Document:

exv10w2

 

Exhibit 10.2

BROCADE COMMUNICATIONS SYSTEMS, INC.

FORM OF AMENDED AND RESTATED

CHANGE OF CONTROL RETENTION AGREEMENT

     This Amended and Restated Change of Control Retention Agreement (the “Agreement”) is entered
into as of May 11, 2007 (the “Effective Date”) by and between Brocade Communications Systems, Inc.
(the “Company”) and                      (“Executive”).

RECITALS

     A. It is expected that the Company from time to time will consider the possibility of a Change
of Control. The Board of Directors of the Company (the “Board”) recognizes that such consideration
can be a distraction to the Executive and can cause the Executive to consider alternative
employment opportunities.

     B. The Board believes that it is in the best interests of the Company and its shareholders to
provide the Executive with an incentive to continue his or her employment and to maximize the value
of the Company upon a Change of Control for the benefit of its shareholders.

     C. In order to provide the Executive with enhanced financial security and sufficient
encouragement to remain with the Company notwithstanding the possibility of a Change of Control,
the Board believes that it is imperative to provide the Executive with certain severance benefits
upon the Executive’s termination of employment.

     D. The Company and Executive wish to amend and restate that certain Change of Control
Retention Agreement dated as of [___].

AGREEMENT

     In consideration of the mutual covenants herein contained and the continued employment of
Executive by the Company, the parties agree as follows:

     1. At-Will Employment. Executive and the Company agree that Executive’s employment
with the Company is and shall continue to be “at-will” employment. Executive and the Company
acknowledge that this employment relationship may be terminated at any time, upon written notice to
the other party, with or without good cause or for any or no cause, at the option either of the
Company or Executive. However, as described in this Agreement, Executive may be entitled to
severance benefits depending upon the circumstances of Executive’s termination of employment.

     2. Severance Benefits.

          (a) Termination of Employment. In the event Executive’s employment with the Company
terminates for any reason during the Term or any duly authorized extension thereof (as set forth in
Section 9 below), Executive will be entitled to any (i) unpaid Base Salary accrued up to the
effective date of termination, (ii) unpaid, but earned and accrued annual incentive for any
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fiscal year as of his termination of employment, (iii) benefits or compensation as provided
under the terms of any employee benefit and compensation agreements or plans applicable to
Executive, and (iv) unreimbursed business expenses required to be reimbursed to Executive.

          (b) Termination Without Cause not in Connection with a Change of Control. If
Executive’s employment is terminated by the Company without Cause during the Term or any duly
authorized extension thereof (as set forth in Section 9 below), and such termination does not occur
in Connection with a Change of Control, then, subject to Sections 3, 5 and 6, Executive will
receive: (i) six (6) months of Executive’s base salary, as in effect immediately prior to the date
of termination, payable in a lump sum payment within thirty (30) days of the Release Effective
Date, (ii) 50% of Executive’s target cash bonus under the Company’s Senior Leadership Plan for the
fiscal year in which Executive’s termination occurs, payable in a lump sum payment within thirty
(30) days of the Release Effective Date, and (iii) reimbursement for premiums paid for medical,
dental and vision benefits (the “COBRA Benefits”) for Executive and Executive’s eligible dependents
under the Company’s benefit plans for six (6) months following Executive’s termination of
employment, payable when such premiums are due, or, at the Company’s sole discretion, in a one-time
lump sum payment when such premiums are first due (provided Executive and Executive’s eligible
dependents validly elect to continue coverage under applicable law).

          (c) Termination Without Cause or Resignation for Good Reason in Connection with a Change
of Control. If Executive’s employment is terminated by the Company without Cause or by
Executive for Good Reason, in either case during the Term or any duly authorized extension thereof
(as set forth in Section 9 below), and the termination is in Connection with a Change of Control,
then, subject to Sections 3, 5 and 6, Executive will receive: (i) twelve (12) months of Executive’s
base salary, as in effect immediately prior to the date of termination, payable in a lump sum
payment within thirty (30) days of the Release Effective Date, (ii) 100% of Executive’s target cash
bonus under the Company’s Senior Leadership Plan for the fiscal year in which Executive’s
termination occurs, payable in a lump sum payment within thirty (30) days of the Release Effective
Date, (iii) reimbursement for premiums paid for COBRA Benefits for Executive and Executive’s
eligible dependents under the Company’s benefit plans for twelve (12) months following Executive’s
termination of employment, payable when such premiums are due, or, at the Company’s sole
discretion, in a one-time lump sum payment when such premiums are first due (provided Executive and
Executive’s eligible dependents validly elect to continue coverage under applicable law), and (iv)
full accelerated vesting with respect to Executive’s then outstanding, unvested equity awards that
were granted to Executive on or prior to the date hereof or during the Term (or any duly authorized
extension thereof). For purposes of clarification, any subsequent determination by the Board or
Compensation Committee of the Board to reduce the amount of acceleration following the term of this
Agreement shall not affect any grants of equity awards made prior to the expiration of such term
unless otherwise agreed to in writing by the Executive.

          (d) Voluntary Termination without Good Reason; Termination for Cause. If Executive’s
employment with the Company terminates voluntarily by Executive without Good Reason or is
terminated for Cause by the Company, then (i) all further vesting of Executive’s outstanding equity
awards will terminate immediately, (ii) all payments of compensation by the Company to Executive
hereunder will terminate immediately, and (iii) Executive will be eligible for severance benefits
only in accordance with the Company’s then established plans, programs, and practices.

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          (e) Termination due to Death or Disability. Notwithstanding anything to the contrary
in this Agreement, if Executive’s employment terminates by reason of death or Disability, then (i)
Executive’s outstanding equity awards will terminate in accordance with the terms and conditions of
the applicable award agreement(s); (ii) all payments of compensation by the Company to Executive
hereunder will terminate immediately, and (iii) Executive will be entitled to receive benefits only
in accordance with the Company’s then established plans, programs, and practices.

          (f) Sole Right to Severance. This Agreement is intended to represent Executive’s sole
entitlement to severance payments and benefits in connection with the termination of Executive’s
employment. To the extent Executive is entitled to receive severance or similar payments and/or
benefits under any other Company plan, program, agreement, policy, practice, or the like, severance
payments and benefits due to Executive under this Agreement will be so reduced, except where the
Company (as authorized by the Compensation Committee or Board) and Executive expressly agree in
writing that such additional benefits are intended to be in addition to (and not in lieu of) the
severance benefits under this Agreement.

     3. Conditions to Receipt of Severance; No Duty to Mitigate.

          (a) Separation Agreement and Release of Claims. The receipt of any severance pursuant
to Section 2 will be subject to Executive signing and not revoking a separation agreement and
release of claims in the form provided to Executive by the Company. No severance will be paid or
provided until the separation agreement and release agreement becomes effective (the “Release
Effective Date”).

          (b) Nondisparagement. During the term of Executive’s employment and for 12 months
thereafter, Executive will not knowingly disparage, criticize, or otherwise make any derogatory
statements regarding the Company, its directors, or its officers. The foregoing restrictions will
not apply to any statements that are made truthfully in response to a subpoena or other compulsory
legal process.

          (c) Other Requirements. Executive agrees to continue to comply with the terms of the
Company’s Employment, Confidential Information, Invention Assignment and Arbitration Agreement
entered into by Executive (the “Confidential Information Agreement”).

          (d) No Duty to Mitigate. Executive will not be required to mitigate the amount of any
payment contemplated by this Agreement, nor will any earnings that Executive may receive from any
other source reduce any such payment.

     4. Definitions.

          (a) Cause. For purposes of this Agreement, “Cause” means (i) Executive’s willful and
continued failure to perform the duties and responsibilities of his position that is not corrected
within a thirty (30) day correction period that begins upon delivery to Executive of a written
demand for performance from the Board that describes the basis for the Board’s belief that
Executive has not substantially performed his duties; (ii) any act of personal dishonesty taken by
Executive in connection with his responsibilities as an employee of the Company with the intention
or reasonable expectation that such may result in substantial personal enrichment of Executive;
(iii) Executive’s conviction of, or plea of nolo contendre to, a felony that the Board reasonably

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believes has had or will have a material detrimental effect on the Company’s reputation or
business, or (iv) Executive materially breaching Executive’s Confidential Information Agreement,
which breach is (if capable of cure) not cured within thirty (30) days after the Company delivers
written notice to Executive of the breach.

          (b) Change of Control. “Change of Control” shall mean the occurrence of any of the
following events:

               (i) the consummation by the Company of a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation;

               (ii) the consummation of the sale or disposition by the Company of all or substantially all of
the Company’s assets;

               (iii) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of the Company representing 50% or more of the
total voting power represented by the Company’s then outstanding voting securities; or

               (iv) a change in the composition of the Board, as a result of which fewer than a majority of
the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A)
are directors of the Company as of the date hereof, or (B) are elected, or nominated for election,
to the Board with the affirmative votes of at least a majority of those directors whose election or
nomination was not in connection with any transactions described in subsections (i), (ii), or (iii)
or in connection with an actual or threatened proxy contest relating to the election of directors
of the Company.

          (c) Disability. For purposes of this Agreement, Disability will have the same defined
meaning as in the Company’s long-term disability plan.

          (d) Good Reason. For purposes of this Agreement, “Good Reason” means the occurrence
of any of the following, without Executive’s consent: (i) a material reduction of Executive’s
duties, title, authority or responsibilities in effect immediately prior to a Change of Control;
(ii) a reduction in Executive’s base salary or target annual cash incentive compensation; (iii) the
failure of the Company to obtain the assumption of the Agreement by the successor, or (iv) the
Company requiring Executive to relocate his or her principal place of business or the Company
relocating its headquarters, in either case to a facility or location outside of a thirty-five (35)
mile radius from Executive’s current principal place of employment; provided, however, that
Executive only will have Good Reason if the Executive gives written notice to the Chief Executive
Officer of the Company of the event or circumstance constituting Good Reason specified in any of
the preceding clauses within ninety (90) days of its initial occurrence and such event or
circumstance is not cured within thirty (30) days after Executive gives such written notice to the
Board.

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Executive’s actions approving any of the foregoing changes (that otherwise may be considered
Good Reason) will be considered consent for the purposes of this Good Reason definition.

          (e) In Connection with a Change of Control. For purposes of this Agreement, a
termination of Executive’s employment with the Company is “in Connection with a Change of Control”
if Executive’s employment is terminated within thirty (30) days prior to, or twelve (12) months
following, a Change of Control.

     5. Excise Taxes. In the event that the benefits provided for in this Agreement
constitute “parachute payments” within the meaning of Section 280G of the Code and will be subject
to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Executive’s
severance benefits payable under the terms of this Agreement will be either

          (a) delivered in full, or

          (b) delivered as to such lesser extent which would result in no portion of such severance
benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account
the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by
Executive on an after-tax basis, of the greatest amount of severance benefits, notwithstanding that
all or some portion of such severance benefits may be taxable under Section 4999 of the Code.

     Unless the Company and Executive otherwise agree in writing, any determination required under
this Section 5 will be made in writing by the Company’s independent public accountants or another
nationally-recognized public accounting firm chosen by the Company (the “Accountants”), whose
determination will be conclusive and binding upon Executive and the Company for all purposes. For
purposes of making the calculations required by this Section 5, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Section 280G and 4999 of the Code. The Company and
Executive will furnish to the Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this Section 5. The Company will bear
all costs the Accountants may reasonably incur in connection with any calculations contemplated by
this Section 5.

     6. Section 409A.

          (a) Notwithstanding Sections 2 and 3 hereof, if Executive is a “specified employee” within the
meaning of Section 409A of the Code and the final regulations and any other guidance promulgated
thereunder (“Section 409A”) at the time of his termination, and the severance payable to Executive,
if any, pursuant to this Agreement, when considered together with any other severance payments or
separation benefits which are considered deferred compensation under Section 409A (together, the
“deferred compensation separation benefits”) will not and could under no circumstances, regardless
of when such termination occurs, be paid in full by March 15 of the year following Executive’s
termination, then only that portion of the severance payments (and any other deferred compensation
separation benefits) which does not exceed the Section 409A Limit (as defined above) may be made
within the first six (6) months following Executive’s termination of employment in accordance with
the payment schedule set forth in Sections 2 and 3 (or, with respect

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to other deferred compensation separation benefits, the payment schedule applicable to each
such payment or benefit).

          (b) Section 409A Limit. “Section 409A Limit” shall mean the lesser of two (2) times:
(i) Executive’s annualized compensation based upon the annual rate of pay paid to Executive during
the Company’s taxable year preceding the Company’s taxable year of Executive’s termination of
employment; or (ii) the maximum amount that may be taken into account under a qualified plan
pursuant to Section 401(a)(17) of the Internal Revenue Code of 1986, as amended (the “Code”) for
the year in which Executive’s employment is terminated.

          (c) Any portion of the severance payments or other deferred compensation separation benefits
in excess of the Section 409A Limit shall accrue and, to the extent such portion of the severance
payments or other deferred compensation separation benefits would otherwise have been payable
within the first six (6) months following Executive’s termination of employment, they will become
payable on the date that is six (6) months and one (1) day following the date of Executive’s
termination of employment.

          (d) All subsequent severance payments or other deferred compensation separation benefits, if
any, will be payable in accordance with the payment schedule applicable to each payment or benefit.

          (e) For these purposes, each severance payment is hereby designated as a separate payment and
will not collectively be treated as a single payment.

          (f) This provision is intended to comply with the requirements of Section 409A so that none of
the severance payments and benefits to be provided hereunder will be subject to the additional tax
imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. The
Company and Executive agree to work together in good faith to consider amendments to this Agreement
and to take such reasonable actions which are necessary, appropriate or desirable to avoid
imposition of any additional tax or income recognition prior to actual payment to Executive under
Section 409A.

     7. Assignment. This Agreement will be binding upon and inure to the benefit of (a)
the heirs, executors, and legal representatives of Executive upon Executive’s death, and (b) any
successor of the Company. Any such successor of the Company will be deemed substituted for the
Company under the terms of this Agreement for all purposes. For this purpose, “successor” means
any person, firm, corporation, or other business entity which at any time, whether by purchase,
merger, or otherwise, directly or indirectly acquires all or substantially all of the assets or
business of the Company. None of the rights of Executive to receive any form of compensation
payable pursuant to this Agreement may be assigned or transferred except by will or the laws of
descent and distribution. Any other attempted assignment, transfer, conveyance, or other
disposition of Executive’s right to compensation or other benefits will be null and void.

     8. Notices. All notices, requests, demands, and other communications called for
hereunder will be in writing and will be deemed given (a) on the date of delivery if delivered
personally, (b) one day after being sent overnight by a well established commercial overnight
service, or (c) four days after being mailed by registered or certified mail, return receipt
requested,

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prepaid and addressed to the parties or their successors at the following addresses, or at
such other addresses as the parties may later designate in writing:

If to the Company:

Attn: General Counsel

Brocade Communications Systems, Inc.

1745 Technology Drive

San Jose, CA 95110

If to Executive:

at the last residential address known by the Company.

     9. Term. The term of this Agreement (the “Term”) shall be five (5) years from the
date hereof and may be extended upon mutual written consent of the Executive and the Company (as
authorized by the Compensation Committee or Board); provided, however, the Term shall be
automatically extended without any further action if the Company has entered into a definitive
agreement regarding a Change of Control (a “Pending Transaction”) until (i) twelve (12) months
following the consummation of such Pending Transaction or (ii) such definitive agreement has
terminated pursuant to its terms without a Change of Control occurring. Notwithstanding the
foregoing, the acceleration provision set forth in Section 2(c)(iv) hereof with respect to equity
awards granted prior to the expiration of the Term (or any extension thereof) shall survive
expiration of the Term (and any duly authorized extension thereof).

     10. Severability. If any provision hereof becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable, or void, this Agreement will continue in full
force and effect without said provision.

     11. Arbitration. The Parties agree that any and all disputes arising out of the terms
of this Agreement, their interpretation, and any of the matters herein released, will be subject to
binding arbitration in Santa Clara County, California before the American Arbitration Association
under its National Rules for the Resolution of Employment Disputes, supplemented by the California
Rules of Civil Procedure. The Parties agree that the prevailing party in any arbitration will be
entitled to injunctive relief in any court of competent jurisdiction to enforce the arbitration
award. The Parties hereby agree to waive their right to have any dispute between them resolved in
a court of law by a judge or jury. This paragraph will not prevent either party from seeking
injunctive relief (or any other provisional remedy) from any court having jurisdiction over the
Parties and the subject matter of their dispute relating to Executive’s obligations under this
Agreement.

     12. Integration. This Agreement represents the entire agreement and understanding
between the parties as to the subject matter herein and supersedes all prior or contemporaneous
agreements whether written or oral, including any agreements that provide for severance benefits
and any agreements that provide for vesting acceleration of Executive’s outstanding equity awards
(except for any terms that provide for the accelerated vesting of Executive’s equity awards if they
are not assumed or substituted by a successor corporation and any terms that provide for more
favorable acceleration of vesting pursuant to outstanding equity awards under agreements entered

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into prior to the date hereof). No waiver, alteration, or modification of any of the
provisions of this Agreement will be binding unless in a writing that specifically references this
Section and is signed by duly authorized representatives of the parties hereto.

     13. Waiver of Breach. The waiver of a breach of any term or provision of this
Agreement, which must be in writing, will not operate as or be construed to be a waiver of any
other previous or subsequent breach of this Agreement.

     14. Headings. All captions and Section headings used in this Agreement are for
convenient reference only and do not form a part of this Agreement.

     15. Tax Withholding. All payments made pursuant to this Agreement will be subject to
withholding of applicable taxes.

     16. Governing Law. This Agreement will be governed by the laws of the State of
California (with the exception of its conflict of laws provisions).

     17. Acknowledgment. Executive acknowledges that he has had the opportunity to discuss
this matter with and obtain advice from his private attorney, has had sufficient time to, and has
carefully read and fully understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.

     18. Counterparts. This Agreement may be executed in counterparts, and each
counterpart will have the same force and effect as an original and will constitute an effective,
binding agreement on the part of each of the undersigned.

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     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the
Company by a duly authorized officer, as of the day and year written below.

COMPANY:

BROCADE COMMUNICATIONS SYSTEMS, INC.

	 	 	 	 	 	 	 	 	 
	Signature:

	 	 	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Print Name:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	EXECUTIVE:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Date:	 	 
	 	 	 	 	 	 	 
	[NAME]
	 	 	 	 	 	 	 	 

[SIGNATURE PAGE TO CHANGE OF CONTROL RETENTION AGREEMENT]

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Exhibit 10.3

BROCADE COMMUNICATIONS SYSTEMS, INC.

1999 STOCK PLAN

(as amended and restated on November 17, 2006)

     1. Purposes of the Plan. The purposes of this 1999 Stock Plan are:

	 	•	 	to attract and retain the best available personnel for positions of
substantial responsibility,
	 
	 	•	 	to provide additional incentive to Employees, Directors and Consultants, and
	 
	 	•	 	to promote the success of the Company’s business.

     Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options,
as determined by the Administrator at the time of grant. Stock Purchase Rights and Restricted
Stock Units may also be granted under the Plan.

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

          (a) “Administrator” means the Board or any of its Committees as shall be administering
the Plan, in accordance with Section 4 of the Plan.

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

          (c) “Award” means, individually or collectively, a grant under the Plan of Options,
Stock Purchase Rights or Restricted Stock Units and other stock or cash awards as the Administrator
may determine.

          (d) “Award Agreement” means the written or electronic agreement setting forth the
terms and provisions applicable to each Award granted under the Plan, including an Option
Agreement. The Award Agreement is subject to the terms and conditions of the Plan.

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

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

          (g) “Committee” means a committee of Directors appointed by the Board in accordance
with Section 4 of the Plan.

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

 

 

          (i) “Company” means Brocade Communications Systems, Inc., a Delaware corporation.

          (j) “Consultant” means any person, including an advisor, engaged by the Company or a
Parent or Subsidiary to render services to such entity.

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

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

          (m) “Employee” means any individual, including Officers and Directors, employed by the
Company or any Parent or Subsidiary of the Company. For purposes of the Plan, the employment
relationship shall be treated as continuing intact while the individual (i) is on any bona fide
leave of absence approved by the Company or (ii) transfers between locations of the Company or
between the Company, its Parent, any Subsidiary, or any successor. Neither service as a Director
nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by
the Company.

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

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

               (i) If the Common Stock is listed on any established stock exchange or a national market
system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of
The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or
the closing bid, if no sales were reported) as quoted on such exchange or system for the last
market trading day on the date of such determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable;

               (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between
the high bid and low asked prices for 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
Administrator deems reliable; or

               (iii) In the absence of an established market for the Common Stock, the Fair Market Value
shall be determined in good faith by the Administrator.

          (p) “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.

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

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          (r) “Notice of Grant” means a written or electronic notice evidencing certain terms
and conditions of an individual Award grant. The Notice of Grant is part of the Award Agreement.

          (s) “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.

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

          (u) “Option Agreement” means an agreement between the Company and a Participant
evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject
to the terms and conditions of the Plan.

          (v) “Option Exchange Program” means a program whereby outstanding Options are
surrendered in exchange for Options with a lower exercise price.

          (w) “Optioned Stock” means the Common Stock subject to an Award.

          (x) “Optionee” means the holder of an outstanding Option or Stock Purchase Right
granted under the Plan.

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

          (z) “Participant” means the holder of an outstanding Award, including an Optionee.

          (aa) “Plan” means this 1999 Stock Plan.

          (bb) “Restricted Stock” means shares of Common Stock acquired pursuant to a grant of
Stock Purchase Rights under Section 11 of the Plan.

          (cc) “Restricted Stock Purchase Agreement” means a written agreement between the
Company and the Participant evidencing the terms and restrictions applying to stock purchased under
a Stock Purchase Right. The Restricted Stock Purchase Agreement is subject to the terms and
conditions of the Plan and the Notice of Grant.

          (dd) “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to
the Fair Market Value of one Share, granted pursuant to Section 12. Each Restricted Stock Unit
represents an unfunded and unsecured obligation of the Company.

          (ee) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3,
as in effect when discretion is being exercised with respect to the Plan.

          (ff) “Section 16(b)” means Section 16(b) of the Exchange Act.

          (gg) “Service Provider” means an Employee, Director or Consultant.

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

          (ii) “Stock Purchase Right” means the right to purchase Common Stock pursuant to
Section 11 of the Plan, as evidenced by a Notice of Grant.

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

     3. Stock Subject to the Plan. Subject to the provisions of Section 14 of the Plan,
the maximum aggregate number of Shares which may be optioned and sold under the Plan is 7,607,000
Shares [60,856,000 Shares as adjusted for three 2:1 stock splits effective on or prior to
12/21/00], plus an annual increase to be added on the first day of the Company’s fiscal year
beginning in 2000 equal to the lesser of (i) 5,000,000 shares [40,000,000 shares as adjusted for
three 2:1 stock splits effective on or prior to 12/21/00], (ii) 5% of the outstanding shares on
such date or (iii) a lesser amount determined by the Board. The Shares may be authorized, but
unissued, or reacquired Common Stock.

     If an Award expires or becomes unexercisable without having been exercised in full, or is
surrendered pursuant to an Option Exchange Program, the unpurchased Shares (or for Awards other
than Options, the forfeited or repurchased Shares), which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has terminated);
provided, however, that Shares that have actually been issued under the Plan upon exercise
of an Award, shall not be returned to the Plan and shall not become available for future
distribution under the Plan, except that if Shares of Restricted Stock or Shares acquired pursuant
to Restricted Stock Units are repurchased by the Company at their original purchase price or are
forfeited to the Company, such Shares shall become available for future grant under the Plan.

     4. Administration of the Plan.

          (a) Procedure.

               (i) Multiple Administrative Bodies. The Plan may be administered by different
Committees with respect to different groups of Service Providers.

               (ii) Section 162(m). To the extent that the Administrator determines it to be
desirable to qualify Awards granted hereunder as “performance-based compensation” within the
meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee of two or more
“outside directors” within the meaning of Section 162(m) of the Code.

               (iii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt
under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the
requirements for exemption under Rule 16b-3.

               (iv) Other Administration. Other than as provided above, the Plan shall be
administered by (A) the Board or (B) a Committee, which committee shall be constituted to satisfy
Applicable Laws.

-4-

 

          (b) Powers of the Administrator. Subject to the provisions of the Plan, and in the
case of a Committee, subject to the specific duties delegated by the Board to such Committee, the
Administrator shall have the authority, in its discretion:

               (i) to determine the Fair Market Value;

               (ii) to select the Service Providers to whom Awards may be granted hereunder;

               (iii) to determine the number of shares of Common Stock to be covered by each Award granted
hereunder;

               (iv) to approve forms of agreement for use under the Plan;

               (v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any
Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise
price, the time or times when Awards may be exercised (which may be based on performance criteria),
any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation
regarding any Award or the shares of Common Stock relating thereto, based in each case on such
factors as the Administrator, in its sole discretion, shall determine;

               (vi) to reduce the exercise price of any Award to the then current Fair Market Value if the
Fair Market Value of the Common Stock covered by such Award shall have declined since the date the
Award was granted;

               (vii) to institute an Option Exchange Program;

               (viii) to construe and interpret the terms of the Plan and Awards granted pursuant to the
Plan;

               (ix) to prescribe, amend and rescind rules and regulations relating to the Plan, including
rules and regulations relating to sub-plans established for the purpose of qualifying for preferred
tax treatment under foreign tax laws;

               (x) to modify or amend each Award (subject to Section 16(c) of the Plan), including the
discretionary authority to extend the post-termination exercisability period of Awards longer than
is otherwise provided for in the Plan;

               (xi) to allow Participants to satisfy withholding tax obligations by electing to have the
Company withhold from the Shares to be issued upon exercise of an Award that number of Shares
having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of
the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is
to be determined. All elections by a Participant to have Shares withheld for this purpose shall be
made in such form and under such conditions as the Administrator may deem necessary or advisable;

               (xii) to authorize any person to execute on behalf of the Company any instrument required to
effect the grant of an Award previously granted by the Administrator;

-5-

 

               (xiii) to make all other determinations deemed necessary or advisable for administering the
Plan.

          (c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations
and interpretations shall be final and binding on all Participants and any other holders of Awards.

     5. Eligibility. Nonstatutory Stock Options, Stock Purchase Rights and Restricted
Stock Units may be granted to Service Providers. Incentive Stock Options may be granted only to
Employees.

     6. Limitations.

          (a) Each Option shall be designated in the Award Agreement as either an Incentive Stock Option
or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Participant during any calendar year (under all plans of the
Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as
Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options shall be
taken into account in the order in which they were granted. The Fair Market Value of the Shares
shall be determined as of the time the Option with respect to such Shares is granted.

          (b) Neither the Plan nor any Award shall confer upon a Participant any right with respect to
continuing the Participant’s relationship as a Service Provider with the Company, nor shall they
interfere in any way with the Participant’s right or the Company’s right to terminate such
relationship at any time, with or without cause.

          (c) The following limitations shall apply to grants of Options:

               (i) No Service Provider shall be granted, in any fiscal year of the Company, Options to
purchase more than 1.5 million Shares.

               (ii) In connection with his or her initial service, a Service Provider may be granted Options
to purchase up to an additional 1.5 million Shares which shall not count against the limit set
forth in subsection (i) above.

               (iii) The foregoing limitations shall be adjusted proportionately in connection with any
change in the Company’s capitalization as described in Section 14.

               (iv) If an Option is cancelled in the same fiscal year of the Company in which it was granted
(other than in connection with a transaction described in Section 14), the cancelled Option will be
counted against the limits set forth in subsections (i) and (ii) above. For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a cancellation of the
Option and the grant of a new Option.

     7. Term of Plan. Subject to Section 20 of the Plan, the Plan shall become effective
upon its adoption by the Board. It shall continue in effect for a term of ten (10) years unless
terminated earlier under Section 16 of the Plan.

-6-

 

     8. Term of Option. The term of each Option shall be stated in the Award Agreement.
In the case of an Incentive Stock Option, the term shall be ten (10) years from the date of grant
or such shorter term as may be provided in the Award Agreement. Moreover, in the case of an
Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock
Option shall be five (5) years from the date of grant or such shorter term as may be provided in
the Award Agreement.

     9. Option Exercise Price and Consideration.

          (a) Exercise Price. The per share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be determined by the Administrator, subject to the following:

               (i) In the case of an Incentive Stock Option

                    (A) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of stock of the Company
or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.

                    (B) granted to any Employee other than an Employee described in paragraph (A) immediately
above, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share
on the date of grant.

               (ii) In the case of a Nonstatutory Stock Option, the per Share exercise price shall be
determined by the Administrator. In the case of a Nonstatutory Stock Option intended to qualify as
“performance-based compensation” within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

               (iii) Notwithstanding the foregoing, Options may be granted with a per Share exercise price of
less than 100% of the Fair Market Value per Share on the date of grant pursuant to a merger or
other corporate transaction.

          (b) Waiting Period and Exercise Dates. At the time an Option is granted, the
Administrator shall fix the period within which the Option may be exercised and shall determine any
conditions which must be satisfied before the Option may be exercised.

          (c) Form of Consideration. The Administrator shall determine the acceptable form of
consideration for exercising an Option, including the method of payment. In the case of an
Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at
the time of grant. Such consideration may consist entirely of:

               (i) cash;

               (ii) check;

-7-

 

               (iii) other Shares which (A) in the case of Shares acquired upon exercise of an option, have
been owned by the Participant for more than six months on the date of surrender, and (B) have a
Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised;

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

               (v) a reduction in the amount of any Company liability to the Participant, including any
liability attributable to the Participant’s participation in any Company-sponsored deferred
compensation program or arrangement;

               (vi) any combination of the foregoing methods of payment; or

               (vii) such other consideration and method of payment for the issuance of Shares to the extent
permitted by Applicable Laws.

     10. Exercise of Option.

          (a) Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder
shall be exercisable according to the terms of the Plan and at such times and under such conditions
as determined by the Administrator and set forth in the Award Agreement. Unless the Administrator
provides otherwise, vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.

     An Option shall be deemed exercised when the Company receives: (i) written or electronic
notice of exercise (in accordance with the Award Agreement) from the person entitled to exercise
the Option, and (ii) full payment for the Shares with respect to which the Option is exercised.
Full payment may consist of any consideration and method of payment authorized by the Administrator
and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option shall
be issued in the name of the Participant or, if requested by the Participant, in the name of the
Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the Shares are issued,
except as provided in Section 14 of the Plan.

     Exercising an Option in any manner shall decrease the number of Shares thereafter available,
both for purposes of the Plan and for sale under the Option, by the number of Shares as to which
the Option is exercised.

          (b) Termination of Relationship as a Service Provider. If a Participant ceases to be
a Service Provider, other than upon the Participant’s death or Disability, the Participant may
exercise his or her Option within such period of time as is specified in the Award Agreement to the
extent that the Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Award Agreement). In the absence of a
specified time in

-8-

 

the Award Agreement, the Option shall remain exercisable for three (3) months following the
Participant’s termination. If, on the date of termination, the Participant is not vested as to his
or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the
Plan. If, after termination, the Participant does not exercise his or her Option within the time
specified by the Administrator, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.

          (c) Disability of Participant. If a Participant ceases to be a Service Provider as a
result of the Participant’s Disability, the Participant may exercise his or her Option within such
period of time as is specified in the Award Agreement to the extent the Option is vested on the
date of termination (but in no event later than the expiration of the term of such Option as set
forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the
Option shall remain exercisable for twelve (12) months following the Participant’s termination.
If, on the date of termination, the Participant is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan. If, after
termination, the Participant does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

          (d) Death of Participant. If a Participant dies while a Service Provider, the Option
may be exercised within such period of time as is specified in the Award Agreement (but in no event
later than the expiration of the term of such Option as set forth in the Notice of Grant), by the
Participant’s estate or by a person who acquires the right to exercise the Option by bequest or
inheritance, but only to the extent that the Option is vested on the date of death. In the absence
of a specified time in the Award Agreement, the Option shall remain exercisable for twelve (12)
months following the Participant’s termination. If, at the time of death, the Participant is not
vested as to his or her entire Option, the Shares covered by the unvested portion of the Option
shall immediately revert to the Plan. The Option may be exercised by the executor or administrator
of the Participant’s estate or, if none, by the person(s) entitled to exercise the Option under the
Participant’s will or the laws of descent or distribution. If the Option is not so exercised
within the time specified herein, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.

          (e) Buyout Provisions. The Administrator may at any time offer to buy out for a
payment in cash or Shares an Option previously granted based on such terms and conditions as the
Administrator shall establish and communicate to the Participant at the time that such offer is
made.

     11. Stock Purchase Rights.

          (a) Rights to Purchase. Stock Purchase Rights may be issued either alone, in addition
to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the
Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan,
it shall advise the offeree in writing or electronically, by means of a Notice of Grant, of the
terms, conditions and restrictions related to the offer, including the number of Shares that the
offeree shall be entitled to purchase, the price to be paid, and the time within which the offeree
must accept such offer. The offer shall be accepted by execution of a Restricted Stock Purchase
Agreement in the form determined by the Administrator.

-9-

 

          (b) Repurchase
Option. Unless the Administrator determines otherwise, the Restricted Stock Purchase Agreement shall grant the Company a repurchase option exercisable
upon the voluntary or involuntary termination of the purchaser’s service with the Company for any
reason (including death or Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Purchase Agreement shall be the original price paid by the purchaser and may be
paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option
shall lapse at a rate determined by the Administrator.

          (c) Other Provisions. The Restricted Stock Purchase Agreement shall contain such
other terms, provisions and conditions not inconsistent with the Plan as may be determined by the
Administrator in its sole discretion.

          (d) Rights as a Shareholder. Once the Stock Purchase Right is exercised, the
purchaser shall have the rights equivalent to those of a shareholder, and shall be a shareholder
when his or her purchase is entered upon the records of the duly authorized transfer agent of the
Company. No adjustment will be made for a dividend or other right for which the record date is
prior to the date the Stock Purchase Right is exercised, except as provided in Section 14 of the
Plan.

     12. Restricted Stock Units.

          (a) Grant. Restricted Stock Units may be granted at any time and from time to time as
determined by the Administrator. Each Restricted Stock Unit grant will be evidenced by an Award
Agreement that will specify such other terms and conditions as the Administrator, in its sole
discretion, will determine, including all terms, conditions, and restrictions related to the grant,
the number of Restricted Stock Units and the form of payout, which, subject to Section 12(d), may
be left to the discretion of the Administrator.

          (b) Vesting Criteria and Other Terms. The Administrator will set vesting criteria
(which may include performance objectives based upon the achievement of Company-wide, departmental
or individual goals, Company performance relative to selected other companies, or any other basis
determined by the Administrator) in its discretion, which, depending on the extent to which the
criteria are met, will determine the number of Restricted Stock Units that will be paid out to the
Participant. After the grant of Restricted Stock Units, the Administrator, in its sole discretion,
may reduce or waive any restrictions for such Restricted Stock Units. Each Award of Restricted
Stock Units will be evidenced by an Award Agreement that will specify the vesting criteria, and
such other terms and conditions as the Administrator, in its sole discretion, will determine.

          (c) Earning Restricted Stock Units. Upon meeting the applicable vesting criteria
(including without limitation, achievement of any applicable performance objectives), the
Participant will be entitled to receive a payout as specified in the Award Agreement.
Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the
Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to
receive a payout.

          (d) Form and Timing of Payment. Payment of earned Restricted Stock Units will be made
as soon as practicable after the date(s) set forth in the Award Agreement. The Restricted Stock
Units will be paid in Shares.

          (e) Cancellation. On the date set forth in the Award Agreement, all unearned
Restricted Stock Units will be forfeited to the Company.

-10-

 

     13. Non-Transferability of Awards. Unless determined otherwise by the Administrator,
an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be exercised, during
the lifetime of the Participant, only by the Participant. If the Administrator makes an Award
transferable, such Award shall contain such additional terms and conditions as the Administrator
deems appropriate.

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

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

          (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Participant as soon as practicable
prior to the effective date of such proposed transaction. The Administrator in its discretion may
provide for a Participant to have the right to exercise his or her Option until ten (10) days prior
to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which
the Option would not otherwise be exercisable. In addition, the Administrator may provide that any
Company repurchase option applicable to any Shares purchased upon exercise of an Award shall lapse
as to all such Shares or, with respect to Restricted Stock Units, all Shares shall vest, provided
the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To
the extent it has not been previously exercised, an Award will terminate immediately prior to the
consummation of such proposed action.

          (c) Merger or Asset Sale. In the event of a merger of the Company with or into
another corporation, or the sale of substantially all of the assets of the Company, each
outstanding Award shall be assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the event that the
successor corporation refuses to assume or substitute for the Award, the Participant shall fully
vest in and have the right to exercise the Award as to all of the Optioned Stock, including Shares
as to which it would not otherwise be vested or exercisable, all restrictions on Restricted Stock
shall lapse, and all outstanding Restricted Stock Units shall fully vest. If an Award becomes
fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale
of assets, the Administrator shall notify the Participant in writing or electronically that the
Award shall be fully vested and exercisable for a period of fifteen

-11-

 

(15) days from the date of such notice, and the Award shall terminate upon the expiration of
such period. For the purposes of this paragraph, the Award shall be considered assumed if,
following the merger or sale of assets, the Award confers the right to purchase or receive, for
each Share subject to the Award immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in the merger or sale
of assets by holders of Common Stock for each Share held on the effective date of the transaction
(and if holders were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if such consideration
received in the merger or sale of assets is not solely common stock of the successor corporation or
its Parent, the Administrator may, with the consent of the successor corporation, provide for the
consideration to be received upon the exercise of the Award, for each Share of Optioned Stock
subject to the Award, to be solely common stock of the successor corporation or its Parent equal in
fair market value to the per share consideration received by holders of Common Stock in the merger
or sale of assets.

     15. Date of Grant. The date of grant of an Award shall be, for all purposes, the date
on which the Administrator makes the determination granting such Award, or such other later date as
is determined by the Administrator. Notice of the determination shall be provided to each
Participant within a reasonable time after the date of such grant.

     16. Amendment and Termination of the Plan.

          (a) Amendment and Termination. The Board may at any time amend, alter, suspend or
terminate the Plan.

          (b) Shareholder Approval. The Company shall obtain shareholder approval of any Plan
amendment to the extent necessary and desirable to comply with Applicable Laws.

          (c) Effect of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Participant, unless mutually agreed
otherwise between the Participant and the Administrator, which agreement must be in writing and
signed by the Participant and the Company. Termination of the Plan shall not affect the
Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards
granted under the Plan prior to the date of such termination.

     17. Conditions Upon Issuance of Shares.

          (a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an Award
unless the exercise of such Award and the issuance and delivery of such Shares shall comply with
Applicable Laws and shall be further subject to the approval of counsel for the Company with
respect to such compliance.

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

-12-

 

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

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

     20. Shareholder Approval. The Plan shall be subject to approval by the shareholders
of the Company within twelve (12) months after the date the Plan is adopted. Such shareholder
approval shall be obtained in the manner and to the degree required under Applicable Laws.

-13-

 

 

Notice of Grant of Stock Options

and Option Agreement

Brocade Communications Systems, Inc.

ID: 77-0409517

1745 Technology Drive

San Jose, CA 95110

 

	 	 	 	 	 	 	 
	Name:

	 	Option Number:	 	 	 	 
	Address:

	 	Plan:
	 	 	1999	 
	 

	 	ID:	 	 	 	 

 

Effective [DATE], you have been granted a(n) Non-Qualified Stock Option to buy [SHARES] shares of
Brocade Communications Systems, Inc. (the Company) stock at $[PRICE] per share.

The total option price of the shares granted is $[PRICE].

Shares in each period will become fully vested on the date shown.

	 	 	 	 	 	 	 
	Shares

	 	Vest Type
	 	Full Vest
	 	Expiration
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 

 

By your signature and the Company’s signature below, you and the Company agree that these options
are granted under and governed by the terms and conditions of the Company’s Stock Option Plan as
amended and the Option Agreement, all of which are attached and made a part of this document.

 

	 	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	Brocade Communications Systems, Inc.

	 	Date
	 
	 	 
	 

	 	 
	 
	 	 
	[EMPLOYEE NAME]

	 	Date

 

BROCADE COMMUNICATIONS SYSTEMS, INC.

1999 STOCK OPTION PLAN

STOCK OPTION AGREEMENT

Termination Period:

          This Option may be exercised for three months after Optionee ceases to be a Service Provider.
Upon the death or Disability of the Optionee, this Option may be exercised for one year after
Optionee ceases to be a Service Provider. In no event shall this Option be exercised later than
the Term/Expiration Date as provided above.

I.      AGREEMENT

          A.      Grant of Option. 

          The Plan Administrator of the Company hereby grants to the Optionee named in the Notice of
Grant attached as Part I of this Agreement (the “Optionee”) an option (the “Option”) to purchase
the number of Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the “Exercise Price”), subject to the terms and conditions of the
Plan, which is incorporated herein by reference. Subject to Section 15(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and the terms and conditions of
this Option Agreement, the terms and conditions of the Plan shall prevail.

          If designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is
intended to qualify as an Incentive Stock Option under Section 422 of the Code. However, if this
Option is intended to be an Incentive Stock Option, to the extent that it exceeds the $100,000 rule
of Code Section 422(d) it shall be treated as a Nonstatutory Stock Option (“NSO”).

          B.      Exercise of Option.

                    (a)      Right to Exercise. This Option is exercisable during its term in accordance with
the Vesting Schedule set out in the Notice of Grant and the applicable provisions of the Plan and
this Option Agreement.

                    (b)      Method of Exercise. This Option is exercisable by delivery of an exercise notice,
in the form attached as Exhibit A (the “Exercise Notice”), which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is being exercised (the
“Exercised Shares”), and such other representations and agreements as may be required by the
Company pursuant to the provisions of the Plan. The Exercise Notice shall be completed by the
Optionee and delivered to Elizabeth Moore, Stock Administrator, of the Company. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares.
This Option shall be deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.

                    No Shares shall be issued pursuant to the exercise of this Option unless such issuance and
exercise complies with Applicable Laws. Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the Option is
exercised with respect to such Exercised Shares.

          C.      Method of Payment.

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

                    1.      cash; or

                    2.      check; or

                    3.      consideration received by the Company under a cashless exercise program implemented by the
Company in connection with the Plan; or

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

                    5.      with the Administrator’s consent, delivery of Optionee’s promissory note (the “Note”) in
the form attached hereto as Exhibit C, in the amount of the aggregate Exercise Price of the
Exercised Shares together with the execution and delivery by the Optionee of the Security Agreement
attached hereto as Exhibit B. The Note shall bear interest at the “applicable federal rate”
prescribed under the Code and its regulations at time of purchase, and shall be secured by a pledge
of the Shares purchased by the Note pursuant to the Security Agreement.

          D.      Non-Transferability of Option. 

          This Option may not be transferred in any manner otherwise than by will or by the laws of
descent or distribution and may be exercised during the lifetime of Optionee only by the Optionee.
The terms of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

          E.      Term of Option. 

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

          F.      Tax Consequences. 

          Some of the federal tax consequences relating to this Option, as of the date of this Option,
are set forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.

          G.      Exercising the Option.

                    1.      Nonstatutory Stock Option. The Optionee may incur regular federal income tax
liability upon exercise of a NSO. The Optionee will be treated as having received compensation
income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Exercised Shares on the date of exercise over their aggregate Exercise Price. If the
Optionee is an Employee or a former Employee, the Company will be required to withhold from his or
her compensation or collect from Optionee and pay to the applicable taxing authorities an amount in
cash equal to a percentage of this compensation income at the time of exercise, and may refuse to
honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at
the time of exercise.

 

 

                    2.      Incentive Stock Option. If this Option qualifies as an ISO, the Optionee will have no
regular federal income tax liability upon its exercise, although the excess, if any, of the Fair
Market Value of the Exercised Shares on the date of exercise over their aggregate Exercise Price
will be treated as an adjustment to alternative minimum taxable income for federal tax purposes and
may subject the Optionee to alternative minimum tax in the year of exercise. In the event that the
Optionee ceases to be an Employee but remains a Service Provider, any Incentive Stock Option of the
Optionee that remains unexercised shall cease to qualify as an Incentive Stock Option and will be
treated for tax purposes as a Nonstatutory Stock Option on the date three (3) months and one (1)
day following such change of status.

                    3.      Disposition of Shares.

                              (a)      NSO. If the Optionee holds NSO Shares for at least one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal income tax
purposes.

                              (b)      ISO. If the Optionee holds ISO Shares for at least one year after exercise and
two years after the grant date, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes. If the Optionee disposes of ISO Shares
within one year after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income rates) to the extent
of the excess, if any, of the lesser of (A) the difference between the Fair Market Value of the
Shares acquired on the date of exercise and the aggregate Exercise Price, or (B) the difference
between the sale price of such Shares and the aggregate Exercise Price. Any additional gain will
be taxed as capital gain, short-term or long-term depending on the period that the ISO Shares were
held.

                              (c)      Notice of Disqualifying Disposition of ISO Shares. If the Optionee sells or
otherwise disposes of any of the Shares acquired pursuant to an ISO on or before the later of (i)
two years after the grant date, or (ii) one year after the exercise date, the Optionee shall
immediately notify the Company in writing of such disposition. The Optionee agrees that he or she
may be subject to income tax withholding by the Company on the compensation income recognized from
such early disposition of ISO Shares by payment in cash or out of the current earnings paid to the
Optionee.

          H.      Entire Agreement; Governing Law. 

                    The Plan is incorporated herein by reference. The Plan and this Option Agreement constitute
the entire agreement of the parties with respect to the subject matter hereof and supersede in
their entirety all prior undertakings and agreements of the Company and Optionee with respect to
the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by
means of a writing signed by the Company and Optionee. This agreement is governed by the internal
substantive laws, but not the choice of law rules, of Delaware.

          I.      NO GUARANTEE OF CONTINUED SERVICE. 

                   
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE
HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE
FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND
THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT
INTERFERE WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS A
SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

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

 

 

[FORM OF PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT]

BROCADE COMMUNICATIONS SYSTEMS, INC.

1999 STOCK PLAN (AS AMENDED AND RESTATED)

PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT

NOTICE OF GRANT

[GRANTEE NAME]

[GRANTEE ADDRESS]

     You (“Grantee”) have been granted an award of Restricted Stock Units under the Company’s
Amended and Restated 1999 Stock Plan (the “Plan”). The date of this Restricted Stock Units
Agreement (the “Agreement”) is the Grant Date defined below. Subject to the provisions of
Appendices A and B (attached) and the Plan, the principal features of this award are as follows:

	 	 	 
	Grant Date:

	 	[                    ] (the “Grant Date”)
	 
	 	 
	Target Number
of Restricted Stock Units:

	 	[                    ] (the “Target Number of Restricted Stock Units”)
	 
	 	 
	Performance Period:

	 	Three year period beginning [PERFORMANCE PERIOD BEGIN DATE] through [PERFORMANCE PERIOD END DATE]
(subject to Section 4(c) of Appendix A) (the “Performance Period”).
	 
	 	 
	Performance Matrix:

	 	The number of Restricted Stock Units in which you may vest in accordance with the Vesting Schedule
will depend upon achievement of targets in Revenue Growth, Operating Income Growth, Free Cash Flow
Growth, and Stock Price Performance for the Performance Period as set forth in Section 1 of Appendix
A.
	 
	 	 
	Vesting Schedule:

	 	The Restricted Stock Units will vest on the final day of the Performance Period, unless vested
earlier in accordance with the terms of this Award (the “Vesting Date”); provided, that Grantee
remains a Service Provider to the Company through the Vesting Date (or as otherwise set forth in
this Agreement).

     Your signature below indicates your agreement and understanding that this award is subject to
all of the terms and conditions contained in Appendices A and B and the Plan. For example,
important additional information on vesting and forfeiture of the Restricted Stock Units is
contained in Sections 3 through 5 and Section 7 of Appendix A. PLEASE BE SURE TO READ ALL OF
APPENDICES A AND B AND THE PLAN, WHICH CONTAIN THE SPECIFIC TERMS AND CONDITIONS OF THIS AWARD.

	 	 	 	 	 
	BROCADE COMMUNICATIONS SYSTEMS, INC.

	 	 	 	GRANTEE
	 
	 	 	 	 
	 

	 	 	 	 
	Signature

	 	 	 	Signature
	 
	 	 	 	 
	 

	 	 	 	 
	Print Name

	 	 	 	Print Name
	 
	 	 	 	 
	 

Title

	 	 	 	 

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APPENDIX A

TERMS AND CONDITIONS OF PERFORMANCE-BASED RESTRICTED STOCK UNITS

     Unless otherwise defined herein, capitalized terms used herein shall have the meanings
ascribed to them in the Plan.

     1. Grant.

          (a) The Company hereby grants to the Grantee under the Plan an award of the Target Number of
Restricted Stock Units set forth on the Notice of Grant, subject to all of the terms and conditions
in this Agreement and the Plan. For each Restricted Stock Unit that vests, the Grantee will be
entitled to receive one (1) Share (subject to automatic adjustment for stock splits, combinations
and other adjustments as contemplated in the Plan).

          (b) The number of Restricted Stock Units in which the Grantee may vest shall be measured based
on the Company’s relative performance versus a Peer Group as defined on Appendix B for the
Performance Period with respect to the following metrics measured at the beginning and end of the
Performance Period (or most readily available dates closest in time prior to such beginning and end
dates for the Peer Group companies):

	 	 	 	 	 
	Metrics	 	Weighting
	Revenue Growth
	 	 	25	%
	Operating Income Growth
	 	 	25	%
	Free Cash Flow Growth
	 	 	25	%
	Stock Price Performance
	 	 	25	%

          (c) Definitions.

               (i) “Revenue Growth” shall be the measure of revenue on a GAAP basis for each of the twelve
month periods as of the beginning and end of the Performance Period (or most readily available
dates closest in time prior to such beginning and end dates for the Peer Group companies)

               (ii) “Operating Income Growth” shall be the measure of income from operations on a GAAP basis,
for each of the twelve month periods as of the beginning and end of the Performance Period (or most
readily available dates closest in time prior to such beginning and end dates for the Peer Group
companies).

               (iii) “Free Cash Flow Growth” shall be the measure of cash flows from operating activities
less purchases of property and equipment on a GAAP basis, for each of the twelve month periods as
of the beginning and end of the Performance Period (or most readily available dates closest in time
prior to such beginning and end dates for the Peer Group companies).

               (iv) “Stock Price Performance” shall be the measure of the average daily price of one share of
common stock (as adjusted for stock splits, combinations and the like) as reported on the
applicable primary stock exchange on which such shares are listed for the ten (10) trading days
prior to (and including) the beginning and end of the Performance Period.

-2-

 

          (d) The number of the Restricted Stock Units in which the Grantee may vest will range from
zero percent (0%) of the Target Number of Restricted Stock Units to two hundred percent (200%) of
the Target Number of Restricted Stock Units and shall be determined as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Threshold	 	Target	 	Maximum
	Average Percentile	 	 	 	 	 	Average Percentile	 	 	 	 	 	Average Percentile	 	 
	Performance	 	 	 	 	 	Performance	 	 	 	 	 	Performance	 	 
	v.	 	 	 	 	 	v.	 	 	 	 	 	v.	 	 
	Peer Group	 	Payout	 	Peer Group	 	Payout	 	Peer Group	 	Payout
	35th 
	 	 	25	%	 	50th	 	 	100	%	 	75th (or higher)	 	 	200	%

NOTE: The actual amount of the payout shall be interpolated on a straight line basis between
(i) the Threshold and Target, or (ii) the Target and Maximum, as the case may be. An Average
Percentile Performance v. Peer Group of less than the 35th percentile shall not be
entitled to any payout under this Award. An Average Percentile Performance v. Peer Group of
greater than the 75th percentile shall be entitled to a payout of 200% of the Target
Number of Restricted Stock Units.

     Example(s) for illustration purposes only:

	 	 	 	 	 
	Performance Metric	 	Example 1	 	Example 2
	Revenue Growth
	 	25th percentile	 	50th percentile
	Operating Income Growth
	 	50th percentile	 	80th percentile
	Free Cash Flow Growth
	 	35th percentile	 	75th percentile
	Stock Price Performance
	 	90th percentile	 	35th percentile
	Overall Average Percentile Performance
	 	50th percentile	 	60th percentile
	Percent of Target Award Earned
	 	100% of Target	 	140% of Target

          (e) When Shares are paid to the Grantee in payment for the Restricted Stock Units, par
value ($.001 per share) will be deemed paid by the Grantee for each Restricted Stock Unit by
services rendered by the Grantee, and will be subject to the appropriate tax withholdings.

     2. Company’s Obligation to Pay. Each Restricted Stock Unit has a value equal to the
Fair Market Value of a Share on the date that the Restricted Stock Unit is granted. Unless and
until the Restricted Stock Units have vested in the manner set forth in Sections 3 through 5, the
Grantee will have no right to payment of such Restricted Stock Units. Prior to actual payment of
Shares upon the vesting of any Restricted Stock Units, such Restricted Stock Units will represent
an unsecured obligation. Payment of any vested Restricted Stock Units shall be made in whole
Shares only and any fractional Shares will be forfeited at the time of payment.

     3. Vesting Schedule/Period of Restriction. Except as provided in Sections 4 and 5,
and subject to Section 7, the Restricted Stock Units awarded by this Agreement shall vest in
accordance with the vesting provisions set forth on the Notice of Grant and Section 1 of this
Agreement. Restricted Stock Units shall not vest in accordance with any of the provisions of this
Agreement unless the Grantee shall have been continuously employed by the Company or by its Parent
or other successor or a Subsidiary from the Grant Date until the Vesting Date occurs.

4. Modifications to Vesting Schedule.

          (a) Vesting upon Leave of Absence. In the event that the Grantee takes an authorized leave of
absence (“LOA”), the Restricted Stock Units awarded by this Agreement that are

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eligible to be earned shall either: (i) not be affected, or (ii) shall be deferred for a
period of time equal to the duration of such LOA, based on the Company’s LOA policy in effect at
such time as determined by the Company in its sole discretion.

          (b) Death or Disability of Grantee. In the event that the Grantee’s relationship with the
Company or its Parent or other successor or a Subsidiary as a Service Provider is terminated prior
to full vesting of the Restricted Stock Units due to his or her death or Disability, the unvested
portion of the Restricted Stock Units subject to this Restricted Stock Unit award shall be
forfeited on the date of the Grantee’s death or Disability.

          (c) Change in Control.

               (i) In the event of a Change in Control during the Performance Period, the Performance Period
shall be deemed to end immediately prior to the Change in Control for purposes of calculating the
performance of the Company against the Peer Group. The Vesting Date shall remain based on the
original term of the Performance Period as set forth in the Notice of Grant (unless vested earlier
in accordance with the terms of this Award and provided that Grantee remains a Service Provider to
the Company (or its successor(s)) through the Vesting Date or as otherwise set forth in this
Agreement).

[NOTE: Include the following if change of control arrangements are applicable to the grant:]

               [(ii) Notwithstanding Section 4(c)(i), if Grantee’s employment with the Company (or any Parent
or Subsidiary of the Company) is terminated by the Company (or the Parent or Subsidiary of the
Company) without Cause or by Grantee for Good Reason in Connection with a Change of Control, then
the greater of: (a) [AMOUNT OF ACCELERATION]% of the original number of Target Number of Restricted
Stock Units set forth in the Notice of Grant, or (b) the number of Restricted Stock Units which
would vest in accordance with Section 4(c)(i), shall immediately vest as of the date of Grantee’s
termination of employment with the Company (or any Parent or Subsidiary of the Company).

               (iii) Any additional vesting of Restricted Stock Units pursuant to Section 4(c)(i)(a) and
payment to Grantee of such underlying Shares shall be contingent on the following: (i) receipt by
the Company of a signed release of claims in form and substance satisfactory to the Company (or its
successor(s)) and expiration of any applicable revocation period with respect to such release; (ii)
Grantee agrees not to knowingly disparage, criticize or otherwise make any derogatory statements
regarding the Company, its directors or officers (other than statements made truthfully in response
to a subpoena or other compulsory legal process); and (iii) Grantee agrees to continue to comply
with the terms of the Company’s Employment, Confidential Information and Invention Assignment
Agreement entered into by Grantee.

               (iv) Definitions.

                    (A) Cause. For purposes of this Agreement, “Cause” means (i) Grantee’s willful and continued
failure to perform the duties and responsibilities of his position that is not corrected within a
thirty (30) day correction period that begins upon delivery to Grantee of a written demand for
performance from the Board that describes the basis for the Board’s belief that Grantee has not
substantially performed his duties; (ii) any act of personal dishonesty taken by Grantee in
connection with his or her responsibilities as an employee of the Company with the intention or
reasonable expectation that such may result in substantial personal enrichment of

-4-

 

Grantee; (iii) Grantee’s conviction of, or plea of nolo contendre to, a felony that the Board
reasonably believes has had or will have a material detrimental effect on the Company’s reputation
or business, or (iv) Grantee materially breaching Grantee’s Confidential Information Agreement,
which breach is (if capable of cure) not cured within thirty (30) days after the Company delivers
written notice to Grantee of the breach.

                    (B) Change of Control. For purposes of this Agreement, “Change of Control” shall mean the
occurrence of any of the following events:

                         (1) the consummation by the Company of a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation;

                         (2) the consummation of the sale or disposition by the Company of all or substantially all of
the Company’s assets;

                         (3) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing 50% or more of the total voting
power represented by the Company’s then outstanding voting securities; or

                         (4) a change in the composition of the Board, as a result of which fewer than a majority of
the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A)
are directors of the Company as of the date hereof, or (B) are elected, or nominated for election,
to the Board with the affirmative votes of at least a majority of those directors whose election or
nomination was not in connection with any transactions described in subsections (i), (ii), or (iii)
or in connection with an actual or threatened proxy contest relating to the election of directors
of the Company.

                    (C) Good Reason. For purposes of this Agreement, “Good Reason” means the occurrence of any of
the following, without Grantee’s consent: (i) a material reduction of Grantee’s duties, title,
authority or responsibilities in effect immediately prior to a Change of Control; (ii) a reduction
in Grantee’s base salary or target annual cash incentive compensation; (iii) the failure of the
Company to obtain the assumption of the Agreement by the successor, or (iv) the Company requiring
Grantee to relocate his or her principal place of business or the Company relocating its
headquarters, in either case to a facility or location outside of a thirty-five (35) mile radius
from Grantee’s current principal place of employment; provided, however, that Grantee only will
have Good Reason if the Executive gives written notice to the Chief Executive Officer of the
Company of the event or circumstances constituting Good Reason specified in any of the preceding
clauses within ninety (90) days of its initial occurrence and such event or circumstance is not
cured within thirty (30) days after Grantee gives such written notice to the Board. Grantee’s
actions approving any of the foregoing changes (that otherwise may be considered Good Reason) will
be considered consent for the purposes of this Good Reason definition.

-5-

 

                    (D) In Connection with a Change of Control. For purposes of this Agreement, a termination of
Grantee’s employment with the Company is “in Connection with a Change of Control” if Grantee’s
employment is terminated at any time from thirty (30) days prior to a Change of Control through the
remainder of the original Performance Period following a Change of Control.]

     5. Administrator Discretion. The Administrator, in its discretion, may accelerate the
vesting of the balance, or some lesser portion of the balance, of the Restricted Stock Units at any
time, subject to the terms of the Plan. Such acceleration may result in tax or other consequences
to the Grantee. If so accelerated, such Restricted Stock Units will be considered as having vested
as of the date specified by the Administrator. If the Administrator, in its discretion,
accelerates the vesting of the balance, or some lesser portion of the balance, of the Restricted
Stock Units, the payment of such accelerated Restricted Stock Units nevertheless shall be made at
the same time or times as if such Restricted Stock Units had vested in accordance with the vesting
schedule set forth on the Notice of Grant and Section 1 of this Agreement or as otherwise provided
herein (whether or not the Grantee remains employed by the Company or by one of its Subsidiaries as
of such date(s)). The Grantee is hereby advised to consult with the Grantee’s own personal tax,
legal and financial advisors regarding the Grantee’s participation in the Plan before taking any
action related to the Plan.

     6. Payment after Vesting. Any Restricted Stock Units that vest in accordance with
Sections 3 through 4 of this Agreement will be paid to the Grantee (or in the event of the
Grantee’s death, to his or her estate) as soon as practicable following the Vesting Date, subject
to Section 9, but no later than March 15th of the calendar year following the Vesting
Date.

     7. Forfeiture. The balance of the Restricted Stock Units that have not vested
pursuant to Sections 3 through 5 at the time of the termination of the Grantee’s relationship with
the Company as a Service Provider for any or no reason will be forfeited.

     8. [Reserved.]

     9. Withholding of Taxes.

          (a) General. Regardless of any action the Company and/or the Grantee’s employer (the
“Employer”) take with respect to any or all income tax (including U.S. federal, state, local and/or
non-U.S. taxes), social insurance, payroll tax, payment on account or other tax-related
withholdings (“Tax-Related Items”), the Grantee acknowledges that the ultimate liability for all
Tax-Related Items legally due by the Grantee is and remains the Grantee’s responsibility and that
the Company and/or the Employer (i) make no guarantees or undertakings regarding the treatment of
any Tax-Related Items in connection with any aspect of the award, including the grant of the
Restricted Stock Units, the vesting of the Restricted Stock Units, the delivery of Shares, the
subsequent sale of any Shares received at vesting and the receipt of any dividends; and (ii) do not
commit to structure the terms of the grant or any aspect of the award to reduce or eliminate the
Grantee’s liability for Tax-Related Items.

          (b) Payment of Tax-Related Items. The Grantee authorizes the Company and/or the
Employer, at its discretion, to satisfy the obligations with regard to all Tax-Related Items by
withholding a portion of the Shares issued as payment for vested Restricted Stock Units that have
an aggregate market value sufficient to pay all Tax-Related Items required to be withheld by the
Company and/or the Employer with respect to the vesting of the Restricted Stock Units and issuance

-6-

 

of the Shares, unless the Company, in its sole discretion, either requires or otherwise
permits the Grantee to make alternate arrangements satisfactory to the Company for such
withholdings in advance of the arising of any withholding obligations. The number of Shares
withheld pursuant to the prior sentence will be rounded up to the nearest whole Share, with no
refund for any value of the Shares withheld in excess of the tax obligation as a result of such
rounding.

          If the obligation of Tax-Related Items is satisfied by reducing the number of Shares delivered
as described herein, the Grantee is deemed to have been issued the full number of Shares subject to
the award of Restricted Stock Units, notwithstanding that a number of the Shares are held back
solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the award.

          If the foregoing method of withholding is prohibited or insufficient to satisfy all
Tax-Related Items required to be withheld by the Company and/or the Employer with respect to the
vesting of the Restricted Stock Units and issuance of the Shares or if the Company, in its
discretion, determines not to apply the foregoing method of withholding, then the Grantee hereby
authorizes the Company and/or the Employer to satisfy such obligations by one or a combination of
the following: (i) withholding from the Grantee’s wages or other cash compensation paid to the
Grantee by the Company and/or the Employer, to the maximum extent permitted by law; or (ii) selling
the applicable number of Shares or arranging for the sale of the applicable number of Shares (in
either case on the Grantee’s behalf and at the Grantee’s discretion pursuant to this authorization)
issued in settlement of vested Restricted Stock Units and retaining the requisite proceeds from
such sale.

          Finally, the Grantee shall pay to the Company and/or the Employer any amount of Tax-Related
Items that the Company and/or the Employer may be required to withhold as a result of the Grantee’s
participation in the Plan that cannot be satisfied by the means previously described. The Company
may refuse to deliver to the Grantee any Shares pursuant to the award if the Grantee fails to
comply with the Grantee’s obligations in connection with the Tax-Related Items, as described in
this Section 9.

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

     11. No Effect on Employment. Subject to any employment contract with the Grantee, the
terms of such employment will be determined from time to time by the Company, or the Subsidiary
employing the Grantee, as the case may be, and the Company, or the Subsidiary employing the
Grantee, as the case may be, will have the right, which is hereby expressly reserved, to terminate
or change the terms of the employment of the Grantee at any time for any reason whatsoever, with or
without good cause. The transactions contemplated hereunder and the vesting schedule set forth on
the first page of this Agreement do not constitute an express or implied promise of continued
employment for any period of time. A leave of absence or an interruption in service (including an
interruption during military service) authorized or acknowledged by the Company or the Subsidiary
employing the Grantee, as the case may be, shall not be deemed a termination of the Grantee’s
relationship with the Company as a Service Provider for the purposes of this Agreement.

-7-

 

     12. Address for Notices. Any notice to be given to the Company under the terms of
this Agreement will be addressed to the Company, in care of Stock Administrator, at 1745 Technology
Drive, San Jose, California 95110, USA or at such other address as the Company may hereafter
designate in writing, with a copy to the Company, C/O General Counsel, 1745 Technology Drive, San
Jose, California 95110, USA.

     13. Grant is Not Transferable. Except to the limited extent provided in this
Agreement or the Plan, this grant of Restricted Stock Units and the rights and privileges conferred
hereby will not be sold, pledged, assigned, hypothecated, transferred or disposed of any way
(whether by operation of law or otherwise) and will not be subject to sale under execution,
attachment or similar process, until the Grantee has been issued Shares in payment of the
Restricted Stock Units. Upon any attempt to sell, pledge, assign, hypothecate, transfer or
otherwise dispose of this grant, or any right or privilege conferred hereby, or upon any attempted
sale under any execution, attachment or similar process, this grant and the rights and privileges
conferred hereby immediately will become null and void.

     14. Restrictions on Sale of Securities. The Shares issued as payment for vested
Restricted Stock Units under this Agreement will be registered under U.S. federal securities laws
and will be freely tradable upon receipt. However, a Grantee’s subsequent sale of the Shares may
be subject to any market blackout-period that may be imposed by the Company and must comply with
the Company’s insider trading policies, and any other U.S. securities laws or other Applicable
Laws.

     15. Binding Agreement. Subject to the limitation on the transferability of this grant
contained herein, this Agreement will be binding upon and inure to the benefit of the heirs,
legatees, legal representatives, successors and assigns of the parties hereto.

     16. Additional Conditions to Issuance of Certificates for Shares. The Company shall
not be required to issue any certificate or certificates for Shares hereunder prior to fulfillment
of all the following conditions: (a) the admission of such Shares to listing on all stock
exchanges on which such class of stock is then listed; (b) the completion of any registration or
other qualification of such Shares under any U.S. state or federal law or under the rulings or
regulations of the Securities and Exchange Commission or any other governmental regulatory body,
which the Administrator shall, in its absolute discretion, deem necessary or advisable; (c) the
obtaining of any approval or other clearance from any U.S. state or federal governmental agency,
which the Administrator shall, in its absolute discretion, determine to be necessary or advisable;
and (d) the lapse of such reasonable period of time following the Vesting Date of the Restricted
Stock Units as the Administrator may establish from time to time for reasons of administrative
convenience.

     17. Plan Governs. This Agreement is subject to all the terms and provisions of the
Plan. In the event of a conflict between one or more provisions of this Agreement and one or more
provisions of the Plan, the provisions of the Plan will govern.

     18. Administrator Authority. The Administrator will have the power to interpret the
Plan and this Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret or revoke any such rules
(including, but not limited to, the determination of whether or not any Restricted Stock Units have
vested). All actions taken and all interpretations and determinations made by the Administrator in
good faith will be final and binding upon the Grantee, the Company and all other interested
persons. No member of the Administrator will be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or this Agreement.

-8-

 

     19. Captions. Captions provided herein are for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.

     20. Agreement Severable. In the event that any provision in this Agreement will be
held invalid or unenforceable, such provision will be severable from, and such invalidity or
unenforceability will not be construed to have any effect on, the remaining provisions of this
Agreement.

     21. Modifications to the Agreement. This Agreement, including Appendix A, together
with the Plan, constitutes the entire understanding of the parties on the subjects covered, subject
to any applicable pre-existing agreement or agreement entered into after the date hereof relating
to full or partial acceleration of vesting in the event of a change of control of the Company (or
similar event). The Grantee expressly warrants that he or she is not accepting this Agreement in
reliance on any promises, representations, or inducements other than those contained herein or
expressly contemplated above. Modifications to this Agreement or the Plan can be made only in an
express written contract executed by a duly authorized officer of the Company. Notwithstanding
anything to the contrary in the Plan or this Agreement, the Company reserves the right to revise
this Agreement as it deems necessary or advisable, in its sole discretion and without the consent
of the Grantee, to comply with Section 409A of the Code or to otherwise avoid imposition of any
additional tax or income recognition under Section 409A of the Code prior to the actual payment of
Shares pursuant to this award of Restricted Stock Units. Notwithstanding the foregoing, if
required by Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), no
Restricted Stock Units will be paid to the Grantee (or in the event of the Grantee’s death, to his
or her estate) earlier than six (6) months and one (1) day following the date of the Termination of
the Grantee’s relationship with the Company as a Service Provider, subject to Section 9.

     22. Amendment, Suspension or Termination of the Plan. By accepting this Restricted
Stock Units award, the Grantee expressly warrants that he or she has received a right to receive
stock under the Plan, and has received, read and understood a description of the Plan. The Grantee
understands that the Plan is discretionary in nature and may be modified, amended, suspended or
terminated by the Company at any time, except as otherwise provided in the Plan and/or the
Agreement.

     23. Labor Law and Nature of Grant. In accepting the award of Restricted Stock Units,
the Grantee acknowledges that:

          (a) the Plan is established voluntarily by the Company;

          (b) the award of Restricted Stock Units is voluntary and occasional and does not create any
contractual or other right to receive future awards of Restricted Stock Units, or benefits in lieu
of Restricted Stock Units even if Restricted Stock Units have been awarded repeatedly in the past;

          (c) all decisions with respect to future awards, if any, will be at the sole discretion of the
Company;

          (d) the Grantee’s participation in the Plan is voluntary;

          (e) the award is an extraordinary item that is outside the scope of the Grantee’s employment
or service contract, if any;

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          (f) the award is not part of normal or expected compensation or salary for any purposes,
including, but not limited to, calculation of any severance, resignation, termination, redundancy,
end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or
similar payments;

          (g) in the event that the Grantee is not an employee of the Company, the award will not be
interpreted to form an employment or service contract or relationship with the Company; and,
furthermore, the award will not be interpreted to form an employment or service contract or
relationship with the Employer or any Parent or other successor or a Subsidiary of the Company;

          (h) the future value of the underlying Shares is unknown and cannot be predicted with
certainty;

          (i) the Company is not providing any tax, legal, or financial advice, nor is the Company
making any recommendations regarding the Grantee’s participation in the Plan or the acquisition or
sale of Shares; and

          (j) the Grantee is hereby advised to consult with the Grantee’s own personal tax, legal and
financial advisors regarding the Grantee’s participation in the Plan before taking any action
related to the Plan.

     24. Data Privacy. The Grantee hereby explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of the Grantee’s personal data as
described in the Notice of Grant and this Agreement and any other Restricted Stock Unit grant
materials by and among, as applicable, the Employer, the Company and its Subsidiaries for the
exclusive purpose of implementing, administering and managing the Grantee’s participation in the
Plan.

          The Grantee understands that the Company and the Employer may hold certain personal
information about the Grantee, including, but not limited to, the Grantee’s name, home address and
telephone number, date of birth, social insurance or other identification number, salary,
nationality, job title, any Shares or directorships held in the Company, details of all Restricted
Stock Units or any other entitlement to Shares awarded, canceled, vested, unvested or outstanding
in the Grantee’s favor, for the exclusive purpose of implementing, administering and managing the
Plan (“Data”).

          The Grantee understands that Data will be transferred to E*Trade or such other stock plan
service provider as may be selected by the Company in the future, which is assisting the Company
with the implementation, administration and management of the Plan. The Grantee understands the
recipients of Data may be located in the Grantee’s country, in the United States or elsewhere, and
that the recipients’ country may have different data privacy laws and protections than the
Grantee’s country. The Grantee understands that the Grantee may request a list with the names and
addresses of any potential recipients of the Data by contacting the Grantee’s local human resources
representative. The Grantee authorizes the Company, E*Trade and any other potential recipients
which may assist the Company (presently or in the future) with implementing, administering and
managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other
form, for the sole purpose of implementing, administering and managing the Grantee’s participation
in the Plan. The Grantee understands that he or she may, at any time, view the Data, request
additional information about the storage and processing of the Data, require any necessary
amendments to the Data or refuse or withdraw the consents herein, in any case without cost, by
contacting in writing the Grantee’s local human resources representative. The Grantee

-10-

 

understands, however, that refusing or withdrawing consent may affect the Grantee’s ability to
participate in the Plan. For more information on the consequences of the Grantee’s refusal to
consent or withdrawal of consent, the Grantee understands that he or she may contact his or her
local human resources representative.

     25. Notice of Governing Law. This award of Restricted Stock Units shall be governed
by, and construed in accordance with, the laws of the State of California, without regard to
principles of conflict of laws. For purposes of litigating any dispute that arises directly or
indirectly from the relationship of the parties evidenced by the award of Restricted Stock Units,
the parties hereby submit to and consent to the exclusive jurisdiction of the State of California
and agree that such litigation shall be conducted on in the courts of Santa Clara County,
California or the federal courts for the United States for the Northern District of California, and
no other courts, where this grant is made and/or to be performed.

     26. Electronic Delivery. The Company may, in its sole discretion, decide to deliver
any documents related to Restricted Stock Units awarded under the Plan or future Restricted Stock
Units that may be awarded under the Plan by electronic means, or to request the Grantee’s consent
to participate in the Plan by electronic means. The Grantee hereby consents to receive such
documents by electronic delivery and if requested, to agree to participate in the Plan through an
on-line or electronic system established and maintained by the Company or another third party
designated by the Company.

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APPENDIX B

PEER GROUP

[NOTE: THE LIST OF PEER GROUP COMPANIES SHALL BE DETERMINED BY THE COMPENSATION COMMITTEE IN
CONNECTION WITH PERFORMANCE RSU GRANTS.]

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[FORM OF TIME-BASED RESTRICTED STOCK UNIT AGREEMENT]

BROCADE COMMUNICATIONS SYSTEMS, INC.

1999 STOCK PLAN (AS AMENDED AND RESTATED)

RESTRICTED STOCK UNIT AGREEMENT

NOTICE OF GRANT

[GRANTEE NAME]

[GRANTEE ADDRESS]

     You (“Grantee”) have been granted an award of Restricted Stock Units under the Company’s
Amended and Restated 1999 Stock Plan (the “Plan”). The date of this Restricted Stock Units
Agreement (the “Agreement”) is the Grant Date defined below. Subject to the provisions of Appendix
A and the Plan, which are attached hereto and incorporated herein in their entirety, the principal
features of this award are as follows:

	 	 	 
	Grant Date:

	 	[GRANT DATE] (the “Grant Date”)
	 
	 	 
	Number of Restricted
Stock Units:

	 	[NUMBER OF RSUs] (the “Number of Restricted Stock
Units”)
	 
	 	 
	Vesting Schedule:

	 	The Restricted Stock Units will vest in accordance
with the following Vesting Schedule; provided,
Grantee remains a Service Provider to the Company
through the applicable vesting dates (the “Vesting
Schedule”):
	 
	 	 
	 

	 	[INSERT VESTING SCHEDULE]

     Your signature below indicates your agreement and understanding that this award is
subject to all of the terms and conditions contained in Appendix A and the Plan. For example,
important additional information on vesting and forfeiture of the Restricted Stock Units is
contained in Sections 3 through 5 and Section 7 of Appendix A. PLEASE BE SURE TO READ ALL OF
APPENDIX A AND THE PLAN, WHICH CONTAIN THE SPECIFIC TERMS AND CONDITIONS OF THIS AWARD.

	 	 	 	 	 
	BROCADE COMMUNICATIONS SYSTEMS, INC.

	 	 	 	GRANTEE
	 
	 	 	 	 
	 

	 	 	 	 
	Signature

	 	 	 	Signature
	 
	 	 	 	 
	 

	 	 	 	 
	Print Name

	 	 	 	Print Name
	 
	 	 	 	 
	 

Title

	 	 	 	 

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APPENDIX A

TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS

     Unless otherwise defined herein, capitalized terms used herein shall have the meanings
ascribed to them in the Plan.

          1. Grant.

               (a) The Company hereby grants to the Grantee under the Plan an award of the Number of
Restricted Stock Units set forth on the Notice of Grant, subject to all of the terms and conditions
in this Agreement and the Plan. For each Restricted Stock Unit that vests, the Grantee will be
entitled to receive one (1) Share (subject to automatic adjustment for stock splits, combinations
and other adjustments contemplated in the Plan).

               (b) When Shares are paid to the Grantee in payment for the Restricted Stock Units, par value
($.001 per share) will be deemed paid by the Grantee for each Restricted Stock Unit by services
rendered by the Grantee, and will be subject to the appropriate tax withholdings.

     2. Company’s Obligation to Pay. Each Restricted Stock Unit has a value equal to the
Fair Market Value of a Share on the date that the Restricted Stock Unit is granted. Unless and
until the Restricted Stock Units have vested in the manner set forth in Sections 3 through 5, the
Grantee will have no right to payment of such Restricted Stock Units. Prior to actual payment of
Shares upon the vesting of any Restricted Stock Units, such Restricted Stock Units will represent
an unsecured obligation. Payment of any vested Restricted Stock Units shall be made in whole
Shares only and any fractional Shares will be forfeited at the time of payment.

     3. Vesting Schedule/Period of Restriction. Except as provided in Sections 4 and 5,
and subject to Section 7, the Restricted Stock Units awarded by this Agreement shall vest in
accordance with the vesting provisions set forth on the Notice of Grant. Restricted Stock Units
shall not vest in accordance with any of the provisions of this Agreement unless the Grantee shall
have been continuously employed by the Company or by its Parent or other successor or a Subsidiary
from the Grant Date through the dates the Restricted Stock Units are otherwise scheduled to vest.

4. Modifications to Vesting Schedule.

          (a) Vesting upon Leave of Absence. In the event that the Grantee takes an authorized leave of
absence (“LOA”), the Restricted Stock Units awarded by this Agreement that are eligible to be
earned shall either: (i) not be affected, or (ii) shall be deferred for a period of time equal to
the duration of such LOA, based on the Company’s LOA policy in effect at such time as determined by
the Company in its sole discretion.

          (b) Death or Disability of Grantee. In the event that the Grantee’s relationship with the
Company or its Parent or other successor or a Subsidiary as a Service Provider is terminated prior
to full vesting of the Restricted Stock Units due to his or her death or Disability, the unvested
portion of the Restricted Stock Units subject to this Restricted Stock Unit award shall be
forfeited on the date of the Grantee’s death or Disability.

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[NOTE: Include the following if change of control arrangements are applicable to the grant:]

          [(c) Change in Control.

               (i) If Grantee’s employment with the Company (or any Parent or Subsidiary of the Company) is
terminated by the Company (or the Parent or Subsidiary of the Company) without Cause or by Grantee
for Good Reason in Connection with a Change of Control, then [AMOUNT OF ACCELERATION]% of the
Number of Restricted Stock Units set forth in the Notice of Grant then unvested shall immediately
vest as of the date of Grantee’s termination of employment with the Company (or any Parent or
Subsidiary of the Company).

               (ii) Any additional vesting of Restricted Stock Units pursuant to Section 4(c)(i) and payment
to Grantee of such underlying Shares shall be contingent on the following: (i) receipt by the
Company of a signed release of claims in form and substance satisfactory to the Company (or its
successor(s)) and expiration of any applicable revocation period with respect to such release; (ii)
Grantee agrees not to knowingly disparage, criticize or otherwise make any derogatory statements
regarding the Company, its directors or officers (other than statements made truthfully in response
to a subpoena or other compulsory legal process); and (iii) Grantee agrees to continue to comply
with the terms of the Company’s Employment, Confidential Information and Invention Assignment
Agreement entered into by Grantee.

               (iii) Definitions.

                    (A) Cause. For purposes of this Agreement, “Cause” means (i) Grantee’s willful and continued
failure to perform the duties and responsibilities of his position that is not corrected within a
thirty (30) day correction period that begins upon delivery to Grantee of a written demand for
performance from the Board that describes the basis for the Board’s belief that Grantee has not
substantially performed his duties; (ii) any act of personal dishonesty taken by Grantee in
connection with his or her responsibilities as an employee of the Company with the intention or
reasonable expectation that such may result in substantial personal enrichment of Grantee; (iii)
Grantee’s conviction of, or plea of nolo contendre to, a felony that the Board reasonably believes
has had or will have a material detrimental effect on the Company’s reputation or business, or (iv)
Grantee materially breaching Grantee’s Confidential Information Agreement, which breach is (if
capable of cure) not cured within thirty (30) days after the Company delivers written notice to
Grantee of the breach.

                    (B) Change of Control. For purposes of this Agreement, “Change of Control” shall mean the
occurrence of any of the following events:

                         (1) the consummation by the Company of a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation;

                         (2) the consummation of the sale or disposition by the Company of all or substantially all of
the Company’s assets;

-3-

 

                         (3) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended) becoming the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company
representing 50% or more of the total voting power represented by the Company’s then outstanding
voting securities; or

                         (4) a change in the composition of the Board, as a result of which fewer than a majority of
the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A)
are directors of the Company as of the date hereof, or (B) are elected, or nominated for election,
to the Board with the affirmative votes of at least a majority of those directors whose election or
nomination was not in connection with any transactions described in subsections (i), (ii), or (iii)
or in connection with an actual or threatened proxy contest relating to the election of directors
of the Company.

                    (C) Good Reason. For purposes of this Agreement, “Good Reason” means the occurrence of any of
the following, without Grantee’s consent: (i) a material reduction of Grantee’s duties, title,
authority or responsibilities in effect immediately prior to a Change of Control; (ii) a reduction
in Grantee’s base salary or target annual cash incentive compensation; (iii) the failure of the
Company to obtain the assumption of the Agreement by the successor, or (iv) the Company requiring
Grantee to relocate his or her principal place of business or the Company relocating its
headquarters, in either case to a facility or location outside of a thirty-five (35) mile radius
from Grantee’s current principal place of employment; provided, however, that Grantee only will
have Good Reason if the Executive gives written notice to the Chief Executive Officer of the
Company of the event or circumstances constituting Good Reason specified in any of the preceding
clauses within ninety (90) days of its initial occurrence and such event or circumstance is not
cured within thirty (30) days after Grantee gives such written notice to the Board. Grantee’s
actions approving any of the foregoing changes (that otherwise may be considered Good Reason) will
be considered consent for the purposes of this Good Reason definition.

                    (D) In Connection with a Change of Control. For purposes of this Agreement, a termination of
Grantee’s employment with the Company is “in Connection with a Change of Control” if Grantee’s
employment is terminated at any time from thirty (30) days prior to a Change of Control through the
last vesting date under the Vesting Schedule following a Change of Control.]

     5. Administrator Discretion. The Administrator, in its discretion, may accelerate the
vesting of the balance, or some lesser portion of the balance, of the Restricted Stock Units at any
time, subject to the terms of the Plan. Such acceleration may result in tax or other consequences
to the Grantee. If so accelerated, such Restricted Stock Units will be considered as having vested
as of the date specified by the Administrator. If the Administrator, in its discretion,
accelerates the vesting of the balance, or some lesser portion of the balance, of the Restricted
Stock Units, the payment of such accelerated Restricted Stock Units nevertheless shall be made at
the same time or times as if such Restricted Stock Units had vested in accordance with the vesting
schedule set forth on the Notice of Grant and Section 1 of this Agreement or as otherwise provided
herein (whether or not the Grantee remains employed by the Company or by one of its Subsidiaries as
of such date(s)). The Grantee is hereby advised to consult with the Grantee’s own personal tax,
legal and financial advisors regarding the Grantee’s participation in the Plan before taking any
action related to the Plan.

-4-

 

     6. Payment after Vesting. Any Restricted Stock Units that vest in accordance with
Sections 3 through 4 of this Agreement will be paid to the Grantee (or in the event of the
Grantee’s
death, to his or her estate) as soon as practicable following the applicable vesting date,
subject to Section 9, but no later than March 15th of the calendar year following the
applicable vesting date.

     7. Forfeiture. The balance of the Restricted Stock Units that have not vested
pursuant to Sections 3 through 5 at the time of the termination of the Grantee’s relationship with
the Company as a Service Provider for any or no reason will be forfeited.

     8. [Reserved.]

     9. Withholding of Taxes.

          (a) General. Regardless of any action the Company and/or the Grantee’s employer (the
“Employer”) take with respect to any or all income tax (including U.S. federal, state, local and/or
non-U.S. taxes), social insurance, payroll tax, payment on account or other tax-related
withholdings (“Tax-Related Items”), the Grantee acknowledges that the ultimate liability for all
Tax-Related Items legally due by the Grantee is and remains the Grantee’s responsibility and that
the Company and/or the Employer (i) make no guarantees or undertakings regarding the treatment of
any Tax-Related Items in connection with any aspect of the award, including the grant of the
Restricted Stock Units, the vesting of the Restricted Stock Units, the delivery of Shares, the
subsequent sale of any Shares received at vesting and the receipt of any dividends; and (ii) do not
commit to structure the terms of the grant or any aspect of the award to reduce or eliminate the
Grantee’s liability for Tax-Related Items.

          (b) Payment of Tax-Related Items. The Grantee authorizes the Company and/or the
Employer, at its discretion, to satisfy the obligations with regard to all Tax-Related Items by
withholding a portion of the Shares issued as payment for vested Restricted Stock Units that have
an aggregate market value sufficient to pay all Tax-Related Items required to be withheld by the
Company and/or the Employer with respect to the vesting of the Restricted Stock Units and issuance
of the Shares, unless the Company, in its sole discretion, either requires or otherwise permits the
Grantee to make alternate arrangements satisfactory to the Company for such withholdings in advance
of the arising of any withholding obligations. The number of Shares withheld pursuant to the prior
sentence will be rounded up to the nearest whole Share, with no refund for any value of the Shares
withheld in excess of the tax obligation as a result of such rounding.

          If the obligation of Tax-Related Items is satisfied by reducing the number of Shares delivered
as described herein, the Grantee is deemed to have been issued the full number of Shares subject to
the award of Restricted Stock Units, notwithstanding that a number of the Shares are held back
solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the award.

          If the foregoing method of withholding is prohibited or insufficient to satisfy all
Tax-Related Items required to be withheld by the Company and/or the Employer with respect to the
vesting of the Restricted Stock Units and issuance of the Shares or if the Company, in its
discretion, determines not to apply the foregoing method of withholding, then the Grantee hereby
authorizes the Company and/or the Employer to satisfy such obligations by one or a combination of
the following: (i) withholding from the Grantee’s wages or other cash compensation paid to the
Grantee by the Company and/or the Employer, to the maximum extent permitted by law; or (ii) selling
the applicable number of Shares or arranging for the sale of the applicable number of Shares (in
either

-5-

 

case on the Grantee’s behalf and at the Grantee’s discretion pursuant to this authorization)
issued in settlement of vested Restricted Stock Units and retaining the requisite proceeds from
such sale.

          Finally, the Grantee shall pay to the Company and/or the Employer any amount of Tax-Related
Items that the Company and/or the Employer may be required to withhold as a result of the Grantee’s
participation in the Plan that cannot be satisfied by the means previously described. The Company
may refuse to deliver to the Grantee any Shares pursuant to the award if the Grantee fails to
comply with the Grantee’s obligations in connection with the Tax-Related Items, as described in
this Section 9.

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

     11. No Effect on Employment. Subject to any employment contract with the Grantee, the
terms of such employment will be determined from time to time by the Company, or the Subsidiary
employing the Grantee, as the case may be, and the Company, or the Subsidiary employing the
Grantee, as the case may be, will have the right, which is hereby expressly reserved, to terminate
or change the terms of the employment of the Grantee at any time for any reason whatsoever, with or
without good cause. The transactions contemplated hereunder and the vesting schedule set forth on
the first page of this Agreement do not constitute an express or implied promise of continued
employment for any period of time. A leave of absence or an interruption in service (including an
interruption during military service) authorized or acknowledged by the Company or the Subsidiary
employing the Grantee, as the case may be, shall not be deemed a termination of the Grantee’s
relationship with the Company or its Subsidiary as a Service Provider for the purposes of this
Agreement.

     12. Address for Notices. Any notice to be given to the Company under the terms of
this Agreement will be addressed to the Company, in care of Stock Administrator, at 1745 Technology
Drive, San Jose, California, 95110, USA, or at such other address as the Company may hereafter
designate in writing, with a copy to the Company, C/O General Counsel, 1745 Technology Drive, San
Jose, California, 95110, USA.

     13. Grant is Not Transferable. Except to the limited extent provided in this
Agreement or the Plan, this grant of Restricted Stock Units and the rights and privileges conferred
hereby will not be sold, pledged, assigned, hypothecated, transferred or disposed of any way
(whether by operation of law or otherwise) and will not be subject to sale under execution,
attachment or similar process, until the Grantee has been issued Shares in payment of the
Restricted Stock Units. Upon any attempt to sell, pledge, assign, hypothecate, transfer or
otherwise dispose of this grant, or any right or privilege conferred hereby, or upon any attempted
sale under any execution, attachment or similar process, this grant and the rights and privileges
conferred hereby immediately will become null and void.

     14. Restrictions on Sale of Securities. The Shares issued as payment for vested
Restricted Stock Units under this Agreement will be registered under U.S. federal securities laws
and

-6-

 

will be freely tradable upon receipt. However, a Grantee’s subsequent sale of the Shares may
be subject to any market blackout-period that may be imposed by the Company and must comply with
the Company’s insider trading policies, and any other U.S. securities laws or other Applicable
Laws.

     15. Binding Agreement. Subject to the limitation on the transferability of this grant
contained herein, this Agreement will be binding upon and inure to the benefit of the heirs,
legatees, legal representatives, successors and assigns of the parties hereto.

     16. Additional Conditions to Issuance of Certificates for Shares. The Company shall
not be required to issue any certificate or certificates for Shares hereunder prior to fulfillment
of all the following conditions: (a) the admission of such Shares to listing on all stock
exchanges on which such class of stock is then listed; (b) the completion of any registration or
other qualification of such Shares under any U.S. state or federal or non-U.S. law or under the
rulings or regulations of the Securities and Exchange Commission or any other governmental
regulatory body, which the Administrator shall, in its absolute discretion, deem necessary or
advisable; (c) the obtaining of any approval or other clearance from any U.S. state or federal or
non-U.S. governmental agency, which the Administrator shall, in its absolute discretion, determine
to be necessary or advisable; and (d) the lapse of such reasonable period of time following the
Vesting Date of the Restricted Stock Units as the Administrator may establish from time to time for
reasons of administrative convenience.

     17. Plan Governs. This Agreement is subject to all the terms and provisions of the
Plan. In the event of a conflict between one or more provisions of this Agreement and one or more
provisions of the Plan, the provisions of the Plan will govern.

     18. Administrator Authority. The Administrator will have the power to interpret the
Plan and this Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret or revoke any such rules
(including, but not limited to, the determination of whether or not any Restricted Stock Units have
vested). All actions taken and all interpretations and determinations made by the Administrator in
good faith will be final and binding upon the Grantee, the Company and all other interested
persons. No member of the Administrator will be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or this Agreement.

     19. Captions. Captions provided herein are for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.

     20. Agreement Severable. In the event that any provision in this Agreement will be
held invalid or unenforceable, such provision will be severable from, and such invalidity or
unenforceability will not be construed to have any effect on, the remaining provisions of this
Agreement.

     21. Modifications to the Agreement. This Agreement, including Appendix A, together
with the Plan, constitutes the entire understanding of the parties on the subjects covered, subject
to any applicable pre-existing agreement or agreement entered into after the date hereof relating
to full or partial acceleration of vesting in the event of a change of control of the Company (or
similar event). The Grantee expressly warrants that he or she is not accepting this Agreement in
reliance on any promises, representations, or inducements other than those contained herein or
expressly contemplated above. Modifications to this Agreement or the Plan can be made only in an
express written contract executed by a duly authorized officer of the Company. Notwithstanding
anything to the contrary in the Plan or this Agreement, the Company reserves the right to revise
this Agreement

-7-

 

as it deems necessary or advisable, in its sole discretion and without the consent
of the Grantee, to comply with Section 409A of the Code or to otherwise avoid imposition of any
additional tax or income recognition under Section 409A of the Code prior to the actual payment of
Shares pursuant to this award of Restricted Stock Units. Notwithstanding the foregoing, if
required by Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”), no Restricted Stock Units will
be paid to the Grantee (or in the event of the Grantee’s death, to his or her estate) earlier than
six (6) months and one (1) day following the date of the Termination of the Grantee’s relationship
with the Company as a Service Provider, subject to Section 9.

     22. Amendment, Suspension or Termination of the Plan. By accepting this Restricted
Stock Units award, the Grantee expressly warrants that he or she has received a right to receive
stock under the Plan, and has received, read and understood a description of the Plan. The Grantee
understands that the Plan is discretionary in nature and may be modified, amended, suspended or
terminated by the Company at any time, except as otherwise provided in the Plan and/or the
Agreement.

     23. Labor Law and Nature of Grant. In accepting the award of Restricted Stock Units,
the Grantee acknowledges that:

          (a) the Plan is established voluntarily by the Company;

          (b) the award of Restricted Stock Units is voluntary and occasional and does not create any
contractual or other right to receive future awards of Restricted Stock Units, or benefits in lieu
of Restricted Stock Units even if Restricted Stock Units have been awarded repeatedly in the past;

          (c) all decisions with respect to future awards, if any, will be at the sole discretion of the
Company;

          (d) the Grantee’s participation in the Plan is voluntary;

          (e) the award is an extraordinary item that is outside the scope of the Grantee’s employment
or service contract, if any;

          (f) the award is not part of normal or expected compensation or salary for any purposes,
including, but not limited to, calculation of any severance, resignation, termination, redundancy,
end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or
similar payments;

          (g) in the event that the Grantee is not an employee of the Company, the award will not be
interpreted to form an employment or service contract or relationship with the Company; and,
furthermore, the award will not be interpreted to form an employment or service contract or
relationship with the Employer or any Parent or other successor or a Subsidiary of the Company;

          (h) the future value of the underlying Shares is unknown and cannot be predicted with
certainty;

          (i) the Company is not providing any tax, legal, or financial advice, nor is the Company
making any recommendations regarding the Grantee’s participation in the Plan or the acquisition or
sale of Shares; and

-8-

 

          (j) the Grantee is hereby advised to consult with the Grantee’s own personal tax, legal and
financial advisors regarding the Grantee’s participation in the Plan before taking any action
related to the Plan.

     24. Data Privacy. The Grantee hereby explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of the Grantee’s personal data as
described in the Notice of Grant and this Agreement and any other Restricted Stock Unit grant
materials by and among, as applicable, the Employer, the Company and its Subsidiaries for the
exclusive purpose of implementing, administering and managing the Grantee’s participation in the
Plan.

          The Grantee understands that the Company and the Employer may hold certain personal
information about the Grantee, including, but not limited to, the Grantee’s name, home address and
telephone number, date of birth, social insurance or other identification number, salary,
nationality, job title, any Shares or directorships held in the Company, details of all Restricted
Stock Units or any other entitlement to Shares awarded, canceled, vested, unvested or outstanding
in the Grantee’s favor, for the exclusive purpose of implementing, administering and managing the
Plan (“Data”).

          The Grantee understands that Data will be transferred to E*Trade or such other stock plan
service provider as may be selected by the Company in the future, which is assisting the Company
with the implementation, administration and management of the Plan. The Grantee understands the
recipients of Data may be located in the Grantee’s country, in the United States or elsewhere, and
that the recipients’ country may have different data privacy laws and protections than the
Grantee’s country. The Grantee understands that the Grantee may request a list with the names and
addresses of any potential recipients of the Data by contacting the Grantee’s local human resources
representative. The Grantee authorizes the Company, E*Trade and any other potential recipients
which may assist the Company (presently or in the future) with implementing, administering and
managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other
form, for the sole purpose of implementing, administering and managing the Grantee’s participation
in the Plan. The Grantee understands that he or she may, at any time, view the Data, request
additional information about the storage and processing of the Data, require any necessary
amendments to the Data or refuse or withdraw the consents herein, in any case without cost, by
contacting in writing the Grantee’s local human resources representative. The Grantee understands,
however, that refusing or withdrawing consent may affect the Grantee’s ability to participate in
the Plan. For more information on the consequences of the Grantee’s refusal to consent or
withdrawal of consent, the Grantee understands that he or she may contact his or her local human
resources representative.

     25. Notice of Governing Law. This award of Restricted Stock Units shall be governed
by, and construed in accordance with, the laws of the State of California, without regard to
principles of conflict of laws. For purposes of litigating any dispute that arises directly or
indirectly from the relationship of the parties evidenced by the award of Restricted Stock Units,
the parties hereby submit to and consent to the exclusive jurisdiction of the State of California
and agree that such litigation shall be conducted on in the courts of Santa Clara County,
California or the federal courts for the United States for the Northern District of California, and
no other courts, where this grant is made and/or to be performed.

     26. Electronic Delivery. The Company may, in its sole discretion, decide to deliver
any documents related to Restricted Stock Units awarded under the Plan or future Restricted Stock
Units
that may be awarded under the Plan by electronic means, or to request the Grantee’s consent
to participate in the Plan by electronic means. The Grantee hereby consents to receive such
documents by electronic delivery and if requested, to agree to participate in the Plan through an
on-line or electronic system established and maintained by the Company or another third party
designated by the Company.

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[FORM OF TIME-BASED RESTRICTED STOCK UNIT AGREEMENT]

BROCADE COMMUNICATIONS SYSTEMS, INC.

1999 STOCK PLAN (AS AMENDED AND RESTATED)

RESTRICTED STOCK UNIT AGREEMENT

FOR NON-U.S. EMPLOYEES

NOTICE OF GRANT

[GRANTEE NAME]

[GRANTEE ADDRESS]

     You (“Grantee”) have been granted an award of Restricted Stock Units under the Company’s
Amended and Restated 1999 Stock Plan (the “Plan”). The date of this Restricted Stock Units
Agreement (the “Agreement”) is the Grant Date defined below. Subject to the provisions of Appendix
A (attached), any appendix to the Agreement for the Grantee’s country of residence (“Appendix B”)
and the Plan, all of which are attached hereto and incorporated herein in their entirety, the
principal features of this award are as follows:

	 	 	 
	Grant Date:

	 	[GRANT DATE] (the “Grant Date”)
	 
	 	 
	Number of Restricted
Stock Units:

	 	[NUMBER OF RSUs] (the “Number of Restricted Stock Units”)
	 
	 	 
	Vesting Schedule:

	 	The Restricted Stock Units will vest in accordance with
the following Vesting Schedule; provided, Grantee
remains a Service Provider to the Company through the
applicable vesting dates (the “Vesting Schedule”):
	 
	 	 
	 

	 	[INSERT VESTING SCHEDULE]

     Your signature below indicates your agreement and understanding that this award is
subject to all of the terms and conditions contained in Appendix A, Appendix B and the Plan. For
example, important additional information on vesting and forfeiture of the Restricted Stock Units
is contained in Sections 3 through 5 and Section 7 of Appendix A. PLEASE BE SURE TO READ ALL OF
APPENDIX A, APPENDIX B AND THE PLAN, WHICH CONTAIN THE SPECIFIC TERMS AND CONDITIONS OF THIS AWARD.

	 	 	 	 	 
	BROCADE COMMUNICATIONS SYSTEMS, INC.

	 	 	 	GRANTEE
	 
	 	 	 	 
	 

	 	 	 	 
	Signature

	 	 	 	Signature
	 
	 	 	 	 
	 

	 	 	 	 
	Print Name

	 	 	 	Print Name
	 
	 	 	 	 
	 

Title

	 	 	 	 

-1-

 

APPENDIX A

TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS

FOR NON-U.S. EMPLOYEES

     Unless otherwise defined herein, capitalized terms used herein shall have the meanings
ascribed to them in the Plan.

          1. Grant.

               (a) The Company hereby grants to the Grantee under the Plan an award of the Number of
Restricted Stock Units set forth on the Notice of Grant, subject to all of the terms and conditions
in this Agreement, Appendix B and the Plan. For each Restricted Stock Unit that vests, the
Grantee will be entitled to receive one (1) Share (subject to automatic adjustment for stock
splits, combinations and other adjustments contemplated in the Plan).

               (b) When Shares are paid to the Grantee in payment for the Restricted Stock Units, par value
($.001 per share) will be deemed paid by the Grantee for each Restricted Stock Unit by services
rendered by the Grantee, and will be subject to the appropriate tax withholdings.

     2. Company’s Obligation to Pay. Each Restricted Stock Unit has a value equal to the
Fair Market Value of a Share on the date that the Restricted Stock Unit is granted. Unless and
until the Restricted Stock Units have vested in the manner set forth in Sections 3 through 5, the
Grantee will have no right to payment of such Restricted Stock Units. Prior to actual payment of
Shares upon the vesting of any Restricted Stock Units, such Restricted Stock Units will represent
an unsecured obligation. Payment of any vested Restricted Stock Units shall be made in whole
Shares only and any fractional Shares will be forfeited at the time of payment.

     3. Vesting Schedule/Period of Restriction. Except as provided in Sections 4 and 5,
and subject to Section 7, the Restricted Stock Units awarded by this Agreement shall vest in
accordance with the vesting provisions set forth on the Notice of Grant. Restricted Stock Units
shall not vest in accordance with any of the provisions of this Agreement unless the Grantee shall
have been continuously employed by the Company or by its Parent or other successor or a Subsidiary
from the Grant Date through the dates the Restricted Stock Units are otherwise scheduled to vest.

     4. Modifications to Vesting Schedule.

          (a) Vesting upon Leave of Absence. In the event that the Grantee takes an authorized leave of
absence (“LOA”), the Restricted Stock Units awarded by this Agreement that are eligible to be
earned shall either: (i) not be affected, or (ii) shall be deferred for a period of time equal to
the duration of such LOA, based on the Company’s LOA policy in effect at such time as determined by
the Company in its sole discretion.

          (b) Death or Disability of Grantee. In the event that the Grantee’s relationship with the
Company or its Parent or other successor or a Subsidiary as a Service Provider is terminated prior
to full vesting of the Restricted Stock Units due to his or her death or Disability, the unvested
portion of the Restricted Stock Units subject to this Restricted Stock Unit award shall be
forfeited on the date of the Grantee’s death or Disability.

-2-

 

     5. Administrator Discretion. The Administrator, in its discretion, may accelerate the
vesting of the balance, or some lesser portion of the balance, of the Restricted Stock Units at any
time, subject to the terms of the Plan. Such acceleration may result in tax or other consequences
to the Grantee. If so accelerated, such Restricted Stock Units will be considered as having vested
as of the date specified by the Administrator. If the Administrator, in its discretion,
accelerates the vesting of the balance, or some lesser portion of the balance, of the Restricted
Stock Units, the payment of such accelerated Restricted Stock Units nevertheless shall be made at
the same time or times as if such Restricted Stock Units had vested in accordance with the vesting
schedule set forth on the Notice of Grant and Section 1 of this Agreement or as otherwise provided
herein (whether or not the Grantee remains employed by the Company or by one of its Subsidiaries as
of such date(s)). The Grantee is hereby advised to consult with the Grantee’s own personal tax,
legal and financial advisors regarding the Grantee’s participation in the Plan before taking any
action related to the Plan.

     6. Payment after Vesting. Any Restricted Stock Units that vest in accordance with
Sections 3 through 4 of this Agreement will be paid to the Grantee (or in the event of the
Grantee’s death, to his or her estate) as soon as practicable following the applicable vesting
date, subject to Section 9, but no later than March 15th of the calendar year following
the applicable vesting date.

     7. Forfeiture. The balance of the Restricted Stock Units that have not vested
pursuant to Sections 3 through 5 at the time of the termination of the Grantee’s relationship with
the Company as a Service Provider for any or no reason will be forfeited.

     8. [Reserved.]

     9. Withholding of Taxes.

          (a) General. Regardless of any action the Company and/or the Grantee’s employer (the
“Employer”) take with respect to any or all income tax (including U.S. federal, state, local and/or
non-U.S. taxes), social insurance, payroll tax, payment on account or other tax-related
withholdings (“Tax-Related Items”), the Grantee acknowledges that the ultimate liability for all
Tax-Related Items legally due by the Grantee is and remains the Grantee’s responsibility and that
the Company and/or the Employer (i) make no guarantees or undertakings regarding the treatment of
any Tax-Related Items in connection with any aspect of the award, including the grant of the
Restricted Stock Units, the vesting of the Restricted Stock Units, the delivery of Shares, the
subsequent sale of any Shares received at vesting and the receipt of any dividends; and (ii) do not
commit to structure the terms of the grant or any aspect of the award to reduce or eliminate the
Grantee’s liability for Tax-Related Items.

          (b) Payment of Tax-Related Items. The Grantee authorizes the Company and/or the
Employer, at its discretion, to satisfy the obligations with regard to all Tax-Related Items by
withholding a portion of the Shares issued as payment for vested Restricted Stock Units that have
an aggregate market value sufficient to pay all Tax-Related Items required to be withheld by the
Company and/or the Employer with respect to the vesting of the Restricted Stock Units and issuance
of the Shares, unless the Company, in its sole discretion, either requires or otherwise permits the
Grantee to make alternate arrangements satisfactory to the Company for such withholdings in advance
of the arising of any withholding obligations. The number of Shares withheld pursuant to the prior
sentence will be no greater than the minimum statutory rate of withholding and will be rounded up
to the nearest whole Share, with no refund for any value of the Shares withheld in excess of the
tax obligation as a result of such rounding.

-3-

 

          If the obligation of Tax-Related Items is satisfied by reducing the number of Shares delivered
as described herein, the Grantee is deemed to have been issued the full number of Shares subject to
the award of Restricted Stock Units, notwithstanding that a number of the Shares are held back
solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the award.

          If the foregoing method of withholding is prohibited or insufficient to satisfy all
Tax-Related Items required to be withheld by the Company and/or the Employer with respect to the
vesting of the Restricted Stock Units and issuance of the Shares or if the Company, in its
discretion, determines not to apply the foregoing method of withholding, then the Grantee hereby
authorizes the Company and/or the Employer to satisfy such obligations by one or a combination of
the following: (a) withholding from the Grantee’s wages or other cash compensation paid to the
Grantee by the Company and/or the Employer, to the maximum extent permitted by law; or (b) selling
the applicable number of Shares or arranging for the sale of the applicable number of Shares (in
either case on the Grantee’s behalf and at the Grantee’s discretion pursuant to this authorization)
issued in settlement of vested Restricted Stock Units and retaining the requisite proceeds from
such sale.

          Finally, the Grantee shall pay to the Company and/or the Employer any amount of Tax-Related
Items that the Company and/or the Employer may be required to withhold as a result of the Grantee’s
participation in the Plan that cannot be satisfied by the means previously described. The Company
may refuse to deliver to the Grantee any Shares pursuant to the award if the Grantee fails to
comply with the Grantee’s obligations in connection with the Tax-Related Items, as described in
this Section 9.

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

     11. No Effect on Employment. Subject to any employment contract with the Grantee, the
terms of such employment will be determined from time to time by the Company, or the Subsidiary
employing the Grantee, as the case may be, and the Company, or the Subsidiary employing the
Grantee, as the case may be, will have the right, which is hereby expressly reserved, to terminate
or change the terms of the employment of the Grantee at any time for any reason whatsoever, with or
without good cause. The transactions contemplated hereunder and the vesting schedule set forth on
the first page of this Agreement do not constitute an express or implied promise of continued
employment for any period of time. A leave of absence or an interruption in service (including an
interruption during military service) authorized or acknowledged by the Company or the Subsidiary
employing the Grantee, as the case may be, shall not be deemed a termination of the Grantee’s
relationship with the Company or its Subsidiary as a Service Provider for the purposes of this
Agreement.

     12. Address for Notices. Any notice to be given to the Company under the terms of
this Agreement will be addressed to the Company, in care of Stock Administrator, at 1745 Technology
Drive, San Jose, California, 95110, USA, or at such other address as the Company may hereafter

-4-

 

designate in writing, with a copy to the Company, C/O General Counsel, 1745 Technology Drive,
San Jose, California, 95110, USA.

     13. Grant is Not Transferable. Except to the limited extent provided in this
Agreement or the Plan, this grant of Restricted Stock Units and the rights and privileges conferred
hereby will not be sold, pledged, assigned, hypothecated, transferred or disposed of any way
(whether by operation of law or otherwise) and will not be subject to sale under execution,
attachment or similar process, until the Grantee has been issued Shares in payment of the
Restricted Stock Units. Upon any attempt to sell, pledge, assign, hypothecate, transfer or
otherwise dispose of this grant, or any right or privilege conferred hereby, or upon any attempted
sale under any execution, attachment or similar process, this grant and the rights and privileges
conferred hereby immediately will become null and void.

     14. Restrictions on Sale of Securities. The Shares issued as payment for vested
Restricted Stock Units under this Agreement will be registered under U.S. federal securities laws
and will be freely tradable upon receipt. However, a Grantee’s subsequent sale of the Shares may
be subject to any market blackout-period that may be imposed by the Company and must comply with
the Company’s insider trading policies, and any other U.S. securities laws or other Applicable
Laws.

     15. Binding Agreement. Subject to the limitation on the transferability of this grant
contained herein, this Agreement will be binding upon and inure to the benefit of the heirs,
legatees, legal representatives, successors and assigns of the parties hereto.

     16. Additional Conditions to Issuance of Certificates for Shares. The Company shall
not be required to issue any certificate or certificates for Shares hereunder prior to fulfillment
of all the following conditions: (a) the admission of such Shares to listing on all stock
exchanges on which such class of stock is then listed; (b) the completion of any registration or
other qualification of such Shares under any U.S. state or federal or non-U.S. law or under the
rulings or regulations of the Securities and Exchange Commission or any other governmental
regulatory body, which the Administrator shall, in its absolute discretion, deem necessary or
advisable; (c) the obtaining of any approval or other clearance from any U.S. state or federal or
non-U.S. governmental agency, which the Administrator shall, in its absolute discretion, determine
to be necessary or advisable; and (d) the lapse of such reasonable period of time following the
Vesting Date of the Restricted Stock Units as the Administrator may establish from time to time for
reasons of administrative convenience.

     17. Plan Governs. This Agreement and the Appendix B are subject to all the terms and
provisions of the Plan. In the event of a conflict between one or more provisions of this
Agreement or the Appendix B and one or more provisions of the Plan, the provisions of the Plan will
govern.

     18. Administrator Authority. The Administrator will have the power to interpret the
Plan and this Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret or revoke any such rules
(including, but not limited to, the determination of whether or not any Restricted Stock Units have
vested). All actions taken and all interpretations and determinations made by the Administrator in
good faith will be final and binding upon the Grantee, the Company and all other interested
persons. No member of the Administrator will be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or this Agreement.

     19. Captions. Captions provided herein are for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.

-5-

 

     20. Agreement Severable. In the event that any provision in this Agreement will be
held invalid or unenforceable, such provision will be severable from, and such invalidity or
unenforceability will not be construed to have any effect on, the remaining provisions of this
Agreement.

     21. Modifications to the Agreement. This Agreement, including Appendix A and B,
together with the Plan, constitutes the entire understanding of the parties on the subjects
covered, subject to any applicable pre-existing agreement or agreement entered into after the date
hereof relating to full or partial acceleration of vesting in the event of a change of control of
the Company (or similar event). The Grantee expressly warrants that he or she is not accepting
this Agreement in reliance on any promises, representations, or inducements other than those
contained herein or expressly contemplated above. Modifications to this Agreement or the Plan can
be made only in an express written contract executed by a duly authorized officer of the Company.
Notwithstanding anything to the contrary in the Plan or this Agreement, the Company reserves the
right to revise this Agreement as it deems necessary or advisable, in its sole discretion and
without the consent of the Grantee, to comply with Section 409A of the Code or to otherwise avoid
imposition of any additional tax or income recognition under Section 409A of the Code prior to the
actual payment of Shares pursuant to this award of Restricted Stock Units. Notwithstanding the
foregoing, if required by Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), no Restricted Stock Units will be paid to the Grantee (or in the event of the Grantee’s
death, to his or her estate) earlier than six (6) months and one (1) day following the date of the
Termination of the Grantee’s relationship with the Company as a Service Provider, subject to
Section 9.

     22. Amendment, Suspension or Termination of the Plan. By accepting this Restricted
Stock Units award, the Grantee expressly warrants that he or she has received a right to receive
stock under the Plan, and has received, read and understood a description of the Plan. The Grantee
understands that the Plan is discretionary in nature and may be modified, amended, suspended or
terminated by the Company at any time, except as otherwise provided in the Plan and/or the
Agreement.

     23. Labor Law and Nature of Grant. In accepting the award of Restricted Stock Units,
the Grantee acknowledges that:

          (a) the Plan is established voluntarily by the Company;

          (b) the award of Restricted Stock Units is voluntary and occasional and does not create any
contractual or other right to receive future awards of Restricted Stock Units, or benefits in lieu
of Restricted Stock Units even if Restricted Stock Units have been awarded repeatedly in the past;

          (c) all decisions with respect to future awards, if any, will be at the sole discretion of the
Company;

          (d) the Grantee’s participation in the Plan is voluntary;

          (e) the award is an extraordinary item that does not constitute compensation of any kind for
services of any kind rendered to the Company or the Employer, and that is outside the scope of the
Grantee’s employment or service contract, if any;

-6-

 

          (f) the award is not part of normal or expected compensation or salary for any purposes,
including, but not limited to, calculation of any severance, resignation, termination, redundancy,
end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or
similar payments and in no event should be considered as compensation for, or relating in any way
to, past services for the Company or the Employer;

          (g) in the event that the Grantee is not an employee of the Company, the award will not be
interpreted to form an employment or service contract or relationship with the Company; and,
furthermore, the award will not be interpreted to form an employment or service contract or
relationship with the Employer or any Parent or other successor or a Subsidiary of the Company;

          (h) the future value of the underlying Shares is unknown and cannot be predicted with
certainty;

          (i) in consideration of the award of Restricted Stock Units, no claim or entitlement to
compensation or damages shall arise from termination of the award or from any diminution in value
of the award or Shares received upon vesting of the award resulting from termination of the
Grantee’s employment or service by the Company or the Employer (for any reason whatsoever and
whether or not in breach of local labor laws) and the Grantee irrevocably releases the Company
and/or the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such
claim is found by a court of competent jurisdiction to have arisen, then, by signing this
Agreement, the Grantee shall be deemed irrevocably to have waived the Grantee’s entitlement to
pursue such claim;

          (j) the Company is not providing any tax, legal, or financial advice, nor is the Company
making any recommendations regarding the Grantee’s participation in the Plan or the acquisition or
sale of Shares; and

          (k) the Grantee is hereby advised to consult with the Grantee’s own personal tax, legal and
financial advisors regarding the Grantee’s participation in the Plan before taking any action
related to the Plan.

     24. Data Privacy. The Grantee hereby explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of the Grantee’s personal data as
described in the Notice of Grant and this Agreement and any other Restricted Stock Unit grant
materials by and among, as applicable, the Employer, the Company and its Subsidiaries for the
exclusive purpose of implementing, administering and managing the Grantee’s participation in the
Plan.

          The Grantee understands that the Company and the Employer may hold certain personal
information about the Grantee, including, but not limited to, the Grantee’s name, home address and
telephone number, date of birth, social insurance or other identification number, salary,
nationality, job title, any Shares or directorships held in the Company, details of all Restricted
Stock Units or any other entitlement to Shares awarded, canceled, vested, unvested or outstanding
in the Grantee’s favor, for the exclusive purpose of implementing, administering and managing the
Plan (“Data”).

          The Grantee understands that Data will be transferred to E*Trade or such other stock plan
service provider as may be selected by the Company in the future, which is assisting the Company
with the implementation, administration and management of the Plan. The Grantee

-7-

 

understands the recipients of Data may be located in the Grantee’s country, in the United
States or elsewhere, and that the recipients’ country may have different data privacy laws and
protections than the Grantee’s country. The Grantee understands that the Grantee may request a
list with the names and addresses of any potential recipients of the Data by contacting the
Grantee’s local human resources representative. The Grantee authorizes the Company, E*Trade and
any other potential recipients which may assist the Company (presently or in the future) with
implementing, administering and managing the Plan to receive, possess, use, retain and transfer the
Data, in electronic or other form, for the sole purpose of implementing, administering and managing
the Grantee’s participation in the Plan. The Grantee understands that he or she may, at any time,
view the Data, request additional information about the storage and processing of the Data, require
any necessary amendments to the Data or refuse or withdraw the consents herein, in any case without
cost, by contacting in writing the Grantee’s local human resources representative. The Grantee
understands, however, that refusing or withdrawing consent may affect the Grantee’s ability to
participate in the Plan. For more information on the consequences of the Grantee’s refusal to
consent or withdrawal of consent, the Grantee understands that he or she may contact his or her
local human resources representative.

     25. Notice of Governing Law. This award of Restricted Stock Units shall be governed
by, and construed in accordance with, the laws of the State of California, without regard to
principles of conflict of laws. For purposes of litigating any dispute that arises directly or
indirectly from the relationship of the parties evidenced by the award of Restricted Stock Units,
the parties hereby submit to and consent to the exclusive jurisdiction of the State of California
and agree that such litigation shall be conducted on in the courts of Santa Clara County,
California or the federal courts for the United States for the Northern District of California, and
no other courts, where this grant is made and/or to be performed.

     26. Language. If the Grantee has received this Agreement or any other document
related to the Plan translated into a language other than English and if the translated version is
different than the English version, the English version will control, unless otherwise prescribed
by local law.

     27. Electronic Delivery. The Company may, in its sole discretion, decide to deliver
any documents related to Restricted Stock Units awarded under the Plan or future Restricted Stock
Units that may be awarded under the Plan by electronic means, or to request the Grantee’s consent
to participate in the Plan by electronic means. The Grantee hereby consents to receive such
documents by electronic delivery and if requested, to agree to participate in the Plan through an
on-line or electronic system established and maintained by the Company or another third party
designated by the Company.

     28. Appendix B. Notwithstanding any provision in this Agreement or any other Plan
documents to the contrary, the award of Restricted Stock Units shall be subject to any special
terms and conditions as set forth in the Appendix B to this Agreement for the Grantee’s country of
residence, if any. The Appendix B, if any, constitutes part of this Agreement.

-8-

 

APPENDIX B

TO TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS

SPECIAL PROVISIONS FOR GRANTEES OUTSIDE THE UNITED STATES

     This Appendix B, which is part of the Agreement, includes additional terms and conditions of
the award of Restricted Stock Units that will apply to Grantees in the countries listed below.
Please note that the exchange control information provided below is current as of April 2007.
However, exchange controls are subject to change and the Grantee should consult his or her personal
advisor(s) with respect to the applicable exchange controls (if any) which may apply to the vesting
of the Restricted Stock Units, acquisition and/or sale of the Shares. Capitalized terms used but
not defined herein shall have the same meanings assigned to them in the Plan, the Agreement and the
Notice of Grant.

Australia

     No special provisions.

Austria

Consumer Protection Act Notice

     The Grantee acknowledges that he or she may be entitled to revoke the Agreement on the basis
of the Austrian Consumer Protection Act according the following rules:

	 	(i)	 	If the Grantee receives the award of Restricted Stock Units under the Plan
outside the business premises of the Company, the Grantee may be entitled to revoke his
or her acceptance of the Agreement. The revocation must be made within one week after
the Grantee has signed the Notice of Grant.
	 
	 	(ii)	 	The revocation must be in written form to be valid. It is sufficient if the
Grantee returns the Agreement to the Company or the Company’s representative with
language that can be understood as his or her refusal to conclude or honor the
Agreement. It is sufficient if the revocation is sent within the period discussed
above.

Belgium

Tax Compliance

     The Grantee is required to report any taxable income attributable to the award of Restricted
Stock Units on his or her annual tax return. In addition, the Grantee is required to report any
bank accounts opened and maintained outside Belgium on his or her annual tax return.

1

 

Brazil

Intent to Comply with Law

     By accepting this award of Restricted Stock Units, the Grantee acknowledges that he or she
agrees to comply with applicable Brazilian laws and pay any and all applicable taxes associated
with the vesting of the Restricted Stock Units and the sale of Shares.

Exchange Control Reporting

     A Grantee resident or domiciled in Brazil will be required to submit annually a declaration of
assets and rights held outside of Brazil to the Central Bank of Brazil if the aggregate value of
such assets and rights is equal to or greater than US$100,000. Assets and rights that must be
reported include Shares of Company stock.

Canada

Consent to Receive Information in English for Quebec Grantees

     The parties acknowledge that it is their express wish that the Agreement, as well as all
documents, notices and legal proceedings entered into, given or instituted pursuant hereto or
relating directly or indirectly hereto, be drawn up in English.

     Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que
de tous documents exécutés, avis donnés et procédures judiciaries intentées, directement ou
indirectement, relativement à ou suite à la présente convention.

Securities Law Information

     The Grantee is permitted to sell Shares acquired in settlement of the Restricted Stock Units
through the designated broker appointed under the Plan provided the resale of Shares acquired in
settlement of the Restricted Stock Units takes place outside of Canada through facilities of a
stock exchange on which the Shares are listed. The Shares are currently listed on the Nasdaq
Global Select market in the United States.

China

Exchange Control Information

     Exchange control approval/reporting requirements may apply when the Grantee sells Shares and
repatriates the proceeds to China. As a result, the Grantee should consult with his/her personal
advisor as to the process for repatriating the proceeds to China.

Germany

No special provisions.

2

 

Hong Kong

Restricted Stock Units Payable Only in Shares

     Restricted Stock Units awarded to Grantees in Hong Kong shall be paid in Shares only. In no
event shall any of such Restricted Stock Units be paid in cash, notwithstanding any discretion
contained in the Plan or any provisions in the Agreement to the contrary.

Securities Law Notice

     This offer of Restricted Stock Units and the Shares subject to the Restricted Stock Units is
not a public offer of securities and is available only for employees of the Company or any parent
or Subsidiary participating in the Plan. The contents of this Appendix B, the Agreement and the
Plan have not been reviewed by any regulatory authority in Hong Kong. The Grantee is advised to
exercise caution in relation to this offer of Restricted Stock Units. If the Grantee has any doubt
as to the contents of this Appendix B, the Agreement or the Plan, the Grantee should obtain
independent professional advice.

Israel

Data Privacy Consent

     Grantee’s right to protect his or her personal data in connection with the Plan might be
restricted under certain circumstances. Specifically, the Company or the Company’s Israeli
Subsidiary may be required to disclose to the Israeli tax authorities information on grants,
vesting and sales under the Plan.

Italy

Plan Document Acknowledgement

     By accepting the award of Restricted Stock Units, the Grantee acknowledges that he or she has
received a copy of the Plan, has review the Plan and the Agreement in their entirety and fully
understands and accepts all provisions of the Plan and the Agreement.

     The Grantee further acknowledges that he or she has read and specifically and expressly
approves the following clauses in the Agreement: Paragraph 9: Withholding of Taxes; Paragraph 13:
Grant is Not Transferable; Paragraph 23: Labor Law and Nature of Grant; Paragraph 25: Notice of
Governing Law; and the Data Privacy Consent below.

Data Privacy Consent

     Notwithstanding Paragraph 24 or any other provision of the Agreement, Grantee agrees that the
following shall apply with regard to data privacy in Italy:

     Grantee hereby explicitly and unambiguously consents to the collection, use, processing and
transfer, in electronic or other form, of personal data as described in this section of
Appendix B by and among, as applicable, the Employer and the Company and any

3

 

of its Subsidiaries for the exclusive purpose of implementing, administering and managing
Grantee’s participation in the Plan.

     Grantee understands that the Employer, the Company and any of its Subsidiaries may hold
certain personal information about Grantee, including, Grantee’s name, home address and telephone
number, date of birth, social insurance number or other identification number, salary, nationality,
job title, any Shares or directorships held in the Company, details of the award of Restricted
Stock Units or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or
outstanding in Grantee’s favor, for the exclusive purpose of managing and administering the Plan
(“Data”).

     Grantee also understands that providing the Company with Grantee’s Data is necessary for the
performance of the Plan and that Grantee’s denial to provide such Data would make it impossible for
the Company to perform its contractual obligations and may affect Grantee’s ability to participate
in the Plan. The Controller of personal data processing is Brocade Communications Systems, Inc.,
with registered offices at 1745 Technology Drive, San Jose, California, 95110, United States of
America, and, pursuant to Legislative Decree no. 196/2003, its representative in Italy is [insert
name of Brocade’s Italian subsidiary] with registered offices at [insert address], Italy. Grantee
understands that Grantee’s Data will not be publicized, but it may be transferred to E*Trade
or other third parties, banks, other financial institutions or brokers involved in the
management and administration of the Plan. Grantee further understands that the Company and/or its
Subsidiaries will transfer Data amongst themselves as necessary for the purpose of implementation,
administration and management of Grantee’s participation in the Plan, and that the Company and/or
its Subsidiaries may each further transfer Data to third parties assisting the Company in the
implementation, administration and management of the Plan, including any requisite transfer to
E*Trade            or another            third party with whom Grantee may elect to deposit any Shares acquired
under the Plan. Such recipients may receive, possess, use, retain and transfer the Data in
electronic or other form, for the purposes of implementing, administering and managing Grantee’s
participation in the Plan. Grantee understands that these recipients may be located in the
European Economic Area, or elsewhere, such as the U.S. or Asia. Should the Company exercise its
discretion in suspending all necessary legal obligations connected with the management and
administration of the Plan, it will delete Grantee’s Data as soon as it has accomplished all the
necessary legal obligations connected with the management and administration of the Plan.

     Grantee understands that Data processing related to the purposes specified above shall take
place under automated or non-automated conditions, anonymously when possible, that comply with the
purposes for which Data are collected and with confidentiality and security provisions as set forth
by applicable laws and regulations, with specific reference to Legislative Decree no. 196/2003.

     The processing activity, including communication, the transfer of Grantee’s Data abroad,
including outside of the European Union, as herein specified and pursuant to applicable laws and
regulations, does not require Grantee’s consent thereto as the processing is necessary to
performance of contractual obligations related to implementation, administration and management of
the Plan. Grantee understands that, pursuant to Section 7

4

 

of the Legislative Decree no. 196/2003, Grantee has the right to, including but not limited
to, access, delete, update, ask for rectification of Grantee’s Data and estop, for legitimate
reason, the Data processing. Furthermore, Grantee is aware that Grantee’s Data will not be used
for direct marketing purposes. In addition, the Data provided can be reviewed and questions or
complaints can be addressed by contacting Grantee’s local human resources department.

Japan

     No special provisions.

Korea

Exchange Control Information

     If Grantee realizes US$500,000 or more from the sale of Shares acquired in settlement of the
Restricted Stock Units, Grantee will be required to repatriate the sale proceeds back to Korea
within 18 months of sale.

Mexico

     Policy Statement. La invitación que la Compañía hace en relación con el Plan es unilateral y
discrecional, por lo tanto, la Compañía se reserva el derecho absoluto para modificar o terminar el
mismo en cualquier momento, sin ninguna responsabilidad para el Opcionante. Esta invitación y, en
el caso del Opcionante, la adquisición de acciones, de ninguna manera establecen relación laboral
alguna entre el Opcionante y la Compañía. Tampoco establece derecho alguno entre el Opcionante y
su empleador.

     English Translation. The invitation the Company is making under the Plan is unilateral and
discretionary and, therefore, the Company reserves the absolute right to amend it and discontinue
it at any time without any liability to the Grantee. This invitation and, in the Grantee’s case,
the acquisition of Shares does not, in any way, establish a labor relationship between the Grantee
and the Company and it does not establish any rights between the Grantee and the Employer.

Netherlands

Notification For Dutch Grantees

     The Grantee has been granted Restricted Stock Units under the Plan, pursuant to which the
Grantee may acquire shares of the Company’s Shares. Grantees that are residents of the Netherlands
should be aware of the Dutch insider trading rules, which may impact the sale of Shares issued upon
vesting of the Restricted Stock Units. In particular, the Grantee may be prohibited from effecting
certain Share transactions if he or she has insider information regarding the Company.

     Below is a discussion of the applicable restrictions. The Grantee is advised to read the
discussion carefully to determine whether the insider rules could apply to him or her. If it is
uncertain whether the insider rules apply, we recommend that the Grantee consults with his or

5

 

her legal advisor. Please note that the Company cannot be held liable if a Grantee violates
the Dutch insider rules. The Grantee is responsible for ensuring his or her compliance with these
rules.

     By entering into the Agreement and participating in the Plan, the Grantee acknowledges having
read and understood the Notification and acknowledges that it is his or her responsibility to
comply with the Dutch insider trading rules, as discussed herein.

Prohibition Against Insider Trading

     Dutch securities laws prohibit insider trading. Under Article 46 of the Act on the
Supervision of the Securities Trade 1995, anyone who has “inside information” related to the
Company is prohibited from effectuating a transaction in securities in or from the Netherlands.
“Inside information” is knowledge of a detail concerning the issuer to which the securities relate
that is not public and which, if published, would reasonably be expected to affect the stock price,
regardless of the development of the price. The insider could be any employee of the Company or
its Dutch Subsidiary who has inside information as described above.

     Given the broad scope of the definition of inside information, certain employees of the
Company working at its Dutch Subsidiary may have inside information and thus, would be prohibited
from effectuating a transaction in securities in the Netherlands at a time when he or she had such
inside information.

Singapore

Securities Law Notification

     The grant of the award of Restricted Stock Units under the Plan is being made on a private
basis and is, therefore, exempt from registration in Singapore.

Director Notification

     If the Grantee is a director, associate director or shadow director of a Singapore Subsidiary
or affiliate of the Company, the Grantee is subject to certain notification requirements under the
Singapore Companies Act. Among these requirements is an obligation to notify the Singapore
Subsidiary or affiliate in writing when the Grantee receives an interest (e.g., Restricted Stock
Units, Shares) in the Company or any related companies. Please contact the Company to obtain a
copy of the notification form. In addition, the Grantee must notify the Singapore Subsidiary or
affiliate when the Grantee sells Shares of the Company or any related company (including when the
Grantee sells Shares acquired pursuant to this award). These notifications must be made within two
days of acquiring or disposing of any interest in the Company or any related company. In addition,
a notification must be made of the Grantee’s interests in the Company or any related company within
two days of becoming a director.

6

 

Spain

Labor Law Acknowledgement

     In accepting the Restricted Stock Unit award, the Grantee acknowledges that he or she consents
to participation in the Plan and has received a copy of the Plan and the Agreement. The Grantee
understands that the Company has unilaterally, gratuitously and discretionally decided to grant
Restricted Stock Units under the Plan to individuals who may be employees of the Company or its
Subsidiaries or affiliates throughout the world. The decision is a limited decision that is
entered into upon the express assumption and condition that the grant will not bind the Company or
any of its Subsidiaries or affiliates. Consequently, the Grantee understands that the Restricted
Stock Units are granted on the assumption and condition that the Restricted Stock Units or the
Shares acquired pursuant to the award shall not become a part of any employment contract (either
with the Company or any of its Subsidiaries) and shall not be considered a mandatory benefit,
salary for any purposes (including severance compensation) or any other right whatsoever. In
addition, the Grantee understands that this award would not be made to the Grantee but for the
assumptions and conditions referred to above; thus, the Grantee acknowledges and freely accepts
that should any or all of the assumptions be mistaken or should any of the conditions not be met
for any reason, then any grant of Restricted Stock Units shall be null and void.

Exchange Control Requirements

     To participate in the Plan, the Grantee must comply with exchange control regulations in
Spain. The acquisition of Shares under the Plan must be declared for statistical purposes to the
Spanish Dirección General de Política Comercial e Inversiones Exteriores (the “DGPCIE”), the Bureau
for Commercial Policy and Foreign Investments, which is a department of the Ministry of the
Economy. The Grantee must make the declaration himself or herself by filing a form with the
DGPCIE. When receiving foreign currency payments derived from the ownership of Shares (i.e.,
dividends or sale proceeds), the Grantee must inform the financial institution receiving the
payment of the basis upon which such payment is made. The Grantee will need to provide the
institution with the following information: (i) the Grantee’s name, address, and fiscal
identification number; (ii) the name and corporate domicile of the Company; (iii) the amount of the
payment; (iv) the currency used; (v) the country of origin; (vi) the reasons for the payment; and
(vii) further information that may be required. If the Grantee acquires Shares under the Plan and
wishes to import the ownership title of such Shares (i.e., share certificates) into Spain, the
Grantee must declare the importation of such securities to the DGPCIE.

Securities Law Notice

     The grant of Restricted Stock Units and the Shares issued pursuant to the award are considered
a private placement outside of the scope of Spanish laws on public offerings and issuances.

Switzerland

     No special provisions.

7

 

Taiwan

     No special provisions.

UAE

     No special provisions.

* * * * *

8

 

[FORM OF PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT –

MARKET CAPITALIZATION GROWTH]

BROCADE COMMUNICATIONS SYSTEMS, INC.

PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT

NOTICE OF GRANT

[GRANTEE NAME]

[GRANTEE ADDRESS]

     You (“Grantee”) have been granted an award of Restricted Stock Units under the Company’s
Amended and Restated 1999 Stock Plan (the “Plan”). The date of this Restricted Stock Unit
Agreement (the “Agreement”) is the Grant Date defined below. Subject to the provisions of Appendix
A, any appendix to the Agreement for Grantee’s country of residence (for non-US employees) and the
Plan, all of which are attached hereto and incorporated herein in their entirety, the principal
features of this Award are as follows:

	 	 	 
	Grant Date:

	 	[                    ] (the “Grant Date”)
	 
	 	 
	Maximum Number
of Restricted Stock Units:

	 	[                    ] (the “Maximum Number of Restricted Stock Units”)
	 
	 	 
	Pool Percentage:

	 	[                    ]
	 
	 	 
	Grantee Percentage of
Restricted Stock Unit Pool:

	 	[                    ]%
	 
	 	 
	Performance Period:

	 	[PERFORMANCE PERIOD BEGIN DATE] through [PERFORMANCE PERIOD END DATE] (subject to Section 4(c) of
Appendix A) (the “Performance Period”).
	 
	 	 
	Performance Matrix:

	 	The number of Restricted Stock Units in which you may vest in accordance with the Vesting Schedule
will depend upon the Company’s Market Capitalization Growth Rate as compared to the QQQQ Growth Rate
for the Performance Period and will be determined in accordance with Section 1 of Appendix A.
	 
	 	 
	 

	 	For this purpose, “Market Capitalization Growth Rate” means the
percentage growth in the Market Capitalization of the Company during
the Performance Period determined by comparing the Market
Capitalization of the Company as of the day immediately preceding the
commencement of the Performance Period with the Market Capitalization
of the Company as of the last day of the Performance Period.
	 
	 	 
	 

	 	For this purpose, “QQQQ Growth Rate” means, as to the Performance
Period, the total return (change in share price plus reinvestment of
any dividends) of a share of Nasdaq-100 Index Tracking Stock issued by

-1-

 

	 	 	 
	 

	 	the PowerShares QQQ Trust, Series 1 (or any successor fund),
denominated as a percentage. For purposes of the preceding sentence,
the “change in share price” will be determined by comparing the 10-day
trading average of Nasdaq-100 Index Tracking Stock as of the day
immediately preceding the commencement of the Performance Period with
the 10-day trading average of Nasdaq-100 Index Tracking Stock as of
the last day of the Performance Period. For this purpose, the “10-day
trading average of Nasdaq-100 Index Tracking Stock” will mean the
average closing sales price of one share of Nasdaq-100 Index Tracking
Stock for the 10 most recent trading days ending on, and including,
the relevant date, as reported on the established stock exchange or
national market system on which Nasdaq-100 Index Tracking Stock is
listed.
	 
	 	 
	 

	 	For additional definitions of terms used in this Agreement, please see
Section 1(c) of Appendix A.
	 
	 	 
	Vesting Schedule:

	 	The Grantee will vest on the date the Administrator determines the number of
Restricted Stock Units earned in accordance with the Performance Matrix and Section 1 of
Appendix A (the “Vesting Date”), provided that such determination will be made within 30 days
after the end of the Performance Period. Except as otherwise provided in Appendix A, the
Grantee will not vest in the Restricted Stock Units unless he or she remains a Service
Provider through the Vesting Date.

     Your signature below indicates your agreement and understanding that this award is subject to
all of the terms and conditions contained in Appendix A, Appendix B, if any, and the Plan. For
example, important additional information on vesting and forfeiture of the Restricted Stock Units
is contained in Sections 3 through 5 and Section 7 of Appendix A. PLEASE BE SURE TO READ ALL OF
APPENDIX A, APPENDIX B, IF ANY, AND THE PLAN, WHICH CONTAIN THE SPECIFIC TERMS AND CONDITIONS OF
THIS AWARD.

	 	 	 	 	 	 	 
	BROCADE COMMUNICATIONS SYSTEMS, INC.

	 	 	 	GRANTEE	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Signature

	 	 	 	Signature	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Print Name

	 	 	 	Print Name	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Title
	 	 	 	 	 	 

-2-

 

APPENDIX A

TERMS AND CONDITIONS OF PERFORMANCE-BASED RESTRICTED STOCK UNITS

     Unless otherwise defined herein, capitalized terms used herein shall have the meanings
ascribed to them in the Plan.

     1. Grant.

          (a) The Company hereby grants to the Grantee under the Plan an award of Restricted Stock
Units, subject to all of the terms and conditions in this Agreement, Appendix B, if any, and the
Plan. For each Restricted Stock Unit that vests, the Grantee will be entitled to receive one (1)
Share (subject to automatic adjustment for stock splits, combinations and the like pursuant to
Section 14 of the Plan).

          (b) The number of Restricted Stock Units in which the Grantee may vest will depend upon the
Company’s Market Capitalization Growth Rate as compared to the QQQQ Growth Rate for the Performance
Period and will be determined following the end of the Performance Period as follows:

               (i) The QQQQ Growth Rate for the Performance Period will be compared to the Company’s Market
Capitalization Growth Rate for the Performance Period;

               (ii) If the QQQQ Growth Rate for the Performance Period equals or exceeds the Company’s Market
Capitalization Growth Rate for the Performance Period, this Restricted Stock Unit award will
immediately terminate and the Restricted Stock Units granted hereunder will be forfeited and
automatically transferred to and reacquired by the Company at no cost to the Company;

               (iii) To the extent the Company’s Market Capitalization Growth Rate for the Performance Period
exceeds the QQQQ Growth Rate for the Performance Period (the “Excess Growth Rate”), the Company’s
Market Capitalization as of the day immediately preceding the commencement of the Performance
Period will be multiplied by the Excess Growth Rate. For the avoidance of doubt, if both rates are
negative, the Company’s Market Capitalization Growth Rate will exceed the QQQQ Growth Rate for
purposes of the previous sentence to the extent that the Company’s Market Capitalization Growth
Rate is a larger number than the QQQQ Growth Rate, and the Excess Growth Rate will be the
difference between the two rates. For example, if the Company’s Market Capitalization Growth Rate
is -10% and the QQQQ Growth Rate is -20%, the Company’s Market Capitalization Growth Rate is higher
than the QQQQ Growth Rate, and the Excess Growth Rate is 10%. The resulting dollar value (rounded
down to the nearest whole dollar) will be referred to herein as the “Market Capitalization Gain”;

               (iv) The Market Capitalization Gain will be multiplied by the Pool Percentage set forth on the
Notice of Grant. The resulting dollar value (rounded down to the nearest whole dollar) will be
referred to herein as the “Restricted Stock Unit Pool”;

               (v) The Restricted Stock Unit Pool will be multiplied by the Grantee Percentage of Restricted
Stock Unit Pool set forth on the Notice of Grant and rounded down to the nearest whole dollar; and

-3-

 

               (vi) The dollar value determined in accordance with Section 1(b)(v) above will be divided by
the 10-Day Trading Average of the Company’s Common Stock as of the last day of the Performance
Period (rounded down to the nearest whole number), resulting in a preliminary number of Restricted
Stock Units.

               The number of Restricted Stock Units in which the Grantee may vest in accordance with the
Vesting Schedule set forth on the Notice of Grant will be the lesser of (A) the preliminary number
of Restricted Stock Units determined in accordance with Section 1(b)(vi) above or (B) the Maximum
Number of Restricted Stock Units; provided, however, that the Administrator, in its sole
discretion, may, within 30 days after the end of the Performance Period, eliminate or reduce the
number of Restricted Stock Units determined in accordance with this Section 1. For the avoidance
of doubt, once the number of Restricted Stock Units have been determined in accordance with the
preceding sentence, the Grantee will vest in such number of Restricted Stock Units in accordance
with the Vesting Schedule and the Administrator may not further eliminate or reduce such number of
Restricted Stock Units. In any event, the Administrator shall not be entitled to eliminate or
reduce the number of Restricted Stock Units determined in accordance with this Section 1 following
a Change of Control.

     Example for illustration purposes only:

	 	 	 	 	 
	A

	 	Market Capitalization as of the day immediately
preceding the commencement of the Performance
Period
	 	 $4,118,055,000
	 
	 	 	 	 
	B

	 	Pool Percentage
	 	 2%
	 
	 	 	 	 
	C

	 	Grantee Percentage of Restricted Stock Unit Pool
	 	 5%
	 
	 	 	 	 
	D

	 	Market Capitalization Growth Rate for the
Performance Period
	 	 20%
	 
	 	 	 	 
	E

	 	QQQQ Growth Rate for the Performance Period
	 	 10%
	 
	 	 	 	 
	F

	 	Excess Growth Rate (D – E)
	 	 10%
	 
	 	 	 	 
	G

	 	Market Capitalization Gain determined by
multiplying the Market Capitalization as of the
day immediately preceding the commencement of
the Performance Period by the Excess Growth
Rate (A x F)
	 	 $ 411,805,500
	 
	 	 	 	 
	H

	 	Restricted Stock Unit Pool determined by
multiplying the Market Capitalization Gain by
the Pool Percentage (B x G)
	 	 $ 8,236,110
	 
	 	 	 	 
	I

	 	Dollar value of the Grantee’s award determined
by multiplying the Restricted Stock Unit Pool
by the Grantee’s Percentage of Restricted Stock
Unit Pool (C x H)
	 	 $ 411,805
	 
	 	 	 	 
	J

	 	10-Day Trading Average of the Company’s Common
Stock as of the last day of the Performance
Period
	 	 $ 11.72
	 
	 	 	 	 
	K

	 	Number of Restricted Stock Units in which the
Grantee may vest, subject to the
Administrator’s discretion to eliminate or
reduce this number (I ÷ J)
	 	 35,136

-4-

 

          (c) Definitions.

               (i) “Market Capitalization” will mean, as of any date, the value equal to the 10-Day Trading
Average of the Company’s Common Stock multiplied by the number of Shares
outstanding as of market close on such date. Market Capitalization will be appropriately
adjusted by the Administrator for the effects of any stock acquisitions, other than acquisitions of
private companies with a purchase price equal to or less than $100 million, made during the
Performance Period by subtracting (A) the Company’s purchase price for the acquired company as of
the date of the initial, public announcement by the Company of the entry into a definitive
agreement by and between the acquired company and the Company (the “Press Release”), from (B) the
Market Capitalization of the Company as of the end of the Performance Period. For purposes of the
preceding sentence, the “Company’s purchase price” will mean the estimated value of the total
consideration to be paid by the Company to the acquired company’s stockholders (in their capacity
as stockholders), as set forth in the Company’s Press Release, less any cash consideration. If the
Company’s Press Release does not set forth the estimated value of the consideration to be paid by
the Company to the acquired company’s stockholders, the “Company’s purchase price” will mean the
value, as of the date of the Press Release, equal to the product of (i) the actual number of shares
of the Company’s Common Stock issued in exchange for the shares of the acquired company’s stock
multiplied by (ii) the Fair Market Value of the Company’s Common Stock as of the market close on
the last market trading day immediately prior to the date of the Press Release.

               (ii) “10-Day Trading Average of the Company’s Common Stock” will mean the average closing
sales price of one share of the Company’s Common Stock for the 10 most recent trading days ending
on, and including, the relevant date, as reported on the established stock exchange or national
market system on which the Company’s Common Stock is listed (or, in the absence of an established
market, as determined in good faith by the Administrator).

          (d) When Shares are paid to the Grantee in payment for the Restricted Stock Units, par value
will be deemed paid by the Grantee for each Restricted Stock Unit by past services rendered by the
Grantee, and will be subject to the appropriate tax withholdings.

     2. Company’s Obligation to Pay. Each Restricted Stock Unit has a value equal to the
Fair Market Value of a Share on the date that the Restricted Stock Unit is granted. Unless and
until the Restricted Stock Units have vested in the manner set forth in Sections 3 through 5, the
Grantee will have no right to payment of such Restricted Stock Units. Prior to actual payment of
any vested Restricted Stock Units, such Restricted Stock Units will represent an unsecured
obligation. Payment of any vested Restricted Stock Units shall be made in whole Shares only and
any fractional shares will be forfeited at the time of payment.

     3. Vesting Schedule/Period of Restriction. Except as provided in Sections 4 and 5,
and subject to Section 7, the Restricted Stock Units awarded by this Agreement shall vest in
accordance with the vesting provisions set forth on the Notice of Grant and Section 1 of this
Agreement. Except as otherwise provided herein, Restricted Stock Units shall not vest in
accordance with any of the provisions of this Agreement unless the Grantee remains a Service
Provider through the Vesting Date.

     4. Modifications to Vesting Schedule.

          (a) Vesting upon Leave of Absence. In the event that the Grantee takes an authorized leave of
absence (“LOA”), the Restricted Stock Units awarded by this Agreement that are eligible to be
earned shall either: (i) not be affected, or (ii) be deferred for a period of time equal to the
duration of such LOA, based on the Company’s LOA policy in effect at such time as determined by the
Company in its sole discretion.

-5-

 

          (b) Death or Disability of Grantee. In the event that the Grantee’s relationship with the
Company as a Service Provider is terminated during the Performance Period due to his or her death
or Disability, the vesting of the Restricted Stock Units subject to this Restricted Stock Unit
award shall be forfeited on the date of the Grantee’s death or Disability.

          (c) Change of Control. In the event of a Change of Control (as defined below) during the
Performance Period, the Performance Period shall be deemed to end immediately prior to the date of
the Press Release for purposes of determining the Company’s Market Capitalization Growth Rate and
the QQQQ Growth Rate and the number of Restricted Stock Units in which the Grantee will be entitled
to vest will be determined by the Administrator (as in existence prior to the Change in Control) in
accordance with the Performance Matrix and Section 1 of this Appendix A. The Grantee shall vest in
the number of Restricted Stock Units determined based on the preceding sentence immediately prior
to and contingent upon the Change of Control (the “New Vesting Date”) (unless vested earlier in
accordance with the terms of this Award, Section 14(c) of the Plan or any employment or change of
control agreement by and between the Company and the Grantee and provided that the Grantee remains
a Service Provider through the New Vesting Date or as otherwise set forth in this Agreement). In
accordance with Section 1 of this Appendix A, the Administrator shall not be entitled to eliminate
or reduce the number of Restricted Stock Units determined in accordance with Section 1 of Appendix
A following a Change of Control.

          (d) Definition of Change of Control. For purposes of this Agreement, “Change of Control”
shall mean the occurrence of any of the following events:

               (1) the consummation by the Company of a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation;

               (2) the consummation of the sale or disposition by the Company of all or substantially all of
the Company’s assets;

               (3) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing 50% or more of the total voting
power represented by the Company’s then outstanding voting securities; or

               (4) a change in the composition of the Board, as a result of which fewer than a majority of
the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A)
are directors of the Company as of the date hereof, or (B) are elected, or nominated for election,
to the Board with the affirmative votes of at least a majority of those directors whose election or
nomination was not in connection with any transactions described in subsections (i), (ii), or (iii)
or in connection with an actual or threatened proxy contest relating to the election of directors
of the Company.

     5. Administrator Discretion. The Administrator, in its discretion, may accelerate the
vesting of the balance, or some lesser portion of the balance, of the Restricted Stock Units at any
time, subject to the terms of the Plan. If so accelerated, such Restricted Stock Units will be
considered as having vested as of the date specified by the Administrator. If the Administrator,
in its

-6-

 

discretion, accelerates the vesting of the balance, or some lesser portion of the balance, of
the Restricted Stock Units, the payment of such accelerated Restricted Stock Units nevertheless
shall be made at the same time or times as if such Restricted Stock Units had vested in accordance
with the Vesting Schedule set forth on the Notice of Grant or as otherwise provided herein (whether
or not the Grantee remains employed by the Company or by one of its Subsidiaries as of such
date(s)), unless an earlier payment date, in the judgment of the Administrator, would not cause the
Grantee to incur an additional tax under Section 409A of the U.S. Internal Revenue Code of 1986, as
amended, and any proposed, temporary or final Treasury Regulations and Internal Revenue Service
guidance thereunder (“Section 409A”).

     6. Payment after Vesting. Any Restricted Stock Units that vest in accordance with
Sections 3 through 5 of this Agreement will be paid to the Grantee (or in the event of the
Grantee’s death, to his or her estate) as soon as practicable following the Vesting Date, subject
to Section 10, but no later than March 15th of the calendar year following the Vesting
Date. Notwithstanding the foregoing, if the Grantee is a “specified employee” within the meaning
of Section 409A(a)(2)(B)(i) and any proposed, temporary or final Treasury Regulations and Internal
Revenue Service guidance thereunder, any Restricted Stock Units that vest on account of the
termination of the Grantee’s relationship with the Company as a Service Provider will be paid to
the Grantee (or in the event of the Grantee’s death, to his or her estate) no earlier than six (6)
months and one (1) day following the date of the termination of the Grantee’s relationship with the
Company (or any Parent or Subsidiary of the Company) as a Service Provider, subject to Section 10.

     7. Forfeiture of Unvested Restricted Stock Units. The balance of the Restricted Stock
Units that have not vested pursuant to Sections 3 through 5 at the time of the termination of the
Grantee’s relationship with the Company (or any Parent or Subsidiary of the Company) as a Service
Provider for any or no reason will be forfeited.

     8. Conditions Requiring Forfeiture of Shares. Notwithstanding any provision in this
Agreement to the contrary, the Company may demand that the Grantee forfeit and transfer to, and the
Grantee hereby agrees that, within thirty (30) days of such demand, the Grantee will (i) forfeit
and transfer to, the Company that number of Shares equal to the number of Shares issued as payment
for vested Restricted Stock Units under this Agreement, or (ii) tender to the Company a cash
payment in immediately available funds in an amount equal to the number of Shares issued as payment
for the vested Restricted Stock Units under this Agreement multiplied by the Fair Market Value of a
Share on the Vesting Date, in the event the Board, in its reasonable discretion, determines within
four (4) years following the Performance Period but in any event prior to a Change of Control that
the Grantee committed financial-based fraud with respect to the Company’s financial statements
filed with the Securities and Exchange Commission requiring the restatement of such financial
statements and such fraud positively impacted the Market Capitalization Growth Rate during the
Performance Period. Except for any applicable offset of amounts reimbursed, nothing herein,
including any determination by the Board contemplated by this Section 8, shall limit or otherwise
waive any Company right of recovery or obligation of reimbursement by applicable executive officers
under Section 304 of the Sarbanes Oxley Act of 2002.

     9. [Reserved.]

     10. Withholding of Taxes.

          (a) General. Regardless of any action the Company and/or the Grantee’s employer (the
“Employer”) take with respect to any or all income tax (including U.S. federal, state,

-7-

 

local and/or non-U.S. taxes), social insurance, payroll tax, payment on account or other
tax-related withholdings (“Tax-Related Items”), the Grantee acknowledges that the ultimate
liability for all Tax-Related Items legally due by the Grantee is and remains the Grantee’s
responsibility and that the Company and/or the Employer (i) make no guarantees or undertakings
regarding the treatment of any Tax-Related Items in connection with any aspect of the award,
including the grant of the Restricted Stock Units, the vesting of the Restricted Stock Units, the
delivery of Shares, the subsequent sale of any Shares received at vesting and the receipt of any
dividends; and (ii) do not commit to structure the terms of the grant or any aspect of the award to
reduce or eliminate the Grantee’s liability for Tax-Related Items.

          (b) Payment of Tax-Related Items. The Grantee authorizes the Company and/or the Employer, at
its discretion, to satisfy the obligations with regard to all Tax-Related Items by withholding a
portion of the Shares issued as payment for vested Restricted Stock Units that have an aggregate
market value sufficient to pay all Tax-Related Items required to be withheld by the Company and/or
the Employer with respect to the vesting of the Restricted Stock Units and issuance of the Shares,
unless the Company, in its sole discretion, either requires or otherwise permits the Grantee to
make alternate arrangements satisfactory to the Company for such withholdings in advance of the
arising of any withholding obligations. The number of Shares withheld pursuant to the prior
sentence will be rounded up to the nearest whole Share, with no refund for any value of the Shares
withheld in excess of the tax obligation as a result of such rounding.

          If the obligation of Tax-Related Items is satisfied by reducing the number of Shares delivered
as described herein, the Grantee is deemed to have been issued the full number of Shares subject to
the award of Restricted Stock Units, notwithstanding that a number of the Shares are held back
solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the award.

          If the foregoing method of withholding is prohibited or insufficient to satisfy all
Tax-Related Items required to be withheld by the Company and/or the Employer with respect to the
vesting of the Restricted Stock Units and issuance of the Shares or if the Company, in its
discretion, determines not to apply the foregoing method of withholding, then the Grantee hereby
authorizes the Company and/or the Employer to satisfy such obligations by one or a combination of
the following: (i) withholding from the Grantee’s wages or other cash compensation paid to the
Grantee by the Company and/or the Employer, to the maximum extent permitted by law; or (ii) selling
the applicable number of Shares or arranging for the sale of the applicable number of Shares (in
either case on the Grantee’s behalf and at the Grantee’s discretion pursuant to this authorization)
issued in settlement of vested Restricted Stock Units and retaining the requisite proceeds from
such sale.

          Finally, the Grantee shall pay to the Company and/or the Employer any amount of Tax-Related
Items that the Company and/or the Employer may be required to withhold as a result of the Grantee’s
participation in the Plan that cannot be satisfied by the means previously described. The Company
may refuse to deliver to the Grantee any Shares pursuant to the award if the Grantee fails to
comply with the Grantee’s obligations in connection with the Tax-Related Items, as described in
this Section 10.

     11. Rights as Stockholder. Neither the Grantee nor any person claiming under or
through the Grantee will have any of the rights or privileges of a stockholder of the Company in
respect of any Shares deliverable hereunder unless and until certificates representing such Shares
(which may be in book entry form) will have been issued, recorded on the records of the Company or
its transfer agents or registrars, and delivered to the Grantee (including through electronic
delivery to a

-8-

 

brokerage account). After such issuance, recordation and delivery, the Grantee will have all
the rights of a stockholder of the Company with respect to voting such Shares and receipt of
dividends and distributions on such Shares.

     12. No Effect on Employment. Subject to any employment contract with the Grantee, the
terms of such employment will be determined from time to time by the Company, or the Subsidiary
employing the Grantee, as the case may be, and the Company, or the Subsidiary employing the
Grantee, as the case may be, will have the right, which is hereby expressly reserved, to terminate
or change the terms of the employment of the Grantee at any time for any reason whatsoever, with or
without good cause. The transactions contemplated hereunder and the Vesting Schedule set forth on
the Notice of Grant do not constitute an express or implied promise of continued employment for any
period of time. A leave of absence or an interruption in service (including an interruption during
military service) authorized or acknowledged by the Company or the Subsidiary employing the
Grantee, as the case may be, shall not be deemed a termination of the Grantee’s relationship with
the Company as a Service Provider for the purposes of this Agreement.

     13. Address for Notices. Any notice to be given to the Company under the terms of
this Agreement will be addressed to the Company, in care of Stock Administrator, at 1745 Technology
Drive, San Jose, CA 95110, or at such other address as the Company may hereafter designate in
writing, with a copy to the Company, C/O General Counsel, 1745 Technology Drive, San Jose, CA
95110.

     14. Grant is Not Transferable. Except to the limited extent provided in this
Agreement or the Plan, this grant of Restricted Stock Units and the rights and privileges conferred
hereby will not be sold, pledged, assigned, hypothecated, transferred or disposed of any way
(whether by operation of law or otherwise) and will not be subject to sale under execution,
attachment or similar process, until the Grantee has been issued Shares in payment of the
Restricted Stock Units. Upon any attempt to sell, pledge, assign, hypothecate, transfer or
otherwise dispose of this grant, or any right or privilege conferred hereby, or upon any attempted
sale under any execution, attachment or similar process, this grant and the rights and privileges
conferred hereby immediately will become null and void.

     15. Restrictions on Sale of Securities. The Shares issued as payment for vested
Restricted Stock Units under this Agreement will be registered under U.S. federal securities laws
and will be freely tradable upon receipt. However, a Grantee’s subsequent sale of the Shares may
be subject to any market blackout-period that may be imposed by the Company and must comply with
the Company’s insider trading policies, and any other applicable securities laws.

     16. Binding Agreement. Subject to the limitation on the transferability of this grant
contained herein, this Agreement will be binding upon and inure to the benefit of the heirs,
legatees, legal representatives, successors and assigns of the parties hereto.

     17. Additional Conditions to Issuance of Certificates for Shares. The Company shall
not be required to issue any certificate or certificates for Shares hereunder prior to fulfillment
of all the following conditions: (a) the admission of such Shares to listing on all stock
exchanges on which such class of stock is then listed; (b) the completion of any registration or
other qualification of such Shares under any U.S. state or federal law or under the rulings or
regulations of the Securities and Exchange Commission or any other governmental regulatory body,
which the Administrator shall, in its absolute discretion, deem necessary or advisable; (c) the
obtaining of any approval or other clearance from any U.S. state or federal governmental agency,
which the Administrator shall, in its

-9-

 

absolute discretion, determine to be necessary or advisable; and (d) the lapse of such
reasonable period of time following the Vesting Date of the Restricted Stock Units as the
Administrator may establish from time to time for reasons of administrative convenience.

     18 Plan Governs. This Agreement and Appendix B, if any, are subject to all the terms
and provisions of the Plan. In the event of a conflict between one or more provisions of this
Agreement or Appendix B, if any, and one or more provisions of the Plan, the provisions of the Plan
will govern.

     19. Administrator Authority. The Administrator will have the power to interpret the
Plan and this Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret or revoke any such rules
(including, but not limited to, the determination of whether or not any Restricted Stock Units have
vested). All actions taken and all interpretations and determinations made by the Administrator in
good faith will be final and binding upon the Grantee, the Company and all other interested
persons. No member of the Administrator will be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or this Agreement.

     20. Captions. Captions provided herein are for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.

     21. Agreement Severable. In the event that any provision in this Agreement will be
held invalid or unenforceable, such provision will be severable from, and such invalidity or
unenforceability will not be construed to have any effect on, the remaining provisions of this
Agreement.

     22. Modifications to the Agreement. This Agreement, together with the Plan and
Appendix B, if any, constitutes the entire understanding of the parties on the subjects covered,
subject to any applicable pre-existing agreement or agreement entered into after the date hereof
relating to full or partial acceleration of vesting in the event of a change of control of the
Company (or similar event). The Grantee expressly warrants that he or she is not accepting this
Agreement in reliance on any promises, representations, or inducements other than those contained
herein or expressly contemplated above. Modifications to this Agreement or the Plan can be made
only in an express written contract executed by a duly authorized officer of the Company.
Notwithstanding anything to the contrary in the Plan or this Agreement, the Company reserves the
right to revise this Agreement as it deems necessary or advisable, in its sole discretion and
without the consent of the Grantee, to comply with Section 409A of the Code or to otherwise avoid
imposition of any additional tax or income recognition under Section 409A of the Code prior to the
actual payment of Shares pursuant to this award of Restricted Stock Units.

     23. Amendment, Suspension or Termination of the Plan. By accepting this Restricted
Stock Units award, the Grantee expressly warrants that he or she has received a right to receive
stock under the Plan, and has received, read and understood a description of the Plan. The Grantee
understands that the Plan is discretionary in nature and may be amended, suspended or terminated by
the Company at any time.

     24. Labor Law and Nature of Grant. In accepting the award of Restricted Stock Units,
the Grantee acknowledges that:

-10-

 

          (a) the Plan is established voluntarily by the Company;

          (b) the award of Restricted Stock Units is voluntary and occasional and does not create any
contractual or other right to receive future awards of Restricted Stock Units, or benefits in lieu
of Restricted Stock Units even if Restricted Stock Units have been awarded repeatedly in the past;

          (c) all decisions with respect to future awards, if any, will be at the sole discretion of the
Company;

          (d) the Grantee’s participation in the Plan is voluntary;

          (e) the award is an extraordinary item that is outside the scope of the Grantee’s employment
or service contract, if any;

          (f) the award is not part of normal or expected compensation or salary for any purposes,
including, but not limited to, calculation of any severance, resignation, termination, redundancy,
end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or
similar payments;

          (g) in the event that the Grantee is not an employee of the Company, the award will not be
interpreted to form an employment or service contract or relationship with the Company; and,
furthermore, the award will not be interpreted to form an employment or service contract or
relationship with the Employer or any Parent or other successor or a Subsidiary of the Company;

          (h) the future value of the underlying Shares is unknown and cannot be predicted with
certainty;

          (i) the Company is not providing any tax, legal, or financial advice, nor is the Company
making any recommendations regarding the Grantee’s participation in the Plan or the acquisition or
sale of Shares; and

          (j) the Grantee is hereby advised to consult with the Grantee’s own personal tax, legal and
financial advisors regarding the Grantee’s participation in the Plan before taking any action
related to the Plan.

     25. Data Privacy. The Grantee hereby explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of the Grantee’s personal data as
described in the Notice of Grant and this Agreement and any other Restricted Stock Unit grant
materials by and among, as applicable, the Employer, the Company and its Subsidiaries for the
exclusive purpose of implementing, administering and managing the Grantee’s participation in the
Plan.

          The Grantee understands that the Company and the Employer may hold certain personal
information about the Grantee, including, but not limited to, the Grantee’s name, home address and
telephone number, date of birth, social insurance or other identification number, salary,
nationality, job title, any Shares or directorships held in the Company, details of all Restricted
Stock Units or any other entitlement to Shares awarded, canceled, vested, unvested or outstanding
in the Grantee’s favor, for the exclusive purpose of implementing, administering and managing the
Plan (“Data”).

          The Grantee understands that Data will be transferred to E*Trade or such other stock plan
service provider as may be selected by the Company in the future, which is assisting the Company
with the implementation, administration and management of the Plan. The Grantee

-11-

 

understands the recipients of Data may be located in the Grantee’s country, in the United
States or elsewhere, and that the recipients’ country may have different data privacy laws and
protections than the Grantee’s country. The Grantee understands that the Grantee may request a
list with the names and addresses of any potential recipients of the Data by contacting the
Grantee’s local human resources representative. The Grantee authorizes the Company, E*Trade and
any other potential recipients which may assist the Company (presently or in the future) with
implementing, administering and managing the Plan to receive, possess, use, retain and transfer the
Data, in electronic or other form, for the sole purpose of implementing, administering and managing
the Grantee’s participation in the Plan. The Grantee understands that he or she may, at any time,
view the Data, request additional information about the storage and processing of the Data, require
any necessary amendments to the Data or refuse or withdraw the consents herein, in any case without
cost, by contacting in writing the Grantee’s local human resources representative. The Grantee
understands, however, that refusing or withdrawing consent may affect the Grantee’s ability to
participate in the Plan. For more information on the consequences of the Grantee’s refusal to
consent or withdrawal of consent, the Grantee understands that he or she may contact his or her
local human resources representative.

     26. Notice of Governing Law. This award of Restricted Stock Units shall be governed
by, and construed in accordance with, the laws of the State of California, without regard to
principles of conflict of laws.

     27. Language. If the Grantee has received this Agreement, Appendix B, if any, or any
other document related to the Plan translated into a language other than English and if the
translated version is different than the English version, the English version will control, unless
otherwise prescribed by local law.

     28. Electronic Delivery. The Company may, in its sole discretion, decide to deliver
any documents related to Restricted Stock Units awarded under the Plan or future Restricted Stock
Units that may be awarded under the Plan by electronic means, or to request the Grantee’s consent
to participate in the Plan by electronic means. The Grantee hereby consents to receive such
documents by electronic delivery and if requested, to agree to participate in the Plan through an
on-line or electronic system established and maintained by the Company or another third party
designated by the Company.

     29. Appendix B. Notwithstanding any provision in this Agreement or any other Plan
documents to the contrary, the award of Restricted Stock Units shall be subject to any special
terms and conditions as set forth in the Appendix B, if any, to this Agreement for the Grantee’s
country of residence outside the United States, if any. The Appendix B, if any, constitutes part
of this Agreement.

-12-

 

APPENDIX B

APPENDIX B

TO TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS

SPECIAL PROVISIONS FOR GRANTEES OUTSIDE THE UNITED STATES

     This Appendix B, which is part of the Agreement, includes additional terms and conditions of
the award of Restricted Stock Units that will apply to Grantees in the countries listed below.
Please note that the exchange control information provided below is current as of April 2007.
However, exchange controls are subject to change and the Grantee should consult his or her personal
advisor(s) with respect to the applicable exchange controls (if any) which may apply to the vesting
of the Restricted Stock Units, acquisition and/or sale of the Shares. Capitalized terms used but
not defined herein shall have the same meanings assigned to them in the Plan, the Agreement and the
Notice of Grant.

Australia

     No special provisions.

Austria

Consumer Protection Act Notice

     The Grantee acknowledges that he or she may be entitled to revoke the Agreement on the basis
of the Austrian Consumer Protection Act according the following rules:

	 	(i)	 	If the Grantee receives the award of Restricted Stock Units under the Plan
outside the business premises of the Company, the Grantee may be entitled to revoke his
or her acceptance of the Agreement. The revocation must be made within one week after
the Grantee has signed the Notice of Grant.
	 
	 	(ii)	 	The revocation must be in written form to be valid. It is sufficient if the
Grantee returns the Agreement to the Company or the Company’s representative with
language that can be understood as his or her refusal to conclude or honor the
Agreement. It is sufficient if the revocation is sent within the period discussed
above.

Belgium

Tax Compliance

     The Grantee is required to report any taxable income attributable to the award of Restricted
Stock Units on his or her annual tax return. In addition, the Grantee is required to report any
bank accounts opened and maintained outside Belgium on his or her annual tax return.

 

					
	RSU Agreement — Appendix B
	 	1
	 	Dated August 14, 2007

 

 

APPENDIX B

Brazil

Intent to Comply with Law

     By accepting this award of Restricted Stock Units, the Grantee acknowledges that he or she
agrees to comply with applicable Brazilian laws and pay any and all applicable taxes associated
with the vesting of the Restricted Stock Units and the sale of Shares.

Exchange Control Reporting

     A Grantee resident or domiciled in Brazil will be required to submit annually a declaration of
assets and rights held outside of Brazil to the Central Bank of Brazil if the aggregate value of
such assets and rights is equal to or greater than US$100,000. Assets and rights that must be
reported include Shares of Company stock.

Canada

Consent to Receive Information in English for Quebec Grantees

     The parties acknowledge that it is their express wish that the Agreement, as well as all
documents, notices and legal proceedings entered into, given or instituted pursuant hereto or
relating directly or indirectly hereto, be drawn up in English.

     Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que
de tous documents exécutés, avis donnés et procédures judiciaries intentées, directement ou
indirectement, relativement à ou suite à la présente convention.

Securities Law Information

     The Grantee is permitted to sell Shares acquired in settlement of the Restricted Stock Units
through the designated broker appointed under the Plan provided the resale of Shares acquired in
settlement of the Restricted Stock Units takes place outside of Canada through facilities of a
stock exchange on which the Shares are listed. The Shares are currently listed on the Nasdaq
Global Select market in the United States.

China

Exchange Control Information

     Exchange control approval/reporting requirements may apply when the Grantee sells Shares and
repatriates the proceeds to China. As a result, the Grantee should consult with his/her personal
advisor as to the process for repatriating the proceeds to China.

Germany

No special provisions.

 

					
	RSU Agreement — Appendix B
	 	2
	 	Dated August 14, 2007

 

 

APPENDIX B

Hong Kong

Restricted Stock Units Payable Only in Shares

     Restricted Stock Units awarded to Grantees in Hong Kong shall be paid in Shares only. In no
event shall any of such Restricted Stock Units be paid in cash, notwithstanding any discretion
contained in the Plan or any provisions in the Agreement to the contrary.

Securities Law Notice

     This offer of Restricted Stock Units and the Shares subject to the Restricted Stock Units is
not a public offer of securities and is available only for employees of the Company or any parent
or Subsidiary participating in the Plan. The contents of this Appendix B, the Agreement and the
Plan have not been reviewed by any regulatory authority in Hong Kong. The Grantee is advised to
exercise caution in relation to this offer of Restricted Stock Units. If the Grantee has any doubt
as to the contents of this Appendix B, the Agreement or the Plan, the Grantee should obtain
independent professional advice.

India

Fringe Benefit Tax

     By accepting the grant of Restricted Stock Units, the Grantee consents and agrees to satisfy
any liability for fringe benefit tax that may be payable by the Company and/or the Employer in
connection with the Restricted Stock Units. Further, by accepting the grant of Restricted Stock
Units, the Grantee agrees that the Company and/or the Employer may collect the fringe benefit tax
from the Grantee by any of the means set forth in Section 9 of the Agreement, withholding from
wages or other cash compensation payable to him or her by the Company or the Employer. The Grantee
further agrees to execute any other consents or elections required to accomplish the above,
promptly upon request of the Company.

Exchange Control Information

     Proceeds from the sale of Shares must be repatriated to India within a reasonable period of
time (i.e., two weeks). The Grantee should obtain a foreign inward remittance certificate from the
bank for his or her records to document compliance with this requirement and submit a copy of the
foreign inward remittance certificate to his or her Employer.

Israel

Data Privacy Consent

     Grantee’s right to protect his or her personal data in connection with the Plan might be
restricted under certain circumstances. Specifically, the Company or the Company’s Israeli
Subsidiary may be required to disclose to the Israeli tax authorities information on grants,
vesting and sales under the Plan.

 

					
	RSU Agreement — Appendix B
	 	3
	 	Dated August 14, 2007

 

 

APPENDIX B

Italy

Plan Document Acknowledgement

     By accepting the award of Restricted Stock Units, the Grantee acknowledges that he or she has
received a copy of the Plan, has review the Plan and the Agreement in their entirety and fully
understands and accepts all provisions of the Plan and the Agreement.

     The Grantee further acknowledges that he or she has read and specifically and expressly
approves the following clauses in the Agreement: Paragraph 9: Withholding of Taxes; Paragraph 13:
Grant is Not Transferable; Paragraph 23: Labor Law and Nature of Grant; Paragraph 25: Notice of
Governing Law; and the Data Privacy Consent below.

Data Privacy Consent

     Notwithstanding Paragraph 24 or any other provision of the Agreement, Grantee agrees that the
following shall apply with regard to data privacy in Italy:

     Grantee hereby explicitly and unambiguously consents to the collection, use, processing and
transfer, in electronic or other form, of personal data as described in this section of
Appendix B by and among, as applicable, the Employer and the Company and any of its
Subsidiaries for the exclusive purpose of implementing, administering and managing Grantee’s
participation in the Plan.

     Grantee understands that the Employer, the Company and any of its Subsidiaries may hold
certain personal information about Grantee, including, Grantee’s name, home address and telephone
number, date of birth, social insurance number or other identification number, salary, nationality,
job title, any Shares or directorships held in the Company, details of the award of Restricted
Stock Units or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or
outstanding in Grantee’s favor, for the exclusive purpose of managing and administering the Plan
(“Data”).

     Grantee also understands that providing the Company with Grantee’s Data is necessary for the
performance of the Plan and that Grantee’s denial to provide such Data would make it impossible for
the Company to perform its contractual obligations and may affect Grantee’s ability to participate
in the Plan. The Controller of personal data processing is Brocade Communications Systems, Inc.,
with registered offices at 1745 Technology Drive, San Jose, California, 95110, United States of
America, and, pursuant to Legislative Decree no. 196/2003, its representative in Italy is Brocade
Communications Italy Srl with registered offices at Largo Rio de Janeiro, 1, 20133 Milano,
Italy. Grantee understands that Grantee’s Data will not be publicized, but it may be transferred
to E*Trade or other third parties, banks, other financial institutions or brokers involved in the
management and administration of the Plan. Grantee further understands that the Company and/or its
Subsidiaries will transfer Data amongst themselves as necessary for the purpose of implementation,
administration and management of Grantee’s participation in the Plan, and that the Company and/or
its Subsidiaries may each further transfer Data to third parties assisting the Company in the
implementation, administration and management of the Plan, including any requisite transfer

 

					
	RSU Agreement — Appendix B
	 	4
	 	Dated August 14, 2007

 

 

APPENDIX B

to E*Trade or another third party with whom Grantee may elect to deposit any Shares
acquired under the Plan. Such recipients may receive, possess, use, retain and transfer the Data
in electronic or other form, for the purposes of implementing, administering and managing Grantee’s
participation in the Plan. Grantee understands that these recipients may be located in the
European Economic Area, or elsewhere, such as the U.S. or Asia. Should the Company exercise its
discretion in suspending all necessary legal obligations connected with the management and
administration of the Plan, it will delete Grantee’s Data as soon as it has accomplished all the
necessary legal obligations connected with the management and administration of the Plan.

     Grantee understands that Data processing related to the purposes specified above shall take
place under automated or non-automated conditions, anonymously when possible, that comply with the
purposes for which Data are collected and with confidentiality and security provisions as set forth
by applicable laws and regulations, with specific reference to Legislative Decree no. 196/2003.

     The processing activity, including communication, the transfer of Grantee’s Data abroad,
including outside of the European Union, as herein specified and pursuant to applicable laws and
regulations, does not require Grantee’s consent thereto as the processing is necessary to
performance of contractual obligations related to implementation, administration and management of
the Plan. Grantee understands that, pursuant to Section 7 of the Legislative Decree no. 196/2003,
Grantee has the right to, including but not limited to, access, delete, update, ask for
rectification of Grantee’s Data and estop, for legitimate reason, the Data processing.
Furthermore, Grantee is aware that Grantee’s Data will not be used for direct marketing purposes.
In addition, the Data provided can be reviewed and questions or complaints can be addressed by
contacting Grantee’s local human resources department.

Japan

     No special provisions.

Korea

Exchange Control Information

     If Grantee realizes US$500,000 or more from the sale of Shares acquired in settlement of the
Restricted Stock Units, Grantee will be required to repatriate the sale proceeds back to Korea
within 18 months of sale.

Mexico

     Policy Statement. La invitación que la Compañía hace en relación con el Plan es unilateral y
discrecional, por lo tanto, la Compañía se reserva el derecho absoluto para modificar o terminar el
mismo en cualquier momento, sin ninguna responsabilidad para el Opcionante. Esta invitación y, en
el caso del Opcionante, la adquisición de acciones, de ninguna manera establecen relación laboral
alguna entre el Opcionante y la Compañía. Tampoco establece derecho alguno entre el Opcionante y
su empleador.

 

					
	RSU Agreement — Appendix B
	 	5
	 	Dated August 14, 2007

 

 

APPENDIX B

     English Translation. The invitation the Company is making under the Plan is unilateral and
discretionary and, therefore, the Company reserves the absolute right to amend it and discontinue
it at any time without any liability to the Grantee. This invitation and, in the Grantee’s case,
the acquisition of Shares does not, in any way, establish a labor relationship between the Grantee
and the Company and it does not establish any rights between the Grantee and the Employer.

Netherlands

Notification For Dutch Grantees

     The Grantee has been granted Restricted Stock Units under the Plan, pursuant to which the
Grantee may acquire shares of the Company’s Shares. Grantees that are residents of the Netherlands
should be aware of the Dutch insider trading rules, which may impact the sale of Shares issued upon
vesting of the Restricted Stock Units. In particular, the Grantee may be prohibited from effecting
certain Share transactions if he or she has insider information regarding the Company.

     Below is a discussion of the applicable restrictions. The Grantee is advised to read the
discussion carefully to determine whether the insider rules could apply to him or her. If it is
uncertain whether the insider rules apply, we recommend that the Grantee consults with his or her
legal advisor. Please note that the Company cannot be held liable if a Grantee violates the Dutch
insider rules. The Grantee is responsible for ensuring his or her compliance with these rules.

     By entering into the Agreement and participating in the Plan, the Grantee acknowledges having
read and understood the Notification and acknowledges that it is his or her responsibility to
comply with the Dutch insider trading rules, as discussed herein.

Prohibition Against Insider Trading

     Dutch securities laws prohibit insider trading. Under Article 46 of the Act on the
Supervision of the Securities Trade 1995, anyone who has “inside information” related to the
Company is prohibited from effectuating a transaction in securities in or from the Netherlands.
“Inside information” is knowledge of a detail concerning the issuer to which the securities relate
that is not public and which, if published, would reasonably be expected to affect the stock price,
regardless of the development of the price. The insider could be any employee of the Company or
its Dutch Subsidiary who has inside information as described above.

     Given the broad scope of the definition of inside information, certain employees of the
Company working at its Dutch Subsidiary may have inside information and thus, would be prohibited
from effectuating a transaction in securities in the Netherlands at a time when he or she had such
inside information.

 

					
	RSU Agreement — Appendix B
	 	6
	 	Dated August 14, 2007

 

 

APPENDIX B

Singapore

Securities Law Notification

     The grant of the award of Restricted Stock Units under the Plan is being made on a private
basis and is, therefore, exempt from registration in Singapore.

Director Notification

     If the Grantee is a director, associate director or shadow director of a Singapore Subsidiary
or affiliate of the Company, the Grantee is subject to certain notification requirements under the
Singapore Companies Act. Among these requirements is an obligation to notify the Singapore
Subsidiary or affiliate in writing when the Grantee receives an interest (e.g., Restricted Stock
Units, Shares) in the Company or any related companies. Please contact the Company to obtain a
copy of the notification form. In addition, the Grantee must notify the Singapore Subsidiary or
affiliate when the Grantee sells Shares of the Company or any related company (including when the
Grantee sells Shares acquired pursuant to this award). These notifications must be made within two
days of acquiring or disposing of any interest in the Company or any related company. In addition,
a notification must be made of the Grantee’s interests in the Company or any related company within
two days of becoming a director.

Spain

Labor Law Acknowledgement

     In accepting the Restricted Stock Unit award, the Grantee acknowledges that he or she consents
to participation in the Plan and has received a copy of the Plan and the Agreement. The Grantee
understands that the Company has unilaterally, gratuitously and discretionally decided to grant
Restricted Stock Units under the Plan to individuals who may be employees of the Company or its
Subsidiaries or affiliates throughout the world. The decision is a limited decision that is
entered into upon the express assumption and condition that the grant will not bind the Company or
any of its Subsidiaries or affiliates. Consequently, the Grantee understands that the Restricted
Stock Units are granted on the assumption and condition that the Restricted Stock Units or the
Shares acquired pursuant to the award shall not become a part of any employment contract (either
with the Company or any of its Subsidiaries) and shall not be considered a mandatory benefit,
salary for any purposes (including severance compensation) or any other right whatsoever. In
addition, the Grantee understands that this award would not be made to the Grantee but for the
assumptions and conditions referred to above; thus, the Grantee acknowledges and freely accepts
that should any or all of the assumptions be mistaken or should any of the conditions not be met
for any reason, then any grant of Restricted Stock Units shall be null and void.

Exchange Control Requirements

     To participate in the Plan, the Grantee must comply with exchange control regulations in
Spain. The acquisition of Shares under the Plan must be declared for statistical purposes to the
Spanish Dirección General de Política Comercial e Inversiones Exteriores (the “DGPCIE”), the Bureau
for Commercial Policy and Foreign Investments, which is a department of the Ministry

 

					
	RSU Agreement — Appendix B
	 	7
	 	Dated August 14, 2007

 

 

APPENDIX B

of the Economy. The Grantee must make the declaration himself or herself by filing a form
with the DGPCIE. When receiving foreign currency payments derived from the ownership of Shares
(i.e., dividends or sale proceeds), the Grantee must inform the financial institution receiving the
payment of the basis upon which such payment is made. The Grantee will need to provide the
institution with the following information: (i) the Grantee’s name, address, and fiscal
identification number; (ii) the name and corporate domicile of the Company; (iii) the amount of the
payment; (iv) the currency used; (v) the country of origin; (vi) the reasons for the payment; and
(vii) further information that may be required. If the Grantee acquires Shares under the Plan and
wishes to import the ownership title of such Shares (i.e., share certificates) into Spain, the
Grantee must declare the importation of such securities to the DGPCIE.

Securities Law Notice

     The grant of Restricted Stock Units and the Shares issued pursuant to the award are considered
a private placement outside of the scope of Spanish laws on public offerings and issuances.

Switzerland

     No special provisions.

Taiwan

     No special provisions.

UAE

     No special provisions.

* * * * *

 

					
	RSU Agreement — Appendix B
	 	8
	 	Dated August 14, 2007

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