Exhibit 10.2
[FORM OF PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT
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MARKET CAPITALIZATION GROWTH]
BROCADE COMMUNICATIONS SYSTEMS, INC.
PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT
NOTICE OF GRANT
[
GRANTEE NAME ]
[ GRANTEE ADDRESS ]
You (“Grantee”) have been
granted an award of Restricted Stock Units under the
Company’s Amended and Restated 1999 Stock Plan (the
“Plan”). The date of this Restricted Stock Unit
Agreement (the “Agreement”) is the Grant Date defined
below. Subject to the provisions of Appendix A, any appendix to the
Agreement for Grantee’s country of residence (for non-US
employees) and the Plan, all of which are attached hereto and
incorporated herein in their entirety, the principal features of
this Award are as follows:
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Grant
Date:
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Maximum Number of
Restricted Stock Units:
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[
] (the “Maximum Number of Restricted Stock
Units”) |
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Pool
Percentage:
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Grantee
Percentage of Restricted Stock Unit Pool:
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[
]% |
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Performance
Period:
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[ PERFORMANCE PERIOD BEGIN
DATE ] through [ PERFORMANCE PERIOD END DATE ]
(subject to Section 4(c) of Appendix A) (the
“Performance Period”). |
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Performance
Matrix:
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The number of Restricted Stock Units
in which you may vest in accordance with the Vesting Schedule will
depend upon the Company’s Market Capitalization Growth Rate
as compared to the QQQQ Growth Rate for the Performance Period and
will be determined in accordance with Section 1 of
Appendix A. |
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For this purpose, “Market
Capitalization Growth Rate” means the percentage growth in
the Market Capitalization of the Company during the Performance
Period determined by comparing the Market Capitalization of the
Company as of the day immediately preceding the commencement of the
Performance Period with the Market Capitalization of the Company as
of the last day of the Performance Period. |
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For this purpose, “QQQQ Growth
Rate” means, as to the Performance Period, the total return
(change in share price plus reinvestment of any dividends) of a
share of Nasdaq-100 Index Tracking Stock issued by |
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the PowerShares QQQ Trust,
Series 1 (or any successor fund), denominated as a percentage.
For purposes of the preceding sentence, the “change in share
price” will be determined by comparing the 10-day trading
average of Nasdaq-100 Index Tracking Stock as of the day
immediately preceding the commencement of the Performance Period
with the 10-day trading average of Nasdaq-100 Index Tracking Stock
as of the last day of the Performance Period. For this purpose, the
“10-day trading average of Nasdaq-100 Index Tracking
Stock” will mean the average closing sales price of one share
of Nasdaq-100 Index Tracking Stock for the 10 most recent trading
days ending on, and including, the relevant date, as reported on
the established stock exchange or national market system on which
Nasdaq-100 Index Tracking Stock is listed. |
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For additional definitions of terms
used in this Agreement, please see Section 1(c) of
Appendix A. |
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Vesting
Schedule :
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The Grantee will vest on the date the
Administrator determines the number of Restricted Stock Units
earned in accordance with the Performance Matrix and Section 1
of Appendix A (the “Vesting Date”), provided that
such determination will be made within 30 days after the end
of the Performance Period. Except as otherwise provided in
Appendix A, the Grantee will not vest in the Restricted Stock
Units unless he or she remains a Service Provider through the
Vesting Date. |
Your signature below indicates your
agreement and understanding that this award is subject to all of
the terms and conditions contained in Appendix A,
Appendix B, if any, and the Plan. For example, important
additional information on vesting and forfeiture of the Restricted
Stock Units is contained in Sections 3 through 5 and
Section 7 of Appendix A. PLEASE BE SURE TO READ ALL OF
APPENDIX A, APPENDIX B, IF ANY, AND THE PLAN, WHICH CONTAIN THE
SPECIFIC TERMS AND CONDITIONS OF THIS AWARD.
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BROCADE
COMMUNICATIONS SYSTEMS, INC.
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GRANTEE |
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Signature
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Signature |
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Print
Name
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Print Name |
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APPENDIX A
TERMS AND CONDITIONS OF PERFORMANCE-BASED RESTRICTED STOCK
UNITS
Unless otherwise defined herein,
capitalized terms used herein shall have the meanings ascribed to
them in the Plan.
1. Grant .
(a) The
Company hereby grants to the Grantee under the Plan an award of
Restricted Stock Units, subject to all of the terms and conditions
in this Agreement, Appendix B, if any, and the Plan. For each
Restricted Stock Unit that vests, the Grantee will be entitled to
receive one (1) Share (subject to automatic adjustment for stock
splits, combinations and the like pursuant to Section 14 of
the Plan).
(b) The
number of Restricted Stock Units in which the Grantee may vest will
depend upon the Company’s Market Capitalization Growth Rate
as compared to the QQQQ Growth Rate for the Performance Period and
will be determined following the end of the Performance Period as
follows:
(i) The
QQQQ Growth Rate for the Performance Period will be compared to the
Company’s Market Capitalization Growth Rate for the
Performance Period;
(ii) If
the QQQQ Growth Rate for the Performance Period equals or exceeds
the Company’s Market Capitalization Growth Rate for the
Performance Period, this Restricted Stock Unit award will
immediately terminate and the Restricted Stock Units granted
hereunder will be forfeited and automatically transferred to and
reacquired by the Company at no cost to the Company;
(iii) To
the extent the Company’s Market Capitalization Growth Rate
for the Performance Period exceeds the QQQQ Growth Rate for the
Performance Period (the “Excess Growth Rate”), the
Company’s Market Capitalization as of the day immediately
preceding the commencement of the Performance Period will be
multiplied by the Excess Growth Rate. For the avoidance of doubt,
if both rates are negative, the Company’s Market
Capitalization Growth Rate will exceed the QQQQ Growth Rate for
purposes of the previous sentence to the extent that the
Company’s Market Capitalization Growth Rate is a larger
number than the QQQQ Growth Rate, and the Excess Growth Rate will
be the difference between the two rates. For example, if the
Company’s Market Capitalization Growth Rate is -10% and the
QQQQ Growth Rate is -20%, the Company’s Market Capitalization
Growth Rate is higher than the QQQQ Growth Rate, and the Excess
Growth Rate is 10%. The resulting dollar value (rounded down to the
nearest whole dollar) will be referred to herein as the
“Market Capitalization Gain”;
(iv) The
Market Capitalization Gain will be multiplied by the Pool
Percentage set forth on the Notice of Grant. The resulting dollar
value (rounded down to the nearest whole dollar) will be referred
to herein as the “Restricted Stock Unit Pool”;
(v) The
Restricted Stock Unit Pool will be multiplied by the Grantee
Percentage of Restricted Stock Unit Pool set forth on the Notice of
Grant and rounded down to the nearest whole dollar; and
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(vi) The
dollar value determined in accordance with Section 1(b)(v)
above will be divided by the 10-Day Trading Average of the
Company’s Common Stock as of the last day of the Performance
Period (rounded down to the nearest whole number), resulting in a
preliminary number of Restricted Stock Units.
The
number of Restricted Stock Units in which the Grantee may vest in
accordance with the Vesting Schedule set forth on the Notice of
Grant will be the lesser of (A) the preliminary number of
Restricted Stock Units determined in accordance with
Section 1(b)(vi) above or (B) the Maximum Number of
Restricted Stock Units; provided, however, that the Administrator,
in its sole discretion, may, within 30 days after the end of
the Performance Period, eliminate or reduce the number of
Restricted Stock Units determined in accordance with this
Section 1. For the avoidance of doubt, once the number of
Restricted Stock Units have been determined in accordance with the
preceding sentence, the Grantee will vest in such number of
Restricted Stock Units in accordance with the Vesting Schedule and
the Administrator may not further eliminate or reduce such number
of Restricted Stock Units. In any event, the Administrator shall
not be entitled to eliminate or reduce the number of Restricted
Stock Units determined in accordance with this Section 1
following a Change of Control.
Example for illustration purposes
only:
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| A |
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Market
Capitalization as of the day immediately preceding the commencement
of the Performance Period
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$4,118,055,000 |
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Pool
Percentage
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2% |
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Grantee Percentage
of Restricted Stock Unit Pool
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5% |
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Market
Capitalization Growth Rate for the
Performance Period
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20% |
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QQQQ Growth Rate for
the Performance Period
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10% |
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Excess Growth Rate
(D – E)
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10% |
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Market
Capitalization Gain determined by multiplying the Market
Capitalization as of the day immediately preceding the commencement
of the Performance Period by the Excess Growth Rate (A x F)
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$ 411,805,500 |
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Restricted Stock
Unit Pool determined by multiplying the Market Capitalization Gain
by the Pool Percentage (B x G)
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$ 8,236,110 |
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Dollar value of the
Grantee’s award determined by multiplying the Restricted
Stock Unit Pool by the Grantee’s Percentage of Restricted
Stock Unit Pool (C x H)
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$ 411,805 |
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10-Day Trading
Average of the Company’s Common Stock as of the last day of
the Performance Period
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$ 11.72 |
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Number of Restricted
Stock Units in which the Grantee may vest, subject to the
Administrator’s discretion to eliminate or reduce this number
(I ÷ J)
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35,136 |
(c)
Definitions .
(i) “Market
Capitalization” will mean, as of any date, the value equal
to
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the
10-Day Trading Average of the Company’s Common Stock
multiplied by the number of Shares outstanding as of market close
on such date. Market Capitalization will be appropriately adjusted
by the Administrator for the effects of any stock acquisitions,
other than acquisitions of private companies with a purchase price
equal to or less than $100 million, made during the
Performance Period by subtracting (A) the Company’s
purchase price for the acquired company as of the date of the
initial, public announcement by the Company of the entry into a
definitive agreement by and between the acquired company and the
Company (the “Press Release”), from (B) the Market
Capitalization of the Company as of the end of the Performance
Period. For purposes of the preceding sentence, the
“Company’s purchase price” will mean the
estimated value of the total consideration to be paid by the
Company to the acquired company’s stockholders (in their
capacity as stockholders), as set forth in the Company’s
Press Release, less any cash consideration. If the Company’s
Press Release does not set forth the estimated value of the
consideration to be paid by the Company to the acquired
company’s stockholders, the “Company’s purchase
price” will mean the value, as of the date of the Press
Release, equal to the product of (i) the actual number of
shares of the Company’s Common Stock issued in exchange for
the shares of the acquired company’s stock multiplied by
(ii) the Fair Market Value of the Company’s Common Stock
as of the market close on the last market trading day immediately
prior to the date of the Press Release.
(ii) “10-Day
Trading Average of the Company’s Common Stock” will
mean the average closing sales price of one share of the
Company’s Common Stock for the 10 most recent trading days
ending on, and including, the relevant date, as reported on the
established stock exchange or national market system on which the
Company’s Common Stock is listed (or, in the absence of an
established market, as determined in good faith by the
Administrator).
(d) When
Shares are paid to the Grantee in payment for the Restricted Stock
Units, par value will be deemed paid by the Grantee for each
Restricted Stock Unit by past services rendered by the Grantee, and
will be subject to the appropriate tax withholdings.
2. Company’s
Obligation to Pay . Each Restricted Stock Unit has a value
equal to the Fair Market Value of a Share on the date that the
Restricted Stock Unit is granted. Unless and until the Restricted
Stock Units have vested in the manner set forth in Sections 3
through 5, the Grantee will have no right to payment of such
Restricted Stock Units. Prior to actual payment of any vested
Restricted Stock Units, such Restricted Stock Units will represent
an unsecured obligation. Payment of any vested Restricted Stock
Units shall be made in whole Shares only and any fractional shares
will be forfeited at the time of payment.
3. Vesting Schedule/Period
of Restriction . Except as provided in Sections 4 and 5,
and subject to Section 7, the Restricted Stock Units awarded
by this Agreement shall vest in accordance with the vesting
provisions set forth on the Notice of Grant and Section 1 of
this Agreement. Except as otherwise provided herein, Restricted
Stock Units shall not vest in accordance with any of the provisions
of this Agreement unless the Grantee remains a Service Provider
through the Vesting Date.
4. Modifications to Vesting
Schedule .
(a)
Vesting upon Leave of Absence. In the event that the Grantee
takes an authorized leave of absence (“LOA”), the
Restricted Stock Units awarded by this Agreement that are eligible
to be earned shall either: (i) not be affected, or
(ii) be deferred for a period of time equal to the duration of
such LOA, based on the Company’s LOA policy in effect at such
time as determined by the Company in its sole discretion.
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(b)
Death or Disability of Grantee . In the event that the
Grantee’s relationship with the Company as a Service Provider
is terminated during the Performance Period due to his or her death
or Disability, the vesting of the Restricted Stock Units subject to
this Restricted Stock Unit award shall be forfeited on the date of
the Grantee’s death or Disability.
(c)
Change of Control. In the event of a Change of Control (as
defined below) during the Performance Period, the Performance
Period shall be deemed to end immediately prior to the date of the
Press Release for purposes of determining the Company’s
Market Capitalization Growth Rate and the QQQQ Growth Rate and the
number of Restricted Stock Units in which the Grantee will be
entitled to vest will be determined by the Administrator (as in
existence prior to the Change in Control) in accordance with the
Performance Matrix and Section 1 of this Appendix A. The
Grantee shall vest in the number of Restricted Stock Units
determined based on the preceding sentence immediately prior to and
contingent upon the Change of Control (the “New Vesting
Date”) (unless vested earlier in accordance with the terms of
this Award, Section 14(c) of the Plan or any employment or change
of control agreement by and between the Company and the Grantee and
provided that the Grantee remains a Service Provider through the
New Vesting Date or as otherwise set forth in this Agreement). In
accordance with Section 1 of this Appendix A, the
Administrator shall not be entitled to eliminate or reduce the
number of Restricted Stock Units determined in accordance with
Section 1 of Appendix A following a Change of Control.
(d)
Definition of Change of Control . For purposes of this
Agreement, “Change of Control” shall mean the
occurrence of any of the following events:
(1) the
consummation by the Company of a merger or consolidation of the
Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation;
(2) the
consummation of the sale or disposition by the Company of all or
substantially all of the Company’s assets;
(3) any
“person” (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) becoming
the “beneficial owner” (as defined in Rule 13d-3
under said Act), directly or indirectly, of securities of the
Company representing 50% or more of the total voting power
represented by the Company’s then outstanding voting
securities; or
(4) a
change in the composition of the Board, as a result of which fewer
than a majority of the directors are Incumbent Directors.
“Incumbent Directors” shall mean directors who either
(A) are directors of the Company as of the date hereof, or
(B) are elected, or nominated for election, to the Board with
the affirmative votes of at least a majority of those directors
whose election or nomination was not in connection with any
transactions described in subsections (i), (ii), or (iii) or in
connection with an actual or threatened proxy contest relating to
the election of directors of the Company.
5. Administrator
Discretion . The Administrator, in its discretion, may
accelerate the vesting of the balance, or some lesser portion of
the balance, of the Restricted Stock Units at any time, subject to
the terms of the Plan. If so accelerated, such Restricted Stock
Units will be considered as having vested as of the date specified
by the Administrator. If the Administrator, in its
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discretion, accelerates the vesting of the balance, or some lesser
portion of the balance, of the Restricted Stock Units, the payment
of such accelerated Restricted Stock Units nevertheless shall be
made at the same time or times as if such Restricted Stock Units
had vested in accordance with the Vesting Schedule set forth on the
Notice of Grant or as otherwise provided herein (whether or not the
Grantee remains employed by the Company or by one of its
Subsidiaries as of such date(s)), unless an earlier payment date,
in the judgment of the Administrator, would not cause the Grantee
to incur an additional tax under Section 409A of the U.S.
Internal Revenue Code of 1986, as amended, and any proposed,
temporary or final Treasury Regulations and Internal Revenue
Service guidance thereunder
(“Section 409A”).
6. Payment after Vesting
. Any Restricted Stock Units that vest in accordance with
Sections 3 through 5 of this Agreement will be paid to the
Grantee (or in the event of the Grantee’s death, to his or
her estate) as soon as practicable following the Vesting Date,
subject to Section 10, but no later than March 15
th of
the calendar year following the Vesting Date. Notwithstanding the
foregoing, if the Grantee is a “specified employee”
within the meaning of Section 409A(a)(2)(B)(i) and any
proposed, temporary or final Treasury Regulations and Internal
Revenue Service guidance thereunder, any Restricted Stock Units
that vest on account of the termination of the Grantee’s
relationship with the Company as a Service Provider will be paid to
the Grantee (or in the event of the Grantee’s death, to his
or her estate) no earlier than six (6) months and one (1) day
following the date of the termination of the Grantee’s
relationship with the Company (or any Parent or Subsidiary of the
Company) as a Service Provider, subject to Section 10.
7. Forfeiture of Unvested
Restricted Stock Units . The balance of the Restricted Stock
Units that have not vested pursuant to Sections 3 through 5 at
the time of the termination of the Grantee’s relationship
with the Company (or any Parent or Subsidiary of the Company) as a
Service Provider for any or no reason will be forfeited.
8. Conditions Requiring
Forfeiture of Shares . Notwithstanding any provision in this
Agreement to the contrary, the Company may demand that the Grantee
forfeit and transfer to, and the Grantee hereby agrees that, within
thirty (30) days of such demand, the Grantee will
(i) forfeit and transfer to, the Company that number of Shares
equal to the number of Shares issued as payment for vested
Restricted Stock Units under this Agreement, or (ii) tender to
the Company a cash payment in immediately available funds in an
amount equal to the number of Shares issued as payment for the
vested Restricted Stock Units under this Agreement multiplied by
the Fair Market Value of a Share on the Vesting Date, in the event
the Board, in its reasonable discretion, determines within four
(4) years following the Performance Period but in any event
prior to a Change of Control that the Grantee committed
financial-based fraud with respect to the Company’s financial
statements filed with the Securities and Exchange Commission
requiring the restatement of such financial statements and such
fraud positively impacted the Market Capitalization Growth Rate
during the Performance Period. Except for any applicable offset of
amounts reimbursed, nothing herein, including any determination by
the Board contemplated by this Section 8, shall limit or
otherwise waive any Company right of recovery or obligation of
reimbursement by applicable executive officers under
Section 304 of the Sarbanes Oxley Act of 2002.
9. [Reserved.]
10. Withholding of Taxes
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(a)
General . Regardless of any action the Company and/or the
Grantee’s employer (the “Employer”) take with
respect to any or all income tax (including U.S. federal, state,
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local
and/or non-U.S. taxes), social insurance, payroll tax, payment on
account or other tax-related withholdings (“Tax-Related
Items”), the Grantee acknowledges that the ultimate liability
for all Tax-Related Items legally due by the Grantee is and remains
the Grantee’s responsibility and that the Company and/or the
Employer (i) make no guarantees or undertakings regarding the
treatment of any Tax-Related Items in connection with any aspect of
the award, including the grant of the Restricted Stock Units, the
vesting of the Restricted Stock Units, the delivery of Shares, the
subsequent sale of any Shares received at vesting and the receipt
of any dividends; and (ii) do not commit to structure the
terms of the grant or any aspect of the award to reduce or
eliminate the Grantee’s liability for Tax-Related
Items.
(b)
Payment of Tax-Related Items . The Grantee authorizes the
Company and/or the Employer, at its discretion, to satisfy the
obligations with regard to all Tax-Related Items by withholding a
portion of the Shares issued as payment for vested Restricted Stock
Units that have an aggregate market value sufficient to pay all
Tax-Related Items required to be withheld by the Company and/or the
Employer with respect to the vesting of the Restricted Stock Units
and issuance of the Shares, unless the Company, in its sole
discretion, either requires or otherwise permits the Grantee to
make alternate arrangements satisfactory to the Company for such
withholdings in adv
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