Document:

exv10w4

 

Exhibit 10.4

BROCADE SENIOR LEADERSHIP PLAN

Revised: May 11, 2007

PURPOSE

The Brocade Senior Leadership Plan is designed to link incentive compensation with Company
performance.

PERFORMANCE PERIOD AND PAYOUT PERIOD

Performance against Company and individual objectives is measured annually (according to the
Company’s fiscal year) (Plan Period), but will be reviewed semi-annually. Payout of earned cash
bonuses, if any, occurs on an annual basis.

ELIGIBILITY

Regular full-time and part-time Vice President (VP) level employees are eligible to participate in
the Senior Leadership Plan Program. To the extent a VP is eligible to and participates in the
Company’s Sales Incentive Plan, then that VP shall not be eligible to participate in this Senior
Leadership Plan.

Participants must be regular (full-time or part-time) employees at the end of the fiscal year to be
eligible to receive a Senior Leadership Plan Payout.

PARTICIPANT PERFORMANCE

As each Plan Period begins, participants must complete a CEO or VP Performance Contract.
Performance contracts should be tied to company and departmental goals as outlined by the board of
directors (i.e., company priorities and initiatives). All goals must be tied to overall company
objectives and have defined measurements.

Before Performance Contracts for Executive VPs are final, they are to be reviewed and approved by
Finance, Human Resources, and the Chief Executive Officer (CEO). Performance Contracts for
Functional VPs are reviewed and approved by the applicable Executive VP. The CEO’s Performance
Contract shall be reviewed by the Chair of the Board of Directors and the Chair of the Compensation
Committee.

At the end of each Plan Period, actual performance against the plan’s financial metric goals is
determined by Finance and provided to the plan participants. Performance against goals is then
assessed by the Participant and then reviewed and assessed by the VP’s manager, in order to
determine each participant’s bonus payout for the period. The Compensation Committee reviews and
approves all Section 16 Officers’ performance and bonus payouts annually. The CEO reviews and
approves all other VP cash bonus payouts. The Compensation Committee shall review and approve the
CEO’s bonus payouts.

 

 

COMPANY PERFORMANCE & SENIOR LEADERSHIP PLAN FUNDING

Each Plan Period, Brocade will set an Operating Margin target for the Company to achieve during the
Plan Period (Target OM).

At the end of each Plan Period, Brocade will fund the Senior Leadership Plan based on the actual
performance achieved by Brocade during the Plan Period (Actual OM) relative to the Target OM
(Actual Funding).

The Actual OM will be communicated following the end of each Plan Period.

PARTICIPANT INCENTIVE TARGET

A Participant’s Incentive Target is determined by the Participant’s pay grade at the end of the
12-month Plan Period, unless otherwise indicated in writing by Brocade.

	 	 	 
	Participant Pay Grade	 	Annual Incentive Target
	CEO
	 	100%
	CEO Direct Reports and Select VPs
	 	50%
	Other VPs
	 	40%

SENIOR LEADERSHIP PLAN PAYOUTS

On an annual basis, the Compensation Committee reviews and approves Section 16 Officers’
performance and cash bonus payouts. The CEO reviews and approves all other VP cash bonuses. Program
payouts are made within eight (8) weeks following the conclusion of the 12-month Plan Period.
Payouts will be pro-rated for Participants who are hired or transferred into the Senior Leadership
Plan during any Plan Period.

Except as otherwise agreed upon by the Company and the Participant, for each Participant, the cash
bonus payout is calculated based on the following formula (less applicable taxes and deductions):

Bonus Payout = (Actual Funding) x (Individual VP Goal Points Earned for the year) x
(Annual Incentive Target) x (Annual Salary)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Non-GAAP	 	 	 	 
	Participant	 	Revenue	 	Operating Income	 	Individual Goals	 	Total
	CEO
	 	 	37.5	%	 	 	37.5	%	 	 	25	%	 	 	100	%
	VPs
	 	 	50	%	 	 	40	%	 	 	10	%	 	 	100	%

Bonuses will be calculated using the salary as of the last day of the Plan Period.

Departmental budgets are communicated at the beginning of each fiscal year and may be updated
quarterly throughout the year by the CEO and CFO. Adherence to the individual’s departmental

 

 

budget is a gate for the individual to qualify for the Senior Leadership Plan bonus. Failure to
adhere to the agreed upon budget disqualifies the individual from a bonus payout.

ADMINISTRATIVE PROCEDURES

Compensation Committee Approval

The Compensation Committee reserves the right to decrease or eliminate bonus otherwise indicated.

New Hires and Promotions

Participants new to the company or who are promoted into the Senior Leadership Plan must complete a
VP Performance Contract within 60 days of beginning in the new position.

Grade/Salary Factor

Payout will be based on the Participant’s salary and pay grade on the last day of the Plan Period.
Bonuses will be pro-rated if Participant received a cash bonus on another bonus program.

Terminations: Anyone who is not on the payroll as of the end of the fiscal year is not eligible to
receive a cash bonus payout.

Leaves of Absences, Disability or Death: In the event of the Participant death, disability time
off, or leave of absence, Payouts will be made on a pro-rated basis, based on the number of days
the Participant was actively working at Brocade. If the Participant is on a legally protected leave
of absence (e.g. Family Medical Leave or Military Leave), the Participant’s eligibility for
participation in Plan may be extended beyond the time above, in accordance with the laws governing
the legally protected leave. In the event of death, any cash bonus payments will be paid to the
Participant’s primary beneficiary as designated in the Participant’s Brocade life insurance plan
documentation, if any.

Performance Improvement Plan/Disciplinary Situations (Development Needed): If a Participant, at
anytime prior to the cash bonus payout 12-month Plan Period, is subject to a performance
improvement plan, discipline or demotion, Brocade may, in its sole discretion, reduce or eliminate
the Cash Payment that the Participant would otherwise have been eligible to receive. If, at the
time prior to the Payout for a 12-month Plan Period, it is determined that a Participant may be
subject to corrective action, discipline or demotion, then Brocade may withhold the entire Cash
Bonus Payout, or a portion thereof, until after a final decision on such corrective action has been
made. If a Participant is given a performance rating of Development Needed, the Participant will
not be eligible to receive a Payout. Only the VP of Human Resources or CEO may approve exceptions
to this policy.

Other Provisions: Participation in the Senior Leadership Plan does not constitute an agreement
(express or implied) between the Participant and Brocade that the Participant will be employed by
Brocade for any specific period of time, nor is there any agreement for continuing or long-
term employment. Terms and conditions regarding the Senior Leadership Plan and any participation
therein, including but not limited to Senior Leadership Plan eligibility, Senior Leadership Plan
funding, and performance and payout criteria and determinations, are subject to change by Brocade
at any time in its sole discretion. Brocade and its Board of Directors retain the absolute right to
interpret, revise, modify or terminate the Senior Leadership Plan at any time in its sole
discretion.

 

 

ADDENDUM TO BROCADE SENIOR LEADERSHIP PLAN

(DATED OCTOBER 21, 2005)

Notwithstanding any terms to the contrary in the Brocade Senior Leadership Plan, the following
terms shall apply to the Bonus Payout under the Senior Leadership Plan for fiscal 2006 and 2007:

	 	 	 	 	 
	 	 	2006	 	2007
	Executive Officers and
Certain Other Officers
	 	 	 	 
	Cash Bonus Premium1

	 	Up to 1.0x of 2006
Bonus Target
	 	Up to 0.5x of 2007
Bonus Target
	Restricted Stock2

	 	1.5x of 2005 Base Salary
	 	N/A
	 
	 	 	 	 
	Other Officers
	 	 	 	 
	 
	 	 	 	 
	Cash Bonus Premium1

	 	Up to 0.35x of 2006
Bonus Target
	 	Up to 0.35x of 2007
Bonus Target

 

			
	1	 	In addition to normal bonus and subject to achievement of revenue and operating
margin/profit targets determined by the Board of Directors and other Company and departmental
financial, strategic and operational metrics.
	 
	2	 	The number of shares of restricted stock to be issued is multiplied by such employee’s
2005 base salary, divided by then fair market value on the date of grant. The grants will be
subject to 2-year cliff vesting. These grants will be in lieu of any 2006 focal option grants
for such employees.exv10w5

 

Exhibit 10.5

Statement
of Work No. 5 to Goods Agreement ROC-P-68

Base Agreement ROC-P-68

SOW# 4907RL0149

This Statement of Work #5 (“SOW”) adopts and incorporates by reference the terms and
conditions of Goods Agreement, as amended, # ROC-P-68 (“GA”) between International Business
Machines Corporation (hereinafter “Buyer”) and Brocade Communications Systems, Inc with offices at
1745 Technology Drive, San Jose, CA 95110 and Brocade Communications Switzerland, SarL, with an
office located at 29 Route de l’Aeroport, Case Postale 105, CH-1215, Geneva 15, Switzerland
(individually and collectively hereinafter “Supplier”).
This SOW is effective beginning on April 2, 2007
(“Effective Date”). For the purposes of interpreting this SOW only, any conflicting, additional
or different terms contained in this SOW will be deemed to supersede and replace those in the GA.

WHEREAS, the parties wish to amend the Agreement to allow Buyer to license Supplier’s courseware
materials for direct license;

WHEREAS, Supplier offers certain educational and training classes for Supplier products and
services. Buyer desires to integrate certain Supplier training class materials into Buyer’s own
educational and training classes. Subject to the terms and conditions of the Agreement, Supplier
and Buyer agree as follows:

THEREFORE, in consideration of the above and the other respective promises of the parties set forth
herein, the parties hereto agree as follows and such agreement is incorporated into the Agreement.

DIRECT LICENSE OF SUPPLIER TRAINING MATERIALS

1. Term and Termination.

     A. Term. This SOW will commence on the Effective Date and will remain in full force
and effect for a term of [**], unless earlier terminated as set forth in the Goods Agreement or
this SOW.

     B. Termination for Convenience. Either party may terminate this SOW, in whole or in
part, for any or no reason upon one hundred eighty (180) days prior written notice to the other
party.

     C. Termination for Cause. If either party defaults in the performance of any material
provision of this SOW, then the non-defaulting party may give written notice to the defaulting
party that if the default is not cured within thirty (30) business days (“Cure Period”), the SOW
will be terminated. If the non-defaulting party gives such notice and the default is not cured
during the Cure Period, then the non-defaulting party may terminate this SOW by written notice
effective immediately at the end of the Cure Period.

     D. Effect of Termination. In addition to any payment or confidentiality obligations,
the provisions of this SOW that naturally survive will survive the termination or expiration of
this SOW for any reason. All other rights and obligations of the parties will cease upon
termination of this SOW. Buyer will return to Supplier, or ensure the destruction of, all copies
of the Training Materials and any other confidential information disclosed under this SOW.

2. Limited License to Supplier Training Materials.

     A. Subject to the terms of this Agreement and the fees listed in Exhibit 1A, Supplier grants
Buyer a non-exclusive perpetual license under Supplier’s copyrights to use, reproduce, modify,
display, prepare derivative works, and distribute the Supplier training class materials and
derivative works of same listed on Exhibit 1A hereto (“Training Materials”), solely to the extent
necessary for Buyer to provide training on Supplier products and services. Supplier reserves all
rights not expressly granted herein, and no other licenses are granted by implication, estoppel, or
otherwise. Buyer agrees

 

			
	[**]	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

	 	 	 	 	 
	Form Title: Licensed Works Agreement Statement of Work

	 	Page 1 of 5
	 	Form Release: 8/98
	(LWA_SOW)
	 	 	 	 
	Form Owner: Global Procurement

	 	 	 	Revision: 2/06

 

 

Statement of Work No. 5 to Goods Agreement ROC-P-68

Base Agreement ROC-P-68

SOW# 4907RL0149

that the foregoing license does not grant to Buyer any title or other right of ownership to the
Training Materials, in whole or in part.

     B. Restrictions. If Buyer modifies any content in the Training Materials, Buyer shall
remove all Supplier trademark, copyright, patent, and notices of other proprietary rights (“Marks”)
included with such modified content.

     C. Translation. Supplier will provide Buyer with the Training Materials in US
English. Buyer will be responsible for translating the Training Materials as necessary.

3. Expenses. Buyer is solely responsible for all expenses incurred in modifying,
reproducing and using the Training Materials. At Buyer’s request, Supplier may assist Buyer with
the integration of the Training Materials into Buyer’s training materials at a fee to be determined
by Supplier at Supplier’s sole discretion.

4. Liability. The parties agree that Supplier shall have no liability for errors
introduced by Buyer into any portion of the Training Materials in the process of modifying,
reproducing and using such portion, and Buyer agrees to indemnify Supplier for all costs relating
to any such errors.

5. Changes to Training Materials. From time to time, Supplier may provide updates to the
Training Materials (“Updates”) in its sole discretion at no additional charge to Buyer. Any
Updates shall be forwarded via CD media to the assigned Buyer contact. Buyer shall not be required
to replace or supplement the Training Materials with Updates, provided however that Supplier shall
have no liability for any use by Buyer of the Training Materials without such Updates provided by
Supplier to Buyer.

6. Additional Terms.

     A. Course Descriptions

Descriptions for the Course Materials shall be set forth in Exhibit 1A, and any new exhibits agreed
by the parties and attached to this Agreement.

     B. Verify Authorship

Supplier will maintain records to verify authorship of Training Materials for [**] after the
termination or expiration of this SOW. On request, Supplier will deliver or otherwise make
available this information in a form specified by Buyer.

     C. Importation Requirements

If applicable, Supplier will provide to Buyer on the commercial invoice:

     1. the Harmonized Tariff Code of the importing country for Training Materials; and

     2. an invoice description that provides enough detail to verify the categorical
classification of Training Materials.

     D. Technical Support

Supplier will make available a member of Brocade Education Services’s curriculum development team
via telephone during reasonable US business hours at no additional charge during the term of the
Agreement.

     E. Marketing Support

Supplier will provide at least [**] on the features, functionality, operation, and use of the
Training Materials to Buyer. [**]. Such training session shall be provided via the internet,
phone, in person, or as otherwise agreed to by the parties and shall be provided at no charge to
Buyer. Additional training sessions may be requested by Buyer, details of such request will be
agreed to by the parties in an amendment to this SOW.

     F. Direct Marketing

Supplier will not conduct any direct marketing to Buyer’s personnel whom Buyer grants access to
Supplier’s Training Materials without Buyer’s prior written consent. In addition, Supplier will
not contact other Buyer organizations or geographies for the purpose of marketing Supplier’s
services or products without contacting the Buyer’s Technical Coordinator as stated in this SOW in
advance to review, coordinate, and approve any such proposed marketing activity.

 

			
	[**]	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

	 	 	 	 	 
	Form Title: Licensed Works Agreement Statement of Work

	 	Page 2 of 5
	 	Form Release: 8/98
	(LWA_SOW)
	 	 	 	 
	Form Owner: Global Procurement

	 	 	 	Revision: 2/06

 

 

Statement of Work No. 5 to Goods Agreement ROC-P-68

Base Agreement ROC-P-68

SOW# 4907RL0149

     G. Press Release

Supplier will not provide any information to the media, or issue any press releases or other
publicity, regarding this Agreement or the parties’ relationship under it, without Buyer’s prior
written consent.

     H. Use of Data

Supplier shall use the data it receives from Buyer or Buyer’s customer, or as otherwise received in
support of this SOW, only for the purposes as permitted for in the Base Agreement and this SOW.

     I. Payment of Fees

Buyer shall pay fees to Supplier as detailed in Exhibit 1A of this SOW. Supplier will invoice
Buyer, in accordance with the instructions on the Buyer Purchase Order, for any fees due Supplier
pursuant to this SOW. Buyer will pay Supplier’s invoice, in US Dollars, within [**] of receipt of
Supplier’s accepted invoice by Buyer. Such fees will be less refunds and adjustments, if any, in
accordance with Buyer’s Customer Satisfaction Policy. Upon reasonable notice to Supplier, Buyer
reserves the right to reasonably change the method and timing of payments to accommodate its
worldwide operations.

     J. End User Relationship

Buyer will manage the relationships and process all billings to the end users for all Training
Materials provided under this SOW.

     K. Pricing

Buyer shall have full freedom and flexibility in pricing the Training Materials for Buyers end
users.

     L. Future Business

The execution of this SOW is no guarantee of future business. Neither party makes any
representation or guarantee as to the success, if any, of any course, program, or other offering,
contemplated herein.

Buyer will grant individual users access to Supplier’s Training Materials on a per user basis. The
decision to grant (or not grant) users access to the Training Materials is at Buyer’s sole
discretion. Buyer makes no representations or guarantees as to the number of individuals granted
access to the Training Materials or the amount of fees that will be paid to Supplier under the
Agreement.

     M. Communications

All communications between the parties will be carried out through the following designated
coordinators. All notices required in writing under this Agreement will be made to the appropriate
contact listed below at the following addresses and will be effective upon actual receipt. Notices
may be transmitted electronically, by registered or certified mail, or courier. All notices, with
the exception of legal notices, may also be provided by facsimile.

	 	 	 	 	 	 	 
	Business Coordinators
	FOR SUPPLIER	 	 	 	FOR BUYER	 	 
	Name

	 	[**]
	 	Name
	 	[**]
	Title

	 	[**]
	 	Title
	 	[**]
	Address

	 	[**]
	 	Address
	 	[**]
	Phone

	 	[**]
	 	Phone
	 	[**]
	Fax

	 	 	 	Fax
	 	[**]
	E-mail

	 	[**]
	 	E-mail
	 	[**]

 

			
	[**]	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

	 	 	 	 	 
	Form Title: Licensed Works Agreement Statement of Work

	 	Page 3 of 5
	 	Form Release: 8/98
	(LWA_SOW)
	 	 	 	 
	Form Owner: Global Procurement

	 	 	 	Revision: 2/06

 

 

Statement of Work No. 5 to Goods Agreement ROC-P-68

Base Agreement ROC-P-68

SOW# 4907RL0149

	 	 	 	 	 	 	 
	Technical Coordinators
	FOR SUPPLIER	 	 	 	FOR BUYER	 	 
	Name

	 	[**]
	 	Name
	 	[**]
	Title

	 	[**]
	 	Title
	 	[**]
	Address

	 	[**]
	 	Address
	 	[**]
	Phone

	 	[**]
	 	Phone
	 	[**]
	Fax

	 	 	 	Fax
	 	[**]
	E-mail

	 	[**]
	 	E-mail
	 	[**]

     N. Electronic Commerce

To initiate electronic transfer of payments associated with this SOW, Supplier has completed the
form entitled “Authorization for Electronic Funds Transfer” and such form is recorded with Buyer.

     O. Entire Agreement

The Base Agreement and this SOW comprise the complete understanding between the parties concerning
the subject matter hereof, and supersede any prior or contemporaneous agreements or understandings,
whether oral or written, regarding the subject matter of the Agreement. There are no conditions,
understandings, agreements, representations, or warranties between the parties, whether expressed
or implied, which are not specified herein. This SOW may only be modified by a written document
executed by the parties hereto.

     P. Survival

Those terms which by their nature extend beyond the term of this SOW will remain in effect after
the termination of this SOW until fulfilled, and apply to both parties and their respective
successors and assignees.

     Q. Reservation of Rights. All right, title and interest in and to any intellectual
property embodied within the Training Materials will remain with Supplier. Supplier hereby
reserves all rights not explicitly granted herein.

	 	 	 	 	 	 	 	 	 	 	 
	ACCEPTED AND AGREED TO:	 	 	 	ACCEPTED AND AGREED TO:	 	 
	International Business Machines Corporation	 	 	 	Brocade Communication Systems, Inc.	 	 
	 
	By: /s/ Malcolm McDonald

	 	   4/26/07	 	 	 	By: /s/ Tom Buiocchi	 	 	 	 
	 	 	 	 	 	 	 
	Buyer Signature

	 	Date
	 	 	 	Supplier Signature
	 	Date	 	 
	Malcolm
McDonald
	 	 	 	 	 	 	 	4/26/07	 	 
	 	 	 	 	 	 	 
	Printed Name

	 	 	 	 	 	Printed Name	 	 	 	 
	Malcolm McDonald

	 	 	 	 	 	Tom Buiocchi	 	 	 	 
	 	 	 	 	 	 	 
	Title & Organization

	 	 	 	 	 	Title & Organization	 	 	 	 
	Team Lead – OEM Storage Procurement	 	 	 	VP, WW Marketing and Support	 	 
	 	 	 	 	 	 	 
	Buyer Address:

	 	 	 	 	 	Supplier Address:	 	 	 	 
	3039 E. Cornwallis Road	 	 	 	    1745 Technology Drive	 	 
	PO Box 12195

	 	 	 	 	 	    San Jose, CA 95110	 	 	 	 
	Research Triangle Park, NC 27709	 	 	 	    USA	 	 
	USA
	 	 	 	 	 	 	 	 	 	 

 

			
	[**]	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

	 	 	 	 	 
	Form Title: Licensed Works Agreement Statement of Work

	 	Page 4 of 5
	 	Form Release: 8/98
	(LWA_SOW)
	 	 	 	 
	Form Owner: Global Procurement

	 	 	 	Revision: 2/06

 

 

Statement of Work No. 5 to Goods Agreement ROC-P-68

Base Agreement ROC-P-68

SOW# 4907RL0149

EXHIBIT 1A

COMPANY LICENSE TO SUPPLIER TRAINING MATERIALS

The following Training Material is licensed by Supplier to Company subject to the terms of this
Agreement and payment of the fees listed below:

Training Materials:

[**]

Fee for Training Materials: $[**]

Description

This Web-based training course provides the technical and process information needed to implement,
deploy, and manage the [**]. Online recorded modules introduce the main concepts with a minimum of
theory and a maximum of practical applications. Online demonstrations and simulations provide
examples of the tasks described.

Audience

This course is for switch administrators, system integrators, support personnel, and anyone
responsible for implementing the [**].

Duration

This course is designed for [**].

Objectives

[**]

[**]

[**]

[**]

[**]

[**]

[**]

[**]

[**]

[**]

[**]

 

			
	[**]	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

	 	 	 	 	 
	Form Title: Licensed Works Agreement Statement of Work

	 	Page 5 of 5
	 	Form Release: 8/98
	(LWA_SOW)
	 	 	 	 
	Form Owner: Global Procurement

	 	 	 	Revision: 2/06

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