), and such terminated person shall be deemed
irrevocably to have waived any claim to damages or specific performance for breach of
contract or dismissal, compensation for loss of office, tort or otherwise with respect to
the Plan or any outstanding Award that is forfeited and/or is terminated by its terms or to
any future Award.

(b) Stockholders’ Rights. Except as provided in Section 9(f), a Participant shall have no
dividend rights, voting rights or other rights as a stockholder with respect to any Shares
covered by his or her Award prior to the issuance of such Shares (as evidenced by an
appropriate entry on the books of the Company or a duly authorized transfer agent of the
Company). No adjustment shall be made for cash dividends or other rights for which the
record date is prior to the date when such Shares are issued, except as expressly provided
in Sections 9(f) and 10.

(c) Regulatory Requirements. Any other provision of the Plan notwithstanding, the
obligation of the Company to issue Shares or other securities under the Plan shall be
subject to all applicable laws, rules and regulations and such approval by any regulatory
body as may be required. The Company reserves the right to restrict, in whole or in part,
the delivery of Shares or other securities pursuant to any Award prior to the satisfaction
of all legal requirements relating to the issuance of such Shares or other securities, to
their registration, qualification or listing or to an exemption from registration,
qualification or listing.

SECTION 13. WITHHOLDING TAXES.

(a) General. A Participant shall make arrangements satisfactory to the Company for the
satisfaction of any withholding tax obligations that arise in connection with his or
her Award. The Company shall not be required to issue any Shares or make any cash payment
under the Plan until such obligations are satisfied.

(b) Share Withholding. The Committee may permit a Participant to satisfy all or part of his
or her withholding or income tax obligations by Cashless Exercise, by having the Company
withhold all or a portion of any Shares that otherwise would be issued to him or her or by
surrendering all or a portion of any Shares that he or she previously acquired; provided
that Shares withheld or previously owned Shares that are tendered shall not exceed the
amount necessary to satisfy the Company’s tax withholding obligations at the minimum
statutory withholding rates, including, but not limited to, U.S. federal and state income
taxes, payroll taxes and foreign taxes, if applicable, unless the previously owned

17

 

Shares
have been held for the minimum duration necessary to avoid financial accounting charges
under applicable accounting guidance or as otherwise permitted by the Committee in its sole
and absolute discretion. Any payment of taxes by assigning Shares to the Company may be
subject to restrictions, including, but not limited to, any restrictions required by rules
of the SEC.

SECTION 14. DURATION AND AMENDMENTS.

(a) Term of the Plan. The Plan shall become effective upon its approval by the Company’s
stockholders. The Plan shall terminate on December 31, 2009 and may be terminated on any
earlier date pursuant to this Section 14.

(b) Right to Amend or Terminate the Plan. The Board may amend or terminate the Plan at any
time and for any reason. Any such termination of the Plan, or any amendment thereof, shall
not impair any Award previously granted under the Plan. No Awards shall be granted under
the Plan after the Plan’s termination. An amendment of the Plan shall be subject to the
approval of the Company’s stockholders only to the extent such approval is required by
applicable laws, regulations or rules.

18exv10w16

 

Exhibit 10.16

FOUNDRY NETWORKS, INC.

2006 STOCK INCENTIVE PLAN

STOCK GRANT AGREEMENT

     This Stock Grant Agreement (the “Agreement”) is made and entered into as of                     ,
200___ by and between Foundry Networks, Inc., a Delaware corporation (the “Company”), and
                                         pursuant to the Foundry Networks, Inc. 2006 Stock Incentive Plan (the
“Plan”). To the extent any capitalized terms used in this Agreement are not defined, they shall
have the meaning ascribed to them in the Plan, which is attached to, and made a part of, this
Agreement. In the event of a conflict between the terms and provisions of the Plan and the terms
and provisions of this Agreement, the Plan terms and provisions shall prevail.

     In consideration of the mutual agreements herein contained and intending to be legally bound
hereby, the parties agree as follows:

     1. Restricted Shares. Pursuant to the Plan, the Company hereby transfers to you, and
you hereby accept from the Company, a Stock Grant Award consisting of                                          Shares (the
“Restricted Shares”), on the terms and conditions set forth herein and in the Plan.

     2. Vesting of Restricted Shares. So long as your Service continues, the Restricted
Shares shall vest in accordance with the following schedule: 12.5% of the total number of
Restricted Shares shall vest on                     , 200___ (the 6-month anniversary of the vesting
commencement date) and 1/48th of the total number of Restricted Shares shall vest and become
exercisable on each monthly anniversary thereafter.

     3. Termination of Service. In the event of the termination of your Service for any
reason, all unvested Restricted Shares shall be immediately forfeited without consideration. For
purposes of facilitating the enforcement of the provisions of this Section 3, you agree that the
Company may issue stop-transfer instructions on the Restricted Shares to the Company’s transfer
agent, may require that Restricted Shares be held by a broker designated by the Company, or may
otherwise hold the Restricted Shares in escrow, until the Restricted Shares have vested and you
have satisfied all applicable obligations with respect to the Restricted Shares, including any
applicable tax withholding obligations set forth in Section 5 below. Any new, substituted or
additional securities or other property which is issued or distributed with respect to the unvested
Restricted Shares shall be subject to the same terms and conditions as are applicable to the
unvested Restricted Shares under this Agreement and the Plan.

     4. Election to Recognize Income in the Year of Grant. Under Section 83 of the Code,
the Fair Market Value of the Restricted Shares on the date the Restricted Shares vest will be
taxable as ordinary income at that time. You understand and acknowledge that you may elect to be
taxed at the time the Restricted Shares are acquired in an amount equal to the Fair Market Value of
the Restricted Shares at that time, rather than the date the Restricted Shares vest, by filing an
election under Section 83(b) of the
Code with the Internal Revenue Service within 30 days after the date of this Agreement.

 

 

YOU
ACKNOWLEDGE AND AGREE THAT IT IS YOUR SOLE RESPONSIBILITY, AND NOT THE COMPANY’S RESPONSIBILITY, TO
FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF YOU REQUEST THE COMPANY OR ITS
REPRESENTATIVES TO MAKE THIS FILING ON YOUR BEHALF.

     5. Withholding Taxes. You agree to make arrangements satisfactory to the Company for
the satisfaction of any applicable withholding tax obligations that arise in connection with the
Restricted Shares which, at the sole discretion of the Committee, may include (i) having the
Company withhold Shares from the Restricted Shares held in escrow, or (ii) tendering Shares to the
Company, in either case, equal in value to the amount necessary to satisfy any such withholding tax
obligation. The Company shall not be required to release the Restricted Shares from the
stop-transfer instructions or escrow unless and until such obligations are satisfied.

     6. Tax Advice. You represent, warrant and acknowledge that the Company has made no
warranties or representations to you with respect to the income tax consequences of the
transactions contemplated by this Agreement, and you are in no manner relying on the Company or the
Company’s representatives for an assessment of such tax consequences. YOU UNDERSTAND THAT THE TAX
LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING ANY
STOCK GRANT AWARD. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED,
FOR THE PURPOSE OF AVOIDING TAXPAYER PENALTIES.

     7. Non-Transferability of Restricted Shares. Restricted Shares which have not vested
pursuant to Section 2 above shall not be anticipated, assigned, attached, garnished, optioned,
transferred or made subject to any creditor’s process, whether voluntarily or involuntarily or by
the operation of law. However, this Section 7 shall not preclude you from designating a
beneficiary who will receive any vested Restricted Shares in the event of the your death, nor shall
it preclude a transfer of vested Restricted Shares by will or by the laws of descent and
distribution.

     8. Restriction on Transfer. Regardless of whether the transfer or issuance of the
Restricted Shares has been registered under the Securities Act or has been registered or qualified
under the securities laws of any state, the Company may impose additional restrictions upon the
sale, pledge, or other transfer of the Restricted Shares (including the placement of appropriate
legends on stock certificates and the issuance of stop-transfer instructions to the Company’s
transfer agent) if, in the judgment of the Company and the Company’s counsel, such restrictions are
necessary in order to achieve compliance with the provisions of the Securities Act, the securities
laws of any state, or any other law.

     9. Stock Certificate Restrictive Legends. Stock certificates evidencing the
Restricted Shares may bear such restrictive legends as the Company and the Company’s counsel deem
necessary under applicable law or pursuant to this Agreement.

     10. Representations, Warranties, Covenants, and Acknowledgments. You hereby agree
that in the event the Company and the Company’s counsel deem it necessary
or advisable in the exercise of their discretion, the transfer or issuance of the

 

 

Restricted Shares
may be conditioned upon you making certain representations, warranties, and acknowledgments
relating to compliance with applicable securities laws.

     11. Voting and Other Rights. Subject to the terms of this Agreement, you shall have
all the rights and privileges of a stockholder of the Company while the Restricted Shares are held
in escrow, including the right to vote and to receive dividends (if any).

     12. No Employment Rights. Neither the Plan nor this Stock Grant Award shall be deemed
to give you a right to remain an Employee, Consultant or director of the Company, a Parent, a
Subsidiary or an Affiliate. The Company and its Parents and Subsidiaries and Affiliates reserve
the right to terminate your Service at any time, with or without cause, and for any reason, subject
to applicable laws.

     13. Notices. Any notice required or permitted by this Agreement shall be in writing
and shall be deemed sufficient when delivered personally or sent by telegram or fax or 48 hours
after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and
addressed to the Company at its principal corporate offices and to you at the address maintained
for you in the Company’s records.

     14. Entire Agreement; Enforcement of Rights. This Agreement, together with the Plan,
sets forth the entire agreement and understanding of the parties relating to the subject matter
herein and therein and merges all prior discussions between the parties. Except as contemplated
under the Plan, no modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, shall be effective unless in writing signed by the parties to this Agreement.
The failure by either party to enforce any rights under this Agreement shall not be construed as a
waiver of any rights of such party.

     15. Governing Law. This Agreement and all acts and transactions pursuant hereto and
the rights and obligations of the parties hereto shall be governed, construed and interpreted in
accordance with the laws of the State of California, without giving effect to principles of
conflicts of law.

     16. Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to renegotiate such provision in good faith.
In the event that the parties cannot reach a mutually agreeable and enforceable replacement for
such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of
this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of
this Agreement shall be enforceable in accordance with its terms.

     17. Successors and Assigns. The rights and benefits of this Agreement shall inure to
the benefit of, and be enforceable by the Company’s successors and assigns. The rights and
obligations of you under this Agreement may not be assigned without the prior written consent of
the Company.

     18. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one instrument.

*   *   *   *

(Signature Page Follows)

 

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on this ___ day of
                    , 200_.

	 	 	 	 	 
	FOUNDRY NETWORKS, INC.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

(Signature)
	 	 
	 
	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	RECIPIENT:	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

(Signature)
	 	 
	 
	 	 	 	 
	Address:	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 	 	 

	 	 	 	 	 
	Telephone Number:	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Email Address:	 	 
	 

	 	 

	 	 

I,                                         , spouse of                     , have read and hereby approve the foregoing
Agreement. In consideration of the Company’s granting my spouse the right to the Restricted Shares
as set forth in the Agreement, I hereby agree to be bound irrevocably by the Agreement and further
agree that any community property or other such interest that I may have in the Restricted Shares
shall hereby be similarly bound by the Agreement. I hereby appoint my spouse as my
attorney-in-fact with respect to any amendment or exercise of any rights under the Agreement.

	 	 	 
	 
	 

Spouse of Recipient

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