BROCADE COMMUNICATIONS SYSTEMS,
INC.
CHANGE OF CONTROL RETENTION
AGREEMENT
This Change of
Control Retention Agreement (the “Agreement”) is
entered into as of May 1, 2005 (the “Effective
Date”) by and between Brocade Communications Systems, Inc.
(the “Company”) and Ian Whiting
(“Executive”).
A. It is
expected that the Company from time to time will consider the
possibility of a Change of Control. The Board of Directors of the
Company (the “Board”) recognizes that such
consideration can be a distraction to the Executive and can cause
the Executive to consider alternative employment
opportunities.
B. The Board
believes that it is in the best interests of the Company and its
shareholders to provide the Executive with an incentive to continue
his or her employment and to maximize the value of the Company upon
a Change of Control for the benefit of its shareholders.
C. In order
to provide the Executive with enhanced financial security and
sufficient encouragement to remain with the Company notwithstanding
the possibility of a Change of Control, the Board believes that it
is imperative to provide the Executive with certain severance
benefits upon the Executive’s termination of
employment.
In consideration
of the mutual covenants herein contained and the continued
employment of Executive by the Company, the parties agree as
follows:
1.
At-Will Employment . Executive and the Company agree that
Executive’s employment with the Company is and shall continue
to be “at-will” employment. Executive and the Company
acknowledge that this employment relationship may be terminated at
any time, upon written notice to the other party, with or without
good cause or for any or no cause, at the option either of the
Company or Executive. However, as described in this Agreement,
Executive may be entitled to severance benefits depending upon the
circumstances of Executive’s termination of
employment.
(a)
Termination of Employment . In the event Executive’s
employment with the Company terminates for any reason, Executive
will be entitled to any (i) unpaid Base Salary accrued up to
the effective date of termination, (ii) unpaid, but earned and
accrued annual incentive for any completed fiscal year as of his
termination of employment, (iii) benefits or compensation as
provided under the terms of any employee benefit and compensation
agreements or plans applicable to Executive, and
(iv) unreimbursed business expenses required to reimbursed to
Executive.
(b)
Termination Without Cause not in Connection with a Change of
Control . If Executive’s employment is terminated by the
Company without Cause and such termination does not occur in
Connection with a Change of Control, then, subject to
Section 3, Executive will receive: (i) six
(6) months of Executive’s base salary, as in effect
immediately prior to the date of termination, payable in a lump sum
payment within thirty (30) days of the Release Effective Date,
(ii) 50% of Executive’s target bonus for the fiscal year
in which Executive’s termination occurs, payable in a lump
sum payment within thirty (30) days of the Release Effective
Date, and (iii) reimbursement for premiums paid for medical, dental
and vision benefits (the “COBRA Benefits”) for
Executive and Executive’s eligible dependents under the
Company’s benefit plans for six (6) months following
Executive’s termination of employment, payable when such
premiums are due (provided Executive and Executive’s eligible
dependents validly elect to continue coverage under applicable
law). Notwithstanding the previous sentence but subject to
Section 3, Executive’s cash severance payments (other
than the payments with respect to the COBRA Benefits) will accrue
during the first six (6) months after Executive’s
termination and will become payable in a lump sum payment on the
date six (6) months and one (1) day following the date of
Executive’s termination; provided, that such cash severance
payments will be paid earlier, subject to Section 3, if
Internal Revenue Service guidance provides that the imposition of
additional tax under Internal Revenue Code Section 409A will not
apply to an earlier payment of Executive’s cash severance
payments, as reasonably determined by the Company.
(c)
Termination Without Cause or Resignation for Good Reason in
Connection with a Change of Control . If Executive’s
employment is terminated by the Company without Cause or by
Executive for Good Reason, and the termination is in Connection
with a Change of Control, then, subject to Section 3,
Executive will receive: (i) twelve (12) months of
Executive’s base salary, as in effect immediately prior to
the date of termination, payable in a lump sum payment within
thirty (30) days of the Release Effective Date, (ii) 100%
of Executive’s target bonus for the fiscal year in which
Executive’s termination occurs, payable in a lump sum payment
within thirty (30) days of the Release Effective Date,
(iii) reimbursement for premiums paid for COBRA Benefits for
Executive and Executive’s eligible dependents under the
Company’s benefit plans for twelve (12) months following
Executive’s termination of employment, payable when such
premiums are due (provided Executive and Executive’s eligible
dependents validly elect to continue coverage under applicable
law), and (iv) full accelerated vesting with respect to
Executive’s then outstanding, unvested stock options granted
on or prior to April 30, 2005 and those stock options granted
to Executive as a result of his promotion to the position of Vice
President, Worldwide Sales. Notwithstanding the previous sentence
but subject to Section 3, Executive’s cash severance
payments (other than the payments with respect to the COBRA
Benefits) will accrue during the first six (6) months after
Executive’s termination and will become payable in a lump sum
payment on the date six (6) months and one (1) day
following the date of Executive’s termination; provided, that
such cash severance payments will be paid earlier, subject to
Section 3, if Internal Revenue Service guidance provides that
the imposition of additional tax under Internal Revenue Code
Section 409A will not apply to an earlier payment of
Executive’s cash severance payments, as reasonably determined
by the Company.
(d)
Voluntary Termination without Good Reason; Termination for
Cause . If Executive’s employment with the Company
terminates voluntarily by Executive without Good Reason or is
terminated for Cause by the Company, then (i) all further
vesting of Executive’s outstanding equity awards will
terminate immediately, (ii) all payments of compensation by
the Company to Executive hereunder will terminate immediately, and
(iii) Executive will be eligible for severance benefits only
in accordance with the Company’s then established plans,
programs, and practices.
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(e)
Termination due to Death or Disability . Notwithstanding
anything to the contrary in this Agreement, if Executive’s
employment terminates by reason of death or Disability, then (i)
Executive’s outstanding equity awards will terminate in
accordance with the terms and conditions of the applicable award
agreement(s); (ii) all payments of compensation by the Company
to Executive hereunder will terminate immediately, and
(iii) Executive will be entitled to receive benefits only in
accordance with the Company’s then established plans,
programs, and practices.
(f)
Sole Right to Severance . This Agreem
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