BROCADE COMMUNICATIONS SYSTEMS,
INC.
1.
Purposes of the Plan . The purposes of this Plan are to
attract and retain the best available personnel for service as
Outside Directors of the Company, to provide additional incentive
to the Outside Directors of the Company to serve as Directors, and
to encourage their continued service on the Board.
The
Plan permits the grant of options and restricted stock units. All
options granted hereunder will be nonstatutory stock
options.
Under
the Plan the subsequent annual grants will be made on the date of
the Company’s Annual Meeting. The Plan will be effective as
of its approval by stockholders of the Company at the
Company’s 2009 Annual Meeting.
2.
Definitions . As used herein, the following definitions will
apply:
(a)
“ Annual Meeting ” means the Company’s
annual meeting of stockholders.
(b)
“ Applicable Laws ” means the requirements
relating to the administration of equity-based awards under U.S.
state corporate laws, U.S. federal and state securities laws, the
Code, any stock exchange or quotation system on which the Common
Stock is listed or quoted and the applicable laws of any foreign
country or jurisdiction where Awards are, or will be, granted under
the Plan.
(c)
“ Award ” means, individually or collectively, a
grant under the Plan of Options or Restricted Stock
Units.
(d)
“ Board ” means the Board of Directors of the
Company, or a duly authorized committee of the Board of Directors
of the Company.
(e)
“ Change in Control ” means the occurrence of
any of the following events:
(i)
Change in Ownership of the Company . A change in the
ownership of the Company which occurs on the date that any one
person, or more than one person acting as a group
(“Person”), acquires ownership of the stock of the
Company that, together with the stock held by such Person,
constitutes more than 50% of the total voting power of the stock of
the Company; or
(ii)
Change in Effective Control of the Company . If the Company
has a class of securities registered pursuant to Section 12 of
the Exchange Act, a change in the effective control of the Company
which occurs on the date that a majority of members of the Board is
replaced during any 12 month period by Directors whose
appointment or election is not endorsed by a majority of the
members of the Board prior to the date of the appointment or
election. For purposes of this clause (ii), if any Person is
considered to be in effective control of the Company, the
acquisition of additional control of the Company by the same Person
will not be considered a Change in Control; or
(iii)
Change in Ownership of a Substantial Portion of the
Company’s Assets . A change in the ownership of a
substantial portion of the Company’s assets which occurs on
the date that any Person acquires (or has acquired during the
12 month period ending on the date of the most recent
acquisition by such person or persons) assets from the Company that
have a total gross fair
market value
equal to or more than 50% of the total gross fair market value of
all of the assets of the Company immediately prior to such
acquisition or acquisitions. For purposes of this subsection (iii),
gross fair market value means the value of the assets of the
Company, or the value of the assets being disposed of, determined
without regard to any liabilities associated with such
assets.
For
purposes of this Section 2(e), persons will be considered to
be acting as a group if they are owners of a corporation that
enters into a merger, consolidation, purchase or acquisition of
stock, or similar business transaction with the Company.
Notwithstanding
the foregoing, a transaction will not be deemed a Change in Control
unless the transaction qualifies as a change in control event
within the meaning of Code Section 409A, as it has been and
may be amended from time to time, and any proposed or final
Treasury Regulations and Internal Revenue Service guidance that has
been promulgated or may be promulgated thereunder from time to
time.
Further
and for the avoidance of doubt, a transaction will not constitute a
Change in Control if: (i) its sole purpose is to change the
state of the Company’s incorporation, or (ii) its sole
purpose is to create a holding company that will be owned in
substantially the same proportions by the persons who held the
Company’s securities immediately before such
transaction.
(f)
“ Code ” means the Internal Revenue Code of
1986, as amended. Reference to a specific section of the Code or
Treasury Regulation thereunder will include such section or
regulation, any valid regulation or other official applicable
guidance promulgated under such section, and any comparable
provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.
(g)
“ Common Stock ” means the common stock of the
Company.
(h)
“ Company ” means Brocade Communications
Systems, Inc., a Delaware corporation, or any successor
thereto.
(i)
“ Director ” means a member of the
Board.
(j)
“ Disability ” means total and permanent
disability as defined in section 22(e)(3) of the Code.
(k)
“ Employee ” means any person, including
officers and Directors, employed by the Company or any Parent or
Subsidiary of the Company. Neither service as a Director nor the
payment of a Director’s fee by the Company will be sufficient
to constitute “employment” by the Company.
(l)
“ Exchange Act ” means the Securities Exchange
Act of 1934, as amended.
(m)
“ Fair Market Value ” means, as of any date, the
value of Common Stock determined as follows:
(i) If
the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the Nasdaq
Global Market, the Nasdaq Global Select Market or the Nasdaq
Capital Market of The Nasdaq Stock Market, its fair market value
will be the closing sales price for such stock (or, if no closing
sales price was reported on that date, as applicable, on the last
trading date such closing sales price was reported) as quoted on
such exchange or
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system on the
day of determination, as reported in The Wall Street Journal
or such other source as the Board deems reliable;
(ii) If
the Common Stock is regularly quoted by a recognized securities
dealer but selling prices are not reported, its fair market value
will be the mean between the high bid and low asked prices for the
Common Stock on the day of determination (or, if no bids and asks
were reported on that date, as applicable, on the last trading date
such bids and asks were reported); or
(iii) In
the absence of an established market for the Common Stock, the fair
market value thereof will be determined in good faith by the
Board.
(n)
“ Inside Director ” means a Director who is an
Employee.
(o)
“ Option ” means a stock option granted pursuant
to the Plan.
(p)
“ Outside Director ” means a Director who is not
an Employee.
(q)
“ Parent ” means a “parent
corporation,” whether now or hereafter existing, as defined
in Section 424(e) of the Code.
(r)
“ Participant ” means the holder of an
outstanding Award.
(s)
“ Plan ” means this 2009 Director
Plan.
(t)
“ Restricted Stock Unit ” or “ RSU
” means a bookkeeping entry representing an amount equal to
the Fair Market Value of one Share, and granted to a Participant
pursuant to Section 6 of the Plan. Each restricted stock unit
represents an unfunded and unsecured obligation of the
Company.
(u)
“ Share ” means a share of the Common Stock, as
adjusted in accordance with Section 14 of the Plan.
(v)
“ 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)
Stock Subject to the Plan . Subject to the provisions of
Section 14 of the Plan, the maximum aggregate number of Shares
that may be awarded under the Plan is 2,000,000 Shares (the
“Pool”), plus any Shares subject to stock options or
similar awards granted under the Company’s 1999 Director Plan
that expire or otherwise terminate without having been exercised in
full and Shares issued pursuant to awards granted under the
Company’s 1999 Director Plan that are forfeited to or
repurchased by the Company, with the maximum number of Shares to be
added to the Plan pursuant to this clause equal to 870,000 Shares.
The Shares may be authorized, but unissued, or reacquired Common
Stock.
(b)
Lapsed Awards . If an outstanding Award expires or becomes
unexercisable without having been exercised in full, or with
respect to Restricted Stock Units, is forfeited to the Company due
to failure to vest, the unpurchased or forfeited Shares which were
subject thereto will become available for future grant or sale
under the Plan (unless the Plan has terminated). Shares that have
actually been issued under the Plan will not be returned to the
Plan and will not become available for future distribution under
the Plan. Shares used to pay the exercise price of an Award or to
satisfy the
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tax withholding
obligations related to an Award will not become available for
future grant or sale under the Plan.
(c)
Full Value Awards . An Award of Restricted Stock Units will
be counted against the Pool as 1.56 Shares for every 1 Share
subject to such Award. To the extent that an Award counted as 1.56
Shares against the Pool at the time of grant pursuant to the
preceding sentence is forfeited or repurchased by the Company and
returned to the Plan (e.g., upon Award termination), the Plan will
be credited with 1.56 Shares that will thereafter be available for
future issuance under the Plan.
(a)
Administration of Option Grants .
(i) All
grants of Options to Outside Directors under this Plan will be
automatic and nondiscretionary and will be made strictly in
accordance with the following provisions; provided, however, that
the Board may, in its sole discretion, provide that certain Outside
Directors are not eligible to receive grants of Options for
specified periods of time.
(ii) No
person will have any discretion to determine the number of Shares
to be covered by Options.
(iii) In
the event that any Option granted under the Plan would cause the
number of Shares subject to outstanding Options plus the number of
Shares previously purchased under Options to exceed the Pool, then
the remaining Shares available for Option grant will be granted
under Options to the Outside Directors on a pro rata basis. No
further grants will be made until such time, if any, as additional
Shares become available for grant under the Plan through action of
the Board or the stockholders to increase the number of Shares
which may be issued under the Plan or through cancellation or
expiration of Options previously granted hereunder.
(b)
Prohibition Against Repricing . Subject to the provisions of
Section 14 of the Plan, the terms of any Option may not be
amended to reduce the exercise price of outstanding Options or
cancel outstanding Options in exchange for cash, other Awards or
Options with an exercise price that is less than the exercise price
of the original Option without stockholder approval.
(a)
Procedure for Exercise of an Option; Rights as Stockholder
.
(i) Any
Option granted hereunder will be exercisable at such times as are
set forth in Section 7(a) or 8(a), as applicable; provided,
however, that no Options will be exercisable until stockholder
approval of the Plan in accordance with Section 20 has been
obtained.
(ii) An
Option may not be exercised for a fraction of a Share.
(iii)
An Option will be deemed to be exercised when the Company receives:
(x) written or electronic notice of exercise (in accordance
with the terms of the Option) from the person entitled to exercise
the Option and (y) full payment for the Shares with respect to
which the Option is exercised (together with any applicable tax
withholding). Full payment may consist of any consideration and
method of payment allowable under Section 12 of the Plan.
Shares issued upon exercise of an Option will be issued in the name
of the Participant or, if requested by the Participant,
in
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the name of the
Participant and his or her spouse. Until the Shares are issued (as
evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to
vote or receive dividends or any other rights as a stockholder will
exist with respect to the Shares subject to any Option,
notwithstanding the exercise of the Option. The Company will issue
(or cause to be issued) such Shares promptly 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 14 of the Plan.
(iv) Exercise
of an Option in any manner will result in a decrease in the number
of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
(b)
Termination of Continuous Status as a Director . Subject to
Section 14, in the event an Participant’s status as a
Director terminates (other than upon the Participant’s death
or Disability), the Participant may exercise his or her Option, but
only within 3 months following the date of such termination,
and only to the extent that the Participant was entitled to
exercise it on the date of such termination (but in no event later
than the expiration of its 7 year term). To the extent that
the Participant was not entitled to exercise an Option on the date
of such termination, and to the extent that the Participant does
not exercise such Option (to the extent otherwise so entitled)
within the time specified herein, the Option will
terminate.
(c)
Disability of Participant . In the event Participant’s
status as a Director terminates as a result of Disability, the
Participant may exercise his or her Option, but only within
12 months following the date of such termination, and only to
the extent that the Participant was entitled to exercise it on the
date of such termination (but in no event later than the expiration
of its 7 year term). To the extent that the Participant was
not entitled to exercise an Option on the date of termination, or
if he or she does not exercise such Option (to the extent otherwise
so entitled) within the time specified herein, the Option will
terminate and the Shares covered by such Option will revert to the
Plan.
(d)
Death of Participant . If a Participant dies while still a
Director, the Participant’s estate or a person who acquired
the right to exercise the Option by bequest or inheritance may
exercise the Option, but only within 12 months following the
date of death, and only to the extent that the Participant was
entitled to exercise it on the date of death (but in no event later
than the expiration of its 7 year term). To the extent that
the Participant was not entitled to exercise an Option on the date
of death, and to the extent that the Participant’s estate or
a person who acquired the right to exercise such Option does not
exercise such Option (to the extent otherwise so entitled) within
the time specified herein, the Option will terminate and the Shares
covered by such Option will revert to the Plan.
6.
Restricted Stock Units .
(a)
Procedures for Grants .
(i) All
grants of Restricted Stock Units to Outside Directors under this
Plan will be automatic and nondiscretionary and will be made
strictly in accordance with the followi
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