Document:

exv10w1

 

Exhibit 10.1

INDEMNITY AGREEMENT

     This Indemnity Agreement (this “Agreement”) dated as of ______________ _____, 2007, is
made by and between Cavium Networks, Inc., a Delaware corporation (the “Company”), and
_______________ (“Indemnitee”).

Recitals

     A. The Company desires to attract and retain the services of highly qualified individuals as
directors, officers, employees and agents.

     B. The Company’s bylaws (the “Bylaws”) require that the Company indemnify its directors, and
empowers the Company to indemnify its officers, employees and agents, as authorized by the Delaware
General Corporation Law, as amended (the “Code”), under which the Company is organized and such
Bylaws expressly provide that the indemnification provided therein is not exclusive and
contemplates that the Company may enter into separate agreements with its directors, officers and
other persons to set forth specific indemnification provisions.

     C. Indemnitee does not regard the protection currently provided by applicable law, the
Company’s governing documents and available insurance as adequate under the present circumstances,
and the Company has determined that Indemnitee and other directors, officers, employees and agents
of the Company may not be willing to serve or continue to serve in such capacities without
additional protection.

     D. The Company desires and has requested Indemnitee to serve or continue to serve as a
director, officer, employee or agent of the Company, as the case may be, and has proferred this
Agreement to Indemnitee as an additional inducement to serve in such capacity.

     E. Indemnitee is willing to serve, or to continue to serve, as a director, officer, employee
or agent of the Company, as the case may be, if Indemnitee is furnished the indemnity provided for
herein by the Company.

Agreement

     Now Therefore, in consideration of the mutual covenants and agreements set forth
herein, the parties hereto, intending to be legally bound, hereby agree as follows:

     1. Definitions.

          (a) Agent. For purposes of this Agreement, the term “agent” of the Company means any person
who: (i) is or was a director, officer, employee or other fiduciary of the Company or a subsidiary
of the Company; or (ii) is or was serving at the request or for the convenience of, or representing
the interests of, the Company or a subsidiary of the Company, as a director, officer, employee or
other fiduciary of a foreign or domestic corporation, partnership, joint venture, trust or other
enterprise.

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          (b) Expenses. For purposes of this Agreement, the term “expenses” shall be broadly construed
and shall include, without limitation, all direct and indirect costs of any type or nature
whatsoever (including, without limitation, all attorneys’, witness, or other professional fees and
related disbursements, and other out-of-pocket costs of whatever nature), actually and reasonably
incurred by Indemnitee in connection with the investigation, defense or appeal of a proceeding or
establishing or enforcing a right to indemnification under this Agreement, the Code or otherwise,
and amounts paid in settlement by or on behalf of Indemnitee, but shall not include any judgments,
fines or penalties actually levied against Indemnitee for such individual’s violations of law. The
term “expenses” shall also include reasonable compensation for time spent by Indemnitee for which
he is not compensated by the Company or any subsidiary or third party (i) for any period during
which Indemnitee is not an agent, in the employment of, or providing services for compensation to,
the Company or any subsidiary; and (ii) if the rate of compensation and estimated time involved is
approved by the directors of the Company who are not parties to any action with respect to which
expenses are incurred, for Indemnitee while an agent of, employed by, or providing services for
compensation to, the Company or any subsidiary.

          (c) Proceedings. For purposes of this Agreement, the term “proceeding” shall be broadly
construed and shall include, without limitation, any threatened, pending, or completed action,
suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative
hearing or any other actual, threatened or completed proceeding, whether brought in the right of
the Company or otherwise and whether of a civil, criminal, administrative or investigative nature,
and whether formal or informal in any case, in which Indemnitee was, is or will be involved as a
party or otherwise by reason of: (i) the fact that Indemnitee is or was a director or officer of
the Company; (ii) the fact that any action taken by Indemnitee or of any action on Indemnitee’s
part while acting as director, officer, employee or agent of the Company; or (iii) the fact that
Indemnitee is or was serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, and in any such case described above, whether or not serving in any such capacity at
the time any liability or expense is incurred for which indemnification, reimbursement, or
advancement of expenses may be provided under this Agreement.

          (d) Subsidiary. For purposes of this Agreement, the term “subsidiary” means any corporation
or limited liability company of which more than 50% of the outstanding voting securities or equity
interests are owned, directly or indirectly, by the Company and one or more of its subsidiaries,
and any other corporation, limited liability company, partnership, joint venture, trust, employee
benefit plan or other enterprise of which Indemnitee is or was serving at the request of the
Company as a director, officer, employee, agent or fiduciary.

          (e) Independent Counsel. For purposes of this Agreement, the term “independent counsel” means
a law firm, or a partner (or, if applicable, member) of such a law firm, that is experienced in
matters of corporation law and neither presently is, nor in the past five (5) years has been,
retained to represent: (i) the Company or Indemnitee in any matter material to either such party,
or (ii) any other party to the proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term “independent counsel” shall not include any person who,
under the applicable standards of professional conduct then

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prevailing, would have a conflict of interest in representing either the Company or Indemnitee
in an action to determine Indemnitee’s rights under this Agreement.

     2. Agreement to Serve. Indemnitee will serve, or continue to serve, as a director, officer,
employee or agent of the Company or any subsidiary, as the case may be, faithfully and to the best
of his or her ability, at the will of such corporation (or under separate agreement, if such
agreement exists), in the capacity Indemnitee currently serves as an agent of such corporation, so
long as Indemnitee is duly appointed or elected and qualified in accordance with the applicable
provisions of the bylaws or other applicable charter documents of such corporation, or until such
time as Indemnitee tenders his or her resignation in writing; provided, however, that nothing
contained in this Agreement is intended as an employment agreement between Indemnitee and the
Company or any of its subsidiaries or to create any right to continued employment of Indemnitee
with the Company or any of its subsidiaries in any capacity.

     The Company acknowledges that it has entered into this Agreement and assumes the obligations
imposed on it hereby, in addition to and separate from its obligations to Indemnitee under the
Bylaws, to induce Indemnitee to serve, or continue to serve, as a director, officer, employee or
agent of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement
in serving as a director, officer, employee or agent of the Company.

     3. Indemnification.

          (a) Indemnification in Third Party Proceedings. Subject to Section 10 below, the Company
shall indemnify Indemnitee to the fullest extent permitted by the Code, as the same may be amended
from time to time (but, only to the extent that such amendment permits Indemnitee to broader
indemnification rights than the Code permitted prior to adoption of such amendment), if Indemnitee
is a party to or threatened to be made a party to or otherwise involved in any proceeding, for any
and all expenses, actually and reasonably incurred by Indemnitee in connection with the
investigation, defense, settlement or appeal of such proceeding.

          (b) Indemnification in Derivative Actions and Direct Actions by the Company. Subject to
Section 10 below, the Company shall indemnify Indemnitee to the fullest extent permitted by the
Code, as the same may be amended from time to time (but, only to the extent that such amendment
permits Indemnitee to broader indemnification rights than the Code permitted prior to adoption of
such amendment), if Indemnitee is a party to or threatened to be made a party to or otherwise
involved in any proceeding by or in the right of the Company to procure a judgment in its favor,
against any and all expenses actually and reasonably incurred by Indemnitee in connection with the
investigation, defense, settlement, or appeal of such proceedings.

     4. Indemnification of Expenses of Successful Party. Notwithstanding any other provision of
this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in
defense of any proceeding or in defense of any claim, issue or matter therein, including the
dismissal of any action without prejudice, the Company shall indemnify

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Indemnitee against all expenses actually and reasonably incurred in connection with the
investigation, defense or appeal of such proceeding.

     5. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement
to indemnification by the Company for some or a portion of any expenses actually and reasonably
incurred by Indemnitee in the investigation, defense, settlement or appeal of a proceeding, but is
precluded by applicable law or the specific terms of this Agreement to indemnification for the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof
to which Indemnitee is entitled.

     6. Advancement of Expenses. To the extent not prohibited by law, the Company shall advance
the expenses incurred by Indemnitee in connection with any proceeding, and such advancement shall
be made within twenty (20) days after the receipt by the Company of a statement or statements
requesting such advances (which shall include invoices received by Indemnitee in connection with
such expenses but, in the case of invoices in connection with legal services, any references to
legal work performed or to expenditures made that would cause Indemnitee to waive any privilege
accorded by applicable law shall not be included with the invoice) and upon request of the Company,
an undertaking to repay the advancement of expenses if and to the extent that it is ultimately
determined by a court of competent jurisdiction in a final judgment, not subject to appeal, that
Indemnitee is not entitled to be indemnified by the Company. Advances shall be unsecured, interest
free and without regard to Indemnitee’s ability to repay the expenses. Advances shall include any
and all expenses actually and reasonably incurred by Indemnitee pursuing an action to enforce
Indemnitee’s right to indemnification under this Agreement, or otherwise and this right of
advancement, including expenses incurred preparing and forwarding statements to the Company to
support the advances claimed. Indemnitee acknowledges that the execution and delivery of this
Agreement shall constitute an undertaking providing that Indemnitee shall, to the fullest extent
required by law, repay the advance if and to the extent that it is ultimately determined by a court
of competent jurisdiction in a final judgment, not subject to appeal, that Indemnitee is not
entitled to be indemnified by the Company. The right to advances under this Section shall continue
until final disposition of any proceeding, including any appeal therein. This Section 6 shall not
apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 10(b).

     7. Notice and Other Indemnification Procedures.

          (a) Notification of Proceeding. Indemnitee will notify the Company in writing promptly upon
being served with any summons, citation, subpoena, complaint, indictment, information or other
document relating to any proceeding or matter which may be subject to indemnification or
advancement of expenses covered hereunder. The failure of Indemnitee to so notify the Company
shall not relieve the Company of any obligation which it may have to Indemnitee under this
Agreement or otherwise.

          (b) Request for Indemnification and Indemnification Payments. Indemnitee shall notify the
Company promptly in writing upon receiving notice of any demand, judgment or other requirement for
payment that Indemnitee reasonably believes to the subject to indemnification under the terms of
this Agreement, and shall request payment thereof by the Company. Indemnification payments
requested by Indemnitee under Section 3 hereof shall be

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made by the Company no later than sixty (60) days after receipt of the written request of
Indemnitee. Claims for advancement of expenses shall be made under the provisions of Section 6
herein.

          (c) Application for Enforcement. In the event the Company fails to make timely payments as
set forth in Sections 6 or 7(b) above, Indemnitee shall have the right to apply to any court of
competent jurisdiction for the purpose of enforcing Indemnitee’s right to indemnification or
advancement of expenses pursuant to this Agreement. In such an enforcement hearing or proceeding,
the burden of proof shall be on the Company to prove by that indemnification or advancement of
expenses to Indemnitee is not required under this Agreement or permitted by applicable law. Any
determination by the Company (including its Board of Directors, stockholders or independent
counsel) that Indemnitee is not entitled to indemnification hereunder, shall not be a defense by
the Company to the action nor create any presumption that Indemnitee is not entitled to
indemnification or advancement of expenses hereunder.

          (d) Indemnification of Certain Expenses. The Company shall indemnify Indemnitee against all
expenses incurred in connection with any hearing or proceeding under this Section 7 unless the
Company prevails in such hearing or proceeding on the merits in all material respects.

     8. Assumption of Defense. In the event the Company shall be requested by Indemnitee to pay
the expenses of any proceeding, the Company, if appropriate, shall be entitled to assume the
defense of such proceeding, or to participate to the extent permissible in such proceeding, with
counsel reasonably acceptable to Indemnitee. Upon assumption of the defense by the Company and the
retention of such counsel by the Company, the Company shall not be liable to Indemnitee under this
Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same
proceeding, provided that Indemnitee shall have the right to employ separate counsel in such
proceeding at Indemnitee’s sole cost and expense. Notwithstanding the foregoing, if Indemnitee’s
counsel delivers a written notice to the Company stating that such counsel has reasonably concluded
that there may be a conflict of interest between the Company and Indemnitee in the conduct of any
such defense or the Company shall not, in fact, have employed counsel or otherwise actively pursued
the defense of such proceeding within a reasonable time, then in any such event the fees and
expenses of Indemnitee’s counsel to defend such proceeding shall be subject to the indemnification
and advancement of expenses provisions of this Agreement.

     9. Insurance. To the extent that the Company maintains an insurance policy or policies
providing liability insurance for directors, officers, employees, or agents of the Company or of
any subsidiary (“D&O Insurance”), Indemnitee shall be covered by such policy or policies in
accordance with its or their terms to the maximum extent of the coverage available for any such
director, officer, employee or agent under such policy or policies. If, at the time of the receipt
of a notice of a claim pursuant to the terms hereof, the Company has D&O Insurance in effect, the
Company shall give prompt notice of the commencement of such proceeding to the insurers in
accordance with the procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to

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cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such
proceeding in accordance with the terms of such policies.

     10. Exceptions.

          (a) Certain Matters. Any provision herein to the contrary notwithstanding, the Company shall
not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee on account of any
proceeding with respect to (i) remuneration paid to Indemnitee if it is determined by final
judgment or other final adjudication that such remuneration was in violation of law (and, in this
respect, both the Company and Indemnitee have been advised that the Securities and Exchange
Commission believes that indemnification for liabilities arising under the federal securities laws
is against public policy and is, therefore, unenforceable and that claims for indemnification
should be submitted to appropriate courts for adjudication, as indicated in Section 10(d) below);
(ii) a final judgment rendered against Indemnitee for an accounting, disgorgement or repayment of
profits made from the purchase or sale by Indemnitee of securities of the Company against
Indemnitee or in connection with a settlement by or on behalf of Indemnitee to the extent it is
acknowledged by Indemnitee and the Company that such amount paid in settlement resulted from
Indemnitee’s conduct from which Indemnitee received monetary personal profit, pursuant to the
provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, or other provisions
of any federal, state or local statute or rules and regulations thereunder; (iii) a final judgment
or other final adjudication that Indemnitee’s conduct was in bad faith, knowingly fraudulent or
deliberately dishonest or constituted willful misconduct (but only to the extent of such specific
determination); or (iv) on account of conduct that is established by a final judgment as
constituting a breach of Indemnitee’s duty of loyalty to the Company or resulting in any personal
profit or advantage to which Indemnitee is not legally entitled. For purposes of the foregoing
sentence, a final judgment or other adjudication may be reached in either the underlying proceeding
or action in connection with which indemnification is sought or a separate proceeding or action to
establish rights and liabilities under this Agreement.

          (b) Claims Initiated by Indemnitee. Any provision herein to the contrary notwithstanding, the
Company shall not be obligated to indemnify or advance expenses to Indemnitee with respect to
proceedings or claims initiated or brought by Indemnitee against the Company or its directors,
officers, employees or other agents and not by way of defense, except (i) with respect to
proceedings brought to establish or enforce a right to indemnification under this Agreement or
under any other agreement, provision in the Bylaws or Certificate of Incorporation or applicable
law, or (ii) with respect to any other proceeding initiated by Indemnitee that is either approved
by the Board of Directors or Indemnitee’s participation is required by applicable law. However,
indemnification or advancement of expenses may be provided by the Company in specific cases if the
Board of Directors determines it to be appropriate.

          (c) Unauthorized Settlements. Any provision herein to the contrary notwithstanding, the
Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee
under this Agreement for any amounts paid in settlement of a proceeding effected without the
Company’s written consent. Neither the Company nor Indemnitee shall unreasonably withhold consent
to any proposed settlement; provided, however, that the

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Company may in any event decline to consent to (or to otherwise admit or agree to any
liability for indemnification hereunder in respect of) any proposed settlement if the Company is
also a party in such proceeding and determines in good faith that such settlement is not in the
best interests of the Company and its stockholders.

     (d) Securities Act Liabilities. Any provision herein to the contrary notwithstanding, the
Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee or
otherwise act in violation of any undertaking appearing in and required by the rules and
regulations promulgated under the Securities Act of 1933, as amended (the “Act”), or in any
registration statement filed with the SEC under the Act. Indemnitee acknowledges that paragraph
(h) of Item 512 of Regulation S-K currently generally requires the Company to undertake in
connection with any registration statement filed under the Act to submit the issue of the
enforceability of Indemnitee’s rights under this Agreement in connection with any liability under
the Act on public policy grounds to a court of appropriate jurisdiction and to be governed by any
final adjudication of such issue. Indemnitee specifically agrees that any such undertaking shall
supersede the provisions of this Agreement and to be bound by any such undertaking.

     11. Nonexclusivity and Survival of Rights. The provisions for indemnification and advancement
of expenses set forth in this Agreement shall not be deemed exclusive of any other rights which
Indemnitee may at any time be entitled under any provision of applicable law, the Company’s
Certificate of Incorporation, Bylaws or other agreements, both as to action in Indemnitee’s
official capacity and Indemnitee’s action as an agent of the Company, in any court in which a
proceeding is brought, and Indemnitee’s rights hereunder shall continue after Indemnitee has ceased
acting as an agent of the Company and shall inure to the benefit of the heirs, executors,
administrators and assigns of Indemnitee. The obligations and duties of the Company to Indemnitee
under this Agreement shall be binding on the Company and its successors and assigns until
terminated in accordance with its terms. The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of the Company, expressly to assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform if no such
succession had taken place.

     No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or
restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by
such Indemnitee in his or her corporate status prior to such amendment, alteration or repeal. To
the extent that a change in the Code, whether by statute or judicial decision, permits greater
indemnification or advancement of expenses than would be afforded currently under the Company’s
Certificate of Incorporation, Bylaws and this Agreement, it is the intent of the parties hereto
that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No
right or remedy herein conferred is intended to be exclusive of any other right or remedy, and
every other right and remedy shall be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, by Indemnitee shall not prevent the
concurrent assertion or employment of any other right or remedy by Indemnitee.

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     12. Term. This Agreement shall continue until and terminate upon the later of: (a) five (5)
years after the date that Indemnitee shall have ceased to serve as a director or and/or officer,
employee or agent of the Company; or (b) one (1) year after the final termination of any
proceeding, including any appeal then pending, in respect to which Indemnitee was granted rights of
indemnification or advancement of expenses hereunder.

     No legal action shall be brought and no cause of action shall be asserted by or in the right
of the Company against an Indemnitee or an Indemnitee’s estate, spouse, heirs, executors or
personal or legal representatives after the expiration of five (5) years from the date of accrual
of such cause of action, and any claim or cause of action of the Company shall be extinguished and
deemed released unless asserted by the timely filing of a legal action within such five-year
period; provided, however, that if any shorter period of limitations is otherwise applicable to
such cause of action, such shorter period shall govern.

     13. Subrogation. In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who, at
the request and expense of the Company, shall execute all papers required and shall do everything
that may be reasonably necessary to secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce such rights.

     14. Interpretation of Agreement. It is understood that the parties hereto intend this
Agreement to be interpreted and enforced so as to provide indemnification to Indemnitee to the
fullest extent now or hereafter permitted by law.

     15. Severability. If any provision of this Agreement shall be held to be invalid, illegal or
unenforceable for any reason whatsoever, (a) the validity, legality and enforceability of the
remaining provisions of the Agreement (including without limitation, all portions of any paragraphs
of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that
are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired
thereby; and (b) to the fullest extent possible, the provisions of this Agreement (including,
without limitation, all portions of any paragraph of this Agreement containing any such provision
held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested by the provision
held invalid, illegal or unenforceable and to give effect to Section 14 hereof.

     16. Amendment and Waiver. No supplement, modification, amendment, or cancellation of this
Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

     17. Notice. Except as otherwise provided herein, any notice or demand which, by the
provisions hereof, is required or which may be given to or served upon the parties hereto shall be
in writing and, if by telegram, telecopy or telex, shall be deemed to have been validly served,
given or delivered when sent, if by overnight delivery, courier or personal delivery, shall be
deemed to have been validly served, given or delivered upon actual delivery and, if mailed, shall
be deemed to have been validly served, given or delivered three (3) business days after deposit in

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the United States mail, as registered or certified mail, with proper postage prepaid and
addressed to the party or parties to be notified at the addresses set forth on the signature page
of this Agreement (or such other address(es) as a party may designate for itself by like notice).
If to the Company, notices and demands shall be delivered to the attention of the Secretary of the
Company.

     18. Governing Law. This Agreement shall be governed exclusively by and construed according to
the laws of the State of Delaware, as applied to contracts between Delaware residents entered into
and to be performed entirely within Delaware.

     19. Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall for all purposes be deemed to be an original but all of which together shall constitute but
one and the same Agreement. Only one such counterpart need be produced to evidence the existence
of this Agreement.

     20. Headings. The headings of the sections of this Agreement are inserted for convenience
only and shall not be deemed to constitute part of this Agreement or to affect the construction
hereof.

     21. Entire Agreement. This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements, understandings and
negotiations, written and oral, between the parties with respect to the subject matter of this
Agreement; provided, however, that this Agreement is a supplement to and in furtherance of the
Company’s Certificate of Incorporation, Bylaws, the Code and any other applicable law, and shall
not be deemed a substitute therefor, and does not diminish or abrogate any rights of Indemnitee
thereunder.

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     In Witness Whereof, the parties hereto have entered into this Agreement effective as
of the date first above written.

	 	 	 	 	 
	 	CAVIUM NETWORKS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	INDEMNITEE

—————————————————————

Signature of Indemnitee

—————————————————————
Print or Type Name of Indemniteeexv10w2

 

Exhibit 10.2

CAVIUM NETWORKS

2001 STOCK INCENTIVE PLAN

     1. Purposes of the Plan. The purposes of this Stock Incentive Plan are to attract and
retain the best available personnel, to provide additional incentive to Employees, Directors and
Consultants and to promote the success of the Company’s business.

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

          (a) “Administrator” means the Board or any of the Committees appointed to administer
the Plan.

          (b) “Affiliate” and “Associate” shall have the respective meanings ascribed to
such terms in Rule 12b-2 promulgated under the Exchange Act.

          (c) “Applicable Laws” means the legal requirements relating to the administration of
stock incentive plans, if any, under applicable provisions of federal and state securities laws,
the corporate laws of California and, to the extent other than California, the corporate law of the
state of the Company’s incorporation, the Code, the rules of any applicable stock exchange or
national market system, and the rules of any foreign jurisdiction applicable to Awards granted to
residents therein.

          (d) “Assumed” means that (i) pursuant to a Corporate Transaction defined in Section
2(q)(i), 2(q)(ii) or 2(q)(iii) or a Related Entity Disposition, the contractual obligations
represented by the Award are assumed by the successor entity or its Parent in connection with the
Corporate Transaction or Related Entity Disposition or (ii) pursuant to a Corporate Transaction
defined in Section 2(q)(iv) or 2(q)(v), the Award is affirmed by the Company. The Award shall not
be deemed “Assumed” for purposes of terminating the Award (in the case of a Corporate Transaction)
and the termination of the Continuous Service of the Grantee (in the case of a Related Entity
Disposition) if pursuant to a Corporate Transaction or a Related Entity Disposition the Award is
replaced with a comparable award with respect to shares of capital stock of the successor entity of
its Parent. However, for purposes of determining whether the vesting of the Award accelerates, the
Award shall be deemed “Assumed” if the Award is replaced with such a comparable stock award or the
Award is replaced with a cash incentive program of the successor entity or Parent thereof which
preserves the compensation element of such Award existing at the time of the Corporate Transaction
or Related Entity Disposition and provides for subsequent payout in accordance with the same
vesting schedule applicable to such Award. The determination of Award comparability shall be made
by the Administrator and its determination shall be final, binding and conclusive.

          (e) “Award” means the grant of an Option, Restricted Stock, or other right or benefit
under the Plan.

          (f) “Award Agreement” means the written agreement evidencing the grant of an Award
executed by the Company and the Grantee, including any amendments thereto.

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

          (h) “Cause” means, with respect to the termination by the Company or a Related Entity
of the Grantee’s Continuous Service, that such termination is for “Cause” as such term is expressly
defined in a then-effective written agreement between the Grantee and the Company or such Related
Entity, or in the absence of such then-effective written agreement and definition, is based on, in
the determination of the Administrator, the Grantee’s: (i) performance of any act or failure to
perform any act in bad faith and to the detriment of the Company or a Related Entity; (ii)
dishonesty, intentional misconduct or material breach of any agreement with the Company or a
Related Entity; or (iii) commission of a crime involving dishonesty, breach of trust, or physical
or emotional harm to any person.

          (i) “Change in Control” means a change in ownership or control of the Company after
the Registration Date effected through either of the following transactions:

               (i) the direct or indirect acquisition by any person or related group of persons (other than
an acquisition from or by the Company or by a Company-sponsored employee benefit plan or by a
person that directly or indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of
securities possessing more than fifty percent (50%) of the total combined voting power of the
Company’s outstanding securities pursuant to a tender or exchange offer made directly to the
Company’s stockholders which a majority of the Continuing Directors who are not Affiliates or
Associates of the offeror do not recommend such stockholders accept, or

               (ii) a change in the composition of the Board over a period of thirty-six (36) months or less
such that a majority of the Board members (rounded up to the next whole number) ceases, by reason
of one or more contested elections for Board membership, to be comprised of individuals who are
Continuing Directors.

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

          (k) “Committee” means any committee appointed by the Board to administer the Plan.

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

          (m) “Company” means Cavium Networks, a California corporation.

          (n) “Consultant” means any person (other than an Employee or a Director, solely with
respect to rendering services in such person’s capacity as a Director) who is engaged by the
Company or any Related Entity to render consulting or advisory services to the Company or such
Related Entity.

          (o) “Continuing Directors” means members of the Board who either (i) have been Board
members continuously for a period of at least thirty-six (36) months or (ii) have been Board
members for less than thirty-six (36) months and were elected or nominated for election as

2

 

Board members by at least a majority of the Board members described in clause (i) who were
still in office at the time such election or nomination was approved by the Board.

          (p) “Continuous Service” means that the provision of services to the Company or a
Related Entity in any capacity of Employee, Director or Consultant, is not interrupted or
terminated. Continuous Service shall not be considered interrupted in the case of (i) any approved
leave of absence, (ii) transfers among the Company, any Related Entity, or any successor, in any
capacity of Employee, Director or Consultant, or (iii) any change in status as long as the
individual remains in the service of the Company or a Related Entity in any capacity of Employee,
Director or Consultant (except as otherwise provided in the Award Agreement). An approved leave of
absence shall include sick leave, military leave, or any other authorized personal leave. For
purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment
upon expiration of such leave is guaranteed by statute or contract.

          (q) “Corporate Transaction” means any of the following transactions:

               (i) a merger or consolidation in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the Company is
incorporated;

               (ii) the sale, transfer or other disposition of all or substantially all of the assets of the
Company (including the capital stock of the Company’s subsidiary corporations);

               (iii) approval by the Company’s shareholders of any plan or proposal for the complete
liquidation or dissolution of the Company;

               (iv) any reverse merger in which the Company is the surviving entity but in which securities
possessing more than fifty percent (50%) of the total combined voting power of the Company’s
outstanding securities are transferred to a person or persons different from those who held such
securities immediately prior to such merger; or

               (v) acquisition by any person or related group of persons (other than the Company or by a
Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3
of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined
voting power of the Company’s outstanding securities (whether or not in a transaction also
constituting a Change in Control).

          (r) “Covered Employee” means an Employee who is a “covered employee” under Section
162(m)(3) of the Code.

          (s) “Director” means a member of the Board or the board of directors of any Related
Entity.

          (t) “Disability” means as defined under the long-term disability policy of the Company
or the Related Entity to which the Grantee provides services regardless of whether the Grantee is
covered by such policy. If the Company or the Related Entity to which the Grantee

3

 

provides service
does not have a long-term disability plan in place, “Disability” means that a Grantee is unable to carry
out the responsibilities and functions of the position held by the
Grantee by reason of any medically determinable physical or mental impairment. A Grantee will not
be considered to have incurred a Disability unless he or she furnishes proof of such impairment
sufficient to satisfy the Administrator in its discretion.

          (u) “Employee” means any person, including an Officer or Director, who is an employee
of the Company or any Related Entity. The payment of a director’s fee by the Company or a Related
Entity shall not be sufficient to constitute “employment” by the Company.

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

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

               (i) Where there exists a public market for the Common Stock, the Fair Market Value shall be
(A) the closing price for a Share for the last market trading day prior to the time of the
determination (or, if no closing price was reported on that date, on the last trading date on which
a closing price was reported) on the stock exchange determined by the Administrator to be the
primary market for the Common Stock or the Nasdaq National Market, whichever is applicable or (B)
if the Common Stock is not traded on any such exchange or national market system, the average of
the closing bid and asked prices of a Share on the Nasdaq Small Cap Market for the day prior to the
time of the determination (or, if no such prices were reported on that date, on the last date on
which such prices were reported), in each case, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable; or

               (ii) In the absence of an established market for the Common Stock of the type described in
(i), above, the Fair Market Value thereof shall be determined by the Administrator in good faith
and in a manner consistent with Section 260.140.50 of Title 10 of the California Code of
Regulations which requires that consideration be given to (A) the price at which securities of
reasonably comparable corporations (if any) in the same industry are being traded, or (B) if there
are no securities of reasonably comparable corporations in the same industry being traded, the
earnings history, book value and prospects of the issuer in light of market conditions generally.

               (x) “Good Reason” means the occurrence after a Corporate Transaction, Change in
Control or Related Entity Disposition of any of the following events or conditions unless consented
to by the Grantee:

               (i) a reduction in the Grantee’s base salary to a level below that in effect at any time
within six (6) months preceding the consummation of a Corporate Transaction, Change in Control or
Related Entity Disposition or at any time thereafter; or

               (ii) requiring the Grantee to be based at any place outside a 100-mile radius from the
Grantee’s job location prior to the Corporate Transaction, Change in Control or Related Entity
Disposition except for reasonably required travel on business which is not

4

 

materially greater than such travel requirements prior to the Corporate Transaction, Change in
Control or Related Entity Disposition.

          (y) “Grantee” means an Employee, Director or Consultant who receives an Award under
the Plan.

          (z) “Immediate Family” means a transferee as permitted by Rule 260.140.41 of Title 10
of the California Code of Regulations which includes any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law and shall also include adoptive relationships.

          (aa) “Incentive Stock Option” means an Option intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.

          (bb) “Non-Qualified Stock Option” means an Option not intended to qualify as an
Incentive Stock Option.

          (cc) “Officer” means a person who is an officer of the Company or a Related Entity
within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.

          (dd) “Option” means an option to purchase Shares pursuant to an Award Agreement
granted under the Plan.

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

          (ff) “Performance-Based Compensation” means compensation qualifying as
“performance-based compensation” under Section 162(m) of the Code.

          (gg) “Plan” means this 2001 Stock Incentive Plan.

          (hh) “Post-Termination Exercise Period” means the period specified in the Award
Agreement of not less than three (3) months commencing on the date of termination (other than
termination by the Company or any Related Entity for Cause) of the Grantee’s Continuous Service, or
such longer period as may be applicable upon death or Disability.

          (ii) “Registration Date” means the first to occur of (i) the closing of the first sale
to the general public pursuant to a registration statement filed with and declared effective by the
Securities and Exchange Commission under the Securities Act of 1933, as amended, of (A) the Common
Stock or (B) the same class of securities of a successor corporation (or its Parent) issued
pursuant to a Corporate Transaction in exchange for or in substitution of the Common Stock; and
(ii) in the event of a Corporate Transaction, the date of the consummation of the Corporate
Transaction if the same class of securities of the successor corporation (or its Parent) issuable
in such Corporate Transaction shall have been sold to the general public pursuant to a registration
statement filed with and declared effective by the Securities and Exchange

5

 

Commission under the Securities Act of 1933, as amended, on or prior to the date of
consummation of such Corporate Transaction.

          (jj) “Related Entity” means any Parent, Subsidiary and any business, corporation,
partnership, limited liability company or other entity in which the Company, a Parent or a
Subsidiary holds a substantial ownership interest, directly or indirectly.

          (kk) “Related Entity Disposition” means the sale, distribution or other disposition by
the Company, a Parent or a Subsidiary of all or substantially all of the interests of the Company,
a Parent or a Subsidiary in any Related Entity effected by a sale, merger or consolidation or other
transaction involving that Related Entity or the sale of all or substantially all of the assets of
that Related Entity, other than any Related Entity Disposition to the Company, a Parent or a
Subsidiary.

          (ll) “Restricted Stock” means Shares issued under the Plan to the Grantee for such
consideration, if any, and subject to such restrictions on transfer, rights of first refusal,
repurchase provisions, forfeiture provisions, and other terms and conditions as established by the
Administrator.

          (mm) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor
thereto.

          (nn) “Share” means a share of the Common Stock.

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

     3. Stock Subject to the Plan.

          (a) Subject to the provisions of Section 10 below, the maximum aggregate number of Shares
which may be issued pursuant to all Awards (including Incentive Stock Options) is 20,691,959
Shares. The Shares may be authorized, but unissued, or reacquired Common Stock.

          (b) Any Shares covered by an Award (or portion of an Award) which is forfeited or canceled,
expires or is settled in cash, shall be deemed not to have been issued for purposes of determining
the maximum aggregate number of Shares which may be issued under the Plan. Shares that actually
have been issued under the Plan pursuant to an Award shall not be returned to the Plan and shall
not become available for future issuance under the Plan, except that if unvested Shares are
forfeited, or repurchased by the Company at their original purchase price, such Shares shall become
available for future grant under the Plan.

     4. Administration of the Plan.

          (a) Plan Administrator.

               (i) Administration with Respect to Directors and Officers. Prior to the Registration
Date, with respect to grants of Awards to Directors or Employees who are also

6

 

Officers or Directors of the Company, the Plan shall be administered by (A) the Board or (B) a
Committee designated by the Board, which Committee shall be constituted in such a manner as to
satisfy the Applicable Laws. On or after the Registration Date, with respect to grants of Awards
to Directors or Employees who are also Officers or Directors of the Company, the Plan shall be
administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy the Applicable Laws and to permit such grants and
related transactions under the Plan to be exempt from Section 16(b) of the Exchange Act in
accordance with Rule 16b-3. Once appointed, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board.

               (ii) Administration With Respect to Consultants and Other Employees. With respect to
grants of Awards to Employees or Consultants who are neither Directors nor Officers of the Company,
the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which
Committee shall be constituted in such a manner as to satisfy the Applicable Laws. Once appointed,
such Committee shall continue to serve in its designated capacity until otherwise directed by the
Board.

               (iii) Administration With Respect to Covered Employees. Notwithstanding the
foregoing, as of and after the date that the exemption for the Plan under Section 162(m) of the
Code expires, as set forth in Section 20 herein, grants of Awards to any Covered Employee intended
to qualify as Performance-Based Compensation shall be made only by a Committee (or subcommittee of
a Committee) which is comprised solely of two or more Directors eligible to serve on a committee
making Awards qualifying as Performance-Based Compensation. In the case of such Awards granted to
Covered Employees, references to the “Administrator” or to a “Committee” shall be deemed to be
references to such Committee or subcommittee.

          (b) Multiple Administrative Bodies. The Plan may be administered by different bodies
with respect to Directors, Officers, Consultants, and Employees who are neither Directors nor
Officers.

          (c) Powers of the Administrator. Subject to Applicable Laws and the provisions of the
Plan (including any other powers given to the Administrator hereunder), and except as otherwise
provided by the Board, the Administrator shall have the authority, in its discretion:

               (i) to select the Employees, Directors and Consultants to whom Awards may be granted from time
to time hereunder;

               (ii) to determine whether and to what extent Awards are granted hereunder;

               (iii) to determine the number of Shares or the amount of other consideration to be covered by
each Award granted hereunder;

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

7

 

               (v) to determine the terms and conditions of any Award granted hereunder;

               (vi) to establish additional terms, conditions, rules or procedures to accommodate the rules
or laws of applicable foreign jurisdictions and to afford Grantees favorable treatment under such
rules or laws; provided, however, that no Award shall be granted under any such additional terms,
conditions, rules or procedures with terms or conditions which are inconsistent with the provisions
of the Plan;

               (vii) to amend the terms of any outstanding Award granted under the Plan, provided that any
amendment that would adversely affect the Grantee’s rights under an outstanding Award shall not be
made without the Grantee’s written consent;

               (viii) to construe and interpret the terms of the Plan and Awards, including without
limitation, any notice of award or Award Agreement, granted pursuant to the Plan; and

               (ix) to take such other action, not inconsistent with the terms of the Plan, as the
Administrator deems appropriate.

     5. Eligibility. Awards other than Incentive Stock Options may be granted to
Employees, Directors and Consultants. Incentive Stock Options may be granted only to Employees of
the Company, a Parent or a Subsidiary. An Employee, Director or Consultant who has been granted an
Award may, if otherwise eligible, be granted additional Awards. Awards may be granted to such
Employees, Directors or Consultants who are residing in foreign jurisdictions as the Administrator
may determine from time to time.

     6. Terms and Conditions of Awards.

          (a) Type of Awards. The Administrator is authorized under the Plan to award any type
of arrangement to an Employee, Director or Consultant that is not inconsistent with the provisions
of the Plan and that by its terms involves or might involve the issuance of (i) Shares, (ii) an
Option, or similar right with a fixed or variable price related to the Fair Market Value of the
Shares and with an exercise or conversion privilege related to the passage of time, the occurrence
of one or more events, or the satisfaction of performance criteria or other conditions, or (iii)
any other security with the value derived from the value of the Shares. Such awards include,
without limitation, Options, or sales or bonuses of Restricted Stock, and an Award may consist of
one such security or benefit, or two (2) or more of them in any combination or alternative.

          (b) Designation of Award. Each Award shall be designated in the Award Agreement. In
the case of an Option, the Option shall be designated as either an Incentive Stock Option or a
Non-Qualified Stock Option. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as Incentive Stock Options
which become exercisable for the first time by a Grantee during any calendar year (under all plans
of the Company or any Parent or Subsidiary) exceeds $100,000, such excess
Options, to the extent of the Shares covered thereby in excess of the foregoing limitation,
shall

8

 

be treated as Non-Qualified Stock Options. For this purpose, Incentive Stock Options shall
be taken into account in the order in which they were granted, and the Fair Market Value of the
Shares shall be determined as of the grant date of the relevant Option.

          (c) Conditions of Award. Subject to the terms of the Plan, the Administrator shall
determine the provisions, terms, and conditions of each Award including, but not limited to, the
Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form
of payment (cash, Shares, or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria. The performance criteria established
by the Administrator may be based on any one of, or combination of, increase in share price,
earnings per share, total shareholder return, return on equity, return on assets, return on
investment, net operating income, cash flow, revenue, economic value added, personal management
objectives, or other measure of performance selected by the Administrator. Partial achievement of
the specified criteria may result in a payment or vesting corresponding to the degree of
achievement as specified in the Award Agreement.

          (d) Acquisitions and Other Transactions. The Administrator may issue Awards under the
Plan in settlement, assumption or substitution for, outstanding awards or obligations to grant
future awards in connection with the Company or a Related Entity acquiring another entity, an
interest in another entity or an additional interest in a Related Entity whether by merger, stock
purchase, asset purchase or other form of transaction.

          (e) Deferral of Award Payment. The Administrator may establish one or more programs
under the Plan to permit selected Grantees the opportunity to elect to defer receipt of
consideration upon exercise of an Award, satisfaction of performance criteria, or other event that
absent the election would entitle the Grantee to payment or receipt of Shares or other
consideration under an Award (but only to the extent that such deferral programs would not result
in an accounting compensation charge unless otherwise determined by the Administrator). The
Administrator may establish the election procedures, the timing of such elections, the mechanisms
for payments of, and accrual of interest or other earnings, if any, on amounts, Shares or other
consideration so deferred, and such other terms, conditions, rules and procedures that the
Administrator deems advisable for the administration of any such deferral program.

          (f) Separate Programs. The Administrator may establish one or more separate programs
under the Plan for the purpose of issuing particular forms of Awards to one or more classes of
Grantees on such terms and conditions as determined by the Administrator from time to time.

          (g) Individual Option Limit. Following the date that the exemption from application
of Section 162(m) of the Code described in Section 20 (or any exemption having similar effect)
ceases to apply to Awards, the maximum number of Shares with respect to which Options may be
granted to any Grantee in any fiscal year of the Company shall be (2,000,000) Shares. In
connection with a Grantee’s commencement of Continuous Service, a Grantee may be granted Options
for up to an additional (1,000,000) Shares which shall not count against the limit set forth in the
previous sentence. The foregoing limitation[s] shall be adjusted proportionately in
connection with any change in the Company’s capitalization pursuant to Section 10, below. To
the extent required by Section 162(m) of the Code or the regulations

9

 

thereunder, in applying the
foregoing limitation[s] with respect to a Grantee, if any Option is canceled, the canceled Option
shall continue to count against the maximum number of Shares with respect to which Options may be
granted to the Grantee. For this purpose, the repricing of an Option shall be treated as the
cancellation of the existing Option and the grant of a new Option.

          (h) Early Exercise. The Award Agreement may, but need not, include a provision
whereby the Grantee may elect at any time while an Employee, Director or Consultant to exercise any
part or all of the Award prior to full vesting of the Award. Any unvested Shares received pursuant
to such exercise may be subject to a repurchase right in favor of the Company or a Related Entity
or to any other restriction the Administrator determines to be appropriate.

          (i) Term of Award. The term of each Award shall be the term stated in the Award
Agreement, provided, however, that the term shall be no more than ten (10) years from the date of
grant thereof. However, in the case of an Incentive Stock Option granted to a Grantee who, at the
time the 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 term of the Incentive Stock
Option shall be five (5) years from the date of grant thereof or such shorter term as may be
provided in the Award Agreement.

          (j) Transferability of Awards. Non-Qualified Stock Options shall be transferable (i)
by will, by the laws of descent and distribution, by instrument to an inter vivos or testamentary
trust in which the Non-Qualified Stock Options are to be passed to beneficiaries upon the death of
the Grantee or (ii) to the extent and in the manner authorized by the Administrator by gift to
members of the Grantee’s Immediate Family. Incentive Stock Options and other Awards may not be
sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will
or by the laws of descent or distribution and may be exercised, during the lifetime of the Grantee,
only by the Grantee.

          (k) Time of Granting Awards. The date of grant of an Award shall for all purposes be
the date on which the Administrator makes the determination to grant such Award, or such other date
as is determined by the Administrator. Notice of the grant determination shall be given to each
Employee, Director or Consultant to whom an Award is so granted within a reasonable time after the
date of such grant.

     7. Award Exercise or Purchase Price, Consideration and Taxes.

          (a) Exercise or Purchase Price. The exercise or purchase price, if any, for an Award
shall be as follows:

               (i) In the case of an Incentive Stock Option:

                    (A) granted to an Employee who, at the time of the grant of such Incentive Stock Option 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 not less than one hundred ten percent (110%) of the Fair Market Value per Share on
the date of grant; or

10

 

                    (B) granted to any Employee other than an Employee described in the preceding paragraph, the
per Share exercise price shall be not less than one hundred percent (100%) of the Fair Market Value
per Share on the date of grant.

               (ii) In the case of a Non-Qualified Stock Option:

                    (A) granted to a person who, at the time of the grant of such Option, 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 not less than one hundred ten percent
(110%) of the Fair Market Value per Share on the date of grant; or

                    (B) granted to any person other than a person described in the preceding paragraph, the per
Share exercise price shall be not less than eighty-five percent (85%) of the Fair Market Value per
Share on the date of grant.

               (iii) In the case of Awards intended to qualify as Performance-Based Compensation, the
exercise or purchase price, if any, shall be not less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant.

               (iv) In the case of the sale of Shares:

                    (A) granted to a person who, at the time of the grant of such Award, or at the time the
purchase is consummated, 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 purchase price shall
be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of
grant; or

                    (B) granted to any person other than a person described in the preceding paragraph, the per
Share purchase price shall be not less than eighty-five percent (85%) of the Fair Market Value per
Share on the date of grant.

               (v) In the case of other Awards, such price as is determined by the Administrator.

               (vi) Notwithstanding the foregoing provisions of this Section 7(a), in the case of an Award
issued pursuant to Section 6(d), above, the exercise or purchase price for the Award shall be
determined in accordance with the principles of Section 424(a) of the Code.

          (b) Consideration. Subject to Applicable Laws, the consideration to be paid for the
Shares to be issued upon exercise or purchase of an Award including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined
at the time of grant). In addition to any other types of consideration the Administrator may
determine, the Administrator is authorized to accept as consideration for Shares issued under the
Plan the following:

               (i) cash;

11

 

               (ii) check;

               (iii) delivery of Grantee’s promissory note with such recourse, interest, security, and
redemption provisions as the Administrator determines as appropriate;

               (iv) if the exercise or purchase occurs on or after the Registration Date, surrender of Shares
or delivery of a properly executed form of attestation of ownership of Shares as the Administrator
may require (including withholding of Shares otherwise deliverable upon exercise of the Award)
which have a Fair Market Value on the date of surrender or attestation equal to the aggregate
exercise price of the Shares as to which said Award shall be exercised (but only to the extent that
such exercise of the Award would not result in an accounting compensation charge with respect to
the Shares used to pay the exercise price unless otherwise determined by the Administrator);

               (v) with respect to Options, if the exercise occurs on or after the Registration Date, payment
through a broker-dealer sale and remittance procedure pursuant to which the Grantee (A) shall
provide written instructions to a Company designated brokerage firm to effect the immediate sale of
some or all of the purchased Shares and remit to the Company, out of the sale proceeds available on
the settlement date, sufficient funds to cover the aggregate exercise price payable for the
purchased Shares and (B) shall provide written directives to the Company to deliver the
certificates for the purchased Shares directly to such brokerage firm in order to complete the sale
transaction; or

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

          (c) Taxes. No Shares shall be delivered under the Plan to any Grantee or other person
until such Grantee or other person has made arrangements acceptable to the Administrator for the
satisfaction of any foreign, federal, state, or local income and employment tax withholding
obligations, including, without limitation, obligations incident to the receipt of Shares or the
disqualifying disposition of Shares received on exercise of an Incentive Stock Option. Upon
exercise of an Award the Company shall withhold or collect from Grantee an amount sufficient to
satisfy such tax obligations.

     8. Exercise of Award.

          (a) Procedure for Exercise; Rights as a Shareholder.

               (i) Any Award granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator under the terms of the Plan and specified in the Award Agreement
but in the case of an Option, in no case at a rate of less than twenty percent (20%) per year over
five (5) years from the date the Option is granted, subject to reasonable conditions such as
continued employment. Notwithstanding the foregoing, in the case of an Option granted to an
Officer, Director or Consultant, the Award Agreement may provide that the Option may become
exercisable, subject to reasonable conditions such as such Officer’s,
Director’s or Consultant’s Continuous Service, at any time or during any period established in
the Award Agreement.

12

 

               (ii) An Award shall be deemed to be exercised when written notice of such exercise has been
given to the Company in accordance with the terms of the Award by the person entitled to exercise
the Award and full payment for the Shares with respect to which the Award is exercised, including,
to the extent selected, use of the broker-dealer sale and remittance procedure to pay the purchase
price as provided in Section 7(b)(v). Until the issuance (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to Shares subject to an Award, notwithstanding the exercise of
an Option or other Award. No adjustment will be made for a dividend or other right for which the
record date is prior to the date the stock certificate is issued, except as provided in the Award
Agreement or Section 10 below.

          (b) Exercise of Award Following Termination of Continuous Service. In the event of
termination of a Grantee’s Continuous Service for any reason other than Disability or death (but
not in the event of a Grantee’s change of status from Employee to Consultant or from Consultant to
Employee), such Grantee may, but only during the Post-Termination Exercise Period (but in no event
later than the expiration date of the term of such Award as set forth in the Award Agreement),
exercise the Award to the extent that the Grantee was entitled to exercise it at the date of such
termination or to such other extent as may be determined by the Administrator. The Grantee’s Award
Agreement may provide that upon the termination of the Grantee’s Continuous Service for Cause, the
Grantee’s right to exercise the Award shall terminate concurrently with the termination of
Grantee’s Continuous Service. In the event of a Grantee’s change of status from Employee to
Consultant, an Employee’s Incentive Stock Option shall convert automatically to a Non-Qualified
Stock Option on the day three (3) months and one day following such change of status. To the
extent that the Grantee is not entitled to exercise the Award at the date of termination, or if the
Grantee does not exercise such Award to the extent so entitled within the Post-Termination Exercise
Period, the Award shall terminate.

          (c) Disability of Grantee. In the event of termination of a Grantee’s Continuous
Service as a result of his or her Disability, Grantee may, but only within twelve (12) months from
the date of such termination (and in no event later than the expiration date of the term of such
Award as set forth in the Award Agreement), exercise the Award to the extent that the Grantee was
otherwise entitled to exercise it at the date of such termination; provided, however, that if such
Disability is not a “disability” as such term is defined in Section 22(e)(3) of the Code, in the
case of an Incentive Stock Option such Incentive Stock Option shall automatically convert to a
Non-Qualified Stock Option on the day three (3) months and one day following such termination. To
the extent that the Grantee is not entitled to exercise the Award at the date of termination, or if
Grantee does not exercise such Award to the extent so entitled within the time specified herein,
the Award shall terminate.

          (d) Death of Grantee. In the event of a termination of the Grantee’s Continuous
Service as a result of his or her death, or in the event of the death of the Grantee during the
Post-Termination Exercise Period or during the twelve (12) month period following the Grantee’s
termination of Continuous Service as a result of his or her Disability, the Grantee’s estate
or a person who acquired the right to exercise the Award by bequest or inheritance may exercise the
Award, but only to the extent that the Grantee was entitled to exercise the Award as of the date

13

 

of termination, within twelve (12) months from the date of death (but in no event later than the
expiration of the term of such Award as set forth in the Award Agreement). To the extent that, at
the time of death, the Grantee was not entitled to exercise the Award, or if the Grantee’s estate
or a person who acquired the right to exercise the Award by bequest or inheritance does not
exercise such Award to the extent so entitled within the time specified herein, the Award shall
terminate.

     9. Conditions Upon Issuance of Shares.

          (a) 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 pursuant thereto shall comply with all
Applicable Laws, and shall be further subject to the approval of counsel for the Company with
respect to such compliance.

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

     10. Adjustments Upon Changes in Capitalization.

          Subject to any required action by the shareholders of the Company, the number of Shares
covered by each outstanding Award, and the number of Shares which have been authorized for issuance
under the Plan but as to which no Awards have yet been granted or which have been returned to the
Plan, the exercise or purchase price of each such outstanding Award, the maximum number of Shares
with respect to which Options may be granted to any Grantee in any fiscal year of the Company, as
well as any other terms that the Administrator determines require adjustment shall be
proportionately adjusted for (i) any increase or decrease in the number of issued Shares resulting
from a stock split, reverse stock split, stock dividend, combination or reclassification of the
Shares, or similar transaction affecting the Shares, (ii) any other increase or decrease in the
number of issued Shares effected without receipt of consideration by the Company, or (iii) as the
Administrator may determine in its discretion, any other transaction with respect to Common Stock
to which Section 424(a) of the Code applies or a similar transaction; 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 Administrator and its
determination shall be final, binding and conclusive. Except as the Administrator determines, 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 hereof shall be made with respect to,
the number or price of Shares subject to an Award.

     11. Corporate Transactions/Change in Control/Related Entity Dispositions.

          (a) Termination of Award to Extent Not Assumed

14

 

               (i) Corporate Transaction. Effective upon the consummation of a Corporate
Transaction, all outstanding Awards under the Plan shall terminate. However, all such Awards shall
not terminate to the extent they are Assumed in connection with the Corporate Transaction.

               (ii) Related Entity Disposition. Effective upon the consummation of a Related Entity
Disposition, for purposes of the Plan and all Awards, there shall be a deemed termination of
Continuous Service of each Grantee who is at the time engaged primarily in service to the Related
Entity involved in such Related Entity Disposition and each Award of such Grantee which is at the
time outstanding under the Plan shall be exercisable in accordance with the terms of the Award
Agreement evidencing such Award. However, such Continuous Service shall not be deemed to terminate
as to the portion of any such award that is Assumed.

          (b) Acceleration of Award Upon Corporate Transaction/Change in Control/Related Entity
Disposition.

               (i) Corporate Transaction. Except as provided otherwise in an individual Award
Agreement, in the event of a Corporate Transaction and:

                    (A) for the portion of each Award that is Assumed, then such Award (if assumed), the
replacement Award (if replaced), or the cash incentive program automatically shall become vested,
exercisable and payable and be released from any repurchase or forfeiture rights (other than
repurchase rights exercisable at fair market value) with respect to one additional year of vesting
credit immediately upon termination of the Grantee’s Continuous Service (substituting the successor
employer corporation, if any, for “Company or Related Entity” for the definition of “Continuous
Service”) if such Continuous Service is terminated by the successor company or the Company without
Cause or voluntarily by the Grantee with Good Reason within twelve (12) months of the Corporate
Transaction; and

                    (B) for the portion of each Award that is not Assumed, such portion of the Award shall
automatically become fully vested and exercisable and be released from any repurchase or forfeiture
rights (other than repurchase rights exercisable at fair market value) with respect to Shares
representing one additional year of vesting credit immediately prior to the specified effective
date of such Corporate Transaction.

               (ii) Change in Control. Except as provided otherwise in an individual Award
Agreement, following a Change in Control (other than a Change in Control which also is a Corporate
Transaction) and upon the termination of the Continuous Service of a Grantee if such Continuous
Service is terminated by the Company or Related Entity without Cause or voluntarily by the Grantee
with Good Reason within twelve (12) months of a Change in Control, Awards representing one
additional year of vesting credit automatically shall become fully vested and exercisable and be
released from any repurchase or forfeiture rights (other than repurchase rights exercisable at fair
market value), immediately upon the termination of such Continuous Service.

               (iii) Related Entity Disposition Except as provided otherwise in an individual Award
Agreement, in the event of a Related Entity Disposition and:

15

 

                    (A) for the portion of each Award that is Assumed, then such Award (if assumed), the
replacement Award (if replaced), or the cash incentive program automatically shall become vested,
exercisable and payable and be released from any repurchase or forfeiture rights (other than
repurchase rights exercisable at fair market value) with respect to one additional year of vesting
credit immediately upon termination of the Grantee’s Continuous Service (substituting the successor
employer corporation, if any, for “Company or Related Entity” for the definition of “Continuous
Service”) if such Continuous Service is terminated by the successor company without Cause or
voluntarily by the Grantee with Good Reason within twelve (12) months of the Related Entity
Disposition; and

                    (B) for the portion of each Award of a Grantee who is at the time engaged primarily in service
to the Related Entity involved in such Related Entity Disposition that is not Assumed, such portion
of the Award of such Grantee automatically shall become fully vested and exercisable and be
released from any repurchase or forfeiture rights (other than repurchase rights exercisable at fair
market value) for Shares that represent one year of additional vesting credit, immediately prior to
the specified effective date of such Related Entity Disposition.

          (c) Effect of Acceleration on Incentive Stock Options. The portion of any Incentive
Stock Option accelerated under this Section 11 in connection with a Corporate Transaction, Change
in Control or Related Entity Disposition shall remain exercisable as an Incentive Stock Option
under the Code only to the extent the $100,000 dollar limitation of Section 422(d) of the Code is
not exceeded. To the extent such dollar limitation is exceeded, the accelerated excess portion of
such Option shall be exercisable as a Non-Qualified Stock Option.

     12. Repurchase Rights. If the provisions of an Award Agreement grant to the Company
the right to repurchase Shares upon termination of the Grantee’s Continuous Service, the Award
Agreement shall (or may, with respect to Awards granted or issued to Officers, Directors or
Consultants) provide that:

          (a) the right to repurchase must be exercised, if at all, within ninety (90) days of the
termination of the Grantee’s Continuous Service (or in the case of Shares issued upon exercise of
Awards after the date of termination of the Grantee’s Continuous Service, within ninety (90) days
after the date of the Award exercise);

          (b) the consideration payable for the Shares upon exercise of such repurchase right shall be
made in cash or by cancellation of purchase money indebtedness within the ninety (90) day periods
specified in Section 12(a);

          (c) the amount of such consideration shall (i) be equal to the original purchase price paid by
Grantee for each such Share; provided, that the right to repurchase such Shares at the original
purchase price shall lapse at the rate of at least twenty percent (20%) of the Shares subject to
the Award per year over five (5) years from the date the Award is granted (without respect to the
date the Award was exercised or became exercisable), and (ii) with respect to Shares, other than
Shares subject to repurchase at the original purchase price pursuant to clause
(i) above, not less than the Fair Market Value of the Shares to be repurchased on the date of
termination of Grantee’s Continuous Service; and

16

 

          (d) the right to repurchase Shares, other than the right to repurchase Shares at the original
purchase price pursuant to clause (i) of Section 12(c), shall terminate on the Registration Date.

     13. Effective Date and Term of Plan. The Plan shall become effective upon the earlier
to occur of its adoption by the Board or its approval by the shareholders of the Company. It shall
continue in effect for a term of ten (10) years unless sooner terminated. Subject to Section 18
below, and Applicable Laws, Awards may be granted under the Plan upon its becoming effective.

     14. Amendment, Suspension or Termination of the Plan.

          (a) The Board may at any time amend, suspend or terminate the Plan. To the extent necessary to
comply with Applicable Laws, the Company shall obtain shareholder approval of any Plan amendment in
such a manner and to such a degree as required.

          (b) No Award may be granted during any suspension of the Plan or after termination of the
Plan.

          (c) Any amendment, suspension or termination of the Plan (including termination of the Plan
under Section 13 above) shall not affect Awards already granted, and such Awards shall remain in
full force and effect as if the Plan had not been amended, suspended or terminated, unless mutually
agreed otherwise between the Grantee and the Administrator, which agreement must be in writing and
signed by the Grantee and the Company.

     15. Reservation of Shares.

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

          (b) 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.

     16. No Effect on Terms of Employment/Consulting Relationship. The Plan shall not
confer upon any Grantee any right with respect to the Grantee’s Continuous Service, nor shall it
interfere in any way with his or her right or the Company’s right to terminate the Grantee’s
Continuous Service at any time, with or without Cause, and with or without notice.

     17. No Effect on Retirement and Other Benefit Plans. Except as specifically provided
in a retirement or other benefit plan of the Company or a Related Entity, Awards shall not be
deemed compensation for purposes of computing benefits or contributions under any retirement plan
of the Company or a Related Entity, and shall not affect any benefits under any other benefit plan
of any kind or any benefit plan subsequently instituted under which the availability

17

 

or amount of
benefits is related to level of compensation. The Plan is not a “Retirement Plan” or “Welfare
Plan” under the Employee Retirement Income Security Act of 1974, as amended.

     18. Shareholder Approval. Continuance of the Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months before or after the date the Plan is adopted.
Such shareholder approval shall be obtained in the degree and manner required under Applicable
Laws. Any Award exercised before shareholder approval is obtained shall be rescinded if shareholder
approval is not obtained within the time prescribed, and Shares issued on the exercise of any such
Award shall not be counted in determining whether shareholder approval is obtained.

     19. Information to Grantees. The Company shall provide to each Grantee, during the
period for which such Grantee has one or more Awards outstanding, copies of financial statements at
least annually.

     20. Effect of Section 162(m) of the Code. Section 162(m) of the Code does not apply
to the Plan prior to the Registration Date. Following the Registration Date, the Plan, and all
Awards issued thereunder, are intended to be exempt from the application of Section 162(m) of the
Code, which restricts under certain circumstances the Federal income tax deduction for compensation
paid by a public company to named executives in excess of $1 million per year. The exemption is
based on Treasury Regulation Section 1.162-27(f), in the form existing on the effective date of the
Plan, with the understanding that such regulation generally exempts from the application of Section
162(m) of the Code compensation paid pursuant to a plan that existed before a company becomes
publicly held. Under such Treasury Regulation, this exemption is available to the Plan for the
duration of the period that lasts until the earlier of (i) the expiration of the Plan, (ii) the
material modification of the Plan, (iii) the exhaustion of the maximum number of shares of Common
Stock available for Awards under the Plan, as set forth in Section 3(a), (iv) the first meeting of
shareholders at which directors are to be elected that occurs after the close of the third calendar
year following the calendar year in which the Company first becomes subject to the reporting
obligations of Section 12 of the Exchange Act, or (v) such other date required by Section 162(m) of
the Code and the rules and regulations promulgated thereunder. The Committee may, without
shareholder approval, amend the Plan retroactively and/or prospectively to the extent it determines
necessary in order to comply with any subsequent clarification of Section 162(m) of the Code
required to preserve the Company’s Federal income tax deduction for compensation paid pursuant to
the Plan. To the extent that the Administrator determines as of the date of grant of an Award that
(i) the Award is intended to qualify as Performance-Based Compensation and (ii) the exemption
described above is no longer available with respect to such Award, such Award shall not be
effective until any stockholder approval required under Section 162(m) of the Code has been
obtained.

18

 

CAVIUM NETWORKS 2001 STOCK INCENTIVE PLAN

NOTICE OF STOCK OPTION AWARD

	 	 	 	 	 
	 

	 	Grantee’s Name and Address:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

          You have been granted an option to purchase shares of Common Stock, subject to the terms and
conditions of this Notice of Stock Option Award (the “Notice”), the Cavium Networks 2001 Stock
Incentive Plan, as amended from time to time (the “Plan”) and the Stock Option Award Agreement (the
“Option Agreement”) attached hereto, as follows. Unless otherwise defined herein, the terms
defined in the Plan shall have the same defined meanings in this Notice.

          Award Number

          Date of Award

          Vesting Commencement Date

          Exercise Price per Share

          Total Number of Shares Subject

          to the Option (the “Shares”)

          Total Exercise Price                      $

          Type of Option:

          Expiration Date:

          Post-Termination Exercise Period: Three (3) Months

Vesting Schedule:

          This Option is immediately exercisable although the Shares issued upon exercise of the Option
will be subject to the restrictions on transfer and a right of repurchase at the Exercise Price per
Share, in favor of the Company, as described in Section 16 of the Option Agreement (the “Repurchase
Right”). For purposes of this Notice and the Option Agreement, the term “vest” shall mean, with
respect to any Shares, that such Shares (whether subject to the Option or acquired upon exercise of
the Option) are no longer subject to the Repurchase Right as to unvested Shares, provided, however,
that such Shares shall remain subject to other restrictions on transfer set forth in the Option
Agreement or the Plan. If the Grantee would become vested in a fraction of a Share, such Share
shall not vest until the Grantee becomes vested in the entire Share. Notwithstanding the
foregoing, the Shares subject to this Notice will be released from Repurchase Right in the event of
a Corporate Transaction, in accordance with Section 16 of the Option Agreement. Provided that
Grantee’s Continuous Service is not terminated and other limitations set forth in this Notice, the
Plan and the Option Agreement, the Repurchase Right as to unvested Shares shall lapse in
accordance with the following schedule:

1

 

          12.5% of the Shares subject to the Option shall vest six months after the Vesting Commencement
Date, and 1/48 of the Shares subject to the Option shall vest on each monthly anniversary of the
Vesting Commencement Date thereafter.

          During any authorized leave of absence, the vesting of the Option as provided in this schedule
shall cease after the leave of absence exceeds a period of ninety (90) days. Vesting of the Option
shall resume upon the Grantee’s termination of the leave of absence and return to service to the
Company or a Related Entity.

          In the event of termination of the Grantee’s Continuous Service for Cause, the Grantee’s right
to exercise the Option shall terminate concurrently with the termination of the Grantee’s
Continuous Service, except as otherwise determined by the Administrator.

          In the event of the Grantee’s change in status from Employee to Consultant or from an Employee
whose customary employment is 20 hours or more per week to an Employee whose customary employment
is fewer than 20 hours per week, vesting of the Option shall continue only to the extent determined
by the Administrator as of such change in status.

          IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and agree that the
Option is to be governed by the terms and conditions of this Notice, the Plan, and the Option
Agreement.

	 	 	 	 	 	 	 
	 	 	CAVIUM NETWORKS,  
	 
	 	 	 	 	 	 
	 	 	a California corporation
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL VEST, IF AT ALL,
ONLY DURING THE PERIOD OF THE GRANTEE’S CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING HIRED,
BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND
AGREES THAT NOTHING IN THIS NOTICE, THE OPTION AGREEMENT, OR THE PLAN SHALL CONFER UPON THE GRANTEE
ANY RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF GRANTEE’S CONTINUOUS SERVICE, NOR SHALL
IT INTERFERE IN ANY WAY WITH THE GRANTEE’S RIGHT OR THE RIGHT OF THE GRANTEE’S EMPLOYER TO
TERMINATE GRANTEE’S CONTINUOUS SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE .
THE GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE
COMPANY TO THE CONTRARY, GRANTEE’S STATUS IS AT WILL.

          The Grantee acknowledges receipt of a copy of the Plan and the Option Agreement, and
represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the
Option subject to all of the terms and provisions hereof and thereof. The Grantee has reviewed
this Notice, the Plan, and the Option Agreement in their entirety, has had an opportunity to obtain
the advice of counsel prior to executing this Notice, and fully understands all provisions

2

 

of this Notice, the Plan and the Option Agreement. The Grantee hereby agrees that all
disputes arising out of or relating to this Notice, the Plan and the Option Agreement shall be
resolved in accordance with Section 23 of the Option Agreement. The Grantee further agrees to
notify the Company upon any change in the residence address indicated in this Notice.

	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	Signed:	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	                     Grantee

3

 

Award Number:

CAVIUM NETWORKS 2001 STOCK INCENTIVE PLAN

IMMEDIATELY EXERCISABLE STOCK OPTION AWARD AGREEMENT

     1. Grant of Option. Cavium Networks, a California corporation (the “Company”), hereby
grants to the Grantee (the “Grantee”) named in the Notice of Stock Option Award (the “Notice”), an
option (the “Option”) to purchase the Total Number of Shares of Common Stock subject to the Option
(the “Shares”) set forth in the Notice, at the Exercise Price per Share set forth in the Notice
(the “Exercise Price”) subject to the terms and provisions of the Notice, this Stock Option Award
Agreement (the “Option Agreement”) and the Company’s 2001 Stock Incentive Plan, as amended from
time to time (the “Plan”), which are incorporated herein by reference. Unless otherwise defined
herein, the terms defined in the Plan shall have the same defined meanings in this Option
Agreement.

     2. Exercise of Option.

          (a) Right to Exercise. The Option shall be immediately exercisable during its term in
accordance with the applicable provisions of the Plan and this Option Agreement. The Option shall
be subject to the provisions of Section 11 of the Plan relating to the exercisability or
termination of the Option in the event of a Corporate Transaction. The Grantee shall be subject to
reasonable limitations on the number of requested exercises during any monthly or weekly period as
determined by the Administrator. In no event shall the Company issue fractional Shares.

          (b) Method of Exercise. The Option shall be exercisable only by delivery of an
Exercise Notice (attached as Exhibit A) which shall state the election to exercise the Option, the
whole number of Shares in respect of which the Option is being exercised, and such other provisions
as may be required by the Administrator. The Exercise Notice shall be signed by the Grantee and
shall be delivered in person, by certified mail, or by such other method as determined from time to
time by the Administrator to the Company accompanied by payment of the Exercise Price. The Option
shall be deemed to be exercised upon receipt by the Company of such written notice accompanied by
the Exercise Price, which, to the extent selected, shall be deemed to be satisfied by use of the
broker-dealer sale and remittance procedure to pay the Exercise Price provided in Section 4(d),
below.

          (c) Taxes. No Shares will be delivered to the Grantee or other person pursuant to the
exercise of the Option until the Grantee or other person has made arrangements acceptable to the
Administrator for the satisfaction of applicable income tax, employment tax, and social security
tax withholding obligations, including, without limitation, obligations incident to the receipt of
Shares. Upon exercise of the Option, the Company or the Grantee’s employer may offset or withhold
(from any amount owed by the Company or the Grantee’s employer to the Grantee) or collect from the
Grantee or other person an amount sufficient to satisfy such tax obligations and/or the employer’s
withholding obligations.

C-1

 

     3. Grantee’s Representations. The Grantee understands that neither the Option nor the
Shares exercisable pursuant to the Option have been registered under the Securities Act of 1933, as
amended or any United States securities laws. In the event the Shares purchasable pursuant to the
exercise of the Option have not been registered under the Securities Act of 1933, as amended, at
the time the Option is exercised, the Grantee shall, if requested by the Company, concurrently with
the exercise of all or any portion of the Option, deliver to the Company his or her Investment
Representation Statement in the form attached hereto as Exhibit B.

     4. Method of Payment. Payment of the Exercise Price shall be made by any of the
following, or a combination thereof, at the election of the Grantee; provided, however, that such
exercise method does not then violate any Applicable Law:

          (a) cash;

          (b) check;

          (c) if the exercise occurs on or after the Registration Date, surrender of Shares or delivery
of a properly executed form of attestation of ownership of Shares as the Administrator may require
(including withholding of Shares otherwise deliverable upon exercise of the Option) which have a
Fair Market Value on the date of surrender or attestation equal to the aggregate Exercise Price of
the Shares as to which the Option is being exercised (but only to the extent that such exercise of
the Option would not result in an accounting compensation charge with respect to the Shares used to
pay the exercise price); or

          (d) if the exercise occurs on or after the Registration Date, payment through a broker-dealer
sale and remittance procedure pursuant to which the Grantee (i) shall provide written instructions
to a Company designated brokerage firm to effect the immediate sale of some or all of the purchased
Shares and remit to the Company, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the purchased Shares and (ii)
shall provide written directives to the Company to deliver the certificates for the purchased
Shares directly to such brokerage firm in order to complete the sale transaction.

     5. Restrictions on Exercise. The Option may not be exercised if the issuance of the
Shares subject to the Option upon such exercise would constitute a violation of any Applicable
Laws. In addition, the Option may be exercised prior to the time that the Plan has been approved
by the shareholders of the Company; provided, however, that all Shares issued upon any such
exercise shall be rescinded if shareholder approval is not obtained within the time prescribed, and
Shares issued on any such exercise shall not be counted in determining whether shareholder
approval is obtained.

     6. Termination or Change of Continuous Service. In the event the Grantee’s Continuous
Service terminates, other than for Cause, the Grantee may, to the extent the Option is vested at
the date of such termination (the “Termination Date”) and the Optionee is otherwise so entitled on
the Termination Date, exercise the Option during the Post-Termination Exercise Period. In the
event of termination of the Grantee’s Continuous Service for Cause, the Grantee’s right to exercise
the Option shall, except as otherwise determined by the Administrator,

C-2

 

terminate concurrently with the termination of the Grantee’s Continuous Service. In no event
shall the Option be exercised later than the Expiration Date set forth in the Notice. In the event
of the Grantee’s change in status from Employee, Director or Consultant to any other status of
Employee, Director or Consultant, the Option shall remain in effect and, except to the extent
otherwise determined by the Administrator, continue to vest. Except as provided in Sections 7 and
8 below, to the extent that the Option is not vested on the Termination Date, or if the Grantee
does not exercise the Option within the Post-Termination Exercise Period, the Option shall
terminate.

     7. Disability of Grantee. In the event the Grantee’s Continuous Service terminates as
a result of his or her Disability, the Grantee may, but only within twelve (12) months from the
Termination Date (and in no event later than the Expiration Date), exercise the Option to the
extent that the Option is vested on the Termination Date and to the extent he or she was otherwise
entitled to exercise it on the Termination Date. To the extent that the Option is not vested on
the Termination Date, or if the Grantee does not exercise the Option to the extent so entitled
within the time specified herein, the Option shall terminate.

     8. Death of Grantee. In the event of the termination of the Grantee’s Continuous
Service as a result of his or her death, or in the event of the Grantee’s death during the
Post-Termination Exercise Period or during the twelve (12) month period following the Grantee’s
termination of Continuous Service as a result of his or her Disability, the Grantee’s estate, or a
person who acquired the right to exercise the Option by bequest or inheritance, may exercise the
Option, but only to the extent the Option is vested at the date of termination, within twelve (12)
months from the date of death (but in no event later than the Expiration Date). To the extent that
the Option is not vested on the date of death, or if the Option is not exercised to the extent so
entitled within the time specified herein, the Option shall terminate.

     9. Transferability of Option. To the extent and in the manner authorized by the
Administrator, the Option may be transferred by will, by the laws of descent and distribution, by
gift to members of the Grantee’s Immediate Family (as defined in the Plan), and by instrument to an
inter vivos or testamentary trust under which the Non-Qualified Stock Option is to be passed to
beneficiaries upon the death of the Grantee as settlor of the trust. The terms of the Option shall
be binding upon the executors, administrators, heirs and successors of the Grantee.

     10. Term of Option. The Option may be exercised no later than the Expiration Date set
forth in the Notice or such earlier date as otherwise provided herein.

     11. Transfer Restrictions for Unvested Shares. The Shares sold to the Grantee
hereunder may not be sold, transferred by gift, pledged, hypothecated, or otherwise transferred or
disposed of by the Grantee prior to the date that the Shares become vested pursuant to the Vesting
Schedule set forth in the Notice. Any attempt to transfer Shares in violation of this Section 11
will be null and void and will be disregarded. After the Shares vest, the Shares will remain
subject to the Company’s Right of First Refusal as set forth in Section 12 and the Company’s
Repurchase Right for vested shares as set forth in Section 16.

C-3

 

     12. Company’s Right of First Refusal.

          (a) Transfer Notice. Neither the Grantee nor a transferee (either being sometimes
referred to herein as the “Holder”) shall sell, hypothecate, encumber or otherwise transfer any
Shares or any right or interest therein without first complying with the provisions of this Section
12 or obtaining the prior written consent of the Company. In the event the Holder desires to
accept a bona fide third-party offer for any or all of the Shares, the Holder shall provide the
Company with written notice (the “Transfer Notice”) of:

	 	(i)	 	The Holder’s intention to transfer;
	 
	 	(ii)	 	The name of the proposed transferee;
	 
	 	(iii)	 	The number of Shares to be transferred; and
	 
	 	(iv)	 	The proposed transfer price or value and terms thereof.

          (b) First Refusal Exercise Notice. The Company shall have the right to purchase (the
“Right of First Refusal”) all but not less than all, of the Shares which are described in the
Transfer Notice (the “Offered Shares”) at any time during the period commencing upon receipt of the
Transfer Notice and ending forty-five (45) days after the first date on which the Company
determines that the Right of First Refusal may be exercised without incurring an accounting expense
with respect to such exercise (the “Option Period”) at the per share price or value and in
accordance with the terms stated in the Transfer Notice, which Right of First Refusal shall be
exercised by written notice (the “First Refusal Exercise Notice”) to the Holder. During the Option
Period and the 120-day period following the expiration of the Option Period, the Company also may
exercise its Repurchase Right in lieu or in addition to its Right of First Refusal if the
Repurchase Right is or becomes exercisable during the Option Period or such 120-day period.

          (c) Payment Terms. The Company shall consummate the purchase of the Offered Shares on
the terms set forth in the Transfer Notice within 15 days after delivery of the First Refusal
Exercise Notice; provided, however, that in the event the Transfer Notice provides for the payment
for the Offered Shares other than in cash, the Company and/or its assigns shall have the right to
pay for the Offered Shares by the discounted cash equivalent of the consideration described in the
Transfer Notice as reasonably determined by the Administrator. Upon payment for the Offered Shares
to the Holder or into escrow for the benefit of the Holder, the Company or its assigns shall become
the legal and beneficial owner of the Offered Shares and all rights and interest therein or related
thereto, and the Company shall have the right to transfer the Offered Shares to its own name or its
assigns without further action by the Holder.

          (d) Assignment. Whenever the Company shall have the right to purchase Shares under
this Right of First Refusal, the Company may designate and assign one or more employees, officers,
directors or shareholders of the Company or other persons or organizations, to exercise all or a
part of the Company’s Right of First Refusal.

          (e) Non-Exercise. If the Company and/or its assigns do not collectively elect to
exercise the Right of First Refusal within the Option Period or such earlier time if the

C-4

 

Company and/or its assigns notifies the Holder that it will not exercise the Right of First
Refusal, then the Holder may transfer the Shares upon the terms and conditions stated in the
Transfer Notice, provided that:

               (i) The transfer is made within 120 days of the expiration of the Option Period; and

               (ii) The transferee agrees in writing that such Shares shall be held subject to the provisions
of this Option Agreement.

          (f) Expiration of Transfer Period. Following such 120-day period, no transfer of the
Offered Shares and no change in the terms of the transfer as stated in the Transfer Notice
(including the name of the proposed transferee) shall be permitted without a new written Transfer
Notice prepared and submitted in accordance with the requirements of this Right of First Refusal.

          (g) Exception for Certain Family Transfers. Anything to the contrary contained in
this section notwithstanding, the transfer of any or all of the Shares during the Grantee’s
lifetime or on the Grantee’s death by will or intestacy to the Grantee’s Immediate Family or a
trust for the benefit of the Grantee or the Grantee’s Immediate Family shall be exempt from the
provisions of this Right of First Refusal (a “Permitted Transfer”); provided, however, that (i) the
transferee or other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Option Agreement, and there shall be no further transfer of such Shares except
in accordance with the terms of this Option Agreement and (ii) prior to any such transfer, each
transferee shall execute an agreement pursuant to which such transferee shall agree to receive and
hold such Shares subject to the provisions of this Option Agreement. “Immediate Family” as used
herein shall mean spouse, domestic partner (as determined by the Administrator), child, lineal
descendant or antecedent, father, mother, brother or sister and the lineal descendants of such
individuals.

          (h) Termination of Right of First Refusal. The provisions of this Right of First
Refusal shall terminate as to all Shares upon the Registration Date.

          (i) Additional Shares or Substituted Securities. In the event of any transaction
described in Section 11 of the Plan, any new, substituted or additional securities or other
property which is by reason of any such transaction distributed with respect to the Shares shall be
immediately subject to the Right of First Refusal, but only to the extent the Shares are at the
time covered by such right.

          (j) Corporate Transaction. Immediately prior to the consummation of a Corporate
Transaction described in Sections 2(m)(i),(ii), and (iii) of the Plan, the Right of First Refusal
shall automatically lapse in its entirety, except to the extent this Option Agreement is assumed by
the successor corporation (or its Parent) in connection with such Corporate Transaction, in which
case the Right of First Refusal shall apply to the new capital stock or other property received in
exchange for the Shares in consummation of the Corporate Transaction, but only to the extent the
Shares are at the time covered by such right.

C-5

 

     13. Escrow of Stock. For purposes of facilitating the enforcement of the provisions
of the Repurchase Right, the Grantee agrees, immediately upon receipt of the certificate(s) for the
Shares, to deliver such certificate(s), together with an Assignment Separate from Certificate in
the form attached hereto as Exhibit C, executed in blank by the Grantee and the Grantee’s spouse
(if required for transfer) with respect to each such stock certificate, to the Secretary or
Assistant Secretary of the Company, or their designee, to hold in escrow for so long as such Shares
have not vested pursuant to the Vesting Schedule set forth in the Notice and are subject to
Company’s Repurchase Right, with the authority to take all such actions and to effectuate all such
transfers and/or releases as may be necessary or appropriate to accomplish the objectives of this
Option Agreement in accordance with the terms hereof. The Grantee hereby acknowledges that the
appointment of the Secretary or Assistant Secretary of the Company (or their designee) as the
escrow holder hereunder with the stated authorities is a material inducement to the Company to make
this Option Agreement and that such appointment is coupled with an interest and is accordingly
irrevocable. The Grantee agrees that such escrow holder shall not be liable to any party hereto
(or to any other party) for any actions or omissions unless such escrow holder is grossly negligent
relative thereto. The escrow holder may rely upon any letter, notice or other document executed by
any signature purported to be genuine and may resign at any time. Subject to the provisions of any
security agreement relating to Grantee’s purchase of the Shares, upon the vesting of Shares and
termination of the Company’s Repurchase Right as set forth in Section 16, the escrow holder will,
upon request, transmit to the Grantee the certificate evidencing such Shares.

     14. Additional Securities. Any securities received as the result of ownership of the
Shares (the “Additional Securities”), including, but not by way of limitation, warrants, options
and securities received as a stock dividend or stock split, or as a result of any transaction
described in Section 11 of the Plan, shall be subject to the same conditions and restrictions as
the Shares with respect to which they were issued, including, without limitation, the Vesting
Schedule set forth in the Notice, Right of First Refusal and the Repurchase Right and retained in
escrow in the same manner as the Shares with respect to which they relate. The Grantee shall be
entitled to direct the Company to exercise any warrant or option received as Additional Securities
upon supplying the funds necessary to do so, in which event the securities so purchased shall
constitute Additional Securities, but the Grantee may not direct the Company to sell any such
warrant or option. If Additional Securities consist of a convertible security, the Grantee may
exercise any conversion right, and any securities so acquired shall constitute Additional
Securities. Appropriate adjustments to reflect the distribution of Additional Securities shall be
made to the price per share to be paid upon the exercise of the Repurchase Right in order to
reflect the effect of any such transaction upon the Company’s capital structure. In the event of
any change in certificates evidencing the Shares or the Additional Securities by reason of any
recapitalization, reorganization or other transaction that results in the creation of Additional
Securities, the escrow holder is authorized to deliver to the issuer the certificates evidencing
the Shares or the Additional Securities in exchange for the certificates of the replacement
securities.

     15. Distributions. Subject to Section 14 and Section 16(e), the Company shall
disburse to the Grantee all dividends and other distributions paid or made in cash with respect to
the Shares and Additional Securities (whether vested or not), less any applicable withholding
obligations.

C-6

 

     16. Company’s Repurchase Right.

          (a) Grant of Repurchase Right. The Company is hereby granted the right (the
“Repurchase Right”), exercisable at any time (i) during the ninety (90) day period following the
Termination Date, to repurchase all or any portion of the Shares that have not vested pursuant to
the terms of the Vesting Schedule purchased upon exercise of the Option (the “Share Repurchase
Period”).

          (b) Exercise of the Repurchase Right. The Repurchase Right shall be exercisable by
written notice delivered to the Grantee prior to the expiration of the Share Repurchase Period.
The notice shall indicate the number of Shares to be repurchased and the date on which the
repurchase is to be effected, such date to be not later than the last day of the Share Repurchase
Period. On the date on which the repurchase is to be effected, the Company and/or its assigns
shall pay to the Grantee in cash or cash equivalents (including the cancellation of any
purchase-money indebtedness) an amount equal to the lesser of (i) the Purchase Price per Share
previously paid by the Grantee to the Company for such Shares; (ii) the Fair Market Value per
Share on the Termination Date and (iii) if the repurchase amount must be more than (i) or (ii)
above under applicable law, then the minimum amount allowed under applicable law. Upon such
payment to the Grantee or into escrow for the benefit of the Grantee, the Company and/or its
assigns shall become the legal and beneficial owner of the Shares being repurchased and all rights
and interest thereon or related thereto, and the Company shall have the right to transfer to its
own name or its assigns the number of Shares being repurchased, without further action by the
Grantee.

          (c) Assignment. Whenever the Company shall have the right to purchase Shares under
this Repurchase Right, the Company may designate and assign one or more employees, officers,
directors or shareholders of the Company or other persons or organizations, to exercise all or a
part of the Company’s Repurchase Right.

          (d) Termination of the Repurchase Right. The Repurchase Right shall terminate with
respect to any Shares for which it is not timely exercised.

          (e) Corporate Transaction. Upon the consummation of a Corporate Transaction, the
Repurchase Right as to unvested Shares shall apply to the new capital stock or other property
(including cash paid other than as a regular cash dividend) received in exchange for the Shares in
consummation of a Corporate Transaction and such stock or property shall be deemed Additional
Securities for purposes of this Agreement, but only to the extent the Shares are at the time
covered by such Repurchase Right. Appropriate adjustments shall be made to the price per share
payable upon exercise of the Repurchase Right to reflect the effect of the Corporate Transaction.

     17. Stop-Transfer Notices. In order to ensure compliance with the restrictions on
transfer set forth in this Option Agreement, the Notice or the Plan, the Company may issue
appropriate “stop transfer” instructions to its transfer agent, if any, and, if the Company
transfers its own securities, it may make appropriate notations to the same effect in its own
records.

C-7

 

     18. Refusal to Transfer. The Company shall not be required (i) to transfer on its
books any Shares that have been sold or otherwise transferred in violation of any of the provisions
of this Option Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or
pay dividends to any purchaser or other transferee to whom such Shares shall have been so
transferred.

     19. Tax Consequences. The Plan does not intend to comply with the Indian Ministry of
Finance Guidelines for tax-favored treatment in India as of the date it was adopted. THE GRANTEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

     20. Lock-Up Agreement.

          (a) Agreement. The Grantee, if requested by the Company and the lead underwriter of
any public offering of the Common Stock or other securities of the Company (the “Lead
Underwriter”), hereby irrevocably agrees not to sell, contract to sell, grant any option to
purchase, transfer the economic risk of ownership in, make any short sale of, pledge or otherwise
transfer or dispose of any interest in any Common Stock or any securities convertible into or
exchangeable or exercisable for or any other rights to purchase or acquire Common Stock (except
Common Stock included in such public offering or acquired on the public market after such offering)
during the 180-day period following the effective date of a registration statement of the Company
filed under the Securities Act of 1933, as amended, or such shorter period of time as the Lead
Underwriter shall specify. The Grantee further agrees to sign such documents as may be requested
by the Lead Underwriter to effect the foregoing and agrees that the Company may impose
stop-transfer instructions with respect to such Common Stock subject until the end of such period.
The Company and the Grantee acknowledge that each Lead Underwriter of a public offering of the
Company’s stock, during the period of such offering and for the 180-day period thereafter, is an
intended beneficiary of this Section 20.

          (b) No Amendment Without Consent of Underwriter. During the period from
identification as a Lead Underwriter in connection with any public offering of the Company’s Common
Stock until the earlier of (i) the expiration of the lock-up period specified in Section 20(a) in
connection with such offering or (ii) the abandonment of such offering by the Company and the Lead
Underwriter, the provisions of this Section 20 may not be amended or waived except with the consent
of the Lead Underwriter.

     21. Entire Agreement: Governing Law. The Notice, 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 the Grantee
with respect to the subject matter hereof, and may not be modified adversely to the Grantee’s
interest except by means of a writing signed by the Company and the Grantee. Nothing in the
Notice, the Plan and this Option Agreement (except as expressly provided therein) is intended to
confer any rights or remedies on any persons other than the parties. The Notice, the Plan and this
Option Agreement are to be construed in accordance with and governed by the internal laws of the
State of California (as permitted by Section 1646.5 of the California Civil Code, or any similar
successor provision) without giving effect to any choice of law rule that would cause the
application of the laws of any jurisdiction other than the internal laws of the State

C-8

 

of California to the rights and duties of the parties. Should any provision of the Notice,
the Plan or this Option Agreement be determined by a court of law to be illegal or unenforceable,
such provision shall be enforced to the fullest extent allowed by law and the other provisions
shall nevertheless remain effective and shall remain enforceable.

     22. Headings. The captions used in the Notice and this Option Agreement are inserted
for convenience and shall not be deemed a part of the Option for construction or interpretation.

     23. Dispute Resolution The provisions of this Section 23 shall be the exclusive means
of resolving disputes arising out of or relating to the Notice, the Plan and this Option Agreement.
The Company, the Grantee, and the Grantee’s assignees pursuant to Section 11 or a Permitted
Transfer (the “parties”) shall attempt in good faith to resolve any disputes arising out of or
relating to the Notice, the Plan and this Option Agreement by negotiation between individuals who
have authority to settle the controversy. Negotiations shall be commenced by either party by
notice of a written statement of the party’s position and the name and title of the individual who
will represent the party. Within thirty (30) days of the written notification, the parties shall
meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem
necessary, to resolve the dispute. If the dispute has not been resolved by negotiation, the
parties agree that any suit, action, or proceeding arising out of or relating to the Notice, the
Plan or this Option Agreement shall be brought in the United States District Court for the Northern
District of California (or should such court lack jurisdiction to hear such action, suit or
proceeding, in a California state court in the County of San Francisco) and that the parties shall
submit to the jurisdiction of such court. The parties irrevocably waive, to the fullest extent
permitted by law, any objection the party may have to the laying of venue for any such suit, action
or proceeding brought in such court. If any one or more provisions of this Section 23 shall for
any reason be held invalid or unenforceable, it is the specific intent of the parties that such
provisions shall be modified to the minimum extent necessary to make it or its application valid
and enforceable.

     24. Confidentiality. The Company shall provide to Grantee, during the period for
which Grantee has one or more Awards outstanding, copies of financial statements of the Company at
least annually. Grantee understands and agrees that such financial statements are confidential and
shall not be disclosed by Grantee, to any entity or person, for any reason, at any time, without
the prior written consent of the Company, unless required by law. If disclosure of such financial
statements is required by law, whether through subpoena, request for production, deposition, or
otherwise, Grantee promptly shall provide written notice to Company, including copies of the
subpoena, request for production, deposition, or otherwise, within five (5) business days of their
receipt by Grantee and prior to any disclosure so as to provide Company an opportunity to move to
quash or otherwise to oppose the disclosure. Notwithstanding the foregoing, Grantee may disclose
the terms of such financial statements to his or her spouse or domestic partner, and for legitimate
business reasons, to legal, financial, and tax advisors.

     25. Notices. Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon personal delivery or upon deposit in the United States mail
by certified mail (if the parties are within the United States) or upon deposit for delivery by an
internationally recognized express mail courier service (for international delivery of notice),
with postage and fees prepaid, addressed to the other party at its address as shown beneath its
signature in the Notice, or to such other address as such party may designate in writing from
time to time to the other party.

C-9

 

Exhibit A

CAVEO NETWORKS 2001 STOCK INCENTIVE PLAN
Notice of Restricted Stock Purchase Award

EXERCISE NOTICE

	 	 	 
	Attention:

	 	Secretary

Caveo Networks

     1.     Effective as of today, ___, ___, the undersigned (the “Grantee”) hereby elects to
exercise the Grantee’s option to purchase ___shares of the Common Stock (the “Shares”) of
Caveo Networks (the “Company”) under and pursuant to the Company’s 2001 Stock Incentive Plan, as
amended from time to time (the “Plan”) and the [ ] Incentive [ ] Non-Qualified Stock Option Award
Agreement (the “Option Agreement”) and Notice of Stock Option Award (the “Notice”) dated
___, ___. Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Exercise Notice.

     2.     Representations of the Grantee. The Grantee acknowledges that the Grantee has received,
read and understood the Notice, the Plan and the Option Agreement and agrees to abide by and be
bound by their terms and conditions.

     3.     Rights as Shareholder. Until the stock certificate evidencing such Shares is 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 Shares, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate 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 stock certificate is issued, except as provided in Section 11(a) of the Plan.

     The Grantee shall enjoy rights as a shareholder until such time as the Grantee disposes of the
Shares or the Company and/or its assignee(s) exercises the Right of First Refusal or the Repurchase
Right. Upon such exercise, the Grantee shall have no further rights as a holder of the Shares so
purchased except the right to receive payment for the Shares so purchased in accordance with the
provisions of the Option Agreement, and the Grantee shall forthwith cause the certificate(s)
evidencing the Shares so purchased to be surrendered to the Company for transfer or cancellation.

     4.     Delivery of Payment. The Grantee herewith delivers to the Company the full Exercise Price
for the Shares, which, to the extent selected, shall be deemed to be satisfied by use of the
broker-dealer sale and remittance procedure to pay the Exercise Price provided in Section 4(d) of
the Option Agreement.

     5.     Tax Consultation. The Grantee understands that the Grantee may suffer adverse tax
consequences as a result of the Grantee’s purchase or disposition of the Shares. The Grantee
represents that the Grantee has consulted with any tax consultants the Grantee deems advisable

1.

 

in connection with the purchase or disposition of the Shares and that the Grantee is not
relying on the Company for any tax advice.

     6.     Tax Election; Taxes. The Grantee shall provide the Company with a copy of any timely filed
83(b) Election relating to the purchase of the Shares. If the Grantee makes a timely 83(b)
Election, the Grantee shall immediately pay the Company (or the Related Entity that employs the
Grantee) the amount necessary to satisfy any applicable federal, state, and local income and
employment tax withholding obligations. If the Grantee does not make a timely 83(b) Election, the
Grantee shall, either at the time that the restrictions lapse under the Option Agreement and the
Plan or at the time withholding is otherwise required by Applicable Law, pay the Company (or the
Related Entity that employs the Grantee) the amount necessary to satisfy any applicable federal,
state, and local income and employment tax withholding obligations. In addition, the Grantee
agrees to satisfy all other applicable federal, state and local income and employment tax
withholding obligations and herewith delivers to the Company the full amount of such obligations or
has made arrangements acceptable to the Company to satisfy such obligations. In the case of an
Incentive Stock Option, the Grantee also agrees, as partial consideration for the designation of
the Option as an Incentive Stock Option, to notify the Company in writing within thirty (30) days
of any disposition of any shares acquired by exercise of the Option if such disposition occurs
within two (2) years from the Grant Date or within one (1) year from the date the Shares were
transferred to the Grantee. If the Company is required to satisfy any federal, state or local
income or employment tax withholding obligations as a result of such an early disposition, the
Grantee agrees to satisfy the amount of such withholding in a manner that the Administrator
prescribes.

     7.     Restrictive Legends. The Grantee understands and agrees that the Company shall cause the
legends set forth below or legends substantially equivalent thereto, to be placed upon any
certificate(s) evidencing ownership of the Shares together with any other legends that may be
required by the Company or by state or federal securities laws:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “ACT”) OR ANY STATE SECURITIES LAWS AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES,
SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN
COMPLIANCE THEREWITH.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER, A RIGHT OF FIRST REFUSAL AND A REPURCHASE
RIGHT HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE
OPTION AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE
SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE

2.

 

OF THE ISSUER. SUCH TRANSFER RESTRICTIONS, RIGHT OF FIRST REFUSAL
AND REPURCHASE RIGHT ARE BINDING ON TRANSFEREES OF THESE SHARES.

     8.     Successors and Assigns. The Company may assign any of its rights under this Exercise
Notice to single or multiple assignees, and this agreement shall inure to the benefit of the
successors and assigns of the Company. Subject to the restrictions on transfer herein set forth,
this Exercise Notice shall be binding upon the Grantee and his or her heirs, executors,
administrators, successors and assigns.

     9.     Headings. The captions used in this Exercise Notice are inserted for convenience and shall
not be deemed a part of this agreement for construction or interpretation.

     10.     Dispute Resolution. The provisions of Section 23 of the Option Agreement shall be the
exclusive means of resolving disputes arising out of or relating to this Exercise Notice

     11.     Governing Law; Severability. This Exercise Notice is to be construed in accordance with
and governed by the internal laws of the State of California (as permitted by Section 1646.5 of the
California Civil Code, or any similar successor provision) without giving effect to any choice of
law rule that would cause the application of the laws of any jurisdiction other than the internal
laws of the State of California to the rights and duties of the parties. Should any provision of
this Exercise Notice be determined by a court of law to be illegal or unenforceable, such provision
shall be enforced to the fullest extent allowed bylaw and the other provisions shall nevertheless
remain effective and shall remain enforceable.

     12.     Notices. Any notice required or permitted hereunder shall be given in writing and shall
be deemed effectively given upon personal delivery or upon deposit in the United States mail by
certified mail (if the parties are within the United States) or upon deposit for delivery by an
internationally recognized express mail courier service (for international delivery of notice),
with postage and fees prepaid, addressed to the other party at its address as shown below beneath
its signature, or to such other address as such party may designate in writing from time to time to
the other party.

     13.     Further Instruments. The parties agree to execute such further instruments and to take
such further action as may be reasonably necessary to carry out the purposes and intent of this
agreement.

     14.     Entire Agreement. The Notice, the Plan and the Option Agreement are incorporated herein
by reference and together with this Exercise Notice 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 the Grantee with respect to the subject matter hereof, and may
not be modified adversely to the Grantee’s interest except by means of a writing signed by the
Company and the Grantee. Nothing in the Notice, the Plan, the

3.

 

Option Agreement and this Exercise Notice (except as expressly provided therein) is intended to
confer any rights or remedies on any persons other than the parties.

	 	 	 	 	 
	Submitted By: 	 	Accepted By:
	 
	 	 	 	 
	Grantee:	 	Caveo Networks
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	(Signature)
	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Address:	 	Address:
	 
	 	 	 	 
	 	 	 	 	 

	 
	 	 	 	 
	 	 	 	 	 

	 
	 	 	 	 
	 	 	 	 	 

4.

 

CAVIUM NETWORKS 2001 STOCK INCENTIVE PLAN

NOTICE OF RESTRICTED STOCK PURCHASE AWARD

	 	 	 	 	 
	 

	 	Grantee’s Name and Address:	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

          You have been granted the right to purchase shares of Common Stock of the Company, subject to
the terms and conditions of this Notice of Restricted Stock Purchase Award (the “Notice”), the
Cavium Networks 2001 Stock Incentive Plan, as amended from time to time (the “Plan”) and the
Restricted Stock Purchase Award Agreement (the “Agreement”) attached hereto, as follows. Unless
otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in
this Notice.

	 	 	 	 	 
	 

	 	Award Number	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Date of Award	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Vesting Commencement Date	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Purchase Price per Share	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Total Number of Shares	 	 
	 

	 	of Common Stock Awarded	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Total Purchase Price	 	 
	 

	 	 	 	 

Vesting Schedule:

          Subject to Grantee’s Continuous Service and other limitations set forth in this Notice, the
Agreement and the Plan, the Shares will “vest” in accordance with the following schedule:

	 	 	 
	 

	 	[12.5% of the Total Number of Shares of Common Stock Awarded shall vest six (6)
months after the Vesting Commencement Date, and 1/48 of the Total Number of Shares
of Common Stock Awarded shall vest each month thereafter until the Shares are fully
vested.]
	 
	 	 
	 

	 	During any authorized leave of absence, the vesting of the Shares shall be suspended
after the leave of absence exceeds a period of ninety (90) days. Vesting of the
Shares shall resume upon the Grantee’s termination of the leave of absence and
return to Continuous Service. The Vesting Schedule of the Shares shall be extended
to the length of the suspension.
	 
	 	 
	 

	 	In the event of Grantee’s change in status from Employee or Director to Consultant,
the vesting of the Shares shall continue only to the extent determined by the
Administrator as of such change in status.

 

 

          For purposes of this Notice and the Agreement, the term “vest” shall mean, with respect to any
Shares, that such Shares are no longer subject to repurchase at the Purchase Price per Share;
provided, however, that such Shares shall remain subject to other restrictions on transfer set
forth in the Agreement or the Plan. Shares that have not vested are deemed “Restricted Shares.”
If the Grantee would become vested in a fraction of a Restricted Share, such Restricted Share shall
not vest until the Grantee becomes vested in the entire Share. Notwithstanding the foregoing, the
Shares subject to this Notice will be subject to the provisions of the Agreement and Section 11 of
the Plan relating to the release of repurchase and forfeiture provisions in the event of a
Corporate Transaction, Change of Control or Related Entity Disposition.

          IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and agree that the
Award is to be governed by the terms and conditions of this Notice, the Plan, and the Agreement.

	 	 	 	 	 	 	 
	 	 	CAVIUM NETWORKS,  
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SHALL VEST, IF AT ALL, ONLY DURING THE PERIOD
OF GRANTEE’S CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS AWARD OR
ACQUIRING SHARES HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS
NOTICE, THE AGREEMENT, NOR IN THE PLAN, SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH RESPECT TO
CONTINUATION OF GRANTEE’S CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE’S
RIGHT OR THE COMPANY’S RIGHT TO TERMINATE GRANTEE’S CONTINUOUS SERVICE AT ANY TIME, WITH OR WITHOUT
CAUSE, AND WITH OR WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE HAS A
WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY, GRANTEE’S STATUS IS AT WILL .

          The Grantee acknowledges receipt of a copy of the Plan and the Agreement and represents that
he or she is familiar with the terms and provisions thereof, and hereby accepts the Award subject
to all of the terms and provisions hereof and thereof. The Grantee has reviewed this Notice, the
Agreement and the Plan in their entirety, has had an opportunity to obtain the advice of counsel
prior to executing this Notice and fully understands all provisions of this Notice, the Agreement
and the Plan. The Grantee hereby agrees that all disputes arising out of or relating to this
Notice, the Plan and the Agreement shall be resolved in accordance with Section 17 of the
Agreement. The Grantee further agrees to notify the Company upon any change in the residence
address indicated in this Notice.

	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	Signed:	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	                     Grantee

 C-2

 

Award Number: __________________

CAVIUM NETWORKS 2001 STOCK INCENTIVE PLAN

RESTRICTED STOCK PURCHASE AWARD AGREEMENT

     1. Purchase of Shares. Cavium Networks, a California corporation (the “Company”),
hereby issues and sells to the Grantee (the “Grantee”) named in the Notice of Restricted Stock
Purchase Award (the “Notice”), the Total Number of Shares of Common Stock Awarded set forth in the
Notice (the “Shares”) for a Purchase Price per Share set forth in the Notice (the “Total Purchase
Price”), subject to the Notice, this Restricted Stock Purchase Award Agreement (the “Agreement”)
and the terms and provisions of the Company’s 2001 Stock Incentive Plan, as amended from time to
time (the “Plan”), which is incorporated herein by reference. Payment for the Shares in the amount
of the Total Purchase Price set forth in the Notice shall be made to the Company upon execution of
the Notice. Unless otherwise defined herein, the terms defined in the Plan shall have the same
defined meanings in this Agreement. All Shares sold hereunder will be deemed issued to the Grantee
as fully paid and nonassessable shares, and the Grantee will have the right to vote the Shares at
meetings of the Company’s shareholders. The Company shall pay any applicable stock transfer taxes
imposed upon the issuance of the Shares to the Grantee hereunder.

     2. Method of Payment. Payment of the Total Purchase Price shall be by any of the
following, or a combination thereof, at the election of the Grantee; provided, however, that such
payment method does not then violate an Applicable Law:

          (a) cash;

          (b) check; or

          (c) such other form of consideration as determined by the Administrator.

     3. Transfer Restrictions. The Shares sold to the Grantee hereunder may not be sold,
transferred by gift, pledged, hypothecated, or otherwise transferred or disposed of by the Grantee
prior to the date when the Shares become vested pursuant to the Vesting Schedule set forth in the
Notice. Any attempt to transfer Restricted Shares in violation of this Section 3 will be null and
void and will be disregarded.

     4. Escrow of Stock. For purposes of facilitating the enforcement of the provisions of
this Agreement, the Grantee agrees, immediately upon receipt of the certificate(s) for the
Restricted Shares, to deliver such certificate(s), together with an Assignment Separate from
Certificate in the form attached hereto as Exhibit A, executed in blank by the Grantee and
the Grantee’s spouse (if required for transfer) with respect to each such stock certificate, to the
Secretary or Assistant Secretary of the Company, or their designee, to hold in escrow for so long
as such Restricted Shares have not vested pursuant to the Vesting Schedule set forth in the Notice
or continue to remain subject to the Company’s Right of First Refusal or Repurchase

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Right, with the authority to take all such actions and to effectuate all such transfers and/or
releases as may be necessary or appropriate to accomplish the objectives of this Agreement in
accordance with the terms hereof. The Grantee hereby acknowledges that the appointment of the
Secretary or Assistant Secretary of the Company (or their designee) as the escrow holder hereunder
with the stated authorities is a material inducement to the Company to make this Agreement and that
such appointment is coupled with an interest and is accordingly irrevocable. The Grantee agrees
that such escrow holder shall not be liable to any party hereto (or to any other party) for any
actions or omissions unless such escrow holder is grossly negligent relative thereto. The escrow
holder may rely upon any letter, notice or other document executed by any signature purported to be
genuine and may resign at any time. Upon the vesting of all Restricted Shares and termination of
the Company’s Right of First Refusal and Repurchase Right, the escrow holder will, without further
order or instruction, transmit to the Grantee the certificate evidencing such Shares, subject,
however, to satisfaction of any withholding obligations provided in Section 6 below.

     5. Distributions. Except as set forth in Section 9(e), the Company shall disburse to
the Grantee all dividends and other distributions paid or made in cash with respect to the Shares
and Additional Securities (whether vested or not), less any applicable withholding obligations.

     6. Section 83(b) Election and Withholding of Taxes. The Grantee shall provide the
Administrator with a copy of any timely election made pursuant to Section 83(b) of the Internal
Revenue Code or similar provision of state law (collectively, an “83(b) Election”), a form of which
is attached hereto as Exhibit B. If the Grantee makes a timely 83(b) Election, the Grantee
shall immediately pay the Company the amount necessary to satisfy any applicable foreign, federal,
state, and local income and employment tax withholding obligations. If the Grantee does not make a
timely 83(b) Election, the Grantee shall, as Restricted Shares shall vest or at the time
withholding is otherwise required by any Applicable Law, pay the Company the amount necessary to
satisfy any applicable foreign, federal, state, and local income and employment tax withholding
obligations. The Grantee may satisfy his or her withholding obligations by authorizing the Company
to transfer to the Company the number of vested Shares held in escrow that have an aggregate Fair
Market Value equal to the withholding obligations. The Grantee hereby represents that he or she
understands (a) the contents and requirements of the 83(b) Election, (b) the application of Section
83(b) to the receipt of the Shares by the Grantee pursuant to this Agreement, (c) the nature of the
election to be made by the Grantee under Section 83(b), and (d) the effect and requirements of the
83(b) Election under relevant state and local tax laws. The Grantee further represents that he or
she intends to file an election pursuant to Section 83(b) with the Internal Revenue Service within
thirty (30) days following the date of this Agreement, and submit a copy of such election with his
or her federal tax return for the calendar year in which the date of this Agreement falls.

     7. Additional Securities. Any securities received as the result of ownership of the
Restricted Shares (the “Additional Securities”), including, but not by way of limitation, warrants,
options and securities received as a stock dividend or stock split, or as a result of a
recapitalization or reorganization or other similar change in the Company’s capital structure,
shall be retained in escrow in the same manner and subject to the same conditions and restrictions
as the Restricted Shares with respect to which they were issued, including, without limitation, the
Vesting Schedule set forth in the Notice, Right of First Refusal and the

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Repurchase Right. The Grantee shall be entitled to direct the Company to exercise any warrant
or option received as Additional Securities upon supplying the funds necessary to do so, in which
event the securities so purchased shall constitute Additional Securities, but the Grantee may not
direct the Company to sell any such warrant or option. If Additional Securities consist of a
convertible security, the Grantee may exercise any conversion right, and any securities so acquired
shall constitute Additional Securities. Appropriate adjustments to reflect the distribution of
Additional Securities shall be made to the price per share to be paid upon the exercise of the
Repurchase Right in order to reflect the effect of any such transaction upon the Company’s capital
structure. In the event of any change in certificates evidencing the Shares or the Additional
Securities by reason of any recapitalization, reorganization or other transaction that results in
the creation of Additional Securities, the escrow holder is authorized to deliver to the issuer the
certificates evidencing the Shares or the Additional Securities in exchange for the certificates of
the replacement securities.

     8. Company’s Right of First Refusal.

          (a) Transfer Notice. Following the date when the Shares become vested pursuant to the
Vesting Schedule set forth in the Notice, the Grantee or a transferee (either being sometimes
referred to herein as the “Holder”) may sell, hypothecate, encumber or otherwise transfer any
Shares or any right or interest therein only (1) upon first obtaining the prior written consent of
the Company or (2) if the Holder first shall have provided the Company with written notice (the
“Transfer Notice”) of:

     (i) The Holder’s intention to transfer;

     (ii) The name of the proposed transferee;

     (iii) The number of Shares to be transferred; and

     (iv) The proposed transfer price or value and terms thereof.

          (b) First Refusal Exercise Notice. The Company shall have the right to purchase (the
“Right of First Refusal”) all but not less than all, of the Shares which are described in the
Transfer Notice (the “Offered Shares”) at any time during the period commencing upon receipt of the
Transfer Notice and ending forty-five (45) days after the first date on which the Company
determines that the Right of First Refusal may be exercised without incurring an accounting expense
with respect to such exercise (the “Option Period”) at the per share price or value and in
accordance with the terms stated in the Transfer Notice, which Right of First Refusal shall be
exercised by written notice (the “First Refusal Exercise Notice”) to the Holder. During the Option
Period and the 120-day period following the expiration of the Option Period, the Company also may
exercise its Repurchase Right in lieu or in addition to its Right of First Refusal if the
Repurchase Right is or becomes exercisable during the Option Period or such 120-day period.

          (c) Payment Terms. The Company shall consummate the purchase of the Offered Shares on
the terms set forth in the Transfer Notice within 15 days after delivery of the First Refusal
Exercise Notice; provided, however, that in the event the Transfer Notice provides for the payment
for the Offered Shares other than in cash, the Company and/or its assigns shall

 C-5

 

have the right to pay for the Offered Shares by the discounted cash equivalent of the
consideration described in the Transfer Notice as reasonably determined by the Administrator. Upon
payment for the Offered Shares to the Holder or into escrow for the benefit of the Holder, the
Company or its assigns shall become the legal and beneficial owner of the Offered Shares and all
rights and interest therein or related thereto, and the Company shall have the right to transfer
the Offered Shares to its own name or its assigns without the further action by the Holder.

          (d) Assignment. Whenever the Company shall have the right to purchase Shares under
this Right of First Refusal, the Company may designate and assign one or more employees, officers,
directors or shareholders of the Company or other persons or organizations, to exercise all or a
part of the Company’s Right of First Refusal.

          (e) Non-Exercise. If the Company and/or its assigns do not collectively elect to
exercise the Right of First Refusal within the Option Period or such earlier time if the Company
and/or its assigns notifies the Holder that it will not exercise the Right of First Refusal, then
the Holder may transfer the Shares upon the terms and conditions stated in the Transfer Notice,
provided that:

     (i) The transfer is made within 120 days of the
expiration of the Option Period; and

     (ii) The transferee agrees in writing that such
Shares shall be held subject to the provisions of this Agreement.

          (f) Expiration of Transfer Period. Following such 120-day period, no transfer of the
Offered Shares and no change in the terms of the transfer as stated in the Transfer Notice
(including the name of the proposed transferee) shall be permitted without a new written Transfer
Notice prepared and submitted in accordance with the requirements of this Right of First Refusal.

          (g) Exception for Certain Family Transfers. Anything to the contrary contained in
this section notwithstanding, the transfer of any or all of the Shares (except that Restricted
Shares may not be so transferred) during the Grantee’s lifetime or on the Grantee’s death by will
or intestacy to the Grantee’s Immediate Family or a trust for the benefit of the Grantee or the
Grantee’s Immediate Family shall be exempt from the provisions of this Right of First Refusal (a
“Permitted Transfer”); provided, however, that (i) the transferee or other recipient shall receive
and hold the Shares so transferred subject to the provisions of this Agreement, and there shall be
no further transfer of such Shares except in accordance with the terms of this Agreement and (ii)
prior to any such transfer, each transferee shall execute an agreement pursuant to which such
transferee shall agree to receive and hold such Shares subject to the provisions of this Agreement.
“Immediate Family” as used herein shall mean spouse, lineal descendant or antecedent, father,
mother, brother or sister and the lineal descendants of such individuals.

          (h) Termination of Right of First Refusal. The provisions of this Right of First
Refusal shall terminate as to all Shares upon the Registration Date.

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          (i) Corporate Transaction/Related Entity Disposition. Immediately prior to the
consummation of a Corporate Transaction described in Section 2(q)(i), (ii) or (iii) of the Plan or
a Related Entity Disposition, the Right of First Refusal shall automatically lapse in its entirety,
except to the extent this Agreement is Assumed, in which case the Right of First Refusal shall
apply to the new capital stock or other property received in exchange for the Shares in
consummation of the Corporate Transaction or Related Entity Disposition, but only to the extent the
Shares are at the time covered by such right.

The Grantee acknowledges and agrees that the Shares are subject to a right of first refusal
(“Right of First Refusal”) as set forth in the Bylaws of the Company and that, except in compliance
with such right of first refusal, the Grantee shall not sell, hypothecate, encumber or otherwise
transfer any Shares or any right or interest therein.

     9. Company’s Repurchase Right.

          (a) Grant of Repurchase Right. The Company is hereby granted the right (the
“Repurchase Right”), exercisable at any time during the ninety (90) day period (the “Share
Repurchase Period”) following the date the Grantee’s Continuous Service terminates for any reason,
with or without cause (including death or disability) (the “Termination Date”) to repurchase all or
any portion of the Shares that are deemed Restricted Shares.

          (b) Exercise of the Repurchase Right. The Repurchase Right shall be exercisable by
written notice delivered to prior to the expiration of the Share Repurchase Period. The notice
shall indicate the number of Shares to be repurchased and the date on which the repurchase is to be
effected, such date to be not later than the last day of the Share Repurchase Period. On the date
on which the repurchase is to be effected, the Company and/or its assigns shall pay to the Grantee
in cash or cash equivalents (including the cancellation of any purchase-money indebtedness) the
Purchase Price per Share previously paid by the Grantee to the Company for such Restricted Shares.
Upon such payment to the Grantee or into escrow for the benefit of the Grantee, the Company and/or
its assigns shall become the legal and beneficial owner of the Shares being repurchased and all
rights and interest thereon or related thereto, and the Company shall have the right to transfer to
its own name or its assigns the number of Shares being repurchased, without further action by the
Grantee.

          (c) Assignment. Whenever the Company shall have the right to purchase Shares under
this Repurchase Right, the Company may designate and assign one or more employees, officers,
directors or shareholders of the Company or other persons or organizations, to exercise all or a
part of the Company’s Repurchase Right.

          (d) Termination of the Repurchase Right. The Repurchase Right shall terminate with
respect to any Shares for which it is not timely exercised.

          (e) Corporate Transaction/Related Entity Disposition. Immediately prior to the
consummation of a Corporate Transaction described in Section 2(q)(i), (ii) or (iii) of the Plan or
a Related Entity Disposition, the Repurchase Right as to all vested Shares shall automatically
lapse in its entirety, except to the extent this Agreement is Assumed, in which case the Repurchase
Right shall apply to the new capital stock or other property received in

 C-7

 

exchange for the vested Shares in consummation of the Corporate Transaction or Related Entity
Disposition, but only to the extent the vested Shares are at the time covered by such right. The
Repurchase Right as to Restricted Shares shall apply to the new capital stock or other property
(including cash paid other than as a regular cash dividend) received in exchange for the Shares in
consummation of the Corporate Transaction or Related Entity Disposition and such stock or property
shall be deemed Additional Securities for purposes of this Agreement, but only to the extent the
Shares are at the time covered by such Repurchase Right. Appropriate adjustments shall be made to
the price per share payable upon exercise of the Repurchase Right to reflect the effect of the
Corporate Transaction or Related Entity Disposition.

     10. Stop-Transfer Notices. In order to ensure compliance with the restrictions on
transfer set forth in this Agreement, the Notice or the Plan, the Company may issue appropriate
“stop transfer” instructions to its transfer agent, if any, and, if the Company transfers its own
securities, it may make appropriate notations to the same effect in its own records.

     11. Refusal to Transfer. The Company shall not be required (i) to transfer on its
books any Shares that have been sold or otherwise transferred in violation of any of the provisions
of this Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.

     12. Restrictive Legends. Grantee understands and agrees that the Company shall cause
the legends set forth below or legends substantially equivalent thereto, to be placed upon any
certificate(s) evidencing ownership of the Shares together with any other legends that may be
required by the Company or by state or federal securities laws:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL SATISFACTORY
TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER, A RIGHT OF FIRST REFUSAL AND A REPURCHASE
RIGHT HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE
RESTRICTED STOCK PURCHASE AGREEMENT BETWEEN THE ISSUER AND THE
ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT
THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS,
RIGHT OF FIRST REFUSAL AND REPURCHASE RIGHT ARE BINDING ON
TRANSFEREES OF THESE SHARES.

 C-8

 

     13. Lock-Up Agreement.

          (a) Agreement. Grantee, if requested by the Company and the lead underwriter of any
public offering of the Common Stock or other securities of the Company (the “Lead Underwriter”),
hereby irrevocably agrees not to sell, contract to sell, grant any option to purchase, transfer the
economic risk of ownership in, make any short sale of, pledge or otherwise transfer or dispose of
any interest in any Common Stock or any securities convertible into or exchangeable or exercisable
for or any other rights to purchase or acquire Common Stock (except Common Stock included in such
public offering or acquired on the public market after such offering) during the 180-day period
following the effective date of a registration statement of the Company filed under the Securities
Act of 1933, as amended, or such shorter period of time as the Lead Underwriter shall specify.
Grantee further agrees to sign such documents as may be requested by the Lead Underwriter to effect
the foregoing and agrees that the Company may impose stop-transfer instructions with respect to
such Common Stock subject until the end of such period. The Company and Grantee acknowledge that
each Lead Underwriter of a public offering of the Company’s stock, during the period of such
offering and for the 180-day period thereafter, is an intended beneficiary of this Section 13.

          (b) No Amendment Without Consent of Underwriter. During the period from
identification as a Lead Underwriter in connection with any public offering of the Company’s Common
Stock until the earlier of (i) the expiration of the lock-up period specified in Section 13(a) in
connection with such offering or (ii) the abandonment of such offering by the Company and the Lead
Underwriter, the provisions of this Section 13 may not be amended or waived except with the consent
of the Lead Underwriter.

     14. Grantee’s Representations. In the event the Shares purchasable pursuant to this
Agreement have not been registered under the Securities Act of 1933, as amended, at the time of
purchase, the Grantee shall, if required by the Company, concurrently with the purchase of the
Shares, deliver to the Company his or her Investment Representation Statement in the form attached
hereto as Exhibit C.

     15. Entire Agreement: Governing Law. The Notice, the Plan and this 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 the Grantee
with respect to the subject matter hereof, and may not be modified adversely to the Grantee’s
interest except by means of a writing signed by the Company and the Grantee. These agreements are
to be construed in accordance with and governed by the internal laws of the State of California (as
permitted by Section 1646.5 of the California Civil Code, or any similar successor provision)
without giving effect to any choice of law rule that would cause the application of the laws of any
jurisdiction other than the internal laws of the State of California to the rights and duties of
the parties. Should any provision of the Notice or this Agreement be determined by a court of law
to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall
remain enforceable.

 C-9

 

     16. Headings. The captions used in this Agreement are inserted for convenience and
shall not be deemed a part of this Agreement for construction or interpretation.

     17. Dispute Resolution The provisions of this Section 17 shall be the exclusive means
of resolving disputes arising out of or relating to the Notice, the Plan and this Agreement. The
Company, the Grantee, and the Grantee’s assignees (the “parties”) shall attempt in good faith to
resolve any disputes arising out of or relating to the Notice, the Plan and this Agreement by
negotiation between individuals who have authority to settle the controversy. Negotiations shall
be commenced by either party by notice of a written statement of the party’s position and the name
and title of the individual who will represent the party. Within thirty (30) days of the written
notification, the parties shall meet at a mutually acceptable time and place, and thereafter as
often as they reasonably deem necessary, to resolve the dispute. If the dispute has not been
resolved by negotiation, the parties agree that any suit, action, or proceeding arising out of or
relating to the Notice, the Plan or this Agreement shall be brought in the United States District
Court for the Northern District of California (or should such court lack jurisdiction to hear such
action, suit or proceeding, in a California state court in the County of San Mateo) and that the
parties shall submit to the jurisdiction of such court. The parties irrevocably waive, to the
fullest extent permitted by law, any objection the party may have to the laying of venue for any
such suit, action or proceeding brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT
THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or more
provisions of this Section 17 shall for any reason be held invalid or unenforceable, it is the
specific intent of the parties that such provisions shall be modified to the minimum extent
necessary to make it or its application valid and enforceable.

     18. Notices. Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon personal delivery or upon deposit in the United States mail
by certified mail (if the parties are within the United States) or upon deposit for delivery by an
internationally recognized express mail courier service (for international delivery of notice),
with postage and fees prepaid, addressed to the other party at its address as shown beneath its
signature in the Notice, or to such other address as such party may designate in writing from time
to time to the other party.

 C-10

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