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Prepared by MERRILL CORPORATION

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Exhibit 10.19.4    
  

 
 

MCDATA SYNTHETIC LEASE
  SECOND AMENDMENT TO PARTICIPATION AGREEMENT    
  

    This SECOND AMENDMENT TO PARTICIPATION AGREEMENT (this "Amendment") dated as of November 9, 2001, is by
and among MCDATA CORPORATION, a Delaware corporation, as Lessee and Construction Agent (in its capacity as Lessee, the "Lessee" and in its capacity as
Construction Agent, the "Construction Agent"); DEUTSCHE BANK AG, NEW YORK BRANCH, a duly licensed branch of Deutsche Bank AG, a German corporation, as
Agent Lessor for the Lessors (in such capacity, the "Agent Lessor"), and as a Lessor (together with any permitted successors and assigns, each a
"Lessor" and collectively the "Lessors"); and DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCH,
as a Lender (together with the other financial institutions as may from time to time become lenders, the "Lenders") under the Credit Agreement and as
Agent for the Lenders (in such capacity, the "Agent"). Capitalized terms used herein and not otherwise defined shall have the meanings assigned such
terms in Annex A to the Participation Agreement (as defined below). 

RECITALS:  

    A.  The
Lessee, the Agent Lessor, the Lessor, the Lender, the Agent and the Arranger are parties to that certain Participation Agreement, dated as of February 9,
2001 (as amended, restated, supplemented or otherwise modified from time to time, the "Participation Agreement"). 

    B.  Section 9.5(g) of
the Participation Agreement contains a covenant of the Lessee to maintain at all times a minimum Consolidated Fixed Charge Coverage
Ratio. In the Lessee's third fiscal quarter of 2001, the Lessee booked one-time charges relating to: a write down of excess and obsolete inventory; SANavigator, Inc.
one-time acquisition charges; and SANavigator, Inc. one time in-process allocation charges. 

    C.  The
Lessee has requested certain amendments to the Participation Agreement to recognize the effect of certain of these charges. 

    D.  The
parties signatory hereto are willing to agree to those amendments on the terms, and subject to the conditions, hereinafter set forth. 

    NOW,
THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto agree as follows: 

    1.  Amendment to Annex A to the Participation Agreement. Subject to the satisfaction of the conditions set forth in  Section 5 below, Annex A to the Participation
Agreement is hereby amended as follows: 

    The
term "Consolidated Fixed Charge Ratio" is hereby amended by deleting the same in its entirety and replacing it with the following: 

    "Consolidated Fixed Charge Ratio' shall mean for the Lessee and its Subsidiaries on a consolidated basis at any date, the quotient of
(a) the sum of (i) Consolidated Net Income, plus (ii) Consolidated Interest Expense, plus (iii) Consolidated Income Tax Expense, plus (iv) Consolidated Lease Rental
Expense, plus (v) depreciation expense, divided by (b) the sum of (x) CMLTD, plus (y) Consolidated Interest Expense plus (z) Consolidated Lease Rental Expense. For
purposes of determining the Consolidated Fixed Charge Ratio (i) as of any date of determination, each of the items utilized in the formula set forth in the previous sentence shall be based on
the results of the two fiscal quarters ending on the date of determination, except for CMLTD which shall be determined as of the most recently completed fiscal quarter for which financial results are
available; (ii) for the Lessee's fiscal quarter ending September 30, 2001, in calculating Consolidated Net Income: (A) the Lessee may exclude up to $14,700,000 in
non-recurring non-cash charges for excess and obsolete inventory; (B) the Lessee may exclude up 

 
to $2,100,000 in non-recurring cash acquisition charges relating to the acquisition of SANavigator, Inc.; and (C) the Lessee may exclude up to $7,200,000 in
non-recurring non-cash charges for the write-off of in-process research and development in connection with the acquisition of SANavigator, Inc.;
and (iii) for the Lessee's fiscal quarters ending December 31, 2001 and March 31, 2002, in calculating Consolidated Net Income, the Lessee may exclude up to $1,100,000 in
non-recurring non-cash acquisition charges relating to the acquisition of SANavigator, Inc., in each quarter." 

    2.  Amendment to the Participation Agreement. Subject to satisfaction of the conditions set forth in  Section 5 below, Section 9.5(g) of the Participation
Agreement is hereby amended by deleting the same in its entirety and replacing it
with the following: 

    "(g) Minimum Consolidated Fixed Charge Ratio. The Lessee shall maintain at all times a minimum Consolidated Fixed Charge Ratio
at least equal to the following for the periods indicated below, such ratio to be measured at the end of each fiscal quarter: 

	Period
 
	 	Ratio

	Closing Date through 9/30/01	 	2.0:1.0
	10/01/01 through 3/31/02	 	1.75:1.0
	4/01/02 through 12/31/02	 	2.0:1.0
	1/01/03 through 12/31/03	 	2.5:1.0
	Thereafter	 	3.0:1.0

    3.  Amendment to Exhibit K to the Participation Agreement. Subject to satisfaction of the conditions set forth in  Section 5 below, Exhibit K to the
Participation Agreement is hereby amended by deleting Annex A thereto in its entirety and replacing it
with Annex A attached hereto. 

    4.  Representation and Warranties. The Lessee hereby represents and warrants to the Agent Lessor, the Lessor, the Lender
and the Agent that the following are true and correct on the date of this Amendment and that, after giving effect to the amendments set forth in Section 1  above, the following will be true and
correct on the Effective Date (as defined below): 

    (a) The
representations and warranties of the Lessee and the Construction Agent set forth in Sections 7.3 and 7.4 of the Participation Agreement are true and
correct in all material respects as if made on such date (except for representations and warranties expressly made as of a specified date, which shall be true and correct in all material respects as
of such date); 

    (b) No
Default or Event of Default has occurred and is continuing; and 

    (c) Each
of the Operative Agreements to which the Lessee or the Construction Agent is a party is in full force and effect as to such Person. 

    5.  Effective Date. The amendments effected by Sections 1, 2 and 3  above shall become effective as of the date of September 30, 2001 (the "Effective Date"), subject to receipt by
McGuireWoods LLP, counsel to the Agent and the Agent Lessor, of a copy of this Amendment duly executed by the Lessee, the Agent Lessor, the Lessor, the Lender and the Agent. 

    6.  Miscellaneous.

    (a) Except
as specifically waived above, the Participation Agreement and each of the Annex, Schedules and Exhibits thereto shall remain in full force and effect, and
the Participation Agreement is hereby ratified and confirmed in all respects. 

    (b) Section headings
in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other
purpose. 

    (c) This
Agreement may be executed in any number of separate counterparts, each of which shall collectively and separately constitute one agreement. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement. 

 
    (d) The Lessee agrees to pay the legal fees of McGuireWoods LLP, counsel to the Agent and the Agent Lessee, in connection with this Amendment upon presentation of an
invoice therefor. 

    7.  GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 

    IN
WITNESS WHEREOF, each party hereto has caused this Amendment to be duly executed and delivered by its proper and duly authorized officer as of the date first written above. 

	

 	
 	
MCDATA CORPORATION,

as Lessee and Construction Agent
	

 	
 	

By:	

/s/ JANET K. COOPER   

	 	 	Name:	Janet K. Cooper
	 	 	Title:	CFO
	

 	
 	
DEUTSCHE BANK AG, NEW YORK BRANCH, as Agent Lessor for the Lessors and as a Lessor
	

 	
 	

By:	

/s/ ROBERT F. MARTORANO, JR.   

	 	 	Name:	Robert F. Martorano, Jr.
	 	 	Title:	Managing Director
	

 	
 	

By:	

/s/ JOHN L. C. ULRICH   

	 	 	Name:	John L. C. Ulrich
	 	 	Title:	Assistant Vice President
	

 	
 	
DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCH, as a Lender and as Agent for the Lenders
	

 	
 	

By:	

/s/ ROBERT F. MARTORANO, JR.   

	 	 	Name:	Robert F. Martorano, Jr.
	 	 	Title:	Managing Director
	

 	
 	

By:	

/s/ JOHN L. C. ULRICH   

	 	 	Name:	John L. C. Ulrich
	 	 	Title:	Assistant Vice President

 
 

Annex A to Second Amendment to Participation Agreement    
  

    ANNEX A TO

COMPLIANCE CERTIFICATE 

FOR THE FISCAL QUARTER ENDING               ,     
  ($ in 000's) 

	 
	 	 
	 	 
	 	 
	 	Calculation
	 	Required

Ratio or Figure
	 
	1.	 	Consolidated Tangible Net Worth (i)-(ii)	 	 	 	 	 	 	 
	 	 	(i)	 	The sum of Consolidated Total Assets of the Lessee and its Subsidiaries;	 	$	 	 	 	 	 
	 	 	(ii)	 	The sum of:	 	$	 	 	 	 	 
	 	 	 	 	(i)	 	the Consolidated Total Liabilities of the Lessee and its Subsidiaries;	 	$	 	 	 	 	 
	 	 	 	 	(ii)	 	all Intangible Assets of Lessee and its Subsidiaries.	 	$	 	 	 	 	 
	 	 	Consolidated Tangible Net Worth	 	$	 	 	$	200,000,000	 
	2.	 	Consolidated Fixed Charge Ratio (i)/(ii)	 	 	 	 	 	 	 
	 	 	(a)	 	the sum of	 	 	 	 	 	 	 
	 	 	 	 	(i)	 	Consolidated Net Income(1)	 	$	 	 	 	 	 
	 	 	 	 	(ii)	 	Consolidated Interest Expense	 	$	 	 	 	 	 
	 	 	 	 	(iii)	 	Consolidated Income Tax Expense	 	$	 	 	 	 	 
	 	 	 	 	(iv)	 	Consolidated Depreciation Expense	 	$	 	 	 	 	 
	 	 	 	 	(v)	 	Consolidated Lease Rental Expense	 	$	 	 	 	 	 
	 	 	(b)	 	the sum of	 	 	 	 	 	 	 
	 	 	 	 	(i)	 	CMLTD	 	$	 	 	 	 	 
	 	 	 	 	(ii)	 	Consolidated Interest Expense	 	$	 	 	 	 	 
	 	 	 	 	(iii)	 	Consolidated Lease Rental Expense	 	$	 	 	 	 	 
	 	 	The Ratio	 	 	   to   	 	 	2.0 to 1.0	(2)
	 	 	 	 	 	 	 	 	 	   to   	 	 	1.75 to 1.0	(3)
	 	 	 	 	 	 	 	 	 	   to   	 	 	2.0 to 1.0	(4)
	 	 	 	 	 	 	 	 	 	   to   	 	 	2.5 to 1.0	(5)
	 	 	 	 	 	 	 	 	 	   to   	 	 	3.0 to 1.0	(6)

	(1)
	Specify
the amount of each of the following non-recurring, non-cash (exception (B) below) charges being excluded from the calculation of Consolidated Net Income for the
applicable quarter: (i) for the fiscal quarter ending September 30, 2001, (A) $         for excess and obsolete inventory (may not exceed $14,700,000);
(B) $         for cash acquisition charges relating to the acquisition of SANavigator, Inc. (may not exceed $2,100,000); and (C) $         for
in-process research and
development in connection with the acquisition of SANavigator, Inc. (may not exceed $7,200,000); and (ii) for the fiscal quarters ending December 31, 2001 and March 31,
2002, $         for acquisition charges relating to the acquisition of SANavigator, Inc. (may not exceed $1,100,000 in each quarter).

	(2)
	Applicable
for reporting periods from the Closing Date through 9/30/01.

	(3)
	Applicable
for reporting periods from 10/01/01 through 3/31/02.

	(4)
	Applicable
for reporting periods from 4/01/02 to 12/31/02.

	(5)
	Applicable
for reporting periods from 1/01/03 through 12/31/03.

	(6)
	Applicable
for reporting periods from 1/01/04 forward. 

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Exhibit 10.19.4

MCDATA SYNTHETIC LEASE SECOND AMENDMENT TO PARTICIPATION AGREEMENT

Annex A to Second Amendment to Participation AgreementPrepared by MERRILL CORPORATION

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Exhibit 10.21.1    
  

 
 

2001 McDATA EQUITY INCENTIVE PLAN
  (An amendment and Restatement of the 1997 Stock Option Plan)
  Adopted October 1, 1997
  Amended May 18, 2001
  Ratified by Shareholders August 1, 2001

Termination Date: September 30, 2007    
  

1.  PURPOSES  

	(a)
	Amendment and Restatement of 1997 Stock Option Plan. The Plan initially was established as the 1997 Stock Option Plan adopted
October 1, 1997 and amended on July 13, 2000 (the "Initial Plan"). The Initial Plan hereby is amended and restated in its entirety as the 2001 McDATA Equity Incentive Plan, effective as
of the date of stockholder approval of this amendment and restatement. Terms of the Initial Plan shall remain in effect and apply to all Options granted pursuant to the Initial Plan.

	(b)
	Eligible Stock Award Recipients. The persons eligible to receive Stock Awards are the Employees, Directors and Consultants of the
Company and its Affiliates.

	(c)
	Available Stock Awards. The purpose of the Plan is to provide a means by which eligible recipients of Stock Awards may be given an
opportunity to benefit from increases in value of the Common Stock through the granting of the following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options,
(iii) stock bonuses and (iv) rights to acquire restricted stock. The Plan also provides for non-discretionary grants of Nonstatutory Stock Options to Non-Employee
Directors of the Company.

	(d)
	General Purpose. The Company, by means of the Plan, seeks to retain the services of the group of persons eligible to receive Stock
Awards, to secure and retain the services of new members of this group and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates. 

2.  DEFINITIONS  

	(a)
	"Affiliate" means any parent corporation or subsidiary corporation of the Company, whether now or hereafter existing, as those terms
are defined in Sections 424(e) and (f), respectively, of the Code.

	(b)
	"Board" means the Board of Directors of the Company.

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

	(d)
	"Committee" means a committee of one or more members of the Board appointed by the Board in accordance with subsection 3(c).

	(e)
	"Common Stock" means the Class B common stock of the Company.

	(f)
	"Company" means McDATA Corporation, a Delaware corporation.

	(g)
	"Consultant" means any person, including an advisor, engaged by the Company or an Affiliate to render consulting or advisory services
and who is compensated for such services. However, the term "Consultant" shall not include either Directors who are not compensated by the Company for their services as Directors or Directors who are
merely paid a director's fee by the Company for their services as Directors.

	(h)
	"Continuous Service" means that the Participant's service with the Company or an Affiliate, whether as an Employee, Director or
Consultant, is not interrupted or terminated. The Participant's Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders
service to the Company or an Affiliate 

 

as
an Employee, Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant's Continuous
Service. For example, a change in status from an Employee of the Company to a Consultant of an Affiliate or a Director will not constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party's sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party,
including sick leave, military leave or any other personal leave. 

	(i)
	"Covered Employee" means the chief executive officer and the four (4) other highest compensated officers of the Company for
whom total compensation is required to be reported to stockholders under the Exchange Act, as determined for purposes of Section 162(m) of the Code.

	(j)
	"Director" means a member of the Board.

	(k)
	"Disability" means the permanent and total disability of a person within the meaning of Section 22(e)(3) of the Code.

	(l)
	"Employee" means any person employed by the Company or an Affiliate. Mere service as a Director or payment of a director's fee by
the Company or an Affiliate shall not be sufficient to constitute "employment" by the Company or an Affiliate.

	(m)
	"Exchange Act" means the Securities Exchange Act of 1934, as amended.

	(n)
	"Fair Market Value" means, as of any date, the value of the Common Stock determined as follows:

	(i)
	If
the Common Stock is listed on any established stock exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair
Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market
with the greatest volume of trading in the Common Stock) on the last market trading day prior to the day of determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable.

	(ii)
	In
the absence of such markets for the Common Stock, the Fair Market Value shall be determined in good faith by the Board. 

	(o)
	"Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of
the Code and the regulations promulgated thereunder.

	(p)
	"Non-Employee Director" means a Director who either (i) is not a current Employee or Officer of the Company or its
parent or a subsidiary, does not receive compensation (directly or indirectly) from the Company or its parent or a subsidiary for services rendered as a consultant or in any capacity other than as a
Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
("Regulation S-K")), does not possess an interest in any other transaction as to which disclosure would be required under Item 404(a) of Regulation S-K and
is not engaged in a business relationship as to which disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
"non-employee director" for purposes of Rule 16b-3.

	(q)
	"Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock Option. 

 

	(r)
	"Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules
and regulations promulgated thereunder.

	(s)
	"Option" means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the Plan.

	(t)
	"Option Agreement" means a written agreement between the Company and an Optionholder evidencing the terms and conditions of an
individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan.

	(u)
	"Optionholder" means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.

	(v)
	"Outside Director" means a Director who either (i) is not a current employee of the Company or an "affiliated corporation"
(within the meaning of Treasury Regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an "affiliated corporation" receiving compensation for
prior services (other than benefits under a tax qualified pension plan), was not an officer of the Company or an "affiliated corporation" at any time and is not currently receiving direct
or indirect remuneration from the Company or an "affiliated corporation" for services in any capacity other than as a Director or (ii) is otherwise considered an "outside director" for purposes
of Section 162(m) of the Code.

	(w)
	"Participant" means a person to whom a Stock Award is granted pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.

	(x)
	"Plan" means this McDATA Corporation 2001 Equity Incentive Plan.

	(y)
	"Restricted Stock Purchase Agreement" means a written agreement between the Company and a holder of restricted stock evidencing the
terms and conditions of an individual restricted stock grant. Each Restricted Stock Purchase Agreement shall be subject to the terms and conditions of the Plan.

	(z)
	"Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act or any successor to
Rule 16b-3, as in effect from time to time.

	(aa)
	"Securities Act" means the Securities Act of 1933, as amended.

	(bb)
	"Stock Award" means any right granted under the Plan, including an Option, a stock bonus and a right to acquire restricted stock.

	(cc)
	"Stock Award Agreement" means a written agreement between the Company and a holder of a Stock Award evidencing the terms and
conditions of an individual Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan.

	(dd)
	"Stock Bonus Agreement" means a written agreement between the Company and a holder of a stock bonus evidencing the terms and
conditions of an individual stock bonus grant. Each Stock Bonus Agreement shall be subject to the terms and conditions of the Plan.

	(ee)
	"Ten Percent Stockholder" means a person who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock
possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any of its Affiliates. 

3.  ADMINISTRATION  

	(a)
	Administration by Board. The Board shall administer the Plan unless and until the Board delegates administration to a Committee, as
provided in subsection 3(c). Whether or not the Board has delegated administration, the Board shall have the final power to determine all questions of policy and expediency that may arise in
the administration of the Plan. 

 

	(b)
	Powers of Board. The Board (or the Committee) shall have the power, subject to, and within the limitations of, the express provisions
of the Plan:

	(i)
	To
determine which of the persons eligible under the Plan shall be granted Stock Awards; when and how each Stock Award shall be granted; what type
or combination of types of Stock Award shall be granted; the provisions of each Stock Award granted (which need not be identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of Common Stock with respect to which a Stock Award shall be granted to each such person.

	(ii)
	To
designate from time to time which Affiliates of the Company shall be eligible to participate in the Plan.

	(iii)
	To
construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and regulations for its
administration. The Board (or the Committee), in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective.

	(iv)
	To
amend the Plan or a Stock Award as provided in Section 12.

	(v)
	Generally,
to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company
and its Affiliates that are not in conflict with the provisions of the Plan. 

	(c)
	Delegation to Committee. In the discretion of the Board (or the Committee), a Committee may consist solely of two or more Outside
Directors, in accordance with Section 162(m) of the Code, and/or solely of two or more Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of
such authority, the Board or the Committee may (1) delegate to a subcommittee of one or more members of the Board who are not Outside Directors the authority to grant Stock Awards to eligible
persons who are either (a) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income resulting from such Stock Award or (b) not persons
with respect to whom the Company wishes to comply with Section 162(m) of the Code and/or) (2) delegate to a subcommittee of one or more members of the Board who are not
Non-Employee Directors the authority to grant Stock Awards to eligible persons who are not then subject to Section 16 of the Exchange Act. The Board and Compensation Committee of
the Company have created a Compensation Subcommittee consisting of the Chief Executive Officer to make grants of Stock Awards consistent with the provisions of this subsection. 

4.  SHARES SUBJECT TO THE PLAN  

	(a)
	Share Reserve. As of the effective date of this restatement and this Section 4 (b) and subject to the provisions of
Section 11 relating to adjustments upon changes in Common Stock, the Common Stock that may be issued pursuant to Stock Awards shall not exceed in the aggregate 24 million (24,000,000)
shares of Common Stock.

	(b)
	Reversion of Shares to the Share Reserve. If any Stock Award shall for any reason expire or otherwise terminate, in whole or in part,
without having been exercised in full, the shares of Common Stock not acquired under such Stock Award shall revert to and again become available for issuance under the Plan.

	(c)
	Source of Shares. The shares of Common Stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or
otherwise. 

 

5.  ELIGIBILITY  

	(a)
	Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only to Employees. Stock Awards other than Incentive
Stock Options may be granted to Employees, Directors and Consultants.

	(b)
	Ten Percent Stockholders. A Ten Percent Stockholder shall not be granted an Incentive Stock Option unless the exercise price of such
Option is at least one hundred ten percent (110%) of the Fair Market Value of the Common Stock at the date of grant and the Option is not exercisable after the expiration of five (5) years from
the date of grant.

	(c)
	Section 162(m) Limitation. Subject to the provisions of Section 11 relating to adjustments upon changes in the shares
of Common Stock, no Employee shall be eligible to be granted Options covering more than four million eight hundred thousand (4,800,000) shares of Common Stock during any calendar year.

	(d)
	Consultants.

	(i)
	A
Consultant shall not be eligible for the grant of a Stock Award if, at the time of grant, a Form S-8 Registration Statement
under the Securities Act ("Form S-8") is not available to register either the offer or the sale of the Company's securities to such Consultant because of the nature of the services
that the Consultant is providing to the Company, or because the Consultant is not a natural person, or as otherwise provided by the rules governing the use of Form S-8, unless the
Company determines both (i) that such grant (A) shall be registered in another manner under the Securities Act (e.g., on a
Form S-3 Registration Statement) or (B) does not require registration under the Securities Act in order to comply with the requirements of the Securities Act, if applicable,
and (ii) that such grant complies with the securities laws of all other relevant jurisdictions.

	(ii)
	Form S-8
generally is available to consultants and advisors only if (1) they are natural persons; (2) they provide
bona fide services to the issuer, its parents, its majority-owned subsidiaries or (for Rule 701 purposes only) majority-owned subsidiaries of the issuer's parent; and (3) the services
are not in connection with the offer or sale of securities in a capital-raising transaction, and do not directly or indirectly promote or maintain a market for the issuer's securities. 

6.  OPTION PROVISIONS  

Each
Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. All Options shall be separately designated Incentive Stock Options or Nonstatutory
Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for shares of Common Stock purchased on exercise of each type of Option. The
provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the
following provisions: 

	(a)
	Term. No Option shall be exercisable after the expiration of ten (10) years from the date it was granted.

	(b)
	Exercise Price of an Incentive Stock Option. The exercise price of each Incentive Stock Option shall be not less than one hundred
percent (100%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted.

	(c)
	Exercise Price of a Nonstatutory Stock Option. The exercise price of each Nonstatutory Stock Option shall be not less than
eighty-five percent (85%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted. 

 

	(d)
	Consideration. The purchase price of Common Stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable
statutes and regulations, either (i) in cash at the time the Option is exercised or (ii) at the discretion of the Board at the time of the grant of the Option (or subsequently in the
case of a Nonstatutory Stock Option) (1) by delivery to the Company of other Common Stock, (2) according to a deferred payment or other similar arrangement with the Optionholder or
(3) in any other form of legal consideration that may be acceptable to the Board; provided, however, that at any time that the Company is incorporated in Delaware, payment of the Common Stock's
"par value," as defined in the Delaware General Corporation Law, shall not be made by deferred payment. 

In
the case of any deferred payment arrangement, interest shall be compounded at least annually and shall be charged at the minimum rate of interest necessary to avoid the treatment as interest, under
any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement. 

	(e)
	Transferability of an Incentive Stock Option. An Incentive Stock Option shall not be transferable except by will or by the laws of
descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to
the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.

	(f)
	Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock Option shall be transferable to the extent provided in the
Option Agreement, as the Board or the Committee shall determine in its sole discretion, or, upon the approval of the Committee or its designee, transferred to the spouse, children, lineal ancestors
and lineal descendants of the Option holder (or to a trust created solely for the benefit of the Option holder and the foregoing persons) or to an organization exempt from taxation pursuant to
Section 501(c)(3) of the Code or to which tax deductible charitable contributions may be made under Section 170 of the Code (excluding such organizations classified as private
foundations under applicable regulations and rulings). If the Nonstatutory Stock Option does not provide for transferability, then the Nonstatutory Stock Option shall not be transferable except by
will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by
delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise
the Option.

	(g)
	Vesting Generally. The total number of shares of Common Stock subject to an Option may, but need not, vest and therefore become
exercisable in periodic installments that may, but need not, be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on
performance or other criteria) as the Board may deem appropriate. The vesting provisions of individual Options may vary. The provisions of this subsection 6(g) are subject to any Option
provisions governing the minimum number of shares of Common Stock as to which an Option may be exercised. 

  

	(h)
	Termination of Continuous Service. In the event an Optionholder's Continuous Service terminates (other than upon the Optionholder's
death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination) but only within such
period of time ending on the earlier of (i) the date three (3) months following the termination of the Optionholder's Continuous Service (or such longer or shorter period specified in
the Option Agreement or as determined by the Board or the Committee), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the
Optionholder does not exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate.

	(i)
	Extension of Termination Date. An Optionholder's Option Agreement may also provide that if the exercise of the Option following the
termination of the Optionholder's Continuous Service (other than upon the Optionholder's death or Disability) would be prohibited at any time solely because the issuance of shares of Common Stock
would violate the registration requirements under the Securities Act, then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in
subsection 6(a) or (ii) the expiration of a period of three (3) months after the termination of the Optionholder's Continuous Service during which the exercise of the
Option would not be in violation of such registration requirements.

	(j)
	Disability of Optionholder. In the event that an Optionholder's Continuous Service terminates as a result of the Optionholder's
Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination), but only within such period of
time ending on the earlier of (i) the date twelve (12) months following such termination (or such longer or shorter period specified in the Option Agreement) or (ii) the
expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified herein, the Option
shall terminate.

	(k)
	Death of Optionholder. In the event (i) an Optionholder's Continuous Service terminates as a result of the Optionholder's
death or (ii) the Optionholder dies within the period (if any) specified in the Option Agreement after the termination of the Optionholder's Continuous Service for a reason other than death,
then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder's estate, by a person who acquired the right to
exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionholder's death pursuant to subsection 6(e) or 6(f), but only within the
period ending on the earlier of (1) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Option Agreement) or (2) the
expiration of the term of such Option as set forth in the Option Agreement. If, after death, the Option is not exercised within the time specified herein, the Option shall terminate.

	(l)
	Early Exercise. The Option may, but need not, include a provision whereby the Optionholder may elect at any time before the
Optionholder's Continuous Service terminates to exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior to the full vesting of the Option. Any unvested
shares of Common Stock so purchased may be subject to a repurchase option in favor of the Company or to any other restriction the Board determines to be appropriate. 

 

7.  PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS  

	(a)
	Stock Bonus Awards. Each Stock Bonus Agreement shall be in such form and shall contain such terms and conditions as the Board (or
Committee) shall deem appropriate. The terms and conditions of Stock Bonus Agreements may change from time to time, and the terms and conditions of separate Stock Bonus Agreements need not be
identical, but each Stock Bonus Agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:

	(i)
	Consideration. A stock bonus may be awarded in consideration for past services actually rendered to
the Company or an Affiliate for its benefit.

	(ii)
	Vesting. Shares of Common Stock awarded under the Stock Bonus Agreement may, but need not, be
subject to a share repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board.

	(iii)
	Termination of Participant's Continuous Service. In the event a Participant's Continuous Service
terminates, the Company may reacquire any or all of the shares of Common Stock held by the Participant which have not vested as of the date of termination under the terms of the Stock Bonus Agreement.

	(iv)
	Transferability. Rights to acquire shares of Common Stock under the Stock Bonus Agreement shall be
transferable by the Participant only upon such terms and conditions as are set forth in the Stock Bonus Agreement, as the Board shall determine in its discretion, so long as Common Stock awarded under
the Stock Bonus Agreement remains subject to the terms of the Stock Bonus Agreement. 

	(b)
	Restricted Stock Awards. Each Restricted Stock Purchase Agreement shall be in such form and shall contain such terms and conditions
as the Board (or Committee) shall deem appropriate. The terms and conditions of the Restricted Stock Purchase Agreements may change from time to time, and the terms and conditions of separate
Restricted Stock Purchase Agreements need not be identical, but each Restricted Stock Purchase Agreement shall include (through incorporation of provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:

	(i)
	Purchase Price. The purchase price under each Restricted Stock Purchase Agreement shall be such
amount as the Board shall determine and designate in such Restricted Stock Purchase Agreement. The purchase price shall not be less than eighty-five percent (85%) of the Common Stock's
Fair Market Value on the date such award is made or at the time the purchase is consummated.

	(ii)
	Consideration. The purchase price of Common Stock acquired pursuant to the Restricted Stock
Purchase Agreement shall be paid either: (1) in cash at the time of purchase; (2) at the discretion of the Board, according to a deferred payment or other similar arrangement with the
Participant; or (3) in any other form of legal consideration that may be acceptable to the Board in its discretion; provided, however, that at any time that the Company is incorporated in
Delaware, then payment of the Common Stock's "par value," as defined in the Delaware General Corporation Law, shall not be made by deferred payment.

	(iii)
	Vesting. Shares of Common Stock acquired under the Restricted Stock Purchase Agreement may, but
need not, be subject to a share repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board.

	(iv)
	Termination of Participant's Continuous Service. In the event a Participant's Continuous Service
terminates, the Company may repurchase or otherwise reacquire any or all of the 

 

shares
of Common Stock held by the Participant which have not vested as of the date of termination under the terms of the Restricted Stock Purchase Agreement. 

	(v)
	Transferability. Rights to acquire shares of Common Stock under the Restricted Stock Purchase
Agreement shall be transferable by the Participant only upon such terms and conditions as are set forth in the Restricted Stock Purchase Agreement, as the Board shall determine in its discretion, so
long as Common Stock awarded under the Restricted Stock Purchase Agreement remains subject to the terms of the Restricted Stock Purchase Agreement. 

	(c)
	Limit on Issuance of Restricted Stock and Stock Bonus Awards. The number of shares of restricted stock and stock bonuses issuable
under the 2001 Plan may not exceed ten percent (10%) of all shares issuable under the 2001 Plan (or 2.4 million shares). 

8.  COVENANTS OF THE COMPANY  

	(a)
	Availability of Shares. During the terms of the Stock Awards, the Company shall keep available at all times the number of shares of
Common Stock required to satisfy such Stock Awards.

	(b)
	Securities Law Compliance. The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the
Plan such authority as may be required to grant Stock Awards and sell shares of Common Stock upon exercise of the Stock Awards; provided, however, that this undertaking shall not require the Company
to register under the Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved
from any liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and until such authority is obtained. 

9.  USE OF PROCEEDS FROM STOCK  

Proceeds
from the sale of Common Stock pursuant to Stock Awards shall constitute general funds of the Company. 

10. MISCELLANEOUS  

	(a)
	Acceleration of Exercisability and Vesting. The Board shall have the power to accelerate the time at which a Stock Award may first be
exercised or the time during which a Stock Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Stock Award stating the time at which it may first be
exercised or the time during which it will vest.

	(b)
	Stockholder Rights. No Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any
shares of Common Stock subject to such Stock Award unless and until such Participant has satisfied all requirements for exercise of the Stock Award pursuant to its terms.

	(c)
	No Employment or other Service Rights. Nothing in the Plan or any instrument executed or Stock Award granted pursuant thereto shall
confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Stock Award was granted or shall affect the right of the Company or an
Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant's
agreement with the Company or 

 

an
Affiliate or (iii) the service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or
the Affiliate is incorporated, as the case may be. 

	(d)
	Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of grant) of
Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and its Affiliates) exceeds
one hundred thousand dollars ($100,000), the Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options.

	(e)
	Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any Stock
Award, (i) to give written assurances satisfactory to the Company as to the Participant's knowledge and experience in financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock
subject to the Stock Award for the Participant's own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances
given pursuant to such requirements, shall be inoperative if (iii) the issuance of the shares of Common Stock upon the exercise or acquisition of Common Stock under the Stock Award has been
registered under a then currently effective registration statement under the Securities Act or (iv) as to any particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock.

	(f)
	Withholding Obligations. To the extent provided by the terms of a Stock Award Agreement, the Participant may satisfy any federal,
state or local tax withholding obligation relating to the exercise or acquisition of Common Stock under a Stock Award by any of the following means (in addition to the Company's right to withhold from
any compensation paid to the Participant by the Company) or by a combination of such means: (i) tendering a cash payment; (ii) authorizing the Company to withhold shares of Common Stock
from the shares of Common Stock otherwise issuable to the participant as a result of the exercise or acquisition of Common Stock under the Stock Award in an amount not to exceed the minimum amount of
tax required to be withheld by law; or (iii) delivering to the Company owned and unencumbered shares of Common Stock.

	(g)
	Stock Awards. Stock Awards may be issued for all lawful purposes, including but not limited to retention, recruitment and
compensation purposes. Further, the Board or Committee may, in its discretion, establish (or modify) its annual Stock Awards grant program for Participants (including Non-Employee
Directors). 

11. ADJUSTMENTS UPON CHANGES IN STOCK  

	(a)
	Capitalization Adjustments. If any change is made in the Common Stock subject to the Plan, or subject to any Stock Award, without the
receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split,
liquidating dividend, combination of shares, 

 

exchange
of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan will be appropriately adjusted in the class(es) and maximum
number of securities subject to the Plan pursuant to subsection 4(a) and the maximum number of securities subject to award to any person pursuant to subsection 5(c), and the
outstanding Stock Awards will be appropriately adjusted in the class(es) and number of securities and price per share of Common Stock subject to such outstanding Stock Awards. The Board shall make
such adjustments, and its determination shall be final, binding and conclusive. (The conversion of any convertible securities of the Company shall not be treated as a transaction that does not involve
the receipt of consideration by the Company.) 

	(b)
	Change in Control. In the event of: (1) a dissolution, liquidation, or sale of all or substantially all of the assets of the
Company; (2) a merger or consolidation in which the Company is not the surviving corporation; or (3) a reverse merger in which the Company is the surviving corporation but the shares of
the Company's Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, then:
(i) any surviving or acquiring corporation shall assume any Stock Awards outstanding under the Plan or shall substitute similar stock awards (including an award to acquire the same
consideration paid to the stockholders in the transaction described in this subsection 11(b) for those outstanding under the Plan, or (ii) in the event any surviving or acquiring
corporation refuses to assume such Stock Awards or to substitute similar stock awards for those outstanding under the Plan, (a) with respect to stock awards held by persons then performing
services as employees, consultants, or directors, the vesting of such Stock Awards and the time during which such Stock Awards may be exercised shall be accelerated prior to such event and the Stock
Awards terminated if not exercised after such acceleration and at or prior to such event. 

12. AMENDMENT OF THE PLAN AND STOCK AWARDS  

	(a)
	Amendment of Plan. The Board at any time, and from time to time, may amend the Plan. However, except as provided in Section 11
relating to adjustments upon changes in Common Stock and except as to minor amendments to benefit the administration of the Plan, to take account of a change in legislation or maintain favorable tax,
exchange control or regulatory treatment for Participants or the Company and its Affiliates, no amendment shall be effective unless approved by the stockholders of the Company to the extent
stockholder approval is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3 and any Nasdaq or applicable securities exchange listing requirements.

	(b)
	Stockholder Approval. The Board may, in its sole discretion, submit any other amendment to the Plan for stockholder approval,
including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of compensation paid to certain executive officers.

	(c)
	Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or
advisable to provide eligible Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock
Options and/or to bring the Plan and/or Incentive Stock Options granted under it into compliance therewith.

	(d)
	No Impairment of Rights. Rights and obligations under any Stock Award granted before amendment of the Plan shall not be impaired by
any amendment of the Plan, except with the consent of the person to whom such Stock Awards were granted, or except as necessary to 

  
comply with any laws or governmental regulations, or except as necessary to ensure that the Plan and/or Stock Awards granted under the Plan comply with the requirements of Section 422 of the
Code. 

13. TERMINATION OR SUSPENSION OF THE PLAN  

	(a)
	Plan Term. The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate on
September 30, 2007. No Stock Awards may be granted under the Plan while the Plan is suspended or after it is terminated.

	(b)
	No Impairment of Rights. Suspension or termination of the Plan shall not impair rights and obligations under any Stock Award granted
while the Plan is in effect except with the written consent of the Participant. 

14. EFFECTIVE DATE OF PLAN  

The
Plan shall become effective as determined by the Board, but no Stock Award shall be exercised (or, in the case of a stock bonus, shall be granted) unless and until the Plan has been approved by
the stockholders of the Company, which approval shall be within twelve (12) months before or after the date the Plan is adopted by the Board. 

15. CHOICE OF LAW  

The
law of the State of Delaware shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to such state's conflict of laws rules. 

QuickLinks

Exhibit 10.21.1

2001 McDATA EQUITY INCENTIVE PLAN (An amendment and Restatement of the 1997 Stock Option Plan) Adopted October 1, 1997 Amended May 18, 2001 Ratified by Shareholders August 1, 2001 Termination Date: September 30,
2007

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