10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended January 30, 2010

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from              to             

Commission file number: 000-25601

Brocade Communications Systems, Inc.

(Exact name of registrant as specified in its charter)

Delaware	77-0409517
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1745 Technology Drive

San Jose, CA 95110

(408) 333-8000

(Address, including zip code, of registrant’s principal executive offices and telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares outstanding of the registrant’s common stock as of February 22, 2010 was 445,131,939 shares.

BROCADE COMMUNICATIONS SYSTEMS, INC.

FORM 10-Q

QUARTER ENDED January 30, 2010

INDEX

		Page
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Statements of Operations for the three months ended January 30, 2010 and January 24, 2009	4
	Condensed Consolidated Balance Sheets as of January 30, 2010 and October 31, 2009	5
	Condensed Consolidated Statements of Cash Flows for the three months ended January 30, 2010 and January 24, 2009	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	39
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 6.	Exhibits	52
SIGNATURES		55

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements regarding future events and future results. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to, statements regarding future revenue, margins, expenses, tax provisions, earnings, cash flows, benefit obligations, debt repayments or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning expected development, performance or market share relating to products or services; any statements regarding future economic conditions or performance; any statements regarding pending litigation, including claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Words such as “expects,” “anticipates,” “assumes,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are based on current expectations, estimates, forecasts and projections about the industries in which Brocade operates, and the beliefs and assumptions of management. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict, including those identified below under “Part II - Other Information, Item 1A. Risk Factors” and elsewhere herein. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Further, Brocade undertakes no obligation to revise or update any forward-looking statements for any reason.

3

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

BROCADE COMMUNICATIONS SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended
	January 30, 2010			January 24, 2009 (1)
	(In thousands, except per share amounts)
Net revenues
Product	$	449,086		$	362,600
Service		90,406			68,991
Total net revenues		539,492			431,591
Cost of revenues
Product		192,572			151,191
Service		49,477			37,985
Total cost of revenues		242,049			189,176
Gross margin
Product		256,514			211,409
Service		40,929			31,006
Total gross margin		297,443			242,415
Operating expenses:
Research and development		90,081			68,451
Sales and marketing		90,366			73,166
General and administrative		16,239			18,388
Legal fees associated with indemnification obligations and other related costs		301			19,299
Amortization of intangible assets		17,052			13,229
Acquisition and integration costs		204			953
In-process research and development		—			26,900
Total operating expenses		214,243			220,386
Income from operations		83,200			22,029
Interest income and other loss, net		72			(3,811	)
Interest expense		(22,073	)		(23,279	)
Loss on sale of investments and property, net		(8,828	)		(864	)
Income (loss) before provision for income taxes		52,371			(5,925	)
Income tax provision		1,276			17,973
Net income (loss)	$	51,095		$	(23,898	)
Net income (loss) per share — basic	$	0.12		$	(0.06	)
Net income (loss) per share — diluted	$	0.11		$	(0.06	)
Shares used in per share calculation — basic		439,080			376,202
Shares used in per share calculation — diluted		484,262			376,202

(1) As adjusted due to changes to the accounting for convertible debt instruments. See Note 2, “Summary of Significant Accounting Policies,” of the Notes to Condensed Consolidated Financial Statements.

See accompanying notes to condensed consolidated financial statements.

4

BROCADE COMMUNICATIONS SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	January 30, 2010			October 31, 2009 (1)
	(In thousands, except par value)
Assets
Current assets:
Cash and cash equivalents	$	496,583		$	334,193
Short-term investments		4,533			4,678
Restricted cash		12,500			12,502
Total cash, cash equivalents, short-term investments and restricted cash		513,616			351,373
Accounts receivable, net of allowances of $11,545 and $12,573 at January 30, 2010 and October 31, 2009, respectively		276,671			297,819
Inventories		72,753			72,152
Deferred tax assets		75,691			84,629
Prepaid expenses and other current assets		61,874			79,302
Total current assets		1,000,605			885,275
Property and equipment, net		439,642			442,408
Goodwill		1,658,060			1,659,934
Intangible assets, net		435,970			470,872
Non-current deferred tax assets		196,230			184,713
Other assets		46,283			28,218
Total assets	$	3,776,790		$	3,671,420
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	139,186		$	181,249
Accrued employee compensation		101,838			160,832
Deferred revenue		175,851			174,870
Current liabilities associated with facilities lease losses		9,474			10,769
Revolving credit facility		14,050			14,050
Current portion of term loan		18,539			38,822
Convertible subordinated debt		172,015			169,332
Other accrued liabilities		114,958			105,263
Total current liabilities		745,911			855,187
Term loan, net of current portion		376,184			860,114
Senior Secured Notes		595,070			—
Non-current liabilities associated with facilities lease losses		8,983			10,150
Non-current deferred revenue		60,528			60,575
Non-current income tax liability		89,729			92,276
Other non-current liabilities		15,528			15,114
Total liabilities		1,891,933			1,893,416
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock, $0.001 par value, 5,000 shares authorized, no shares issued and outstanding		—			—
Common stock, $0.001 par value, 800,000 shares authorized:
Issued and outstanding: 443,451 and 433,988 shares at January 30, 2010 and October 31, 2009, respectively		443			434
Additional paid-in capital		1,962,279			1,901,238
Accumulated other comprehensive loss		(11,212	)		(5,920	)
Accumulated deficit		(66,653	)		(117,748	)
Total stockholders’ equity		1,884,857			1,778,004
Total liabilities and stockholders’ equity	$	3,776,790		$	3,671,420

(1) As adjusted due to changes to the accounting for convertible debt instruments. See Note 2, “Summary of Significant Accounting Policies,” of the Notes to Condensed Consolidated Financial Statements.

See accompanying notes to condensed consolidated financial statements.

5

BROCADE COMMUNICATIONS SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended
	January 30, 2010			January 24, 2009 (1)
	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	51,095		$	(23,898	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Excess tax detriment from employee stock plans		—			336
Depreciation and amortization		51,012			39,754
Loss on disposal of property and equipment		8,813			558
Amortization of debt issuance costs and original issue discount		6,663			3,545
Net losses on investments and marketable equity securities		168			860
Provision for doubtful accounts receivable and sales allowances		3,043			2,271
Non-cash compensation expense		21,523			18,080
Capitalization of interest cost		(3,315	)		(2,043	)
In-process research and development		—			26,900
Changes in assets and liabilities, net of acquired assets and assumed liabilities:
Restricted cash		2			—
Accounts receivable		18,104			(12,044	)
Inventories		(601	)		14,397
Prepaid expenses and other assets		4,982			(2,228	)
Accounts payable		(39,735	)		(64,080	)
Accrued employee compensation		(67,155	)		(47,057	)
Deferred revenue		935			17,681
Other accrued liabilities		16,036			26,521
Liabilities associated with facilities lease losses		(2,463	)		(3,321	)
Liability associated with class action lawsuit		—			(160,000	)
Net cash provided by (used in) operating activities		69,107			(163,768	)
Cash flows from investing activities:
Purchases of short-term investments		(24	)		—
Proceeds from maturities and sale of short-term investments		1			136,297
Proceeds from maturities and sale of long-term investments		—			30,058
Proceeds from sale of property		30,185			—
Purchases of property and equipment		(47,317	)		(35,818	)
Decrease in restricted cash		—			1,075,079
Net cash paid in connection with acquisitions		—			(1,297,482	)
Net cash used in investing activities		(17,155	)		(91,866	)
Cash flows from financing activities:
Payment of senior underwriting fees related to the term loan		—			(30,525	)
Payment of principal related to the term loan		(506,545	)		—
Proceeds from Senior Secured Notes		587,968			—
Proceeds from issuance of common stock, net		30,031			8,548
Proceeds from revolving credit facility		—			14,050
Excess tax detriment from employee stock plans		—			(336	)
Net cash provided by (used in) financing activities		111,454			(8,263	)
Effect of exchange rate fluctuations on cash and cash equivalents		(1,016	)		51
Net increase (decrease) in cash and cash equivalents		162,390			(263,846	)
Cash and cash equivalents, beginning of period		334,193			453,884
Cash and cash equivalents, end of period	$	496,583		$	190,038
Supplemental schedule of non-cash investing activities:
Fair value of stock options and unvested awards assumed in exchange for acquired Foundry assets	$	—		$	254,312

(1) As adjusted due to changes to the accounting for convertible debt instruments. See Note 2, “Summary of Significant Accounting Policies,” of the Notes to Condensed Consolidated Financial Statements.

See accompanying notes to condensed consolidated financial statements.

6

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

Brocade Communications Systems, Inc. (“Brocade” or the “Company”) has prepared the accompanying financial data as of January 30, 2010 and for the three months ended January 30, 2010 and January 24, 2009, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States (“U.S.”) generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The October 31, 2009 Condensed Consolidated Balance Sheet was derived from the Company’s audited consolidated financial statements, but does not include all disclosures required by U.S. generally accepted accounting principles. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2009.

In the opinion of management, all adjustments (which include only normal recurring adjustments, except as otherwise indicated) necessary to present a fair statement of financial position as of January 30, 2010, results of operations for the three months ended January 30, 2010 and January 24, 2009, and cash flows for the three months ended January 30, 2010 and January 24, 2009 have been made. The results of operations for the three months ended January 30, 2010 are not necessarily indicative of the operating results for the full fiscal year or any future period.

The Company’s fiscal year is the 52 or 53 weeks ending on the last Saturday in October. As is customary for companies that use the 52/53-week convention, every fifth year contains a 53-week year. Fiscal year 2010 is a 52-week fiscal year and fiscal year 2009 was a 53-week fiscal year. The second quarter of fiscal year 2009 consisted of fourteen weeks, which was one week longer than a typical quarter. The Company’s next 14-week quarter will be in the second quarter of fiscal year 2014. The Condensed Consolidated Financial Statements include the accounts of Brocade and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

The Company has evaluated subsequent events through the date that the financial statements were issued on March 2, 2010.

2. Summary of Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies for the three months ended January 30, 2010 as compared to those disclosed in Brocade’s Annual Report on Form 10-K for the fiscal year ended October 31, 2009, except for the changes in the accounting for convertible debt instruments and revenue recognition as a result of new accounting standards as described below.

Convertible Debt Instruments

In the first quarter of 2010, the Company adopted a new standard that changed the accounting for convertible debt instruments with cash settlement features. As of adoption, this new standard applied to the Company’s convertible subordinated debt (see Note 9, “Borrowings,” of the Notes to Condensed Consolidated Financial Statements). Under the previous standard, the convertible subordinated debt was recognized entirely as a liability. In accordance with adopting this new standard, Brocade retrospectively recognized both a liability and an equity component of the convertible subordinated debt at fair value. The liability component is recognized as the fair value of a similar instrument that does not have a conversion feature at issuance. The equity component, which is the value of the conversion feature at issuance, is recognized as the difference between the proceeds from the issuance of the convertible subordinated debt and the fair value of the liability component, after adjusting for the deferred tax impact. The convertible subordinated debt was issued at a coupon rate of 2.25%, which was below that of a similar instrument that does not have a conversion feature (8.75%). Therefore, the valuation of the debt component, using the income approach, resulted in a debt discount. The debt discount is reduced over the expected life of the debt, which is also the stated life of the debt. For additional discussion, see Note 9, “Borrowings,” of the Notes to Condensed Consolidated Financial Statements.

7

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

As a result of applying this new standard retrospectively to all periods presented, the Company recognized the following incremental effects on individual line items on the Condensed Consolidated Statements of Operations (in thousands, expect per share amounts):

	Three Months Ended January 24, 2009
	Before Adoption			Adjustments			After Adoption
Interest expense	$	(21,357	)	$	(1,922	)	$	(23,279	)
Income tax provision	$	22,028		$	(4,055	)	$	17,973
Net loss	$	(26,031	)	$	2,133		$	(23,898	)
Net loss per share - basic	$	(0.07	)	$	0.01		$	(0.06	)
Net loss per share - diluted	$	(0.07	)	$	0.01		$	(0.06	)

In addition, the Company recognized the following incremental effects on individual line items on the Condensed Consolidated Balance Sheets (in thousands):

	As of October 31, 2009
	Before Adoption			Adjustments			After Adoption
Goodwill	$	1,648,217		$	11,717		$	1,659,934
Non-current deferred tax assets	$	185,713		$	(1,000	)	$	184,713
Convertible subordinated debt	$	171,822		$	(2,490	)	$	169,332
Additional paid-in capital	$	1,872,050		$	29,188		$	1,901,238
Accumulated deficit	$	(101,767	)	$	(15,981	)	$	(117,748	)

Revenue Recognition

In October 2009, the Financial Accounting Standards Board (“FASB”) amended the accounting standards for revenue recognition to remove tangible products containing software components and non-software components that function together to deliver the product’s essential functionality from the scope of industry specific software revenue recognition guidance. In October 2009, the FASB also amended the accounting standards for multiple deliverable revenue arrangements to:

• provide updated guidance on whether multiple deliverables exist, how the deliverables in an arrangement should be separated, and how the consideration should be allocated;

• require an entity to allocate revenue in an arrangement using estimated selling price (“ESP”) of deliverables if a vendor does not have vendor-specific objective evidence (“VSOE”) of selling price or third-party evidence (“TPE”) of selling price; and

• eliminate the use of the residual method and require an entity to allocate revenue using the relative selling price method.

The Company elected to early adopt this accounting guidance at the beginning of its first quarter of fiscal year 2010 on a prospective basis for applicable transactions originating or materially modified after October 31, 2009.

Multiple-element arrangements. The Company’s multiple-element product offerings include networking hardware with embedded software products and support, which are considered separate units of accounting. For certain of the Company’s products, software and non-software components function together to deliver the tangible product’s essential functionality. The Company allocates revenue to each element in a multiple-element arrangement based upon their relative selling price. When applying the relative selling price method, the Company determines the selling price for each deliverable using VSOE of selling price, if it exists, or TPE of selling price. If neither VSOE nor TPE of selling price exist for a deliverable, the Company uses its best estimate of selling price for that deliverable. Revenue allocated to each element is then recognized when the basic revenue recognition criteria is met for each element.

Consistent with its methodology under previous accounting guidance, the Company determines VSOE based on its normal pricing and discounting practices for the specific product or service when sold separately. In determining VSOE, the Company requires that a substantial majority of the selling prices for a product or service fall within a reasonably narrow pricing range, generally evidenced by approximately 80% of such historical stand-alone transactions falling within ±15% of the median rates. For post-contract customer support (“PCS”), however, the Company considers stated renewal rates in determining VSOE.

        In certain limited instances, the Company is not able to establish VSOE for all deliverables in an arrangement with multiple elements. This may be due to the Company infrequently selling each element separately, not pricing products within a narrow range, or only having a limited sales history. When VSOE cannot be established, the Company attempts to establish selling price of each element based on TPE. TPE is determined based on competitor prices for similar deliverables when sold separately. Generally, the Company’s go-to-market strategy differs from that of its peers and its offerings contain a significant level of customization and differentiation such that the comparable pricing of products with similar functionality cannot be obtained. Furthermore, the Company is unable to reliably determine what similar competitor products’ selling prices are on a stand-alone basis. Therefore, the Company is typically not able to determine TPE.

8

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

When the Company is unable to establish selling price using VSOE or TPE, the Company uses ESP in its allocation of arrangement consideration. The objective of ESP is to determine the price at which the Company would transact a sale if the product or service were sold on a stand-alone basis. ESP is generally used for offerings that are not typically sold on a stand-alone basis or for new or highly customized offerings.

The Company determines ESP for a product or service by considering multiple factors including, but not limited to, geographies, market conditions, competitive landscape, internal costs, gross margin objectives and pricing practices. The determination of ESP is made through consultation with and formal approval by the Company’s management, taking into consideration the go-to-market strategy.

The Company regularly reviews VSOE, TPE and ESP and maintains internal controls over the establishment and updates of these estimates. There were no material impacts during the three months ended January 30, 2010 nor does the Company expect a material impact in the near term from changes in VSOE, TPE or ESP.

Total net revenues as reported and unaudited pro forma total net revenues that would have been reported during the three months ended January 30, 2010, if the transactions entered into or materially modified after October 31, 2009 were subject to previous accounting guidance, are shown in the following table (in thousands):

	As Reported		Pro Forma Basis as if the Previous Accounting Guidance Were in Effect
Total net revenues for the three months ended January 30, 2010	$	539,492	$	536,626

The impact to total net revenues during the three months ended January 30, 2010 of the accounting guidance was primarily to net product revenues. Since the use of the residual method is eliminated under the new accounting standards, any discounts offered by the Company are allocated to all deliverables.

The new accounting standards for revenue recognition if applied in the same manner to the year ended October 31, 2009 would not have had a material impact on total net revenues for that fiscal year. In terms of the timing and pattern of revenue recognition, the new accounting guidance for revenue recognition is not expected to have a significant effect on total net revenues in periods after the initial adoption when applied to multiple-element arrangements based on current go-to-market strategies due to the existence of VSOE across most of the Company’s product and service offerings.

Business Combinations

In the first quarter of 2010, the Company adopted revised standards for business combinations. These revised standards generally require an entity to recognize the assets acquired, liabilities assumed, contingencies, and contingent consideration at their fair value on the acquisition date. In circumstances where the acquisition-date fair value for a contingency cannot be determined during the measurement period and it is concluded that it is probable that an asset or liability exists as of the acquisition date and the amount can be reasonably estimated, a contingency is recognized as of the acquisition date based on the estimated amount. The revised standards further require that acquisition-related costs be recognized separately from the acquisition and expensed as incurred, restructuring costs generally be expensed in periods subsequent to the acquisition date, and changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period impact income tax expense. In addition, acquired in-process research and development is capitalized as an intangible asset and amortized over its estimated useful life. These new standards are applicable to the Company beginning in the first quarter of 2010.

Intangible Assets

In the first quarter of 2010, the Company adopted new standards for defensive intangible assets, which are acquired intangible assets that the acquirer does not intend to actively use but intends to hold to prevent its competitors from obtaining access to them. As these assets are separately identifiable, these new standards require an acquiring entity to account for defensive intangible assets as a separate unit of accounting. Defensive intangible assets must be recognized at fair value. These new standards are applicable to intangible assets purchased by the Company beginning in the first quarter of 2010.

9

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Restricted Cash

During fiscal year 2009, the Company entered into an agreement with one of the defendants in connection with the Special Litigation Committee’s litigation. Under this agreement, the Company received $12.5 million, which was held in restricted cash until certain contingencies pursuant to the agreement were to be removed. On February 3, 2010, these contingencies were satisfied and the restrictions on the cash were removed.

Concentrations

A majority of the Company’s accounts receivable balance is derived from sales to OEM partners in the computer storage and server industry. As of January 30, 2010, three customers accounted for 17%, 17% and 11%, respectively, of total accounts receivable. As of October 31, 2009, two customers accounted for 16% and 11%, respectively, of total accounts receivable. The Company performs ongoing credit evaluations of its customers and generally does not require collateral on accounts receivable balances. The Company has established reserves for credit losses, sales allowances, and other allowances. While the Company has not experienced material credit losses in any of the periods presented, there can be no assurance that the Company will not experience material credit losses in the future, particularly in light of the current economic environment.

For the three months ended January 30, 2010 and January 24, 2009, the same three customers each represented 10% or more of the Company’s total net revenues for a combined total of 54% and 56% of total net revenues, respectively. The Company’s future success depends upon the buying patterns of significant customers, such as companies within the financial services, education and health sectors, the U.S. government or individual agencies within the U.S. government, their response to current and future IT investment trends and the continued demand by such customers for the Company’s products. Delays in or a reduction in IT spending, domestically and/or internationally, could harm the Company’s business, results of operations and financial condition in a number of ways, including longer sales cycles, increased inventory provisions, increased production costs, lowered prices for Brocade’s products and reduced sales volumes. In addition, the loss of any one significant OEM partner, or a decrease in the level of sales to any one significant OEM partner, or unsuccessful quarterly negotiation on key terms, conditions or timing of purchase orders placed during a quarter, would likely cause serious harm to Brocade’s business and financial results.

The Company currently relies on single and limited sources for multiple key components used in the manufacture of its products. Additionally, the Company relies on multiple contract manufacturers for the production of its products. The inability of any single or limited source supplier to fulfill supply, or the inability of a contract manufacturer to fulfill production requirements, could have an adverse effect on the Company’s future operating results. Further, if the Company’s suppliers face challenges in obtaining credit or otherwise for operating their businesses, they may become unable to continue to offer the materials the Company uses to manufacture its products.

The Company’s business is concentrated in the networking industry, which from time to time has been impacted by unfavorable economic conditions and reduced information technology (“IT”) spending rates. Accordingly, the Company’s future success depends upon the buying patterns of customers in the networking industry, their response to current and future IT investment trends and the continued demand by such customers for the Company’s products. The Company’s future success, in part, will depend upon its ability to enhance its existing products and to develop and introduce, on a timely basis, new cost-effective products and features that keep pace with technological developments and emerging industry standards.

Use of Estimates in Preparation of Condensed Consolidated Financial Statements

The preparation of condensed consolidated financial statements and related disclosures in conformity with U.S. generally accepted accounting principles requires management to make estimates and judgments that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Estimates are used for, but not limited to sales allowances and programs, bad debts, stock-based compensation, allocation of purchase price allocations, warranty obligations, excess inventory and purchase commitments, restructuring costs, facilities lease losses, impairment of goodwill and intangible assets, litigation, income taxes and investments. Actual results may differ materially from these estimates.

10

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Recent Accounting Pronouncements

In January 2010, the FASB issued an update to ASC 820-10 Measuring Liabilities at Fair Values (“ASC 820-10”). The update to ASC 820-10 requires disclosure of significant transfers in and out of Level 1 and Level 2 measurements and the reasons for the transfers, and a gross presentation of activity within the Level 3 rollforward, presenting separately information about purchases, sales issuances and settlements. The update to ASC 820-10 will be adopted by the Company in the second quarter of fiscal year 2010, except for the gross presentation of the Level 3 rollforward which will be adopted by the Company in the second quarter of fiscal year 2011. The Company is currently evaluating the impact of the update to ASC 820-10, but does not expect the adoption to have a material impact on its financial position, results of operations, and cash flows.

3. Acquisitions

Foundry Networks, Inc.

On December 18, 2008, the Company completed its acquisition of Foundry Networks, Inc. (“Foundry”) in accordance with the Agreement and Plan of Merger, which the Company entered into on July 21, 2008, as well as with Amendment No. 1 to the Agreement and Plan of Merger, which the Company entered into on November 7, 2008 (as amended, the “Foundry Merger Agreement”). As a result of the merger, Foundry is now a wholly-owned subsidiary of the Company.

The Company recorded the acquisition using the purchase method of accounting and, accordingly, has included the results of operations of Foundry in the accompanying Condensed Consolidated Statements of Operations from December 18, 2008, the date the acquisition was completed.

The total purchase price of the Foundry acquisition was $2.8 billion and is comprised of the following (in thousands):

	Amount
Cash tendered for shares of outstanding common stock of Foundry (1)	$	2,506,474
Fair value of stock options and awards assumed and accelerated in connection with acquisition		254,312
Direct transaction costs		27,395
Total purchase price	$	2,788,181

(1) This amount includes $248.4 million paid by the Company to acquire 14.0 million shares of Foundry common stock in the open market before the consummation of the acquisition, net of $3.5 million in dividends received.

Direct transaction costs include investment banking, legal and accounting fees and other external costs directly related to the acquisition.

The Company allocated the total purchase consideration to the net assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective fair values at the acquisition date, resulting in initial goodwill of approximately $1,475.6 million, which is not deductible for income tax purposes. The Company also allocated $26.9 million to in-process research and development (“IPR&D”) which was charged to expense at the consummation of the business combination. Goodwill represents the excess of the purchase price over the fair value of the underlying acquired net tangible and intangible assets. The factors that contributed to the recognition of goodwill included securing buyer-specific synergies that increase revenue and profits and are not otherwise available to a marketplace participant, acquiring a talented workforce, and significant cost-saving opportunities. The allocation of the purchase price reflects various estimates and analyses.

Of the total purchase price, approximately $392.3 million has been allocated to amortizable intangible assets acquired. The amortizable intangible assets are being amortized on a straight-line basis over their estimated useful lives as follows:

	Amount (in thousands)		Weighted- Average Useful Life (in years)
Developed products technology	$	191,300	5.00
Customer relationships	$	194,500	5.00
Order backlog	$	6,500	0.25

11

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The following unaudited pro forma financial information for the three months ended January 24, 2009 presents a summary of the results of operations of the Company assuming the acquisition of Foundry occurred at the beginning of the period presented. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the merger had taken place at the beginning of the period presented, nor is it indicative of future operating results:

In thousands, except per share amounts	Three Months Ended January 24, 2009 (1)
Total net revenues	$	508,638
Pretax income		7,196
Net income		2,416
Basic net income per share		0.01
Diluted net income per share	$	0.01

(1) The unaudited pro forma financial results for the three months ended January 24, 2009 include Brocade’s historical results for the three months ended January 24, 2009, which include Foundry’s results subsequent to December 18, 2008, and Foundry’s historical results for the period October 26, 2008 to December 18, 2008, including amortization for acquired intangible assets, elimination of IPR&D charge and acquisition-related fees, and related tax effects. Brocade’s historical results for the three months ended January 24, 2009 reflect the incremental effects on individual line items on the Condensed Consolidated Statement of Operations as a result of retrospectively applying the new accounting standard for convertible debt instruments (see Note 2, “Summary of Significant Accounting Policies,” of the Notes to Condensed Consolidated Financial Statements).

4. Goodwill and Intangible Assets

The following table summarizes the goodwill activity by reportable segment during the three months ended January 30, 2010 (in thousands):

	Data Storage		Ethernet Products			Global Services		Total
Balance at October 31, 2009	$	176,989	$	1,325,856		$	157,089	$	1,659,934
Tax and other adjustments (1)		—		(1,874	)		—		(1,874	)
Balance at January 30, 2010	$	176,989	$	1,323,982		$	157,089	$	1,658,060

(1) The goodwill adjustment of $1.9 million was primarily a result of the tax benefit of stock options exercised from acquired companies.

Intangible assets other than goodwill are amortized over the following estimated remaining useful lives, unless the Company has determined these lives to be indefinite. The following tables present details of the Company’s intangible assets (in thousands, except for useful life):

January 30, 2010	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Useful Life (in years)
Tradename	$	13,941	$	10,918	$	3,023	9.97
Core/developed technology		338,158		147,331		190,827	3.45
Customer relationships		364,981		122,861		242,120	3.90
Total intangible assets	$	717,080	$	281,110	$	435,970	3.74
October 31, 2009	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Useful Life (in years)
Tradename	$	13,941	$	9,980	$	3,961	8.05
Core/developed technology		338,158		129,843		208,315	3.63
Customer relationships		364,981		106,385		258,596	4.13
Total intangible assets	$	717,080	$	246,208	$	470,872	3.94

12

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The following table presents the amortization of intangible assets included on the Condensed Consolidated Statements of Operations (in thousands):

	Three Months Ended
	January 30, 2010		January 24, 2009
Cost of revenues	$	17,850	$	11,968
Operating expenses		17,052		13,229
Total	$	34,902	$	25,197

The following table presents the estimated future amortization of intangible assets as of January 30, 2010 (in thousands):

Fiscal Year	Estimated Future Amortization
2010 (remaining nine months)	$	91,970
2011		119,770
2012		107,062
2013		94,057
2014		16,816
Thereafter		6,295
Total	$	435,970

5. Balance Sheet Details

The following table provides details of selected balance sheet items (in thousands):

	January 30, 2010			October 31, 2009
Accounts Receivable:
Accounts receivable	$	288,216		$	310,392
Allowance for doubtful accounts		(3,954	)		(3,954	)
Sales allowances		(7,591	)		(8,619	)
Total	$	276,671		$	297,819
Inventories:
Raw materials	$	7,763		$	4,605
Finished goods		64,990			67,547
Total	$	72,753		$	72,152
Property and equipment, net: (1)
Computer equipment and software	$	123,607		$	122,219
Engineering and other equipment		269,939			258,116
Furniture and fixtures		14,214			14,691
Leasehold improvements		37,465			64,186
Land and building		51,377			81,298
Company campus (2)		254,520			218,797
Subtotal		751,122			759,307
Less: Accumulated depreciation and amortization		(311,480	)		(316,899	)
Total	$	439,642		$	442,408
Other accrued liabilities:
Income taxes payable	$	3,570		$	3,702
Accrued warranty		5,488			5,808
Inventory purchase commitments		20,405			17,011
Accrued sales programs		26,607			13,377
Accrued liabilities		49,492			53,878
Other		9,396			11,487
Total	$	114,958		$	105,263

(1) Depreciation expense was approximately $16.1 million and $14.0 million for the three months ended January 30, 2010 and January 24, 2009, respectively.

(2) In connection with the purchase of the property located in San Jose, California, the Company engaged a third party as development manager to manage the development and construction of improvements on the property, which are still in progress. Included in the Company campus as of January 30, 2010 and October 31, 2009 is $8.0 million that the Company has agreed to pay the developer on May 22, 2011 or earlier if Brocade decides to sell any part of the Company campus project before such date.

13

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

6. Investments and Equity Securities

The following table summarizes the Company’s investments and equity securities (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
January 30, 2010
Corporate bonds	$	4,533	$	—	$	—	$	4,533
Total	$	4,533	$	—	$	—	$	4,533
Reported as:
Short-term investments							$	4,533
Long-term investments								—
Total							$	4,533
October 31, 2009
Corporate bonds	$	4,678	$	—	$	—	$	4,678
Total	$	4,678	$	—	$	—	$	4,678
Reported as:
Short-term investments							$	4,678
Long-term investments								—
Total							$	4,678

At January 30, 2010 and October 31, 2009, the Company had no unrealized holding gains/losses on investments. Net unrealized holding losses or gains on investments, if any, are included in accumulated other comprehensive income (loss) in the accompanying Condensed Consolidated Balance Sheets.

7. Fair Value Measurements

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. The Company applies fair value measurements for both financial and nonfinancial assets and liabilities. The Company has no non-financial assets and liabilities that are required to be measured at fair value on a recurring basis as of January 30, 2010.

The Company did not elect to measure any eligible financial instruments at fair value and report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date.

The Company utilizes a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value:

Level 1: Observable inputs that reflect quoted prices in active markets for identical assets or liabilities. Brocade’s assets utilizing Level 1 inputs include money market funds.

Level 2: Inputs that reflect quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in less active markets, or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Brocade’s assets and liabilities utilizing Level 2 inputs include corporate bonds and derivative instruments, respectively.

Level 3: Unobservable inputs that reflect the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. Brocade has no assets or liabilities utilizing Level 3 inputs.

14

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Assets measured at fair value on a recurring basis as of January 30, 2010 were as follows (in thousands):

			Fair Value Measurements Using
	Balance as of January 30, 2010		Quoted Prices in Active Markets For Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	$	104,159	$	104,159	$	—	$	—
Corporate bonds		4,533		—		4,533		—
Total assets measured at fair value	$	108,692	$	104,159	$	4,533	$	—
Liabilities:
Derivative liabilities, net	$	2,994	$	—	$	2,994	$	—
Total liabilities measured at fair value	$	2,994	$	—	$	2,994	$	—

The Company uses a midpoint of the highest bid and lowest offering obtained from market makers to value its corporate bonds. The Company uses observable market prices for comparable instruments to value its derivative instruments.

8. Liabilities Associated with Facilities Lease Losses

The Company reevaluates its estimates and assumptions on a quarterly basis and makes adjustments to the reserve balance if necessary. The following table summarizes the activity related to the facilities lease loss reserve, net of expected sublease income (in thousands):

	Lease Loss Reserve
Reserve balance at October 31, 2009	$	20,919
Cash payments on facilities leases		(2,507	)
Non-cash charges and other adjustments, net		45
Reserve balance at January 30, 2010	$	18,457

Cash payments for facilities leases related to the above noted facilities lease losses will be paid over the respective lease terms through fiscal year 2017.

9. Borrowings

Senior Secured Notes

On January 20, 2010, the Company issued $300.0 million aggregate principal amount of its 6.625% Senior Secured Notes due 2018 at an issue price of 99.239% of the principal amount of the notes (the “2018 Notes”) and $300.0 million aggregate principal amount of its 6.875% Senior Secured Notes due 2020 at an issue price of 99.114% of the principal amount of the notes (the “2020 Notes” and, together with the 2018 Notes, the “Notes”), in a private placement to “qualified institutional buyers” in the United States defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States pursuant to Regulation S under the Securities Act (the “Notes Offering”). The 2018 Notes mature on January 15, 2018 and bear interest at a rate of 6.625% per annum, payable semi-annually on January 15 and July 15 of each year, commencing on July 15, 2010. The 2020 Notes mature on January 15, 2020 and bear interest at a rate of 6.875% per annum, payable semi-annually on January 15 and July 15 of each year, commencing on July 15, 2010. The Company’s obligations under the Notes are guaranteed by certain of the Company’s domestic subsidiaries (the “Subsidiary Guarantors”). The obligations of the Company and the Subsidiary Guarantors under the Notes and the related guarantees are secured by liens, subject to certain exceptions and permitted liens and subject to the terms of an intercreditor agreement, on all assets of the Company and the Subsidiary Guarantors that secure any obligations under the Senior Secured Credit Facility, as described below.

The Company used approximately $435.0 million of the net proceeds of the Notes Offering to repay a portion of the outstanding term loan under the Senior Secured Credit Facility on January 20, 2010, and used the remaining net proceeds, together with cash on hand, to retire the 2.25% subordinated convertible notes (“2.25% Notes”) originally issued by McDATA Corporation (“McDATA”), a wholly owned subsidiary of Brocade, on February 16, 2010.

        As of January 30, 2010, the liability associated with the 2018 Notes of $297.7 million, net of the debt discount of $2.3 million, and the liability associated with the 2020 Notes of $297.3 million, net of the debt discount of $2.7 million, are together reported as “Senior Secured Notes,” on the Condensed Consolidated Balance Sheets.

15

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Debt fees totaling $10.4 million associated with the Notes are classified entirely as long-term and have been capitalized as deferred financing costs, with $22.9 thousand amortized as of January 30, 2010. As of January 30, 2010, deferred financing costs were $10.3 million and are reported within “Other assets” on the Condensed Consolidated Balance Sheets. The deferred financing costs of the 2018 Notes and the 2020 Notes are being amortized using the effective interest method over the eight-year and ten-year term of the debt, respectively. No payments were made towards the principal of the Notes during the three months ended January 30, 2010.

The 2018 Notes were issued pursuant to an indenture, dated as of January 20, 2010 (the “2018 Indenture”), among the Company, the Subsidiary Guarantors and Wells Fargo Bank, National Association, as trustee. The 2020 Notes were issued pursuant to an indenture, dated as of January 20, 2010 (the “2020 Indenture” and, together with the 2018 Indenture, the “Indentures”), among the Company, the Subsidiary Guarantors and Wells Fargo Bank, National Association, as trustee.

On or after January 15, 2013, the Company may redeem all or a part of the 2018 Notes at the redemption prices set forth in the 2018 Indenture, plus accrued and unpaid interest and special interest, if any, to the applicable redemption date. In addition, at any time prior to January 15, 2013, the Company may, on one or more than one occasions, redeem some or all of the 2018 Notes at any time at a redemption price equal to 100% of the principal amount of the 2018 Notes redeemed, plus a “make-whole” premium as of, and accrued and unpaid interest and special interest, if any, to the applicable redemption date. On or after January 15, 2015, the Company may redeem all or a part of the 2020 Notes at the redemption prices set forth in the 2020 Indenture, plus accrued and unpaid interest and special interest, if any, to the applicable redemption date. In addition, at any time prior to January 15, 2015, the Company may, on one or more than one occasions, redeem some or all of the 2020 Notes at any time at a redemption price equal to 100% of the principal amount of the 2020 Notes redeemed, plus a “make-whole” premium as of, and accrued and unpaid interest and special interest, if any, to the applicable redemption date. At any time prior to January 15, 2013, the Company may also redeem up to 35% of the aggregate principal amount of the 2018 Notes and 2020 Notes, using the proceeds of certain qualified equity offerings, at the redemption prices set forth in the 2018 Indenture and the 2020 Indenture, respectively.

If the Company experiences specified change of control triggering events, it must offer to repurchase the Notes at a repurchase price equal to 101% of the principal amount of the Notes repurchased, plus accrued and unpaid interest and special interest, if any, to the applicable repurchase date. If the Company or its subsidiaries sell assets under certain specified circumstances, the Company must offer to repurchase the Notes at a repurchase price equal to 100% of the principal amount of the Notes repurchased, plus accrued and unpaid interest and special interest, if any, to the applicable repurchase date.

Each indenture contains covenants that, among other things, restrict the ability of the Company and its restricted subsidiaries to:

• pay dividends, make investments or make other restricted payments;

• incur additional indebtedness;

• sell assets;

• enter into transactions with affiliates;

• incur liens;

• permit consensual encumbrances or restrictions on the Company’s restricted subsidiaries’ ability to pay dividends or make certain other payments to the Company;

• consolidate, merge, sell or otherwise dispose of all or substantially all of the Company’s or its restricted subsidiaries’ assets; and

• designate subsidiaries as unrestricted.

These covenants are subject to a number of other limitations and exceptions set forth in the Indentures. The Company was in compliance with all applicable covenants as of January 30, 2010.

Each indenture provides for customary events of default, including, but not limited to, cross defaults to specified other debt of the Company and its subsidiaries. In the case of an event of default arising from specified events of bankruptcy or insolvency, all outstanding Notes will become due and payable immediately without further action or notice. If any other event of default under either indenture occurs or is continuing, the applicable trustee or holders of at least 25% in aggregate principal amount of the then outstanding 2018 Notes or 2020 Notes, as applicable, may declare all of the 2018 Notes or 2020 Notes, respectively, to be due and payable immediately.

16

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

In connection with the issuance of the Notes, the Company and the Subsidiary Guarantors also entered into registration rights agreements with the initial purchasers relating to each series of Notes. Under the terms of these registration rights agreements, with respect to each series of Notes, the Company and the Subsidiary Guarantors are required to use commercially reasonable efforts to file with the SEC a registration statement relating to an offer to exchange the applicable series of notes for an issue of SEC-registered notes (the “Exchange Notes”) with terms identical to the applicable series of Notes (except that the Exchange Notes will not be subject to restrictions on transfer or to any increase in annual interest rate) and maintain the effectiveness of such registration statement until 180 days after the closing of the applicable exchange offer. Upon the effectiveness of the registration statement for a series of Notes, the Company and the Subsidiary Guarantors have agreed to offer Exchange Notes in return for the applicable series of Notes and to hold the exchange offer open for at least 20 business days after the date the Company mails notice of the exchange offer to the applicable series of noteholders. Under specified circumstances, including if the exchange offer may not be completed because it would violate any applicable law or applicable interpretations of the staff of the SEC, or if the exchange offer is not for any other reason completed within 365 days after the closing date, or any initial purchaser so requests in connection with any offer or sale of notes, the registration rights agreements provide that the Company and the Subsidiary Guarantors shall file a shelf registration statement for the resale of the applicable series of Notes. If the Company and the Subsidiary Guarantors default on their registration obligations under a registration rights agreement, additional interest, up to a maximum amount of 1.0% per annum, will be payable on the applicable series of Notes until all such registration defaults are cured.

Senior Secured Credit Facility

On October 7, 2008, the Company entered into a credit agreement with the following lenders, Bank of America, N.A., Morgan Stanley Senior Funding, Inc., Banc of America Securities LLC, HSBC Bank USA National Association and Keybank National Association. The credit agreement provides for (i) a five-year $1,100.0 million term loan facility and (ii) a five-year $125.0 million revolving credit facility, which includes a $25.0 million swing line loan subfacility and a $25.0 million letter of credit subfacility. On January 8, 2010, the Company entered into an amendment and waiver to the credit agreement, among other things, (i) to increase flexibility under certain financial and other covenants, (ii) to permit the Company to issue additional senior indebtedness in aggregate principal amount outstanding at any time of up to $600.0 million, (iii) to permit the Company to issue additional subordinated indebtedness in aggregate principal amount outstanding at any time of up to $600.0 million, and (iv) to permit the Company to sell its accounts receivable and lease receivables for fair market value with the aggregate amount paid for such receivables, net of collections, not at any time exceeding $125.0 million. On January 20, 2010, the Company closed its offering of its 2018 Notes and its 2020 Notes. The Company applied approximately $435.0 million of the proceeds of this offering to prepay the term loan, whereupon the amendment and waiver to credit agreement became effective.

The net proceeds of the term loan facility were used to finance a portion of the Company’s acquisition of Foundry. In addition to the term loan facility, during the year ended October 31, 2009, the Company drew $14.1 million from the $125.0 million revolving credit facility to finance a small portion of the merger. The Company may draw additional proceeds from the revolving credit facility in the future for ongoing working capital and other general corporate purposes. The term loan facility and revolving credit facility are referred to together as the “Senior Secured Credit Facility.” As of January 30, 2010 and October 31, 2009, $14.1 million was outstanding under the revolving credit facility.

Loans under the Senior Secured Credit Facility bear interest, at the Company’s option, at a rate equal to either the London Interbank Offered Rate (“LIBOR”) rate, plus an applicable margin equal to 4.0% per annum or the prime lending rate, plus an applicable margin equal to 3.0% per annum. The applicable margin with respect to revolving loans is subject to adjustment based on the Company’s consolidated senior secured leverage ratio, as defined in the credit agreement. The LIBOR rate floor is 3.0% per annum and the prime lending rate floor is 4.0% per annum, in each case, for the life of the Senior Secured Credit Facility. For the three months ended January 30, 2010, the weighted-average interest rate on the term loan was 7.0%.

The Company is permitted to make voluntary prepayments at any time (without payment of a premium, other than in the case of a repricing transaction in respect of the term loan facility), and is required to make mandatory prepayments on the term loan (without payment of a premium) with (i) net cash proceeds from non-ordinary course asset sales (subject to reinvestment rights and other exceptions), (ii) net cash proceeds from issuances of debt (other than certain permitted debt), and (iii) casualty proceeds and condemnation awards (subject to reinvestment rights and other exceptions). The Company is required to pay quarterly installments on the term loan equal to an aggregate annual amount of 5% of the original principal amount thereof in the first and second years, 10% in the third year, 20% in the fourth year and 60% in the fifth year, with any remaining balance payable on the final maturity date of the term loan. Upon a repricing of the term loan (including through a refinancing) that results in the weighted-average yield or applicable rate of such term loan immediately after such repricing to be lower than such yield or rate immediately prior to such repricing, a 2.0% premium is payable during the first year following the closing and a 1.0% premium is payable during the second year following the closing.

17

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Debt fees totaling $31.6 million associated with financing the acquisition have been capitalized as deferred financing costs, with $9.0 million amortized as of January 30, 2010. As of January 30, 2010 and October 31, 2009, deferred financing costs were $22.6 million and $21.4 million, respectively, and are reported within “Other assets” on the Condensed Consolidated Balance Sheets. The deferred financing costs are being amortized using the effective interest method over the five-year term of the debt. During the three months ended January 30, 2010, the Company paid $506.5 million towards the principal of the term loan, $500.0 million of which were voluntary prepayments.

The obligations of the Company and its subsidiary guarantors under the Senior Secured Credit Facility and the related guarantees thereunder are secured, subject to customary permitted liens and other agreed upon exceptions, by (i) a first priority pledge of all of the equity interests of each of the Company’s direct and indirect subsidiaries and (ii) a perfected first priority interest in and mortgages on all tangible and intangible assets of the Company and each subsidiary guarantor, except, in the case of a foreign subsidiary, to the extent such pledge would be prohibited by applicable law or would result in materially adverse tax consequences (limited, in the case of a first-tier foreign subsidiary, to 65% of the voting stock and 100% of non-voting stock of such first-tier foreign subsidiary). In addition, the term loan has not been registered with the SEC as of January 30, 2010.

The credit agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to the Company and its subsidiaries, including, among other things, restrictions on liens, indebtedness, investments, fundamental changes, dispositions, capital expenditures, prepayment of other indebtedness, redemption or repurchase of subordinated indebtedness, dividends and other distributions. The credit agreement contains financial covenants that require the Company to maintain a minimum consolidated fixed charge coverage ratio, a maximum consolidated leverage ratio and a maximum consolidated senior secured leverage ratio, each as defined in the credit agreement. The credit agreement also includes customary events of default, including cross-defaults on the Company’s material indebtedness and change of control. The Company was in compliance with all applicable covenants as of January 30, 2010 and October 31, 2009. The financial and other covenants agreed to by Brocade in connection with such indebtedness and the increased indebtedness and higher debt-to-equity ratio of Brocade in comparison to that of Brocade on a historical basis will have the effect, among other things, of reducing Brocade’s flexibility to respond to changing business and economic conditions and increasing borrowing costs, and may adversely affect Brocade’s operations and financial results. In addition, the Company’s failure to comply with these covenants could result in a default under the Senior Secured Credit Facility and its other debt, which could permit the holders to accelerate such debt or demand payment in exchange for a waiver of such default. If any of the Company’s debt is accelerated, the Company may not have sufficient funds available to repay such debt.

Covenant Compliance

Under the Senior Secured Credit Facility and the associated indentures, certain limitations, restrictions and defaults could occur if the Company is not able to satisfy and remain in compliance with specified financial ratios.

Consolidated Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), as defined in the credit agreement, is used to determine the Company’s compliance with certain covenants in the Senior Secured Credit Facility. Consolidated EBITDA is defined as:

• Consolidated net income

Plus:

• Consolidated interest charges;

• Provision for federal, state, local and foreign income taxes;

• Depreciation and amortization expense;

• Fees, costs and expenses incurred on or prior to the closing date in connection with the acquisition and the financing thereof;

• Any cash restructuring charges and integration costs in connection with the merger, in an aggregate amount not to exceed $75.0 million;

• Non-cash restructuring charges incurred in connection with the acquisition, all as approved by Banc of America Securities LLC and Morgan Stanley Senior Funding, Inc.;

• Other non-recurring expenses reducing consolidated net income which do not represent a cash item in such period or future periods;

• Any non-cash stock-based compensation expense; and

• Legal fees associated with the indemnification obligations for the benefit of former officers and directors in connection with Brocade’s historical stock option litigation;

Minus:

• Federal, state, local and foreign income tax credits; and

• All non-cash items increasing consolidated net income.

18

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

In addition, the Company must comply with the following financial covenants as noted below:

Consolidated Fixed Charge Coverage Ratio

Consolidated fixed charge coverage ratio means, at any date of determination, the ratio of (a) (i) consolidated EBITDA (excluding interest expense attributable to the campus sale-leaseback), plus (ii) rentals payable under leases of real property, less (iii) the aggregate amount of all capital expenditures to (b) consolidated fixed charges; provided that, for purposes of calculating the consolidated fixed charge coverage ratio for any period ending prior to the first anniversary of the closing date, consolidated interest charges shall be an amount equal to actual consolidated interest charges from the closing date through the date of determination multiplied by a fraction the numerator of which is 365 and the denominator of which is the number of days from the closing date through the date of determination.

In accordance with the amendment and waiver to the credit agreement, the Company has agreed that it will not permit the consolidated fixed charge coverage ratio as of the end of any fiscal quarter during any period set forth below to be less than the ratio set forth below opposite such period:

Four Fiscal Quarters Ending During Period:	Minimum Consolidated Fixed Charge Coverage Ratio
Closing date through October 31, 2009	1.25:1.00
November 1, 2009 through October 30, 2010	1.25:1.00
October 31, 2010 through October 29, 2011	1.50:1.00
October 30, 2011 through October 27, 2012	1.75:1.00
October 28, 2012 and thereafter	1.75:1.00

Consolidated Leverage Ratio

Consolidated leverage ratio means, as of any date of determination, the ratio of (a) consolidated funded indebtedness as of such date to (b) consolidated EBITDA for the measurement period ending on such date.

In accordance with the amendment and waiver to the credit agreement, the Company has agreed that it will not permit the consolidated leverage ratio at any time during any period set forth below to be greater than the ratio set forth below opposite such period:

Four Fiscal Quarters Ending During Period:	Maximum Consolidated Leverage Ratio
Closing date through October 31, 2009	4.25:1.00
November 1, 2009 through October 30, 2010	3.75:1.00
October 31, 2010 through October 29, 2011	3.00:1.00
October 30, 2011 through October 27, 2012	2.75:1.00
October 28, 2012 and thereafter	2.75:1.00

Consolidated Senior Secured Leverage Ratio

Consolidated senior secured leverage ratio means, as of any date of determination, the ratio of (a) consolidated funded indebtedness as of such date, minus, without duplication, all unsecured senior subordinated or subordinated indebtedness of Brocade or its subsidiaries on a consolidated basis as of such date (including the McDATA convertible subordinated debt), to (b) consolidated EBITDA for the measurement period ending on such date.

In accordance with the amendment and waiver to the credit agreement, the Company has agreed that it will not permit the consolidated senior secured leverage ratio at any time during any period set forth below to be greater than the ratio set forth below opposite such period:

Four Fiscal Quarters Ending During Period:	Maximum Consolidated Senior Secured Leverage Ratio
Closing date through October 31, 2009	2.30:1.00
November 1, 2009 through October 30, 2010	2.50:1.00
October 31, 2010 through October 29, 2011	2.50:1.00
October 30, 2011 through October 27, 2012	2.25:1.00
October 28, 2012 and thereafter	2.00:1.00

19

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Convertible Subordinated Debt

On January 29, 2007, effective upon the consummation of the merger with McDATA, the Company fully and unconditionally guaranteed and became a co-obligor on the 2.25% Notes of McDATA. The 2.25% Notes were convertible into McDATA’s Class A common stock at a conversion rate of 93.3986 shares per $1,000 principal amount of notes (aggregate of approximately 16.1 million shares) at any time prior to February 15, 2010, subject to adjustments. Pursuant to Brocade’s merger agreement with McDATA, at the effective time of the merger, each outstanding share of McDATA’s Class A common stock, $0.01 par value per share, was converted into the right to receive 0.75 of a share of Brocade’s common stock, $0.001 par value per share, together with cash in lieu of fractional shares. As a result, an approximate aggregate of 12.1 million shares of Brocade’s common stock are issuable upon conversion of the 2.25% Notes at any time prior to February 15, 2010, subject to adjustments. On February 16, 2010, the Company fully paid off the principal of the 2.25% Notes for a total amount of $172.5 million.

In thousands	As of January 30, 2010		As of October 31, 2009
Outstanding gross principal	$	172,500	$	172,500
Net carrying amount	$	172,015	$	169,332
Unamortized discount (1)	$	485	$	3,168
Equity component carrying amount	$	29,188	$	29,188

(1) The remaining amortization period for the convertible subordinated debt is approximately 16 days as of January 30, 2010.

As of January 30, 2010, the approximate aggregate fair value of the outstanding convertible subordinated debt was $171.8 million. The Company estimated the fair value of the outstanding convertible subordinated debt as of January 30, 2010 by using the high and low prices per $100 of the Company’s 2.25% Notes as of the last day of trading for the first fiscal 2010 quarter, which were both $99.60.

The convertible subordinated debt pays a fixed rate of interest semiannually. The Company capitalized a portion of the interest associated with this debt during the periods presented. In addition, the effective interest rate for this convertible subordinated debt is 8.63% for both the three months ended January 30, 2010 and January 24, 2009. The amount of interest cost recognized relating to both the contractual interest coupon and amortization of the discount on the liability component of the 2.25% Notes was as follows:

	Three Months Ended
In thousands	January 30, 2010		January 24, 2009
Interest expense	$	3,653	$	3,433

10. Commitments and Contingencies

Company Campus Contractual Obligations. On May 23, 2008, Brocade purchased property located in San Jose, California, which consists of three unimproved building parcels that are entitled for approximately 562,000 square feet of space in three buildings. The total purchase price for the property was $50.9 million. In connection with the purchase, Brocade also engaged a third party as development manager to manage the development and construction of improvements on the property. Brocade’s obligation for development and construction of three buildings and a parking garage on the purchased property is approximately $172.0 million (in addition to the purchase price for the property), payable in various installments through approximately July 2010. Brocade’s obligation for tenant improvements for the campus is approximately $95.7 million, in addition to the $8.0 million that the Company has agreed to pay the developer on May 22, 2011 or earlier if Brocade decides to sell any part of the Company campus project before such date. Brocade plans to develop the land through June 2010 and finance the purchase and the development through operating cash flows. In connection with the purchase, Brocade also obtained a four-year option, exercisable at its sole discretion through May 22, 2012, to purchase a fourth unimproved approximate four acre parcel for a fixed price of approximately $26.0 million. The costs incurred to date in connection with the Company campus are $214.7 million as of January 30, 2010.

20

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Product Warranties

The Company’s accrued liability for estimated future warranty costs is included in other accrued liabilities in the accompanying Condensed Consolidated Balance Sheets. The following table summarizes the activity related to the Company’s accrued liability for estimated future warranty costs during the three months ended January 30, 2010 and January 24, 2009 (in thousands):

	Accrued Warranty
	Three Months Ended
	January 30, 2010			January 24, 2009
Beginning balance	$	5,808		$	5,051
Liabilities accrued for warranties issued during the period (1)		756			2,639
Warranty claims paid and uses during the period		(477	)		(379	)
Changes in liability for pre-existing warranties during the period		(599	)		(267	)
Ending balance	$	5,488		$	7,044

(1) Included in the $2.6 million in liabilities accrued for warranties issued during the three months ended January 24, 2009 is $1.9 million in warranty liabilities resulting from the Foundry acquisition.

In addition, the Company has standard indemnification clauses contained within its various customer contracts. As such, the Company indemnifies the parties to whom it sells its products with respect to the Company’s product infringing upon any patents, trademarks, copyrights, or trade secrets, as well as against bodily injury or damage to real or tangible personal property caused by a defective Company product. As of January 30, 2010, there have been no known material events or circumstances that have resulted in a customer contract-related indemnification liability to the Company.

Manufacturing and Purchase Commitments

Brocade has manufacturing arrangements with Hon Hai Precision Industry Co., Ltd. (“Foxconn”), Sanmina-SCI Corporation (“Sanmina”), Flextronics International Ltd. (“Flextronics”), Celestica, Inc. (“Celestica”), Asteel Flash Group (“Flash”), Accton Wireless Broadband Corporation (“Accton”) and Quanta Computer Incorporated (“Quanta”) (collectively, the “CMs”) under which Brocade provides twelve-month product forecasts and places purchase orders in advance of the scheduled delivery of products to Brocade’s customers. The required lead time for placing orders with the CMs depends on the specific product. The CMs invoice Brocade based on prices and payment terms mutually agreed upon and set forth in purchase orders it issues to them. Although the purchase orders Brocade places with its CMs are cancelable, the terms of the agreements require Brocade to purchase all inventory components not returnable, usable by, or sold to other customers of the CMs.

As of January 30, 2010, the Company’s aggregate commitment to the CMs for inventory components used in the manufacture of Brocade products was $243.2 million, which the Company expects to utilize during future normal ongoing operations, net of a purchase commitments reserve of $20.4 million. The Company’s purchase commitments reserve reflects the Company’s estimate of purchase commitments it does not expect to consume in normal operations within the next twelve months.

Income Taxes

The Company is subject to several ongoing audits. For additional discussion, see Note 14, “Income Taxes,” of the Notes to Condensed Consolidated Financial Statements. The Company believes it has adequate reserves for all open tax years.

Legal Proceedings

Initial Public Offering Litigation

        On July 20, 2001, the first of a number of putative class actions for violations of the federal securities laws was filed in the United States District Court for the Southern District of New York against Brocade, certain of its officers and directors, and certain of the underwriters for Brocade’s initial public offering (“IPO”) of securities. A consolidated amended class action captioned, In re Brocade Communications Systems, Inc. Initial Public Offering Securities Litigation, No. 01 Civ. 6613, was filed on April 19, 2002. The complaint generally alleges that various underwriters engaged in improper and undisclosed activities related to the allocation of shares in Brocade’s initial public offering and seeks unspecified damages for claims under the Exchange Act on behalf of a purported class of purchasers of common stock from May 24, 1999 to December 6, 2000. The lawsuit against Brocade was coordinated for pretrial proceedings with a number of other pending litigations challenging underwriter practices in over 300 cases as In re Initial Public Offering Securities Litigation, 21 MC 92 (SAS), including actions against McDATA Corporation, Inrange Technologies Corporation (“Inrange”) (which was first acquired by Computer Network Technology Corporation (“CNT”) and subsequently acquired by McDATA as part of the CNT acquisition), and Foundry (collectively, the “Brocade Entities”), and certain of each entity’s respective officers and directors, and initial public offering underwriters.

21

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The parties have reached a global settlement of the coordinated litigation, under which the insurers will pay the full amount of settlement share allocated to the Brocade Entities, and the Brocade Entities will bear no financial liability. On October 5, 2009, the Court granted final approval of the settlement. Certain objectors have appealed the Court’s final order.

Securities Litigation

Beginning on or about May 24, 2005, several derivative actions were filed against certain of Brocade’s current and former officers and directors relating to Brocade’s historical stock option practices. These actions were filed in the United States District Court for the Northern District of California (“Federal Court”) and in the California Superior Court in Santa Clara County (“State Court”). The derivative actions pending in Federal Court were consolidated under the caption In re Brocade Communications Systems, Inc. Derivative Litigation, Case No. C 05-02233 CRB (the “Federal Action”), and the derivative actions pending in State Court were also consolidated under the caption In re Brocade Communications Systems, Inc. Derivative Litigation, Case No. 1:05cv041683 (the “State Action”). An additional, unconsolidated derivative action also was filed in the Federal Court in April 2008.

On February 22, 2008, Brocade’s Board of Directors appointed a Special Litigation Committee of the Board (“SLC”) with plenary authority to, among other things, evaluate and resolve the claims asserted in the federal and state derivative actions. On August 1, 2008, Brocade, acting through the SLC, filed a Second Amended Complaint in the Federal Action against ten former officers, directors, or employees of Brocade, asserting claims for breach of fiduciary duty and violations of federal and state laws in connection with Brocade’s historical stock option practices. In August 2008, the State Court and Federal Court realigned Brocade as the plaintiff and dismissed the shareholder plaintiffs in the State Action, Federal Action and the unconsolidated federal derivative action, respectively.

On December 12, 2008, the Federal Court dismissed all claims against five of the Federal Action defendants (who were also defendants in the State Action) and some, but not all, of the claims against the remaining five Federal Action defendants. In April 2009, the unconsolidated federal derivative action was dismissed without prejudice, and the claims asserted in the State Action against the defendants who had not also been named in the Federal Action were also dismissed without prejudice.

By January 30, 2010, the SLC had reached settlement agreements with all of the other defendants in the Federal and State Actions. The terms of the settlements differ in each case. Terms contained in some, but not all, of the agreements include the payment of money to Brocade, the surrender of certain shares of Brocade stock to Brocade, the contribution of specified amounts to reduce the legal fees and expenses that Brocade otherwise might have been obligated to pay, and releases. The agreements with all of the five Federal Action defendants and with all of the five State Action defendants have been approved by the Federal and State Courts, as applicable.

Intellectual Property Litigation

On June 21, 2005, Enterasys Networks, Inc. (“Enterasys”) filed a lawsuit against Foundry (and Extreme Networks, Inc.) in the United States District Court for the District of Massachusetts alleging that certain of Foundry’s products infringe six of Enterasys’ patents and seeking injunctive relief, as well as unspecified damages. On August 28, 2007, the Court granted Foundry’s motion to stay the case based on petitions that Foundry filed with the USPTO for reexamination of five of the six Enterasys patents. On July 14, 2009, the United States Patent and Trademark Office (“USPTO”) issued reexamination certificates for two of the patents undergoing reexamination indicating that the patents were valid over the references that Foundry had submitted. On August 7, 2009, Brocade filed a new petition for reexamination of one of the patents that received a reexamination certificate. On October 16, 2009, the USPTO granted the new petition for reexamination. On January 5, 2010, the USPTO issued a reexamination certificate for a third patent, confirming all original claims and new claims added during reexamination. To date, the USPTO has issued final Office Actions (which are published on the USPTO Web site) rejecting all asserted claims of the two remaining Enterasys patents that were submitted for reexamination. Enterasys has appealed both of those rejections to the Board of Patent Appeals and Interferences. The USPTO is currently in the process of reexamining one of the patents as noted above, and the litigation case in Court continues to be stayed.

22

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

On September 6, 2006, Chrimar Systems, Inc. (“Chrimar”) filed a lawsuit against Foundry (and D-Link Corporation and PowerDsine, Ltd.) in the United States District Court for the Eastern District of Michigan alleging that certain of Foundry’s products infringe Chrimar’s U.S. Patent 5,406,260 and seeking injunctive relief, as well as unspecified damages. Discovery has been completed and summary judgment motions are ongoing. No trial date has been set.

On February 7, 2008, Network-1 Security Solutions, Inc. (“Network-1”) filed a lawsuit against Foundry and other networking companies, namely, Cisco Systems, Inc. (“Cisco”), Cisco-Linksys, LLC, Adtran, Inc., Enterasys, Extreme Networks, Inc., NetGear, Inc., and 3Com Corporation in the United States District Court for the Eastern District of Texas, Tyler Division, alleging that certain of Foundry’s products infringe Network-1’s U.S. Patent No 6,218,930 and seeking injunctive relief, as well as unspecified damages. The parties currently are conducting discovery. Trial is set for July 12, 2010.

General

From time to time, the Company is subject to other legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of trademarks, copyrights, patents and/or other intellectual property rights, and commercial contract disputes. Third parties assert patent infringement claims against the Company from time to time in the form of letters, lawsuits and other forms of communication. In addition, from time to time, the Company receives notification from customers claiming that they are entitled to indemnification or other obligations from the Company related to infringement claims made against them by third parties. Litigation, even if the Company is ultimately successful, can be costly and divert management’s attention away from the day-to-day operations of the Company. In the event of a result adverse to the Company, the Company could incur substantial monetary liability and/or be required to change its business practices. Any unfavorable determination could have a material adverse effect on the Company’s financial position, results of operations, cash flows or business.

The Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company reviews the need for any such liability on a quarterly basis. As of January 30, 2010, the Company has not recorded any such material liabilities other than with respect to one litigation matter relating to a commercial contract dispute.

11. Derivative Instruments and Hedging Activities

In the normal course of business, the Company is exposed to fluctuations in interest rates and the exchange rates associated with foreign currencies. The Company’s primary objective for holding derivative financial instruments is to manage foreign currency exchange rate risk. The Company currently does not enter into derivative instruments to manage credit risk. However, the Company manages its exposure to credit risk through its investment policies. The Company generally enters into derivative transactions with high-credit quality counterparties and, by policy, limits the amount of credit exposure to any one counterparty based on its analysis of that counterparty’s relative credit standing. The amounts subject to credit risk related to derivative instruments are generally limited to the amounts, if any, by which a counterparty’s obligations exceed the Company’s obligations with that counterparty.

Foreign Currency Exchange Rate Risk

        A majority of the Company’s revenue, expense and capital purchasing activities is transacted in U.S. dollars. However, the Company is exposed to foreign currency exchange rate risk inherent in conducting business globally in numerous currencies, of which the most significant to its operations for the three months ended January 30, 2010 were the euro, the Japanese yen, the British pound, the Singapore dollar and the Swiss franc. The Company is primarily exposed to foreign currency fluctuations related to operating expenses denominated in currencies other than the U.S. dollar. The Company has established a foreign currency risk management program to protect against fluctuations in the volatility of future cash flows caused by changes in foreign currency exchange rates. This program reduces, but does not always entirely eliminate, the impact of foreign currency exchange rate movements. The Company’s foreign currency risk management program includes foreign currency derivatives with cash flow hedge accounting designation that utilizes foreign currency forward contracts to hedge exposures to the variability in the U.S. dollar equivalent of anticipated non-U.S. dollar-denominated cash flows. These instruments generally have a maturity of less than one year. For these derivatives, the Company reports the after-tax gain or loss from the effective portion of the hedge as a component of accumulated other comprehensive loss in stockholders’ equity and reclassifies it into earnings in the same period in which the hedged transaction affects earnings, and within the same line item on the condensed consolidated statements of operations as the impact of the hedged transaction. The Company also may enter into other non-designated derivatives that consist primarily of forward contracts to minimize the risk associated with the foreign exchange effects of revaluing monetary assets and liabilities. Monetary assets and liabilities denominated in foreign currencies and any associated outstanding forward contracts are marked-to-market with realized and unrealized gains and losses included in “Interest income and other loss, net.” As of January 30, 2010, there were no forward contracts of this nature outstanding. For amounts not associated with foreign currency forward contracts, gains and losses from transactions denominated in foreign currencies are included in the Company’s net income (loss) as part of “Interest income and other loss, net,” in the accompanying Condensed Consolidated Statements of Operations. The Company recognized foreign currency transaction gains of $0.1 million and $2.7 million for the three months ended January 30, 2010 and January 24, 2009, respectively.

23

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Volume of Derivative Activity

Total gross notional amounts for foreign currency forward contracts, presented by currency, are as follows (in thousands):

In United States Dollars	January 30, 2010		October 31, 2009
Euro	$	46,655	$	61,790
Japanese yen		9,542		11,523
British pound		18,437		23,991
Singapore dollar		12,300		15,319
Swiss franc		5,980		7,385
Total	$	92,914	$	120,008

The Company utilizes a rolling hedge strategy for the majority of its foreign currency forward contracts with cash flow hedge accounting designation that hedges exposures to the variability in the U.S. dollar equivalent of anticipated non-U.S. dollar-denominated cash flows. All of the Company’s foreign currency forward contracts are single delivery, which are settled at maturity involving one cash payment exchange.

Net unrealized gain and loss positions are recorded within “Other accrued liabilities.” As of January 30, 2010, the Company had a gross unrealized loss of $3.1 million, offset by a gross unrealized gain of $0.2 million, both of which are included in “Other accrued liabilities.” The net amount of $2.9 million represents effective hedges and is reported as a component of accumulated other comprehensive loss. Hedge ineffectiveness, which is reported in the Condensed Consolidated Statements of Operations, was not significant.

12. Sale-Leaseback Transactions

During the three months ended January 30, 2010, the Company sold an owned property to an unrelated third party. Net proceeds from this sale were $30.2 million. Concurrent with this sale, the Company entered into an agreement to lease the property back from the purchaser over a minimum lease term of two years. The Company classified this lease as an operating lease. The Company actively uses this property and considers the lease as a normal leaseback. An $8.8 million loss on the sale of the property was recognized immediately upon execution of the sale and is recorded within “Loss on sale of investments and property, net” on the Condensed Consolidated Statements of Operations.

13. Stock-Based Compensation

Stock-based compensation expense was included in the following line items on the Condensed Consolidated Statements of Operations as follows (in thousands):

	Three Months Ended
	January 30, 2010		January 24, 2009
Cost of revenues	$	4,516	$	3,308
Research and development		6,184		5,341
Sales and marketing		8,096		6,190
General and administrative		2,727		3,241
Total stock-based compensation	$	21,523	$	18,080

Compensation expense, net of estimated forfeitures, related to stock options for the three months ended January 30, 2010 and January 24, 2009 was $3.7 million and $4.8 million, respectively. Compensation expense, net of estimated forfeitures, related to restricted stock units (“RSUs”) for the three months ended January 30, 2010 and January 24, 2009 was $10.4 million and $10.9 million, respectively.

24

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

As of January 30, 2010, unrecognized compensation expense, net of estimated forfeitures, related to stock options and RSUs was $14.4 million and $102.5 million, respectively, which is expected to be recognized over a weighted-average period of 1.11 years for stock options and 1.85 years for RSUs.

For the three months ended January 30, 2010, Brocade granted 1.2 million stock options and 2.0 million RSUs. For the three months ended January 24, 2009, Brocade granted 2.9 million stock options and 1.7 million RSUs. The weighted-average grant date fair value of stock options granted during the three months ended January 30, 2010 and January 24, 2009 was $3.20 and $1.66, respectively. The total intrinsic value of stock options exercised for the three months ended January 30, 2010 and January 24, 2009 was $23.0 million and $88.0 thousand, respectively. The weighted-average grant date fair value of RSUs granted during the three months ended January 30, 2010 and January 24, 2009 was $7.34 and $3.31, respectively.

The Company accounts for the Brocade employee stock purchase plan (“ESPP”) as a compensatory plan and recorded compensation expense of $7.3 million and $1.3 million for the three months ended January 30, 2010 and January 24, 2009, respectively. As of January 30, 2010, unrecognized compensation expense, net of estimated forfeitures, related to employee stock purchases under the Brocade ESPP was $31.6 million, which is expected to be recognized over a weighted-average period of 1.24 years.

On November 24, 2009, the Compensation Committee of the Board of Directors approved the grant of approximately 2.0 million RSUs under the Company’s long-term, performance-based equity inventive plan as described in Brocade’s Annual Report on Form 10-K for the fiscal year ended October 31, 2009. As of October 31, 2009, $17.7 million in compensation expense related to these awards had been recognized to date. Liability-classified awards are required to be remeasured to current fair value at each reporting date until settlement. In accordance with the applicable accounting standard, for the three months ended January 30, 2010, the Company recorded a $3.5 million benefit related to these awards as a result of the decrease in Brocade’s closing share price on November 24, 2009, the date of settlement, from when these awards were fair valued as of October 31, 2009. As of January 30, 2010, Brocade has no remaining unrecognized compensation expense related to these awards.

On December 11, 2009, the Compensation Committee of the Board of Directors approved a market performance-based equity incentive plan (“Incentive Plan”) under the 2009 Stock Plan. The Incentive Plan provides for the grant of restricted stock units to certain Company executive officers. For each restricted stock unit that vests, the plan participant will be entitled to receive one share of the Company’s common stock. The restricted stock units that vest are subject to the Company’s stock price performance compared to the NASDAQ-100 Index over an initial twenty-four-month performance period, which is from December 10, 2009 to December 9, 2011 (“growth rate delta”). Performance is calculated by dividing the average closing price over the 60-day period prior to December 9, 2011 by the average closing price over the 60-day period centered at December 10, 2009. The Incentive Plan participants must also remain a service provider to the Company during the performance period to receive one half of the awards and an additional one year after the end of the performance period to receive the remaining half of the awards.

Under the principal terms of the Incentive Plan, the Incentive Plan participants are entitled to receive restricted stock units up to the awards granted adjusted for twice the growth rate delta percentage. One half of the awards vest on December 9, 2011 and the remaining half vests on December 10, 2012.

The Company calculated the fair value of the restricted stock units under the Incentive Plan at the December 11, 2009 grant date, when the Compensation Committee of the Board of Directors approved the Incentive Plan. The fair value of the restricted stock units to be granted under the Incentive Plan was estimated using a Monte Carlo simulation which required assumptions for expected volatilities, correlation coefficients and risk-free rates of return. Expected volatilities were derived using a method that calculates historical volatility over a period equal to the length of the measurement period for the Incentive Plan and the companies included in the related index. Correlation coefficients were based on the same data used to calculate historical volatilities and were used to model how our stock price moves in relation to the companies included in the related index. The Company used a risk-free rate of return that is equal to the yield of a zero-coupon U.S. Treasury bill that is commensurate with the measurement period. The Company adjusted the calculated fair value for estimated forfeitures to derive total stock-based compensation expense. The Company recognized $0.4 million in stock-based compensation expense for the three months ended January 30, 2010.

14. Income Taxes

For the three months ended January 30, 2010, the Company recorded income tax expense of $1.3 million primarily as a result of foreign taxes and lapse of the Federal research and development credit for periods after December 31, 2009, offset with the first quarter discrete benefits associated with changes in uncertain tax positions related to the settlement of the Foundry IRS audit, a one-time loss on sale of property, and a law change allowing 5-year carryback of federal net operating losses as a result of the American Recovery and Reinvestment Act of 2009 effective on November 20, 2009. For the three months ended January 24, 2009, the Company recorded income tax expense of $18.0 million primarily as a result of the effect of acquisition-related items not deductible for tax purposes, offset by the tax benefit of losses generated.

25

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

During the three months ended January 30, 2010, the Company recorded a net decrease of approximately $1.1 million in its total unrecognized tax benefits. The total gross unrecognized tax benefits of $169.9 million at January 30, 2010 would affect the Company’s effective tax rate, if recognized. In December 2009, the Company reached agreement with the Internal Revenue Service (“IRS”) on audit issues for Foundry’s federal income tax returns for the years ended December 31, 2006 and 2007. The Company has recorded a corresponding adjustment to reduce its gross unrecognized tax benefits by $5.1 million. The Company expects to resolve the fiscal year 2003 IRS audit during the next twelve months. As such, after the Company reaches settlement with the IRS, the Company expects to record a corresponding adjustment to its unrecognized tax benefits. The Company believes such settlement should not have a material impact to the results of operations. Excluding the IRS audit, the Company does not expect a significant change in the gross unrecognized tax benefits during the next twelve months.

The Company believes that sufficient positive evidence existed from historical operations and projections of taxable income in future years to conclude that it was more likely than not that the Company would realize its deferred tax assets. Accordingly, the Company only applies a valuation allowance on the deferred tax assets relating to capital loss carryforwards, investments and foreign operating loss carryforwards due to limited carryforward periods and the character of such tax attributes.

The Company has been examined by the IRS for its domestic federal income tax returns for fiscal years 2003 through 2006. The IRS is contesting the Company’s transfer pricing for the cost sharing and buy-in arrangements with its foreign subsidiaries. The Company has filed a protest to appeal the amount of proposed IRS adjustments in the Revenue Agent’s Report with the Appeals Office of the IRS. The Company believes it is sufficiently reserved for the ultimate settlement amount on this issue. The IRS is also examining the Company’s fiscal year 2007 and 2008 income tax returns. The IRS may make similar claims against the Company’s transfer pricing arrangements in future examinations. In May 2006, the Franchise Tax Board notified the Company that its California income tax returns for the years ended October 25, 2003 and October 30, 2004 were subject to audit. The IRS and Franchise Tax Board audits are still ongoing and the Company believes its reserves are adequate to cover any potential assessments that may result from these examinations.

15. Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. Currently, the CODM is the Chief Executive Officer.

As a result of the Foundry acquisition during the first quarter of fiscal year 2009, Brocade reorganized into four operating segments, of which two are individually reportable segments: Data Storage and Global Services; and two, Internet Protocol (“IP”) Layer 2-3 and IP Layer 4-7/Application Delivery Products (“IP Layer 4-7/ADP”), are combined into one reportable segment: Ethernet Products. The objective of this new organization is to enable the Company to more effectively focus on growth opportunities, while being well-positioned to more rapidly scale and accommodate new business opportunities, including potential future acquisitions. These segments are organized principally by product category. The types of products and services from which each reportable segment derives its revenues are as follows:

• Data Storage encompasses the SAN business, which includes infrastructure products and solutions including directors, switches, routers, fabric-based software applications, distance/extension products, as well as management applications and utilities to centralize data management. Data Storage also includes the server portfolio, which is comprised of host bus adapters (“HBAs”), converged network adapters, mezzanine cards, as well as SAN switch modules for bladed servers;

• Ethernet Products includes Open Systems Interconnection Reference Model (“OSI”) Layer 2-3 switches and routers which enable efficient use of bandwidth-intensive network business applications and digital entertainment on both local area networks and wide area networks, OSI Layer 4-7 switches which allow enterprises and service providers to build highly available network infrastructures that efficiently direct the flow of traffic, and file area network products and associated management solutions; and

• Global Services include break/fix maintenance, extended warranty, installation, consulting, network management, related software maintenance and support revenue, and telecommunications services.

Financial decisions and the allocation of resources are based on the information from the Company’s internal management reporting system. At this point in time, the Company does not track all of its assets by operating segments. The majority of the Company’s assets as of January 30, 2010 were attributable to its United States operations.

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BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Summarized financial information by reportable segment for the three months ended January 30, 2010 and January 24, 2009, based on the internal management reporting system, is as follows (in thousands):

	Data Storage		Ethernet Products		Global Services		Total
Three months ended January 30, 2010
Net revenues	$	353,650	$	95,436	$	90,406	$	539,492
Cost of revenues		129,732		62,840		49,477		242,049
Gross margin	$	223,918	$	32,596	$	40,929	$	297,443
Three months ended January 24, 2009
Net revenues	$	310,779	$	51,821	$	68,991	$	431,591
Cost of revenues		117,163		34,028		37,985		189,176
Gross margin	$	193,616	$	17,793	$	31,006	$	242,415

16. Net Income (Loss) per Share

The following table presents the calculation of basic and diluted net income (loss) per share (in thousands, except per share amounts):

	Three Months Ended
	January 30, 2010		January 24, 2009
Basic net income (loss) per share
Net income (loss)	$	51,095	$	(23,898	)
Weighted-average shares used in computing basic net income (loss) per share		439,080		376,202
Basic net income (loss) per share	$	0.12	$	(0.06	)
Diluted net income (loss) per share
Net income (loss)	$	51,095	$	(23,898	)
Weighted-average shares used in computing basic net income (loss) per share		439,080		376,202
Dilutive potential common shares in the form of stock options		30,704		—
Dilutive potential common shares in the form of stock awards		14,013		—
Dilutive potential common shares in the form of ESPP shares		465		—
Weighted-average shares used in computing diluted net income (loss) per share		484,262		376,202
Diluted net income (loss) per share	$	0.11	$	(0.06	)
Antidilutive potential common shares in the form of (1)
Stock options		10,575		98,499
Stock awards		108		15,654
Antidilutive potential common shares resulting from the potential conversion of (1)
Convertible subordinated debt		12,083		12,083

(1) These amounts are excluded from the computation of diluted net income (loss) per share.

17. Comprehensive Income

The components of comprehensive income, net of tax, are as follows (in thousands):

	Three Months Ended
	January 30, 2010			January 24, 2009
Net income (loss)	$	51,095		$	(23,898	)
Other comprehensive income:
Change in net unrealized gains (losses) on cash flow hedges		(4,242	)		75,600
Change in cumulative translation adjustments		(1,050	)		(248	)
Total comprehensive income	$	45,803		$	51,454

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis in conjunction with the condensed consolidated financial statements and notes thereto included in Item 1 of this Quarterly Report on Form 10-Q and with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report filed on Form 10-K with the Securities and Exchange Commission on December 14, 2009.

Overview

Our goal is to be a leading provider of end-to-end networking solutions and services to Global 2000, enterprise and service provider customers. Our business model is driven by our two key markets, namely our core Storage Networking business, where we offer directors, switches, top-of-rack switches, end-of-row switches and backbones, file management solutions, application delivery, HBAs, converged network products and server virtualization solutions, and our newer Ethernet business, which we acquired in December 2008, where we offer modular and stackable 1 Gigabit Ethernet (“GbE”) and 10GbE solutions, Enhanced Power Over Ethernet plus, as well as security and wireless solutions.

We expect that global IT spending overall, and Storage Networking and Ethernet in particular, will continue to recover during fiscal year 2010. Our success in Storage Networking is expected to benefit from increasing demand for Fibre Channel. We believe our success in the Storage Networking business provides a robust strategic and financial platform for our Ethernet business as we build upon our product portfolio and account penetration in that market. In addition, beginning in the second quarter of fiscal year 2010, we are adding resources to our Ethernet business. We plan to take a number of steps to increase account acquisition and penetration in our Ethernet business, including redeploying resources and driving end-customer demand through a direct sales model, as well as channel and OEM partner routes to market. Moreover, we plan to continue to support our Storage Networking and Ethernet growth plans through continuous innovation and new product introductions.

In January 2010, we restructured our balance sheet with the issuance of $600 million of long-term fixed notes. We also amended our credit agreement for our Senior Secured Credit Facility in January 2010 to increase flexibility and to allow for more strategic options, such as greater investment in the business, increased pay down of debt, limited stock repurchases and other strategic uses.

Going forward, we expect the number of Storage Networking and Ethernet ports shipped to fluctuate depending on the demand for our existing and recently introduced Ethernet products and Storage Networking products, as well as the timing of product transitions by our OEM partners. We currently expect that average selling prices per port for our Data Storage products will likely decline at rates consistent with historical rates of low-to mid-single digits per quarter, and for our Ethernet products to likely decline in the mid-single digits per quarter.

Historically, our revenues tend to increase sequentially in our first and fourth fiscal quarters. On a sequential basis, our revenues tend to remain stable, or decline slightly, in our second and third fiscal quarters. Mindful of the current economic environment, we plan to continue to closely control operating expenses, while at the same time continuing to invest in strategic areas to grow our business.

Results of Operations

We report our fiscal year on a 52/53-week period ending on the last Saturday in October. As is customary for companies that use the 52/53-week convention, every fifth year contains a 53-week year. Our fiscal year 2010 is a 52-week fiscal year and our fiscal year 2009 was a 53-week fiscal year, with our second quarter of fiscal year 2009 consisting of fourteen weeks, which was one week longer than a typical quarter. Our next 14-week quarter will be in the second quarter of fiscal year 2014.

Effective November 1, 2009, we adopted a new accounting standard which required the separation of the liability and equity components of our 2.25% Notes that may be settled in cash upon conversion in a manner that reflects our economic interest cost. Accordingly, we bifurcated the debt into debt and equity components and will amortize the debt discount that will result in the “economic interest cost” being reflected in our Condensed Consolidated Statements of Operations. We have retrospectively applied the change in accounting to all periods presented, and have recast the Condensed Consolidated Financial Statements presented in this report.

Our results of operations for the three months ended January 30, 2010 and January 24, 2009 are reported in this discussion and analysis as a percentage of total net revenues, except for gross margin with respect to each segment, which is indicated as a percentage of the respective segment net revenues.

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Revenues. Our data networking solutions enable network convergence and end-to-end networking from the edge to the core of our customers’ networking infrastructures. Our revenues are derived primarily from sales of our Data Storage family of SAN products, sales of our Ethernet products, and our service and support offerings related to those products.

Our total net revenues are summarized as follows (in thousands, except percentages):

	Three Months Ended
	January 30, 2010		% of Net Revenues		January 24, 2009		% of Net Revenues		Increase/ (Decrease)		% Change
Data Storage	$	353,650	65.5	%	$	310,779	72.0	%	$	42,871	13.8	%
Ethernet Products		95,436	17.7	%		51,821	12.0	%		43,615	84.2	%
Global Services		90,406	16.8	%		68,991	16.0	%		21,415	31.0	%
Total net revenues	$	539,492	100.0	%	$	431,591	100.0	%	$	107,901	25.0	%

The increase in total net revenues for the three months ended January 30, 2010 compared with the three months ended January 24, 2009 reflects growth in sales across all segments.

• The increase in Data Storage product revenues for the period reflects a 19.1% increase in the number of ports shipped, market share growth and mix shift from 4 Gigabit (“Gb”) director and switch products to 8 Gb director and switch products, which carry a higher price per port, offset by a decrease in average selling price per port of 4.5%. The accelerating demand for Data Storage products aligns with the Company’s view of the strengthening of the entire IT market;

• Ethernet Products revenues for the period increased as a result of the inclusion of Foundry, which was acquired in December 2008, for the full first fiscal quarter of 2010, but reflect relatively lower revenues from Federal customers and slower-than-anticipated development in our go-to-market routes; and

• The increase in Global Services revenues was a result of the inclusion of Foundry, which was acquired in December 2008, for the full first fiscal quarter of 2010, as well as the continued expansion of our installed base.

For the three months ended January 30, 2010, the declines in average selling prices were the result of a continuing competitive pricing environment, offset by a mix shift to higher port density and price per port products.

Our total net revenues by geographical area are summarized as follows (in thousands, except percentages):

	Three Months Ended
	January 30, 2010		% of Net Revenues		January 24, 2009		% of Net Revenues		Increase/ (Decrease)		% Change
North America	$	337,207	62.5	%	$	276,171	64.0	%	$	61,036	22.1	%
Europe, the Middle East and Africa		136,857	25.4	%		105,545	24.4	%		31,312	29.7	%
Asia Pacific		53,139	9.8	%		43,972	10.2	%		9,167	20.8	%
Central and South America		12,289	2.3	%		5,903	1.4	%		6,386	108.2	%
Total net revenues	$	539,492	100.0	%	$	431,591	100.0	%	$	107,901	25.0	%

From fiscal year 2007 through the first fiscal quarter of 2010, North America revenues have accounted for between 58% and 69% of total net revenues. International revenues slightly increased as a percentage of total net revenues for the three months ended January 30, 2010 compared with the three months ended January 24, 2009 primarily as a result of increased revenues in Europe, the Middle East and Africa. Revenues are attributed to geographic areas based on where our products are shipped. However, certain OEM partners take possession of our products domestically and then distribute these products to their international customers. Because we account for all of those OEM revenues as domestic revenues, we cannot be certain of the extent to which our domestic and international revenue mix is impacted by the practices of our OEM partners, but we believe that international revenues comprise a larger percentage of our total net revenues than the attributed revenues may indicate.

A significant portion of our revenue is concentrated among a relatively small number of our OEM partners. For the three months ended January 30, 2010 and January 24, 2009, the same three customers each represented 10% or more of our total net revenues for a combined total of 54% and 56%, respectively, of our total net revenues. We expect that a significant portion of our future revenues will continue to come from sales of products to a relatively small number of OEM partners and, as a result of the Foundry acquisition, to the U.S. government or individual agencies within the U.S. government through our distributors. Therefore, the loss of, or a decrease in the level of sales to, or a change in the ordering pattern of any one of these customers could seriously harm our financial condition and results of operations.

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A majority of our accounts receivable balance is derived from sales to OEM partners in the computer storage and server industry. As of January 30, 2010, three customers accounted for 17%, 17% and 11%, respectively, of total accounts receivable. As of October 31, 2009, two customers accounted for 16% and 11%, respectively, of total accounts receivable. We perform ongoing credit evaluations of our customers and generally do not require collateral on accounts receivable balances. We have established reserves for credit losses, sales allowances, and other allowances. While we have not experienced material credit losses in any of the periods presented, there can be no assurance that we will not experience material credit losses in the future.

Gross margin. Gross margin as stated below is indicated as a percentage of the respective segment net revenues, except for total gross margin, which is stated as a percentage of total net revenues. Gross margin is summarized as follows (in thousands, except percentages):

	Three Months Ended
	January 30, 2010		% of Net Revenues		January 24, 2009		% of Net Revenues		Increase/ (Decrease)		% Points Change
Data Storage	$	223,918	63.3	%	$	193,616	62.3	%	$	30,302	1.0	%
Ethernet Products		32,596	34.2	%		17,793	34.3	%		14,803	(0.1	)%
Global Services		40,929	45.3	%		31,006	44.9	%		9,923	0.4	%
Total gross margin	$	297,443	55.1	%	$	242,415	56.2	%	$	55,028	(1.1	)%

For the three months ended January 30, 2010 compared with the three months ended January 24, 2009, total gross margin increased in absolute dollars, but total gross margin percentage decreased primarily due to increased mix of Ethernet Products revenue, which carries a lower overall gross margin, and increased amortization of intangible assets acquired under the Foundry acquisition.

Gross margin percentage by reportable segment increased or decreased for the three months ended January 30, 2010 compared with the three months ended January 24, 2009 primarily due to the following factors:

• Data Storage gross margins relative to net revenues improved primarily due to a 3.0% decrease in manufacturing costs and amortization of intangible assets related to the McDATA acquisition. These lower costs were partially offset by a 2.0% increase in product costs relative to net revenues, mainly due to a decline in average selling price, offset by mix shift to 8 Gb director and switch products;

• Ethernet Products gross margins relative to net revenues slightly decreased primarily due to an increase in amortization of intangible assets related to the Foundry acquisition, and stock-based compensation, partially offset by the impact on product costs of purchase price accounting adjustments for the three months ended January 24, 2009 related to deferred revenue; and

• Global Services gross margins relative to net revenues increased primarily due to a 3.1% decrease in service and support spending and amortization of intangible assets relative to net revenues due to additional revenue generated from the Foundry acquisition, but was partially offset by a one-time charge in the Services supply chain.

Gross margin is primarily affected by average selling price per port, number of ports shipped and cost of revenues. As described above, we expect that average selling prices per port for our Data Storage products will continue to decline at rates consistent with historical rates of low-to mid-single digits per quarter, and for our Ethernet products to decline in the mid-single digits, unless pricing pressures accelerate, or new product introductions by us or our competitors, or other factors that may be beyond our control further affect pricing. We believe that we have the ability to partially mitigate the effect of declines in average selling price per port on gross margins by reducing our product and manufacturing operations costs. However, the average selling price per port could decline at a faster pace than we anticipate. If this dynamic occurs, we may not be able to reduce our costs fast enough to prevent a decline in our gross margins. In addition, we must continue to increase the current volume of ports shipped to maintain our current gross margins. If we are unable to offset future reductions in average selling price per port with reductions in product and manufacturing operations costs, or if as a result of future reductions in average selling price per port, our revenues do not grow, our gross margins would be negatively affected.

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We recently introduced several new products and expect to introduce additional new products in the near future. As new or enhanced products are introduced, we must successfully manage the transition from older products in order to minimize disruption in customers’ ordering patterns, avoid excessive levels of older product inventories and provide sufficient supplies of new products to meet customer demands. Our gross margins would likely be adversely affected if we fail to successfully manage the introductions of these new products. For additional discussion, see “Part II - Other Information, Item 1A. Risk Factors.”

Research and development expenses. Research and development (“R&D”) expenses consist primarily of salaries and related expenses for personnel engaged in engineering and R&D activities, fees paid to consultants and outside service providers, nonrecurring engineering charges, prototyping expenses related to the design, development, testing and enhancement of our products, depreciation related to engineering and test equipment, and related IT and facilities expenses.

R&D expenses are summarized as follows (in thousands, except percentages):

	January 30, 2010		% of Net Revenues		January 24, 2009		% of Net Revenues		Increase/ (Decrease)		% Change
Three months ended	$	90,081	16.7	%	$	68,451	15.9	%	$	21,630	31.6	%

R&D expenses increased for the three months ended January 30, 2010 compared with the three months ended January 24, 2009 due to the following:

	$ Change 2009 to 2010 QTD
Salaries and wages	$	10,383
Expenses related to IT, facilities and other shared functions		3,912
Nonrecurring engineering expenses		3,648
Depreciation		2,580
Stock-based compensation		842
Various individually insignificant items		265
Total change	$	21,630

The increase in salaries and wages, expenses related to IT, facilities and other shared functions, depreciation and stock-based compensation was primarily the result of headcount growth. The increase in nonrecurring engineering expenses was primarily the result of continued development of new and enhanced products.

Sales and marketing expenses. Sales and marketing expenses consist primarily of salaries, commissions and related expenses for personnel engaged in sales, marketing and customer service functions, costs associated with promotional and marketing programs, travel expenses, and related IT and facilities expenses.

Sales and marketing expenses are summarized as follows (in thousands, except percentages):

	January 30, 2010		% of Net Revenues		January 24, 2009		% of Net Revenues		Increase/ (Decrease)		% Change
Three months ended	$	90,366	16.8	%	$	73,166	16.9	%	$	17,200	23.5	%

Sales and marketing expenses increased for the three months ended January 30, 2010 compared with the three months ended January 24, 2009 due to the following:

	$ Change 2009 to 2010 QTD
Salaries and wages	$	9,942
Expenses related to IT, facilities and other shared functions		1,990
Stock-based compensation		1,906
Advertising and conferences		1,544
Various individually insignificant items		1,818
Total change	$	17,200

The increase in salaries and wages, expenses related to IT, facilities and other shared functions, and stock-based compensation was primarily the result of headcount growth.

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General and administrative expenses. General and administrative (“G&A”) expenses consist primarily of salaries and related expenses for corporate executives, finance, human resources and investor relations, as well as recruiting expenses, professional fees, other corporate expenses, and related IT and facilities expenses.

G&A expenses are summarized as follows (in thousands, except percentages):

	January 30, 2010		% of Net Revenues		January 24, 2009		% of Net Revenues		Increase/ (Decrease)			% Change
Three months ended	$	16,239	3.0	%	$	18,388	4.3	%	$	(2,149	)	(11.7	)%

G&A expenses decreased for the three months ended January 30, 2010 compared with the three months ended January 24, 2009 due to the following:

	$ Change 2009 to 2010 QTD
Outside services	$	(848	)
Stock-based compensation		(514	)
Facility expenses		(355	)
Various individually insignificant items		(432	)
Total change	$	(2,149	)

The decrease in outside services, stock-based compensation and facility expenses was primarily the result of an increase in expenses allocated from G&A to other departments due to headcount growth in R&D and sales and marketing.

Legal fees associated with indemnification obligations and other related costs, net. These expenses consist of legal fees for various matters, including applicable indemnification obligations, defense of the Company in legal proceedings, and actions to pursue claims by the Special Litigation Committee of the Board of Directors. Pursuant to the Company’s charter documents and indemnification agreements, we have certain indemnification obligations to our directors, officers and employees, as well as certain former directors, officers and employees. As a result of such obligations and claims filed by the Special Litigation Committee of the Board of Directors, we incurred expenses related to amounts paid to certain former directors, officers and employees of the Company who have been and/or are subject to ongoing SEC, civil actions and/or criminal proceedings in connection with Brocade’s historical stock option granting practices.

Legal fees associated with indemnification obligations and other related costs, net, are summarized as follows (in thousands, except percentages):

	January 30, 2010		% of Net Revenues		January 24, 2009		% of Net Revenues		Increase/ (Decrease)			% Change
Three months ended	$	301	0.1	%	$	19,299	4.5	%	$	(18,998	)	(98.4	)%

Legal fees decreased for the three months ended January 30, 2010 compared with the three months ended January 24, 2009 primarily due to resolution of multiple legal proceedings related to the Special Litigation Committee’s litigation, as well as a decrease in legal expenses in connection with the litigation filed on behalf of the Company by the Special Litigation Committee of the Board of Directors.

Amortization of intangible assets. Amortization of intangible assets is summarized as follows (in thousands, except percentages):

	January 30, 2010		% of Net Revenues		January 24, 2009		% of Net Revenues		Increase/ (Decrease)		% Change
Three months ended	$	17,052	3.2	%	$	13,229	3.1	%	$	3,823	28.9	%

During the three months ended January 30, 2010, we recorded amortization of intangible assets related to the acquisitions of McDATA, Silverback Systems, Inc., Strategic Business Systems, Inc. and Foundry. The increase in amortization of intangible assets for the three months ended January 30, 2010 compared with the three months ended January 24, 2009 was primarily due to the acquisition of Foundry which was completed in December 2008.

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Acquisition and integration costs. Acquisition and integration costs are summarized as follows (in thousands, except percentages):

	January 30, 2010		% of Net Revenues		January 24, 2009		% of Net Revenues		Increase/ (Decrease)			% Change
Three months ended	$	204	—	%	$	953	0.2	%	$	(749	)	(78.6	)%

For the three months ended January 30, 2010 and January 24, 2009, we recorded acquisition and integration costs primarily for consulting services and other professional fees in connection with our integration of Foundry.

In-process research and development. IPR&D is summarized as follows (in thousands, except percentages):

	January 30, 2010		% of Net Revenues		January 24, 2009		% of Net Revenues		Increase/ (Decrease)			% Change
Three months ended	$	—	—	%	$	26,900	1.9	%	$	(26,900	)	(100.0	)%

On December 18, 2008, we completed our acquisition of Foundry. In connection with this acquisition, we recorded a $26.9 million IPR&D charge (see Note 3, “Acquisitions,” of the Notes to Condensed Consolidated Financial Statements).

The $26.9 million IPR&D charge was recorded because the acquired technologies had not reached technological feasibility and had no alternative uses. Technological feasibility is defined as being equivalent to completion of a beta-phase working prototype in which there is no remaining significant risk relating to the development. At the time of the acquisition in December 2008, Foundry was developing new products in multiple product areas that qualify as IPR&D. These efforts included FastIron SuperX Family, FastIron CX, NetIron CER, TurboIron and various other projects. Development efforts for these projects have been completed, with the exception of FastIron CX and NetIron CER which are both expected to be completed in March 2010.

The value assigned to the Foundry IPR&D was determined by estimating costs to develop the purchased IPR&D into commercially viable products, estimating the resulting net cash flows from the projects when completed, and discounting the net cash flows to their present values. The revenue estimates used in the net cash flow forecasts were based on estimates of relevant market sizes and growth factors, expected trends in technology, and the nature and expected timing of new product introductions by Foundry and its competitors.

The rate utilized to discount the net cash flows to their present values was based on Foundry’s weighted-average cost of capital. The weighted-average cost of capital was adjusted to reflect the difficulties and uncertainties in completing each project and thereby achieving technological feasibility, the percentage of completion of each project, anticipated market acceptance and penetration, market growth rates, and risks related to the impact of potential changes in future target markets. Based on these factors, a discount rate of 12.5% was deemed appropriate for valuing the IPR&D.

The estimates used in valuing IPR&D were based upon assumptions believed to be reasonable but which are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may occur.

Interest income and other loss, net. Interest income and other loss, net, are summarized as follows (in thousands, except percentages):

	January 30, 2010		% of Net Revenues		January 24, 2009			% of Net Revenues		Increase/ (Decrease)		% Change
Three months ended	$	72	—	%	$	(3,811	)	(0.9	)%	$	3,883	101.9	%

For the three months ended January 30, 2010 compared with the three months ended January 24, 2009, the increase in interest income and other loss, net, was primarily related to the $4.4 million in acquisition-related financing charges in the three months ended January 24, 2009.

Interest expense. Interest expense primarily represents the interest cost associated with our term loan and convertible subordinated debt (see Note 9, “Borrowings,” of the Notes to Condensed Consolidated Financial Statements). Interest expense is summarized as follows (in thousands, except percentages):

	January 30, 2010			% of Net Revenues		January 24, 2009			% of Net Revenues		Increase/ (Decrease)			% Change
Three months ended	$	(22,073	)	(4.1	)%	$	(23,279	)	(5.4	)%	$	(1,206	)	(5.2	)%

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Interest expense decreased for the three months ended January 30, 2010 compared with the three months ended January 24, 2009 primarily as a result of accelerated payments towards the principal of the term loan since it was obtained in the fourth fiscal quarter of 2008, as well as an increase of $1.3 million in capitalization of interest cost in connection with the development of our campus during the three months ended January 30, 2010.

Loss on sale of investments and property, net. Loss on sale of investments, net, is summarized as follows (in thousands, except percentages):

	January 30, 2010			% of Net Revenues		January 24, 2009			% of Net Revenues		Increase/ (Decrease)		% Change
Three months ended	$	(8,828	)	(1.6	)%	$	(864	)	(0.2	)%	$	7,964	921.8	%

For the three months ended January 30, 2010 compared with the three months ended January 24, 2009, the increase in loss on sale of investments and property, net, was primarily related to the $8.8 million loss on the sale of owned property in San Jose to an unrelated third party (see Note 12, “Sale-Leaseback Transactions,” of the Notes to Condensed Consolidated Financial Statements).

The $0.9 million in loss on sale of investments and property, net, for the three months ended January 24, 2009 was due to a loss of $0.9 million on the disposition of portfolio investments at amounts below the carrying value.

Provision for income taxes. Provision for income taxes and the effective tax rates are summarized as follows (in thousands, except effective tax rates):

	Three Months Ended
	January 30, 2010			January 24, 2009
Provision for income taxes	$	1,276		$	17,973
Effective tax rate		2.4	%		(303.3	)%

Our effective tax rate increased for the three months ended January 30, 2010 compared with the three months ended January 24, 2009 primarily due to the following (see Note 14, “Income Taxes,” of the Notes to Condensed Consolidated Financial):

• Lapse of the Federal R&D credit periods after December 31, 2009;

• Change in uncertain tax positions related to the settlement of the Foundry IRS audit during the three months ended January 30, 2010;

• One-time loss on the sale of property; and

• Law change allowing 5-year carryback on net operating losses as a result of the American Recovery and Reinvestment Act of 2009 effective on November 20, 2009.

Based on the forecasted financials, we currently expect the effective tax rate for fiscal year 2010 to be lower than fiscal year 2009. However, factors such as the successful integration of Foundry’s international operations and associated structuring could affect the level of our foreign revenues and earnings. As estimates and judgments are used to project such international earnings, the impact to our tax provision could vary if the current planning or assumptions change. Given that the tax rate is driven by several different factors, it is not possible to estimate our future tax rate with a high degree of certainty.

To the extent that international revenues and earnings differ from those historically achieved, a factor largely influenced by the buying behavior of our OEM partners or by unfavorable prospective and retrospective effects of changing tax laws and regulations, our income tax provision could change.

The IRS and other tax authorities regularly examine our income tax returns. For additional discussion, see Note 14, “Income Taxes,” of the Notes to Condensed Consolidated Financial Statements. We are currently undergoing an IRS audit for fiscal year 2003, which we expect to resolve during the next twelve months. As such, after we reach settlement with the IRS, we expect to record a corresponding adjustment to our unrecognized tax benefits. We believe such settlement should not have a material impact to the results of operations. We also believe that our reserves for unrecognized tax benefits are adequate for open tax years.

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Stock-based compensation expense. Stock-based compensation expense is summarized as follows (in thousands, except percentages):

	January 30, 2010		% of Net Revenues		January 24, 2009		% of Net Revenues		Increase/ (Decrease)		% Change
Three months ended	$	21,523	4.0	%	$	18,080	4.2	%	$	3,443	19.0	%

The increase in stock-based compensation expense for the three months ended January 30, 2010 compared with the three months ended January 24, 2009 was primarily due to increased headcount, as well as the adoption of our 2009 ESPP for which compensation expense is recognized using the graded vesting method over the twenty-four month offering period in comparison to the six-month offering period under our 1999 ESPP.

Liquidity and Capital Resources

	January 30, 2010			October 31, 2009			Increase/ (Decrease)
	(in thousands)
Cash and cash equivalents	$	496,583		$	334,193		$	162,390
Short-term investments		4,533			4,678			(145	)
Restricted cash		12,500			12,502			(2	)
Total	$	513,616		$	351,373		$	162,243
Percentage of total assets		14	%		10	%

We use cash generated by operations as our primary source of liquidity. We expect that cash provided by operating activities may fluctuate in future periods as a result of a number of factors, including fluctuations in our operating results, the rate at which products are shipped during the quarter, accounts receivable collections, inventory and supply chain management, and the timing and amount of tax and other payments. For additional discussion, see “Part II - Other Information, Item 1A. Risk Factors.”

Based on past performance and current expectations, we believe that internally generated cash flows are generally sufficient to support business operations, capital expenditures, contractual obligations, and other liquidity requirements associated with our operations for at least the next twelve months. We paid off our convertible subordinated debt due on February 15, 2010 through our existing cash on hand, together with the remaining net proceeds from the Senior Secured Notes issued on January 20, 2010. There are no other transactions, arrangements, or other relationships with unconsolidated entities or other persons that are reasonably likely to materially affect liquidity and the availability of and our requirements for capital resources.

Financial Condition

Cash and cash equivalents, short-term investments and restricted cash as of January 30, 2010 increased by $162.2 million over the balance as of October 31, 2009 primarily due to the borrowings made under the Senior Secured Notes. For the three months ended January 30, 2010, we generated $69.1 million in cash from operating activities, which was higher than our net income for the same period as a result of adjustments to net income for non-cash items related to depreciation and amortization and stock-based compensation expense, as well as a decrease in accounts receivable, partially offset by a decrease in accounts payable and accrued employee compensation. Accounts receivable days sales outstanding, which is a measure of the average number of days that a company takes to collect revenue after a sale has been made, for the three months ended January 30, 2010 was 47 days, compared with 52 days for the three months ended January 24, 2009. The decrease in accounts receivable days sales outstanding was due to stronger collections during the first fiscal quarter of 2010.

Net cash used in investing activities for the three months ended January 30, 2010 totaled $17.2 million and was primarily the result of $47.3 million in purchases of property and equipment, offset by $30.2 million in proceeds resulting from the sale of property.

Net cash provided by financing activities for the three months ended January 30, 2010 totaled $111.5 million and was primarily the result of net proceeds from the issuance of Senior Secured Notes of $588.0 million and proceeds from the issuance of common stock from ESPP purchases and stock option exercises of $30.0 million, offset by payment of principal related to the term loan of $506.5 million.

Net proceeds from the issuance of common stock in connection with employee participation in our equity compensation plans have historically been a significant component of our liquidity. The extent to which our employees participate in these programs generally increases or decreases based upon changes in the market price of our common stock. As a result, our cash flow resulting from the issuance of common stock in connection with employee participation in equity compensation plans will vary.

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Three Months Ended January 30, 2010 Compared to Three Months Ended January 24, 2009

Operating Activities. Net cash provided by operating activities increased for the three months ended January 30, 2010 compared with the three months ended January 24, 2009 by $232.9 million. The increase was primarily due to net income, the $160.0 million payment of the liability associated with the settlement of the class action lawsuit during the three months ended January 24, 2009 and increased accounts receivable collections during the three months ended January 30, 2010.

Investing Activities. Net cash used in investing activities decreased for the three months ended January 30, 2010 compared with the three months ended January 24, 2009 by $74.7 million. The decrease was primarily due to cash paid in connection with the Foundry acquisition during the three months ended January 24, 2009 and increased proceeds from the sale of property during the three months ended January 30, 2010. This decrease was partially offset by a decrease in restricted cash which was released to finance a portion of the Foundry acquisition, as well as decreased proceeds from short-term and long-term investments.

Financing Activities. Net cash provided by financing activities increased for the three months ended January 30, 2010 compared with the three months ended January 24, 2009 by $119.7 million. The increase was primarily due to increased proceeds from the issuance of bonds and decreased payment of senior underwriting fees related to the term loan, partially offset by the payment of principal related to the term loan.

Liquidity

Manufacturing and Purchase Commitments. We have manufacturing arrangements with Foxconn, Sanmina, Flextronics, Celestica, Flash, Accton and Quanta (collectively, the “CMs”) under which we provide twelve-month product forecasts and place purchase orders in advance of the scheduled delivery of products to our customers. Our purchase commitments reserve reflects our estimate of purchase commitments we do not expect to consume in normal operations within the next twelve months, in accordance with our policy (see Note 10, “Commitments and Contingencies,” of the Notes to Condensed Consolidated Financial Statements).

Company Campus Contractual Obligations. On May 23, 2008, we purchased property located in San Jose, California, which consists of three unimproved building parcels that are entitled for approximately 562,000 square feet of space in three buildings. For additional discussion, see Note 10, “Commitments and Contingencies,” of the Notes to Condensed Consolidated Financial Statements.

Income Taxes. We accrue U.S. income taxes on the earnings of our foreign subsidiaries unless the earnings are considered indefinitely reinvested outside of the United States. We intend to reinvest current and accumulated earnings of our foreign subsidiaries for expansion of our business operations outside the United States for an indefinite period of time.

The IRS and other tax authorities regularly examine our income tax returns (see Note 14, “Income Taxes,” of the Notes to Condensed Consolidated Financial Statements). We believe we have adequate reserves for all open tax years.

Senior Secured Credit Facility. A portion of our outstanding debt is related to the financing of the Foundry acquisition, the costs and expenses related to the merger, and the ongoing working capital and other general corporate purposes of the combined organization after consummation of the merger (see Note 9, “Borrowings,” of the Notes to Condensed Consolidated Financial Statements). We have the following resources available to obtain short-term or long-term financing, if we need additional liquidity, as of January 30, 2010 (in thousands):

	Original Amount Available		January 30, 2010
			Used		Available
Revolving credit facility	$	125,000	$	14,050	$	110,950
Total	$	125,000	$	14,050	$	110,950

Senior Secured Notes. In January 2010, we issued $600 million of long-term fixed notes to restructure our balance sheet by using the proceeds from the Senior Secured Notes to pay down a substantial portion of the outstanding term loan, with the remaining net proceeds used to retire the convertible subordinated debt due on February 15, 2010 (see Note 9, “Borrowings,” of the Notes to Condensed Consolidated Financial Statements).

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Contractual Obligations

The following table summarizes our contractual obligations, including interest expense, and commitments as of January 30, 2010 (in thousands):

	Total		Less than 1 Year		1—3 Years		3—5 Years		More than 5 Years
Contractual Obligations:
Term loan (1)	$	512,207	$	57,817	$	242,041	$	212,349	$	—
Senior Secured Notes due 2018 (1)		459,546		20,421		39,750		39,750		359,625
Senior Secured Notes due 2020 (1)		506,817		21,192		41,250		41,250		403,125
Convertible subordinated debt (1)		174,441		174,441		—		—		—
Revolving credit facility (1)		14,053		14,053		—		—		—
Non-cancelable operating leases (2)		109,807		36,431		29,347		21,139		22,890
Purchase commitments, gross (3)		243,224		243,224		—		—		—
Company campus capital expenditures (4)		111,901		111,901		—		—		—
Total contractual obligations	$	2,131,996	$	679,480	$	352,388	$	314,488	$	785,640
Other Commitments:
Standby letters of credit	$	1,416	$	n/a	$	n/a	$	n/a	$	n/a
Unrecognized tax benefits and related accrued interest (5)	$	173,001	$	n/a	$	n/a	$	n/a	$	n/a

(1) Amount reflects total anticipated cash payments, including anticipated interest payments.

(2) Amount excludes contractual sublease income of $33.1 million, which consists of $5.0 million to be received in less than one year, $9.1 million to be received in one to three years, $9.7 million to be received in three to five years and $9.3 million to be received in more than five years.

(3) Amount reflects total gross purchase commitments under our manufacturing arrangements with third-party contract manufacturers. Of this amount, we have accrued $20.4 million for estimated purchase commitments that we do not expect to consume in normal operations within the next twelve months, in accordance with our policy.

(4) Amount reflects $111.9 million in capital expenditures in connection with the development of the corporate campus. Including the costs incurred to date of $214.7 million, the total contractual obligation on the Company campus is approximately $326.6 million.

(5) As of January 30, 2010, we had a liability for unrecognized tax benefits of $169.9 million and a net accrual for the payment of related interest and penalties of $3.1 million. We expect to resolve the fiscal year 2003 IRS audit during the next twelve months. As such, after we reach settlement with the IRS, we expect to record a corresponding adjustment to our unrecognized tax benefits. Due to availability of net operating losses, the IRS audit settlement is not expected to result in a significant tax payment. Other than the 2003 IRS audit, we are unable to make a reasonably reliable estimate of the timing of payments in individual years due to uncertainties in the timing of tax audit outcome.

Share Repurchase Program. As of November 29, 2007, our Board of Directors authorized a total of $800.0 million for the repurchase of our common stock. Purchases have been made, from time to time, in the open market or by privately negotiated transactions and have been funded from available working capital. The number of shares purchased and the timing of purchases have been based on the level of our cash balances, general business and market conditions, and other factors, including alternative investment opportunities. During the third fiscal quarter of 2008, we suspended our share repurchase program due to the then pending Foundry acquisition. We are prioritizing our use of cash for debt repayment following the close of the Foundry acquisition. As such, we made no share repurchases for the three months ended January 30, 2010. Approximately $414.1 million remains authorized for future repurchases under this program as of January 30, 2010.

Off-Balance Sheet Arrangements

As part of our ongoing business, we do not participate in transactions that generate material relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or for other contractually narrow or limited purposes. As of January 30, 2010, we did not have any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

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Critical Accounting Estimates

There have been no material changes in the matters for which we make critical accounting estimates in the preparation of our condensed consolidated financial statements during the three months ended January 30, 2010 as compared to those disclosed in our Annual Report on Form 10-K for the fiscal year ended October 31, 2009, with the exception of our accounting policy for convertible debt instruments and revenue recognition as described in Note 2, “Summary of Significant Accounting Policies,” of the Notes to Condensed Consolidated Financial Statements.

Recent Accounting Pronouncements

For a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our condensed consolidated financial statements, see Note 2, “Summary of Significant Accounting Policies,” of the Notes to Condensed Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business, we are exposed to market risks related to changes in interest rates, foreign currency exchange rates and equity prices that could impact our financial position and results of operations. Our risk management strategy with respect to these three market risks may include the use of derivative financial instruments. We use derivative contracts only to manage existing underlying exposures of the Company. Accordingly, we do not use derivative contracts for speculative purposes. Our risks and risk management strategy are outlined below. Actual gains and losses in the future may differ materially from the sensitivity analyses presented below based on changes in the timing and amount of interest rates and our actual exposures and hedges.

Interest Rate Risk

Our exposure to market risk due to changes in the general level of United States interest rates relates primarily to our debt, cash equivalents and short-term investment portfolios.

We are exposed to changes in interest rates as a result of our borrowings under our term loan. As of January 30, 2010, the weighted-average interest rate on the term loan was 7.0%, which represents the minimum interest rate under the credit agreement. The current market rates are such that a 1% increase in market rates would still result in a 7.0% interest rate on the term loan. However, based on outstanding principal indebtedness of $427.4 million under our term loan as of January 30, 2010, if market rates average 1% above the interest rate floor over the remaining term of the debt, which would result from an increase in market rates of approximately 3.0%, our interest expense would increase by approximately $12.1 million.

Our cash, cash equivalents, and short-term investments are primarily maintained at five major financial institutions in the United States. The primary objective of our investment activities is the preservation of principal while maximizing investment income and minimizing risk.

We did not have any material investments as of January 30, 2010 that are sensitive to changes in interest rates.

Foreign Currency Exchange Rate Risk

We are exposed to foreign currency exchange rate risk inherent in conducting business globally in numerous currencies, of which the most significant to our operations for the three months ended January 30, 2010 were the euro, the Japanese yen, the British pound, the Singapore dollar and the Swiss franc. We are primarily exposed to foreign currency fluctuations related to operating expenses denominated in currencies other than the U.S. dollar. As such, we benefit from a stronger U.S. dollar and may be adversely affected by a weaker U.S. dollar relative to the foreign currency. We use foreign currency forward contracts designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in our forecasted operating expenses denominated in currencies other than the U.S. dollar. We also may enter into other non-designated derivatives that consist primarily of forward contracts to minimize the risk associated with the foreign exchange effects of revaluing monetary assets and liabilities. We recognize the gains and losses on foreign currency forward contracts in the same period as the remeasurement losses and gains of the related foreign currency denominated exposures. Alternatively, we may choose not to hedge the foreign currency risk associated with our foreign currency exposures if such exposure acts as a natural foreign currency hedge for other offsetting amounts denominated in the same currency or if the currency is difficult or too expensive to hedge.

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As of January 30, 2010, we held $92.9 million in cash flow derivative instruments. The maximum length of time over which we are hedged as of January 30, 2010 is through November 5, 2010.

Equity Price Risk

We had no investments in publicly traded equity securities as of January 30, 2010. We monitor our equity investments for impairment on a periodic basis. In the event that the carrying value of the equity investment exceeds its fair value, and we determine the decline in value to be other-than-temporary, we reduce the carrying value to its current fair value. Generally, we do not attempt to reduce or eliminate our market exposure on these equity securities. We do not purchase our equity securities with the intent to use them for speculative purposes. The aggregate cost of our equity investments in non-publicly traded companies was $6.8 million at January 30, 2010.

Our common stock is quoted on the NASDAQ Global Select Market under the symbol “BRCD.” On January 29, 2010, the last business day of our first fiscal quarter of 2010, the last reported sale price of our common stock on the NASDAQ Global Select Market was $6.87 per share.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”).

The purpose of this evaluation is to determine if, as of the Evaluation Date, our disclosure controls and procedures are effective such that the information required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective.

(b) Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting that occurred during the quarter ended January 30, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Disclosure Controls and Procedures.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues within a company are detected. The inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

The information set forth in Note 10 (see “Legal Proceedings” of Note 10) of the Notes to Condensed Consolidated Financial Statements in Part 1, Item 1 of this Form 10-Q is incorporated herein by reference.

Item 1A. Risk Factors

Intense competition in the market for networking solutions could prevent Brocade from maintaining or increasing revenue, profitability and cash flows with respect to its networking solutions.

The market for data and storage networking solutions is intensely competitive. In particular, Cisco maintains a dominant position in the Ethernet networking market and several of its products compete directly with Brocade’s products. Purchasers of networking solutions may choose Cisco’s products because of its longer operating history, different product line and strong reputation in the networking market. In addition, Cisco may develop new technologies that directly compete with Brocade’s products or render its products obsolete.

Brocade also competes with other companies, such as 3Com, Alcatel-Lucent, Enterasys Networks, Inc., Extreme Networks, Inc., F5 Networks, Inc., Force10 Networks, Inc., HP ProCurve Division, Huawei Technologies Co. Ltd. and Juniper. Brocade also faces significant competition from providers of Fibre Channel switching products for interconnecting servers and storage. These principal competitors include Cisco and QLogic Corporation. Brocade also faces other competitors in markets adjacent to the SAN and Ethernet networking markets, such as QLogic and Emulex Corporation in the server connectivity or HBA market. Brocade may continue to face competitors with well-established market share and customer relationships in adjacent markets. Some of Brocade’s current and potential competitors have greater market leverage, longer operating histories, greater financial, technical, sales, marketing and other resources, more name recognition and larger installed customer bases. Brocade’s competitors could also adopt more aggressive pricing policies than Brocade. Brocade believes that competition based on price may become more aggressive than it has traditionally experienced. Brocade’s competitors could also devote greater resources to the development, promotion and sale of their products than Brocade and, as a result, may be able to respond more quickly to changes in customer or market requirements. Brocade’s failure to successfully compete in the market would harm Brocade’s business and financial results.

Convergence and consolidation trends within the information technology industry are also beginning to bring historically separated computing, storage and Ethernet networking technologies together. These trends are shifting long-standing industry partnerships/alliances, go-to-market routes, technology models and represent risks for Brocade. For example, the ongoing development of new networking protocols such as FCoE and Converged Enhanced Ethernet (“CEE”) are designed to merge storage and Ethernet network traffic inside of data centers. Brocade recently introduced new products that support FCoE/CEE. If the adoption rate of FCoE/CEE products varies significantly to what Brocade and other industry experts currently project, this may negatively impact Brocade’s businesses.

Competitors are likely to use emerging technologies and alternate routes-to-market to compete with Brocade. In addition, Brocade’s OEM partners, who also have relationships with some of Brocade’s current competitors, could become new competitors by developing and introducing products that compete with Brocade’s product offerings, by choosing to sell Brocade’s competitors’ products instead of Brocade’s products, or by offering preferred pricing or promotions on Brocade’s competitors’ products. For example, even though Brocade and IBM announced an agreement in April 2009 for IBM to sell certain Brocade Ethernet products and IP routers, Juniper and IBM announced a similar agreement in July 2009 with respect to certain of Juniper’s Ethernet switches and enterprise IP routers.

Competitive pressure will also likely intensify as technology trends may impact long-standing alliances, partnerships and go-to-market routes. For example, in November 2009 Cisco, EMC and VMware announced a coalition called the “Virtual Computing Environment” (“VCE”), through which it and its business partners would sell packaged “cloud computing” and data center virtualization solutions. Further, Cisco and EMC announced a joint venture called “Acadia”, which is designed to serve as a support and services arm of VCE. EMC is currently Brocade’s top OEM in terms of Fibre Channel sales and has been a go-to-market and technology partner since 1997. The tightening relationship between Cisco and EMC may harm Brocade’s partnership with EMC. In addition, on November 11, 2009, HP, another Brocade OEM partner, announced its intent to acquire 3Com, a Brocade competitor in the Ethernet market. If this acquisition of 3Com is completed, it may increase the competitive dynamics in the Ethernet and other markets for Brocade and could negatively impact important routes to market for Brocade’s storage and converged networking products.

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Brocade’s future revenue growth depends on its ability to introduce new products and services on a timely basis and achieve market acceptance of these new products and services.

The market for networking solutions is characterized by rapidly changing technology, accelerating product introduction cycles, changes in customer requirements and evolving industry standards. Brocade’s future success depends largely upon its ability to address the rapidly changing needs of its customers by developing and supplying high-quality, cost-effective products, product enhancements and services on a timely basis and by keeping pace with technological developments and emerging industry standards. This risk will likely become more pronounced as the networking markets become more competitive and as demand for new and improved technologies increases.

Brocade has introduced a significant number of new products in recent history, including products across its family of Ethernet and Storage solutions, which accounts for a substantial portion of Brocade’s revenues. Developing new offerings requires significant upfront investments that may not result in revenue for an extended period of time, if at all. Brocade must achieve widespread market acceptance of Brocade’s new product and service offerings on a timely basis in order to realize the benefits of Brocade’s investments. In addition, Brocade’s plans to sell its offerings through new channels also requires that market acceptance be successful. For example, in April 2009 Brocade announced an expanded relationship with IBM whereby IBM will rebrand and sell a set of Brocade enterprise Ethernet networking products through the IBM global sales force and authorized IBM business partners, extending Brocade’s existing relationship with IBM for storage area networking products. This expanded relationship also requires Brocade to make certain significant upfront investments, which costs may not be recovered or provide the desired return on investment if the anticipated benefits of the expanded relationship are not ultimately successful.

The success of Brocade’s product and service offerings depends on numerous factors, including its ability to:

• Properly define the new products and services;

• Timely develop and introduce the new products and services;

• Differentiate Brocade’s new products and services from its competitors’ technology and product offerings;

• Address the complexities of interoperability of Brocade’s products with its installed base, OEM partners’ server and storage products and its competitors’ products; and

• Maintain high levels of product quality and reliability.

Various factors impacting market acceptance are outside of Brocade’s control, including the following:

• The availability and price of competing products and alternative technologies;

• The cost of certain product subcomponents, which could reduce Brocade’s gross margins;

• Product qualification requirements by Brocade’s OEM partners, which can cause delays in the market acceptance;

• The timing of the adoption of new industry standards relative to Brocade’s development of new technologies and products;

• The ability of its OEM partners to successfully distribute, support and provide training for its products; and

• Customer acceptance of Brocade’s products, including its Ethernet solutions.

If Brocade is not able to successfully develop and market new and enhanced products and services on a timely basis, its business and results of operations will likely be harmed.

The prices of Brocade’s products have declined in the past and Brocade expects the prices of Brocade’s products to continue to decline, which could reduce Brocade’s revenues, gross margins and profitability.

The average selling price for Brocade’s products has declined in the past, and Brocade expects it to continue to decline in the future as a result of changes in competitive pricing pressure, broader macroeconomic factors, product mix, increased sales discounts, new product introductions by Brocade or Brocade’s competitors, the entrance of new competitors and other factors. Price declines may also increase as competitors ramp up product releases that compete with Brocade’s products. Furthermore, as a result of cautious capital spending in the technology sector, coupled with broader macroeconomic factors, both Brocade and its competitors may pursue more aggressive pricing strategies in an effort to maintain or seek to increase sales levels. If Brocade is unable to offset any negative impact that changes in competitive pricing pressures, broader macroeconomic factors, product mix, increased sales discounts, enhanced marketing programs, new product introductions by Brocade or Brocade’s competitors, or other factors may have on the average selling price of Brocade’s products by increasing the volume of products shipped or reducing product manufacturing costs, Brocade’s total revenues and gross margins will be negatively impacted.

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In addition, to maintain Brocade’s gross margins, Brocade must maintain or increase the number of products shipped, develop and introduce new products and product enhancements, and continue to reduce the manufacturing costs of Brocade’s products. While Brocade has successfully reduced the cost of manufacturing Brocade’s products in the past, Brocade may not be able to continue to reduce cost of production at historical rates. Moreover, most of Brocade’s expenses are fixed in the short-term or incurred in advance of receipt of corresponding revenue. As a result, Brocade may not be able to decrease its spending quickly enough or in sufficient amounts to offset any unexpected shortfall in revenues. If this occurs, Brocade could incur losses and Brocade’s operating results and gross margins could be below expectations. Additionally, Brocade’s gross margins may be negatively affected by fluctuations in manufacturing volumes, component costs, the mix of product configurations sold and the mix of distribution channels through which its products are sold. For example, on a historical basis, Brocade’s Ethernet networking products generally realized higher gross margins on direct sales to an end-user than on sales through its resellers or to its OEMs. As a result, any significant shift in revenue through resellers or to OEMs could harm Brocade’s gross margins. In addition, if product or related warranty costs associated with Brocade’s products are greater than previously experienced, Brocade’s gross margins may also be adversely affected. Finally, increased costs resulting from higher-than-anticipated oil prices and the volatility of the value of the U.S. dollar may affect the costs of components used in Brocade’s products and negatively affect Brocade’s gross margins.

The slowdown in the domestic and global economies and their delayed recovery may increasingly adversely affect Brocade’s operating results and financial condition.

The domestic and global economies have undergone a period of significant uncertainty and slowdown, which has resulted in reduced demand for information technology, including high-performance data networking solutions, and an extended delay in the recovery of such economies may continue to negatively impact demand further. Information technology spending has historically declined as general economic and market conditions have worsened. If the domestic and global economic slowdown is prolonged, or if Brocade’s customers believe such a slowdown will continue for a sustained period, Brocade’s customers may further reduce their information technology spending and future budgets. Brocade is particularly susceptible to reductions in information technology spending because the purchase of IT-related products is often discretionary and may involve a significant commitment of capital and other resources. Different geographic regions (e.g. North America, Western Europe, Asia Pacific region) may experience greater economic slowdown and/or a longer recovery period. Future delays or reductions in information technology spending, domestically and/or internationally, could harm Brocade’s business, results of operations and financial condition in a number of ways, including longer sales cycles, increased inventory provisions, increased production costs, lowered prices for its products and reduced sales volumes. Similarly, if Brocade’s suppliers face challenges in obtaining credit or otherwise in operating their businesses, they may become unable to continue to offer the materials Brocade uses to manufacture its products or may offer the materials at higher prices. These events have caused, and may further cause, reductions in Brocade’s revenue, profitability and cash flows; increased price competition and operating costs; longer fulfillment cycles; and may cause many other risks noted in this Form 10-Q, which could adversely affect Brocade’s business, results of operations and financial condition.

Given the current uncertainty about the extent and duration of the global financial slowdown, it is difficult for Brocade, its customers and its suppliers to accurately forecast future product demand. The reduced visibility could cause Brocade to produce excess products that would increase its inventory carrying costs and result in obsolete inventory. Alternatively, this forecasting difficulty could cause a shortage of products or materials used in Brocade’s products that would result in its inability to satisfy demand for its products and a loss of market share.

The economic slowdown has also significantly affected financing markets, the availability of capital and the terms and conditions of financing arrangements, including the overall cost of financing. Circumstances may arise in which Brocade needs or desires to raise additional capital. Such capital may not be available on commercially reasonable terms, or at all, which in turn could adversely affect Brocade’s financial condition and could increase shareholder dilution.

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The failure to accurately forecast demand for Brocade’s products or the failure to successfully manage the production of Brocade’s products could negatively affect the supply of key components for Brocade’s products and Brocade’s ability to manufacture and sell Brocade’s products.

Brocade provides product forecasts to its contract manufacturers and places purchase orders with them in advance of the scheduled delivery of products to Brocade’s customers. Moreover, in preparing sales and demand forecasts, Brocade relies largely on input from its partners and its resellers and end-user customers. Therefore, if Brocade or its partners are unable to accurately forecast demand, or if Brocade fails to effectively communicate with its distribution partners about end-user demand or other time-sensitive information, the sales and demand forecasts may not reflect the most accurate, up-to-date information. If these forecasts are inaccurate, Brocade may be unable to obtain adequate manufacturing capacity from its contract manufacturers to meet customers’ delivery requirements or Brocade may accumulate excess inventories. Furthermore, Brocade may not be able to identify forecast discrepancies until late in its fiscal quarter. Consequently, Brocade may not be able to make adjustments to its business model. If Brocade is unable to obtain adequate manufacturing capacity from its contract manufacturers, if Brocade accumulates excess inventories, or if Brocade is unable to make necessary adjustments to Brocade’s business model, revenue may be delayed or even lost to Brocade’s competitors and Brocade’s business and financial results may be harmed. In addition, Brocade may experience higher fixed costs as it expands its contract manufacturer capabilities, which could negatively affect Brocade’s ability to react quickly if demand suddenly decreases.

Brocade’s ability to accurately forecast demand also may become increasingly more difficult as Brocade enters new or adjacent markets, begins phasing out certain products, or acquires other companies or businesses. Forecasting demand for new or adjacent markets, particularly where the markets are not yet well-established, may be highly speculative and uncertain. For products that are nearing end of life or are being replaced by new versions, it may be difficult to forecast how quickly to decrease production on the older products and ramp up production on the new products. Acquired companies or businesses may offer less visibility into demand than Brocade typically has experienced, may cause customer uncertainty regarding purchasing decisions, and may use different measures to evaluate demand that are less familiar to Brocade and thus more difficult to accurately predict.

In addition, although the purchase orders placed with Brocade’s contract manufacturers are cancelable, in certain circumstances Brocade could be required to purchase certain unused material not returnable, usable by, or sold to other customers if Brocade cancels any of Brocade’s orders. This purchase commitment exposure is particularly high in periods of new product introductions and product transitions. If Brocade is required to purchase unused material from Brocade’s contract manufacturers, Brocade would incur unanticipated expenses and Brocade’s business and financial results could be negatively affected. In the past, Brocade has experienced delays in shipments of its Ethernet products from its contract manufacturers and OEMs, which in turn delayed product shipments to its customers. Brocade may in the future experience similar delays or other problems, such as insufficient quantity of product, acquisition by a competitor or business failure of any of its OEMs, any of which could harm Brocade’s business and operating results.

Brocade is subject to and may be subject to more intellectual property infringement claims and litigation that are costly to defend and/or settle, and that could result in significant damage and cost awards against Brocade and limit Brocade’s ability to use certain technologies in the future.

Brocade competes in markets that are frequently subject to claims and related litigation regarding patent and other intellectual property rights. From time to time, third parties have asserted patent, copyright and trade secret rights against Brocade, and as particular examples, against its products and services, subcomponents of its products, methods performed by its products or used in its operations, or uses of its products by its customers. Brocade and companies acquired by Brocade, such as Foundry, have in the past incurred, are currently incurring and will in the future incur substantial expenses to defend against such third-party claims. For instance, Brocade currently is involved in patent-related lawsuits with Enterasys Networks, Inc., Network-1 Security Solutions, Inc., and Chrimar Systems, Inc. In addition, Brocade may be subject to indemnification obligations with respect to infringement of third-party intellectual property rights pursuant to Brocade agreements with suppliers, OEM and channel partners or customers. The third party asserters of such intellectual property claims may be unreasonable in their settlement demands, or may simply refuse to settle, which could lead to expensive settlement payments and/or prolonged periods of litigation expenses. In the event of an adverse determination, Brocade could incur substantial monetary liability and be prohibited from shipping certain products or incorporating necessary components into Brocade’s products. Suppliers of components or OEM systems to Brocade may be unwilling to, or not be able to, defend or indemnify Brocade against third-party assertions directed at the components or systems they supply to Brocade, and may be unwilling to take licenses that would assure Brocade’s supply of such components or OEM systems. Customers may perceive such third-party intellectual property claims as risks, and may, as a result, be less willing to do business with Brocade. Any of the above scenarios could have a material adverse effect on Brocade’s financial position, results of operations, cash flows, and future business prospects.

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Brocade relies on a combination of patent, copyright, trademark and trade secret laws and contractual restrictions on disclosure to protect its intellectual property rights in its proprietary technologies, but none of these methods of protection may be entirely reliable, due to, for instance, employee hiring and turnover, geographic dispersion of employees, technology disclosures with suppliers, customers, and partners, unpredictable events or negligence, and other aspects of doing business on the scale of Brocade’s operations. Brocade attempts to identify its technological developments for assessment of whether to file patent applications, but there can be no assurance that all patentable technological developments will be captured in patent applications. Further, although Brocade has patent applications pending, there can be no assurance that patents will be issued from pending applications, or that claims allowed on any future patents will be sufficiently broad to protect its technology. The value, validity, and enforceability of intellectual property rights generated by Brocade’s operations, obtained from acquired companies, or purchased from third parties, are subject to many unknowns, and may not ultimately have the value originally anticipated.

Brocade has a high concentration of customers, including a limited number of OEM partners, which it relies on for a substantial portion of its revenues. The loss of any of these customers or OEM partners, a disruption in demand in a key vertical market, or a decrease in their purchases could significantly reduce Brocade’s revenues and negatively affect Brocade’s financial results.

Brocade depends on recurring purchases from a limited number of large OEM partners for a substantial portion of its revenues. As a result, these large OEM partners have a significant influence on Brocade’s quarterly and annual financial results. For fiscal years 2009, 2008 and 2007, the same three customers each represented 10% or more of Brocade’s total net revenues for a combined total of 48%, 65% and 68%, respectively. Brocade’s agreements with its OEM partners are typically cancelable, non-exclusive, have no minimum purchase requirements and have no specific timing requirements for purchases. Brocade’s OEM partners could also elect to reduce, or rebalance, the amount they purchase from Brocade and increase the amount purchased from Brocade’s competitors. Also, one or more of Brocade’s OEM partners could elect to consolidate or enter into a strategic partnership with one of Brocade’s competitors, which could have the effect of reducing or eliminating Brocade’s future revenue opportunities with that OEM partner. Brocade anticipates that a significant portion of its revenues and operating results will continue to depend on sales to a relatively small number of OEM partners. The loss of any one significant OEM partner, or a decrease in the level of sales to any one significant OEM partner, or unsuccessful quarterly negotiation on key terms, conditions or timing of purchase orders placed during a quarter, would likely cause serious harm to Brocade’s business and financial results.

Brocade’s OEM partners evaluate and qualify Brocade’s products for a limited time period before they begin to market and sell them. Assisting Brocade’s OEM partners through the evaluation process requires significant sales, marketing and engineering management efforts on Brocade’s part, particularly if Brocade’s products are being qualified with multiple distribution partners at the same time. In addition, once Brocade’s products have been qualified, its customer agreements have no minimum purchase commitments. Brocade may not be able to effectively maintain or expand its distribution channels, manage distribution relationships successfully, or market its products through distribution partners. Brocade must continually assess, anticipate and respond to the needs of its distribution partners and their customers, and ensure that its products integrate with their solutions. Brocade’s failure to successfully manage its distribution relationships or the failure of its distribution partners to sell Brocade’s products could reduce Brocade’s revenues significantly. In addition, Brocade’s ability to respond to the needs of its distribution partners in the future may depend on third parties producing complementary products and applications for Brocade’s products. If Brocade fails to respond successfully to the needs of these groups, its business and financial results could be harmed.

The loss or delay of continued orders from any of Brocade’s more significant customers, such as the U.S. government or individual agencies within the U.S. government, or companies within the financial services, education and health sectors, could also cause its revenue and profitability to suffer. For example, if Brocade is unable to offer qualified products to such government customers due to governmental procurement delays to the timing of approval of the federal budget or other reasons, and regulations and requirements with respect to country of origin designation, Brocade’s government orders could decrease, which would negatively impact its revenue and operating results. In addition, Brocade’s ability to attract new customers will depend on a variety of factors, including the cost-effectiveness, reliability, scalability, breadth and depth of its products. In addition, a change in the mix of Brocade’s customers, or a change in the mix of direct and indirect sales, could adversely affect its revenue and gross margins.

Brocade is dependent on sole source and limited source suppliers for certain key components, the loss of which may significantly impact results of operations.

Although Brocade uses standard parts and components for its products where possible, Brocade’s contract manufacturers currently purchase, on Brocade’s behalf, several key components used in the manufacture of its products from single or limited supplier sources. Brocade’s principal single source components include its application-specific integrated circuits (“ASICs”) and Brocade’s principal limited source components include memory, certain oscillators, microprocessors, certain connectors, certain logic chips, power supplies, programmable logic devices, printed circuit boards, certain optical components, packet processors and switching fabrics. Brocade generally acquires these components through purchase orders and has no long-term commitments regarding supply or pricing with such suppliers. If Brocade is unable to obtain these and other components when required or if Brocade experiences significant component defects, Brocade may not be able to deliver Brocade’s products to Brocade’s customers in a timely manner. In addition, the current economic and industry environment including the recent global economic slowdown may cause some of these sole source or limited source suppliers to delay production or to go out of business or be acquired by third parties, which could result disrupt Brocade’s supply chain. As a result, Brocade’s business and financial results could be harmed.

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In addition, the loss of any of Brocade’s major third-party contract manufacturers could significantly impact Brocade’s ability to produce its products for an indefinite period of time. Qualifying a new contract manufacturer and commencing volume production is typically a lengthy and expensive process. If Brocade is required to change any of its contract manufacturers or if any of its contract manufacturer experiences delays, disruptions, capacity constraints, component parts shortages or quality control problems in its manufacturing operations, shipment of Brocade’s products to Brocade’s customers could be delayed and result in loss of revenues and Brocade’s competitive position and relationship with customers could be harmed.

Brocade incurred substantial indebtedness to finance the acquisition of Foundry that decreases Brocade’s business flexibility and access to capital, and increases its borrowing costs, which may adversely affect Brocade’s operations and financial results.

Upon completion of the acquisition of Foundry in December 2008, Brocade increased its indebtedness by approximately $1.1 billion, which is substantially greater than its indebtedness prior to the acquisition. The $1.1 billion debt was originally issued under a term loan facility. In January 2010, that term loan was amended to permit Brocade to issue $600 million of senior indebtedness. Following the issuance of $600 million in Senior Secured Notes in January 2010, Brocade applied approximately $435 million of the proceeds to prepay a portion of the original $1.1 billion term loan. The financial and other covenants agreed to by Brocade in connection with such indebtedness and the increased indebtedness and higher debt-to-equity ratio of Brocade in comparison to that of Brocade on a recent historical basis will have the effect, among other things, of reducing Brocade’s flexibility to respond to changing business and economic conditions and increasing borrowing costs, and may adversely affect Brocade’s operations and financial results. The increased indebtedness may also adversely affect Brocade’s ability to access sources of capital or incur certain liens. In addition, Brocade’s failure to comply with these covenants could result in a default under the Senior Secured Credit Facility and its other debt, including the $600 million in Senior Secured Notes, which could permit the holders to accelerate such debt or demand payment in exchange for a waiver of such default. If any of Brocade’s debt is accelerated, Brocade may not have sufficient funds available to repay such debt. The current debt under the Senior Secured Credit Facility has a floating interest rate and an increase in interest rates may negatively impact Brocade’s financial results. The mandatory debt repayment schedule on the Senior Secured Credit Facility may negatively impact Brocade’s cash position and reduce Brocade’s financial flexibility. In addition, any negative changes by rating agencies to Brocade’s credit rating may negatively impact the value and liquidity of Brocade’s debt and equity securities and Brocade’s ability to access sources of capital.

Brocade’s failure to successfully manage the transition between its new products and its older products may adversely affect Brocade’s financial results.

As Brocade introduces new or enhanced products, Brocade must successfully manage the transition from older products to minimize disruption in customers’ ordering patterns, avoid excessive levels of older product inventories and provide sufficient supplies of new products to meet customer demands. When Brocade introduces new or enhanced products that feature higher-performance, higher-density and new technology options, Brocade faces numerous risks relating to product transitions, including the inability to accurately forecast demand, address new or higher product cost structures, and manage different sales and support requirements due to the type or complexity of the new products. In addition, any customer uncertainty regarding the timeline for rolling out new products or Brocade’s plans for future support of existing products, may negatively impact customer purchase decisions.

Changes in industry structure and market conditions could lead to charges related to discontinuances of certain of Brocade’s products or businesses and asset impairments.

Brocade carries a substantial amount of acquired intangible assets and goodwill on its balance sheet, which is predominately related to the Ethernet business in connection with Brocade’s acquisition of Foundry in December 2008. Brocade’s determination of fair value of long-lived assets relies on management’s assumptions of future revenues, operating costs, and other relevant factors. In response to changes in industry and market conditions, Brocade may be required to realign its resources strategically and consider restructuring, disposing of, or otherwise exiting businesses. Any decision to limit investment in, or dispose of or otherwise exit businesses may result in the recording of special charges, such as inventory and technology-related write-offs, workforce reduction costs, charges relating to consolidation of excess facilities, or claims from third parties who were resellers or users of discontinued products. Similarly, if management’s estimates of future operating results change or if there are changes to other assumptions, such as the discount rate applied to future cash flows, the estimate of the fair value of Brocade’s reporting units could change significantly, which could result in goodwill impairment charges. Brocade’s estimates with respect to the useful life or ultimate recoverability of Brocade’s carrying basis of assets, including purchased intangible assets, could change as a result of such assessments and decisions. For example, during the three months ended May 2, 2009, Brocade recorded a non-cash $53.3 million impairment charge in connection with the decision to no longer offer Brocade’s suite of Files products.

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Brocade’s estimates relating to the liabilities for excess facilities are also affected by changes in real estate market conditions. In addition, Brocade has made investments in certain private companies which could become impaired if the operating results of those companies change adversely. Brocade is required to perform goodwill impairment tests on an annual basis and between annual tests in certain circumstances, and future goodwill impairment tests may result in a charge to earnings.

Brocade has extensive international operations, which subjects it to additional business risks.

A significant portion of Brocade’s sales occur in international jurisdictions. In addition, Brocade’s contract manufacturers have significant operations in China. Brocade plans to continue to expand its international operations and sales activities. Brocade’s international sales of its Ethernet networking products have primarily depended on its resellers, including Pan Dacom GmbH in Europe, Stark Technology Inc. in Taiwan and Samsung Corporation in Korea. The failure by international resellers to sell Brocade’s products could limit its ability to sustain and grow revenue. Expansion of international operations will involve inherent risks that Brocade may not be able to control, including:

• Supporting multiple languages;

• Recruiting sales and technical support personnel with the skills to design, manufacture, sell and support Brocade’s products;

• Complying with governmental regulation of encryption technology and regulation of imports and exports, including obtaining required import or export approval for its products;

• Increased complexity and costs of managing international operations;

• Increased exposure to foreign currency exchange rate fluctuations;

• Commercial laws and business practices that favor local competition;

• Multiple, potentially conflicting, and changing governmental laws, regulations and practices, including differing export, import, tax, labor, anti-bribery and employment laws;

• Longer sales cycles and manufacturing lead times;

• Difficulties in collecting accounts receivable;

• Reduced or limited protection of intellectual property rights;

• Managing a research and development team in geographically diverse locations, including China and India; and

• Increased complexity of logistics and distribution arrangements.

Failure to manage expansion effectively could seriously harm Brocade’s business, financial condition and prospects. In addition, international political instability may halt or hinder Brocade’s ability to do business and may increase Brocade’s costs. Various events, including the occurrence or threat of terrorist attacks, increased national security measures in the United States and other countries, and military action and armed conflicts, may suddenly increase international tensions. Such events may have an adverse effect on the world economy and could adversely affect Brocade’s business operations or the operations of Brocade’s OEM partners, contract manufacturers and suppliers.

To date, no material amount of Brocade’s international revenues and cost of revenues have been denominated in foreign currencies. As a result, an increase in the value of the U.S. dollar relative to foreign currencies could make Brocade’s products more expensive and, thus, not competitively priced in foreign markets. Additionally, a decrease in the value of the U.S. dollar relative to foreign currencies could increase Brocade’s operating costs in foreign locations. In the future, a larger portion of Brocade’s international revenues may be denominated in foreign currencies, which will subject Brocade to additional risks associated with fluctuations in those foreign currencies. In addition, Brocade may be unable to successfully hedge against any such fluctuations.

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Brocade may not realize the anticipated benefits of past or future acquisitions and strategic investments, and integration of acquired companies or technologies may negatively impact Brocade’s business.

Brocade has in the past acquired, or made strategic investments in, other companies, products or technologies, and Brocade expects to make additional acquisitions and strategic investments in the future. Examples of recent acquisitions include Foundry in December 2008, Strategic Business Systems, Inc. in March 2008 and McDATA Corporation in January 2007. Brocade may not realize the anticipated benefits of the acquisition of Foundry or any other acquisitions or strategic investments, which involve numerous risks, including:

• Difficulties in successfully integrating the acquired businesses;

• Revenue attrition in excess of anticipated levels if existing customers alter or reduce their historical buying patterns;

• Unanticipated costs, litigation and other contingent liabilities;

• Diversion of management’s attention from Brocade’s daily operations and business;

• Adverse effects on existing business relationships with suppliers and customers;

• Risks associated with entering into markets in which Brocade has limited or no prior experience;

• Inability to attract and retain key employees;

• Inability to retain key customers, distributors, vendors and other business partners of the acquired business;

• Inability to effectively coordinate sales and marketing efforts to communicate the capabilities of the combined company;

• Inability to successfully develop new products and services on a timely basis that address the market opportunities of the combined company;

• Inability to compete effectively against companies already serving the broader market opportunities expected to be available to the combined company;

• Inability to qualify the combined company’s products with OEM partners on a timely basis, or at all;

• Failure to consolidate the combined company’s professional services and customer support organizations;

• Inability to successfully integrate and harmonize financial reporting and information technology systems;

• Failure to successfully manage additional remote locations, including the additional infrastructure and resources necessary to support and integrate such locations;

• Assumption or incurrence of debt and contingent liabilities and related obligations to service such liabilities and Brocade’s ability to satisfy financial and other negative operating covenants;

• Additional costs such as increased costs of manufacturing and service costs, costs associated with excess or obsolete inventory, costs of employee redeployment, relocation and retention, including salary increases or bonuses, accelerated amortization of deferred equity compensation and severance payments, reorganization or closure of facilities, taxes, advisor and professional fees, and termination of contracts that provide redundant or conflicting services;

• Incurrence of significant exit charges if products acquired in business combinations are unsuccessful;

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• Incurrence of acquisition and integration related costs, accounting charges, or amortization costs for acquired intangible assets, that could negatively impact Brocade’s operating results and financial condition;

• Potential write-down of goodwill and/or acquired intangible assets, which are subject to impairment testing on an annual basis, and could significantly impact Brocade’s operating results; and

• Dilution of the percentage of Brocade’s stockholders to the extent equity is used as consideration or option plans are assumed, such as in the case of the Foundry acquisition, in which approximately 125.1 million additional shares of Brocade common stock became issuable in connection with the assumption or substitution of Foundry equity awards.

If Brocade is not able to successfully integrate businesses, products, technologies or personnel that Brocade acquires, or to realize expected benefits of Brocade’s acquisitions or strategic investments, Brocade’s business and financial results would be adversely affected.

Business interruptions could adversely affect Brocade’s business.

Brocade’s operations and the operations of its suppliers, contract manufacturers and customers are vulnerable to interruptions by fire, earthquake, hurricane, power loss, telecommunications failure and other events beyond Brocade’s control. For example, a substantial portion of Brocade’s facilities, including its corporate headquarters, is located near major earthquake faults. Brocade does not have multiple site capacity for all of its services in the event of any such occurrence. In the event of a major earthquake, Brocade could experience business interruption, destruction of facilities and loss of life. Brocade does not carry earthquake insurance and has not set aside funds or reserves to cover such potential earthquake-related losses. Additionally, health issues such as an outbreak of a pandemic or epidemic, including the H1N1 flu (swine flu) virus, may interrupt business operations in those geographic regions affected by the disease. In addition, one of Brocade’s contract manufacturers has a major facility located in an area that is subject to hurricanes. In the event that a material business interruption occurs that affects Brocade, its suppliers, contract manufacturers or customers, shipments could be delayed and Brocade’s business and financial results could be harmed. Despite Brocade’s implementation of network security measures, its servers may be vulnerable to computer viruses, break-ins, and similar disruptions from unauthorized tampering with its computer systems. Brocade may not carry sufficient insurance to compensate for losses that may occur as a result of any of these events.

Brocade’s business is subject to cyclical fluctuations and uneven sales patterns, which make predicting results of operations difficult.

Many of Brocade’s partners experience uneven sales patterns in their businesses due to the cyclical nature of information technology spending. For example, some of Brocade’s partners close a disproportionate percentage of their sales transactions in the last month, weeks and days of each fiscal quarter, and other partners experience spikes in sales during the fourth calendar quarter of each year. Because a large portion of Brocade’s sales are derived from a small number of OEM partners, when they experience seasonality, Brocade typically experiences similar seasonality. Historically, Brocade’s first and fourth fiscal quarters are seasonally stronger quarters than its second and third fiscal quarters. These OEM partners make decisions to purchase inventory based on a variety of factors, including their product qualification cycles and their expectations of end customer demand that may be affected by seasonality and internal supply management objectives. Others require that Brocade maintain inventories of Brocade’s products in hubs adjacent to their manufacturing facilities and purchase Brocade’s products only as necessary to fulfill immediate customer demand. In addition, Brocade has experienced quarters where uneven sales patterns of Brocade’s OEM partners have resulted in a significant portion of Brocade’s revenue occurring in the last month of Brocade’s fiscal quarter. For example, Brocade’s Ethernet networking business typically experiences significantly higher levels of sales towards the end of a period. Such non-linearity in shipments due to sales patterns can increase risks of disruption during this critical period as well as raise costs, as irregular shipment patterns result in periods of underutilized capacity and additional costs associated with higher inventory levels and inventory planning. Furthermore, orders received towards the end of the period may not ship within the period due to Brocade’s manufacturing lead times. This exposes Brocade to additional inventory risk because Brocade must order products in anticipation of expected future orders and additional sales risk if Brocade is unable to fulfill unanticipated demand. In addition, receipt of a high number of customer orders towards the end of a fiscal quarter will increase reported receivables outstanding as a fraction of reported sales and result in higher days sales outstanding. Brocade is not able to predict the degree to which the seasonality and uneven sales patterns of Brocade’s OEM partners or other customers will affect Brocade’s business in the future, particularly as Brocade releases new products.

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Undetected software or hardware errors could increase Brocade’s costs, reduce Brocade’s revenues and delay market acceptance of Brocade’s products.

Networking products frequently contain undetected software or hardware errors, or bugs, when first introduced or as new versions are released. Brocade’s products are becoming increasingly complex and particularly, as Brocade continues to expand its product portfolio to include software-centric products, including software licensed from third parties, errors may be found from time to time in Brocade’s products. In addition, through its acquisitions, Brocade has assumed, and may in the future assume, products previously developed by an acquired company that have not been through the same level of product development, testing and quality control processes used by Brocade, and may have known or undetected errors. Some types of errors also may not be detected until the product is installed in a heavy production or user environment. In addition, Brocade’s products are often combined with other products, including software, from other vendors, and these products often need to interface with existing networks, each of which have different specifications and utilize multiple protocol standards and products from other vendors. As a result, when problems occur, it may be difficult to identify the source of the problem. These problems may cause Brocade to incur significant warranty and repair costs, may divert the attention of engineering personnel from product development efforts, and may cause significant customer relations problems. Moreover, the occurrence of hardware and software errors, whether caused by another vendor’s storage, data management or Ethernet products or Brocade’s, could delay market acceptance of Brocade’s new products.

Brocade’s quarterly and annual revenues and operating results may fluctuate in future periods due to a number of factors, which could adversely affect the trading price of Brocade’s stock.

Brocade’s quarterly and annual revenues and operating results may vary significantly in the future due to a number of factors. Factors that may affect the predictability of Brocade’s annual and quarterly results include, but are not limited to, the following:

• Disruptions or a continued decline in general economic conditions, particularly in the information technology industry;

• Announcements of pending or completed acquisitions or other strategic transactions by Brocade, its competitors or its partners;

• Announcements, introductions and transitions of new products by Brocade, its competitors or its partners;

• The timing of customer orders, product qualifications and product introductions of Brocade’s partners;

• Seasonal fluctuations;

• Long and complex sales cycles;

• Declines in average selling prices for Brocade’s products as a result of competitive pricing pressures or new product introductions by Brocade or its competitors;

• The emergence of new competitors and new technologies in the networking markets;

• Deferrals of customer orders in anticipation of new products, services, or product enhancements introduced by Brocade or its competitors;

• Brocade’s ability to timely produce products that comply with new environmental restrictions or related requirements of its customers;

• Brocade’s ability to obtain sufficient supplies of sole- or limited-sourced components, including ASICs, microprocessors, certain connectors, certain logic chips and programmable logic devices;

• Increases in prices of components used in the manufacture of Brocade’s products;

• Brocade’s ability to attain and maintain production volumes and quality levels;

• Variations in the mix of Brocade’s products sold and the mix of distribution channels and geographies through which they are sold;

• Pending or threatened litigation;

• Stock-based compensation expense that is affected by Brocade’s stock price;

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• New legislation and regulatory developments; and

• Other risk factors detailed in this section.

Accordingly, the results of any prior periods should not be relied upon as an indication of future performance. Brocade cannot assure you that in some future quarter Brocade’s revenues or operating results will not be below Brocade’s projections or the expectations of stock market analysts or investors, which could cause Brocade’s stock price to decline.

Brocade’s business is subject to increasingly complex corporate governance, public disclosure, accounting and tax requirements, and environmental regulations that could adversely affect Brocade’s business and financial results.

Brocade is subject to changing rules and regulations of federal and state government as well as the stock exchange on which Brocade’s common stock is listed. These entities, including the Public Company Accounting Oversight Board, the SEC, the IRS and NASDAQ, have issued a significant number of new and increasingly complex requirements and regulations over the course of the last several years and continue to develop additional regulations and requirements in response to laws enacted by Congress. In addition, the Department of Treasury, the SEC and various Congressional representatives have recently proposed additional rules and regulations that may go into effect in the near future. Brocade is also subject to various rules and regulations of certain foreign jurisdictions, including applicable tax regulations. Brocade’s efforts to comply with these requirements have resulted in, and are likely to continue to result in, an increase in expenses and a diversion of management’s time from other business activities. A change in the tax law in the jurisdictions in which Brocade does business, including an increase in tax rates or an adverse change in the treatment of an item of income or expense, could result in a material increase in Brocade’s tax expense. For example, in May 5, 2009, the President of the United States and the U.S. Treasury Department proposed changing certain of the U.S. tax rules for U.S. corporations doing business outside the United States. Specific legislation has not yet been proposed or enacted, but it is possible that these or other changes in the U.S. tax laws could increase Brocade’s U.S. income tax liability in the future.

Brocade is subject to periodic audits or other reviews by such governmental agencies. For example, Brocade is under examination by the IRS for its domestic federal income tax return for the fiscal years 2003 through 2008. In May 2006, the Franchise Tax Board notified Brocade that its California income tax returns for the years ended October 25, 2003 and October 30, 2004 were subject to audit. All these examination cycles remain open as of January 30, 2010. The SEC also periodically reviews Brocade’s public company filings. Any such examination or review frequently requires management’s time and diversion of internal resources and, in the event of an unfavorable outcome, may result in additional liabilities or adjustments to Brocade’s historical financial results.

The IRS is contesting the Company’s transfer pricing for the cost sharing and buy-in arrangements with its foreign subsidiaries. The Company appealed the Revenue Agent’s Report to the Appeals Office of the IRS for the years under examination through 2006. The IRS started the examination of the Company’s fiscal year 2007 and 2008 income tax returns. The IRS may make similar claims against the Company’s transfer pricing arrangements in future examinations. Audits by the IRS are subject to inherent uncertainties and an unfavorable outcome could occur, such as fines or penalties. The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on Brocade’s results of operations for that period or future periods. The expense of defending and resolving such an audit may be significant. The amount of time to resolve an audit is unpredictable and defending Brocade may divert management’s attention from Brocade’s day-to-day business operations, which could adversely affect Brocade’s business.

Brocade is subject to various environmental and other regulations governing product safety, materials usage, packaging and other environmental impacts in the various countries where Brocade’s products are sold. For example, many of Brocade’s products are subject to laws and regulations that restrict the use of lead, mercury, hexavalent chromium, cadmium and other substances, and require producers of electrical and electronic equipment to assume responsibility for collecting, treating, recycling and disposing of Brocade’s products when they have reached the end of their useful life. For example, in Europe, substance restrictions apply to products sold, and certain of Brocade’s partners require compliance with these or more stringent requirements. In addition, recycling, labeling, financing and related requirements apply to products Brocade sells in Europe. China has also enacted similar legislation with similar requirements for Brocade’s products or its partners. Despite Brocade’s efforts to ensure that its products comply with new and emerging requirements, Brocade cannot provide absolute assurance that its products will, in all cases, comply with such requirements. If Brocade’s products do not comply with the substance restrictions under local environmental laws, Brocade could become subject to fines, civil or criminal sanctions and contract damage claims. In addition, Brocade could be prohibited from shipping non-compliant products into one or more jurisdictions and required to recall and replace any non-compliant products already shipped, which would disrupt its ability to ship products and result in reduced revenue, increased obsolete or excess inventories, and harm to Brocade’s business and customer relationships. Brocade’s suppliers may also fail to provide it with compliant materials, parts and components despite Brocade’s requirement to do so, which could impact Brocade’s ability to timely produce compliant products and, accordingly, could disrupt its business.

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Brocade relies on licenses from third parties and the loss or inability to obtain any such license could harm its business.

Many of Brocade’s products are designed to include software or other intellectual property licensed from third parties. While it may be necessary in the future to seek or renew licenses relating to various aspects of its products, Brocade believes that, based upon past experience and standard industry practice, such licenses generally can be obtained on commercially reasonable terms. Nonetheless, there can be no assurance that the necessary licenses will be available on acceptable terms, if at all. Brocade’s inability to obtain certain licenses or other rights on favorable terms could have an adverse effect on Brocade’s business, operating results and financial condition. In addition, if Brocade fails to carefully manage the use of “open source” software in Brocade’s products, Brocade may be required to license key portions of Brocade’s products on a royalty-free basis or expose key parts of source code.

Brocade is exposed to various risks related to legal proceedings or claims that could adversely affect its operating results.

Brocade is a party to lawsuits in the normal course of its business. Litigation in general can be expensive, lengthy and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict. Responding to lawsuits brought against Brocade, or legal actions initiated by Brocade, can often be expensive and time-consuming. For example, in the past, Brocade has incurred significant expenses pursuant to certain indemnification obligations to various current and former officers and directors in connection with Brocade’s historical stock option granting practices and other related matters. Unfavorable outcomes from these claims and/or lawsuits could adversely affect Brocade’s business, results of operations, or financial condition.

If Brocade loses key talent or is unable to hire additional qualified talent, Brocade’s business may be harmed.

Brocade’s success depends, to a significant degree, upon the continued contributions of key management, engineering, sales and other talent, many of whom would be difficult to replace. Brocade believes its future success will also depend, in large part, upon Brocade’s ability to attract and retain highly skilled managerial, engineering, sales and other talent, and on the ability of management to operate effectively, both individually and as a group, in geographically diverse locations. There is a limited number of qualified talent in the applicable market and competition for such employees is strong. In the past, Brocade has experienced difficulty in hiring qualified talent in areas such as ASICs, software, system and test, sales, marketing, service, key management and customer support. Although Brocade’s stock price generally increased during the twelve months ended January 30, 2010, any future declines in Brocade’s stock price could result in additional “underwater” stock options held by its employees. If such a decline in Brocade’s stock price were to occur, any resulting underwater options could decrease Brocade’s ability to incentivize or retain qualified talent. Brocade’s ability to retain qualified talent may also be affected by future and recent acquisitions, which may cause uncertainty and loss of key talent. The loss of the services of any of Brocade’s key employees, the inability to attract or retain qualified talent in the future, or delays in hiring required talent, particularly engineers and sales talent, could delay the development and introduction of Brocade’s products or services, and negatively affect Brocade’s ability to sell its products or services.

In addition, companies in the computer storage, networking and server industries whose employees accept positions with competitors may claim that their competitors have engaged in unfair hiring practices or that there will be inappropriate disclosure of confidential or proprietary information. Brocade may be subject to such claims in the future as Brocade seeks to hire additional qualified talent. Such claims could result in litigation. As a result, Brocade could incur substantial costs in defending against these claims, regardless of their merits, and be subject to additional restrictions if any such litigation is resolved against Brocade.

Provisions in Brocade’s charter documents, customer agreements and Delaware law could prevent or delay a change in control of Brocade, which could hinder stockholders’ ability to receive a premium for Brocade’s stock.

Provisions of Brocade’s certificate of incorporation and bylaws may discourage, delay or prevent a merger or mergers that a stockholder may consider favorable. These provisions include:

• Authorizing the issuance of preferred stock without stockholder approval;

• Providing for a classified board of directors with staggered, three-year terms;

• Prohibiting cumulative voting in the election of directors;

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• Limiting the persons who may call special meetings of stockholders;

• Prohibiting stockholder actions by written consent; and

• Requiring supermajority voting to effect amendments to the foregoing provisions of Brocade’s certificate of incorporation and bylaws.

Certain provisions of Delaware law also may discourage, delay or prevent someone from acquiring or merging with Brocade, and Brocade’s agreements with certain of Brocade’s customers require that Brocade give prior notice of a change of control and grant certain manufacturing rights following a change of control. Brocade’s various change-of-control provisions could prevent or delay a change in control of Brocade, which could hinder stockholders’ ability to receive a premium for Brocade’s stock. Brocade’s proxy statement for the 2010 annual meeting of stockholders contains two proposals to amend the Company’s certification of incorporation that, if approved by the stockholders, would eliminate the classified board of directors and supermajority voting thresholds in the Company’s certificate of incorporation and bylaws.

Brocade may not realize the anticipated benefits in connection with its recent purchase of real estate and plans to develop and construct office buildings, which could disrupt its business and negatively impact its financial performance.

Brocade’s recent purchase of real estate in San Jose, California and its commitment to build a new campus of several buildings on that real estate constitute a substantial investment. Brocade may not realize the anticipated benefits with respect to the purchase and development of such property. Brocade is devoting significant capital resources to developing the campus, which will reduce Brocade’s liquidity and financial flexibility. Additionally, the development, construction and maintenance of the new campus may result in unexpected costs or delays, which may negatively impact Brocade’s financial position. Moreover, any delays in the development or construction of the new campus may also suspend Brocade’s ability to move into the new campus on a timely basis and, as a result, may disrupt Brocade’s business.

Item 6. Exhibits

EXHIBIT INDEX

Exhibit Number	Description of Document
3.1	Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 from Brocade’s quarterly report on Form 10-Q for the quarter ended July 28, 2007)
3.2	Certificates of Correction and Corrected Amended and Restated Certificate of Incorporation effective as of June 1, 2009 (incorporated by reference to Exhibit 3.5 from Brocade’s quarterly report on Form 10-Q for the quarter ended May 2, 2009)
3.3	Amended and Restated Bylaws of the Registrant effective as of February 10, 2009 (incorporated by reference to Exhibit 3.2 from Brocade’s Form 8-K filed on February 10, 2009)
3.4	Certificate of Designation of Rights, Preferences and Privileges of Series A Participating Preferred Stock of Brocade Communications Systems, Inc. (incorporated by reference to Exhibit 4.1 from Brocade’s Registration Statement on Form 8-A filed on February 11, 2002)
3.5	Certificate of Elimination of Series A Participating Preferred Stock of Brocade (incorporated by reference to Exhibit 3.1 from Brocade’s Form 8-K filed on February 16, 2007)
4.1	Form of Registrant’s Common Stock certificate (incorporated by reference to Exhibit 4.1 from Brocade’s Registration Statement on Form S-1 (Reg. No. 333-74711), as amended)
4.2	First Supplemental Indenture dated as of January 29, 2007 by and among McDATA Corporation, Brocade, and Wells Fargo Bank, National Association, as successor in interest to Wells Fargo Bank Minnesota, National Association (incorporated by reference to Exhibit 4.2 from Brocade’s Form 10-Q for the quarter ended April 28, 2007)
4.3	Second Supplemental Indenture dated as of January 29, 2007 by and among McDATA Corporation, McDATA Services Corporation, a Minnesota corporation f/k/a Computer Network Technology Corporation, Brocade, and U.S. Bank National Association (incorporated by reference to Exhibit 4.3 from Brocade’s Form 10-Q for the quarter ended April 28, 2007)

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4.4	Indenture dated February 7, 2003 by and among McDATA Corporation and Wells Fargo Bank Minnesota, National Association (incorporated by reference to Exhibit 4.4 from Brocade’s Form 10-Q for the quarter ended April 28, 2007)
4.5	Indenture dated February 20, 2002 by and among Computer Network Technology Corporation and U.S. Bank National Association (incorporated by reference to Exhibit 4.5 from Brocade’s Form 10-Q for the quarter ended April 28, 2007)
4.6	Indenture, dated as of January 20, 2010, by and among Brocade, the Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as Trustee, governing the 2018 Notes (incorporated by reference to Exhibit 4.1 from Brocade’s Form 8-K filed on January 26, 2010)
4.7	Indenture, dated as of January 20, 2010, by and among Brocade, the Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as Trustee, governing the 2020 Notes (incorporated by reference to Exhibit 4.2 from Brocade’s Form 8-K filed on January 26, 2010)
10.1*	Executive Leadership Plan (formerly Senior Leadership Plan), as amended as of December 3, 2009 (incorporated by reference to Exhibit 10.1 from Brocade’s Form 8-K filed on December 9, 2009)
10.2*	Form of Restricted Stock Unit Agreement (Market Stock Units) under Brocade’s 2009 Stock Plan (incorporated by reference to Exhibit 10.2 from Brocade’s Form 8-K filed on December 9, 2009)
10.3**/†	Amendment Number 39 dated December 15, 2009, to Statement of Work Number 1 of the Goods Agreement between IBM and Brocade
10.4**	Amendment and Waiver No. 1 dated January 8, 2010, to the Credit Agreement, dated as of October 7, 2008, by and among Brocade, the lenders party thereto, Bank of America, N.A., as administrative agent, swing line lender and letter of credit issuer, Morgan Stanley Senior Funding, Inc., as syndication agent, Banc of America Securities LLC and Morgan Stanley Senior Funding, Inc., as joint lead arrangers and joint bookrunners, and HSBC Bank USA National Association and Keybank National Association, as co-documentation agents
10.5**	Purchase Agreement, dated January 13, 2010, between Brocade and J.P. Morgan Inc., as representative of the several Initial Purchasers listed in Schedule 1 thereto
10.6	Security Agreement, dated as of January 20, 2010, by and among Brocade, the Subsidiary Guarantors listed on the signature pages thereto and Wells Fargo Bank, National Association, as collateral agent (incorporated by reference to Exhibit 10.1 from Brocade’s Form 8-K filed on January 26, 2010)
10.7	Security Agreement, dated as of January 20, 2010, by and among Brocade, the Subsidiary Guarantors listed on the signature pages thereto and Wells Fargo Bank, National Association, as collateral agent (incorporated by reference to Exhibit 10.2 from Brocade’s Form 8-K filed on January 26, 2010)
10.8	Registration Rights Agreement, dated as of January 20, 2010, by and among Brocade, the Subsidiary Guarantors listed on the signature pages thereto and the purchasers named therein (incorporated by reference to Exhibit 10.3 from Brocade’s Form 8-K filed on January 26, 2010)
10.9	Registration Rights Agreement, dated as of January 20, 2010, by and among Brocade, the Subsidiary Guarantors listed on the signature pages thereto and the purchasers named therein (incorporated by reference to Exhibit 10.4 from Brocade’s Form 8-K filed on January 26, 2010)
10.10**	Real Estate Sale Agreement effective as of January 25, 2010 by and between Brocade Communications Systems Skyport LLC, a wholly-owned subsidiary of Brocade, and CA-Skyport III Limited Partnership
10.11**	Lease Agreement dated as of January 28, 2010 by and between Brocade and CA-Skyport III Limited Partnership
10.12**/†	Amendment Number 2 dated February 2, 2010 to OEM Purchase and License Agreement between EMC Corporation and Brocade

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31.1**	Rule 13a-14(a)/15d-14(a) Certification by the Chief Executive Officer
31.2**	Rule 13a-14(a)/15d-14(a) Certification by the Chief Financial Officer
32.1**	Certification by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Indicates management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 15(b) of Form 10-K.

** Filed herewith.

† Confidential treatment requested as to certain portions, which portions were omitted and filed separately with the Securities and Exchange Commission.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Brocade Communications Systems, Inc.
Date: March 2, 2010	By:	/s/    RICHARD DERANLEAU
		Richard Deranleau
		Chief Financial Officer

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EX-10.3

Exhibit 10.3

3039 E CORNWALLIS RD

RESEARCH TRIANGLE PARK NC 27709-2195

December 15, 2009

Mr. Mike Harrison

Brocade Communications Systems, Inc.

1745 Technology Drive

San Jose, CA 95110

Subject: Amendment 39 to SOW#1 of the IBM/Brocade Goods Agreement ROC-P-68

This letter (the “Amendment”) serves as Amendment Number 39 to SOW#1, including all amendments thereto (“SOW#1”) of the Goods Agreement ROC-P-68 (the “Agreement”), which the parties hereto do mutually agree to amend as follows

1. Replace the last paragraph of Section 2.1, Price Modifications, with the following paragraph:

The parties agree to review price changes, including but not limited to changes in market conditions, support variances, and the business relationship. Such reviews shall occur as mutually agreed upon between the parties. An authorized representative of Supplier, or the authorized designee, must provide Buyer with notice of all price changes (“Price Change Notices”) and such Price Change Notices must be accepted by an authorized representative of Buyer, or the authorized designee. Authorized Representatives of Supplier and Buyer are listed in Section 10, Communications Coordinators, Pricing Notices. Any pricing changes which may result from such reviews and activities shall become effective on the date listed on the updated Products/Pricing Attachment. Notices may be sent and accepted by electronic mail.

2. Delete Section 10, Communications Coordinators, with the following Section 10.

10. COMMUNICATIONS COORDINATORS

All communications between the parties will be carried out through the following designated coordinators.

BUSINESS COORDINATORS

FOR SUPPLIER		FOR BUYER
Name	[**]	Name	[**]
Address	[**]	Address	[**]
Phone	[**]	Phone	[**]
Email	[**]	Email	[**]

TECHNICAL COORDINATORS

FOR SUPPLIER		FOR BUYER
Name	[**]	Name	[**]
Address	[**]	Address	[**]
Phone	[**]	Phone	[**]
Email	[**]	Email	[**]

[**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 1 of 40

PRICING NOTICES

FOR SUPPLIER	Authorized Representative	FOR BUYER	Authorized Representative
Name	[**]	Name	[**]
Address	[**]	Address	[**]
Phone	[**]	Phone	[**]
Email	[**]	Email	[**]

All legal notices will be sent to the following addresses and will be deemed received (a) two (2) days after mailing if sent by certified mail, return receipt requested or (b) on the date confirmation is received if sent by facsimile to the party set forth below:

LEGAL NOTICES

FOR SUPPLIER		FOR BUYER
Name	General Counsel Legal Department	Name	[**]
Address	[**]	Address	[**]
Phone	[**]	Phone	[**]
Fax	[**]	Email	[**]

3. Exhibit A of the SOW#1 is hereby deleted in its entirety and replaced with Exhibit A attached hereto.

4. Exhibit B of the SOW #1 is hereby deleted in its entirety and replaced with Exhibit B attached hereto.

5. The effective date of this Amendment shall be the date on the top of this Amendment (the “Effective Date”).

The parties acknowledge that they have read this Amendment, understand it, and agree to be bound by its terms and conditions. All capitalized terms not defined herein shall have the meaning set forth in the Goods Agreement or the SOW #1. All other terms and conditions of the Goods Agreement and SOW#1 that are unaffected by the revisions set forth in this Amendment shall remain in full force and effect. Further, the parties agree that this Amendment and the Goods Agreement and SOW#1 are the complete and exclusive statement of the agreement between the parties, superseding all proposals or other prior agreement, oral or written, and all other communications between the parties relating to this subject.

Accepted and Agreed To:		Accepted and Agreed To:
International Business Machines Corporation		Brocade Communications Systems, Inc.
By:	/s/ Michelle B. Wright                12/22/09	By:	/s/ Matt Taylor                12/17/09
Authorized Signature                                Date		Authorized Signature              Date
Michelle B. Wright		Matt Taylor
Type or Print Name		Type or Print Name
GCM –Storage OEM Procurement		Sr. Director OEM Sales/Service
Title & Organization		Title & Organization

Address:	Address:	1745 Technology Drive
		San Jose, CA 95110

* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 2 of 40

Accepted and Agreed To:
Brocade Communications Switzerland, SarL
By:	/s/ Kevin L. McKenna
Authorized Signature                Date 16 December 2009
Kevin L. McKenna
Type or Print Name
Director
Title & Organization

Amendment 39 to SOW 1 Brocade Confidential Information Page 3 of 40

AMENDMENT 39 TO SOW-1

EXHIBIT A Updated as of December 15, 2009

Supplier Part Number		Buyer Part Number
Brocade Model	Brocade P/N	IBM Model or FC #	IBM PN / NUMA-Q PN	Description	Unit Price	**[**] months Software Maintenance (included in unit price of product)	Out of Warranty Pricing
1Gbit/sec Switch Products and Software
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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 4 of 40

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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 5 of 40

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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 6 of 40

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* [**] 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.

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[**]*	[**]	[**]	[**]	[**]	[**]	[**]	[**]
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4Gbit/sec Switch Products and Software
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* [**] 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.

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BROCADE 5000
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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 10 of 40

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8Gbit/sec Switch Products and Software
BROCADE 300
[**]	[**]	[**]	[**]	[**]	[**]	[**]	[**]
[**]	[**]	[**]	[**]	[**]	[**]	[**]	[**]
	BROCADE 300 BUNDLED WITH SFP’S
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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 11 of 40

	BROCADE 300 FRU’s
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	BROCADE 300 SFP’S
	NOTE: For SFP pricing, reference Director Section - BROCADE DCX (DATA CENTER BACKBONE)
	BROCADE 300 OPTIONAL SOFTWARE
[**]	[**]	[**]	[**]	[**]	[**]	[**]	[**]
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BROCADE 5100
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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 12 of 40

	[**]	[**]	[**]	[**]	[**]	[**]	[**]
	BROCADE 5100 BUNDLED WITH SFP’S
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	BROCADE 5100 FRU’s
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	BROCADE 5100 SFP’s
	NOTE: For SFP pricing, reference Director Section - BROCADE DCX (DATA CENTER BACKBONE)
	BROCADE 5100 OPTIONAL SOFTWARE
	[**]	[**]	[**]	[**]	[**]
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	[**]	[**]	[**]	[**]	[**]
	[**]	[**]	[**]	[**]	[**]
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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 13 of 40

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BROCADE 5300
[**]	[**]	[**]	[**]	[**]	[**]	[**]	[**]
	BROCADE 5300 BUNDLED WITH SFP’S
[**]	[**]	[**]	[**]	[**]	[**]	[**]	[**]
[**]	[**]	[**]	[**]	[**]	[**]	[**]	[**]
	BROCADE 5300 FRU’s
[**]	[**]	[**]	[**]	[**]	[**]	[**]	[**]
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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 14 of 40

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[**]	[**]	[**]	[**]	[**]	[**]	[**]	[**]
[**]	[**]	[**]	[**]	[**]	[**]	[**]	[**]
	BROCADE 5300 SFP’S
	NOTE: For SFP pricing, reference Director Section - BROCADE DCX (DATA CENTER BACKBONE)
	BROCADE 5300 OPTIONAL SOFTWARE
[**]	[**]	[**]	[**]	[**]	[**]	[**]	[**]
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FCoE Switch Products and Software
BROCADE 8000 (Accessories, FRU’s, Optional Software)
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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 15 of 40

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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 16 of 40

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BROCADE 8000 CEE Only (Accessories, FRU’s, Optional Software)
[**]	[**]	[**]	[**]	[**]	[**]	[**]	[**]
	BROCADE 8000 CEE Only FRU’s
[**]	[**]	[**]	[**]	[**]	[**]	[**]	[**]
EXTENSION PRODUCTS
BROCADE 7800 (Accessories, FRU’s, Optional Software)
[**]	[**]	[**]	[**]	[**]	[**]	[**]	[**]
	BROCADE 7800 FRU’s
[**]	[**]	[**]	[**]	[**]	[**]	[**]	[**]
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	BROCADE 7800 OPTIONAL SOFTWARE
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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 17 of 40

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MULTI-PROTOCOL ROUTER
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DIRECTOR PRODUCTS AND SOFTWARE
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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 18 of 40

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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 19 of 40

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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 20 of 40

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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 21 of 40

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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 22 of 40

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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 23 of 40

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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 24 of 40

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BROCADE DCX (DATA CENTER BACKBONE)
[**]	[**]	[**]	[**]	[**]	[**]	[**]	[**]
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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 25 of 40

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	DCX BLADE - BUNDLED WITH SFP’S
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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 26 of 40

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* [**] 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.

Amendment 39 to SOW 1 Brocade Confidential Information Page 27 of 40

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	DCX - FRU’s
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BROCADE FX8-24 DCX EXTENSION BLADE
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	BROCADE FX8-24 DCX EXTENSION BLADE - FRU’s
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	BROCADE FX8-24 DCX EXTENSION BLADE - OPTIONAL SOFTWARE
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* [**] 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.

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BROCADE FCoE 10-24 DCX Blade
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	BROCADE FCoE 10-24 DCX Blade - FRU’s
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FABRIC MANAGER
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Supplier Part Number		Buyer Part Number
Brocade Model	Brocade P/N	IBM Model or FC #	IBM PN / NUMA-Q PN	Description	Out of Warranty
DIRECTOR PRODUCTS (part numbers for DCX RMA purposes only)
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** For purpose of calculating the fees for the annual Software Maintenance Support Program as described in Section 9.4, the annual Software Maintenance Fee per Unit for each part number where it is applicable as follows:

Supplier Part Number		Buyer Part Number
Brocade Model	Brocade P/N	IBM Model or FC #	IBM PN / NUMA-Q PN	Product Description	Annual Software Maintenance Fee per Unit
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AMENDMENT 39 TO SOW-1

EXHIBIT B

Supplier Part Number		Buyer Part Number
Brocade Model	Brocade P/N	IBM Model or FC #	IBM P/N	Description	Unit Price	Defect Based SW Support – [**] Years (included in unit price of product)	Non Defect Based SW Technical Support & SW Upgrades – [**] Year (included in unit price of product)	Out of Warranty Pricing
BROCADE DCX-4S
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	BROCADE DCX-4S MAINTENANCE RENEWALS
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BROCADE 8000
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	BROCADE 8000 - MAINTENANCE RENEWALS
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BROCADE 8000 (CEE Only)
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	BROCADE 8000 - MAINTENANCE RENEWALS
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BROCADE 7800 Extension Switch
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	BROCADE 7800 MAINTENANCE RENEWALS
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EX-10.4

Exhibit 10.4

AMENDMENT AND WAIVER NO. 1 TO

CREDIT AGREEMENT

AMENDMENT AND WAIVER NO. 1, dated as of January 8, 2010 (this “Amendment and Waiver”), among BROCADE COMMUNICATIONS SYSTEMS, INC., a Delaware corporation (the “Borrower”), BANK OF AMERICA, N.A., as Administrative Agent, and the Required Lenders listed on the signature pages hereto, to the Credit Agreement dated as of October 7, 2008 (the “Credit Agreement”) among the Borrower, each lender from time to time party thereto (collectively, the “Lenders” and individually, a “Lender”), and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.

WHEREAS, Section 10.01 of the Credit Agreement permits the Credit Agreement to be amended from time to time;

NOW, THEREFORE, in consideration of the premises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

Section 1. Amendments.

Upon and subject to the Amendment and Waiver No. 1 Effective Date (as defined below), the Credit Agreement is amended as follows:

(a) Section 2.05(b) of the Credit Agreement is hereby amended by deleting clause (i) in its entirety and replacing it with: “(i) [Reserved]”;

(b) Section 2.05(b)(iii) of the Credit Agreement is hereby amended by (A) replacing the parenthetical “(excluding any Over-Allotment Amount)” with “(excluding Section 7.02(i))” and (B) adding the following immediately before the period:

“; provided that, any Indebtedness incurred or issued under Section 7.02(i) (A) on or substantially concurrently with the Amendment and Waiver No. 1 Effective Date shall prepay the Term Loans in accordance with Section 2.05(b)(x) and (y) after the Amendment and Waiver No. 1 Effective Date shall prepay an aggregate principal amount of Loans as otherwise required hereunder”

(c) Section 2.05(b)(vi) of the Credit Agreement is hereby amended by (A) replacing “(i)” immediately after “clauses” with “(ii)” in the first sentence and (B) deleting “or Excess Cash Flow, as the case may be” in the second sentence;

(d) Section 2.05(b)(x) of the Credit Agreement is hereby amended by replacing clause (x) in its entirety with the following:

“(x) The Borrower shall prepay the Term Loans in accordance with Section 4(e) of Amendment and Waiver No. 1 to this Agreement. Such prepayment shall be applied in accordance with Section 2.05(b)(v) and (ix) (exclusive of the last sentence of such paragraph (ix)).”

(e) Section 6.02 of the Credit Agreement is hereby amended by replacing “Section 6.02(d)” with “Section 6.02(c)” in the first sentence of the second paragraph.

(f) Section 6.12(b) of the Credit Agreement is hereby amended by adding “(other than any Immaterial Subsidiary or a Permitted Receivables Subsidiary)” immediately after the first instance of the word “Subsidiary” in the first sentence.

(g) Section 6.12 of the Credit Agreement is hereby amended by adding the following clause (e) immediately after clause (d):

“(e) Upon the incurrence of any Indebtedness permitted to be incurred pursuant to Section 7.02(i) and permitted to be secured under Section 7.01(y)(i) or (ii), as applicable; the Loan Parties shall execute and deliver, and hereby irrevocably authorize the Administrative Agent to enter into, execute and deliver, the First Lien Intercreditor Agreement and/or the Junior Lien Intercreditor Agreement; provided that the Borrower shall have provided, and the Administrative Agent shall be entitled to rely upon, an officer’s certificate by a Responsible Officer to the effect that such Indebtedness is permitted to be incurred pursuant to Section 7.02(i) and permitted to be secured under Section 7.01(y)(i) or (ii), as applicable.”

(h) Section 7.01 of the Credit Agreement is hereby amended by (A) deleting the word “and” at the end of clause (w); (B) replacing the period at the end of clause (x) with a semicolon and (C) adding the following new clauses (y) and (z) immediately after clause (x):

“(y) Liens on Collateral securing Indebtedness permitted to be incurred under Section 7.02(i); provided that, to the extent that the Liens on Collateral securing such Indebtedness permitted under Section 7.02(i) constitute (i) First Lien Obligations, the holders of such Indebtedness (or a representative thereof on behalf of such holders) and the Administrative Agent, in its capacity as collateral agent, shall have executed and delivered a First Lien Intercreditor Agreement and (ii) Second Lien Obligations, holders of such Indebtedness (or a representative thereof on behalf of such holders) and the Administrative Agent, in its capacity as collateral agent, shall have executed and delivered a Junior Lien Intercreditor Agreement; and

(z) Liens securing Permitted Receivables Financings.”

(i) Section 7.02 of the Credit Agreement is hereby amended by replacing clause (y) in the second paragraph with “(y) all Indebtedness incurred pursuant to Section 7.02(i) or Section 7.02(v), as applicable, shall at all times be treated as incurred under such subsections”;

2.

(j) Section 7.02(i) of the Credit Agreement is hereby amended by replacing it in its entirety with the following:

“(i) Indebtedness of the Borrower or any Guarantor and any refinancings, refundings, renewals or extensions of any Indebtedness incurred under this Section 7.02(i) in an aggregate principal amount outstanding not to exceed $600,000,000; provided that (x) any Indebtedness under this Section 7.02(i) shall have no amortization, sinking fund, provision requiring any mandatory principal prepayment or repurchase or scheduled maturity, in each case, prior to the date that is 180 days following the Maturity Date (other than customary offers to repurchase upon a change of control, fundamental change or asset sale or, in the case of convertible debt securities, customary provisions regarding the conversions of such debt securities into common stock and any cash or net share settlement in connection therewith) and (y) the covenants, events of default, guarantees, collateral and other terms of which (other than interest rate, including in the form of original issue discount, and redemption premiums), taken as a whole, are not, in the Borrower’s reasonable determination, materially more restrictive to the Loan Parties than those in this Agreement; provided further that in the case of any refinancing, refunding, renewal or extension thereof if the Indebtedness being refinanced, refunded, renewed or extended is subordinated in right of payment to the Obligations under this Agreement, such Indebtedness issued in exchange for, or the net proceeds of which are used to so refinance, refund, renew or extend, shall be so subordinated in right of payment to such Obligations on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being refinanced, refunded, renewed or extended;”

(k) Section 7.02(v) of the Credit Agreement is hereby amended by replacing it in its entirety with the following:

“(v) Subordinated Indebtedness of the Borrower or any Guarantor and any refinancings, refundings, renewals or extensions of any Indebtedness incurred under this Section 7.02(v) in an aggregate principal amount outstanding not to exceed $600,000,000; provided that (x) any Indebtedness under this Section 7.02(v) shall have no amortization, sinking fund, provision requiring any mandatory principal prepayment or repurchase or scheduled maturity, in each case, prior to the date that is 180 days following the Maturity Date (other than customary offers to repurchase upon a change of control, fundamental change or asset sale or, in the case of convertible debt securities, customary provisions regarding the conversions of such debt securities into common stock and any cash or net share settlement in connection therewith) and (y) the covenants, events of default, guarantees, collateral and other terms (including subordination) of which (other than interest rate, including in the form of original issue discount, and redemption premiums), taken as a whole, are not, in the Borrower’s reasonable determination, materially more restrictive to the Loan Parties than those in this Agreement; provided further that in the case of any refinancing, refunding, renewal or extension thereof that such Indebtedness issued in exchange for, or the net proceeds of which are used to refinance, refund, renew or extend, shall be subordinated in right of payment to the Obligations under this Agreement on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being refinanced, refunded, renewed or extended;”

3.

(l) Section 7.02(w) of the Credit Agreement is hereby amended by replacing it in its entirety with the following:

“(w) Indebtedness in connection with Permitted Receivables Financings; and”

(m) Section 7.02 of the Credit Agreement is hereby amended by adding the following new clause (x) immediately after clause (w):

“(x) all premiums (if any), interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in clauses (a) through (w) above.”

(n) Section 7.03 of the Credit Agreement is hereby amended by (A) deleting the word “and” at the end of clause (o); (B) replacing the period at the end of clause (p) with “; and” and (C) adding the following new clauses (q) and (r) immediately after clause (p):

“(q) Investments arising as a result of Permitted Receivables Financings; and

(r) Investments by the Borrower and its Subsidiaries to the extent constituting Indebtedness permitted under Section 7.02(a)”

(o) Section 7.05(g) of the Credit Agreement is hereby amended by replacing it in its entirety with the following:

“(g) the purchase and sale or other transfer (including by capital contribution) of Receivables Assets pursuant to Permitted Receivables Financings for the fair market value thereof, as reasonably determined by the Borrower as set forth in a certificate by a Responsible Officer;”

(p) Section 7.06 of the Credit Agreement is hereby amended by adding “, except” immediately before the colon in the introductory clause.

(q) Section 7.06 of the Credit Agreement is hereby amended by replacing clause (j) in its entirety with the following:

“(j) the Borrower and its Subsidiaries may make Restricted Payments to the extent that the aggregate amount of all such Restricted Payments permitted by this clause (j) does not exceed in the aggregate the greater of (i) $20,000,000 and (ii) if on a Pro Forma Basis and after giving effect to such Restricted Payment the Borrower shall have had a Consolidated Senior Secured Leverage Ratio as of the most recent Measurement Period for which financial statements are required to be delivered pursuant to Section 6.01(a) or (b) that is less than 2.00:1.00, $100,000,000; provided that in each case immediately prior to and after giving effect to such Restricted Payment no Default shall have occurred and be continuing.”

4.

(r) Section 7.07 of the Credit Agreement is hereby amended by adding “and engage in Permitted Receivables Financings” immediately before the period.

(s) Section 7.08 of the Credit Agreement is hereby amended by (A) replacing the word “and” at the end of clause (g) with a semicolon; (B) replacing the period at the end of clause (h) with “; and” and (C) adding the following new clause (i) immediately after clause (h):

“(i) transactions pursuant to any Permitted Receivables Financing.”

(t) Section 7.09(iv) of the Credit Agreement is hereby amended by replacing “Section 7.01(e), (i), (j), (k) and (t)” with “Section 7.01(e), (i), (j), (k), (t), (y) and (z)”.

(u) Section 7.10 of the Credit Agreement is hereby amended by replacing it in its entirety with the following:

7.10 Financial Covenants.

(a) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge Coverage Ratio as of the end of any fiscal quarter during any period set forth below to be less than the ratio set forth below opposite such period:

Four Fiscal Quarters Ending During any Period Below:	Minimum Consolidated Fixed Charge Coverage Ratio
Closing Date through October 31, 2009	1.25:1.00
November 1, 2009 through October 30, 2010	1.25:1.00
October 31, 2010 through October 29, 2011	1.50:1.00
October 30, 2011 and thereafter	1.75:1.00

(b) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio at any time during any period set forth below to be greater than the ratio set forth below opposite such period:

Four Fiscal Quarters Ending During any Period Below	Maximum Consolidated Leverage Ratio
Closing Date through October 31, 2009	4.25:1.00
November 1, 2009 through October 30, 2010	3.75:1.00
October 31, 2010 through October 29, 2011	3.00:1.00
October 30, 2011 and thereafter	2.75:1.00

5.

(c) Consolidated Senior Secured Leverage Ratio. Permit the Consolidated Senior Secured Leverage Ratio at any time during any period set forth below to be greater than the ratio set forth below opposite such period:

Four Fiscal Quarters Ending During any Period Below	Maximum Senior Secured Leverage Ratio
Closing Date through October 31, 2009	2.30:1.00
November 1, 2009 through October 30, 2010	2.50:1.00
October 31, 2010 through October 29, 2011	2.50:1.00
October 30, 2011 through October 27, 2012	2.25:1:00
October 28, 2012 and thereafter	2.00:1.00

(v) Section 7.11 of the Credit Agreement is hereby amended by replacing it in its entirety with the following:

7.11 Capital Expenditures. Make or become legally obligated to make any Capital Expenditure, except for Capital Expenditures not exceeding, in the aggregate for the Borrower and its Subsidiaries during each fiscal year set forth below, the amount set forth opposite such fiscal year:

Fiscal Year	Amount
2009	$	200,000,000
2010	$	225,000,000
2011	$	125,000,000
2012	$	150,000,000
2013	$	150,000,000

; provided, however, that so long as no Default has occurred and is continuing or would result from such expenditure, any portion of any amount set forth above, if not expended in the fiscal year for which it is permitted above, may be carried over for expenditure in the immediately following fiscal year only; and provided, further, if any such amount is so carried over, it will be deemed used in subsequent fiscal year before the amount set forth opposite such fiscal year above.

(w) Section 7.12(a) of the Credit Agreement is hereby amended by (A) replacing “Debt Securities, the McData Notes, any Indebtedness permitted under Sections 7.02(g), (h) or (i)” with “the McData Notes, any Indebtedness permitted under Sections 7.02(g), (h), (i) or (v)” and (B) replacing “Section 7.02(d), or 7.02(i)” in the proviso with “Section 7.02(d), 7.02(g), 7.02(i) or 7.02(v)”.

(x) Section 7.12(b) of the Credit Agreement is hereby amended and restated in its entirety as follows:

“amend or modify, or permit the amendment or modification of, any Related Document, the Permitted Receivables Documents or any document governing the Indebtedness permitted to be incurred under Section 7.02(i) and 7.02(v), or the McData Notes in a manner that, taken as a whole, is materially adverse, in the Borrower’s reasonable determination, to the interests of the Lenders; or”

6.

(y) Section 1.01 of the Credit Agreement is hereby amended as follows:

(i) The definition of “Applicable ECF Sweep Percentage” shall be deleted in its entirety.

(ii) The definition of “Change of Control” is hereby amended by adding “the Indebtedness permitted to be incurred under Section 7.02(i),” immediately after the first occurrence of the word “governing” in clause (d) of such definition.

(iii) The definition of “Collateral Documents” is hereby amended by adding “the First Lien Intercreditor Agreement, the Junior Lien Intercreditor Agreement,” immediately after “Security Agreement,”.

(iv) The definition of “Consolidated EBITDA” is hereby amended by:

(A) deleting the first parenthetical phrase “(other than for purposes of calculating Excess Cash Flow)” in the first proviso;

(B) deleting the second parenthetical phrase “(if consummated during such Measurement Period)” in the first proviso; and

(C) deleting the last proviso in its entirety and replacing it with the following:

“provided, further, that the Consolidated EBITDA of the Borrower for the fiscal quarters ended January 26, 2008, April 26, 2008, July 26, 2008 and October 25, 2008, was $94,287,000, $93,381,000, $96,230,000 and $105,748,000, respectively, and the Consolidated EBITDA of the Acquired Business as adjusted to the Borrower’s fiscal quarters ended January 26, 2008, April 26, 2008, July 26, 2008 and October 25, 2008, was $41,075,000, $32,270,000, $36,391,000 and $36,391,000, respectively.”

(v) The definition of “Consolidated Interest Charges” shall be amended by (A) deleting the word “and” immediately before (b) and (B) adding the following immediately after “GAAP,” in clause (b):

“and (C) commissions, discounts, yield and other fees and charges incurred in connection with any Permitted Receivables Financing which are payable to any person other than the Loan Parties,”

(vi) The definition of “Consolidated Senior Secured Leverage Ratio” shall be amended by adding “senior,” immediately before “senior subordinated”.

7.

(vii) The definition of “Convertible Note Hedge” shall be amended and restated to read in its entirety as follows:

“Convertible Note Hedge” means the call option, capped call option, call spread option or similar option transaction purchased by the Borrower to hedge its exposure with respect to the issuance and delivery of its Equity Interests upon conversion of the convertible notes permitted to be issued hereunder.

(viii) The definition of “Excess Cash Flow” shall be deleted in its entirety.

(ix) The definition of “Indebtedness” shall be amended by (A) deleting “and” at the end of clause (g); (B) replacing the period at the end of clause “(h)” with “; and” and (C) adding the following new clause (i) immediately after clause (h):

“(i) all Permitted Receivables Financings.”

(x) The definition of “Loan Documents” in the Credit Agreement shall be amended by (A) replacing “and” immediately preceding “(i)” with “,” and (B) adding the following immediately before the semicolon: “(j) any amendment to this Agreement in accordance with Section 10.01 and (k) the First Lien Intercreditor Agreement and the Junior Lien Intercreditor Agreement”.

(xi) The definition of “Over-Allotment Amount” shall be deleted in its entirety.

(xii) The definition of “Pro Forma Basis” shall be amended by adding “(but excluding amounts outstanding under any Permitted Receivables Financing)” immediately after “outstanding Indebtedness” in clause (a).

(xiii) The following definitions shall be added to Section 1.01 of the Credit Agreement:

“Extension Letter” shall mean that certain extension letter, dated December 18, 2008 by and between the Borrower and the Administrative Agent.

“First Lien Intercreditor Agreement” shall mean an intercreditor agreement entered into in connection with the issuance of any Indebtedness permitted to be incurred under Section 7.02(i) secured by a Lien ranking pari passu to the Lien securing the Obligations, substantially in the form of Exhibit A to Amendment and Waiver No. 1 to this Agreement, in form and substance reasonably satisfactory to the Administrative Agent.

“First Lien Obligations” shall mean the obligations in respect of any Indebtedness permitted to be incurred pursuant to Section 7.02(i) and permitted to be secured under Section 7.01(y)(i), that are intended to have a Lien on the Collateral that is pari passu with the Lien of the Secured Parties securing the Obligations.

“Junior Lien Intercreditor Agreement” shall mean an intercreditor agreement entered into in connection with the issuance of any Indebtedness permitted to be incurred pursuant to Section 7.02(i) and permitted to be secured under Section 7.01(y)(ii) secured by a Lien ranking junior to the Lien securing the Obligations, in form and substance reasonably satisfactory to the Administrative Agent.

8.

“Permitted Receivables Documents” shall mean all documents and agreements evidencing, relating to or otherwise governing a Permitted Receivables Financing.

“Permitted Receivables Financing” shall mean one or more transactions pursuant to which (i) Receivables Assets or interests therein are sold to or financed by one or more Special Purpose Receivables Subsidiaries, and such Special Purpose Receivables Subsidiaries finance their acquisition of such Receivables Assets or interests therein, or the financing thereof, by selling or borrowing against such Receivables Assets or (ii) Receivable Assets or interests therein are sold directly to one or more investors or other purchasers (other than Borrower or any Subsidiary); provided that in each case (A) recourse to the Borrower or any Subsidiary (other than the Special Purpose Receivables Subsidiaries) and any obligations or agreements of the Borrower or any Subsidiary (other than the Special Purpose Receivables Subsidiaries) in connection with such transactions shall be limited to the extent customary for similar transactions in the applicable jurisdictions as reasonably determined by Borrower, and (B) the aggregate Receivables Net Investment since the Amendment and Waiver No. 1 Effective Date shall not exceed $125,000,000 at any time.

“Receivables Assets” shall mean accounts receivable (including any bills of exchange), lease receivables and any related assets and property from time to time originated, acquired or otherwise owned by Borrower or any Subsidiary.

“Receivables Net Investment” shall mean the aggregate cash amount paid by the lenders or purchasers under any Permitted Receivables Financing in connection with their purchase of, or the making of loans secured by, Receivables Assets or interests therein, as the same may be reduced from time to time by collections with respect to such Receivables Assets or otherwise in accordance with the terms of the Permitted Receivables Documents.

“Second Lien Obligations” shall mean obligations in respect of any Indebtedness permitted to be incurred pursuant to Section 7.02(i) and permitted to be secured under Section 7.01(y)(ii) that are intended to have a Lien on the Collateral that ranks junior to the Lien of the Secured Parties securing the Obligations.

“Special Purpose Receivables Subsidiary” shall mean a direct or indirect Subsidiary of the Borrower established in connection with a Permitted Receivables Financing for the acquisition of Receivables Assets or interests therein, and which is organized in a manner intended to reduce the likelihood that it would be substantively consolidated with the Borrower or any of the Subsidiaries (other than Special Purpose Receivables Subsidiaries) in the event the Borrower or any such Subsidiary becomes subject to a proceeding under Debtor Relief Laws.

“Subordinated Indebtedness” shall mean Indebtedness of the Borrower or any Guarantor that is by its terms subordinated in right of payment to the obligations of the Borrower and such Guarantor, as applicable, under this Agreement.

9.

Section 2. Representation and Warranties.

Borrower represents and warrants to the Lenders as of the date hereof and the Amendment and Waiver No. 1 Effective Date that:

(a) The execution, delivery and performance by each Loan Party of this Amendment and Waiver have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) result in any breach or contravention of, or the creation of any Lien upon any of the assets of such Person or any of its Subsidiaries (other than as permitted by Section 7.01 of the Credit Agreement) under (x) any material Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (y) any material order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any material Law, except with respect to any breach, contravention or violation (but not creation of Liens) referred to in clauses (b) and (c), to the extent that such breach, contravention or violation would not reasonably be expected to have a Material Adverse Effect

(b) Before and after giving effect to this Amendment and Waiver, the representations and warranties of the Borrower and each other Loan Party contained in Article V of the Credit Agreement or any other Loan Document shall be true and correct in all material respects on and as of the Amendment and Waiver No. 1 Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date, and except that the representations and warranties contained in Section 5.05(a) and (b) of the Credit Agreement shall be deemed to refer to the most recent statements furnished pursuant to Section 6.01(a) and (b), respectively, of the Credit Agreement; provided that any representation or warranty that is qualified as to materiality or “Material Adverse Effect” shall be true and correct in all respects.

(c) At the time of and before and immediately after giving effect to this Amendment and Waiver, no Default shall exist.

Section 3. Waiver.

The Administrative Agent and the Required Lenders hereby waive the post-closing requirements set forth under the Extension Letter relating to the delivery of the certificates, agreements or instruments evidencing the Pledged Securities (as defined in the Security Agreement) of the Foreign Subsidiaries listed in Annex I attached hereto, accompanied by instruments of transfer and stock powers undated and endorsed in blank; provided that the Borrower shall have delivered to the Administrative Agent a certificate from a Responsible Officer stating that each such Foreign Subsidiary listed in Annex I hereto is an Immaterial Subsidiary.

10.

Section 4. Conditions to Effectiveness.

This Amendment and Waiver shall become effective as of the date when each of the following conditions is satisfied (the “Amendment and Waiver No. 1 Effective Date”):

(a) The Administrative Agent (or its counsel) shall have received from (i) Lenders constituting the Required Lenders and (ii) each of the other parties hereto, a counterpart of this Amendment and Waiver signed on behalf of such party.

(b) All corporate and other proceedings taken or to be taken in connection with this Amendment and Waiver and all documents incidental thereto, whether or not referred to herein, shall be reasonably satisfactory in form and substance to the Administrative Agent.

(c) The representations and warranties in Section 2 of this Amendment and Waiver shall be true and correct.

(d) The Borrower shall have paid a consent fee (the “Consent Fee”) to the Administrative Agent, for the ratable account of the Applicable Lenders (as defined below), equal to (i) 0.25% of the aggregate outstanding principal amount of Term Loans of the Applicable Lenders, plus (ii) 0.25% of the aggregate amount of Revolving Credit Commitments of the Applicable Lenders. “Applicable Lender” shall mean each Lender that has delivered an executed counterpart of this Amendment and Waiver prior to 12:00 noon, New York City time, on Friday January 8, 2010 or such later date and time specified by the Borrower and notified in writing to the Lenders by the Administrative Agent.

(e) On or prior to the 20th Business Day (or such later date as may be agreed in writing by the Administrative Agent, in its sole discretion) after receipt of counterparts of this Amendment and Waiver from the Required Lenders, the Borrower shall have prepaid an aggregate principal amount of Term Loans equal to the greater of (i) $300,000,000 and (ii) the aggregate amount of Indebtedness incurred under Section 7.02(i) of the Credit Agreement (after giving effect to this Amendment and Waiver) in excess of the initial $150,000,000, with Net Cash Proceeds from Indebtedness incurred pursuant to Section 7.01(i) of the Credit Agreement (after giving effect to this Amendment and Waiver). Such prepayment shall be applied as set forth in Section 2.05(b)(ix) of the Credit Agreement (as amended hereby). The Borrower shall notify the Administrative Agent in writing of any prepayment of Term Loans required to be made by this Section 4(e) not later than 11:00 a.m. (A) three Business Days prior to any prepayment of Eurodollar Rate Loans and (2) on the date of prepayment of Base Rate Loans.

(f) All reasonable and documented out-of-pocket expenses payable on or before the Amendment and Waiver No. 1 Effective Date by the Borrower to the Administrative Agent (or its Affiliates) in connection with this Amendment and Waiver shall have been paid, including the reasonable and documented fees, charges and disbursements of Cahill Gordon & Reindel LLP, as counsel for the Administrative Agent.

(g) Solely with respect to Section 3 hereof, the Administrative Agent (or its counsel) shall have received from the Borrower the officer’s certificate referred to in Section 3 hereof, in form and substance reasonably satisfactory to the Administrative Agent.

11.

Section 5. Counterparts.

This Amendment and Waiver may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Amendment and Waiver by telecopy or electronic transmission (including in .pdf or similar format) shall be effective as delivery of a manually executed counterpart of this Amendment and Waiver.

Section 6. Applicable Law.

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

Section 7. Headings.

Section headings herein and in the Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Amendment and Waiver or any Loan Document.

Section 8. Effect of Amendment and Waiver.

On and after the Amendment and Waiver No. 1 Effective Date, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof” or words of like import referring to the Credit Agreement, and each reference in each of the Loan Documents to “the Credit Agreement,” “thereunder,” “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as amended by this Amendment and Waiver. The Credit Agreement and each of the other Loan Documents, as supplemented by this Amendment and Waiver, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. Except as expressly set forth herein, this Amendment and Waiver shall not by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of the Lenders or the Administrative Agent under the Credit Agreement or any other Loan Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other provision of the Credit Agreement or any other Loan Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. By executing and delivering a copy hereof, each applicable Loan Party hereby agrees and confirms that all Loans and Obligations shall be guaranteed and secured pursuant to the Loan Documents as provided therein.

12.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment and Waiver to be duly executed as of the date first above written.

BROCADE COMMUNICATIONS SYSTEMS, INC., as Borrower
By:	/s/ Jean Furter
Name:		Jean Furter
Title:		Vice President, Treasurer

BANK OF AMERICA, N.A., as Administrative Agent
By:	/s/ Robert Rittelmeyer
Name:		Robert Rittelmeyer
Title:		Vice President
BANK OF AMERICA, N.A., as a Lender, Swing Line Lender and L/C Issuer
By:	/s/ Kevin McMahon
Name:		Kevin McMahon
Title:		Senior Vice President

280 Funding, as a Lender
By:	GSO Capital Partners LP, as Portfolio Manager
By:	/s/ George Fan
Name:	George Fan
Title:	Authorized Signatory

Aberdeen Loan Funding Ltd
By:	Highland Capital Management, L.P., as Collateral Manager
By:	Strand Advisors, Inc., Its General Partner, as a Lender
By:	/s/ Jason Post
Name:	Jason Post
Title:	Operations Director

AIB Debt Management Limited, as a Lender
By:	/s/ Roisin O’Connell
Name:	Roisin O’Connell
Title:	Vice President Investment Advisor to AIB Debt Management, Limited

By:	/s/ Gregory J. Wiske
Name:	Gregory J. Wiske
Title:	Vice President Investment Advisor to AIB Debt Management, Limited

AIM FLOATING RATE FUND
By:	INVESCO Senior Secured Management, Inc. as Sub-Adviser
By:	/s/ Thomas Ewald
Name:	Thomas Ewald
Title:	Authorized Signatory

Aladdin Flexible Investment Fund
Series SPC 2008-I,
as a Lender
By:	/s/ Christine M. Barto
Name:	Christine M. Barto
Title:	Authorized Signatory

Aladdin Flexible Investment Fund SPC
Series 2008-2, as a Lender
By:	/s/ Christine M. Barto
Name:	Christine M. Barto
Title:	Authorized Signatory

ALZETTE EUROPEAN CLO S.A.
By:	INVESCO Senior Secured Management, Inc.
	as Collateral Manager
By:	/s/ Thomas Ewald
Name:	Thomas Ewald
Title:	Authorized Signature

American Bankers Insurance Company of Florida, as a Lender
By:	/s/ Arvind Admal
Name:	Arvind Admal
Title:	AS ATTORNEY-IN-FACT

American Memorial Life Insurance Company, as a Lender
By:	/s/ Arvind Admal
Name:	Arvind Admal
Title:	AS ATTORNEY-IN-FACT

American Security Insurance Company,
as a Lender
By:	/s/ Arvind Admal
Name:	Arvind Admal
Title:	AS ATTORNEY-IN-FACT

Ameriprise Certificate Company, as a Lender
By:	/s/ Robin C. Stancil
Name:	Robin C. Stancil
Title:	Assistant Vice President

Ameriprise Financial Company, Inc., as a Lender
By:	/s/ Robin C. Stancil
Name:	Robin C. Stancil
Title:	Assistant Vice President

AMMC CLO III, LIMITED
By:	American Money Management Corp., as Collateral Manager, as a Lender
By:	/s/ Chester M. Eng
Name:	Chester M. Eng
Title:	Senior Vice President

AMMC CLO IV, LIMITED
By:	American Money Management Corp., as Collateral Manager, as a Lender
By:	/s/ Chester M. Eng
Name:	Chester M. Eng
Title:	Senior Vice President

AMMC CLO V, LIMITED
By:	American Money Management Corp., as Collateral Manager, as a Lender
By:	/s/ Chester M. Eng
Name:	Chester M. Eng
Title:	Senior Vice President

AMMC CLO VI, LIMITED
By:	American Money Management Corp., as Collateral Manager, as a Lender
By:	/s/ Chester M. Eng
Name:	Chester M. Eng
Title:	Senior Vice President

AMMC VII, LIMITED
By:	American Money Management Corp., as Collateral Manager, as a Lender
By:	/s/ Chester M. Eng
Name:	Chester M. Eng
Title:	Senior Vice President

ARES ENHANCED CREDIT OPPORTUNITIES FUND LTD.
By:	Ares Enhanced Credit Opportunities Fund Management, L.P., as a Lender
By:	/s/ Seth J. Brufsky
Name:	Seth J. Brufsky
Title:	Authorized Signatory
ARES ENHANCED LOAN INVESTMENT STRATEGY IR LTD.
By:	ARES ENHANCED LOAN MANAGEMENT IR, L.P.,
	as Portfolio Manager
By:	Ares Enhanced Loan IR GP, LLC,
	as its General Partner
By:	Ares Management LLC, as its Manager,
	as a Lender
By:	/s/ Seth J. Brufsky
Name:	Seth J. Brufsky
Title:	Authorized Signatory

ARES ENHANCED LOAN INVESTMENT STRATEGY II, LTD.
By:	Ares Enhanced Loan Management II, L.P.,
	Investment Manager
By:	Ares Enhanced Loan GP II, LLC,
	Its General Partner, as a Lender
By:	/s/ Seth J. Brufsky
Name:	Seth J. Brufsky
Title:	Authorized Signatory
ARES ENHANCED LOAN INVESTMENT STRATEGY III, LTD.
By:	ARES ENHANCED LOAN MANAGEMENT III, L.P.
By:	ARES ENHANCED LOAN III GP, LLC,
	ITS GENERAL PARTNER
By:	ARES MANAGEMENT LLC, ITS MANAGER,
	as a Lender
By:	/s/ Seth J. Brufsky
Name:	Seth J. Brufsky
Title:	Authorized Signatory

Ares IIR CLO Ltd.
By:	Ares CLO Management IIR, L.P.,
	Investment Manager
By:	Ares CLO GP IIR, LLC,
	Its General Partner, as a Lender
By:	/s/ Seth J. Brufsky
Name:	Seth J. Brufsky
Title:	Authorized Signatory
ARES IIIR/IVR CLO LTD.
By:	ARES CLO MANAGEMENT IIIR/IVR, L.P.
By:	ARES CLO GP IIIR/IVR, LLC,
	ITS GENERAL PARTNER
By:	ARES MANAGEMENT LLC, ITS MANAGER,
	as a Lender
By:	/s/ Seth J. Brufsky
Name:	Seth J. Brufsky
Title:	Authorized Signatory

Ares Institutional Loan Fund B.V.
By:	Ares Management Limited, its investment advisor,
	as a Lender
By:	/s/ Seth J. Brufsky
Name:	Seth J. Brufsky
Title:	Authorized Signatory

Ares VIII CLO Ltd.
By:	Ares CLO Management VIII, L.P., Investment Manager
By:	Ares CLO GP VIII, LLC, Its General Partner, as a Lender
By:	/s/ Seth J. Brufsky
Name:	Seth J. Brufsky
Title:	Authorized Signatory
Ares IX CLO Ltd.
By:	Ares CLO Management IX, L.P.
By:	Ares CLO GP IX, LLC, Its General Partner
By:	Ares Management LLC, Its Managing Member, As A Lender
By:	/s/ Seth J. Brufsky
Name:	Seth J. Brufsky
Title:	Authorized Signatory

Ares VR CLO Ltd.
By:	Ares CLO Management VR, L.P., Investment Manager
By:	Ares CLO GP VR, LLC, Its General Partner, as a Lender
By:	/s/ Seth J. Brufsky
Name:	Seth J. Brufsky
Title:	Authorized Signatory
Ares VIR CLO Ltd.
By:	Ares CLO Management VIR, L.P., Investment Manager
By:	Ares CLO GP VIR, LLC, Its General Partner as a Lender
By:	/s/ Seth J. Brufsky
Name:	Seth J. Brufsky
Title:	Authorized Signatory

Ares X CLO Ltd.
By:	Ares CLO Management X, L.P., Investment Manager
By:	Ares CLO GP X, LLC, Its General Partner, as a Lender
By:	/s/ Seth J. Brufsky
Name:	Seth J. Brufsky
Title:	Authorized Signatory
ARES XI CLO LTD.
By:	ARES CLO MANAGEMENT XI, L.P.
By:	ARES CLO GP XI, LLC, ITS GENERAL PARTNER
By:	ARES MANAGEMENT LLC, ITS MANAGER, as a Lender
By:	/s/ Seth J. Brufsky
Name:	Seth J. Brufsky
Title:	Authorized Signatory

ARES XII CLO LTD.
By:	ARES CLO MANAGEMENT XII, L.P.
By:	ARES CLO GP XII, LLC, ITS GENERAL PARTNER
By:	ARES MANAGEMENT LLC, ITS MANAGER, as a Lender
By:	/s/ Seth J. Brufsky
Name:	Seth J. Brufsky
Title:	Authorized Signatory
CONFLUENT 2 LIMITED
By:	Ares Private Account Management I, L.P., as Sub-Manager
By:	Ares Private Account Management I GP, LLC, as General Partner
By:	Ares Management LLC, as Manager, as a Lender
By:	/s/ Seth J. Brufsky
Name:	Seth J. Brufsky
Title:	Authorized Signatory

FUTURE FUND BOARD OF GUARDIANS
By:	Ares Enhanced Loan Investment Strategy Advisor IV, L.P., its Investment Manager
By:	Ares Enhanced Loan Investment Strategy Advisor IV, LLC, its General Partner
By:	Ares Management LLC, its Managing Member, as a Lender
By:	/s/ Seth J. Brufsky
Name:	Seth J. Brufsky
Title:	Authorized Signatory
Global Loan Opportunity Fund B.V.
By:	Ares Management Limited, its Portfolio Manager, as a Lender
By:	/s/ Seth J. Brufsky
Name:	Seth J. Brufsky
Title:	Authorized Signatory

Atrium IV, as a Lender
By:	/s/ Thomas Flannery
Name:	Thomas Flannery
Title:	Authorized Signatory

Atrium V
By:	Credit Suisse Alternative Capital, Inc. , as collateral [not legible]
By:	/s/ Thomas Flannery
Name:	Thomas Flannery
Title:	Authorized Signatory

AVALON CAPITAL LTD. 3
By:	INVESCO Senior Secured Management, Inc., as Asset Manager
By:	/s/ Thomas Ewald
Name:	Thomas Ewald
Title:	Authorized Signatory

MAPLEWOOD (CAYMAN) LIMITED, as a Lender
By:	Babson Capital Management LLC, as Investment Manager
By:	/s/ Arthur J. McMahon
Name:	Arthur J. McMahon
Title:	Director
OLYMPIC PARK LTD., as a Lender
By:	Babson Capital Management LLC, as Investment Manager
By:	/s/ Arthur J. McMahon
Name:	Arthur J. McMahon
Title:	Director
XELO VII LIMITED, as a Lender
By:	Babson Capital Management LLC, as Investment Manager
By:	/s/ Arthur J. McMahon
Name:	Arthur J. McMahon
Title:	Director
JFIN CLO 2007 LTD., as a Lender
By:	Jefferies Finance LLC, as Collateral Manager
By:	/s/ Kevin Stephens
Name:	Kevin Stephens
Title:	Closing Manager

BABSON CLO LTD. 2004-I BABSON CLO LTD. 2005-I BABSON CLO LTD, 2005-II BABSON CLO LTD, 2005-III BABSON CLO LTD. 2006-I BABSON CLO LTD. 2007-I BABSON CLO LTD. 2008-II BABSON LOAN OPPORTUNITY CLO, LTD. BABSON MID-MARKET CLO LTD. 2007-II OSPREY CDO 2006-1 LTD. SAPPHIRE VALLEY CDO I, LTD. SUFFIELD CLO, LIMITED, as Lenders
By:	Babson Capital Management LLC as Collateral Manager
By:	/s/ Arthur J. McMahon
Name:	Arthur J. McMahon
Title:	Director
BABSON CAPITAL LOAN PARTNERS I, L.P., as a Lender
By:	Babson Capital Management LLC as Investment Manager
By:	/s/ Arthur J. McMahon
Name:	Arthur J. McMahon
Title:	Director
HOLLY INVESTMENT CORPORATION.,
as a Lender
By:	Babson Capital Management LLC as Investment Manager
By:	/s/ Arthur J. McMahon
Name:	Arthur J. McMahon
Title:	Director

Bacchus (US) 2006-1, Ltd., as a Lender
By:	/s/ David Snyder
Name:	David Snyder
Title:	President

Banc Investment Group, LLC, as a Lender
By:	/s/ Allen Sztukowski
Name:	Allen Sztukowski
Title:	Chief Compliance Officer

BANK OF AMERICA, N.A., as a Lender
By:	/s/ Jonathan M. Barnes
Name:	Jonathan M. Barnes
Title:	Vice President

THE BANK OF NOVA SCOTIA, as a Lender
By:	/s/ Michael Kus
Name:	Michael Kus
Title:	Director

BELHURST CLO, LTD.
By:	INVESCO Senior Secured Management, Inc. as Collateral Manager
By:	/s/ Thomas Ewald
Name:	Thomas Ewald
Title:	Authorized Signatory

The Broad Foundation
By:	GSP Capital Partners LP, its Investment Advisor
By:	/s/ George Fan
Name:	George Fan
Title:	Authorized Signatory

California Public Employees Retirement System
By:	RiverSource Investments, LLC, its agent
By:	/s/ Robin C. Stancil
Name:	Robin C. Stancil
Title:	Assistant Vice President

Castle Garden Funding, as a Lender
By:	/s/ Thomas Flannery
Name:	Thomas Flannery
Title:	Authorized Signatory

CELTS CLO 2007-1 LTD
By:	INVESCO Senior Secured Management, Inc.
	as Portfolio Manager
By:	/s/ Thomas Ewald
Name:	Thomas Ewald
Title:	Authorized Signatory

Cent CDO 10 Limited
By:	RiverSource Investments, LLC,
	as Collateral Manager
By:	/s/ Robin C. Stancil
Name:	Robin C. Stancil
Title:	Director of Operations

Cent CDO 12 Limited
By:	RiverSource Investments, LLC,
	as Collateral Manager
By:	/s/ Robin C. Stancil
Name:	Robin C. Stancil
Title:	Director of Operations

Cent CDO 14 Limited
By:	RiverSource Investments, LLC,
	as Collateral Manager
By:	/s/ Robin C. Stancil
Name:	Robin C. Stancil
Title:	Director of Operations

Cent CDO 15 Limited
By:	RiverSource Investments, LLC,
	as Collateral Manager
By:	/s/ Robin C. Stancil
Name:	Robin C. Stancil
Title:	Assistant Vice President

Cent CDO XI Limited
By:	RiverSource Investments, LLC,
	as Collateral Manager
By:	/s/ Robin C. Stancil
Name:	Robin C. Stancil
Title:	Director of Operations

Centurion CDO 8 Limited
By:	RiverSource Investments, LLC,
	as Collateral Manager
By:	/s/ Robin C. Stancil
Name:	Robin C. Stancil
Title:	Director of Operations

Centurion CDO 9 Limited
By:	RiverSource Investments, LLC, as Collateral Manager
By:	/s/ Robin C. Stancil
Name:	Robin C. Stancil
Title:	Director of Operations

Centurion CDO VI Limited
By:	RiverSource Investments, LLC,
	as Collateral Manager
By:	/s/ Robin C. Stancil
Name:	Robin C. Stancil
Title:	Director of Operations

Centurion CDO VII Limited
By:	RiverSource Investments, LLC,
	as Collateral Manager
By:	/s/ Robin C. Stancil
Name:	Robin C. Stancil
Title:	Director of Operations

CHAMPLAIN CLO, LTD.
By:	INVESCO Senior Secured Management, Inc,
	as Collateral Manager
By:	/s/ Thomas Ewald
Name:	Thomas Ewald
Title:	Authorized Signatory

CHARTER VIEW PORTFOLIO
By:	INVESCO Senior Secured Management, Inc.
	as Investment Advisor
By:	/s/ Thomas Ewald
Name:	Thomas Ewald
Title:	Authorized Signatory

Chelsea Park CLO Ltd.
By:	GSO / Blackstone Debt Funds Management LLC
	as Collateral Manager
By:	/s/ Dan H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

Churchill Financial Cayman Ltd.,
as a Lender, by
Churchill Financial LLC, as its Collateral Manager
By:	/s/ Eric Wieczorek
Name:	Eric Wieczorek
Title:	Vice President

CIM VI, L.L.C.
By:	GSO Capital Partners LP
	as Manager
By:	/s/ Dan H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

Citron Investment Corporation
By:	GSO Capital Partners LP as Manager
By:	/s/ Dan H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

Columbus Park CDO Ltd.
By:	GSO / Blackstone Debt Funds Management LLC as Collateral Manager
By:	/s/ Dan H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

Comerica Bank, as a Lender
By:	/s/ Guy Simpson
Name:	Guy Simpson
Title:	Vice President

Copper River CLO Ltd, as a Lender
By:	Guggenheim Investment Management, LLC,
	as Collateral Manager
By:	/s/ Kaitlin Trinh
Name:	Kaitlin Trinh
Title:	Director

CORTINA FUNDING, as a Lender
By:	/s/ Irfan Ahmed
Name:	Irfan Ahmed
Title:	Authorized Signatory

Cratos CLO I LTD, as a Lender
By:	Cratos CDO Management, LLC
	as Attorney-in-fact
By:	Cratos Capital Partners, LLC
	Its Manager
By:	/s/ Ronald J. Banks
Name:	Ronald J. Banks
Title:	Managing Director

Credit Suisse Syndicated Loan Fund
By:	Credit Suisse Alternative Capital, Inc.,
	as Agent (Subadvisor) for Credit Suisse Asset Management (Australia) Limited, the Responsible Entity for Credit Suisse Syndicated Loan Fund
By:	/s/ Thomas Flannery
Name:	Thomas Flannery
Title:	Authorized Signatory

Credos Floating Rate Fund, L.P.
By:	Shenkman Capital Management, Inc.,
	its General Partner
By:	/s/ Richard H. Weinstein
Name:	Richard H. Weinstein
Title:	Executive Vice President

DIVERSIFIED CREDIT PORTFOLIO LTD.
By:	INVESCO Senior Secured Management, Inc.
	as Investment Adviser
By:	/s/ Thomas Ewald
Name:	Thomas Ewald
Title:	Authorized Signatory

[not legible] MONEY, INC., as a Lender
By:	/s/ Dennis Talley
Name:	Dennis Talley
Title:	Managing Director

Dryden VIII – Leveraged Loan CDO 2005, as a Lender
By:	Prudential Investment Management, Inc.,
	as Collateral Manager
By:	/s/ Joseph Lemanowicz
Name:	Joseph Lemanowicz
Title:	Vice President

Dryden XI – Leveraged Loan CDO 2006, as a Lender
By:	Prudential Investment Management, Inc.,
	as Collateral Manager
By:	/s/ Joseph Lemanowicz
Name:	Joseph Lemanowicz
Title:	Vice President

Dryden XVIII – Leveraged Loan 2007 Ltd.,
as a Lender
By:	Prudential Investment Management, Inc.,
	as Collateral Manager
By:	/s/ Joseph Lemanowicz
Name:	Joseph Lemanowicz
Title:	Vice President

Dryden XXI – Leveraged Loan CDO LLC, as a Lender
By:	Prudential Investment Management, Inc.,
	as Collateral Manager
By:	/s/ Joseph Lemanowicz
Name:	Joseph Lemanowicz
Title:	Vice President

Eastland CLO, Ltd.
By:	Highland Capital Management, L.P.,
	as Collateral Manager
By:	Strand Advisors, Inc.,
	Its General Partner
By:	/s/ Jason Post
Name:	Jason Post
Title:	Operations Director

Employers Insurance Company of Wausau,
as Lender
By:	/s/ Sheila Finnerty
Name:	Sheila Finnerty
Title:	Vice President

Energizer I Loan Funding LLC,
as Lender
By:	/s/ Emily Chong
Name:	Emily Chong
Title:	Director

Fairway Loan Funding Company,
as a Lender
By:	Pacific Investment Management Company LLC,
	as its Investment Advisor
By:	/s/ Arthur Y.D. Ong
Name:	Arthur Y.D. Ong
Title:	Executive Vice President

Federal Warranty Service Corp.
as a Lender
By:	/s/ Arvind Admal
Name:	Arvind Admal
Title:	AS ATTORNEY-IN-FACT

Fifth Third Bank,
as a Lender
By:	/s/ Matthew Cannon
Name:	Matthew Cannon
Title:	Vice President

Flagship CLO III
By:	Deutsche Investment Management Americas, Inc.
	(as successor in interest to Deutsche Asset Management Inc.),
	as Collateral Manager
By:	/s/ Eric S. Meyer
Name:	Eric S. Meyer
Title:	Managing Director
By:	/s/ Paula Penkal
Name:	Paula Penkal
Title:	Vice President

Flagship CLO IV
By:	Deutsche Investment Management Americas, Inc.
	(as successor in interest to Deutsche Asset Management Inc.),
	as Sub-Adviser
By:	/s/ Eric S. Meyer
Name:	Eric S. Meyer
Title:	Managing Director
By:	/s/ Paula Penkal
Name:	Paula Penkal
Title:	Vice President

Flagship CLO V
By:	Deutsche Investment Management Americas, Inc.
	(as successor in interest to Deutsche Asset Management Inc.),
	as Collateral Manager
By:	/s/ Eric S. Meyer
Name:	Eric S. Meyer
Title:	Managing Director
By:	/s/ Paula Penkal
Name:	Paula Penkal
Title:	Vice President

Flagship CLO VI
By:	Deutsche Investment Management Americas, Inc.
	as Collateral Manager
By:	/s/ Eric S. Meyer
Name:	Eric S. Meyer
Title:	Managing Director
By:	/s/ Paula Penkal
Name:	Paula Penkal
Title:	Vice President

FM LEVERAGED CAPITAL FUND I
By:	GSO / Blackstone Debt Funds Management LLC as Subadviser to FriedbergMilstein LLC
By:	/s/ Dan H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

Franklin Floating Rate Daily Access Fund, as a Lender
By:	/s/ Richard Hsu
Name:	Richard Hsu
Title:	Vice President

Franklin Floating Rate Master Series, as a Lender
By:	/s/ Richard Hsu
Name:	Richard Hsu
Title:	Vice President

Franklin Templeton Series II Funds Franklin Floating Rate II Fund, as a Lender
By:	/s/ Richard Hsu
Name:	Richard Hsu
Title:	Vice President

FRIEDBERGMILSTEIN PRIVATE CAPITAL FUND I
By:	GSO /Blackstone Debt Funds Management LLC as Subadviser to FriedbergMilstein LLC
By:	/s/ Dan H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

GALE FORCE 1 CLO, LTD.
By:	GSO / Blackstone Debt Funds Management LLC as Collateral Manager
By:	/s/ Dan H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

GALE FORCE 2 CLO, LTD.
By:	GSO /Blackstone Debt Funds Management LLC as Collateral Manager
By:	/s/ Dan H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

GALE FORCE 3 CLO, LTD.
By:	GSO /Blackstone Debt Funds Management LLC as Collateral Manager
By:	/s/ Dan H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

GALE FORCE 4 CLO, LTD.
By:	GSO /Blackstone Debt Funds Management LLC as Collateral Manager
By:	/s/ Dan H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

GANNETT PEAK CLO I, LTD.
By:	McDonnell Investment Management, LLC, as Investment Manager
By:	/s/ Kathleen A. Zarn
Name:	Kathleen A. Zarn
Title:	Vice President

Gleneagles CLO, Ltd.
By:	Highland Capital Management, L.P., as Collateral Manager
By:	Strand Advisors, Inc., Its General Partner
By:	/s/ Jason Post
Name:	Jason Post
Title:	Operations Director

GMAM Group Pension Trust I
By:	State Street Bank & Trust Company as Trustee For GMAM Group Pension Trust I
By:	/s/ Timothy [not legible]
Name:	Timothy [not legible]
Title:	Officer

Golden Night II CLO Ltd., as a Lender
By:	/s/ Elizabeth [not legible]
Name:	Elizabeth [not legible]
Title:	Portfolio Manager
LORD ABBETT & CO. LLC as Collateral Manager

GoldenTree Capital Opportunities, LP
By:	GoldenTree Asset Management, LP, as a Lender
By:	/s/ Karen Weber
Name:	Karen Weber
Title:	Director – Bank Debt

GoldenTree Loan Opportunities III, Limited
By:	GoldenTree Asset Management, LP, as a Lender
By:	/s/ Karen Weber
Name:	Karen Weber
Title:	Director – Bank Debt

GoldenTree Loan Opportunities IV, Limited
By:	GoldenTree Asset Management, LP, as a Lender
By:	/s/ Karen Weber
Name:	Karen Weber
Title:	Director – Bank Debt

GoldenTree Loan Opportunities V, Limited
By:	GoldenTree Asset Management, LP, as a Lender
By:	/s/ Karen Weber
Name:	Karen Weber
Title:	Director – Bank Debt

GOLUB CAPITAL FUNDING CLO-8, LTD., as a Lender
By:	GOLUB CAPITAL PARTNERS
	MANAGEMENT LTD, as Collateral Manager
By:	/s/ Cora Passis
Name:	Cora Passis
Title:	Designated Signatory

GOLUB CAPITAL MANAGEMENT CLO 2007-1, LTD, as a Lender
By:	GOLUB CAPITAL PARTNERS MANAGEMENT LTD, as Collateral Manager
By:	/s/ Cora Passis
Name:	Cora Passis
Title:	Designated Signatory

GOLUB CAPITAL SENIOR LOAN OPPORTUNITY FUND, LTD., as a Lender
By:	GOLUB CAPITAL INCORPORATED, as Collateral Manager
By:	/s/ Cora Passis
Name:	Cora Passis
Title:	Designated Signatory

GOLUB INTERNATIONAL LOAN LTD, I, as a Lender
By:	GOLUB CAPITAL INTERNATIONAL MANAGEMENT LLC, as Collateral Manager
By:	/s/ David Golub
Name:	David Golub
Title:	Designated Signatory

Grand Central Asset Trust, Cameron I Series, as a Lender
By:	/s/ Adam Jacobs
Name:	Adam Jacobs
Title:	Attorney-in-Fact

Grand Horn CLO Ltd., as a Lender
By:	Seix Investment Advisors LLC, as Collateral Manager
By:	/s/ George Goudelias
Name:	George Goudelias
Title:	Managing Director

Grayson CLO, Ltd.
By:	Highland Capital Management, L.P., as Collateral Manager
By:	Strand Advisors, Inc., Its General Partner
By:	/s/ Jason Post
Name:	Jason Post
Title:	Operations Director

Green Lane CLO Ltd, as a Lender
By:	Guggenheim Investment Management, LLC, as Collateral Manager
By:	/s/ Kaitlin Trinh
Name:	Kaitlin Trinh
Title:	Director

Green Park CDO B.V., as a Lender
By:	/s/ Dan H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

Greenbriar CLO, Ltd.
By:	Highland Capital Management, L.P., as Collateral Manager
By:	Strand Advisors, Inc., Its General Partner
By:	/s/ Jason Post
Name:	Jason Post
Title:	Operations Director

GREYROCK CDO LTD.
By:	Aladdin Capital Management LLC as Manager, as a Lender
By:	/s/ Christine M. Barto
Name:	Christine M. Barto
Title:	Authorized Signatory

GSO Co-Investment Partners, LLC
By:	GSO Capital Partners LP as Manager
By:	/s/ Dan H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

GSO Domestic Capital Funding LLC, as a Lender
By:	GSO Capital Partners LP, as Collateral Manager
By:	/s/ George Fan
Name:	George Fan
Title:	Authorized Signatory

GSO Royal Holdings CB LLC as a Lender
By:	GSO Capital Partners LP, Manager
By:	/s/ George Fan
Name:	George Fan
Title:	Authorized Signatory

GULF STREAM-COMPASS CLO 2002-I, LTD
By:	Gulf Stream Asset Management LLC
	As Collateral Manager
GULF STREAM-COMPASS CLO 2003-I, LTD
By:	Gulf Stream Asset Management LLC
	As Collateral Manager
GULF STREAM-COMPASS CLO 2004-I, LTD
By:	Gulf Stream Asset Management LLC
	As Collateral Manager
GULF STREAM-COMPASS CLO 2005-I, LTD
By:	Gulf Stream Asset Management LLC
	As Collateral Manager
GULF STREAM-COMPASS CLO 2005-II, LTD
By:	Gulf Stream Asset Management LLC
	As Collateral Manager
GULF STREAM-RASHINBAN CLO 2006-I, LTD
By:	Gulf Stream Asset Management LLC
	As Collateral Manager
GULF STREAM-SEXTANT CLO 2007-I, LTD
By:	Gulf Stream Asset Management LLC
	As Collateral Manager
GULF STREAM-COMPASS CLO 2007, LTD
By:	Gulf Stream Asset Management LLC
	As Collateral Manager
By:	/s/ Barry K. Love
Name:	Barry K. Love
Title:	Chief Credit Officer

Highland Floating Rate Advantage Fund, as a Lender
By:	/s/ Jason Blackburn
Name:	Jason Blackburn
Title:	Secretary and Treasurer

HillMark Funding Ltd.,
By:	HillMark Capital Management, L.P., as Collateral Manager, as Lender
By:	/s/ Hillel Weinberger
Name:	Hillel Weinberger
Title:	Chairman

HSBC Bank USA, N.A., as a Lender
By:	/s/ David Hants
Name:	David Hants
Title:	Senior Vice President

HUDSON CANYON FUNDING II, LTD
By:	INVESCO Senior Secured Management, Inc. as Collateral Manager & Attorney in Fact
By:	/s/ Thomas Ewald
Name:	Thomas Ewald
Title:	Authorized Signature

HUDSON STRAITS CLO 2004, LTD.
By:	GSO / Blackstone Debt Funds Management LLC
	as Collateral Manager
By:	/s/ Dan H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

Hyde Park CDO B.V., as a Lender
By:	/s/ Dan H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

ILLINOIS STATE BOARD OF INVESTMENT
By:	McDonnell Investment Management, LLC,
	as Manager
By:	/s/ Kathleen A. Zarn
Name:	Kathleen A. Zarn
Title:	Vice President

ING Prime Rate Trust
By:	ING Investment Management Co.,
	as its Investment Manager
ING Senior Income Fund
By:	ING Investment Management Co.,
	as its Investment Manager
ING Investment Management CLO II, LTD.
By:	ING Alternative Asset Management LLC,
	as its Investment Manager
ING Investment Management CLO IV, LTD.
By:	ING Alternative Asset Management LLC,
	as its Investment Manager
ING International (II) – Senior Bank Loans Euro
By:	ING Investment Management Co., as its Investment Manager
ING Investment Trust Co. Plan for Employee Benefit Investment Funds – Senior Loan Fund
By:	ING Investment Trust Co.
	as its trustee
By:	/s/ Robert Wilson
Name:	Robert Wilson
Title:	Senior Vice President

INWOOD PARK CDO LTD.
By:	Blackstone Debt Advisors L.P.
	as Collateral Manager
By:	/s/ Dan H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

Iron Hill CLO Limited, as a Lender
By:	Guggenheim Partners Europe Limited, as Collateral Manager
By:	/s/ Adrian Duffy
Name:	Adrian Duffy
Title:	Senior Managing Director

Jasper CLO, Ltd.
By:	Highland Capital Management, L.P., as Collateral Manager
By:	Strand Advisors, Inc., Its General Partner
By:	/s/ Jason Post
Name:	Jason Post
Title:	Operations Director

John Alden Life Insurance Company as a Lender
By:	/s/ Arvind Admal
Name:	Arvind Admal
Title:	AS ATTORNEY-IN-FACT

JPMorgan Leveraged Loans Master Fund L.P., as a Lender
By:	/s/ William J. Morgan
Name:	William J. Morgan
Title:	Managing Director

Kennecott Funding Ltd, as a Lender
By:	Guggenheim Investment Management, LLC, as Collateral Manager
By:	/s/ Kaitlin Trinh
Name:	Kaitlin Trinh
Title:	Director

KeyBank National Association, as a Lender
By:	/s/ Raed Y. Alfayoumi
Name:	Raed Y. Alfayoumi
Title:	Vice President

LAFAYETTE SQUARE CDO LTD.
By:	Blackstone Debt Advisors L.P.
	as Collateral Manager
By:	/s/ Dan H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

LANDMARK III CDO LTD.
By:	Aladdin Capital Management LLC as Manager
	as a Lender
By:	/s/ Christine M. Barto
Name:	Christine M. Barto
Title:	Authorized Signatory

LANDMARK IX CDO LTD.
By:	Aladdin Capital Management LLC as Manager
	as a Lender
By:	/s/ Christine M. Barto
Name:	Christine M. Barto
Title:	Authorized Signatory

LANDMARK V CDO LTD.
By:	Aladdin Capital Management LLC as Manager
	as a Lender
By:	/s/ Christine M. Barto
Name:	Christine M. Barto
Title:	Authorized Signatory

LANDMARK VI CDO LTD.
By:	Aladdin Capital Management LLC as Manager as a Lender
By:	/s/ Christine M. Barto
Name:	Christine M. Barto
Title:	Authorized Signatory

LANDMARK VII CDO LTD.
By:	Aladdin Capital Management LLC as Manager as a Lender
By:	/s/ Christine M. Barto
Name:	Christine M. Barto
Title:	Authorized Signatory

LANDMARK VIII CDO LTD.
By:	Aladdin Capital Management LLC as Manager as a Lender
By:	/s/ Christine M. Barto
Name:	Christine M. Barto
Title:	Authorized Signatory

Latitude CLO I, Ltd., as a Lender
By:	/s/ Kirk Wallace
Name:	Kirk Wallace
Title:	Senior Vice President

Latitude CLO II, Ltd., as a Lender
By:	/s/ Kirk Wallace
Name:	Kirk Wallace
Title:	Senior Vice President

Latitude CLO III, Ltd., as a Lender
By:	/s/ Kirk Wallace
Name:	Kirk Wallace
Title:	Senior Vice President

LeverageSource III S.a.r.l, as a Lender
By:	/s/ Kristopher D. Lacy
Name:	Kristopher D. Lacy
Title:	Authorized Signatory

Liberty Mutual Fire Insurance Company, as a Lender
By:	/s/ Sheila Finnerty
Name:	Sheila Finnerty
Title:	Vice President

Liberty Mutual Insurance Company, as a Lender
By:	/s/ Sheila Finnerty
Name:	Sheila Finnerty
Title:	Vice President

LIMEROCK CLO I
By:	INVESCO Senior Secured Management, Inc.
	as Investment Manager
By:	/s/ Thomas Ewald
Name:	Thomas Ewald
Title:	Authorized Signature

Loan Funding III (Delaware) LLC, as a Lender
By:	Pacific Investment Management Company LLC,
	as its Investment Advisor
By:	/s/ Arthur Y.D. Ong
Name:	Arthur Y.D. Ong
Title:	Executive Vice President

Loan Funding IV LLC
By:	Highland Capital Management, L.P., as Collateral Manager
By:	Strand Advisors, Inc., Its General Partner
By:	/s/ Jason Post
Name:	Jason Post
Title:	Operations Director

Loan Funding VII LLC
By:	Highland Capital Management, L.P.,
	as Collateral Manager
By:	Strand Advisors, Inc., Its General Partner
By:	/s/ Jason Post
Name:	Jason Post
Title:	Operations Director

Loan Star State Trust
By:	Highland Capital Management, L.P.,
	as Collateral Manager
By:	Strand Advisors, Inc., Its General Partner
By:	/s/ Jason Post
Name:	Jason Post
Title:	Operations Director

Longhorn Credit Funding, LLC
By:	Highland Capital Management, L.P.,
	as Collateral Manager
By:	Strand Advisors, Inc., Its General Partner
By:	/s/ Jason Post
Name:	Jason Post
Title:	Operations Director

Lord Abbett Investment Trust – Lord Abbett
Floating Rate Fund, as a Lender
By:	/s/ Elizabeth [not legible]
Name:	Elizabeth [not legible]
Title:	Portfolio Manager

Madison Park Funding I, Ltd, as a Lender
By:	/s/ Thomas Flannery
Name:	Thomas Flannery
Title:	Authorized Signatory

Madison Park Funding II, Ltd
By:	Credit Suisse Alternative Capital, Inc.,
	as Collateral Manager
By:	/s/ Thomas Flannery
Name:	Thomas Flannery
Title:	Authorized Signatory

Madison Park Funding III, Ltd
By:	Credit Suisse Alternative Capital, Inc.,
	as Collateral Manager
By:	/s/ Thomas Flannery
Name:	Thomas Flannery
Title:	Authorized Signatory

Mars Associates Retirement Plan, as a Lender
By:	Pacific Investment Management Company LLC,
	as its Investment Advisor
By:	/s/ Arthur Y.D. Ong
Name:	Arthur Y.D. Ong
Title:	Executive Vice President

Mayport CLO Ltd., as a Lender
By:	Pacific Investment Management Company LLC,
	as its Investment Advisor
By:	/s/ Arthur Y.D. Ong
Name:	Arthur Y.D. Ong
Title:	Executive Vice President

MONUMENT PARK CDO LTD.
By:	Blackstone Debt Advisors L.P.
	as Collateral Manager
By:	/s/ Dan H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

MORGAN STANLEY SENIOR FUNDING, INC.,
as a Lender
By:	/s/ Ryan Vetsch
Name:	Ryan Vetsch
Title:	Vice President

MOSELLE CLO S.A.
By:	INVESCO Senior Secured Management, Inc.
	as Collateral Manager
By:	/s/ Thomas Ewald
Name:	Thomas Ewald
Title:	Authorized Signature

Muzinich & Co (Ireland) Limited for the account of Extrayield $ Loan Fund, as a Lender
By:	/s/ Michael Ludwig
Name:	Michael Ludwig
Title:	Director

NAUTIQUE FUNDING LTD.
By:	INVESCO Senior Secured Management, Inc.
	as Collateral Manager
By:	/s/ Thomas Ewald
Name:	Thomas Ewald
Title:	Authorized Signature

NewStar CP Funding LLC, as a Lender
By:	NewStar Financial, Inc., its Designated Manager
By:	/s/ Jeffrey Greene
Name:	Jeffrey Greene
Title:	Director

NewStar Credit Opportunities Funding II Ltd.,
as a Lender
By:	NewStar Financial, Inc., its Designated Manager
By:	/s/ Jeffrey Greene
Name:	Jeffrey Greene
Title:	Director

OCTAGON INVESTMENT PARTNERS V, LTD.
By:	Octagon Credit Investors, LLC
	as Portfolio Manager
OCTAGON INVESTMENT PARTNERS VI, LTD.
By:	Octagon Credit Investors, LLC
	as Collateral Manager
OCTAGON INVESTMENT PARTNERS VII, LTD.
By:	Octagon Credit Investors, LLC
	as Collateral Manager
OCTAGON INVESTMENT PARTNERS VIII, LTD.
By:	Octagon Credit Investors, LLC
	as Collateral Manager
OCTAGON INVESTMENT PARTNERS IX, LTD.
By:	Octagon Credit Investors, LLC
	as Manager
OCTAGON INVESTMENT PARTNERS X, LTD.
By:	Octagon Credit Investors, LLC
	as Collateral Manager
OCTAGON INVESTMENT PARTNERS XI, LTD.
By:	Octagon Credit Investors, LLC
	as Collateral Manager
HAMLET II, LTD.
By:	Octagon Credit Investors, LLC
	as Portfolio Manager
US Bank N.A., solely as trustee of the DOLL Trust (for Qualified Institutional Investors only), (and not in its individual capacity)
By:	Octagon Credit Investors, LLC
	as Portfolio Manager
, as a Lender
By:	/s/ Donald C. Young
Name:	Donald C. Young
Title:	Portfolio Manager

PACIFIC FUNDING LLC, as a Lender
By:	/s/ Tara E. Kenny
Name:	Tara E. Kenny
Title:	Assistant Vice President

Pacific Life Funds-PL. Floating Rate Loan Fund
By:	/s/ Jason Blackburn
Name:	Jason Blackburn
Title:	Authorized Signatory

Pacific Select Fund-Floating Rate Loan Portfolio
By:	/s/ Jason Blackburn
Name:	Jason Blackburn
Title:	Authorized Signatory

PACIFICA CDO II, Ltd., as a Lender
By:	/s/ Ronald Grobeck
Name:	Ronald Grobeck
Title:	Managing Director

PACIFICA CDO IV, Ltd., as a Lender
By:	/s/ Ronald Grobeck
Name:	Ronald Grobeck
Title:	Managing Director

PACIFICA CDO V, Ltd., as a Lender
By:	/s/ Ronald Grobeck
Name:	Ronald Grobeck
Title:	Managing Director

PACIFICA CDO VI, Ltd., as a Lender
By:	/s/ Ronald Grobeck
Name:	Ronald Grobeck
Title:	Managing Director

PETRUSSE EUROPEAN CLO S.A.
By:	INVESCO Senior Secured Management, Inc. As Collateral Manager
By:	/s/ Thomas Ewald
Name:	Thomas Ewald
Title:	Authorized Signatory

PIMCO Cayman Bank Loan Fund, as a Lender
By:	Pacific Investment Management Company LLC, as its Investment Advisor
By:	/s/ Arthur Y. D. Ong
Name:	Arthur Y. D. Ong
Title:	Executive Vice President

Portola CLO, Ltd., as a Lender
By:	Pacific Investment Management Company LLC, as its Investment Advisor
By:	/s/ Arthur Y. D. Ong
Name:	Arthur Y. D. Ong
Title:	Executive Vice President

PPM GRAYHAWK CLO, LTD.
By:	/s/ [not legible]
	PPM America, Inc., as Collateral Manager

PPM MONARCH BAY FUNDING LLC, as a Lender
By:	/s/ Tara E. Kenny
Name:	Tara E. Kenny
Title:	Assistant Vice President

PPM SHADOW CREEK FUNDING LLC, as a Lender
By:	/s/ Tara E. Kenny
Name:	Tara E. Kenny
Title:	Assistant Vice President

PROSPECT PARK CDO LTD
By:	Blackstone Debt Advisors L.P., as Collateral Manager
By:	/s/ Daniel H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

Regent’s Park CDO B.V., as a Lender
By:	/s/ Daniel H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

RIVERSIDE PARK CLO LTD
By:	GSO / Blackstone Debt Funds Management LLC as Collateral Manager
By:	/s/ Daniel H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

RiverSource Bond Series, Inc.
RiverSource Floating Rate Fund, as a Lender
By:	/s/ Robin C. Stancil
Name:	Robin C. Stancil
Title:	Assistant Vice President

RiverSource Institutional
Leveraged Loan Fund II, L.P.,
By:	RiverSource Investment, LLC, as Investment Manager
By:	/s/ Robin C. Stancil
Name:	Robin C. Stancil
Title:	Assistant Secretary

RiverSource Life Insurance Company, as a Lender
By:	/s/ Robin C. Stancil
Name:	Robin C. Stancil
Title:	Assistant Vice President

RiverSource Strategic Allocation Series, Inc.
RiverSource Strategic Income Allocation Fund, as a Lender
By:	/s/ Robin C. Stancil
Name:	Robin C. Stancil
Title:	Assistant Vice President

Rogerscasey Target Solutions, LLC
By:	Shenkman Capital Management, Inc., as Investment Manager
By:	/s/ Richard H. Weinstein
Name:	Richard H. Weinstein
Title:	Executive Vice President

SAGAMORE CLO LTD.
By:	INVESCO Senior Secured Management, Inc. As Collateral Manager
By:	/s/ Thomas Ewald
Name:	Thomas Ewald
Title:	Authorized Signatory

Sandelman Finance 2006-1, Ltd.
By:	Sandelman Partners, LP as Collateral Manager, as a Lender
By:	/s/ Peter A. Bio
Name:	Peter A. Bio
Title:	Head of Capital Structure

Sandelman Finance 2006-2, Ltd.
By:	Sandelman Partners, LP as Collateral Manager, as a Lender
By:	/s/ Peter A. Bio
Name:	Peter A. Bio
Title:	Head of Capital Structure

SARATOGA CLO I, LIMITED
By:	INVESCO Senior Secured Management, Inc. As the Asset Manager
By:	/s/ Thomas Ewald
Name:	Thomas Ewald
Title:	Authorized Signatory

Sargas CLO II LTD.
By:	Pangaea Asset Management, LLC, its Collateral Manager
By:	/s/ Michael P. King
Name:	Michael P. King
Title:	Senior Managing Director

SERVES 2006-1, Ltd.
By:	/s/ [not legible]
	PPM America, Inc., as Collateral Manager

SHINNECOCK CLO 2006-1 LTD, as a Lender
By:	/s/ John Hall
Name:	John Hall
Title:	Authorized Signatory

Southfork CLO, Ltd.
By:	Highland Capital Management, L.P. As Collateral Manager
By:	Strand Advisors, Inc., Its General Partner
By:	/s/ Jason Post
Name:	Jason Post
Title:	Operations Director

Southport CLO, Limited, as a Lender
By:	Pacific Investment Management Company LLC, as its Investment Advisor
By:	/s/ Arthur Y. D. Ong
Name:	Arthur Y. D. Ong
Title:	Executive Vice President

St. James’s Park CDO B.V., as a Lender
By:	/s/ Daniel H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

State of Connecticut Retirement Plans and Trust Funds
By:	Shenkman Capital Management, Inc., as Investment Manager
By:	/s/ Richard H. Weinstein
Name:	Richard H. Weinstein
Title:	Executive Vice President

STICHTING DEPOSITARY APG FIXED INCOME CREDITS POOL, as a Lender
By:	apg Asset Management US Inc.
By:	/s/ Michael Leiva
Name:	Michael Leiva
Title:	Portfolio Manager

Stichting Mars Pensioenfonds, as a Lender
By:	Pacific Investment Management Company LLC, as its Investment Advisor
By:	/s/ Arthur Y. D. Ong
Name:	Arthur Y. D. Ong
Title:	Executive Vice President

Stone Tower Credit Funding I Ltd.
By:	Stone Tower Fund Management LLC, As Its Collateral Manager, as a Lender
By:	/s/ Michael W. DelPercio
Name:	Michael W. DelPercio
Title:	Authorized Signatory

Sumitomo Mitsui Banking Corporation, as a Lender
By:	/s/ William M. Ginn
Name:	William M. Ginn
Title:	Executive Officer

SWISS CAPITAL PRO LOAN LIMITED, as a Lender
For and on behalf of BNY Mellon Trust Company (Ireland) Limited under power of attorney
By:	/s/ Robert Blake
Name:	Robert Blake
Title:	Vice President

TRIBECA PARK CLO LTD.
By:	GSO /Blackstone Debt Funds Management LLC, as Collateral Manager
By:	/s/ Daniel H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

Trimaran CLO IV Ltd, as a Lender
By:	Trimaran Advisors, L.L.C.
By:	/s/ Dominick J. Mazzitelli
Name:	Dominick J. Mazzitelli
Title:	Managing Director

Trimaran CLO V Ltd, as a Lender
By:	Trimaran Advisors, L.L.C.
By:	/s/ Dominick J. Mazzitelli
Name:	Dominick J. Mazzitelli
Title:	Managing Director

Trimaran CLO VI Ltd, as a Lender
By:	Trimaran Advisors, L.L.C.
By:	/s/ Dominick J. Mazzitelli
Name:	Dominick J. Mazzitelli
Title:	Managing Director

Trimaran CLO VII Ltd, as a Lender
By:	Trimaran Advisors, L.L.C.
By:	/s/ Dominick J. Mazzitelli
Name:	Dominick J. Mazzitelli
Title:	Managing Director

TRS HY FNDS LLC
By:	Deutsche Bank AG Cayman Islands Brach, its sole member
By:	DB Services New Jersey, Inc.
By:	/s/ Alice L. Wagner
Name:	Alice L. Wagner
Title:	Vice President
By:	/s/ Angeline Quintana
Name:	Angeline Quintana
Title:	Assistant Vice President

Trustmark Insurance Company
By:	Shenkman Capital Management, Inc., as Investment Advisor
By:	/s/ Richard H. Weinstein
Name:	Richard H. Weinstein
Title:	Executive Vice President

Union Bank, N.A., as a Lender
By:	/s/ Allan B. Miner
Name:	Allan B. Miner
Title:	Vice President

Union Security Insurance Company, as a Lender
By:	/s/ Arvind Admal
Name:	Arvind Admal
Title:	As Attorney-In-Fact

UNION SQUARE CDO LTD.
By:	Blackstone Debt Advisors L.P. as Collateral Manager
By:	/s/ Daniel H. Smith
Name:	Daniel H. Smith
Title:	Authorized Signatory

United Service Protection Corp., as a Lender
By:	/s/ Arvind Admal
Name:	Arvind Admal
Title:	As Attorney-In-Fact

VENTURE III CDO LIMITED,
By:	its investment advisor, MJX Asset Management LLC, as a Lender
By:	/s/ Simon Yuan
Name:	Simon Yuan
Title:	Vice President

VENTURE IX CDO LIMITED,
By:	its investment advisor, MJX Asset Management LLC, as a Lender
By:	/s/ Simon Yuan
Name:	Simon Yuan
Title:	Vice President

VENTURE VII CDO LIMITED,
By:	its investment advisor, MJX Asset Management LLC, as a Lender
By:	/s/ Simon Yuan
Name:	Simon Yuan
Title:	Vice President

VENTURE VIII CDO LIMITED,
By:	its investment advisor, MJX Asset Management LLC, as a Lender
By:	/s/ Simon Yuan
Name:	Simon Yuan
Title:	Vice President

Virginia Retirement System, as a Lender
By:	Pacific Investment Management Company LLC, as its Investment Advisor
By:	/s/ Arthur Y. D. Ong
Name:	Arthur Y. D. Ong
Title:	Executive Vice President

WASATCH CLO LTD
By:	INVESCO Senior Secured Management, Inc. As Portfolio Manager
By:	/s/ Thomas Ewald
Name:	Thomas Ewald
Title:	Authorized Signatory

Wells Fargo Bank, National Association, as a Lender
By:	/s/ Karen Byler
Name:	Karen Byler
Title:	Senior Vice President

Westbrook CLO, Ltd.
By:	Shenkman Capital Management, Inc., as Investment Manager
By:	/s/ Richard H. Weinstein
Name:	Richard H. Weinstein
Title:	Executive Vice President

Westwood CDO I, Ltd., as a Lender
By:	/s/ Ronald Grobeck
Name:	Ronald Grobeck
Title:	Managing Director

Westwood CDO II, Ltd., as a Lender
By:	/s/ Ronald Grobeck
Name:	Ronald Grobeck
Title:	Managing Director

EXHIBIT A

FORM FIRST LIEN INTERCREDITOR AGREEMENT

FIRST LIEN INTERCREDITOR AGREEMENT

dated as of

January [    ], 2010

among

BANK OF AMERICA, N.A.,

as Administrative Agent for the Credit Agreement Secured Parties,

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as the 2018 Notes Collateral Agent,

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as the 2018 Notes Authorized Representative,

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as the 2020 Notes Collateral Agent,

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as the 2020 Notes Authorized Representative,

and

each additional Collateral Agent and Authorized Representative from time to time party hereto

TABLE OF CONTENTS

		Page
ARTICLE I
DEFINITIONS
SECTION 1.01	Construction; Certain Defined Terms	2
ARTICLE II
PRIORITIES AND AGREEMENTS WITH RESPECT TO SHARED COLLATERAL
SECTION 2.01	Priority of Claims	11
SECTION 2.02	Actions with Respect to Shared Collateral; Prohibition on Contesting Liens	12
SECTION 2.03	No Interference; Payment Over	14
SECTION 2.04	Automatic Release of Liens	15
SECTION 2.05	Certain Agreements with Respect to Bankruptcy or Insolvency Proceedings	15
SECTION 2.06	Reinstatement	16
SECTION 2.07	Insurance	16
SECTION 2.08	Refinancings	17
SECTION 2.09	Possessory Collateral Agent as Gratuitous Bailee for Perfection	17
SECTION 2.10	Amendments to First Lien Security Documents	17
ARTICLE III
EXISTENCE AND AMOUNTS OF LIENS AND OBLIGATIONS
ARTICLE IV
THE APPLICABLE COLLATERAL AGENT
SECTION 4.01	Authority	19
ARTICLE V
MISCELLANEOUS
SECTION 5.01	Notices	20
SECTION 5.02	Waivers; Amendment; Joinder Agreements	21
SECTION 5.03	Parties in Interest	21
SECTION 5.04	Survival of Agreement	22
SECTION 5.05	Counterparts	22

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		Page
SECTION 5.06	Severability	22
SECTION 5.07	Governing Law	22
SECTION 5.08	Submission to Jurisdiction; Waivers	22
SECTION 5.09	WAIVER OF JURY TRIAL	23
SECTION 5.10	Headings	23
SECTION 5.11	Conflicts	23
SECTION 5.12	Provisions Solely to Define Relative Rights	23
SECTION 5.13	Integration	23
SECTION 5.14	Other First Lien Obligations	24
SECTION 5.15	Agent Capacities	25

-ii-

FIRST LIEN INTERCREDITOR AGREEMENT (as amended, restated, modified or supplemented from time to time, this “Agreement”) dated as of January [    ], 2010, among BANK OF AMERICA, N.A., as administrative agent for the Credit Agreement Secured Parties (as defined below) under the Credit Documents (as defined below) (in such capacity and together with its successors in such capacity, the “Administrative Agent”), Wells Fargo Bank, National Association, as collateral agent for the 2018 Notes First Lien Secured Parties (as defined below) (in such capacity and together with its successors in such capacity, the “2018 Notes Collateral Agent”), Wells Fargo Bank, National Association, as Authorized Representative for the 2018 Notes First Lien Secured Parties (in such capacity and together with its successors in such capacity, the “2018 Notes Authorized Representative”), Wells Fargo Bank, National Association, as collateral agent for the 2020 Notes First Lien Secured Parties (as defined below) (in such capacity and together with its successors in such capacity, the “2020 Notes Collateral Agent”), Wells Fargo Bank, National Association, as Authorized Representative for the 2020 Notes First lien Secured Parties (in such capacity and together with its successors in such capacity, the “2020 Notes Authorized Representative”), and each additional Authorized Representative from time to time party hereto for the Other First Lien Secured Parties of the Series with respect to which it is acting in such capacity.

Reference is made to (i) the Credit Agreement dated as of October 7, 2008 (as amended, restated, extended, Refinanced, supplemented, waived or otherwise modified from time to time (including by that certain Amendment and Waiver dated as of January [    ], 2010) the “Credit Agreement”), among Brocade Communication Systems, Inc. (the “Company”), the Lenders party thereto from time to time, the Administrative Agent and the other parties named therein, as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time; (ii) the Security Agreement, dated as of December 18, 2008 (as amended, restated, extended, supplemented, waived or otherwise modified from time to time, the “Security Agreement”), by and among the Grantors party thereto and the Credit Agreement Collateral Agent, as the same may be further amended, restated, amended and restated, extended, supplemented or modified from time to time; (iii) the [    ]% Senior Secured Notes due 2018 (as amended, restated, extended, Refinanced, supplemented, waived or otherwise modified from time to time, the “2018 Notes”) issued pursuant to an Indenture (as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time, the “2018 Notes Indenture”) dated as of date hereof among the Company, the Subsidiaries identified therein and Wells Fargo Bank, National Association, as trustee (the “2018 Trustee”); (iv) the Security Agreement, dated as of the date hereof (as the same may be amended, restated, amended and restated, extended, supplemented or modified from time to time, the “2018 Notes Security Agreement”), by and among the Company, the Subsidiaries party thereto, and the 2018 Notes Collateral Agent; (v) the [    ]% Senior Secured Notes due 2020 (as amended, restated, extended, Refinanced, supplemented or otherwise modified from time to time, the “2020 Notes”) issued pursuant to an Indenture (as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time, the “2020 Notes Indenture”) dated as of date hereof among the Company, the Subsidiaries identified therein and Wells Fargo Bank, National Association, as trustee (the “2020 Trustee”); and (vi) the Security Agreement, dated as of the date hereof (as the same may be amended, restated, amended and restated, extended, supplemented or modified from time to time, the “2020 Notes Security Agreement”), by and among the Company, the Subsidiaries party thereto, and the 2020 Notes Collateral Agent.

In consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Collateral Agent (as defined below), the Administrative Agent (for itself and on behalf of the Credit Agreement Secured Parties), the 2018 Trustee (for itself and on behalf of the 2018 Notes First Lien Secured Parties), the 2020 Trustee (for itself and on behalf of the 2020 Notes First Lien Secured Parties) and each additional Authorized Representative (for itself and on behalf of the Other First Lien Secured Parties of the applicable Series) agree as follows:

Section 9. DEFINITIONS

(a) Construction; Certain Defined Terms.

(i) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument, other document, statute or regulation herein shall be construed as referring to such agreement, instrument, other document, statute or regulation as from time to time amended, supplemented or otherwise modified, (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, but shall not be deemed to include the subsidiaries of such Person unless express reference is made to such subsidiaries, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (iv) all references herein to Articles, Sections and Annexes shall be construed to refer to Articles, Sections and Annexes of this Agreement, (v) unless otherwise expressly qualified herein, the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights and (vi) the term “or” is not exclusive.

(ii) It is the intention of the First Lien Secured Parties of each Series that the holders of First Lien Obligations of such Series (and not the First Lien Secured Parties of any other Series) bear the risk of (i) any determination by a court of competent jurisdiction that (x) any of the First Lien Obligations of such Series are unenforceable under applicable law or are subordinated to any other obligations (other than another Series of First Lien Obligations), (y) any of the First Lien Obligations of such Series do not have an enforceable security interest in any of the Collateral securing any other Series of First Lien Obligations and/or (z) any intervening security interest exists securing any other obligations (other than another Series of First Lien Obligations) on a basis ranking prior to the security interest of such Series of First Lien Obligations but junior to the security interest of any other Series of First Lien Obligations or (ii) the existence of any Collateral for any other Series of First Lien Obligations that is not Shared Collateral (any such condition referred to in the foregoing clauses (i) or (ii) with respect to any Series of First Lien Obligations, an “Impairment” of such Series); provided that the

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existence of a maximum claim with respect to any real property subject to a mortgage which applies to all First Lien Obligations shall not be deemed to be an Impairment of any Series of First Lien Obligations. In the event of any Impairment with respect to any Series of First Lien Obligations, the results of such Impairment shall be borne solely by the holders of such Series of First Lien Obligations, and the rights of the holders of such Series of First Lien Obligations (including, without limitation, the right to receive distributions in respect of such Series of First Lien Obligations pursuant to Section 2.01) set forth herein shall be modified to the extent necessary so that the effects of such Impairment are borne solely by the holders of the Series of such First Lien Obligations subject to such Impairment. Additionally, in the event the First Lien Obligations of any Series are modified pursuant to applicable law (including, without limitation, pursuant to Section 1129 of the Bankruptcy Code), any reference to such First Lien Obligations or the Secured Credit Documents governing such First Lien Obligations shall refer to such obligations or such documents as so modified.

(iii) Capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Credit Agreement. As used in this Agreement, the following terms have the meanings specified below:

“2018 Notes” has the meaning assigned to such term in the recitals of this Agreement.

“2018 Notes Authorized Representative” shall have the meaning assigned to such term in the introductory paragraph to this Agreement.

“2018 Notes Collateral Agent” has the meaning assigned to such term in the recitals of this Agreement.

“2018 Notes Indenture” has the meaning assigned to such term in the recitals of this Agreement.

“2018 Notes First Lien Documents” means the 2018 Notes Indenture, the 2018 Notes issued thereunder, the 2018 Notes Security Agreement and any security documents and other operative agreements evidencing or governing the Indebtedness thereunder, and the liens securing such Indebtedness, including any agreement entered into for the purpose of securing the 2018 Notes First Lien Obligations.

“2018 Notes First Lien Obligations” means the Other First Lien Obligations pursuant to the 2018 Notes Indenture.

“2018 Notes First Lien Secured Parties” means the 2018 Notes Collateral Agent, the 2018 Notes Authorized Representative and the holders of the 2018 Notes First Lien Obligations.

“2018 Notes Security Agreement” has the meaning assigned to such term in the recitals of this Agreement.

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“2018 Trustee” has the meaning assigned to such term in the recitals of this Agreement.

“2020 Notes” has the meaning assigned to such term in the recitals of this Agreement.

“2020 Notes Authorized Representative” shall have the meaning assigned to such term in the introductory paragraph to this Agreement.

“2020 Notes Collateral Agent” has the meaning assigned to such term in the recitals of this Agreement.

“2020 Notes Indenture” has the meaning assigned to such term in the recitals of this Agreement.

“2020 Notes First Lien Documents” means the 2020 Notes Indenture, the 2020 Notes issued thereunder, the 2020 Notes Security Agreement and any security documents and other operative agreements evidencing or governing the Indebtedness thereunder, and the liens securing such Indebtedness, including any agreement entered into for the purpose of securing the 2020 Notes First Lien Obligations.

“2020 Notes First Lien Obligations” means the Other First Lien Obligations pursuant to the 2020 Notes Indenture.

“2020 Notes First Lien Secured Parties” means the 2020 Notes Collateral Agent, the 2020 Notes Authorized Representative and the holders of the 2020 Notes First Lien Obligations.

“2020 Notes Security Agreement” has the meaning assigned to such term in the recitals of this Agreement.

“2020 Trustee” has the meaning assigned to such term in the recitals of this Agreement.

“Additional Senior Class Debt Collateral Agent” shall have the meaning assigned to such term in Section 5.14.

“Additional Senior Class Debt” shall have the meaning assigned to such term in Section 5.14.

“Additional Senior Class Debt Parties” shall have the meaning assigned to such term in Section 5.14.

“Additional Senior Class Debt Representative” shall have the meaning assigned to such term in Section 5.14.

“Administrative Agent” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

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“Agreement” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

“Applicable Authorized Representative” means, with respect to any Shared Collateral, (i) the Administrative Agent for so long as a Discharge of the Credit Agreement Obligations shall not have occurred and (ii) the Major Non-Controlling Authorized Representative if there has been a Discharge of the Credit Agreement Obligations; provided, in each case, that if there shall occur one or more Non-Controlling Authorized Representative Enforcement Dates, the Applicable Authorized Representative shall be the Authorized Representative that is the Major Non-Controlling Authorized Representative in respect of the most recent Non-Controlling Authorized Representative Enforcement Date.

“Applicable Collateral Agent” means, with respect to any Shared Collateral, (i) the Administrative Agent for so long as a Discharge of the Credit Agreement Obligations shall not have occurred and (ii) the Collateral Agent for the Series of First Lien Obligations represented by the Major Non-Controlling Authorized Representative if there has been a Discharge of the Credit Agreement Obligations; provided, in each case, that if there shall occur one or more Non-Controlling Authorized Representative Enforcement Dates, the Applicable Collateral Agent shall be the Collateral Agent for the Series of First Lien Obligations represented by the Major Non-Controlling Authorized Representative in respect of the most recent Non-Controlling Authorized Representative Enforcement Date.

“Authorized Representative” means, at any time, (i) in the case of any Credit Agreement Obligations or the Credit Agreement Secured Parties, the Administrative Agent, (ii) in the case of the 2018 Notes Obligations or the 2018 Notes Secured Parties, the 2018 Trustee, (iii) in the case of the 2020 Notes Obligations or the 2020 Notes Secured Parties, the 2020 Trustee and (iv)in the case of any other Series of Other First Lien Obligations or Other First Lien Secured Parties that become subject to this Agreement after the date hereof, the Authorized Representative named for such Series in the applicable Joinder Agreement.

“Bankruptcy Case” shall have the meaning assigned to such term in Section 2.05(b).

“Bankruptcy Code” shall mean Title 11 of the United States Code, as amended.

“Bankruptcy Law” shall mean the Bankruptcy Code and any similar Federal, state or foreign law for the relief of debtors.

“Collateral” means all assets and properties subject to Liens created pursuant to any First Lien Security Document to secure one or more Series of First Lien Obligations.

“Collateral Agent” means (i) in the case of any Credit Agreement Obligations, the Administrative Agent, (ii) in the case of the 2018 Notes Obligations, the 2018 Notes Collateral Agent, (iii) in the case of the 2020 Notes Obligations, the 2020 Notes Collateral Agent and (iv) in the case of any other Series of Other First Lien Obligations that become subject to this Agreement after the date hereof, the Collateral Agent named for such Series in the applicable Joinder Agreement.

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“Controlling Secured Parties” means, with respect to any Shared Collateral, (i) at any time when the Administrative Agent is the Applicable Collateral Agent, the Credit Agreement Secured Parties and (ii) at any other time, the Series of First Lien Secured Parties whose Authorized Representative is the Applicable Authorized Representative for such Shared Collateral.

“Credit Agreement” shall have the meaning assigned to such term in the introductory paragraph to this Agreement.

“Credit Agreement Collateral Documents” means the Security Agreement, the other Collateral Documents (as defined in the Credit Agreement) and each other agreement entered into in favor of the Administrative Agent for the purpose of securing any Credit Agreement Obligations.

“Credit Agreement Obligations” means all amounts owing to any party pursuant to the terms of any Credit Document, including, without limitation, all amounts in respect of any principal, premium, interest (including any interest accruing subsequent to the commencement of a Bankruptcy Case at the rate provided for in the Credit Agreement, whether or not such interest is an allowed claim under any such proceeding or under applicable state, federal or foreign law), penalties, fees, expenses, indemnifications, reimbursements, damages and other liabilities, and guarantees of the foregoing amounts and including, without limitation, the “Obligations” as defined in the Credit Agreement.

“Credit Agreement Secured Parties” means the holders of Credit Agreement Obligations, including the “Secured Parties” as defined in the Credit Agreement.

“Credit Documents” mean the Credit Agreement, each Credit Agreement Collateral Document and the Loan Documents (as defined in the Credit Agreement).

“DIP Financing” shall have the meaning assigned to such term in Section 2.05(b).

“DIP Financing Liens” shall have the meaning assigned to such term in Section 2.05(b).

“DIP Lenders” shall have the meaning assigned to such term in Section 2.05(b).

“Discharge” means, with respect to any Shared Collateral and any Series of First Lien Obligations, the date on which such Series of First Lien Obligations is no longer secured by such Shared Collateral. The term “Discharged” shall have a corresponding meaning.

“Discharge of Credit Agreement Obligations” means, with respect to any Shared Collateral, the Discharge of the Credit Agreement Obligations with respect to such Shared Collateral; provided that the Discharge of Credit Agreement Obligations shall not be deemed to have occurred in connection with a Refinancing of such Credit Agreement Obligations with additional First Lien Obligations secured by such Shared Collateral under an Other First Lien Document which has been designated in writing by the Administrative Agent (under the Credit Agreement so Refinanced) to the Other First Lien Collateral Agent and each other Authorized Representative as the “Credit Agreement” for purposes of this Agreement.

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“Event of Default” means an “Event of Default” (or similarly defined term) as defined in any Secured Credit Document.

“First Lien Documents” means, with respect to the Credit Agreement Obligations, the Credit Agreement Documents, and with respect to the Initial Other First Lien Obligations or any Series of Additional Senior Class Debt, the Other First Lien Documents.

“First Lien Obligations” means, collectively, (i) the Credit Agreement Obligations and (ii) each Series of Other First Lien Obligations.

“First Lien Secured Parties” means (i) the Credit Agreement Secured Parties and (ii) the Other First Lien Secured Parties with respect to each Series of Other First Lien Obligations (including the 2018 Notes First Lien Secured Parties and the 2020 Notes First Lien Secured Parties).

“First Lien Security Documents” means, collectively, (i) the Credit Agreement Collateral Documents and (ii) the Other First Lien Security Documents, including the 2018 Notes Security Agreement and the 2020 Notes Security Agreement.

“Grantors” means the Company and each Subsidiary or direct or indirect parent company of the Company which has granted a security interest pursuant to any First Lien Security Document to secure any Series of First Lien Obligations.

“Impairment” shall have the meaning assigned to such term in Section 1.01(b).

“Initial Notes” means the 2018 Notes and the 2020 Notes.

“Initial Notes Security Agreements” means the 2018 Notes Security Agreement and the 2020 Notes Security Agreement.

“Initial Other Authorized Representatives” means the 2018 Notes Authorized Representative and the 2020 Notes Authorized Representative.

“Initial Other First Lien Agreements” means the 2018 Notes Indenture and the 2020 Notes Indenture.

“Initial Other First Lien Documents” means the 2018 Notes First Lien Documents and the 2020 Notes First Lien Documents.

“Initial Other First Lien Obligations” means the 2018 Notes First Lien Obligations and the 2020 Notes First Lien Obligations.

“Initial Other First Lien Secured Parties” means the 2018 Notes First Lien Secured Parties and the 2020 Notes First Lien Secured Parties.

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“Insolvency or Liquidation Proceeding” means:

(1) any case commenced by or against the Company or any other Grantor under any Bankruptcy Law, any other proceeding for the reorganization, recapitalization or adjustment or marshalling of the assets or liabilities of the Company or any other Grantor, any receivership or assignment for the benefit of creditors relating to the Company or any other Grantor or any similar case or proceeding relative to the Company or any other Grantor or its creditors, as such, in each case whether or not voluntary;

(2) any liquidation, dissolution, marshalling of assets or liabilities or other winding up of or relating to the Company or any other Grantor, in each case whether or not voluntary and whether or not involving bankruptcy or insolvency; or

(3) any other proceeding of any type or nature in which substantially all claims of creditors of the Company or any other Grantor are determined and any payment or distribution is or may be made on account of such claims.

“Intervening Creditor” shall have the meaning assigned to such term in Section 2.01(a).

“Joinder Agreement” means the document in the form of Exhibit A to this Agreement required to be delivered by an Authorized Representative to each Collateral Agent and each Authorized Representative pursuant to Section 5.14 of this Agreement in order to create an additional Series of Other First Lien Obligations or a Refinancing of any Series of First Lien Obligations and add Other First Lien Secured Parties hereunder.

“Lien” shall mean any mortgage, pledge, security interest, hypothecation, assignment, lien (statutory or other) or similar encumbrance (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement or any lease in the nature thereof).

“Major Non-Controlling Authorized Representative” means, with respect to any Shared Collateral, the Authorized Representative of the Series of Other First Lien Obligations that constitutes the largest outstanding principal amount of any then outstanding Series of First Lien Obligations with respect to such Shared Collateral; provided, however, that if there are two outstanding Series of Other First Lien Obligations which have an equal outstanding principal amount, the Series of Other First Lien Obligations with the earlier maturity date shall be considered to have the larger outstanding principal amount for purposes of this definition.

“New York UCC” shall mean the Uniform Commercial Code as from time to time in effect in the State of New York.

“Non-Controlling Authorized Representative” means, at any time with respect to any Shared Collateral, any Authorized Representative that is not the Applicable Authorized Representative at such time with respect to such Shared Collateral.

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“Non-Controlling Authorized Representative Enforcement Date” means, with respect to any Non-Controlling Authorized Representative, the date which is 180 days (throughout which 180 day period such Non-Controlling Authorized Representative was the Major Non-Controlling Authorized Representative) after the occurrence of both (i) an Event of Default (under and as defined in the First Lien Documents under which such Non-Controlling Authorized Representative is the Authorized Representative) and (ii) each Collateral Agent’s and each other Authorized Representative’s receipt of written notice from such Non-Controlling Authorized Representative certifying that (x) such Non-Controlling Authorized Representative is the Major Non-Controlling Authorized Representative and that an Event of Default (under and as defined in the First Lien Documents under which such Non-Controlling Authorized Representative is the Authorized Representative) has occurred and is continuing and (y) the First Lien Obligations of the Series with respect to which such Non-Controlling Authorized Representative is the Authorized Representative are currently due and payable in full (whether as a result of acceleration thereof or otherwise) in accordance with the terms of the applicable Other First Lien Document; provided that the Non-Controlling Authorized Representative Enforcement Date shall be stayed and shall not occur and shall be deemed not to have occurred with respect to any Shared Collateral (1) at any time the Applicable Authorized Representative has commenced and is diligently pursuing any enforcement action with respect to such Shared Collateral or (2) at any time the Grantor that has granted a security interest in such Shared Collateral is then a debtor under or with respect to (or otherwise subject to) any Insolvency or Liquidation Proceeding.

“Non-Controlling Secured Parties” means, with respect to any Shared Collateral, the First Lien Secured Parties which are not Controlling Secured Parties with respect to such Shared Collateral.

“Other First Lien Agreement” means any indenture, including the Initial Other First Lien Agreements and the Initial Notes, credit agreement (excluding the Credit Agreement) or other agreement, document or instrument, pursuant to which any Grantor has or will incur Other First Lien Obligations; provided that, in each case, the Indebtedness thereunder (other than the Initial Other First Lien Obligations) has been designated as Other First Lien Obligations pursuant to and in accordance with Section 5.14.

“Other First Lien Collateral Agents” means each of the Collateral Agents other than the Administrative Agent.

“Other First Lien Documents” means, with respect to the Initial Other First Lien Obligations or any Series of Additional Senior Class Debt, the Other First Lien Agreements, including the Initial Other First Lien Documents and the Other First Lien Security Documents and each other agreement entered into for the purpose of securing the Initial Other First Lien Obligations or any Series of Additional Senior Class Debt; provided that, in each case, the Indebtedness thereunder (other than the Initial Other First Lien Obligations) has been designated as Other First Lien Obligations pursuant to Section 5.14 hereto.

“Other First Lien Obligations” means all amounts owing pursuant to the terms of any Other First Lien Agreement (including the Initial Other First Lien Agreements), including, without limitation, all amounts in respect of any principal, premium, interest (including any interest accruing subsequent to the commencement of a Bankruptcy Case at the rate provided for

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in the respective Other First Lien Agreement, whether or not such interest is an allowed claim under any such proceeding or under applicable state, federal or foreign law), penalties, fees, expenses, indemnifications, reimbursements, damages and other liabilities, and guarantees of the foregoing amounts.

“Other First Lien Secured Party” means the holders of any Other First Lien Obligations and any Authorized Representative with respect thereto and shall include the Initial Other First Lien Secured Parties.

“Other First Lien Security Documents” means any security agreement or any other document now existing or entered into after the date hereof that create Liens on any assets or properties of any Grantor to secure the Other First Lien Obligations.

“Possessory Collateral” means any Shared Collateral in the possession of the Collateral Agent (or its agents or bailees), to the extent that possession thereof perfects a Lien thereon under the Uniform Commercial Code of any jurisdiction or otherwise. Possessory Collateral includes, without limitation, any Certificated Securities, Promissory Notes, Instruments, and Chattel Paper, in each case, delivered to or in the possession of the Collateral Agent under the terms of the First Lien Security Documents. All capitalized terms used in this definition and not defined elsewhere in this Agreement have the meaning assigned to them in the New York UCC.

“Proceeds” shall have the meaning assigned to such term in Section 2.01(a).

“Refinance” means, in respect of any indebtedness, to refinance, extend, renew, defease, amend, increase, modify, supplement, restructure, refund, replace or repay, or to issue other indebtedness or enter alternative financing arrangements, in exchange or replacement for such indebtedness (in whole or in part), including by adding or replacing lenders, creditors, agents, borrowers and/or guarantors, and including in each case, but not limited to, after the original instrument giving rise to such indebtedness has been terminated and including, in each case, through any credit agreement, indenture or other agreement. “Refinanced” and “Refinancing” have correlative meanings.

“Secured Credit Document” means (i) the Credit Agreement and the Loan Documents (as defined in the Credit Agreement), (ii) the Initial Other First Lien Documents and (iii) each other Other First Lien Documents.

“Security Agreement” has the meaning assigned to such term in the recitals of this Agreement.

“Series” means (a) with respect to the First Lien Secured Parties, each of (i) the Credit Agreement Secured Parties (in their capacities as such), (ii) the 2018 Notes First Lien Secured Parties (in their capacities as such), (iii) the 2020 Notes First Lien Secured Parties (in their capacities as such) and (iv) the Other First Lien Secured Parties that become subject to this Agreement after the date hereof that are represented by a common Authorized Representative (in its capacity as such for such Other First Lien Secured Parties) and (b) with respect to any First Lien Obligations, each of (i) the Credit Agreement Obligations, (ii) the 2018 Notes First Lien

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Obligations, (iii) the 2020 Notes First Lien Obligations and (iv) the Other First Lien Obligations incurred pursuant to any Other First Lien Document, which pursuant to any Joinder Agreement, are to be represented hereunder by a common Authorized Representative (in its capacity as such for such Other First Lien Obligations).

“Shared Collateral” means, at any time, Collateral in which the holders of two or more Series of First Lien Obligations (or their respective Authorized Representatives or Collateral Agents on behalf of such holders) hold a valid and perfected security interest or Lien at such time. If more than two Series of First Lien Obligations are outstanding at any time and the holders of less than all Series of First Lien Obligations hold a valid and perfected security interest or Lien in any Collateral at such time, then such Collateral shall constitute Shared Collateral for those Series of First Lien Obligations that hold a valid security interest or Lien in such Collateral at such time and shall not constitute Shared Collateral for any Series which does not have a valid and perfected security interest or Lien in such Collateral at such time.

Section 10. PRIORITIES AND AGREEMENTS WITH RESPECT TO SHARED COLLATERAL

(a) Priority of Claims.

(i) Anything contained herein or in any of the Secured Credit Documents to the contrary notwithstanding (but subject to Section 1.01(b)), if an Event of Default has occurred and is continuing, and the Applicable Collateral Agent is taking action to enforce rights in respect of any Shared Collateral, or any distribution is made in respect of any Shared Collateral in any Bankruptcy Case of any Grantor or any First Lien Secured Party receives any payment pursuant to any intercreditor agreement (other than this Agreement) with respect to any Shared Collateral, the proceeds of any sale, collection or other liquidation of any such Shared Collateral by any First Lien Secured Party or received by the Applicable Collateral Agent or any First Lien Secured Party pursuant to any such intercreditor agreement with respect to such Shared Collateral and proceeds of any such distribution (subject, in the case of any such distribution, to the sentence immediately following) to which the First Lien Obligations are entitled under any intercreditor agreement (other than this Agreement) (all proceeds of any sale, collection or other liquidation of any Collateral and all proceeds of any such distribution being collectively referred to as “Proceeds”), shall be applied by the Applicable Collateral Agent in the following order:

(1) FIRST, to the payment of all reasonable costs and expenses incurred by each Collateral Agent in connection with such collection or sale or otherwise in connection with this Agreement, any other Secured Credit Documents or any of the First Lien Obligations, including all court costs and the reasonable fees and expenses of its agents and legal counsel, the repayment of all advances made by the Applicable Collateral Agent or any First Lien Secured Party hereunder or under any other Secured Credit Documents on behalf of any Grantor and any other reasonable costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Secured Credit Documents;

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(2) SECOND, to the extent Proceeds remain after the application pursuant to preceding clause (i), to the payment in full of the First Lien Obligations of each Series (the amounts so applied to be distributed among the First Lien Secured Parties pro rata in accordance with the respective amounts of the First Lien Obligations owed to them on the date of any such distribution and in accordance with the terms of the applicable Secured Credit Documents); and

(3) THIRD, any balance of such Proceeds remaining after the application pursuant to preceding clauses (i) and (ii), to the Grantors, their successors or assigns, or as a court of competent jurisdiction may otherwise direct.

If, despite the provisions of this Section 2.01(a)(ii), any First Lien Secured Party shall receive any payment or other recovery in excess of its portion of payments on account of the First Lien Obligations to which it is then entitled in accordance with this Section 2.01(a), such First Lien Secured Party shall hold such payment or recovery in trust for the benefit of all First Lien Secured Parties for distribution in accordance with this Section 2.01(a).

(ii) Notwithstanding the foregoing, with respect to any Shared Collateral for which a third party (other than a First Lien Secured Party) has a lien or security interest that is junior in priority to the security interest of any Series of First Lien Obligations but senior (as determined by appropriate legal proceedings in the case of any dispute) to the security interest of any other Series of First Lien Obligations (such third party an “Intervening Creditor”), the value of any Shared Collateral or Proceeds which are allocated to such Intervening Creditor shall be deducted on a ratable basis solely from the Shared Collateral or Proceeds to be distributed in respect of the Series of First Lien Obligations with respect to which such Impairment exists.

(iii) It is acknowledged that the First Lien Obligations of any Series may, subject to the limitations set forth in the then extant Secured Credit Documents, be increased, extended, renewed, replaced, restated, supplemented, restructured, repaid, refunded, Refinanced or otherwise amended or modified from time to time, all without affecting the priorities set forth in Section 2.01(a) or the provisions of this Agreement defining the relative rights of the First Lien Secured Parties of any Series.

(iv) Notwithstanding the date, time, method, manner or order of grant, attachment or perfection of any Liens securing any Series of First Lien Obligations granted on the Shared Collateral and notwithstanding any provision of the Uniform Commercial Code of any jurisdiction, or any other applicable law or the Secured Credit Documents or any defect or deficiencies in the Liens securing the First Lien Obligations of any Series or any other circumstance whatsoever (but, in each case, subject to Section 1.01(b)), each First Lien Secured Party hereby agrees that the Liens securing each Series of First Lien Obligations on any Shared Collateral shall be of equal priority.

(b) Actions with Respect to Shared Collateral; Prohibition on Contesting Liens.

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(i) With respect to any Shared Collateral, notwithstanding Section 2.01, only the Applicable Collateral Agent shall act or refrain from acting with respect to such Shared Collateral (including with respect to any intercreditor agreement with respect to any Shared Collateral). At any time when the Administrative Agent is the Applicable Collateral Agent with respect to any Shared Collateral, no Other First Lien Secured Party shall or shall instruct any Collateral Agent to, commence any judicial or nonjudicial foreclosure proceedings with respect to, seek to have a trustee, receiver, liquidator or similar official appointed for or over, attempt any action to take possession of, exercise any right, remedy or power with respect to, or otherwise take any action to enforce its security interest in or realize upon, or take any other action available to it in respect of, such Shared Collateral (including with respect to any intercreditor agreement with respect to such Shared Collateral), whether under any Other First Lien Security Document, applicable law or otherwise, it being agreed that only the Administrative Agent, acting in accordance with the Credit Agreement Collateral Documents, shall be entitled to take any such actions or exercise any such remedies with respect to such Shared Collateral at such time.

(ii) With respect to any Shared Collateral at any time when any Other First Lien Collateral Agent is the Applicable Collateral Agent, (i) such Other First Lien Collateral Agent shall act only on the instructions of the Applicable Authorized Representative, (ii) such Other First Lien Collateral Agent shall not follow any instructions with respect to such Shared Collateral (including with respect to any intercreditor agreement with respect to any Shared Collateral) from any Non-Controlling Authorized Representative (or any other First Lien Secured Party other than the Applicable Authorized Representative) and (iii) no Non-Controlling Authorized Representative or other First Lien Secured Party (other than the Applicable Authorized Representative) shall or shall instruct such Other First Lien Collateral Agent to, commence any judicial or nonjudicial foreclosure proceedings with respect to, seek to have a trustee, receiver, liquidator or similar official appointed for or over, attempt any action to take possession of, exercise any right, remedy or power with respect to, or otherwise take any action to enforce its security interest in or realize upon, or take any other action available to it in respect of, such Shared Collateral (including with respect to any intercreditor agreement with respect to such Shared Collateral), whether under any First Lien Security Document, applicable law or otherwise, it being agreed that only such Other First Lien Collateral Agent, acting on the instructions of the Applicable Authorized Representative and in accordance with the Other First Lien Security Documents applicable to it, shall be entitled to take any such actions or exercise any such remedies with respect to such Shared Collateral.

(iii) Notwithstanding the equal priority of the Liens securing each Series of First Lien Obligations, the Applicable Collateral Agent (in the case of any Other First Lien Collateral Agent, acting on the instructions of the Applicable Authorized Representative) may deal with the Shared Collateral as if such Applicable Collateral Agent had a senior Lien on such Collateral. No Non-Controlling Authorized Representative or Non-Controlling Secured Party will contest, protest or object to any foreclosure proceeding or action brought by the Applicable Collateral Agent, the Applicable Authorized Representative or the Controlling Secured Party or any other exercise by the Applicable Collateral Agent, the Applicable Authorized Representative or the Controlling Secured Party of any rights and remedies relating to the Shared Collateral, or to cause the Applicable Collateral Agent to do so. The foregoing shall not be construed to limit the rights and priorities of any First Lien Secured Party, the Applicable Collateral Agent or any Authorized Representative with respect to any Collateral not constituting Shared Collateral.

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(iv) Each of the Collateral Agents and the Authorized Representatives agrees that it will not accept any Lien on any Collateral for the benefit of any Series of First Lien Obligations (other than funds deposited for the discharge or defeasance of any Other First Lien Agreement) other than pursuant to the First Lien Security Documents, and by executing this Agreement (or a Joinder Agreement), each Collateral Agent and each Authorized Representative and the Series of First Lien Secured Parties for which it is acting hereunder agree to be bound by the provisions of this Agreement and the other First Lien Security Documents applicable to it.

(v) Each of the First Lien Secured Parties agrees that it will not (and hereby waives any right to) contest or support any other Person in contesting, in any proceeding (including any Insolvency or Liquidation Proceeding), the perfection, priority, validity or enforceability of a Lien held by or on behalf of any of the First Lien Secured Parties in all or any part of the Collateral, or the provisions of this Agreement; provided that nothing in this Agreement shall be construed to prevent or impair (i) the rights of any Collateral Agent or any Authorized Representative to enforce this Agreement or (ii) the rights of any First Lien Secured Party from contesting or supporting any other Person in contesting the enforceability of any Lien purporting to secure First Lien Obligations constituting unmatured interest pursuant to Section 502(b)(2) of the Bankruptcy Code.

(c) No Interference; Payment Over.

(i) Each First Lien Secured Party agrees that (i) it will not challenge or question in any proceeding the validity or enforceability of any First Lien Obligations of any Series or any First Lien Security Document or the validity, attachment, perfection or priority of any Lien under any First Lien Security Document or the validity or enforceability of the priorities, rights or duties established by or other provisions of this Agreement; provided that nothing in this Agreement shall be construed to prevent or impair the rights of any First Lien Secured Party from challenging or questioning the validity or enforceability of any First Lien Obligations constituting unmatured interest or the validity of any Lien relating thereto pursuant to Section 502(b)(2) of the Bankruptcy Code; (ii) it will not take or cause to be taken any action the purpose or intent of which is, or could be, to interfere, hinder or delay, in any manner, whether by judicial proceedings or otherwise, any sale, transfer or other disposition of the Shared Collateral by the Applicable Collateral Agent, (iii) except as provided in Section 2.02, it shall have no right to (A) direct the Applicable Collateral Agent or any other First Lien Secured Party to exercise any right, remedy or power with respect to any Shared Collateral (including pursuant to any intercreditor agreement) or (B) consent to the exercise by the Applicable Collateral Agent or any other First Lien Secured Party of any right, remedy or power with respect to any Shared Collateral, (iv) it will not institute any suit or assert in any suit, bankruptcy, insolvency or other proceeding any claim against the Applicable Collateral Agent or any other First Lien Secured Party seeking damages from or other relief by way of specific performance, instructions or otherwise with respect to any Shared Collateral, and none of the Applicable Collateral Agent, any Applicable Authorized Representative or any other First Lien Secured Party shall be liable for any action taken or omitted to be taken by the Applicable Collateral Agent, such Applicable Authorized Representative or other First Lien Secured Party with respect to any Shared Collateral in accordance with the provisions of this Agreement, (v) it will not seek, and hereby waives any right, to have any Shared Collateral or any part thereof marshaled upon any

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foreclosure or other disposition of such Collateral and (vi) it will not attempt, directly or indirectly, whether by judicial proceedings or otherwise, to challenge the enforceability of any provision of this Agreement; provided that nothing in this Agreement shall be construed to prevent or impair the rights of any of the Applicable Collateral Agent or any other First Lien Secured Party to enforce this Agreement.

(ii) Each First Lien Secured Party hereby agrees that if it shall obtain possession of any Shared Collateral or shall realize any proceeds or payment in respect of any such Shared Collateral, pursuant to any First Lien Security Document or by the exercise of any rights available to it under applicable law or in any Insolvency or Liquidation Proceeding or through any other exercise of remedies (including pursuant to any intercreditor agreement), at any time prior to the Discharge of each of the First Lien Obligations, then it shall hold such Shared Collateral, proceeds or payment in trust for the other First Lien Secured Parties having a security interest in such Shared Collateral and promptly transfer any such Shared Collateral, proceeds or payment, as the case may be, to the Applicable Collateral Agent for such Shared Collateral, to be distributed by such Applicable Collateral Agent in accordance with the provisions of Section 2.01(a) hereof.

(d) Automatic Release of Liens.

(i) If, at any time any Shared Collateral is transferred to a third party or otherwise disposed of, in each case, in connection with any enforcement by the Applicable Collateral Agent in accordance with the provisions of this Agreement, then (whether or not any Insolvency or Liquidation Proceeding is pending at the time) the Liens in favor of the other Collateral Agents for the benefit of each Series of First Lien Secured Parties upon such Shared Collateral will automatically be released and discharged upon final conclusion of foreclosure proceeding as and when, but only to the extent, such Liens of the Applicable Collateral Agent on such Shared Collateral are released and discharged; provided that any proceeds of any Shared Collateral realized therefrom shall be applied pursuant to Section 2.01 hereof.

(ii) Each Collateral Agent and each Authorized Representative agrees to execute and deliver (at the sole cost and expense of the Grantors) all such authorizations and other instruments as shall reasonably be requested by the Applicable Collateral Agent to evidence and confirm any release of Shared Collateral provided for in this Section.

(e) Certain Agreements with Respect to Bankruptcy or Insolvency Proceedings.

(i) This Agreement shall continue in full force and effect notwithstanding the commencement of any proceeding under the Bankruptcy Code or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law by or against the Company or any of its subsidiaries.

(ii) If any Grantor shall become subject to a case (a “Bankruptcy Case”) under the Bankruptcy Code and shall, as debtor(s)-in-possession, move for approval of financing (“DIP Financing”) to be provided by one or more lenders (the “DIP Lenders”) under Section 364 of the Bankruptcy Code or the use of cash collateral under Section 363 of the Bankruptcy

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Code, each First Lien Secured Party (other than any Controlling Secured Party or any Authorized Representative of any Controlling Secured Party) agrees that it will raise no objection to any such financing or to the Liens on the Shared Collateral securing the same (“DIP Financing Liens”) or to any use of cash collateral that constitutes Shared Collateral, unless any Controlling Secured Party, or an Authorized Representative of any Controlling Secured Party, shall then oppose or object to such DIP Financing or such DIP Financing Liens or use of cash collateral (and (i) to the extent that such DIP Financing Liens are senior to the Liens on any such Shared Collateral for the benefit of the Controlling Secured Parties, each Non-Controlling Secured Party will subordinate its Liens with respect to such Shared Collateral on the same terms as the Liens of the Controlling Secured Parties (other than any Liens of any First Lien Secured Parties constituting DIP Financing Liens) are subordinated thereto, and (ii) to the extent that such DIP Financing Liens rank pari passu with the Liens on any such Shared Collateral granted to secure the First Lien Obligations of the Controlling Secured Parties, each Non-Controlling Secured Party will confirm the priorities with respect to such Shared Collateral as set forth herein), in each case so long as (A) the First Lien Secured Parties of each Series retain the benefit of their Liens on all such Shared Collateral pledged to the DIP Lenders, including proceeds thereof arising after the commencement of such proceeding, with the same priority vis-a-vis all the other First Lien Secured Parties (other than any Liens of the First Lien Secured Parties constituting DIP Financing Liens) as existed prior to the commencement of the Bankruptcy Case, (B) the First Lien Secured Parties of each Series are granted Liens on any additional collateral pledged to any First Lien Secured Parties as adequate protection or otherwise in connection with such DIP Financing or use of cash collateral, with the same priority vis-a-vis the First Lien Secured Parties as set forth in this Agreement, (C) if any amount of such DIP Financing or cash collateral is applied to repay any of the First Lien Obligations, such amount is applied pursuant to Section 2.01(a) of this Agreement, and (D) if any First Lien Secured Parties are granted adequate protection, including in the form of periodic payments, in connection with such DIP Financing or use of cash collateral, the proceeds of such adequate protection are applied pursuant to Section 2.01(a) of this Agreement; provided that the First Lien Secured Parties of each Series shall have a right to object to the grant of a Lien to secure the DIP Financing over any Collateral subject to Liens in favor of the First Lien Secured Parties of such Series or its Authorized Representative that shall not constitute Shared Collateral; and provided further that the First Lien Secured Parties receiving adequate protection shall not object to any other First Lien Secured Party receiving adequate protection comparable to any adequate protection granted to such First Lien Secured Parties in connection with a DIP Financing or use of cash collateral.

(f) Reinstatement. In the event that any of the First Lien Obligations shall be paid in full and such payment or any part thereof shall subsequently, for whatever reason (including an order or judgment for disgorgement of a preference under Title 11 of the Bankruptcy Code, or any similar law, or the settlement of any claim in respect thereof), be required to be returned or repaid, the terms and conditions of this Article II shall be fully applicable thereto until all such First Lien Obligations shall again have been paid in full in cash.

(g) Insurance. As between the First Lien Secured Parties, the Applicable Collateral Agent (and in the case of the Other First Lien Collateral Agent, acting at the direction of the Applicable Authorized Representative), shall have the right to adjust or settle any insurance policy or claim covering or constituting Shared Collateral in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding affecting the Shared Collateral.

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(h) Refinancings. The First Lien Obligations of any Series may be Refinanced, in whole or in part, in each case, without notice to, or the consent (except to the extent a consent is otherwise required to permit the Refinancing transaction under any Secured Credit Document) of any First Lien Secured Party of any other Series, all without affecting the priorities provided for herein or the other provisions hereof; provided that the Authorized Representative of the holders of any such Refinancing indebtedness shall have executed a Joinder Agreement on behalf of the holders of such Refinancing indebtedness.

(i) Possessory Collateral Agent as Gratuitous Bailee for Perfection.

(i) The Possessory Collateral shall be delivered to the Administrative Agent and the Administrative Agent agrees to hold any Shared Collateral constituting Possessory Collateral that is part of the Collateral in its possession or control (or in the possession or control of its agents or bailees) as gratuitous bailee for the benefit of each other First Lien Secured Party and any assignee solely for the purpose of perfecting the security interest granted in such Possessory Collateral, if any, pursuant to the applicable First Lien Security Documents, in each case, subject to the terms and conditions of this Section 2.09; provided that at any time the Administrative Agent is not the Applicable Collateral Agent, the Administrative Agent shall, at the request of the Applicable Collateral Agent, promptly deliver all Possessory Collateral to the Applicable Collateral Agent together with any necessary endorsements (or otherwise allow the Applicable Collateral Agent to obtain control of such Possessory Collateral). The Company shall take such further action as is required to effectuate the transfer contemplated hereby and shall indemnify each Collateral Agent for loss or damage suffered by such Collateral Agent as a result of such transfer except for loss or damage suffered by such Collateral Agent as a result of its own willful misconduct or gross negligence.

(ii) Each Collateral Agent (other than the Administrative Agent) agrees to hold any Shared Collateral constituting Possessory Collateral, from time to time in its possession, as gratuitous bailee for the benefit of each other First Lien Secured Party and any assignee, solely for the purpose of perfecting the security interest granted in such Possessory Collateral, if any, pursuant to the applicable First Lien Security Documents, in each case, subject to the terms and conditions of this Section 2.09.

(iii) The duties or responsibilities of each Collateral Agent under this Section 2.09 shall be limited solely to holding any Shared Collateral constituting Possessory Collateral as gratuitous bailee for the benefit of each other First Lien Secured Party for purposes of perfecting the Lien held by such First Lien Secured Parties therein.

(j) Amendments to First Lien Security Documents.

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(a) Without the prior written consent of the Administrative Agent and each other Collateral Agent, each Other First Lien Collateral Agent agrees that no Other First Lien Security Document may be amended, supplemented or otherwise modified or entered into to the extent such amendment, supplement or modification, or the terms of any new Other First Lien Security Document would be prohibited by, or would require any Grantor to act or refrain from acting in a manner that would violate, any of the terms of this Agreement or the Secured Credit Documents pursuant to which such Series of First Lien Obligations was incurred.

(b) Without the prior written consent of each Other First Lien Collateral Agent, the Administrative Agent agrees that no Credit Agreement Collateral Document may be amended, supplemented or otherwise modified or entered into to the extent such amendment, supplement or modification, or the terms of any new Credit Agreement Collateral Document would be prohibited by, or would require any Grantor to act or refrain from acting in a manner that would violate, any of the terms of this Agreement or the Secured Credit Documents pursuant to which such Series of First Lien Obligations was incurred.

(c) In determining whether an amendment to any First Lien Security Document is permitted by this Section 2.10, each Collateral Agent may conclusively rely on an officer’s certificate of the Company stating that such amendment is permitted by this Section 2.10.

Section 11. EXISTENCE AND AMOUNTS OF LIENS AND OBLIGATIONS

Whenever a Collateral Agent or any Authorized Representative shall be required, in connection with the exercise of its rights or the performance of its obligations hereunder, to determine the existence or amount of any First Lien Obligations of any Series, or the Shared Collateral subject to any Lien securing the First Lien Obligations of any Series, it may request that such information be furnished to it in writing by each other Authorized Representative or Collateral Agent and shall be entitled to make such determination or not make any determination on the basis of the information so furnished; provided, however, that if an Authorized Representative or a Collateral Agent shall fail or refuse reasonably promptly to provide the requested information, the requesting Collateral Agent or Authorized Representative shall be entitled to make any such determination or not make any determination by such method as it may, in the exercise of its good faith judgment, determine, including by reliance upon a certificate of the Company. Each Collateral Agent and each Authorized Representative may rely conclusively, and shall be fully protected in so relying, on any determination made by it in accordance with the provisions of the preceding sentence (or as otherwise directed by a court of competent jurisdiction) and shall have no liability to any Grantor, any First Lien Secured Party or any other person as a result of such determination.

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Section 12. THE APPLICABLE COLLATERAL AGENT

Authority.

(i) Notwithstanding any other provision of this Agreement, nothing herein shall be construed to impose any fiduciary or other duty on any Applicable Collateral Agent to any Non-Controlling Secured Party or give any Non-Controlling Secured Party the right to direct any Applicable Collateral Agent, except that each Applicable Collateral Agent shall be obligated to distribute proceeds of any Shared Collateral in accordance with Section 2.01 hereof.

(ii) In furtherance of the foregoing, each Non-Controlling Secured Party acknowledges and agrees that the Applicable Collateral Agent shall be entitled, for the benefit of the First Lien Secured Parties, to sell, transfer or otherwise dispose of or deal with any Shared Collateral as provided herein and in the First Lien Security Documents, as applicable, for which the Applicable Collateral Agent is the collateral agent of such Shared Collateral, without regard to any rights to which the Non-Controlling Secured Parties would otherwise be entitled as a result of the First Lien Obligations held by such Non-Controlling Secured Parties. Without limiting the foregoing, each Non-Controlling Secured Party agrees that none of the Applicable Collateral Agent, the Applicable Authorized Representative or any other First Lien Secured Party shall have any duty or obligation first to marshal or realize upon any type of Shared Collateral (or any other Collateral securing any of the First Lien Obligations), or to sell, dispose of or otherwise liquidate all or any portion of such Shared Collateral (or any other Collateral securing any First Lien Obligations), in any manner that would maximize the return to the Non-Controlling Secured Parties, notwithstanding that the order and timing of any such realization, sale, disposition or liquidation may affect the amount of proceeds actually received by the Non-Controlling Secured Parties from such realization, sale, disposition or liquidation. Each of the First Lien Secured Parties waives any claim it may now or hereafter have against any Collateral Agent or the Authorized Representative of any other Series of First Lien Obligations or any other First Lien Secured Party of any other Series arising out of (i) any actions which any Collateral Agent, Authorized Representative or the First Lien Secured Parties take or omit to take (including, actions with respect to the creation, perfection or continuation of Liens on any Collateral, actions with respect to the foreclosure upon, sale, release or depreciation of, or failure to realize upon, any of the Collateral and actions with respect to the collection of any claim for all or any part of the First Lien Obligations from any account debtor, guarantor or any other party) in accordance with the First Lien Security Documents or any other agreement related thereto or to the collection of the First Lien Obligations or the valuation, use, protection or release of any security for the First Lien Obligations, (ii) any election by any Applicable Authorized Representative or any holders of First Lien Obligations, in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b) of the Bankruptcy Code or (iii) subject to Section 2.05, any borrowing by, or grant of a security interest or administrative expense priority under Section 364 of the Bankruptcy Code or any equivalent provision of any other Bankruptcy Law, by the Company or any of its Subsidiaries, as debtor-in-possession. Notwithstanding any other provision of this Agreement, the Applicable Collateral Agent shall not accept any Shared Collateral in full or partial satisfaction of any First Lien Obligations pursuant to Section 9-620 of the Uniform Commercial Code of any jurisdiction, without the consent of each Authorized Representative representing holders of First Lien Obligations for whom such Collateral constitutes Shared Collateral.

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Section 13. MISCELLANEOUS

(a) Notices. All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(i) if to the Administrative Agent, to it at:

Bank of America, N.A.

Agency Management

1455 Market Street, 5th Floor

Mail Code: CA5-701-05-19

San Francisco, CA 94103

Attention: Robert Rittelmeyer

Telephone: (415) 436-2616

Telecopier: (415) 503-5099

Electronic Mail: robert.j.rittelmeyer@bankofamerica.com

(ii) if to the 2018 Notes Collateral Agent or the 2018 Trustee, to it at:

Wells Fargo Bank, National Association

707 Wilshire Blvd, 17^th Floor

Los Angeles, CA 90017

Telephone: 213-614-2588

Facsimile: 213-614-3355

Attn: Corporate Trust Services

(iii) if to the 2020 Notes Collateral Agent or the 2020 Trustee, to it at:

Wells Fargo Bank, National Association

707 Wilshire Blvd, 17^th Floor

Los Angeles, CA 90017

Telephone: 213-614-2588

Facsimile: 213-614-3355

Attn: Corporate Trust Services

(iv) if to any other Authorized Representative or Collateral Agent, to it at the address set forth in the applicable Joinder Agreement.

Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt (if a Business Day) and on the next Business Day thereafter (in all other cases) if delivered by hand or overnight courier service or

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sent by telecopy or on the date five Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 5.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 5.01. As agreed to in writing among each Collateral Agent and each Authorized Representative from time to time, notices and other communications may also be delivered by e-mail to the e-mail address of a representative of the applicable person provided from time to time by such person.

(b) Waivers; Amendment; Joinder Agreements.

(i) No failure or delay on the part of any party hereto in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereto are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on any party hereto in any case shall entitle such party to any other or further notice or demand in similar or other circumstances.

(ii) Neither this Agreement nor any provision hereof may be terminated, waived, amended or modified (other than pursuant to any Joinder Agreement) except pursuant to an agreement or agreements in writing entered into by each Authorized Representative and each Collateral Agent (and with respect to any such termination, waiver, amendment or modification to Section 2.10 or which otherwise by the terms of this Agreement requires the Company’s consent or which increases the obligations or reduces the rights of the Company or any other Grantor, with the consent of the Company).

(iii) Notwithstanding the foregoing, without the consent of any First Lien Secured Party, any Authorized Representative may become a party hereto by execution and delivery of a Joinder Agreement in accordance with Section 5.14 of this Agreement and upon such execution and delivery, such Authorized Representative and the Other First Lien Secured Parties and Other First Lien Obligations of the Series for which such Authorized Representative is acting shall be subject to the terms hereof and the terms of the Other First Lien Security Documents applicable thereto.

(iv) Notwithstanding the foregoing, without the consent of any other Authorized Representative or First Lien Secured Party, the Collateral Agents may effect amendments and modifications to this Agreement to the extent necessary to reflect any incurrence of any Other First Lien Obligations in compliance with the Credit Agreement and the other Secured Credit Documents.

(c) Parties in Interest. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, as well as the other First Lien Secured Parties, all of whom are intended to be bound by, and to be third party beneficiaries of, this Agreement.

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(d) Survival of Agreement. All covenants, agreements, representations and warranties made by any party in this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement.

(e) Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original but all of which when taken together shall constitute a single contract. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

(f) Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

(g) Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of New York, without regard to conflicts of laws principles thereof.

(h) Submission to Jurisdiction; Waivers. Each Collateral Agent and each Authorized Representative, on behalf of itself and the First Lien Secured Parties of the Series for whom it is acting, irrevocably and unconditionally:

(i) submits for itself and its property in any legal action or proceeding relating to this Agreement and the First Lien Security Documents, or for recognition and enforcement of any judgment in respect thereof, to the exclusive general jurisdiction of the state and federal courts located in New York County and appellate courts from any thereof;

(ii) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

(iii) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Person (or its Authorized Representative) at the address referred to in Section 5.01;

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(iv) agrees that nothing herein shall affect the right of any other party hereto (or any First Lien Secured Party) to effect service of process in any other manner permitted by law or shall limit the right of any party hereto (or any First Lien Secured Party) to sue in any other jurisdiction; and

(v) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section 5.08 any special, exemplary, punitive or consequential damages.

(i) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.09.

(j) Headings. Article, Section and Annex headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

(k) Conflicts. In the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of any of the other Secured Credit Documents or First Lien Security Documents, the provisions of this Agreement shall control.

(l) Provisions Solely to Define Relative Rights. The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of the First Lien Secured Parties in relation to one another. None of the Company, any other Grantor or any other creditor thereof shall have any rights or obligations hereunder, except as expressly provided in this Agreement (provided that nothing in this Agreement (other than Section 2.04, 2.05, 2.08, 2.09 or Article V) is intended to or will amend, waive or otherwise modify the provisions of the Credit Agreement or any Other First Lien Documents), and none of the Company or any other Grantor may rely on the terms hereof (other than Sections 2.04, 2.05, 2.08, 2.09 and Article V). Nothing in this Agreement is intended to or shall impair the obligations of any Grantor, which are absolute and unconditional, to pay the First Lien Obligations as and when the same shall become due and payable in accordance with their terms.

(m) Integration. This Agreement together with the other Secured Credit Documents and the First Lien Security Documents represents the agreement of each of the Grantors and the First Lien Secured Parties with respect to the subject matter hereof and there are no promises, undertakings, representations or warranties by any Grantor, the Administrative Agent, any or any other First Lien Secured Party relative to the subject matter hereof not expressly set forth or referred to herein or in the other Secured Credit Documents or the First Lien Security Documents.

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(n) Other First Lien Obligations.

To the extent, but only to the extent not prohibited by the provisions of the Credit Agreement and the Other First Lien Documents, the Company may incur additional indebtedness after the date hereof that is secured on an equal and ratable basis by the liens securing either the Credit Agreement Obligations or the Other First Lien Obligations (such indebtedness referred to as “Additional Senior Class Debt”). Any such Additional Senior Class Debt may be secured by a Lien and may be Guaranteed by the Grantors on a senior basis, in each case under and pursuant to the Other First Lien Documents, if and subject to the condition that the Collateral Agent and Authorized Representative of any such Additional Senior Class Debt (an “Additional Senior Class Debt Collateral Agent” and an “Additional Senior Class Debt Representative,” respectively), acting on behalf of the holders of such Additional Senior Class Debt (such Additional Senior Class Debt Collateral Agent, Additional Senior Class Debt Representative and holders in respect of any Additional Senior Class Debt being referred to as the “Additional Senior Class Debt Parties”), becomes a party to this Agreement by satisfying the conditions set forth in clauses (i) through (iv) of the immediately succeeding paragraph.

In order for an Additional Senior Class Debt Representative and Additional Senior Class Debt Collateral Agent to become a party to this Agreement,

(1) such Additional Senior Class Debt Representative, such Additional Senior Class Debt Collateral Agent, each Collateral Agent, each Authorized Representative and each Grantor shall have executed and delivered an instrument substantially in the form of Exhibit A (with such changes as may be reasonably approved by each Collateral Agent and such Additional Senior Class Debt Representative) pursuant to which such Additional Senior Class Debt Representative becomes an Authorized Representative hereunder, and such Additional Senior Class Debt Collateral Agent becomes a Collateral Agent hereunder, and the Additional Senior Class Debt in respect of which such Additional Senior Class Debt Representative is the Authorized Representative and the related Additional Senior Class Debt Parties become subject hereto and bound hereby;

(2) the Company shall have (x) delivered to each Collateral Agent true and complete copies of each of the Other First Lien Documents relating to such Additional Senior Class Debt, certified as being true and correct by a Responsible Officer of the Company and (y) identified in a certificate of an authorized officer the obligations to be designated as Other First Lien Obligations and the initial aggregate principal amount or face amount thereof;

(3) all filings, recordations and/or amendments or supplements to the First Lien Security Documents necessary or desirable in the reasonable judgment of the Additional Senior Class Debt Collateral Agent to confirm and perfect the Liens securing the relevant obligations relating to such Additional Senior Class Debt shall have been made, executed and/or delivered (or, with respect to any such filings or recordations, acceptable provisions to perform such filings or recordings have been taken in the

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reasonable judgment of the Additional Senior Class Debt Collateral Agent), and all fees and taxes in connection therewith shall have been paid (or acceptable provisions to make such payments have been taken in the reasonable judgment of the Additional Senior Class Debt Collateral Agent); and

(4) the Other First-Lien Documents, as applicable, relating to such Additional Senior Class Debt shall provide, in a manner reasonably satisfactory to each Collateral Agent, that each Additional Senior Class Debt Party with respect to such Additional Senior Class Debt will be subject to and bound by the provisions of this Agreement in its capacity as a holder of such Additional Senior Class Debt.

Upon the execution and delivery of a Joinder Agreement by an Additional Senior Class Debt Representative and an Additional Collateral Agent in accordance with this Section 5.14, each other Authorized Representative and Collateral Agent shall acknowledge such execution and delivery thereof, subject to the terms of this Section 5.14.

(o) Agent Capacities. Except as expressly provided herein or in the Credit Agreement Collateral Documents, Bank of America, N.A. is acting in the capacity of Administrative Agent solely for the Credit Agreement Secured Parties. Except as expressly provided herein or in the 2018 Notes First Lien Documents, Wells Fargo Bank, National Association is acting in the capacity of the 2018 Notes Collateral Agent solely for the 2018 Notes First Lien Secured Parties. . Except as expressly provided herein or in the 2020 Notes First Lien Documents, Wells Fargo Bank, National Association is acting in the capacity of the 2020 Notes Collateral Agent solely for the 2020 Notes First Lien Secured Parties. Except as expressly set forth herein, none of the Administrative Agent, the 2018 Notes Collateral Agent or the 2020 Notes Collateral Agent shall have any duties or obligations in respect of any of the Collateral, all of such duties and obligations, if any, being subject to and governed by the applicable Secured Credit Documents.

[Remainder of this page intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

BANK OF AMERICA, N.A., as Administrative Agent
By:
	Name:
	Title:
WELLS FARGO BANK, NATIONAL ASSOCIATION, as 2018 Notes Collateral Agent
By:
	Name:
	Title:
WELLS FARGO BANK, NATIONAL ASSOCIATION, as 2018 Trustee
By:
	Name:
	Title:
WELLS FARGO BANK, NATIONAL ASSOCIATION, as 2020 Notes Collateral Agent
By:
	Name:
	Title:

[Signature Page to First Lien Intercreditor Agreement]

WELLS FARGO BANK, NATIONAL ASSOCIATION, as 2020 Trustee
By:
	Name:
	Title:

-2-

CONSENT OF GRANTORS

Dated: January [    ], 2010

Reference is made to the First Lien Intercreditor Agreement dated as of the date hereof between Bank of America, N.A., as Administrative Agent, Wells Fargo Bank, National Association, as 2018 Notes Collateral Agent, Wells Fargo Bank, National Association, as 2018 Trustee, Wells Fargo Bank, National Association, as 2020 Notes Collateral Agent, and Wells Fargo Bank, National Association, as 2020 Trustee, as the same may be amended, restated, supplemented, waived, or otherwise modified from time to time (the “Intercreditor Agreement”). Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Intercreditor Agreement.

The Company has read the foregoing Intercreditor Agreement and consents thereto. The Company agrees that it will not, and will cause each of the other Grantors to not, take any action that would be contrary to the express provisions of the foregoing Intercreditor Agreement, agrees to abide by the requirements expressly applicable to it under the foregoing Intercreditor Agreement and agrees that, except as otherwise provided therein, no First Lien Secured Party shall have any liability to any Grantor for acting in accordance with the provisions of the foregoing Intercreditor Agreement. The Company confirms on behalf of each Grantor that the foregoing Intercreditor Agreement is for the sole benefit of the First Lien Secured Parties and their respective successors and assigns, and that no Grantor is an intended beneficiary or third party beneficiary thereof except to the extent otherwise expressly provided therein.

Notwithstanding anything to the contrary in the Intercreditor Agreement or provided herein, each party to the Intercreditor Agreement agrees that the Company and the other Grantors shall not have any right to consent to or approve any amendment, modification or waiver of any provision of the Intercreditor Agreement except to the extent their rights are adversely affected (in which case the Company shall have the right to consent to or approve any such amendment, modification or waiver).

Without limitation to the foregoing, the Company agrees to take, and to cause each other Grantor to take, such further action and to execute and deliver such additional documents and instruments (in recordable form, if requested) as the Collateral Agent may reasonably request to effectuate the terms of and the lien priorities contemplated by the Intercreditor Agreement.

This Consent shall be governed and construed in accordance with the laws of the State of New York, without regard to conflicts of laws principles thereof. Notices delivered to the Company pursuant to this Consent shall be delivered in accordance with the notice provisions set forth in the Intercreditor Agreement.

Consent of Grantors - 1

IN WITNESS HEREOF, this Consent is hereby executed by each of the Grantors as of the date first written above.

BROCADE COMMUNICATION SYSTEMS, INC.
By:
	Name:
	Title:
[LIST SUBSIDIARY GUARANTORS]
By:
	Name:
	Title:

Consent of Grantors - 2

Exhibit A

to First Lien Intercreditor Agreement

[FORM OF] JOINDER NO. [            ] dated as of [                    ], 20[    ] (the “Joinder Agreement”) to the FIRST LIEN INTERCREDITOR AGREEMENT dated as of January [    ], 2010 (the “First Lien Intercreditor Agreement”), among Bank of America, N.A., as Administrative Agent for the Credit Agreement Secured Parties under the Credit Documents, Wells Fargo Bank, National Association, as 2018 Notes Collateral Agent, Wells Fargo Bank, National Association, as 2018 Trustee, Wells Fargo Bank, National Association, as 2020 Notes Collateral Agent, Wells Fargo Bank, National Association, as 2020 Trustee, and the additional Authorized Representatives from time to time a party thereto.¹

A. Capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to such terms in the First Lien Intercreditor Agreement.

B. As a condition to the ability of the Company to incur Other First Lien Obligations and to secure such Additional Senior Class Debt with the liens and security interests created by the Other First Lien Security Documents, the Additional Senior Class Debt Representative in respect of such Additional Senior Class Debt is required to become an Authorized Representative, and the Additional Senior Class Debt Collateral Agent is required to become a Collateral Agent, and such Additional Senior Class Debt and the Additional Senior Class Debt Parties in respect thereof are required to become subject to and bound by, the First Lien Intercreditor Agreement. Section 5.14 of the First Lien Intercreditor Agreement provides that such Additional Senior Class Debt Representative may become an Authorized Representative, such Additional Senior Class Debt Collateral Agent may become a Collateral Agent, and such Additional Senior Class Debt and such Additional Senior Class Debt Parties may become subject to and bound by, the First Lien Intercreditor Agreement, pursuant to the execution and delivery by the Additional Senior Debt Class Representative of an instrument in the form of this Joinder and the satisfaction of the other conditions set forth in Section 5.14 of the First Lien Intercreditor Agreement. The undersigned Additional Senior Class Debt Representative (the “New Representative”) and Additional Senior Class Debt Collateral Agent (the “New Collateral Agent”) are executing this Joinder Agreement in accordance with the requirements of the First Lien Intercreditor Agreement and the First Lien Security Documents.

Accordingly, the New Representative and the New Collateral Agent agree as follows:

SECTION 1. In accordance with Section 5.14 of the First Lien Intercreditor Agreement, the New Representative and the New Collateral Agent by their signatures below become an Authorized Representative and a Collateral Agent,

¹ In the event of the Refinancing of the Credit Agreement Obligations, this Joinder will be revised to reflect joinder by a new Credit Agreement Collateral Agent

Exhibit A-1

respectively, under, and the related Additional Senior Class Debt and Additional Senior Class Debt Parties become subject to and bound by, the First Lien Intercreditor Agreement with the same force and effect as if the New Representative and New Collateral Agent had originally been named therein as an Authorized Representative or a Collateral Agent, respectively, and the New Representative and the New Collateral Agent, on their behalf and on behalf of such Additional Senior Class Debt Parties, hereby agree to all the terms and provisions of the First Lien Intercreditor Agreement applicable to them as Authorized Representative and Collateral Agent, respectively, and to the Additional Senior Class Debt Parties that they represent as Other First Lien Secured Parties. Each reference to a “Authorized Representative” in the First Lien Intercreditor Agreement shall be deemed to include the New Representative, and each reference to a “Collateral Agent” in the First Lien Intercreditor Agreement shall be deemed to include the New Collateral Agent. The First Lien Intercreditor Agreement is hereby incorporated herein by reference.

SECTION 2. Each of the New Representative and New Collateral Agent represent and warrant to each Collateral Agent, each Authorized Representative and the other First Lien Secured Parties, individually, that (i) it has full power and authority to enter into this Joinder Agreement, in its capacity as [agent] [trustee], (ii) this Joinder Agreement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability, and (iii) the Other First Lien Documents relating to such Additional Senior Class Debt provide that, upon the New Representative’s and the New Collateral Agent’s entry into this Joinder Agreement, the Additional Senior Class Debt Parties in respect of such Additional Senior Class Debt will be subject to and bound by the provisions of the First Lien Intercreditor Agreement as Other First Lien Secured Parties.

SECTION 3. This Joinder Agreement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Joinder Agreement shall become effective when each Collateral Agent shall have received a counterpart of this Joinder Agreement that bears the signatures of the New Representative and the New Collateral Agent. Delivery of an executed signature page to this Joinder Agreement by facsimile transmission shall be effective as delivery of a manually signed counterpart of this Joinder Agreement.

SECTION 4. Except as expressly supplemented hereby, the First Lien Intercreditor Agreement shall remain in full force and effect.

SECTION 5. THIS JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.

SECTION 6. In case any one or more of the provisions contained in this Joinder Agreement should be held invalid, illegal or unenforceable in any respect, no party hereto shall be required to comply with such provision for so long as

Exhibit A-2

such provision is held to be invalid, illegal or unenforceable, but the validity, legality and enforceability of the remaining provisions contained herein and in the First Lien Intercreditor Agreement shall not in any way be affected or impaired. The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 7. All communications and notices hereunder shall be in writing and given as provided in Section 5.01 of the First Lien Intercreditor Agreement. All communications and notices hereunder to the New Representative and the New Collateral Agent shall be given to them at their respective addresses set forth below their signatures hereto.

SECTION 8. The Company agrees to reimburse each Collateral Agent and each Authorized Representative for its reasonable out-of-pocket expenses in connection with this Joinder Agreement, including the reasonable fees, other charges and disbursements of counsel.

Exhibit A-3

IN WITNESS WHEREOF, the New Representative and New Collateral Agent have duly executed this Joinder Agreement to the First Lien Intercreditor Agreement as of the day and year first above written.

[NAME OF NEW REPRESENTATIVE], as [            ] for the holders of [                        ],
By:
	Name: Title:
Address for notices: ___________________ ___________________ attention of: _________ Telecopy: ___________
[NAME OF NEW COLLATERAL AGENT], as [            ] for the holders of [                        ],
By:
	Name: Title:
Address for notices: ___________________ ___________________ attention of: _________ Telecopy: ___________

Exhibit A-4

Acknowledged by:
BANK OF AMERICA, N.A., as Administrative Agent and Credit Agreement Collateral Agent
By:
	Name:
	Title:
BANK OF AMERICA, N.A., as Authorized Representative for the Credit Agreement Secured Parties
By:
	Name:
	Title:
[                                         ], as 2018 Notes Collateral Agent
By:
	Name:
	Title:
[                                         ], as 2018 Trustee
By:
	Name:
	Title:

[                                    ], as 2020 Notes Collateral Agent
By:
	Name:
	Title:
[                                    ], as 2020 Trustee
By:
	Name:
	Title:

ANNEX I

Jurisdiction	Legal Entity	Record Owner
Ireland	McDATA Technology Systems Ltd.	McDATA Corporation
Hong Kong	McDATA Hong Kong Ltd.	McDATA Corporation
Singapore	McDATA Tech. Sys. Singapore Pte. Ltd.	McDATA Corporation
Brazil	McDATA do Brasil Ltda	McDATA Services Corporation
England & Wales	McDATA International Ltd.	McDATA International Ltd

EX-10.5

Exhibit 10.5

EXECUTION COPY

BROCADE COMMUNICATIONS SYSTEMS, INC.

$300,000,000

6.625% Senior Secured Notes due 2018

$300,000,000

6.875% Senior Secured Notes due 2020

Purchase Agreement

January 13, 2010

J.P. Morgan Securities Inc.

  As Representative of the

  several Initial Purchasers listed

  in Schedule 1 hereto

c/o J.P. Morgan Securities Inc.

270 Park Avenue

New York, NY 10179

Ladies and Gentlemen:

Brocade Communications Systems, Inc., a Delaware corporation (the “Company”), proposes to issue and sell to the several initial purchasers listed in Schedule 1 hereto (the “Initial Purchasers”), for whom you are acting as representative (the “Representative”), $300,000,000 principal amount of its 6.625% Senior Secured Notes due 2018 (the “2018 Notes”) and $300,000,000 principal amount of its 6.875% Senior Secured Notes due 2020 (the “2020 Notes”, and together with the 2018 Notes, the “Securities”). The 2018 Notes will be issued pursuant to an Indenture to be dated as of the Closing Date (as defined below) (the “2018 Indenture”) among the Company, the guarantors listed in Schedule 2 hereto (the “Guarantors”) and Wells Fargo Bank, National Association (“Wells Fargo”), as trustee (the “2018 Trustee”), and the 2020 Notes will be issued pursuant to an Indenture to be dated as of the Closing Date (the “2020 Indenture”, and together with the 2018 Indenture, the “Indentures”) among the Company, the Guarantors and Wells Fargo, as trustee (the “2020 Trustee”, and together with the 2018 Trustee, the Trustees). The Securities will be guaranteed on a secured senior basis by each of the Guarantors (the “Guarantees”).

The Securities and the Guarantees will be secured by a lien, subject to Permitted Exceptions (as defined below) on all the Company’s and the Guarantors’ assets that secure that certain Credit Agreement, dated as of October 7, 2008 (as amended, supplemented or otherwise modified from time to time, the “Senior Secured Credit Facility”), among the Company, the lenders party thereto and Bank of America, N.A., as administrative agent (the “Administrative Agent”) (such assets, collectively, the “Collateral”).

The portion of the Collateral relating to real property and fixtures shall be described in the mortgages, deeds of trust or deeds to secure debt delivered pursuant to Section 4(p) hereof in form and substance reasonably satisfactory to the Representative (collectively, the “Mortgages”) with respect to each property listed on Annex D hereto (each, a “Mortgaged Property” and, collectively, the “Mortgaged Properties”) and the portion of the Collateral other than real property shall be described in the Security Agreement for the 2018 Notes (the “2018 Security Agreement”) and the Security Agreement for the 2020 Notes (the “2020 Security Agreement”), each to be dated the Closing Date (collectively, the “Security Agreements” and, together with the Mortgages, the “Collateral Documents”). Each of the Collateral Documents shall be delivered to Wells Fargo, acting as collateral agent (the “Collateral Agent”), granting a security interest with respect to the Collateral, subject to Permitted Exceptions, for the benefit of the Trustees and each holder of the Securities and the successors and assigns of the foregoing. The rights of the holders of the Securities with respect to the Collateral shall be further governed by the Intercreditor Agreement to be dated the Closing Date (the “Intercreditor Agreement”) among the Company, the Guarantors, the Administrative Agent and the Collateral Agent.

The Securities will be sold to the Initial Purchasers without being registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon an exemption therefrom. The Company and the Guarantors have prepared a preliminary offering memorandum dated January 8, 2010 (the “Preliminary Offering Memorandum”) and will prepare an offering memorandum dated the date hereof (the “Offering Memorandum”) setting forth information concerning the Company and the Securities. Copies of the Preliminary Offering Memorandum have been, and copies of the Offering Memorandum will be, delivered by the Company to the Initial Purchasers pursuant to the terms of this Agreement. The Company hereby confirms that it has authorized the use of the Preliminary Offering Memorandum, the other Time of Sale Information (as defined below) and the Offering Memorandum in connection with the offering and resale of the Securities by the Initial Purchasers in the manner contemplated by this Agreement. Capitalized terms used but not defined herein shall have the meanings given to such terms in the Preliminary Offering Memorandum. References herein to the Preliminary Offering Memorandum, the Time of Sale Information and the Offering Memorandum shall be deemed to refer to and include any document incorporated by reference therein.

At or prior to the time when sales of the Securities were first made (the “Time of Sale”), the following information shall have been prepared (collectively, the “Time of Sale Information”): the Preliminary Offering Memorandum, as supplemented and amended by the written communications listed on Annex A hereto.

Holders of each of the 2018 Notes and the 2020 Notes (including the Initial Purchasers and their direct and indirect transferees) will be entitled to the benefits of a Registration Rights Agreement, to be dated the Closing Date and substantially in the form attached hereto as Exhibit A (each, a “Registration Rights Agreement”, and collectively, the “Registration Rights Agreements”), pursuant to which the Company and the Guarantors will agree to file one or more registration statements with the Securities and Exchange Commission (the “Commission”) providing for the registration under the Securities Act of such Securities or the Exchange Securities referred to (and as defined) in the applicable Registration Rights Agreement.

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The Company hereby confirms its agreement with the several Initial Purchasers concerning the purchase and resale of the Securities, as follows:

1. Purchase and Resale of the Securities. (a) The Company agrees to issue and sell the Securities to the several Initial Purchasers as provided in this Agreement, and each Initial Purchaser, on the basis of the representations, warranties and agreements set forth herein and subject to the conditions set forth herein, agrees, severally and not jointly, to purchase from the Company (i) the respective principal amount of 2018 Notes set forth opposite such Initial Purchaser’s name in Schedule 1 hereto under the caption “2018 Notes” at a price equal to 97.559% of the principal amount thereof plus accrued interest, if any, from January 20, 2010 to the Closing Date and (ii) the respective principal amount of 2020 Notes set forth opposite such Initial Purchaser’s name in Schedule 1 hereto under the caption “2020 Notes” at a price equal to 97.434% of the principal amount thereof plus accrued interest, if any, from January 20, 2010 to the Closing Date. The Company will not be obligated to deliver any of the Securities except upon payment for all the Securities to be purchased as provided herein.

(b) The Company understands that the Initial Purchasers intend to offer the Securities for resale on the terms set forth in the Time of Sale Information. Each Initial Purchaser, severally and not jointly, represents, warrants and agrees that:

(i) it is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act (a “QIB”) and an accredited investor within the meaning of Rule 501(a) under the Securities Act;

(ii) it has not solicited offers for, or offered or sold, and will not solicit offers for, or offer or sell, the Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D under the Securities Act (“Regulation D”) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act; and

(iii) it has not solicited offers for, or offered or sold, and will not solicit offers for, or offer or sell, the Securities as part of their initial offering except:

(A) within the United States to persons whom it reasonably believes to be QIBs in transactions pursuant to Rule 144A under the Securities Act (“Rule 144A”) and in connection with each such sale, it has taken or will take reasonable steps to ensure that the purchaser of the Securities is aware that such sale is being made in reliance on Rule 144A; or

(B) in accordance with the restrictions set forth in Annex C hereto.

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(c) Each Initial Purchaser acknowledges and agrees that the Company and, for purposes of the opinions to be delivered to the Initial Purchasers pursuant to Sections 6(f) and 6(g), counsel for the Company and counsel for the Initial Purchasers, respectively, may rely upon the accuracy of the representations and warranties of the Initial Purchasers, and compliance by the Initial Purchasers with their agreements, contained in paragraph (b) above (including Annex C hereto), and each Initial Purchaser hereby consents to such reliance.

(d) The Company acknowledges and agrees that the Initial Purchasers may offer and sell Securities to or through any affiliate of an Initial Purchaser and that any such affiliate may offer and sell Securities purchased by it to or through any Initial Purchaser, subject to compliance by the Initial Purchasers with their agreements contained in Section 1(b) above, including Annex C hereto.

(e) The Company and the Guarantors acknowledge and agree that the Initial Purchasers are acting solely in the capacity of an arm’s length contractual counterparty to the Company and the Guarantors with respect to the offering of Securities contemplated hereby (including in connection with determining the terms of the offering) and not as financial advisors or fiduciaries to, or agents of, the Company, the Guarantors or any other person. Additionally, neither the Representative nor any other Initial Purchaser is advising the Company, the Guarantors or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction. The Company and the Guarantors shall consult with their own advisors concerning such matters and shall be responsible for making their own independent investigation and appraisal of the transactions contemplated hereby, and neither the Representative nor any other Initial Purchaser shall have any responsibility or liability to the Company or the Guarantors with respect thereto. Any review by any Representative or any other Initial Purchaser of the Company, the Guarantors and the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of such Representative or such Initial Purchaser, as the case may be, and shall not be on behalf of the Company, the Guarantors or any other person. The Company and the Guarantors agree that they will not claim that the Initial Purchasers, or any of them, has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Company or the Guarantors, in connection with such transactions or the process leading thereto.

2. Payment and Delivery. (a) Payment for and delivery of the Securities will be made at the offices of Simpson Thacher & Bartlett LLP, 2550 Hanover Street, Palo Alto, CA 94304, at 10:00 A.M., New York City time, on January 20, 2010, or at such other time or place on the same or such other date, not later than the fifth business day thereafter, as J.P. Morgan Securities Inc. and the Company may agree upon in writing. The time and date of such payment and delivery is referred to herein as the “Closing Date”.

(b) Payment for the Securities shall be made by wire transfer in immediately available funds to the account(s) specified by the Company to J.P. Morgan Securities Inc. against delivery to the nominee of The Depository Trust Company, for the account of the Initial Purchasers, of one or more global notes representing the Securities (collectively, the “Global Note”), with any transfer taxes payable in connection with the sale of the Securities duly paid by the Company. The Global Note will be made available for inspection by the Representative not later than 1:00 P.M., New York City time, on the business day prior to the Closing Date.

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3. Representations and Warranties of the Company and the Guarantors. The Company and the Guarantors jointly and severally represent and warrant to each Initial Purchaser that:

(a) Preliminary Offering Memorandum, Time of Sale Information and Offering Memorandum. The Preliminary Offering Memorandum, as of its date, did not, the Time of Sale Information, at the Time of Sale, did not, and at the Closing Date, will not, and the Offering Memorandum, in the form first used by the Initial Purchasers to confirm sales of the Securities and as of the Closing Date, will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company and the Guarantors make no representation or warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser through the Representative expressly for use in the Preliminary Offering Memorandum, the Time of Sale Information or the Offering Memorandum.

(b) Additional Written Communications. The Company (including its agents and representatives, other than the Initial Purchasers in their capacity as such) has not prepared, made, used, authorized, approved or referred to and will not prepare, make, use, authorize, approve or refer to any written communication that constitutes an offer to sell or solicitation of an offer to buy the Securities (each such communication by the Company or its agents and representatives (other than a communication referred to in clauses (i), (ii) and (iii) below) an “Issuer Written Communication”) other than (i) the Preliminary Offering Memorandum, (ii) the Offering Memorandum, (iii) the documents listed on Annex A hereto, including a term sheet substantially in the form of Annex B hereto, which constitute part of the Time of Sale Information, and (iv) any electronic road show or other written communications, in each case used in accordance with Section 4(c) hereof. Each such Issuer Written Communication, when taken together with the Time of Sale Information, did not, and at the Closing Date will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation and warranty with respect to any statements or omissions made in each such Issuer Written Communication in reliance upon and in conformity with information relating to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser through the Representative expressly for use in any Issuer Written Communication.

(c) Incorporated Documents. The documents incorporated by reference in each of the Time of Sale Information and the Offering Memorandum, when filed with the Commission, conformed or will conform, as the case may be, in all material respects to the requirements of the Exchange Act and the rules and regulations of the Commission thereunder, and did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

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(d) Financial Statements. The financial statements and the related notes thereto included or incorporated by reference in each of the Time of Sale Information and the Offering Memorandum present fairly in all material respects the financial position of the Company and its subsidiaries as of the dates indicated and the results of their operations and the changes in their cash flows for the periods specified; such financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods covered thereby (subject, in the case of interim financial statements, to normal recurring year-end adjustments); the other financial information included or incorporated by reference in each of the Time of Sale Information and the Offering Memorandum has been derived from the accounting records of the Company and its subsidiaries and fairly presents the information shown thereby in all material respects; and the pro forma financial information and the related notes thereto included or incorporated by reference in each of the Time of Sale Information and the Offering Memorandum has been prepared in accordance with the Commission’s rules and guidance with respect to pro forma financial information, and the assumptions underlying such pro forma financial information are reasonable.

(e) No Material Adverse Change. Since the date of the most recent financial statements of the Company included or incorporated by reference in each of the Time of Sale Information and the Offering Memorandum (i) there has not been any material changes in the capital stock (other than the issuance of shares of the Company’s common stock pursuant to the Company’s employee stock purchase plans, the vesting of restricted stock units and upon exercise of stock options and warrants described as outstanding in, and the grant of options and awards under existing equity incentive plans described in, the Time of Sale Information and the Offering Memorandum) or long-term debt of the Company or any of its subsidiaries, or any dividend or distribution of any kind declared, set aside for payment, paid or made by the Company on any class of capital stock, or any material adverse change, or any development that would reasonably be expected to result in a material adverse change, in or affecting the business, properties, financial position or results of operations of the Company and its subsidiaries taken as a whole; (ii) neither the Company nor any of its subsidiaries has entered into any transaction or agreement (other than agreements entered into with original equipment manufacturers in the ordinary course of business consistent with past practice and the sale and leaseback of the Company’s building and property located at 1600 Technology Drive, San Jose, CA 95110) that is material to the Company and its subsidiaries taken as a whole or incurred any liability or obligation, direct or contingent, that is material to the Company and its subsidiaries taken as a whole; and (iii) neither the Company nor any of its subsidiaries has sustained any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor disturbance or dispute or any action, order or decree of any court or arbitrator or governmental or regulatory authority, except in each case as otherwise disclosed in the Time of Sale Information.

(f) Organization and Good Standing. The Company, each Guarantor and each of its Significant Subsidiaries (as defined below) have been duly organized and are validly existing and in good standing under the laws of their respective jurisdictions of organization, are duly qualified to do business and are in good standing in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires such qualification, and have all power and authority necessary to own or hold their respective properties and to conduct the businesses in which they are engaged, except where the failure to be so qualified, in good standing or have such power or authority would not, individually or in the aggregate, have a material adverse effect on the business, properties, financial position,

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results of operations of the Company and its subsidiaries taken as a whole or on the performance by the Company and the Guarantors of their obligations under the Securities and the Guarantees (a “Material Adverse Effect”). The subsidiaries listed in Schedule 3 to this Agreement are the only significant subsidiaries (as defined in Rule 1-02 of Regulation S-X under the Exchange Act) of the Company (the “Significant Subsidiaries”) and no other subsidiary or subsidiaries of the Company, individually or in the aggregate, constitutes or constitute a significant subsidiary (as defined in Rule 1-02 of Regulation S-X under the Exchange Act) of the Company.

(g) Capitalization. The Company has and, as of October 31, 2009, after giving effect to the offering of the Securities, the Company would have had, an authorized capitalization as set forth in each of the Time of Sale Information and the Offering Memorandum under the heading “Capitalization”; and all the outstanding shares of capital stock or other equity interests of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable (except, in the case of any foreign subsidiary, for directors’ qualifying shares and except as otherwise disclosed in each of the Time of Sale Information and the Offering Memorandum) and are owned directly or indirectly by the Company, free and clear of any lien, charge, encumbrance, security interest, restriction on voting or transfer or any other claim of any third party, other than as expressly permitted in the Security Agreements or Indentures and, after giving effect to the offering of the Securities, under or pursuant to the Collateral Documents.

(h) Stock Options. With respect to the outstanding stock options (the “Stock Options”) granted pursuant to the stock-based compensation plans of the Company and its subsidiaries (the “Company Stock Plans”), except as otherwise disclosed in the Time of Sale Information and the Offering Memorandum, (i) each Stock Option intended to qualify as an “incentive stock option” under Section 422 of the Code so qualifies, (ii) each grant of a Stock Option was duly authorized no later than the date on which the grant of such Stock Option was by its terms to be effective (the “Grant Date”) by all necessary corporate action, including, as applicable, approval by the board of directors of the Company (or a duly constituted and authorized committee thereof) and any required stockholder approval by the necessary number of votes or written consents, and the award agreement governing such grant (if any) was duly executed and delivered by each party thereto, (iii) each such grant was made in accordance with the terms of the Company Stock Plans, the Exchange Act and the rules of the Nasdaq Global Select Market, (iv) the per share exercise price of each Stock Option was equal to the fair market value of a share of Common Stock (as defined in the applicable Company Stock Plan) on the applicable Grant Date and (v) each such grant was properly accounted for in accordance with U.S. generally accepted accounting principles in the financial statements (including the related notes) of the Company and disclosed in the Company’s filings with the Commission in accordance with the Exchange Act and all other applicable laws, except in the case of clauses (i)-(v) in such instances that are reasonably expected to not have a Material Adverse Effect. Except as otherwise disclosed in the Time of Sale Information and the Offering Memorandum, the Company has not knowingly granted, and there is no and has been no policy or practice of the Company of granting, Stock Options prior to the release or other public announcement of material information regarding the Company or its subsidiaries or their results of operations or prospects, except in such instances that are reasonably expected to not have a Material Adverse Effect.

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(i) Due Authorization. The Company and each of the Guarantors have full right, power and authority to execute and deliver this Agreement, the Securities, the Indentures (including each Guarantee set forth therein), each of the Collateral Documents, the Intercreditor Agreement, the Exchange Securities and the Registration Rights Agreements (collectively, the “Transaction Documents”) and to perform their respective obligations hereunder and thereunder; and all action required to be taken for the due and proper authorization, execution and delivery of each of the Transaction Documents and the consummation of the transactions contemplated thereby has been duly and validly taken.

(j) The Indentures. Each of the Indentures has been duly authorized by the Company and each of the Guarantors and, when duly executed and delivered in accordance with its terms by each of the parties thereto, will constitute a valid and legally binding agreement of the Company and each of the Guarantors enforceable against the Company and each of the Guarantors in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability (collectively, the “Enforceability Exceptions”); and on the Closing Date, each of the Indentures will conform in all material respects to the requirements of the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), and the rules and regulations of the Commission applicable to an indenture that is qualified thereunder.

(k) The Securities and the Guarantees. The Securities have been duly authorized by the Company and, when duly executed, authenticated, issued and delivered as provided in the applicable Indenture and paid for as provided herein, will be duly and validly issued and outstanding and will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms, subject to the Enforceability Exceptions, and will be entitled to the benefits of the applicable Indenture; and the Guarantees have been duly authorized by each of the Guarantors and, when the Securities have been duly executed, authenticated, issued and delivered as provided in the applicable Indenture and paid for as provided herein, will be valid and legally binding obligations of each of the Guarantors, enforceable against each of the Guarantors in accordance with their terms, subject to the Enforceability Exceptions, and will be entitled to the benefits of the applicable Indenture.

(l) The Exchange Securities. On the Closing Date, the Exchange Securities (including the related guarantees) will have been duly authorized by the Company and, when duly executed, authenticated, issued and delivered as contemplated by the applicable Registration Rights Agreement, will be duly and validly issued and outstanding and will constitute valid and legally binding obligations of the Company, as issuer, and each of the Guarantors, as guarantor, enforceable against the Company and each of the Guarantors in accordance with their terms, subject to the Enforceability Exceptions, and will be entitled to the benefits of the applicable Indenture.

(m) Purchase and Registration Rights Agreements. This Agreement has been duly authorized, executed and delivered by the Company and each of the Guarantors; and each of the Registration Rights Agreements has been duly authorized by the Company and each of the Guarantors and on the Closing Date will be duly executed and delivered by the Company and each of the Guarantors and, when duly executed and delivered in accordance with its terms by each of the parties thereto, will constitute a valid and legally binding agreement of the Company and each of the Guarantors enforceable against the Company and each of the Guarantors in accordance with its terms, subject to the Enforceability Exceptions, and except that rights to indemnity and contribution thereunder may be limited by applicable law and public policy.

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(n) Collateral Documents and Intercreditor Agreement. Each of the Collateral Documents and the Intercreditor Agreement has been duly authorized by the Company and each of the Guarantors, in each case, to the extent a party thereto, and, when duly executed and delivered in accordance with its terms by each of the parties thereto, will constitute a valid and legally binding agreement of the Company and each of the Guarantors, in each case, to the extent a party thereto, enforceable against the Company and each of the Guarantors, to the extent a party thereto, in accordance with its terms, subject to the Enforceability Exceptions. The Collateral conforms in all material respects to the description thereof contained in the Time of Sale Information and the Offering Memorandum. Schedule 5 hereto sets forth, as of the date of this Agreement and as of the Closing Date: all agreements or instruments of indebtedness for borrowed money of the Company, the Guarantors and each other subsidiary of the Company.

(o) Mortgages. Upon execution and delivery, the Mortgages will be effective to grant a legal, valid and enforceable mortgage lien on each mortgagor’s right, title and interest in the property described therein. When the Mortgages are duly recorded in the proper recorders’ offices or appropriate public records and the mortgage recording fees and taxes, if any, in respect thereof are paid and compliance is otherwise had with the formal requirements of state law applicable to the recording of real estate mortgages generally, each such Mortgage shall constitute a validly perfected and enforceable lien and security interest in the related portion of the Mortgaged Property constituting real property or fixtures for the benefit of the Trustees and the holders of the Securities, pari passu with the security interest in such property in favor of the Administrative Agent for the benefit of the lenders under the Senior Secured Credit Facility, subject only to the encumbrances and exceptions to title expressly permitted in the Mortgages or Indentures (including those liens expressly permitted to be incurred or which exist on the Collateral pursuant to the Indentures) or expressly set forth as an exception to the policies of title insurance obtained to insure the lien of each Mortgage with respect to each of the Mortgaged Properties, including, without limitation, the mortgages securing the Senior Secured Credit Facility (such encumbrances and exceptions, the “Mortgage Permitted Exceptions”), and to the Enforceability Exceptions.

(p) Security Agreement. The 2018 Security Agreement and the 2020 Security Agreement, as applicable, when duly executed and delivered in accordance with its terms by each of the parties thereto, will be effective to grant a valid and enforceable security interest, in favor of the Collateral Agent for the benefit of the Trustees and the holders of, as applicable, the 2018 Notes or the 2020 Notes, in each grantor’s right, title and interest in the Collateral (other than the Mortgaged Properties), subject to the Enforceability Exceptions.

(q) Personal Property Collateral. Upon the proper filing of financing statements, or Mortgages, or to the extent applicable, appropriate filings in the U.S. Patent and Trademark Office and the U.S. Copyright Office in order to perfect the security interest in the United States registrations or applied for intellectual property which is part of the Collateral, as applicable, with respect to the Collateral described in the Security Agreements and the fixtures and certain personal property described in the Mortgages (the “Personal Property Collateral”), in each case, in the proper recording office, the security interests granted thereby will constitute valid,

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perfected liens and security interests in the Collateral of each grantor or mortgagor, for the benefit of the Trustees and the holders of the Securities, enforceable in accordance with the terms contained therein, to the extent such security interests can be perfected by filing a financing statement under the UCC of the jurisdiction of organization of such grantor or by filing a mortgage under the local law of the jurisdiction in which the fixtures are located, and subject only to the encumbrances and exceptions to title expressly permitted in the Security Agreements or Indentures (including those liens expressly permitted to be incurred or which exist on the Collateral pursuant to the Indentures or the Collateral Documents) (such encumbrances and exceptions, together with the Mortgage Permitted Exceptions, the “Permitted Exceptions”), and to the Enforceability Exceptions.

(r) Ownership of Collateral. The Company and the Guarantors collectively own, have rights in, or have the power and authority to collaterally assign rights in, the Collateral, free and clear of any liens other than the Permitted Exceptions and liens pursuant to the Senior Secured Credit Facility.

(s) Descriptions of the Transaction Documents. Each Transaction Document conforms in all material respects to the description thereof contained in each of the Time of Sale Information and the Offering Memorandum.

(t) No Violation or Default. Neither the Company nor any of its subsidiaries is (i) with respect to the Company, any Guarantor or any Significant Subsidiary, in violation of its charter or by-laws or similar organizational documents; (ii) in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject; or (iii) in violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses (ii) and (iii) above, for any such default or violation that would not, individually or in the aggregate, have a Material Adverse Effect.

(u) No Conflicts. The execution, delivery and performance by the Company and each of the Guarantors of each of the Transaction Documents to which each is a party, the issuance and sale of the Securities (including the Guarantees) and compliance by the Company and each of the Guarantors with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents will not (i) breach or violate any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, except liens, charges or encumbrances created or imposed pursuant to the Collateral Documents or as may have been waived or otherwise approved pursuant to such indenture, mortgage, deed of trust, loan agreement or other agreement or instrument, (ii) result in the violation of the provisions of the charter or by-laws or similar organizational documents of

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the Company, any Guarantor or any of the Company’s Significant Subsidiaries or (iii) result in the violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses (i) and (iii) above, for any such breach, violation or default that would not, individually or in the aggregate, have a Material Adverse Effect.

(v) No Consents Required. No consent, approval, authorization, order, registration or qualification of or with any court or arbitrator or governmental or regulatory authority is required for the execution, delivery and performance by the Company and each of the Guarantors of each of the Transaction Documents to which each is a party, the issuance and sale of the Securities (including the Guarantees) and compliance by the Company and each of the Guarantors with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents, except for (x) such consents, approvals, authorizations, orders and registrations or qualifications as may be required (i) under applicable state securities laws in connection with the purchase and resale of the Securities by the Initial Purchasers, (ii) to perfect the Collateral Agent’s security interests granted pursuant to the Collateral Documents and the related financing statements and (iii) with respect to the Exchange Securities (including the related guarantees) under the Securities Act, the Trust Indenture Act and applicable state securities laws as contemplated by the Registration Rights Agreements, (y) such consents, approvals, authorizations, orders and registrations or qualifications as have been obtained or (z) such consents, approvals, authorizations, orders and registrations or qualifications the failure of which to obtain would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or have a material adverse effect on the consummation of offering of the Securities or the transactions contemplated by the Transaction Documents.

(w) Legal Proceedings. Except as otherwise disclosed in each of the Time of Sale Information and the Offering Memorandum, there are no legal, governmental or regulatory investigations, actions, suits or proceedings pending to which the Company or any of its subsidiaries is or may be a party or to which any property of the Company or any of its subsidiaries is or may be the subject that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect; and no such investigations, actions, suits or proceedings are, to the knowledge of the Company and each of the Guarantors, overtly threatened.

(x) Independent Accountants. KPMG LLP, who has audited certain financial statements of the Company and its subsidiaries, are independent registered accountants with respect to the Company and its subsidiaries within the applicable rules and regulations adopted by the Commission and the Public Company Accounting Oversight Board (United States) and as required by the Securities Act.

(y) Title to Real and Personal Property. The Company and its subsidiaries have good and marketable title to, or have valid rights to lease or otherwise use, all items of real and personal property that are material to the respective businesses of the Company and its subsidiaries, in each case free and clear of all liens, encumbrances, claims and defects and imperfections of title except Permitted Exceptions and those that (i) do not materially interfere with the use made and proposed to be made of such property by the Company and its subsidiaries or (ii) could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

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(z) Title to Intellectual Property. The Company and its subsidiaries own or possess adequate rights to use all patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses and know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) necessary for the conduct of their respective businesses, except in any such instances that, individually or in the aggregate, are not reasonably expected to have a Material Adverse Effect; and the conduct of their respective businesses will not conflict in any material respect with any such rights of others, and, except as otherwise disclosed in the Time of Sale Information and the Offering Memorandum, the Company and its subsidiaries have not received any notice of any claim of infringement of or conflict with any such rights of others, except in any such instances that, individually or in the aggregate, are not reasonably expected to have a Material Adverse Effect.

(aa) No Undisclosed Relationships. No relationship, direct or indirect, exists between or among the Company or any of its subsidiaries, on the one hand, and the directors, officers, a person who is known to the Company to be the beneficial owner of more than five percent of any class of the Company’s voting securities or any other affiliate of the Company or any of its subsidiaries, on the other, that would be required by the Securities Act to be described in a registration statement filed with the Commission and that is not so described in each of the Time of Sale Information and the Offering Memorandum.

(bb) Investment Company Act. Neither the Company nor any of its subsidiaries is, and after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in each of the Time of Sale Information and the Offering Memorandum none of them will be, an “investment company” or an entity “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder (collectively, the “Investment Company Act”).

(cc) Taxes. Except as otherwise disclosed in the Time of Sale Information and the Offering Memorandum, the Company and its subsidiaries have filed all federal, state, local and foreign tax returns required to be filed through the date hereof and has paid all taxes shown as due on such returns, except in such instances that are reasonably expected to not have a Material Adverse Effect; the Company and its subsidiaries have either paid or appropriately reserved under generally accepted accounting principals (“GAAP”) for all federal, state, local and foreign taxes required to be paid through the date hereof, except in such instances that are reasonably expected to not have a Material Adverse Effect; and except as otherwise disclosed in each of the Time of Sale Information and the Offering Memorandum, there is no material tax deficiency that has been, or that is expected to be, asserted against the Company or any of its Significant Subsidiaries or any Guarantor or any of their respective properties or assets.

(dd) Licenses and Permits. The Company and its subsidiaries possess all licenses, certificates, permits and other authorizations issued by, and have made all declarations and filings with, the appropriate federal, state, local or foreign governmental or regulatory authorities

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that are necessary for the ownership or lease of their respective properties or the conduct of their respective businesses as described in each of the Time of Sale Information and the Offering Memorandum, except where the failure to possess or make the same would not, individually or in the aggregate, have a Material Adverse Effect; and except as otherwise disclosed in each of the Time of Sale Information and the Offering Memorandum, neither the Company nor any of its subsidiaries has received notice of any revocation or modification of any such material license, certificate, permit or authorization or has any reason to believe that any such material license, certificate, permit or authorization will not be renewed in the ordinary course.

(ee) No Labor Disputes. No labor disturbance by or dispute with employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company and each of the Guarantors, is threatened, except as would not have a Material Adverse Effect.

(ff) Compliance With Environmental Laws. Except as otherwise disclosed in the Time of Sale Information and the Offering Memorandum, (i) the Company and its subsidiaries (x) are in compliance with all applicable federal, state, local and foreign laws, statutes, rules, regulations, requirements, decisions and orders relating to the protection of the environment or natural resources, or to hazardous or toxic substances or wastes, pollutants or contaminants (collectively, “Environmental Laws”), (y) have received and are in compliance with all permits, licenses, certificates or other authorizations or approvals required of them under applicable Environmental Laws to conduct their respective businesses, and (z) have not received written notice of any actual or potential liability under or relating to any Environmental Laws, including for the investigation or remediation of any disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants, and have no knowledge of any event or condition that would reasonably be expected to result in any such notice, and (ii) there are no costs or liabilities associated with Environmental Laws of or relating to the Company or its subsidiaries, except in the case of each of (i) and (ii) above, for any such failure to comply, or failure to receive required permits, licenses or approvals, or cost or liability, as would not, individually or in the aggregate, have a Material Adverse Effect; and (iii) except as otherwise disclosed in the Time of Sale Information and the Offering Memorandum, (x) there are no proceedings that are pending, or that are known to be contemplated, against the Company or any of its subsidiaries under any Environmental Laws in which a governmental entity is also a party, other than such proceedings regarding which it is reasonably believed no monetary sanctions of $100,000 or more will be imposed, (y) the Company and its subsidiaries are not aware of any issues regarding compliance with, or liabilities or other obligations under, Environmental Laws that could reasonably be expected to have a Material Adverse Effect, and (z) none of the Company and its subsidiaries anticipates material capital expenditures relating to any Environmental Laws other than customary amounts incurred in the ordinary course of business during the construction of the Company’s new corporate headquarters in San Jose, California.

(gg) Hazardous Substances. There has been no storage, generation, transportation, handling, treatment, disposal, discharge, emission, or other release of any kind of toxic wastes or hazardous substances, including, but not limited to, any naturally occurring radioactive materials, brine, drilling mud, crude oil, natural gas liquids and other petroleum materials, by, due to or caused by the Company or any of its subsidiaries (or, to the Company’s or any Guarantor’s knowledge, any other entity (including any predecessor) for whose acts or omissions the Company or any of its subsidiaries is or could reasonably be expected to be liable) upon any of

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the property now or previously owned or leased by the Company or any of its subsidiaries, or upon any other property, in violation of any Environmental Laws or in a manner or to a location that could reasonably be expected to give rise to any liability under the Environmental Laws, except for any violation or liability which would not, individually or in the aggregate, have a Material Adverse Effect.

(hh) Compliance With ERISA. Except as otherwise disclosed in the Time of Sale Information and the Offering Memorandum or as would not have a Material Adverse Effect, (i) Each employee benefit plan, within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), for which the Company or any member of its “Controlled Group” (defined as any organization which is a member of a controlled group of corporations within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended (the “Code”)) would have any liability (each, a “Plan”) has been maintained in compliance with its terms and the requirements of any applicable statutes, orders, rules and regulations, including but not limited to ERISA and the Code; (ii) no prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to any Plan excluding transactions effected pursuant to a statutory or administrative exemption; (iii) for each Plan that is subject to the funding rules of Section 412 of the Code or Section 302 of ERISA, no “accumulated funding deficiency” as defined in Section 412 of the Code, whether or not waived, has occurred or is reasonably expected to occur; (iv) the fair market value of the assets of each Plan exceeds the present value of all benefits accrued under such Plan (determined based on those assumptions used to fund such Plan); (v) no “reportable event” (within the meaning of Section 4043(c) of ERISA) has occurred or is reasonably expected to occur; and (vi) neither the Company nor any member of the Controlled Group has incurred, nor reasonably expects to incur, any liability under Title IV of ERISA (other than contributions to the Plan or premiums to the PBGC, in the ordinary course and without default) in respect of a Plan (including a “multiemployer plan”, within the meaning of Section 4001(a)(3) of ERISA).

(ii) Disclosure Controls. The Company and its subsidiaries maintain an effective system of “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, including controls and procedures designed to ensure that such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure. The Company and its subsidiaries have carried out evaluations of the effectiveness of their disclosure controls and procedures as required by Rule 13a-15 of the Exchange Act.

(jj) Accounting Controls. The Company and its subsidiaries maintain systems of “internal control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that comply with the requirements of the Exchange Act and have been designed by, or under the supervision of, their respective principal executive and principal financial officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company and its subsidiaries maintain internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with

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management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as disclosed in each of the Time of Sale Information and the Offering Memorandum, there are no material weaknesses or significant deficiencies in the Company’s internal controls. The Company’s auditors and the Audit Committee of the Board of Directors of the Company have been advised of: (i) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.

(kk) Insurance. The Company, the Guarantors and the Significant Subsidiaries have insurance covering their respective properties, operations, personnel and businesses, including business interruption insurance, which insurance is in amounts and insures against material losses and risks and are reasonably believed to be adequate to protect the Company, the Guarantors and the Significant Subsidiaries and their respective businesses; and neither the Company, nor the Guarantors nor any of the Significant Subsidiaries has (i) received notice from any insurer or agent of such insurer that capital improvements or other expenditures are required or necessary to be made in order to continue such insurance or (ii) any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business.

(ll) No Unlawful Payments. Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company and each of the Guarantors, any director, officer, agent, employee or other person associated with or acting on behalf of the Company or any of its subsidiaries has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment.

(mm) Compliance with Money Laundering Laws. The operations of the Company and its subsidiaries are and have been conducted at all times in material compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Guarantor, overtly threatened.

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(nn) Compliance with OFAC. None of the Company, any of its subsidiaries or, to the knowledge of the Company or any Guarantor, any director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”); and the Company will not directly or indirectly use the proceeds of the offering of the Securities hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

(oo) Solvency. On and immediately after the Closing Date, the Company (after giving effect to the issuance of the Securities and the other transactions related thereto as described in each of the Time of Sale Information and the Offering Memorandum) will be Solvent. As used in this paragraph, the term “Solvent” means, with respect to a particular date, that on such date (i) the fair value of the assets of the Company and its consolidated subsidiaries taken as a whole is not less than the total amount of liabilities of the Company and its consolidated subsidiaries taken as a whole; (ii) the Company is able to pay its debts and other liabilities, contingent obligations and commitments as they mature and become due in the normal course of business; (iii) assuming consummation of the issuance of the Securities as contemplated by this Agreement, the Time of Sale Information and the Offering Memorandum, the Company is not incurring debts or liabilities beyond its ability to pay as such debts and liabilities mature; and (iv) the Company is not engaged in any business or transaction, and does not propose to engage in any business or transaction, for which its property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which the Company is engaged.

(pp) Senior Indebtedness. The Securities constitute “senior indebtedness” as such term is defined in any indenture or agreement governing any outstanding subordinated indebtedness of the Company.

(qq) No Restrictions on Subsidiaries. Except pursuant to the Senior Secured Credit Facility, no subsidiary of the Company is currently prohibited, directly or indirectly, under any agreement or other instrument to which it is a party or is subject, from paying any dividends to the Company, from making any other distribution on such subsidiary’s capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary’s properties or assets to the Company or any other subsidiary of the Company.

(rr) No Broker’s Fees. Neither the Company nor any of its subsidiaries is a party to any contract, agreement or understanding with any person (other than this Agreement and the agreement dated January 7, 2010 between the Company and Qatalyst Partners LP) that would give rise to a valid claim against any of them or any Initial Purchaser for a brokerage commission, finder’s fee or like payment in connection with the offering and sale of the Securities, other than in connection with the amendment to Senior Secured Credit Facility. Without derogation of the reimbursement obligation of the Initial Holders contemplated by Section 10 below, the Company is responsible for payment of any such payments to Qatalyst Partners LP.

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(ss) Rule 144A Eligibility. On the Closing Date, the Securities will not be of the same class as securities listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in an automated inter-dealer quotation system; and each of the Preliminary Offering Memorandum and the Offering Memorandum, as of its respective date, contains or will contain all the information that, if requested by a prospective purchaser of the Securities, would be required to be provided to such prospective purchaser pursuant to Rule 144A(d)(4) under the Securities Act.

(tt) No Integration. Neither the Company nor any of its affiliates (as defined in Rule 501(b) of Regulation D) has, directly or through any agent (including, without limitation, any financial advisor to the Company), sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act), that is or will be integrated with the sale of the Securities in a manner that would require registration of the Securities under the Securities Act.

(uu) No General Solicitation or Directed Selling Efforts. None of the Company or any of its affiliates or any other person (including, without limitation, any financial advisor to the Company) acting on its or their behalf (other than the Initial Purchasers, as to which no representation is made) has (i) solicited offers for, or offered or sold, the Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act or (ii) engaged in any directed selling efforts within the meaning of Regulation S under the Securities Act (“Regulation S”), and all such persons have complied with the offering restrictions requirement of Regulation S.

(vv) Securities Law Exemptions. Assuming the accuracy of the representations and warranties of the Initial Purchasers contained in Section 1(b) (including Annex C hereto) and their compliance with their agreements set forth therein, it is not necessary, in connection with the issuance and sale of the Securities to the Initial Purchasers and the offer, resale and delivery of the Securities by the Initial Purchasers in the manner contemplated by this Agreement, the Time of Sale Information and the Offering Memorandum, to register the Securities under the Securities Act or to qualify the Indentures under the Trust Indenture Act.

(ww) No Stabilization. Neither the Company nor any of the Guarantors nor any person acting on their behalf (including, without limitation, any financial advisor to the Company) has taken, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Securities.

(xx) Margin Rules. Neither the issuance, sale and delivery of the Securities and the Guarantees by the Company and the Guarantors nor the application of the proceeds thereof by the Company as described in each of the Time of Sale Information and the Offering Memorandum will violate Regulation T, U or X of the Board of Governors of the Federal Reserve System or any other regulation of such Board of Governors.

(yy) Forward-Looking Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in any of the Time of Sale Information or the Offering Memorandum has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.

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(zz) Statistical and Market Data. Nothing has come to the attention of the Company or the Guarantors that has caused the Company or any Guarantor to believe that the statistical and market-related data included or incorporated by reference in each of the Time of Sale Information and the Offering Memorandum is not based on or derived from sources that are reliable and accurate in all material respects.

(aaa) Sarbanes-Oxley Act. There is and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply with any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith (the “Sarbanes-Oxley Act”), including Section 402 related to loans and Sections 302 and 906 related to certifications.

4. Further Agreements of the Company and the Guarantors. The Company and each of the Guarantors jointly and severally covenant and agree with each Initial Purchaser that:

(a) Delivery of Copies. The Company will deliver, without charge, to the Initial Purchasers as many copies of the Preliminary Offering Memorandum, any other Time of Sale Information, any Issuer Written Communication and the Offering Memorandum (including all amendments and supplements thereto) as the Representative may reasonably request.

(b) Offering Memorandum, Amendments or Supplements. Before finalizing the Offering Memorandum or making or distributing any amendment or supplement to any of the Time of Sale Information or the Offering Memorandum or filing with the Commission any document that will be incorporated by reference therein, the Company will furnish to the Representative and counsel for the Initial Purchasers a copy of the proposed Offering Memorandum or such amendment or supplement or document to be incorporated by reference therein for review, and will not distribute any such proposed Offering Memorandum, amendment or supplement or file any such document with the Commission to which the Representative reasonably objects, provided that nothing is this section shall prevent the Company from complying with its obligations under law or the rules of the NASDAQ Global Select Market (the “Exchange”).

(c) Additional Written Communications. Before making, preparing, using, authorizing, approving or referring to any Issuer Written Communication, the Company will furnish to the Representative and counsel for the Initial Purchasers a copy of such written communication for review and will not make, prepare, use, authorize, approve or refer to any such written communication to which the Representative reasonably objects.

(d) Notice to the Representative. The Company will advise the Representative promptly, and confirm such advice in writing, (i) of the issuance by any governmental or regulatory authority of any order preventing or suspending the use of any of the Time of Sale Information, any Issuer Written Communication or the Offering Memorandum or the initiation or threatening of any proceeding for that purpose; (ii) of the occurrence of any event at any time prior to the completion of the initial offering of the Securities as a result of which any of the

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Time of Sale Information, any Issuer Written Communication or the Offering Memorandum as then amended or supplemented would include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing when such Time of Sale Information, Issuer Written Communication or the Offering Memorandum is delivered to a purchaser, not misleading; and (iii) of the receipt by the Company of any notice with respect to any suspension of the qualification of the Securities for offer and sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and the Company will use its reasonable best efforts to prevent the issuance of any such order preventing or suspending the use of any of the Time of Sale Information, any Issuer Written Communication or the Offering Memorandum or suspending any such qualification of the Securities and, if any such order is issued, will use its reasonable best efforts to obtain as soon as possible the withdrawal thereof.

(e) Time of Sale Information. If at any time prior to the Closing Date (i) any event shall occur or condition shall exist as a result of which any of the Time of Sale Information as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or (ii) it is necessary to amend or supplement any of the Time of Sale Information to comply with law, the Company will immediately notify the Initial Purchasers thereof and forthwith prepare and, subject to paragraph (b) above, furnish to the Initial Purchasers such amendments or supplements to any of the Time of Sale Information (or any document to be filed with the Commission and incorporated by reference therein) as may be necessary so that the statements in any of the Time of Sale Information as so amended or supplemented will not, in light of the circumstances under which they were made, be misleading or so that any of the Time of Sale Information will comply with law.

(f) Ongoing Compliance of the Offering Memorandum. If at any time prior to the completion of the initial offering of the Securities (i) any event shall occur or condition shall exist as a result of which the Offering Memorandum as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances existing when the Offering Memorandum is delivered to a purchaser, not misleading or (ii) it is necessary to amend or supplement the Offering Memorandum to comply with law, the Company will immediately notify the Initial Purchasers thereof and forthwith prepare and, subject to paragraph (b) above, furnish to the Initial Purchasers such amendments or supplements to the Offering Memorandum (or any document to be filed with the Commission and incorporated by reference therein) as may be necessary so that the statements in the Offering Memorandum as so amended or supplemented (including such document to be incorporated by reference therein) will not, in the light of the circumstances existing when the Offering Memorandum is delivered to a purchaser, be misleading or so that the Offering Memorandum will comply with law.

(g) Blue Sky Compliance. The Company will qualify the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions in the United States of America or Canada as the Representative shall reasonably request and will continue such qualifications in effect so long as required for the offering and resale of the Securities; provided that neither the

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Company nor any of the Guarantors shall be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of process in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so subject.

(h) Clear Market. During the period from the date hereof through and including the date that is 90 days after the date hereof, the Company and each of the Guarantors will not, without the prior written consent of J.P. Morgan Securities Inc., offer, sell, contract to sell or otherwise dispose of any debt securities issued or guaranteed by the Company or any of the Guarantors and having a tenor of more than one year.

(i) Use of Proceeds. The Company will apply the net proceeds from the sale of the Securities as described in the Time of Sale Information and the Offering Memorandum under the heading “Use of proceeds”.

(j) Supplying Information. While the Securities remain outstanding and are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, the Company and each of the Guarantors will, during any period in which the Company is not subject to and in compliance with Section 13 or 15(d) of the Exchange Act, furnish to holders of the Securities and prospective purchasers of the Securities designated by such holders, upon the request of such holders or such prospective purchasers, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

(k) DTC. The Company will assist the Initial Purchasers in arranging for the Securities to be eligible for clearance and settlement through The Depository Trust Company (“DTC”).

(l) No Resales by the Company. The Company will not, and will not permit any of its affiliates (as defined in Rule 144 under the Securities Act) to, resell any of the Securities that have been acquired by any of them, except for Securities purchased by the Company or any of its affiliates and resold in a transaction registered under the Securities Act.

(m) No Integration. Neither the Company nor any of its affiliates (as defined in Rule 501(b) of Regulation D) will, directly or through any agent (including, without limitation, any financial advisor to the Company), sell, offer for sale, solicit offers to buy or otherwise negotiate in respect of, any security (as defined in the Securities Act), that is or will be integrated with the sale of the Securities in a manner that would require registration of the Securities under the Securities Act.

(n) No General Solicitation or Directed Selling Efforts. None of the Company or any of its affiliates or any other person (including, without limitation, any financial advisor to the Company) acting on its or their behalf (other than the Initial Purchasers, as to which no covenant is given) will (i) solicit offers for, or offer or sell, the Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act or (ii) engage in any directed selling efforts within the meaning of Regulation S, and all such persons will comply with the offering restrictions requirement of Regulation S.

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(o) No Stabilization. Neither the Company nor any of the Guarantors will take, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Securities.

(p) Collateral Filings. Within the time periods set forth on Schedule 4, the Company and the Guarantors shall deliver, furnish and/or cause to be furnished all of the documents set forth on Schedule 4.

5. Certain Agreements of the Initial Purchasers. Each Initial Purchaser hereby represents and agrees that it has not and will not use, authorize use of, refer to, or participate in the planning for use of, any written communication that constitutes an offer to sell or the solicitation of an offer to buy the Securities other than (i) the Preliminary Offering Memorandum and the Offering Memorandum, (ii) a written communication that contains no “issuer information” (as defined in Rule 433(h)(2) under the Securities Act) that was not included (including through incorporation by reference) in the Preliminary Offering Memorandum or the Offering Memorandum, (iii) any written communication listed on Annex A or prepared pursuant to Section 4(c) above (including any electronic road show), (iv) any written communication prepared by such Initial Purchaser and approved by the Company in advance in writing or (v) any written communication relating to or that contains the terms of the Securities and/or other information that was included (including through incorporation by reference) in the Preliminary Offering Memorandum or the Offering Memorandum.

6. Conditions of Initial Purchasers’ Obligations. The obligation of each Initial Purchaser to purchase Securities on the Closing Date as provided herein is subject to the performance by the Company and each of the Guarantors of their respective covenants and other obligations hereunder and to the following additional conditions:

(a) Representations and Warranties. The representations and warranties of the Company and the Guarantors contained herein shall be true and correct on the date hereof and on and as of the Closing Date; and the statements of the Company, the Guarantors and their respective officers made in any certificates delivered pursuant to this Agreement shall be true and correct on and as of the Closing Date.

(b) No Downgrade. Subsequent to the earlier of (A) the Time of Sale and (B) the execution and delivery of this Agreement, (i) no downgrading shall have occurred in the rating accorded the Securities or any other debt securities or preferred stock issued or guaranteed by the Company or any of its subsidiaries by any “nationally recognized statistical rating organization”, as such term is defined by the Commission for purposes of Rule 436(g)(2) under the Securities Act; and (ii) no such organization shall have publicly announced that it has under surveillance or review, or has changed its outlook with respect to, its rating of the Securities or of any other debt securities or preferred stock issued or guaranteed by the Company or any of its subsidiaries (other than an announcement with positive implications of a possible upgrading).

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(c) No Material Adverse Change. No event or condition of a type described in Section 3(e) hereof shall have occurred or shall exist, which event or condition is not described in each of the Time of Sale Information (excluding any amendment or supplement thereto) and the Offering Memorandum (excluding any amendment or supplement thereto) the effect of which in the judgment of the Representative makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Securities on the terms and in the manner contemplated by this Agreement, the Time of Sale Information and the Offering Memorandum.

(d) Officer’s Certificate. The Representative shall have received on and as of the Closing Date a certificate of an executive officer of the Company and of each Guarantor who has specific knowledge of the Company’s or such Guarantor’s financial matters and is satisfactory to the Representative (i) confirming that such officer has carefully reviewed the Time of Sale Information and the Offering Memorandum and, to the knowledge of such officer, the representations set forth in Sections 3(a) and 3(b) hereof are true and correct, (ii) confirming that the other representations and warranties of the Company and the Guarantors in this Agreement are true and correct in all material respects (except to the extent already qualified by materiality, in which case such representations, warranties and statements shall be true and correct in all respects) and that the Company and the Guarantors have complied with all agreements and satisfied all conditions on their part to be performed or satisfied hereunder at or prior to the Closing Date and (iii) to the effect set forth in paragraphs (b) and (c) above.

(e) Comfort Letters. On the date of this Agreement and on the Closing Date, KPMG LLP shall have furnished to the Representative, at the request of the Company, letters, dated the respective dates of delivery thereof and addressed to the Initial Purchasers, in form and substance reasonably satisfactory to the Representative, containing statements and information of the type customarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained or incorporated by reference in each of the Time of Sale Information and the Offering Memorandum; provided, that the letters delivered on the Closing Date shall use a “cut-off” date no more than three business days prior to the Closing Date.

(f) Opinion and 10b-5 Statement of Counsel for the Company. Cooley Godward Kronish LLP, counsel for the Company, shall have furnished to the Representative, at the request of the Company, their written opinion and 10b-5 statement, dated the Closing Date and addressed to the Initial Purchasers, in the form agreed between the Company and the Representative.

(g) Opinion and 10b-5 Statement of Counsel for the Initial Purchasers. The Representative shall have received on and as of the Closing Date an opinion and 10b-5 statement of Simpson Thacher & Bartlett LLP, counsel for the Initial Purchasers, with respect to such matters as the Representative may reasonably request, and such counsel shall have received such documents and information as they may reasonably request to enable them to pass upon such matters.

(h) No Legal Impediment to Issuance. No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as of the Closing Date, prevent the issuance or sale of the Securities or the issuance of the Guarantees in the United States, Canada or any jurisdiction in

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which the Securities have been sold by the Initial Purchasers; and no injunction or order of any federal, state or foreign court shall have been issued that would, as of the Closing Date, prevent the issuance or sale of the Securities or the issuance of the Guarantees in the United States, Canada or any jurisdiction in which the Securities have been sold by the Initial Purchasers.

(i) Good Standing. The Representative shall have received on and as of the Closing Date satisfactory evidence of the good standing of the Company and the Guarantors in their respective jurisdictions of organization and their good standing in such other jurisdictions as the Representative may reasonably request, in each case in writing or any standard form of telecommunication from the appropriate governmental authorities of such jurisdictions.

(j) Registration Rights Agreement. The Initial Purchasers shall have received a counterpart of each of the Registration Rights Agreements that shall have been executed and delivered by a duly authorized officer of the Company and each of the Guarantors

(k) DTC. The Securities shall be eligible for clearance and settlement through DTC.

(l) Collateral Filings. Except as otherwise contemplated by the Security Agreements, each document (including any Uniform Commercial Code financing statement) required by the Security Agreements, or under law or reasonably requested by the Representative, in each case, to be filed, registered or recorded, or delivered for filing on or prior to the Closing Date, in order to create in favor of the Trustees, for the benefit of the holders of the Securities, a perfected lien and security interest in the Personal Property Collateral, which is conveyed by the Security Agreements and which can be perfected by the making of such filings, registrations or recordations, prior and superior to the right of any other person (other than Permitted Exceptions), shall be in proper form for filing, registration or recordation.

(m) CFO Certificate. On the Closing Date, the Chief Financial Officer of the Company shall have delivered to the Representative a certificate, in form and substance reasonably satisfactory to the Representative, as to certain matters disclosed in the Preliminary Offering Memorandum and the Offering Memorandum.

(n) Insurance. On or prior to the Closing Date, the Initial Purchasers shall have received satisfactory evidence that the Company and the Guarantors maintain insurance with respect to the Collateral as specified by applicable terms of the Indentures.

(o) Senior Secured Credit Facility. Concurrently with or prior to the Closing Date, (i) the Senior Secured Credit Facility shall be amended to permit, among other things, the issuance of the Securities and the Exchange Securities; and (ii) the Representative shall have received all documents entered into and received in connection with any amendment of the Senior Secured Credit Facility, in form and substance reasonably satisfactory to the Representative.

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(p) Collateral Documents. The Initial Purchasers shall have received conformed counterparts of the Collateral Documents (except as otherwise provided herein with respect to timing of the delivery of the Mortgages and related documents), each duly executed and delivered by each party thereto, each in forms and substance reasonably satisfactory to the Representative.

(q) Intercreditor Agreement. The Initial Purchasers shall have received conformed counterparts of the Intercreditor Agreement duly executed and delivered by each party thereto, in form and substance reasonably satisfactory to the Representative.

(r) Lien Searches. The Representative shall have received the results of a recent lien search in each of the jurisdictions where they may reasonably request, and such search shall reveal no liens on any of the assets of the Company and the Guarantors or their respective subsidiaries except for (i) Permitted Exceptions and (ii) liens that will be released concurrently with or prior to the issuance and sale of the Securities by the Company.

(s) Additional Documents. On or prior to the Closing Date, except as otherwise expressly permitted under this Agreement, the Indenture or the Security Agreements to be furnished after the Closing Date, the Company and the Guarantors shall have furnished to the Representative such further certificates and documents as the Representative may reasonably request. On or prior to the Closing Date, the Company shall have furnished to the Representative the letter, dated on or before the Closing Date, to the Company from its financial advisor substantially in the form attached hereto as Exhibit B.

All opinions, letters, certificates and evidence mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Initial Purchasers.

7. Indemnification and Contribution.

(a) Indemnification of the Initial Purchasers. The Company and each of the Guarantors jointly and severally agree to indemnify and hold harmless each Initial Purchaser, its affiliates, directors and officers and each person, if any, who controls such Initial Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, reasonable legal fees and other reasonable expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based upon, any untrue statement, or alleged untrue statement, of a material fact contained in the Preliminary Offering Memorandum, any of the other Time of Sale Information, any Issuer Written Communication or the Offering Memorandum (or any amendment or supplement thereto) or any omission, or alleged omission, to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser or through the Representative expressly for use therein.

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(b) Indemnification of the Company. Each Initial Purchaser agrees, severally and not jointly, to indemnify and hold harmless the Company, each of the Guarantors, each of their respective directors and officers and each person, if any, who controls the Company or any of the Guarantors within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to such Initial Purchaser furnished to the Company in writing by such Initial Purchaser or through the Representative expressly for use in the Preliminary Offering Memorandum, any of the other Time of Sale Information, any Issuer Written Communication or the Offering Memorandum (or any amendment or supplement thereto), it being understood and agreed that the only such information furnished by any Initial Purchaser consists of the following information: the information contained in (i) the third paragraph, (ii) the fourth paragraph, (iii) the fourth and fifth sentences of the fifteenth paragraph and (iv) the first and sixth sentences of the seventeenth paragraph, in each case under the caption “Plan of distribution” in the Offering Memorandum.

(c) Notice and Procedures. If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any person in respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such person (the “Indemnified Person”) shall promptly notify the person against whom such indemnification may be sought (the “Indemnifying Person”) in writing; provided that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under paragraph (a) or (b) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise than under paragraph (a) or (b) above. If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person (who shall not, without the consent of the Indemnified Person, be counsel to the Indemnifying Person) to represent the Indemnified Person and any others entitled to indemnification pursuant to this Section 7 that the Indemnifying Person may designate in such proceeding and shall pay the fees and expenses of such proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as incurred. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or

25

potential differing interests between them. It is understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such reasonable fees and expenses shall be reimbursed as they are incurred. Any such separate firm for any Initial Purchaser, its affiliates, directors and officers and any control persons of such Initial Purchaser shall be designated in writing by J.P. Morgan Securities Inc. and any such separate firm for the Company, the Guarantors, their respective directors and officers and any control persons of the Company and the Guarantors shall be designated in writing by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested that an Indemnifying Person reimburse the Indemnified Person for reasonable fees and expenses of counsel as contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by the Indemnifying Person of such request and (ii) the Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement. No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement (x) includes an unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.

(d) Contribution. If the indemnification provided for in paragraphs (a) and (b) above is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors on the one hand and the Initial Purchasers on the other from the offering of the Securities or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company and the Guarantors on the one hand and the Initial Purchasers on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Guarantors on the one hand and the Initial Purchasers on the other shall be deemed to be in the same respective proportions as the net proceeds (before deducting expenses) received by the Company from the sale of the Securities and the total discounts and commissions received by the Initial Purchasers in connection therewith, as provided in this Agreement, bear to the aggregate offering price of the Securities. The relative fault of the Company and the Guarantors on the one hand and the Initial Purchasers

26

on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or any Guarantor or by the Initial Purchasers and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

(e) Limitation on Liability. The Company, the Guarantors and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Person in connection with any such action or claim. Notwithstanding the provisions of this Section 7, in no event shall an Initial Purchaser be required to contribute any amount in excess of the amount by which the total discounts and commissions received by such Initial Purchaser with respect to the offering of the Securities exceeds the amount of any damages that such Initial Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Initial Purchasers’ obligations to contribute pursuant to this Section 7 are several in proportion to their respective purchase obligations hereunder and not joint.

(f) Non-Exclusive Remedies. The remedies provided for in this Section 7 are not exclusive and shall not limit any rights or remedies that may otherwise be available to any Indemnified Person at law or in equity.

8. Termination. This Agreement may be terminated in the absolute discretion of the Representative, by notice to the Company, if after the execution and delivery of this Agreement and on or prior to the Closing Date (i) trading generally shall have been suspended or materially limited on the New York Stock Exchange, the NASDAQ Stock Market or the over-the-counter market; (ii) trading of any securities issued or guaranteed by the Company or any of the Guarantors shall have been suspended on any exchange or in any over-the-counter market; (iii) a general moratorium on commercial banking activities shall have been declared by federal or New York State authorities; (iv) a material disruption occurs in commercial banking or securities settlement or clearance services in the United States; or (v) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis, either within or outside the United States, that, in the judgment of the Representative, is material and adverse and makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Securities on the terms and in the manner contemplated by this Agreement, the Time of Sale Information and the Offering Memorandum.

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9. Defaulting Initial Purchaser. (a) If, on the Closing Date, any Initial Purchaser defaults on its obligation to purchase the Securities that it has agreed to purchase hereunder, the non-defaulting Initial Purchasers may in their discretion arrange for the purchase of such Securities by other persons satisfactory to the Company on the terms contained in this Agreement. If, within 36 hours after any such default by any Initial Purchaser, the non-defaulting Initial Purchasers do not arrange for the purchase of such Securities, then the Company shall be entitled to a further period of 36 hours within which to procure other persons satisfactory to the non-defaulting Initial Purchasers to purchase such Securities on such terms. If other persons become obligated or agree to purchase the Securities of a defaulting Initial Purchaser, either the non-defaulting Initial Purchasers or the Company may postpone the Closing Date for up to five full business days in order to effect any changes that in the opinion of counsel for the Company or counsel for the Initial Purchasers may be necessary in the Time of Sale Information, the Offering Memorandum or in any other document or arrangement, and the Company agrees to promptly prepare any amendment or supplement to the Time of Sale Information or the Offering Memorandum that effects any such changes. As used in this Agreement, the term “Initial Purchaser” includes, for all purposes of this Agreement unless the context otherwise requires, any person not listed in Schedule 1 hereto that, pursuant to this Section 9, purchases Securities that a defaulting Initial Purchaser agreed but failed to purchase.

(b) If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Initial Purchaser or Initial Purchasers by the non-defaulting Initial Purchasers and the Company as provided in paragraph (a) above, the aggregate principal amount of such Securities that remains unpurchased does not exceed one-eleventh of the aggregate principal amount of all the Securities, then the Company shall have the right to require each non-defaulting Initial Purchaser to purchase the principal amount of Securities that such Initial Purchaser agreed to purchase hereunder plus such Initial Purchaser’s pro rata share (based on the principal amount of Securities that such Initial Purchaser agreed to purchase hereunder) of the Securities of such defaulting Initial Purchaser or Initial Purchasers for which such arrangements have not been made.

(c) If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Initial Purchaser or Initial Purchasers by the non-defaulting Initial Purchasers and the Company as provided in paragraph (a) above, the aggregate principal amount of such Securities that remains unpurchased exceeds one-eleventh of the aggregate principal amount of all the Securities, or if the Company shall not exercise the right described in paragraph (b) above, then this Agreement shall terminate without liability on the part of the non-defaulting Initial Purchasers. Any termination of this Agreement pursuant to this Section 9 shall be without liability on the part of the Company or the Guarantors, except that the Company and each of the Guarantors will continue to be liable for the payment of expenses as set forth in Section 10 hereof and except that the provisions of Section 7 hereof shall not terminate and shall remain in effect.

(d) Nothing contained herein shall relieve a defaulting Initial Purchaser of any liability it may have to the Company, the Guarantors or any non-defaulting Initial Purchaser for damages caused by its default.

10. Payment of Expenses. Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, the Company and each of the Guarantors jointly and severally agree to pay or cause to be paid the following costs and expenses incident to the performance of their respective obligations hereunder, (i) the costs incident to the printing of the Preliminary Offering Memorandum, any other Time of Sale

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Information, any Issuer Written Communication and the Offering Memorandum (including any amendment or supplement thereto) and the distribution thereof; (ii) the fees and expenses of the Company’s and the Guarantors’ counsel; (iii) any fees charged by rating agencies for rating the Securities; (iv) 50% of the fees and expenses of any chartered aircraft used by the Company in connection with any “road show” presentation to potential investors; and (v) all other expenses incurred by the Company in connection with any “road show” presentation to potential investors up to a maximum of $25,000; provided, however, that, if the closing of the offering contemplated by this Agreement occurs, upon or promptly following such closing, the Initial Purchasers agree to reimburse the Company for the Company’s out-of-pocket fee to its investment advisor in connection with such offering in an amount equal to $1,750,000, and reimburse the Company for a portion of the Company’s documented out-of-pocket expenses in connection with such offering exceeding $25,000 in an amount not to exceed $1,239,000.

11. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and any controlling persons referred to herein, and the affiliates, officers and directors of each Initial Purchaser referred to in Section 7 hereof. Nothing in this Agreement is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. No purchaser of Securities from any Initial Purchaser shall be deemed to be a successor merely by reason of such purchase.

12. Survival. The respective indemnities, rights of contribution, representations, warranties and agreements of the Company, the Guarantors and the Initial Purchasers contained in this Agreement or made by or on behalf of the Company, the Guarantors or the Initial Purchasers pursuant to this Agreement or any certificate delivered pursuant hereto shall survive the delivery of and payment for the Securities and shall remain in full force and effect, regardless of any termination of this Agreement or any investigation made by or on behalf of the Company, the Guarantors or the Initial Purchasers.

13. Patriot Act. In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the Initial Purchasers are required to obtain, verify and record information that identifies their respective clients, including the Company, which information may include the name and address of their respective clients, as well as other information that will allow the Initial Purchasers to properly identify their respective clients.

14. Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise expressly provided, the term “affiliate” has the meaning set forth in Rule 405 under the Securities Act; (b) the term “business day” means any day other than a day on which banks are permitted or required to be closed in New York City; (c) the term “Exchange Act” means the Securities Exchange Act of 1934, as amended; (d) the term “subsidiary” has the meaning set forth in Rule 405 under the Securities Act; and (e) the term “written communication” has the meaning set forth in Rule 405 under the Securities Act.

15. Miscellaneous. (a) Authority of the Representative. Any action by the Initial Purchasers hereunder may be taken by J.P. Morgan Securities Inc. on behalf of the Initial Purchasers, and any such action taken by J.P. Morgan Securities Inc. shall be binding upon the Initial Purchasers.

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(b) Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted and confirmed by any standard form of telecommunication. Notices to the Initial Purchasers shall be given to the Representative c/o J.P. Morgan Securities Inc., 270 Park Avenue, New York, New York 10017 (fax: (212) 270-1063), Attention: Rajesh Kapadia. Notices to the Company or any Guarantor shall be given to it c/o the Company at 1745 Technology Drive, San Jose, California 95110 (fax: (408) 333-5620); Attention: Chief Financial Officer, with a copy to General Counsel (fax: (408) 333-5630) and with a copy to Cooley Godward Kronish LLP, 3175 Hanover Street, Palo Alto, CA 94304 (fax: (650) 849-7400), Attention: Nancy H. Wojtas.

(c) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

(d) Counterparts. This Agreement may be signed in counterparts (which may include counterparts delivered by any standard form of telecommunication), each of which shall be an original and all of which together shall constitute one and the same instrument.

(e) Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto.

(f) Headings. The headings herein are included for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.

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If the foregoing is in accordance with your understanding, please indicate your acceptance of this Agreement by signing in the space provided below.

Very truly yours,
BROCADE COMMUNICATIONS SYSTEMS, INC.
By	/s/ Richard Deranleau
Title:	Vice President and Chief Financial Officer
BROCADE COMMUNICATIONS SYSTEMS SKYPORT LLC
By	/s/ Richard Deranleau
Title:	Chief Financial Officer
INRANGE TECHNOLOGIES CORPORATION
By	/s/ Richard Deranleau
Title:	Chief Financial Officer
MCDATA CORPORATION
By	/s/ Richard Deranleau
Title:	Chief Financial Officer
MCDATA SERVICES CORPORATION
By	/s/ Richard Deranleau
Title:	Treasurer
STRATEGIC BUSINESS SYSTEMS, INC.
By	/s/ Jean Furter
Title:	Treasurer
FOUNDRY NETWORKS, LLC
By	/s/ Richard Deranleau
Title:	Chief Financial Officer

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Accepted: January 13, 2010

J.P. MORGAN SECURITIES INC.

By	/s/ Curt Sigfstead
	Authorized Signatory

For itself and on behalf of the

several Initial Purchasers listed in

Schedule 1 hereto.

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Schedule 1

	Principal Amount to be Purchased
Initial Purchaser	2018 Notes		2020 Notes
J.P. Morgan Securities Inc.	$	154,717,000	$	154,717,000
Goldman, Sachs & Co.	$	88,680,000	$	88,680,000
Barclays Capital Inc.	$	26,415,000	$	26,415,000
Banc of America Securities LLC	$	15,094,000	$	15,094,000
Wells Fargo Securities, LLC	$	15,094,000	$	15,094,000
Total	$	300,000,000.00	$	300,000,000.00

Schedule 2

Guarantors

BROCADE COMMUNICATIONS SYSTEMS SKYPORT LLC

INRANGE TECHNOLOGIES CORPORATION

MCDATA CORPORATION

MCDATA SERVICES CORPORATION

STRATEGIC BUSINESS SYSTEMS, INC.

FOUNDRY NETWORKS, LLC

Schedule 3

Significant Subsidiaries

BROCADE COMMUNICATIONS SWITZERLAND SARL (a Swiss company)

BROCADE GLOBAL HOLDINGS GMBH (a Swiss company)

FOUNDRY NETWORKS HOLDINGS LLC (a Delaware limited liability company)

FOUNDRY NETWORKS INTERNATIONAL LLC (a Delaware limited liability company)

FOUNDRY NETWORKS INTERNATIONAL HOLDINGS C.V. (a Netherlands partnership)

BROCADE COMMUNICATIONS LUXEMBOURG HOLDINGS II SCS (a Luxembourg partnership)

BROCADE COMMUNICATIONS LUXEMBOURG HOLDINGS SARL (a Luxembourg company)

BROCADE COMMUNICATIONS LUXEMBOURG SARL (a Luxembourg company)

BROCADE SWITZERLAND HOLDINGS GMBH (a Swiss company)

BROCADE TECHNOLOGY GMBH (a Swiss company)

FOUNDRY NETWORKS, LLC (a Delaware limited liability company)

INRANGE TECHNOLOGIES CORPORATION (a Delaware corporation)

MCDATA CORPORATION (a Delaware corporation)

MCDATA INTERNATIONAL LTD. (a U.K. company)

MCDATA SERVICES CORPORATION (a Minnesota corporation)

Schedule 4

POST-CLOSING MATTERS

Within 90 days after the Closing Date the Initial Purchasers and the Trustees shall have received each of the following documents, which shall be reasonably satisfactory in form and substance to the Initial Purchasers, the Trustees and each of their respective counsel with respect to the Collateral, as appropriate:

(i) Mortgages. Fully executed counterparts of Mortgages for each of the Mortgaged Properties, together with evidence that counterparts of all the Mortgages have been delivered to First American Title Insurance Company, 633 Third Avenue, New York, NY 10017, Attention: Steven Farber (the “Title Company”) for recording in all applicable jurisdictions to the extent necessary or, in the reasonable opinion of the Representative, desirable to effectively create a valid and enforceable mortgage lien on each Mortgaged Property in favor of the Collateral Agent for its benefit and the benefit of the Trustees and the holders of the Securities, pari passu with the security interest in such property in favor of the Administrative Agent for the benefit of the lenders under the Senior Secured Credit Facility, securing the obligations related to the Securities (provided that in jurisdictions that impose mortgage recording taxes, such Mortgages shall not secure indebtedness in an amount exceeding 100% of the fair market value of such Mortgaged Property, as reasonably determined, in good faith, by the Company and reasonably acceptable to the Representative), subject to the Mortgage Permitted Exceptions.

(ii) Counsel Opinions. Opinions limited to enforceability of the Mortgages addressed to the Initial Purchasers and the Collateral Agent, of local counsel in each jurisdiction where the Mortgaged Property is located.

(iii) Title Insurance. With respect to each Mortgaged Property, a policy of title insurance (or commitment to issue such a policy having the effect of a policy of title insurance) insuring (or committing to insure) the lien of the applicable Mortgage as a valid and enforceable mortgage or deed of trust lien on the real property described therein, in an amount equal to 110% of the fair market value of such Mortgaged Property as reasonably determined, in good faith, by the Company and reasonably acceptable to the Representative (such policies collectively, the “Mortgage Policies”) issued by such Title Company, which reasonably assures the Representative that the Mortgages on such Mortgaged Properties are valid and enforceable mortgage liens on the respective Mortgaged Properties, free and clear of all defects and encumbrances except Mortgage Permitted Exceptions and liens with junior priority and such Mortgage Policies shall otherwise be in form and substance reasonably satisfactory to the Representative and shall include such title endorsements and affirmative coverages as shall reasonably be required by the Collateral Agent.

(iv) Survey. The Company and the appropriate Guarantors shall deliver to the Title Company and the Collateral Agent any and all surveys as shall be required by the Title Company to cause the Title Company to issue the title insurance required pursuant to clause (iii) above without an exception for survey coverage.

(v) Mortgaged Property Indemnification. With respect to each Mortgaged Property, such affidavits, certificates, instruments of indemnification and other items (including a so-called “gap” indemnification) as shall be reasonably required to induce the Title Company to issue the Mortgage Policy/ies and endorsements contemplated above.

(vi) Collateral Fees and Expenses. Evidence reasonably acceptable to the Representative of payment by the Company of all Mortgage Policy premiums, search and examination charges, mortgage recording taxes, fees, charges, costs and expenses required for the recording of the Mortgages, fixture filings and issuance of the Mortgage Policies referred to above.

2

Schedule 5

List of Indebtedness for Borrowed Money

• Senior Secured Credit Facility

• 2.25% Subordinated Convertible Notes due February 15, 2010, issued by McData Corporation

Annex A

Additional Time of Sale Information

1. With respect to the 2018 Notes, term sheet containing the terms of the 2018 Notes, substantially in the form set forth in Annex B under the caption “2018 Notes”.

2. With respect to the 2020 Notes, term sheet containing the terms of the 2020 Notes, substantially in the form set forth in Annex B under the caption “2020 Notes”.

Annex B

BROCADE COMMUNICATIONS SYSTEMS, INC.

Pricing Term Sheet for 2018 Notes and 2020 Notes

2018 Notes

Issuer:	Brocade Communications Systems, Inc.
Security Description:	6.625% Senior Secured Notes due 2018
Distribution:	144A/Reg S with registration rights
Size:	$300,000,000
Gross Proceeds:	$297,717,000
Maturity:	January 15, 2018
Coupon:	6.625%
Issue Price:	99.239% of face amount
Yield to Maturity:	6.75%
Spread to Benchmark Treasury:	+329 basis points
Benchmark Treasury:	UST 4.25% due 11/15/2017
Interest Payment Dates:	January 15 and July 15, commencing July 15, 2010
Clawback:	Up to 35% at 106.625%
Until:	January 15, 2013
Optional Redemption:	Make-whole call @ T+50bps prior to January 15, 2013, then:

On or after:	Price:
January 15, 2013	103.313	%
January 15, 2014	103.313	%
January 15, 2015	101.656	%
January 15, 2016 and thereafter	100.000	%

Change of Control Triggering Event:	Putable at 101% of principal plus accrued interest
Trade Date:	January 13, 2010
Settlement:	T+4; January 20, 2010
CUSIP:	144A: 111621 AE8 Reg S: U11097 AB5
ISIN:	144A: US111621AE81 Reg S: USU11097AB50
Denominations/Multiple:	$2,000 x $1,000
Ratings:	Ba2/BBB-
Bookrunners:	J.P. Morgan
	Goldman, Sachs & Co.
Co-Managers:	Barclays
	BofA Merrill Lynch
	Wells Fargo Securities

2020 Notes

Issuer:	Brocade Communications Systems, Inc.
Security Description:	6.875% Senior Secured Notes due 2020
Distribution:	144A/Reg S with registration rights
Size:	$300,000,000
Gross Proceeds:	$297,342,000
Maturity:	January 15, 2020
Coupon:	6.875%
Issue Price:	99.114% of face amount
Yield to Maturity:	7%
Spread to Benchmark Treasury:	+321 basis points
Benchmark Treasury:	UST 3.375% due 11/15/2019
Interest Payment Dates:	January 15 and July 15, commencing July 15, 2010
Clawback:	Up to 35% at 106.875%
Until:	January 15, 2013
Optional Redemption:	Make-whole call @ T+50bps prior to January 15, 2015, then:

On or after:	Price:
January 15, 2015	103.438	%
January 15, 2016	102.292	%
January 15, 2017	101.146	%
January 15, 2018 and thereafter	100.000	%

Change of Control Triggering Event:	Putable at 101% of principal plus accrued interest
Trade Date:	January 13, 2010
Settlement:	T+4; January 20, 2010
CUSIP:	144A: 111621 AH1 Reg S: U11097 AC3
ISIN:	144A: US111621AH13 Reg S: USU11097AC34
Denominations/Multiple:	$2,000 x $1,000
Ratings:	Ba2/BBB-
Bookrunners:	J.P. Morgan
	Goldman, Sachs & Co.
Co-Managers:	Barclays
	BofA Merrill Lynch
	Wells Fargo Securities

B-2

Annex C

Restrictions on Offers and Sales Outside the United States

In connection with offers and sales of Securities outside the United States:

(a) Each Initial Purchaser acknowledges that the Securities have not been registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an exemption from, or in transactions not subject to, the registration requirements of the Securities Act.

(b) Each Initial Purchaser, severally and not jointly, represents, warrants and agrees that:

(i) Such Initial Purchaser has offered and sold the Securities, and will offer and sell the Securities, (A) as part of their distribution at any time and (B) otherwise until 40 days after the later of the commencement of the offering of the Securities and the Closing Date, only in accordance with Regulation S under the Securities Act (“Regulation S”) or Rule 144A or any other available exemption from registration under the Securities Act.

(ii) None of such Initial Purchaser or any of its affiliates or any other person acting on its or their behalf has engaged or will engage in any directed selling efforts with respect to the Securities, and all such persons have complied and will comply with the offering restrictions requirement of Regulation S.

(iii) At or prior to the confirmation of sale of any Securities sold in reliance on Regulation S, such Initial Purchaser will have sent to each distributor, dealer or other person receiving a selling concession, fee or other remuneration that purchases Securities from it during the distribution compliance period a confirmation or notice to substantially the following effect:

“The Securities covered hereby have not been registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering of the Securities and the date of original issuance of the Securities, except in accordance with Regulation S or Rule 144A or any other available exemption from registration under the Securities Act. Terms used above have the meanings given to them by Regulation S.”

(iv) Such Initial Purchaser has not and will not enter into any contractual arrangement with any distributor with respect to the distribution of the Securities, except with its affiliates or with the prior written consent of the Company.

Terms used in paragraph (a) and this paragraph (b) and not otherwise defined in this Agreement have the meanings given to them by Regulation S.

(c) Each Initial Purchaser, severally and not jointly, represents, warrants and agrees that:

(i) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the United Kingdom Financial Services and Markets Act 2000 (the “FSMA”)) received by it in connection with the issue or sale of any Securities in circumstances in which Section 21(1) of the FSMA does not apply to the Company or the Guarantors; and

(ii) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom.

(d) Each Initial Purchaser, severally and not jointly, represents, warrants and agrees that, in relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of the Securities to the public in that Relevant Member State prior to the publication of a prospectus in relation to the notes which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of the Securities to the public in that Relevant Member State at any time:

(i) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

(ii) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;

(ii) to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the representatives for any such offer; or

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(iv) in any other circumstances which do not require the publication by us of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of notes to the public” in relation to any notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Securities so as to enable an investor to decide to purchase or subscribe the Securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

(e) Each Initial Purchaser acknowledges that no action has been or will be taken by the Company that would permit a public offering of the Securities, or possession or distribution of any of the Time of Sale Information, the Offering Memorandum, any Issuer Written Communication or any other offering or publicity material relating to the Securities, in any country or jurisdiction where action for that purpose is required.

C-3

Annex D

Mortgaged Property

Entity of Record	Address	City	State
Brocade Communications Systems, Skyport LLC	1600 Technology Drive	San Jose	CA
McDATA Corporation	4 Brocade Parkway	Broomfield	CO
McDATA Corporation	Land	Broomfield	CO
Brocade Communications Systems, Inc	Land	San Jose	CA

Exhibit A

Form of Registration Rights Agreement

[2018][2020] Notes

This REGISTRATION RIGHTS AGREEMENT dated January [20], 2010 (this “Agreement”) is entered into by and among Brocade Communications Systems, Inc., a Delaware corporation (the “Company”), the guarantors listed in Schedule 1 hereto (the “Guarantors”) and J.P. Morgan Securities Inc. (“JPMorgan”), Goldman, Sachs & Co., Barclays Capital Inc., Banc of America Securities LLC and Wells Fargo Securities, LLC (the “Initial Purchasers”).

The Company, the Guarantors and the Initial Purchasers are parties to the Purchase Agreement dated January 13, 2010 (the “Purchase Agreement”), which provides for the sale by the Company to the Initial Purchasers of, among other things, $300,000,000 aggregate principal amount of the Company’s [6.625] [6.875]% Senior Secured Notes due [2018][2020] (the “Securities”) which will be guaranteed on a senior secured basis by each of the Guarantors. As an inducement to the Initial Purchasers to enter into the Purchase Agreement, the Company and the Guarantors have agreed to provide to the Initial Purchasers and their direct and indirect transferees the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the closing under the Purchase Agreement.

In consideration of the foregoing, the parties hereto agree as follows:

1. Definitions. As used in this Agreement, the following terms shall have the following meanings:

“Additional Guarantor” shall mean any subsidiary of the Company that executes a Subsidiary Guarantee under the Indenture after the date of this Agreement.

“Business Day” shall mean any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed.

“Company” shall have the meaning set forth in the preamble and shall also include the Company’s successors.

“Electing Holder” shall mean any Holder that has returned a completed and signed Notice and Questionnaire to the Company in accordance with Section 2(b).

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

“Exchange Dates” shall have the meaning set forth in Section 2(a)(ii) hereof.

“Exchange Offer” shall mean the exchange offer by the Company and the Guarantors of Exchange Securities for Registrable Securities pursuant to Section 2(a) hereof.

“Exchange Offer Registration” shall mean a registration under the Securities Act effected pursuant to Section 2(a) hereof.

“Exchange Offer Registration Statement” shall mean an exchange offer registration statement on Form S-4 (or, if applicable, on another appropriate form) and all amendments and supplements to such registration statement, in each case including the Prospectus contained therein or deemed a part thereof, all exhibits thereto and any document incorporated by reference therein.

“Exchange Securities” shall mean senior secured notes issued by the Company and guaranteed by the Guarantors under the Indenture containing terms identical to the Securities (except that the Exchange Securities will not be subject to restrictions on transfer or to any increase in annual interest rate for failure to comply with this Agreement) and to be offered to Holders of Securities in exchange for Securities pursuant to the Exchange Offer.

“Free Writing Prospectus” means each free writing prospectus (as defined in Rule 405 under the Securities Act) prepared by or on behalf of the Company or used or referred to by the Company in connection with the sale of the Securities or the Exchange Securities.

“Guarantors” shall have the meaning set forth in the preamble and shall also include any Guarantor’s successors and any Additional Guarantors.

“Holders” shall mean the Initial Purchasers, for so long as they own any Registrable Securities, and each of their successors, assigns and direct and indirect transferees who become owners of Registrable Securities under the Indenture; provided that for purposes of Sections 4 and 5 of this Agreement, the term “Holders” shall include Participating Broker-Dealers.

“Indemnified Person” shall have the meaning set forth in Section 5(c) hereof.

“Indemnifying Person” shall have the meaning set forth in Section 5(c) hereof.

“Indenture” shall mean the Indenture relating to the Securities dated as of January [20], 2010 among the Company, the Guarantors and Wells Fargo Bank, National Association, as trustee, and as the same may be amended from time to time in accordance with the terms thereof.

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“Initial Purchasers” shall have the meaning set forth in the preamble.

“Inspector” shall have the meaning set forth in Section 3(a)(xiv) hereof.

“Issuer Information” shall have the meaning set forth in Section 5(a) hereof.

“JPMorgan” shall have the meaning set forth in the preamble.

“Majority Holders” shall mean the Holders of a majority of the aggregate principal amount of the outstanding Registrable Securities; provided that whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, any Registrable Securities owned directly or indirectly by the Company or any of its affiliates shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage or amount; and provided, further, that if the Company shall issue any additional Securities under the Indenture prior to consummation of the Exchange Offer or, if applicable, the effectiveness of any Shelf Registration Statement, such additional Securities and the Registrable Securities to which this Agreement relates shall be treated together as one class for purposes of determining whether the consent or approval of Holders of a specified percentage of Registrable Securities has been obtained.

“Notice and Questionnaire” shall mean a notice of registration statement and selling security holder questionnaire distributed to an Initial Purchaser by the Company upon receipt of a Shelf Request from such Initial Purchaser.

“Participating Broker-Dealers” shall have the meaning set forth in Section 4(a) hereof.

“Person” shall mean an individual, partnership, limited liability company, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof.

“Prospectus” shall mean the prospectus included in, or, pursuant to the rules and regulations of the Securities Act, deemed a part of, a Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including a prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by a Shelf Registration Statement, and by all other amendments and supplements to such prospectus, and in each case including any document incorporated by reference therein.

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“Purchase Agreement” shall have the meaning set forth in the preamble.

“Registrable Securities” shall mean the Securities; provided that the Securities shall cease to be Registrable Securities (i) when a Registration Statement with respect to such Securities has become effective under the Securities Act and such Securities have been exchanged or disposed of pursuant to such Registration Statement, (ii) the date of the second anniversary of this Agreement, provided that such date shall be extended by the number of days of any extension that occurs pursuant to Section 3(d) hereof or (iii) when such Securities cease to be outstanding.

“Registration Expenses” shall mean any and all expenses incident to performance of or compliance by the Company and the Guarantors with this Agreement, including without limitation: (i) all SEC, stock exchange or Financial Industry Regulatory Authority registration and filing fees, (ii) all fees and expenses incurred in connection with compliance with applicable state securities or blue sky laws (including reasonable fees and disbursements of counsel for any Underwriters or Holders in connection with blue sky qualification of any Exchange Securities or Registrable Securities, with supporting documentation), (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, printing and distributing any Registration Statement, any Prospectus, any Free Writing Prospectus and any amendments or supplements thereto, any underwriting agreements, securities sales agreements or other similar agreements and any other documents relating to the performance of and compliance with this Agreement, with supporting documentation, (iv) all rating agency fees, (v) all fees and disbursements relating to the qualification of the Indenture under applicable securities laws, (vi) the fees and disbursements of the Trustee and its counsel, (vii) the fees and disbursements of counsel for the Company and the Guarantors and, in the case of a Shelf Registration Statement, the fees and disbursements of one counsel for the Holders (which counsel shall be selected by the Majority Holders and which counsel may also be counsel for the Initial Purchasers), with supporting documentation, and (viii) the fees and disbursements of the independent public accountants of the Company and the Guarantors, including the expenses of any special audits or “comfort” letters required by or incident to the performance of and compliance with this Agreement, but excluding fees and expenses of counsel to the Underwriters (other than fees and expenses set forth in clause (ii) above) or the Holders and underwriting discounts and commissions, brokerage commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder.

“Registration Statement” shall mean any registration statement of the Company and the Guarantors that covers any of the Exchange Securities or Registrable Securities pursuant to the provisions of this Agreement and all amendments and supplements to any such registration statement, including post-effective amendments, in each case including the Prospectus contained therein or deemed a part thereof, all exhibits thereto and any document incorporated by reference therein.

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“SEC” shall mean the United States Securities and Exchange Commission.

“Securities” shall have the meaning set forth in the preamble.

“Securities Act” shall mean the Securities Act of 1933, as amended from time to time.

“Shelf Effectiveness Period” shall have the meaning set forth in Section 2(b) hereof.

“Shelf Registration” shall mean a registration effected pursuant to Section 2(b) hereof.

“Shelf Registration Statement” shall mean a “shelf” registration statement of the Company and the Guarantors that covers all or a portion of the Registrable Securities (but no other securities unless approved by a majority of the Holders whose Registrable Securities are to be covered by such Shelf Registration Statement) on an appropriate form under Rule 415 under the Securities Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein or deemed a part thereof, all exhibits thereto and any document incorporated by reference therein.

“Shelf Request” shall have the meaning set forth in Section 2(b) hereof.

“Subsidiary Guarantees” shall mean the guarantees of the Securities and Exchange Securities by the Guarantors under the Indenture.

“Staff” shall mean the staff of the SEC.

“Target Registration Date” shall have the meaning set forth in Section 2(d) hereof.

“Trust Indenture Act” shall mean the Trust Indenture Act of 1939, as amended from time to time.

“Trustee” shall mean the trustee with respect to the Securities under the Indenture.

“Underwriter” shall have the meaning set forth in Section 3(e) hereof.

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“Underwritten Offering” shall mean an offering in which Registrable Securities are sold to an Underwriter for reoffering to the public.

2. Registration Under the Securities Act. (a) To the extent not prohibited by any applicable law or applicable interpretations of the Staff, the Company and the Guarantors shall use their commercially reasonable efforts to (i) cause to be filed an Exchange Offer Registration Statement covering an offer to the Holders to exchange all the Registrable Securities for Exchange Securities and (ii) have such Registration Statement remain effective until 180 days after the last Exchange Date for use by one or more Participating Broker-Dealers. The Company and the Guarantors shall commence the Exchange Offer promptly after the Exchange Offer Registration Statement is declared effective by the SEC and use their commercially reasonable efforts to complete the Exchange Offer not later than 60 days after such effective date.

The Company and the Guarantors shall commence the Exchange Offer by mailing the related Prospectus, appropriate letters of transmittal and other accompanying documents to each Holder (which, with respect to Notes represented by global certificates in the name of The Depository Trust Company (“DTC”) or a nominee thereof, may be effected through the facilities of DTC) stating, in addition to such other disclosures as are required by applicable law, substantially the following:

(i) that the Exchange Offer is being made pursuant to this Agreement and that all Registrable Securities validly tendered and not properly withdrawn will be accepted for exchange;

(ii) the dates of acceptance for exchange (which shall be a period of at least 20 Business Days from the date such notice is mailed) (the “Exchange Dates”);

(iii) that any Registrable Security not tendered will remain outstanding and continue to accrue interest but will not retain any rights under this Agreement, except as otherwise specified herein;

(iv) that any Holder electing to have a Registrable Security exchanged pursuant to the Exchange Offer will be required to (A) surrender such Registrable Security, together with the appropriate letters of transmittal, to the institution and at the address (located in the Borough of Manhattan, The City of New York) and in the manner specified in the notice, or (B) effect such exchange otherwise in compliance with the applicable procedures of the depositary for such Registrable Security, in each case prior to the close of business on the last Exchange Date; and

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(v) that any Holder will be entitled to withdraw its election, not later than the close of business on the last Exchange Date, by (A) sending to the institution and at the address (located in the Borough of Manhattan, The City of New York) specified in the notice, a telegram, telex, facsimile transmission or letter setting forth the name of such Holder, the principal amount of Registrable Securities delivered for exchange and a statement that such Holder is withdrawing its election to have such Securities exchanged or (B) effecting such withdrawal in compliance with the applicable procedures of the depositary for the Registrable Securities.

As a condition to participating in the Exchange Offer, a Holder will be required to represent to the Company and the Guarantors that (i) any Exchange Securities to be received by it will be acquired in the ordinary course of its business, (ii) at the time of the commencement of the Exchange Offer it has no arrangement or understanding with any Person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Securities in violation of the provisions of the Securities Act, (iii) it is not an “affiliate” (within the meaning of Rule 405 under the Securities Act) of the Company or any Guarantor and (iv) if such Holder is a broker-dealer that will receive Exchange Securities for its own account in exchange for Registrable Securities that were acquired as a result of market-making or other trading activities, then such Holder will deliver a Prospectus (or, to the extent permitted by law, make available a Prospectus to purchasers) in connection with any resale of such Exchange Securities.

As soon as practicable after the last Exchange Date, the Company and the Guarantors shall:

(i) accept for exchange Registrable Securities or portions thereof validly tendered and not properly withdrawn pursuant to the Exchange Offer; and

(ii) deliver, or cause to be delivered, to the Trustee for cancellation all Registrable Securities or portions thereof so accepted for exchange by the Company and issue, and cause the Trustee to promptly authenticate and deliver to each Holder, Exchange Securities equal in principal amount to the principal amount of the Registrable Securities tendered by such Holder.

The Company and the Guarantors shall use their commercially reasonable efforts to complete the Exchange Offer as provided above and shall comply with the applicable requirements of the Securities Act, the Exchange Act and other applicable laws and regulations in connection with the Exchange Offer. The Exchange Offer shall not be subject to any conditions, other than that the Exchange Offer does not violate any applicable law or applicable interpretations of the Staff.

(b) In the event that (i) the Company and the Guarantors determine that the Exchange Offer Registration provided for in Section 2(a) above is not available or may not be completed as soon as practicable after the last Exchange

7

Date because it would violate any applicable law or applicable interpretations of the Staff, (ii) the Exchange Offer is not for any other reason completed by the Target Registration Date (it being understood that participation in the Exchange Offer of all Holders eligible to participate therein is not required for the Company and the Guarantors to complete the Exchange Offer) or (iii) upon receipt of a written request (a “Shelf Request”) from any Initial Purchaser representing that it holds Registrable Securities that are or were ineligible to be exchanged in the Exchange Offer, the Company and the Guarantors shall use their commercially reasonable efforts to cause to be filed as soon as practicable after such determination date or Shelf Request, as the case may be, a Shelf Registration Statement providing for the sale of all the Registrable Securities by the Holders thereof and to have such Shelf Registration Statement become effective no later than the Target Registration Date; provided that no Holder will be entitled to have any Registrable Securities included in any Shelf Registration Statement, or entitled to use the prospectus forming a part of such Shelf Registration Statement, until such Holder shall have delivered a completed and signed Notice and Questionnaire and provided such other information regarding such Holder as is contemplated by Section 3(b) to the Company.

In the event that the Company and the Guarantors are required to file a Shelf Registration Statement pursuant to clause (iii) of the preceding sentence, the Company and the Guarantors shall use their commercially reasonable efforts to file and have become effective both an Exchange Offer Registration Statement pursuant to Section 2(a) with respect to all Registrable Securities and a Shelf Registration Statement (which may be a combined Registration Statement with the Exchange Offer Registration Statement) with respect to offers and sales of Registrable Securities held by the Initial Purchasers after completion of the Exchange Offer.

The Company and the Guarantors agree to use their commercially reasonable efforts to keep the Shelf Registration Statement continuously effective until the date on which the Securities cease to be Registrable Securities or such shorter period that will terminate when all the Registrable Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement (the “Shelf Effectiveness Period”). The Company and the Guarantors further agree to supplement or amend the Shelf Registration Statement, the related Prospectus and any Free Writing Prospectus if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement or by the Securities Act or by any other rules and regulations thereunder or if reasonably requested by a Holder of Registrable Securities with respect to information relating to such Holder, and to use their commercially reasonable efforts to cause any such amendment to become effective, if required, and such Shelf Registration Statement, Prospectus or Free Writing Prospectus, as the case may be, to become usable as soon as thereafter practicable. The Company and the Guarantors agree to furnish to the Electing Holders copies of any such supplement or amendment promptly after its being used or filed with the SEC.

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(c) The Company and the Guarantors shall pay all Registration Expenses in connection with any registration pursuant to Section 2(a) or Section 2(b) hereof. Each Holder shall pay all underwriting discounts and commissions, brokerage commissions and transfer taxes, if any, relating to the sale or disposition of such Holder’s Registrable Securities pursuant to the Shelf Registration Statement.

(d) An Exchange Offer Registration Statement pursuant to Section 2(a) hereof will not be deemed to have become effective unless it has been declared effective by the SEC. A Shelf Registration Statement pursuant to Section 2(b) hereof will not be deemed to have become effective unless it has been declared effective by the SEC or is automatically effective upon filing with the SEC as provided by Rule 462 under the Securities Act.

In the event that either the Exchange Offer is not completed (the “Exchange Offer Default”) or the Shelf Registration Statement, if required pursuant to Section 2(b) hereof, does not become effective (the “Shelf Registration Default” and, together with the Exchange Offer Registration Default, the “Registration Default”) on or prior to, in the case of the Exchange Offer, 365 days after the Closing Date or, in the case of the Shelf Registration Statement, the later of 365 days after the Closing Date and 90 days after the receipt by the Company of a Shelf Request (the “Target Registration Date”), the interest rate on the Registrable Securities will be increased by (i) 0.25% per annum for the first 90-day period immediately following the Target Registration Date and (ii) an additional 0.25% per annum with respect to each subsequent 90-day period, in each case until the Exchange Offer is completed, the Shelf Registration Statement, if required hereby, becomes effective or the Securities cease to be Registrable Securities, up to a maximum increase of 1.00% per annum.

If the Shelf Registration Statement, if required hereby, has become effective and thereafter either ceases to be effective or the Prospectus contained therein ceases to be usable, in each case whether or not permitted by this Agreement, at any time during the Shelf Effectiveness Period, and such failure to remain effective or usable exists for more than 45 days (whether or not consecutive) in any 12-month period, then the interest rate on the Registrable Securities will be increased by (i) 0.25% per annum for the first 90-day period and (ii) an additional 0.25% per annum with respect to each subsequent 90-day period, up to a maximum increase of 1.00% per annum, commencing on the 45th day in such 12-month period and ending on such date that the Shelf Registration Statement has again become effective or the Prospectus again becomes usable, as the case may be.

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(e) Without limiting the remedies available to the Initial Purchasers and the Holders, the Company and the Guarantors acknowledge that any failure by the Company or the Guarantors to comply with their obligations under Section 2(a) and Section 2(b) hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company’s and the Guarantors’ obligations under Section 2(a) and Section 2(b) hereof.

3. Registration Procedures. (a) In connection with their obligations pursuant to Section 2(a) and Section 2(b) hereof, the Company and the Guarantors shall use their commercially reasonable efforts to, as expeditiously as possible:

(i) prepare and file with the SEC a Registration Statement on the appropriate form under the Securities Act, which form (x) shall be selected by the Company and the Guarantors, (y) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Securities by the Holders thereof and (z) shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith; and use their commercially reasonable efforts to cause such Registration Statement to become effective and remain effective for the applicable period in accordance with Section 2 hereof;

(ii) prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period in accordance with Section 2 hereof and cause each Prospectus to be supplemented by any required prospectus supplement and, as so supplemented, to be filed pursuant to Rule 424 under the Securities Act; and keep each Prospectus current during the period described in Section 4(3) of and Rule 174 under the Securities Act that is applicable to transactions by brokers or dealers with respect to the Registrable Securities or Exchange Securities;

(iii) to the extent any Free Writing Prospectus is used, file with the SEC any Free Writing Prospectus that is required to be filed by the Company or the Guarantors with the SEC in accordance with the Securities Act and to retain any Free Writing Prospectus not required to be filed;

(iv) in the case of a Shelf Registration, furnish to each Electing Holder, to counsel for the Initial Purchasers, to counsel for such Holders and to each Underwriter of an Underwritten Offering of Registrable Securities, if any, without charge, as many copies of each Prospectus, preliminary prospectus or Free Writing Prospectus, and any amendment or supplement thereto, as such Holder, counsel or Underwriter may reasonably request in order to facilitate the sale or other disposition of the Registrable Securities thereunder; and, subject to

10

Section 3(c), the Company and the Guarantors consent to the use of such Prospectus, preliminary prospectus or such Free Writing Prospectus and any amendment or supplement thereto in accordance with applicable law by each of the Holders of Registrable Securities and any such Underwriters in connection with the offering and sale of the Registrable Securities covered by and in the manner described in such Prospectus, preliminary prospectus or such Free Writing Prospectus or any amendment or supplement thereto in accordance with applicable law;

(v) register or qualify the Registrable Securities under all applicable state securities or blue sky laws of such jurisdictions as any Holder of Registrable Securities covered by a Registration Statement shall reasonably request in writing by the time the applicable Registration Statement becomes effective; cooperate with such Holders in connection with any filings required to be made with the Financial Industry Regulatory Authority; and do any and all other acts and things that may be reasonably necessary or advisable to enable each Holder to complete the disposition in each such jurisdiction of the Registrable Securities owned by such Holder; provided that neither the Company nor any Guarantor shall be required to (1) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (2) file any general consent to service of process in any such jurisdiction or (3) subject itself to taxation in any such jurisdiction if it is not so subject;

(vi) notify counsel for the Initial Purchasers and, in the case of a Shelf Registration, notify each Electing Holder and counsel for such Holders promptly and, if requested by any such Holder or counsel, confirm such advice in writing (1) when a Registration Statement has become effective, when any post-effective amendment thereto has been filed and becomes effective and when, after the effective date of any such Registration Statement, any Free Writing Prospectus or any amendment or supplement to the Prospectus or any Free Writing Prospectus has been filed, (2) of any request by the SEC or any state securities authority for amendments and supplements to a Registration Statement, Prospectus or Free Writing Prospectus or for additional information after the Registration Statement has become effective, (3) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, including the receipt by the Company of any notice of objection of the SEC to the use of a Shelf Registration Statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) under the Securities Act, (4) if, between the applicable effective date of a Shelf Registration Statement and the closing of any sale of Registrable Securities covered thereby, the representations and warranties of the Company or any Guarantor contained in any underwriting agreement, securities sales agreement or other similar agreement, if any, relating to an offering of such Registrable Securities cease to be true and correct in all material respects or if the Company or any Guarantor receives any notification with respect to the

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suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose, (5) of the happening of any event during the period a Registration Statement is effective that makes any statement made in such Registration Statement or the related Prospectus or any Free Writing Prospectus untrue in any material respect or that requires the making of any changes in such Registration Statement or Prospectus or any Free Writing Prospectus in order to make the statements therein not misleading and (6) of any determination by the Company or any Guarantor that a post-effective amendment to a Registration Statement or any amendment or supplement to the Prospectus or any Free Writing Prospectus would be appropriate;

(vii) obtain the withdrawal of any order suspending the effectiveness of a Registration Statement or, in the case of a Shelf Registration, the resolution of any objection of the SEC pursuant to Rule 401(g)(2), including by filing an amendment to such Shelf Registration Statement on the proper form, at the earliest practicable time and provide immediate notice to each Electing Holder of the withdrawal of any such order or such resolution;

(viii) in the case of a Shelf Registration, furnish to each Electing Holder of Registrable Securities, without charge, at least one conformed copy of each Registration Statement and any post-effective amendment thereto (without any documents incorporated therein by reference or exhibits thereto, unless requested);

(ix) in the case of a Shelf Registration, cooperate with the Holders of Registrable Securities to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends (including one or more global certificates, if applicable) and enable such Registrable Securities to be issued in such denominations and registered in such names (consistent with the provisions of the Indenture) as such Holders may reasonably request at least one Business Day prior to the closing of any sale of Registrable Securities;

(x) in the case of a Shelf Registration, upon the occurrence of any event contemplated by Section 3(a)(vi)(5) hereof, use their commercially reasonable efforts to prepare and file with the SEC a supplement or post-effective amendment to such Shelf Registration Statement or the related Prospectus or any Free Writing Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered (or, to the extent permitted by law, made available) to purchasers of the Registrable Securities, such Prospectus or Free Writing Prospectus, as the case may be, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and the Company and the Guarantors shall notify the Electing Holders to suspend use of the

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Prospectus or any Free Writing Prospectus as promptly as practicable after the occurrence of such an event, and such Holders hereby agree to suspend use of the Prospectus or any Free Writing Prospectus, as the case may be, until the Company and the Guarantors have amended or supplemented the Prospectus or any Free Writing Prospectus, as the case may be, to correct such misstatement or omission;

(xi) a reasonable time prior to the filing of any Registration Statement, any Prospectus, any Free Writing Prospectus, any amendment to a Registration Statement or amendment or supplement to a Prospectus or a Free Writing Prospectus or of any document that is to be incorporated by reference into a Registration Statement, a Prospectus or a Free Writing Prospectus after initial filing of a Registration Statement, provide copies of such document to the Initial Purchasers and their counsel (and, in the case of a Shelf Registration Statement, to the Holders of Registrable Securities and their counsel) and make such of the representatives of the Company and the Guarantors as shall be reasonably requested by the Initial Purchasers or their counsel (and, in the case of a Shelf Registration Statement, the Holders of Registrable Securities or their counsel) available for discussion of such document; and the Company and the Guarantors shall not, at any time after initial filing of a Registration Statement, use or file any Prospectus, any Free Writing Prospectus, any amendment of or supplement to a Registration Statement or a Prospectus or a Free Writing Prospectus, or any document that is to be incorporated by reference into a Registration Statement, a Prospectus or a Free Writing Prospectus, of which the Initial Purchasers and their counsel (and, in the case of a Shelf Registration Statement, the Holders of Registrable Securities and their counsel) shall not have previously been advised and furnished a copy or to which the Initial Purchasers or their counsel (and, in the case of a Shelf Registration Statement, the Holders of Registrable Securities or their counsel) shall object;

(xii) obtain a CUSIP number for all Exchange Securities or Registrable Securities, as the case may be, not later than the initial effective date of a Registration Statement;

(xiii) cause the Indenture to be qualified under the Trust Indenture Act in connection with the registration of the Exchange Securities or Registrable Securities, as the case may be; cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for the Indenture to be so qualified in accordance with the terms of the Trust Indenture Act; and execute, and use their commercially reasonable efforts to cause the Trustee to execute, all documents as may be required to effect such changes and all other forms and documents required to be filed with the SEC to enable the Indenture to be so qualified in a timely manner;

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(xiv) in the case of a Shelf Registration, make available for inspection by a representative of the Holders of the Registrable Securities (an “Inspector”), any Underwriter participating in any disposition pursuant to such Shelf Registration Statement, any attorneys and accountants designated by a majority of the Holders of Registrable Securities to be included in such Shelf Registration and any attorneys and accountants designated by such Underwriter, at reasonable times and in a reasonable manner, all pertinent financial and other records, documents and properties of the Company and its subsidiaries, and cause the respective officers, directors and employees of the Company and the Guarantors to supply all information reasonably requested by any such Inspector, Underwriter, attorney or accountant in connection with a Shelf Registration Statement; provided that if any such information is identified by the Company or any Guarantor as being confidential or proprietary, each Person receiving such information shall take such actions as are reasonably necessary to protect the confidentiality of such information to the extent such action is otherwise not inconsistent with, an impairment of or in derogation of the rights and interests of any Inspector, Holder or Underwriter); provided, further, that all information that is provided by the Company shall be kept confidential by such Persons, unless disclosure thereof is required or requested under compulsion of law (whether by oral question, interrogatory, subpoena, civil investigative demand or otherwise), by order or act of any court or governmental or regulatory authority or body, or such information is or has become available to the public generally through the Company or through a third party without an accompanying obligation of confidentiality owed by such Person to the Company, or the Company consents to the non-confidential treatment of such information;

(xv) in the case of a Shelf Registration, use their commercially reasonable efforts to cause all Registrable Securities to be listed on any securities exchange or any automated quotation system on which similar securities issued or guaranteed by the Company or any Guarantor are then listed if requested by the Majority Holders, to the extent such Registrable Securities satisfy applicable listing requirements;

(xvi) if reasonably requested by any Holder of Registrable Securities covered by a Shelf Registration Statement, as soon as practicable include in a Prospectus supplement or post-effective amendment such information with respect to such Holder as such Holder reasonably requests to be included therein and make all required filings of such Prospectus supplement or such post-effective amendment as soon as the Company has received notification of the matters to be so included in such filing;

(xvii) in the case of a Shelf Registration, enter into such customary agreements and take all such other actions in connection therewith (including those requested by the Holders of a majority in principal amount of the Registrable Securities covered by the Shelf Registration Statement) in order to expedite or facilitate the disposition of such Registrable Securities including, but not limited to, an Underwritten Offering and in such connection, (1) to the extent possible, make such representations and warranties to the Holders and any

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Underwriters of such Registrable Securities with respect to the business of the Company and its subsidiaries and the Registration Statement, Prospectus, any Free Writing Prospectus and documents incorporated by reference or deemed incorporated by reference, if any, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings and confirm the same if and when requested, (2) obtain opinions of counsel to the Company and the Guarantors (which counsel and opinions, in form, scope and substance, shall be reasonably satisfactory to the Holders and such Underwriters and their respective counsel) addressed to each selling Holder and Underwriter of Registrable Securities, covering the matters customarily covered in opinions requested in underwritten offerings, (3) obtain “comfort” letters from the independent certified public accountants of the Company and the Guarantors (and, if necessary, any other certified public accountant of any subsidiary of the Company or any Guarantor, or of any business acquired by the Company or any Guarantor for which financial statements and financial data are or are required to be included in the Registration Statement) addressed to each selling Holder (to the extent permitted by applicable professional standards) and Underwriter of Registrable Securities, such letters to be in customary form and covering matters of the type customarily covered in “comfort” letters in connection with underwritten offerings, including but not limited to financial information contained in any preliminary prospectus, Prospectus or Free Writing Prospectus and (4) deliver such documents and certificates as may be reasonably requested by the Holders of a majority in principal amount of the Registrable Securities being sold or the Underwriters, and which are customarily delivered in underwritten offerings, to evidence the continued validity of the representations and warranties of the Company and the Guarantors made pursuant to clause (1) above and to evidence compliance with any customary conditions contained in an underwriting agreement; and

(xviii) so long as any Registrable Securities remain outstanding, cause each Additional Guarantor upon the creation or acquisition by the Company of such Additional Guarantor, to execute a counterpart to this Agreement in the form attached hereto as Annex A and to deliver such counterpart, together with an opinion of counsel as to the enforceability thereof against such entity, to the Initial Purchasers no later than five Business Days following the execution thereof.

(b) In the case of a Shelf Registration Statement, the Company may require each Holder of Registrable Securities to furnish to the Company a Notice and Questionnaire and such other information regarding such Holder and the proposed disposition by such Holder of such Registrable Securities as the Company and the Guarantors may from time to time reasonably request in writing.

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(c) Each Holder of Registrable Securities covered in a Shelf Registration Statement and each Participating Broker-Dealer intending to use the Prospectus included in the Registration Statement for resales of Exchange Securities agrees that, upon receipt of any notice from the Company and the Guarantors of the happening of any event of the kind described in Section 3(a)(vi)(3) or 3(a)(vi)(5) hereof, such Person will forthwith discontinue disposition of Registrable Securities pursuant to the Shelf Registration Statement or use of the Prospectus or any Free Writing Prospectus until such Person’s receipt of the copies of the supplemented or amended Prospectus and any Free Writing Prospectus contemplated by Section 3(a)(x) hereof and, if so directed by the Company and the Guarantors, such Holder will deliver to the Company and the Guarantors all copies in its possession, other than permanent file copies then in such Holder’s possession, of the Prospectus and any Free Writing Prospectus covering such Registrable Securities that is current at the time of receipt of such notice.

(d) If the Company and the Guarantors shall give any notice to suspend the disposition of Registrable Securities pursuant to a Registration Statement, the Company and the Guarantors shall extend the period during which such Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from and including the date of the giving of such notice to and including the date when the Holders of such Registrable Securities shall have received copies of the supplemented or amended Prospectus or any Free Writing Prospectus necessary to resume such dispositions. The Company and the Guarantors may give any such notice only twice during any 365-day period and any such suspensions shall not exceed 30 days for each suspension and there shall not be more than two suspensions in effect during any 365-day period.

(e) The Holders of Registrable Securities covered by a Shelf Registration Statement who desire to do so may sell such Registrable Securities in an Underwritten Offering. In any such Underwritten Offering, the investment bank or investment banks and manager or managers (each an “Underwriter”) that will administer the offering will be selected by the Holders of a majority in principal amount of the Registrable Securities included in such offering.

4. Participation of Broker-Dealers in Exchange Offer. (a) The Staff has taken the position that any broker-dealer that receives Exchange Securities for its own account in the Exchange Offer in exchange for Securities that were acquired by such broker-dealer as a result of market-making or other trading activities (a “Participating Broker-Dealer”) may be deemed to be an “underwriter” within the meaning of the Securities Act and must deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Securities.

The Company and the Guarantors understand that it is the Staff’s position that if the Prospectus contained in the Exchange Offer Registration Statement includes a plan of distribution containing a statement to the above effect and the

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means by which Participating Broker-Dealers may resell the Exchange Securities, without naming the Participating Broker-Dealers or specifying the amount of Exchange Securities owned by them, such Prospectus may be delivered by Participating Broker-Dealers (or, to the extent permitted by law, made available to purchasers) to satisfy their prospectus delivery obligation under the Securities Act in connection with resales of Exchange Securities for their own accounts, so long as the Prospectus otherwise meets the requirements of the Securities Act.

(b) In light of the above, and notwithstanding the other provisions of this Agreement, the Company and the Guarantors agree to amend or supplement the Prospectus contained in the Exchange Offer Registration Statement for a period of up to 180 days after the last Exchange Date (as such period may be extended pursuant to Section 3(d) of this Agreement), in order to expedite or facilitate the disposition of any Exchange Securities by Participating Broker-Dealers consistent with the positions of the Staff recited in Section 4(a) above. The Company and the Guarantors further agree that Participating Broker-Dealers shall be authorized to deliver such Prospectus (or, to the extent permitted by law, make available) during such period in connection with the resales contemplated by this Section 4.

(c) The Initial Purchasers shall have no liability to the Company, any Guarantor or any Holder with respect to any request that they may make pursuant to Section 4(b) above.

5. Indemnification and Contribution. (a) The Company and each Guarantor, jointly and severally, agree to indemnify and hold harmless each Initial Purchaser and each Holder, their respective affiliates, directors and officers and each Person, if any, who controls any Initial Purchaser or any Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, reasonable legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based upon, (1) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or (2) any untrue statement or alleged untrue statement of a material fact contained in any Prospectus, any Free Writing Prospectus or any “issuer information” (“Issuer Information”) filed or required to be filed pursuant to Rule 433(d) under the Securities Act, or any omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, (i) any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to any Initial Purchaser or information

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relating to any Holder furnished to the Company in writing through JPMorgan or any selling Holder, respectively expressly for use therein or (ii) the use of any such Registration Statement or any Prospectus or any Free Writing Prospectus after notice has been given to Holders pursuant to Section 3(a)(vi)(5) prior to such time as the Company furnishes an amended or supplemented prospectus pursuant to Section 3(a)(x). In connection with any Underwritten Offering permitted by Section 3, the Company and the Guarantors, jointly and severally, will also indemnify the Underwriters, if any, selling brokers, dealers and similar securities industry professionals participating in the distribution, their respective affiliates and each Person who controls such Persons (within the meaning of the Securities Act and the Exchange Act) to the same extent as provided above with respect to the indemnification of the Holders, if requested in connection with any Registration Statement, any Prospectus, any Free Writing Prospectus or any Issuer Information.

(b) Each Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, the Guarantors, the Initial Purchasers and the other selling Holders, the directors of the Company and the Guarantors, each officer of the Company and the Guarantors who signed the Registration Statement and each Person, if any, who controls the Company, the Guarantors, any Initial Purchaser and any other selling Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to such Holder furnished to the Company in writing by such Holder expressly for use in any Registration Statement, any Prospectus and any Free Writing Prospectus.

(c) If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any Person in respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such Person (the “Indemnified Person”) shall promptly notify the Person against whom such indemnification may be sought (the “Indemnifying Person”) in writing; provided that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under paragraph (a) or (b) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise than under paragraph (a) or (b) above. If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others entitled to indemnification pursuant to this Section 5 that the Indemnifying Person may designate in such proceeding and shall pay the

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reasonable fees and expenses of such proceeding and shall pay the reasonable fees and expenses of such counsel related to such proceeding, as incurred. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded after consultation with legal counsel that there may be legal defenses available to it that are different from or in addition to those available to the Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such reasonable fees and expenses shall be reimbursed as they are incurred. Any such separate firm (x) for any Initial Purchaser, its affiliates, directors and officers and any control Persons of such Initial Purchaser shall be designated in writing by JPMorgan, (y) for any Holder, its directors and officers and any control Persons of such Holder shall be designated in writing by the Majority Holders and (z) in all other cases shall be designated in writing by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested that an Indemnifying Person reimburse the Indemnified Person for reasonable fees and expenses of counsel as contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by the Indemnifying Person of such request and (ii) the Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement. No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement (A) includes an unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (B) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.

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(d) If the indemnification provided for in paragraphs (a) and (b) above is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors from the offering of the Securities and the Exchange Securities, on the one hand, and by the Holders from receiving Securities or Exchange Securities registered under the Securities Act, on the other hand, or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company and the Guarantors on the one hand and the Holders on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company and the Guarantors on the one hand and the Holders on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and the Guarantors or by the Holders and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

(e) The Company, the Guarantors and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 5 were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any reasonable legal or other expenses incurred by such Indemnified Person in connection with any such action or claim. Notwithstanding the provisions of this Section 5, in no event shall a Holder be required to contribute any amount in excess of the amount by which the total price at which the Securities or Exchange Securities sold by such Holder exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The Holders’ obligations to contribute pursuant to this Section 5 are several and not joint.

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(f) The remedies provided for in this Section 5 are not exclusive and shall not limit any rights or remedies that may otherwise be available to any Indemnified Person at law or in equity.

(g) The indemnity and contribution provisions contained in this Section 5 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of the Initial Purchasers or any Holder or any Person controlling any Initial Purchaser or any Holder, or by or on behalf of the Company or the Guarantors or the officers or directors of or any Person controlling the Company or the Guarantors, (iii) acceptance of any of the Exchange Securities and (iv) any sale of Registrable Securities pursuant to a Shelf Registration Statement.

6. General.

(a) No Inconsistent Agreements. The Company and the Guarantors represent, warrant and agree that (i) the rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of any other outstanding securities issued or guaranteed by the Company or any Guarantor under any other agreement and (ii) neither the Company nor any Guarantor has entered into, or on or after the date of this Agreement will enter into, any agreement that is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement or otherwise conflicts with the provisions hereof.

(b) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company and the Guarantors have obtained the written consent of Holders of at least a majority in aggregate principal amount of the outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or consent; provided that no amendment, modification, supplement, waiver or consent to any departure from the provisions of Section 5 hereof shall be effective as against any Holder of Registrable Securities unless consented to in writing by such Holder. Any amendments, modifications, supplements, waivers or consents pursuant to this Section 6(b) shall be by a writing executed by each of the parties hereto.

(c) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, telex, telecopier, or any courier guaranteeing overnight delivery (i) if to a Holder, at the most current address given by such Holder to the Company by means of a notice given in accordance with the provisions of this Section 6(c), which address initially is, with respect to the Initial Purchasers, the address set forth in the Purchase Agreement; (ii) if to the Company and the Guarantors, initially at the Company’s address set forth in the Purchase Agreement and

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thereafter at such other address, notice of which is given in accordance with the provisions of this Section 6(c); and (iii) to such other persons at their respective addresses as provided in the Purchase Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this Section 6(c). All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt is acknowledged, if telecopied; and on the next Business Day if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee, at the address specified in the Indenture.

(d) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders; provided that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Registrable Securities in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all the terms of this Agreement, and by taking and holding such Registrable Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement and such Person shall be entitled to receive the benefits hereof. The Initial Purchasers (in their capacity as Initial Purchasers) shall have no liability or obligation to the Company or the Guarantors with respect to any failure by a Holder to comply with, or any breach by any Holder of, any of the obligations of such Holder under this Agreement.

(e) Third Party Beneficiaries. Each Holder shall be a third party beneficiary to the agreements made hereunder between the Company and the Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights or the rights of other Holders hereunder.

(f) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

(g) Headings. The headings in this Agreement are for convenience of reference only, are not a part of this Agreement and shall not limit or otherwise affect the meaning hereof.

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(h) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

(i) Entire Agreement; Severability. This Agreement contains the entire agreement between the parties relating to the subject matter hereof and supersedes all oral statements and prior writings with respect thereto. If any term, provision, covenant or restriction contained in this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable or against public policy, the remainder of the terms, provisions, covenants and restrictions contained herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated. The Company, the Guarantors and the Initial Purchasers shall endeavor in good faith negotiations to replace the invalid, void or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, void or unenforceable provisions.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

BROCADE COMMUNICATIONS SYSTEMS, INC.

By:

Name:

Title:

BROCADE COMMUNICATIONS SYSTEMS SKYPORT LLC

By:

Name:

Title:

INRANGE TECHNOLOGIES CORPORATION

By:

Name:

Title:

MCDATA CORPORATION

By:

Name:

Title:

MCDATA SERVICES CORPORATION

By:

Name:

Title:

STRATEGIC BUSINESS SYSTEMS, INC.

By:

Name:

Title:

24

FOUNDRY NETWORKS, LLC

By:

Name:

Title:

Confirmed and accepted as of the date first above written:

J.P. MORGAN SECURITIES INC.

For itself and on behalf of the

  several Initial Purchasers

By
	Authorized Signatory

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Schedule 1

Guarantors

BROCADE COMMUNICATIONS SYSTEMS SKYPORT LLC

INRANGE TECHNOLOGIES CORPORATION

MCDATA CORPORATION

MCDATA SERVICES CORPORATION

STRATEGIC BUSINESS SYSTEMS, INC.

FOUNDRY NETWORKS, LLC

Annex A

Counterpart to Registration Rights Agreement

The undersigned hereby absolutely, unconditionally and irrevocably agrees as a Guarantor (as defined in the Registration Rights Agreement, dated as of January [20], 2010, by and among Brocade Communications Systems, Inc., a Delaware corporation (the “Company”), the guarantors party thereto and J.P. Morgan Securities Inc., on behalf of itself and the other Initial Purchasers, relating to the Company’s [6.625] [6.875]% Senior Secured Notes due [2018][2020]) to be bound by the terms and provisions of such Registration Rights Agreement.

IN WITNESS WHEREOF, the undersigned has executed this counterpart as of                             .

[NAME]

By:

Name:

Title:

Exhibit B

Form of Letter

Qatalyst Partners LP

3 Embarcadero Center, 6^th Floor

San Francisco, CA 94111

January     , 2010

Brocade Communications Systems, Inc.

1745 Technology Drive

San Jose, CA 95110

Attention: Richard Deranleau

Ladies and Gentlemen:

Reference is hereby made to the purchase agreement dated January     , 2010 (the “Purchase Agreement”) between you and J.P. Morgan Securities Inc., as representative of the several initial purchasers named therein (the “Representative”). Terms defined in the Purchase Agreement shall have such meanings when used herein.

We confirm that Qatalyst Partners LP is a member of the Financial Industry Regulatory Authority (“FINRA”) in good standing and a broker-dealer registered as such under the Securities Exchange Act of 1934, as amended.

We also confirm that, in connection with the offering of the Securities contemplated under the Purchase Agreement, neither Qatalyst Partners LP nor any of its affiliates, directly or indirectly, (a) has sold or will sell, has offered or will offer for sale, has solicited or will solicit offers to buy, the Securities, or (b) has taken or will take any action that, if taken by the Company, would cause there to be a misrepresentation or breach of covenant pursuant to Section 3(tt), (uu), or (ww) or Section 4(m), (n) or (o) of the Purchase Agreement.

This letter is being delivered solely to you in connection with the offering of the Securities and may not be relied upon by any other party or for any other purpose without our prior written consent. We acknowledge that a copy of this letter may be disclosed to the Representatives in accordance with Section 6(s) of the Purchase Agreement.

Sincerely,

Qatalyst Partners LP

By:

Name:

Title:

2

EX-10.10

Exhibit 10.10

REAL ESTATE SALE AGREEMENT

[1600 Technology Drive, San Jose, California]

THIS REAL ESTATE SALE AGREEMENT (this “Agreement”) is made effective as of January 25, 2010 (the “Effective Date”), by and between Brocade Communications Systems Skyport LLC, a Delaware limited liability company (“Seller”), and
CA-Skyport III Limited Partnership, a Delaware limited partnership (“Purchaser”). In consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser agree as follows:

1. PURCHASE AND SALE OF PROPERTY. Subject to and in accordance with the terms and conditions set forth in this Agreement, Purchaser shall purchase from Seller and Seller shall sell to Purchaser a certain parcel of real estate (the “Real Property”) in the City of San Jose, County of Santa Clara, State of California, which parcel is more particularly described in attached Exhibit A, and upon which is located an office building commonly known as “1600 Technology Drive,” together with (a) all buildings and improvements owned by Seller, and any and all of Seller’s rights, easements, licenses and privileges presently thereon or appertaining thereto (the “Improvements”), (b) Seller’s right, title and interest, to the extent transferable, in and to (i) the right to use the name “1600 Technology Drive”, (ii) all licenses and permits relating solely to the Property, (iii) any blueprints, plans, specifications, maps or drawings relating solely to the Property (it being agreed that Seller shall be obligated to deliver possession of the foregoing only to the extent in Seller’s possession or control), and (iv) any guaranties or warranties relating to the Improvements; and (c) equipment located within Garage B (as defined in the Skyport Plaza (Adjusted Parcel II) Declaration of Common Easements, Covenants, Conditions and Restrictions (the “Declaration”)) and listed on Schedule 1 to Exhibit G attached hereto (the “Exterior Equipment”) (all of the foregoing, collectively referred to in this Agreement as the “Property”); provided, however, the term “Property” expressly excludes all property listed on Exhibit B attached hereto.

2. CONSIDERATION. The total consideration to be paid by Purchaser to Seller for the purchase of the Property is THIRTY MILLION THREE HUNDRED FIFTY THOUSAND and No/100 Dollars ($30,350,000.00) (the “Consideration”).

2.1 Deposit. Within two (2) business days after the Effective Date, Purchaser shall deposit in escrow with First American Title Insurance Company, with an address of 1737 North First Street, Suite 500, San Jose, California 95112, telephone: (408) 451-7800, contact Dian Blair (“Escrow Holder”), a deposit in the amount of Four Million Dollars ($4,000,000.00) (the “Deposit”), which shall be fully non-refundable to the extent provided in this Section 2.1. If Purchaser fails to make the Deposit on or before the fifth (5th) business day following the Effective Date, then this Agreement shall terminate, and shall be of no force or effect. All sums constituting the Deposit shall be held in a federally insured interest-bearing account. If the sale of the Property as contemplated hereunder is consummated, the Deposit plus interest accrued thereon shall be credited against the Consideration. If the sale of the Property is not consummated because of the failure of any condition precedent or Seller’s default hereunder, then the

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Deposit plus interest accrued thereon shall immediately be returned to Purchaser. If the sale is not consummated because of Purchaser’s default hereunder, the Deposit, together with interest accrued thereon shall be paid to and retained by Seller as liquidated damages, in accordance with the provision below.

THE PARTIES HAVE AGREED THAT SELLER’S ACTUAL DAMAGES, IN THE EVENT OF A FAILURE TO CONSUMMATE THIS SALE BECAUSE OF A PURCHASER DEFAULT WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. AFTER NEGOTIATION, THE PARTIES HAVE AGREED THAT, CONSIDERING ALL THE CIRCUMSTANCES EXISTING ON THE DATE OF THIS AGREEMENT, THE AMOUNT OF THE DEPOSIT, PLUS ALL INTEREST ACCRUED THEREON, IS A REASONABLE ESTIMATE OF THE DAMAGES THAT SELLER WOULD INCUR IN SUCH EVENT; PROVIDED, HOWEVER, THAT THIS PROVISION WILL NOT COVER OR APPLY TO, AND SHALL NOT LIQUIDATE OR LIMIT SELLER’S RIGHT TO RECOVER OR PURCHASER’S LIABILITY FOR ATTORNEYS’ FEES OR FOR BREACH BY PURCHASER OF ANY OF PURCHASER’S INDEMNITY OBLIGATIONS UNDER THIS AGREEMENT. BY PLACING ITS INITIALS BELOW, EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED, AT THE TIME THIS AGREEMENT WAS MADE, THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION.

INITIALS: Seller              Purchaser             

2.2 Balance of Consideration. At Closing, Purchaser shall pay to Seller the Consideration, plus or minus the prorations described in this Agreement (such amount, as adjusted, being referred to as the “Cash Balance”). Purchaser shall pay the Cash Balance by federal funds wire transferred to First American Title Insurance Company, located in San Jose, California (“Escrow Agent”) .

3. DUE DILIGENCE AND TITLE REVIEW

3.1 Delivery of Due Diligence Materials by Seller. To the extent within the possession or control of Seller, Seller has previously delivered to Purchaser and Purchaser’s representatives any environmental studies, soils studies, plans, specifications, maps, surveys and other similar materials relating to the physical and environmental condition of the Property (“Reports”). Purchaser acknowledges and understands that all such materials were made available by Seller only for Purchaser’s convenience in making its own examination and determination as to whether it wishes to purchase the Property, and, in so doing, Purchaser shall rely exclusively upon its own independent investigation and evaluation of every aspect of the Property and not on any materials supplied by Seller. Without limiting the generality of the foregoing, Seller has also previously made available the following due diligence items (together with the Reports, collectively, “Due Diligence Items”): (a) to the extent in the possession of Seller or Seller’s property manager, any plans and specifications for the Property; (b) copies of all service contracts

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or service agreements relating to the operation and maintenance of the Property (collectively, the “Contracts”); (c) property tax bills for the last two (2) fiscal tax years and the property tax bill for the current year to the extent in the possession of Seller; and (d) to the extent in the possession of Seller, operating statements for the Property for the last two (2) calendar years and the current year-to-date.

3.2 Evidence of Title. Seller has heretofore caused to be delivered to Purchaser (a) a current preliminary title report on the Real Property dated as of November 23, 2009, issued by First American Title Insurance Company, with an address of 1737 North First Street, San Jose, California 95112, telephone: (408) 451-7800, contact Dian Blair (the “Title Insurer”) under Order Number: NCS-421391-SC (the “Title Report”), (b) available copies of all title exception documents referred to in the Title Report, and (c) any existing survey of the Real Property and the Improvements in Seller’s possession, if any (the “Survey”). In addition, Seller has ordered, and will provide to Purchaser when it is available, a current ALTA/ACSM survey of the Real Property and the Improvements prepared by Kier and Wright (the “Updated Survey”). At Closing, as a condition precedent to Purchaser’s obligations hereunder, Title Insurer shall issue an ALTA Owner’s Title Insurance Policy, with liability in the amount of the Purchase Price, showing title vested in Purchaser or its assignee, subject only to those exceptions which are listed on Exhibit D (the “Permitted Exceptions”).

4. CLOSING. The payment of the Consideration, the transfer of title to the Property and the satisfaction of all other terms and conditions of the transaction contemplated by this Agreement (the “Closing”) shall occur on January 28, 2010, or such earlier date as the parties may mutually agree (such day being sometimes referred to as the “Closing Date”), through escrow at the San Jose office of the Title Insurer.

4.1 Seller’s Closing Deliveries. At Closing, Seller shall execute (as necessary), or cause to be executed, and deliver to Purchaser (either through escrow or as otherwise provided below) each of the documents described below: (a) one original Grant Deed, in the form of Exhibit E, subject to the exceptions listed in such form and the Permitted Exceptions; (b) Seller’s non-foreign affidavit, in the form attached hereto as Exhibit H, and a properly executed California Form 593-C certifying that Seller is qualified to do business in California; (c) two original counterparts of the Closing Statement (as defined in Section 4.3 below); (d) such transfer tax forms as are required by law (“Transfer Documents”); (e) two original counterparts of the Leaseback (as defined in Section 5 below) between Purchaser and Seller; (f) a Bill of Sale (the “Bill of Sale”) in the form attached hereto as Exhibit G; and (g) an Assignment of Intangibles (the “Assignment of Intangibles”) from Seller to Purchaser in the form attached hereto as Exhibit F. The Closing Statement may be signed in facsimile counterparts on the Closing Date. To the extent available, Seller shall leave all of the original plans and specifications, licenses and permits pertaining to the Property at the premises.

4.2 Purchaser’s Closing Deliveries. At Closing, Purchaser shall deliver or cause to be delivered to Seller executed counterparts of the Closing Statement, the Leaseback, the Assignment of Intangibles and the Transfer Documents, together with the Cash Balance described in Section 2.1 above, and such evidence of Purchaser’s power and authority as Seller or Title Insurer may reasonably request.

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4.3 Closing Prorations and Adjustments. The provisions of this Section 4.3 shall survive the Closing. The Title Company shall prepare a statement of the prorations and adjustments required by this Agreement (the “Closing Statement”), and submit it to Purchaser and Seller for approval at least one (1) business day prior to the Closing Date. The items listed below are to be equitably prorated or adjusted as of the close of business on the Closing Date, except as provided otherwise below, it being understood that for purposes of prorations and adjustments, Seller shall be deemed the owner of the Property on such day and Purchaser shall be deemed the owner of the Property as of the day after the Closing Date.

4.3.1 Taxes and Fees. Real property taxes, special taxes, and any installment payments on account of assessments or bonds applicable to the Property or any part thereof, and annual permits and/or inspection fees (calculated on the basis of the period covered) shall be prorated as of the Closing Date on the basis of a 365-day year. The remaining principal amount (after the application of the prorated portion of any installment applicable to the period prior to the Closing Date) of any and all assessments and/or bonds which encumber the Property or any part thereof shall not be prorated or apportioned, but shall be assumed in full by Purchaser as of Closing (and Purchaser shall not be entitled to a credit from Seller against the Purchase Price in the amount of such assessments and/or bonds).

4.3.2 Utility Deposits. Seller shall be entitled to recover any and all deposits with respect to the Property held by any utility company as of the Closing Date.

4.3.3 Utilities. Water, electric, telephone and all other utility and fuel charges, fuel on hand (at cost plus sales tax), and any other payments to utility companies shall be prorated to the extent not paid by Seller (or its affiliate) directly to third parties or to Purchaser as additional rent under the Leaseback.

4.3.4 Leaseback. To the extent that, pursuant to the Leaseback, Seller (or its affiliate) is paying the charges for any expenses subject to proration pursuant to this Section 4.3 directly to the applicable governmental entity, utility or service provider, or other third party, prorations of such expenses shall be made with respect to such expenses upon termination of the Leaseback, rather than on the Closing Date. To the extent that, pursuant to the Leaseback, Seller (or its affiliate) is paying the charges for any expenses subject to proration pursuant to this Section 4.3 in the form of operating expense reimbursements to Purchaser under the Leaseback, prorations of such expenses shall be performed at the Closing and reconciliations of operating expenses shall be made in accordance with the terms of the Leaseback.

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4.4 Reservation of Rights to Contest. Notwithstanding anything to the contrary contained in this Agreement, Seller reserves the exclusive right to meet with governmental officials and to contest any reassessment or assessment of the Property or any portion thereof and to attempt to obtain a refund for any taxes previously paid. Seller shall retain all rights with respect to any refund of taxes applicable to any period prior to the Closing Date. Purchaser shall cooperate with Seller, at Seller’s reasonable request and at Seller’s expense, if necessary in connection with any such contest or reassessment, which cooperation may include executing applications or other documents.

4.5 Transaction Costs. Except as otherwise specifically set forth in this Agreement, the closing costs and other costs incurred in connection with the transactions contemplated by this Agreement shall be paid as follows: (a) Seller shall pay (i) the base premium payable to the Title Company in connection with the issuance of an CLTA standard owner’s title policy, (ii) all recording fees for title clearance documents, (iii) county transfer taxes, (iv) one-half of city transfer taxes, (v) all legal fees payable to attorneys retained by Seller, and (vi) one-half of all escrow fees payable to the Escrow Agent; and (b) Purchaser shall pay for (i) title insurance costs and fees for the ALTA extended owner’s coverage (except those expressly the responsibility of Seller as provided above), including fees for extended coverage, endorsements, coinsurance or reinsurance, and any loan policy charges, (ii) one-half of the city transfer taxes, (iii) recording charges (except those expressly the responsibility of Seller as provided above), (iv) costs incurred in connection with obtaining any survey of the Property that Purchaser elects to obtain, and (v) one-half of all escrow fees payable to Escrow Agent. At Closing, Purchaser also shall reimburse Seller for the cost of the Updated Survey in the amount of $4,800. All other closing and other transaction costs shall be allocated according to customary practice in San Jose, California. Seller and Purchaser shall, however, be responsible for the fees of their respective attorneys. The provisions of this Section 4.5 shall survive any termination of this Agreement.

4.6 Reprorations. Notwithstanding anything contained herein to the contrary, all reprorations contemplated by this Agreement shall be completed within one (1) year of Closing (subject to extension solely as necessary due to the unavailability of final information, but in no event to exceed two (2) years after Closing). The provisions of this Section 4.7 shall survive the Closing.

5. LEASEBACK. As of the Closing Date, Purchaser shall lease the entire Building to Seller’s parent corporation, Brocade Communications Systems, Inc., pursuant to a written lease in the form attached hereto as Exhibit C (the “Leaseback”).

6. BROKERAGE. Seller agrees to pay any brokerage commission due to Studley for services rendered in connection with the sale and purchase of the Property pursuant to separate agreement between Seller and Studley. Seller and Purchaser shall each indemnify and hold the other harmless from and against any and all claims of all other brokers and finders claiming by, through or under the indemnifying party and in any way related to the sale and purchase of the Property, this Agreement or otherwise, including, without limitation, attorneys’ fees and expenses incurred by the indemnified party in connection with such claim.

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7. DEFAULT AND REMEDIES.

7.1 Purchaser’s Remedies. Notwithstanding anything to the contrary contained in this Agreement, if Closing does not occur due to a Seller default, then, as Purchaser’s sole and exclusive remedy hereunder and at Purchaser’s option, either (a) Purchaser may terminate this Agreement and recover the Deposit and interest accrued thereon; or (b) upon notice to Seller not more than ten (10) days after Purchaser becomes aware of such failure, and provided an action is filed within thirty (30) days thereafter, Purchaser may seek specific performance of this Agreement but not damages. Purchaser’s failure to seek specific performance as aforesaid shall constitute its election to proceed under clause (a) above.

7.2 Seller’s Remedies. Purchaser and Seller acknowledge that it would be extremely impractical and difficult to ascertain the actual damages which would be suffered by Seller if Purchaser fails to consummate the purchase and sale contemplated herein for any reason other than Seller’s default hereunder in any material respect or the failure of a condition precedent to Purchaser’s obligation to close hereunder. Purchaser and Seller have considered carefully the expenses of Seller incurred in connection with the preparation of this Agreement and Seller’s performance hereunder, and the other damages, general and special, which Purchaser and Seller realize and recognize Seller will sustain but which Seller cannot at this time calculate with absolute certainty. Based on all those considerations, Purchaser and Seller have agreed that the damage to Seller in such event would reasonably be expected to be equal to the sum of the Deposit. Accordingly, if Purchaser fails to consummate the purchase of the Property in accordance with the terms of this Agreement solely as a result of a default by Purchaser, then (i) Seller shall have the right to retain the entire Deposit as full and complete liquidated damages, and (ii) the ROFO Agreement shall terminate and thereafter be of no force or effect.

THE PARTIES FURTHER ACKNOWLEDGE AND AGREE THAT (A) PURCHASER SEEKS TO LIMIT ITS LIABILITY UNDER THIS AGREEMENT TO THE AMOUNT OF THE DEPOSIT IN THE EVENT THIS AGREEMENT IS TERMINATED AND THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT DOES NOT CLOSE DUE TO A DEFAULT OF PURCHASER UNDER THIS AGREEMENT, AND (B) THE PAYMENT OF SUCH LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND 1677.

Seller:              Purchaser:             

7.3 Post-Closing Remedies. After Closing, Seller and Purchaser shall, subject to the terms and conditions of this Agreement, have such rights and remedies as are available at law or in equity, except that neither Seller nor Purchaser shall be entitled to recover from the other consequential or special damages.

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8. CONDITIONS PRECEDENT.

8.1 Due Diligence. Prior to the Effective Date, Purchaser has inspected the Property, obtained any necessary internal approvals to the transaction, and satisfied itself as to all matters relating to the Property, including, but not limited to, environmental, engineering, structural, financial, title and survey matters, and the Due Diligence Items.

8.2 Accuracy of Seller’s Representations and Warranties. As a condition to the obligations of Purchaser to close hereunder, each of Seller’s representations and warranties set forth in Section 9.1 below shall be materially true and correct as of the Closing.

8.3 Closing Deliveries. It shall be a condition to the obligations of Purchaser to close hereunder that Seller has executed and delivered to Purchaser or Escrow Agent the documents described in Section 4.1, and it shall be a condition to the obligations of Seller to close hereunder that Purchaser has executed and delivered to Seller or Escrow Agent the documents described in Section 4.2 and has delivered the Cash Balance to Escrow Agent pursuant to Section 2.2 .

9. REPRESENTATIONS, WARRANTIES AND COVENANTS.

9.1 Seller’s Representations and Warranties. Subject to Section 9.3 below, Seller hereby represents and warrants to Purchaser as to the following matters, as of the date of this Agreement:

9.1.1 Organization and Authority. Seller is duly organized and in good standing under the laws of the state of its organization. Seller has the power and authority under its organizational documents to sell, transfer, convey and deliver the Property to be sold and purchased hereunder, and all action and approvals required thereunder have been duly taken and obtained.

9.1.2 No Conflict. The execution and delivery of this Agreement, the consummation of the transactions provided for herein and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions of, or constitute a default under, any provision of Seller’s organizational documents.

9.1.3 Condemnation. Seller has not received from any governmental authority any written notice of any pending or threatened condemnation of the Property or any part thereof.

9.1.4 Litigation. Seller has not been served with any litigation which is still pending against Seller with respect to its ownership or operation of the Property.

9.1.5 Compliance. Seller has not received from any governmental authority any written notice of any current violation by the Property of any municipal, state and federal and other governmental statutes, rules, requirements, regulations, laws and ordinances, including zoning ordinances and regulations,

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and covenants, easements and restrictions of record governing and relating to use (as general office and administrative, and communications laboratory purposes), occupancy or possession of the Property, or to the use, storage generation or disposal of hazardous or toxic materials or substances (all of the foregoing collectively, “Regulations”) applicable to the Property, except with respect to violations resulting from acts or omissions of Purchaser, its employees or agents, copies of which have been provided to Purchaser. Except with respect to violations resulting from acts or omissions of Purchaser (copies of which have been provided to Purchaser), its employees or agents, Seller is in compliance with any past notices of past violations of Regulations.

9.1.6 No Leases. There are no leases, licenses or occupancy agreement in effect with respect to the Property (other than the Leaseback, which will be entered into at the Closing).

9.1.7 Due Diligence Items. To Seller’s Knowledge: all Due Diligence Items in Seller’s possession or control which disclose information that materially affects the Property have been provided to Purchaser, all of the Due Diligence Items provided as copies are correct and complete copies of the original of such items, and none of the Due Diligence Items provided to Purchaser has been amended, modified or terminated by Seller except as disclosed in writing to Purchaser.

When used in this Agreement, the term “Seller’s Knowledge” shall mean and be limited to the actual (and not constructive) knowledge of Duncan Schmidt and Victor Garcia, without inquiry other than a review of Seller’s files with respect to the Property. Seller represents and warrants to Purchaser that Duncan Schmidt is the person with day to day responsibility for this transaction and for the assembly and delivery of due diligence items in connection herewith on behalf of Seller, and that Victor Garcia is the person with day to day management responsibility for the Property on behalf of Seller.

9.1.8 Contracts. There are no contracts or agreements relating to the ownership, operation and maintenance of the Property that will be binding upon Purchaser after the Closing.

9.1.9 OFAC. Seller (a) is not acting, directly or indirectly, for or on behalf of any person, group, entity or nation named by any Executive Order or the United States Department of the Treasury as a terrorist, “Specially Designated and Blocked Persons”, or other banned or blocked person, group, entity, nation or transaction pursuant to any law, order, rule, or regulation that is enforced or administered by the Office of Foreign Asset Control (“OFAC”) of the United States Department of the Treasury; and (b) is not engaged, directly or indirectly, in any dealings or transactions and is not otherwise associated with such person, group, entity or nation.

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9.2 Purchaser’s Representations and Warranties. Subject to Section 9.5 below, Purchaser represents and warrants that:

9.2.1 ERISA. Purchaser’s rights under this Agreement, the assets it shall use to acquire the Property and, upon its acquisition by Purchaser, the Property itself, do not and shall not constitute plan assets within the meaning of 29 C.F.R. §2510.3-101, and Purchaser is not a “governmental plan” within the meaning of section 3(32) of the Employee Retirement Income Security Act of 1974, as amended, and the execution of this Agreement and the purchase of the Property by Purchaser is not subject to state statutes regulating investments of and fiduciary obligations with respect to governmental plans.

9.2.2 Organization and Authority. Purchaser is duly organized and in good standing under the laws of the state of its organization. Purchaser has the power and authority under its organizational documents to perform its obligations hereunder, and all action and approvals required thereunder have been duly taken and obtained.

9.2.3 No Conflict. The execution and delivery of this Agreement, the consummation of the transactions provided for herein and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions of, or constitute a default under, any provision of Purchaser’s organizational documents.

9.2.4 No Bankruptcy. Purchaser has not (i) made a general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by Purchaser’s creditors, (iii) suffered the appointment of a receiver to take possession of all, or substantially all, of Purchaser’s assets, (iv) suffered the attachment or other judicial seizure of all, or substantially all, of Purchaser’s assets, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement, extension or composition to its creditors generally.

9.2.5 OFAC. Purchaser (a) is not acting, directly or indirectly, for or on behalf of any person, group, entity or nation named by any Executive Order or the United States Department of the Treasury as a terrorist, “Specially Designated and Blocked Persons”, or other banned or blocked person, group, entity, nation or transaction pursuant to any law, order, rule, or regulation that is enforced or administered by OFAC of the United States Department of the Treasury; and (b) is not engaged, directly or indirectly, in any dealings or transactions and is not otherwise associated with such person, group, entity or nation.

9.3 Survival. Purchaser’s right to enforce the representations and warranties set forth in Section 9.1, shall survive the Closing, but only as to claims of which Purchaser notifies Seller in writing within six (6) months after Closing and brings legal action to enforce within one (1) year of Closing, and not otherwise. Seller’s right to enforce the representations and warranties set forth in Section 9.2 shall survive the Closing, provided Subsections 9.2.2 and 9.2.3 shall only survive the Closing as to claims of which Seller notifies Purchaser in writing within six (6) months after Closing, and brings legal action to enforce within one (1) year and not otherwise.

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10. LIMITATION OF LIABILITY. Notwithstanding anything to the contrary contained herein, if the Closing shall have occurred (and Purchaser shall not have waived, relinquished or released any applicable rights in further limitation), the aggregate liability of Seller arising pursuant to or in connection with the representations, warranties, indemnifications, covenants or other obligations (whether express or implied) of Seller under this Agreement (or any document executed or delivered in connection herewith) shall not exceed Four Million Dollars ($4,000,000.00) (the “Liability Limitation”). No constituent partner or member in or agent of Seller, nor any advisor, trustee, director, officer, member, partner, employee, beneficiary, shareholder, participant, representative or agent of any entity that is or becomes a constituent partner or member in Seller or an agent of Seller (“Seller’s Affiliates”) shall have any personal liability, directly or indirectly, under or in connection with this Agreement or any agreement made or entered into under or pursuant to the provisions of this Agreement, or any amendment or amendments to any of the foregoing made at any time or times, heretofore or hereafter, and Purchaser and its successors and assigns and, without limitation, all other persons and entities, shall look solely to Seller’s assets for the payment of any claim or for any performance, and Purchaser, on behalf of itself and its successors and assigns, hereby waives any and all such personal liability Notwithstanding anything to the contrary contained in this Agreement, neither the negative capital account of any constituent partner or member in Seller, nor any obligation of any constituent partner or member in any entity owning an interest (directly or indirectly) in Seller to restore a negative capital account or to contribute capital to Seller (or any entity owning an interest, directly or indirectly, in any other constituent partner or member of Seller), shall at any time be deemed to be the property or an asset of Seller or any such other partner or member (and neither Purchaser nor any of its successors or assigns shall have any right to collect, enforce or proceed against or with respect to any such negative capital account of such party’s obligations to restore or contribute). No advisor, trustee, director, officer, member, partner, employee, beneficiary, shareholder, participant, representative or agent of Purchaser or of any entity that is or becomes a member or an agent of Purchaser (“Purchaser’s Affiliates”) shall have any personal liability, directly or indirectly, under or in connection with this Agreement or any agreement made or entered into under or pursuant to the provisions of this Agreement, or any amendment or amendments to any of the foregoing made at any time or times, heretofore or hereafter, and Seller and its successors and assigns and, without limitation, all other persons and entities, shall look solely to Purchaser’s assets for the payment of any claim or for any performance, and Seller, on behalf of itself and its successors and assigns, hereby waives any and all such personal liability. The provisions of this Section 10 shall survive the Closing and any termination of this Agreement.

11. LOSS BY FIRE OR OTHER CASUALTY; CONDEMNATION. Purchaser shall be bound to purchase the Property for the full Consideration as required by the terms hereof, without regard to the occurrence or effect of any damage to or destruction of any Improvements or condemnation of any portion of the Property, provided: (a) the cost to repair any damage or destruction, or the diminution in the value of the remaining Property as a result of a partial condemnation, is fully insured (other than standard deductibles) and does not exceed five percent (5%) of the Consideration, and (b) at Closing Purchaser shall be credited against the Consideration the amount of any insurance proceeds or condemnation awards collected by Seller

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as a result of any such damage or destruction or condemnation plus the amount of any applicable insurance deductibles less any monies actually expended by Seller to repair any damage, or such proceeds shall be assigned to Purchaser if not then collected. If such damage or destruction, or the diminution in value resulting from such condemnation, does not satisfy clauses (a) and (b) of the preceding sentence, Purchaser may at its option either terminate this Agreement or consummate this purchase. If Purchaser proceeds with the purchase, all insurance proceeds and condemnation awards shall be paid over to Purchaser (or assigned if not yet collected) and all applicable deductible amounts shall be credited against the Purchase Price, less only such monies actually expended by Seller to repair any damage.

12. MISCELLANEOUS.

12.1 Entire Agreement. All understandings and agreements heretofore had between Seller and Purchaser with respect to the Property are merged in this Agreement, which, together with the exhibits hereto, fully and completely expresses the agreement of the parties. Purchaser acknowledges that it has inspected the Property and that it accepts the same in its “as is” condition subject to use, ordinary wear and tear and natural deterioration. Purchaser further acknowledges that, except as expressly provided in this Agreement, neither Seller nor any agent or representative of Seller has made, and Seller is not liable for or bound in any manner by, any express or implied warranties, guaranties, promises, statements, inducements, representations or information pertaining to the Property.

12.2 Assignment. Except as provided in Section 12.11 below, neither this Agreement nor any interest hereunder shall be assigned or transferred by Purchaser without Seller’s consent; provided, however, that no such consent shall be required with respect to Purchaser’s assignment of its right to purchase the Property under this Agreement to an entity controlled by, controlling, or under common control with, directly or indirectly, Purchaser; provided that upon any such assignment permitted hereunder, the Purchaser named herein shall not be released from liability to Seller for the performance of “Purchaser’s” obligations hereunder. Seller may assign or otherwise transfer its interest under this Agreement. As used in this Agreement, the term “Seller” shall be deemed to include any assignee or other transferee of any Seller. Upon any such transfer by a Seller, such Seller shall be relieved of any subsequently accruing liability under this Agreement. Subject to the foregoing, this Agreement shall inure to the benefit of and shall be binding upon Seller and Purchaser and their respective successors and assigns.

12.3 Modifications. This Agreement shall not be modified or amended except in a written document signed by Seller and Purchaser.

12.4 Time of Essence. Time is of the essence of this Agreement. In the computation of any period of time provided for in this Agreement or by law, the day of the act or event from which the period of time runs shall be excluded, and the last day of such period shall be included, unless it is a Saturday, Sunday, or legal holiday, in which case the period shall be deemed to run until the end of the next day which is not a Saturday, Sunday, or legal holiday.

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12.5 Governing Law. This Agreement shall be governed and interpreted in accordance with the laws of the state in which the Property is located.

12.6 Notices. All notices, requests, demands or other communications required or permitted under this Agreement shall be in writing and delivered personally, by facsimile transmission with confirmed receipt, or by overnight courier (such as Federal Express), addressed as follows below. All notices given in accordance with the terms hereof shall be deemed given when received or upon refusal of delivery. Either party hereto may change the address for receiving notices, requests, demands or other communication by notice sent in accordance with the terms of this Section 11.6.

If to Seller:

c/o Brocade Communications Systems, Inc.

1745 Technology Drive

San Jose, California 95110

Attention:  Michael Hirahara,

          VP, Global Real Estate & Facilities

Facsimile: 408/333-8101

With copy to:

Brocade Communications Systems, Inc.

1745 Technology Drive

San Jose, California 95110

Attention: Richard Deranleau, CFO

Facsimile: 408/333-5955

And to:

SSL Law Firm LLP

575 Market Street, Suite 2700

San Francisco, California 94105

Attention: Jodi Fedor

Facsimile: 415/814-6401

If to Purchaser:

CA-Skyport III Limited Partnership

c/o Equity Office Properties

Two North Riverside Plaza, Suite 2100

Chicago, Illinois 60606

Attention: Matt Koritz, General Counsel

Facsimile: 312/ 775-6574

With a copy to:

CA-Skyport III Limited Partnership

c/o Equity Office Properties

2655 Campus Drive, Suite 100

San Mateo, California 94403

Attention: John Moe

Facsimile: 650/ 372-3603

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And to:

Allen Matkins Leck Gamble Mallory & Natsis, LLP

1901 Avenue of the Stars, Suite 1800

Los Angeles, California 90067

Attention: Anton N. Natsis, Esq.

Facsimile: 310/788-2410

12.7 “AS IS” SALE. ACKNOWLEDGING PURCHASER’S OPPORTUNITY TO INSPECT THE PROPERTY, BUT SUBJECT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES PROVIDED BY SELLER IN THIS AGREEMENT, PURCHASER AGREES TO TAKE THE PROPERTY “AS-IS,” “WHERE-IS,” AND WITH ALL FAULTS AND CONDITIONS THEREON. ANY INFORMATION, REPORTS, STATEMENTS, DOCUMENTS OR RECORDS (COLLECTIVELY, THE “DISCLOSURES”) PROVIDED OR MADE TO PURCHASER OR ITS CONSTITUENTS BY SELLER OR ANY OF SELLER’S AFFILIATES CONCERNING THE CONDITION OF THE PROPERTY SHALL NOT BE REPRESENTATIONS OR WARRANTIES. PURCHASER SHALL NOT RELY ON SUCH DISCLOSURES, BUT RATHER, PURCHASER SHALL RELY ONLY ON ITS OWN INSPECTION OF THE PROPERTY. PURCHASER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO (A) THE NATURE, QUALITY OR CONDITION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY; (B) THE INCOME TO BE DERIVED FROM THE PROPERTY, (C) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH PURCHASER MAY CONDUCT THEREON, (D) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY; (E) THE HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY; OR (F) ANY OTHER MATTER WITH RESPECT TO THE PROPERTY, AND SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS REGARDING TERMITES OR WASTES, AS DEFINED BY THE U.S. ENVIRONMENTAL PROTECTION AGENCY REGULATIONS AT 40 C.F.R., OR ANY HAZARDOUS SUBSTANCE, AS DEFINED BY THE COMPREHENSIVE ENVIRONMENTAL RESPONSE COMPENSATION AND LIABILITY ACT OF 1980 (“CERCLA”), AS AMENDED, AND REGULATIONS PROMULGATED THEREUNDER. PURCHASER, ITS SUCCESSORS AND ASSIGNS, HEREBY WAIVE, RELEASE AND AGREE NOT TO

13

MAKE ANY CLAIM OR BRING ANY COST RECOVERY ACTION OR CLAIM FOR CONTRIBUTION OR OTHER ACTION OR CLAIM AGAINST SELLER OR SELLER’S AFFILIATES, AND BASED ON (A) ANY FEDERAL, STATE, OR LOCAL ENVIRONMENTAL OR HEALTH AND SAFETY LAW OR REGULATION, INCLUDING CERCLA OR ANY STATE EQUIVALENT, OR ANY SIMILAR LAW NOW EXISTING OR HEREAFTER ENACTED, (B) ANY DISCHARGE, DISPOSAL, RELEASE, OR ESCAPE OF ANY CHEMICAL, OR ANY MATERIAL WHATSOEVER, ON, AT, TO OR FROM THE PROPERTY, OR (C) ANY ENVIRONMENTAL CONDITIONS WHATSOEVER ON OR UNDER THE PROPERTY, OTHER THAN ENVIRONMENTAL CONDITIONS RESULTING FROM MIGRATION OR MATERIALS FROM OTHER PROPERTY OWNED OR OPERATED BY SELLER OR SELLER’S AFFILIATES AND FIRST BEING PRESENT ON OR UNDER THE PROPERTY AFTER CLOSING. PURCHASER REPRESENTS TO SELLER THAT, SUBJECT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES PROVIDED BY SELLER IN THIS AGREEMENT, PURCHASER HAS CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER DEEMS NECESSARY OR DESIRABLE TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO. UPON CLOSING, PURCHASER SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER’S INVESTIGATIONS, AND PURCHASER, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER AND SELLER’S AFFILIATES FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH PURCHASER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER AND SELLER’S AFFILIATES AT ANY TIME BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS AT THE PROPERTY, VIOLATIONS OF ANY APPLICABLE LAWS AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY, PROVIDED SUCH RELEASE SHALL NOT APPLY TO CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES) AGAINST SELLER OR SELLER’S AFFILIATES EITHER (i) PURSUANT TO OR ARISING OUT OF ANY SEPARATE AGREEMENT WITH PURCHASER OR (ii) IN THEIR CAPACITY AS OWNER OR OPERATOR OF PROPERTY OTHER THAN

14

THE PROPERTY, TO THE EXTENT SUCH CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES) RELATE TO ENVIRONMENTAL CONDITIONS FIRST BEING PRESENT ON OR UNDER THE PROPERTY AFTER CLOSING.

TO THE EXTENT OF PURCHASER’S RELEASE OF SELLER PURSUANT TO THIS AGREEMENT, PURCHASER EXPRESSLY WAIVES ALL RIGHTS UNDER CALIFORNIA CIVIL CODE SECTION 1542, AS AMENDED OR MODIFIED, WHICH PROVIDES THAT:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

PURCHASER HEREBY SPECIFICALLY ACKNOWLEDGES THAT PURCHASER HAS CAREFULLY REVIEWED THIS SUBSECTION, AND DISCUSSED ITS IMPORT WITH LEGAL COUNSEL, IS FULLY AWARE OF ITS CONSEQUENCES, AND THAT THE PROVISIONS OF THIS SUBSECTION ARE A MATERIAL PART OF THIS AGREEMENT; PROVIDED, HOWEVER, SUCH RELEASE, WAIVER OR DISCHARGE SHALL NOT APPLY AND SHALL BE OF NO FORCE OR EFFECT FOR ANY CLAIMS ARISING OUT OF SELLER’S FRAUD.

Seller’s initials     Purchaser’s initials

THE PROVISIONS OF THIS SECTION 12.7 SHALL SURVIVE THE CLOSING AND ANY TERMINATION OF THIS AGREEMENT.

12.8 Trial by Jury. In any lawsuit or other proceeding initiated by Purchaser under or with respect to this Agreement, Purchaser waives any right it may have to trial by jury. In addition, Purchaser waives any right to seek rescission of the transaction provided for in this Agreement.

12.9 Reports. If for any reason Purchaser does not consummate the Closing (other than due to a Seller default), then Purchaser shall, upon Seller’s written request, assign and transfer to Seller all of its right, title and interest in and to any and all studies, reports, surveys and other information, data and/or documents relating to the physical condition of the Property or any part thereof prepared by third parties at the request of Purchaser, its employees and agents, and shall deliver to Seller copies of all of the

15

foregoing upon Seller’s reimbursement to Purchaser of all costs paid by Purchaser to third parties who prepared any such items; provided, however, that the foregoing shall not apply to any internal studies, reports, budgets or projections, nor to any other information or documentation determined by Purchaser to be confidential or privileged.

12.10 Reporting Person. Seller and Purchaser hereby designate Escrow Agent to act as and perform the duties and obligations of the “reporting person” with respect to the transaction contemplated by this Agreement for purposes of 26 C.F.R. Section 1.6045-4(e)(5) relating to the requirements for information reporting on real estate transaction closed on or after January 1, 1991. In this regard, Seller and Purchaser each agree to execute at Closing, and to cause Escrow Agent to execute at Closing, a Designation Agreement, designating Escrow Agent as the reporting person with respect to the transaction contemplated by this Agreement.

12.11 Section 1031 Exchange. Either party may structure the disposition or acquisition of the Property, as the case may be, as a like-kind exchange under Internal Revenue Code Section 1031 at the exchanging party’s sole cost and expense, provided that the time periods provided in this Agreement (including, without limitation, the Closing Date) shall not be delayed or otherwise affected. The other party shall reasonably cooperate therein, provided that such other party shall incur no material costs, expenses or liabilities in connection with the exchanging party’s exchange. If either party uses a qualified intermediary to effectuate an exchange, any assignment of the rights or obligations of such party hereunder shall not relieve, release or absolve such party of its obligations to the other party. The exchanging party shall indemnify, defend and hold harmless the other party from all liability in connection with the indemnifying party’s exchange, and the indemnified party shall not be required to take title to or contract for the purchase of any other property. The provisions of this Section 12.11 shall survive the Closing.

12.12 Press Releases. The parties hereto shall not issue any press releases with respect to the transactions contemplated hereby or consummated in accordance with the terms hereof except as required by law (including, without limitation, in connection with SEC requirements and filings) or upon the mutual agreement of the parties as to the form and content of such press release (with consent not to be unreasonably withheld or delayed by either party).

12.13 Counterparts. This Agreement may be executed in any number of identical counterparts, any or all of which may contain the signatures of less than all of the parties, and all of which shall be construed together as but a single instrument.

12.14 Construction. This Agreement shall not be construed more strictly against Seller merely by virtue of the fact that the same has been prepared by Seller or its counsel, it being recognized both of the parties hereto have contributed substantially and materially to the preparation of this Agreement.

12.15 Attorneys’ Fees. In the event of legal proceedings between the parties with respect to this Agreement or the transaction contemplated hereby, the prevailing

16

party therein shall be entitled to recover from the losing party all of its costs of enforcement and such legal proceedings, including, but not limited to, its reasonable attorneys’ and paralegal fees, witness fees, court reporters’ fees and other costs of suit.

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their duly authorized representatives as of the date first above written.

SELLER:	BROCADE COMMUNICATIONS SYSTEMS SKYPORT LLC, a Delaware limited liability company
	By:	Brocade Communications Systems, Inc.,
		a Delaware corporation
		Its Sole Member
	By:
	Name:
	Title:
PURCHASER:	CA-SKYPORT III LIMITED PARTNERSHIP, a Delaware limited partnership
	By:	LH GP Holdings LLC,
		a Delaware limited liability company
		Its General Partner
	By:
	Name:
	Title:

17

LIST OF EXHIBITS:

A Legal Description

B Excluded Items

C Leaseback

D Permitted Exceptions

E Grant Deed

F Assignment of Intangibles

G Bill of Sale

H Non-Foreign Affidavit

18

EXHIBIT A

LEGAL DESCRIPTION

[1600 Technology Drive, San Jose, California]

Real property in the City of San Jose, County of Santa Clara, State of California, described as follows:

PARCEL ONE:

ALL OF PARCEL A, AS SAID PARCEL IS SHOWN UPON THAT CERTAIN PARCEL MAP FILED FOR RECORD IN THE OFFICE OF THE RECORDER OF THE COUNTY OF SANTA CLARA ON NOVEMBER 18, 2003 IN BOOK 766 OF MAPS AT PAGES 14, 15, 16, 17 AND 18.

PARCEL TWO:

ANY AND ALL EASEMENTS BENEFITING PARCEL ONE ABOVE DESCRIBED PURSUANT TO SKYPORT PLAZA DECLARATION OF COMMON EASEMENTS, COVENANTS, CONDITIONS AND RESTRICTIONS, EXECUTED BY SPIEKER PROPERTIES, L.P., A CALIFORNIA LIMITED PARTNERSHIP, AND RECORDED FEBRUARY 14, 2001 AS INSTRUMENT NO. 15560409, AS AMENDED BY FIRST AMENDMENT TO SKYPORT PLAZA DECLARATION OF COMMON EASEMENTS, COVENANTS, CONDITIONS AND RESTRICTIONS EXECUTED BY SKYPORT PLAZA OWNERS ASSOCIATION RECORDED OCTOBER 26, 2001 AS INSTRUMENT NO. 15929606, SECOND AMENDMENT TO SKYPORT PLAZA DECLARATION OF COMMON EASEMENTS, COVENANTS, CONDITIONS AND RESTRICTIONS EXECUTED BY SKYPORT PLAZA OWNER’S ASSOCIATION, RECORDED OCTOBER 22, 2002 AS INSTRUMENT NO. 16552265, THIRD AMENDMENT TO SKYPORT PLAZA DECLARATION OF COMMON EASEMENTS, COVENANTS, CONDITIONS AND RESTRICTIONS EXECUTED BY SKYPORT PLAZA OWNER’S ASSOCIATION, RECORDED SEPTEMBER 12, 2003 AS INSTRUMENT NO. 17343456, AND FOURTH AMENDMENT TO SKYPORT PLAZA DECLARATION OF COMMON EASEMENTS, COVENANTS, CONDITIONS AND RESTRICTIONS EXECUTED BY SKYPORT PLAZA OWNERS ASSOCIATION, RECORDED ON NOVEMBER 18, 2003 AS INSTRUMENT NO. 17480072 AND CORRECTED AND RE-RECORDED ON DECEMBER 4, 2003 AS INSTRUMENT NO. 17502811, OFFICIAL RECORDS OF SANTA CLARA COUNTY.

PARCEL THREE:

ANY AND ALL EASEMENTS BENEFITING PARCEL ONE ABOVE DESCRIBED PURSUANT TO THOSE CERTAIN “SKYPORT PLAZA (ADJUSTED PARCEL II) DECLARATION OF COMMON EASEMENTS, COVENANTS, CONDITIONS AND RESTRICTIONS” EXECUTED BY EOP-SKYPORT I L.L.C., A DELAWARE LIMITED LIABILITY COMPANY AND BROCADE COMMUNICATION SYSTEMS SKYPORTL.L.C., A DELAWARE LIMITED LIABILITY COMPANY, RECORDED NOVEMBER 18, 2003 AS INSTRUMENT NO. 17480071, AND CORRECTED AND RE- RECORDED ON DECEMBER 4, 2003 AS INSTRUMENT NO. 17502810 OFFICIAL RECORDS OF SANTA CLARA COUNTY.

APN: 230-29-119

1

EXHIBIT B

EXCLUDED ITEMS

[1600 Technology Drive, San Jose, California]

All removable equipment and personal property located within the interior of the Building, including, without limitation, racks located within the lab areas that are bolted and seismically braced.

1

EXHIBIT C

LEASEBACK

EXHIBIT D

PERMITTED EXCEPTIONS

[1600 Technology Drive, San Jose, California]

Exceptions Number 1 (non-delinquent only), 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 14, 15, 17, 18 and 19 of the Title Report.

1

EXHIBIT E

DEED

RECORDING REQUESTED BY

AND WHEN RECORDED RETURN TO:

CA-Skyport I Limited Partnership

__________________________________________

__________________________________________

Attention: __________________________________

(Space above for Recorder’s Use)

Documentary Transfer Tax is not of public record and is shown on a separate sheet attached to this deed.

GRANT DEED

FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, BROCADE COMMUNICATIONS SYSTEMS SKYPORT LLC (“Grantor”), a Delaware limited liability company, hereby grants to CA-SKYPORT III LIMITED PARTNERSHIP (“Grantee”), a Delaware limited liability company, the real property located in the City of San Jose, County of Santa Clara, State of California, described on Exhibit A attached hereto and made a part hereof (the “Property”), subject to:

1. Acts of Grantee, and those claiming by, through and under Grantee.

2. General and special taxes and assessments not yet delinquent.

3. Zoning, building and other governmental and quasi-governmental laws, codes and regulations.

4. Any adverse claim to any portion of the Property which has been created by artificial means or has accreted to any such portion so created and riparian rights, if any.

5. Covenants, conditions, restrictions, and private or public utility easements of record together with easements or claims of easements not shown by the public records.

6. Encroachments, overlaps, boundary line disputes, or other matters which would be disclosed by an accurate survey or inspection of the Property.

Mail Tax Statements To:

1

Executed as of this      day of January, 2010.

BROCADE COMMUNICATIONS SYSTEMS SKYPORT LLC, a Delaware limited liability company
By:	Brocade Communications Systems, Inc.,
	a Delaware corporation
Its:	Sole Member
By:
Name:
Title:

2

EXHIBIT A to DEED

3

EXHIBIT F

ASSIGNMENT OF INTANGIBLES

[1600 Technology Drive, San Jose, California]

This instrument is executed and delivered to be effective as of             , 2010, by and between Brocade Communications Systems Skyport LLC, a Delaware limited liability company (“Seller”), and CA-Skyport III Limited Partnership, a Delaware limited partnership (“Purchaser”), covering the real property described in Exhibit A attached hereto (“Real Property”), commonly known as “1600 Technology Drive” (the “Building”).

1. Assignment. For good and valuable consideration, Seller hereby assigns, transfers, sets over and conveys to Purchaser Seller’s right, title and interest, to the extent transferable, in and to (i) the right to use the name “1600 Technology Drive,” (ii) all licenses and permits relating solely to the Property, (iii) any blueprints, plans, specifications, maps or drawings relating solely to the Property (it being agreed that Seller shall be obligated to deliver possession of the foregoing only to the extent in Seller’s possession or control), and (iv) any guaranties or warranties relating to the Improvements.

2 Successors and Assigns. This instrument is binding upon, and shall inure to the benefit of Seller and Purchaser and their respective heirs, legal representatives, successors and assigns.

3 Power and Authority. Each of Purchaser and Seller represents and warrants to the other that it is fully empowered and authorized to execute and deliver this instrument, and that the individual signing this instrument on its behalf represents is fully empowered and authorized to do so.

4. Attorneys’ Fees. If either Purchaser or Seller or their respective successors or assigns file suit to enforce the obligations of the other party under this instrument, the prevailing party shall be entitled to recover the reasonable fees and expenses of its attorneys.

1

IN WITNESS WHEREOF, the undersigned have caused this instrument to be executed effective as of the date written above.

SELLER:	BROCADE COMMUNICATIONS SYSTEMS SKYPORT LLC, a Delaware limited liability company
	By:	Brocade Communications Systems, Inc.,
		a Delaware corporation
	Its:	Sole Member
	By:
	Name:
	Title:
PURCHASER:	CA-SKYPORT III LIMITED PARTNERSHIP, a Delaware limited partnership
	By:	LH GP Holdings LLC,
		a Delaware limited liability company
	Its:	General Partner
	By:
	Name:
	Title:

2

EXHIBIT A Assignment of Intangibles

LEGAL DESCRIPTION

[1600 Technology Drive, San Jose, California]

3

EXHIBIT G

BILL OF SALE

[1600 Technology Drive, San Jose, California]

For good and valuable consideration the receipt of which is hereby acknowledged, Brocade Communications Systems Skyport LLC, a Delaware limited liability company (“Seller”), does hereby sell, transfer, and convey, without warranty, to CA-Skyport III Limited Partnership, a Delaware limited partnership (“Purchaser”), all personal property described in Schedule 1 attached hereto.

Purchaser is accepting such personal property in its “as is” condition.

DATED this              day of             , 2010.

BROCADE COMMUNICATIONS SYSTEMS SKYPORT LLC, a Delaware limited liability company
By:	Brocade Communications Systems, Inc.,
	a Delaware corporation
Its:	Sole Member
By:
Name:
Title:

SCHEDULE 1

EXTERIOR EQUIPMENT

Outside Enclosure:

EG2: 800kW Emergency Generator

EG3: 1000kW Emergency Generator

Inside Garage:

ATS3: Automatic Transfer Switch

ATS4: Automatic Transfer Switch

UPS3: 500kW UPS

UPS4: 500kW UPS

EG4: 1000kW Emergency Generator

LN2: Liquid Nitrogen Tank

Air Compressor: Air Compressor and Air Dryer

EXHIBIT H

CERTIFICATE OF NON-FOREIGN STATUS

[1600 Technology Drive, San Jose, California]

1. The undersigned (“Transferor”) hereby certifies:

a. That Transferor is not a foreign entity (as said term is defined in the Internal Revenue Code and Income Tax Regulations) with respect to the transfer of that certain property known as “1600 Technology Drive,” located in San Jose, California (the “Property”) legally described in Exhibit A attached hereto and made a part hereof.

b. The tax identification number of Transferor is , and the offices of Transferor are located at 1745 Technology Drive, San Jose, CA 95110.

2. Transferor understands that this Certification may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punishable by fine, imprisonment or both.

Under penalties of perjury, I declare that I have examined this Certification and to the best of my knowledge and belief, it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of the Transferor.

Dated the              day of             , 2010 in San Jose, California.

BROCADE COMMUNICATIONS SYSTEMS SKYPORT LLC, a Delaware limited liability company
By:	Brocade Communications Systems, Inc.,
	a Delaware corporation
Its:	Sole Member
By:
Name:
Title:

EX-10.11

Exhibit 10.11

LEASE AGREEMENT

by and between

CA-SKYPORT III LIMITED PARTNERSHIP

(“Landlord”)

and

BROCADE COMMUNICATIONS SYSTEMS, INC.

(“Tenant”)

January 28, 2010

EXHIBITS

Exhibit A	Land
Exhibit B	Premises
Exhibit C	Leased Exterior Equipment
Exhibit D	Form of Bill of Sale
Exhibit E	Market Rent Analysis
Exhibit F	Components of Base Building Systems

BASIC LEASE INFORMATION

Lease Date:	January 28, 2010
Landlord:	CA-SKYPORT III LIMITED PARTNERSHIP, a Delaware limited partnership
Landlord’s Address:	CA-Skyport III Limited Partnership
	1740 Technology Drive, Suite 150
	San Jose, California 95110 Attention: Skyport Property Manager
	With copies to:
	Equity Office 2655 Campus Drive, Suite 100 San Mateo, California 94403
	Attn: Managing Counsel
	and to:
	Equity Office
	Two North Riverside Plaza, Suite 2100
	Chicago, Illinois 60606
	Attn: Lease Administration
	And a copy to:
	Allen Matkins Leck Gamble Mallory & Natsis, LLP
	1901 Avenue of the Stars, Suite 1800 Los Angeles, California 90067 Attention: Anton N. Natsis, Esq.
Tenant:	BROCADE COMMUNICATIONS SYSTEMS, INC.
Tenant’s Address:	1745 Technology Drive
	San Jose, California 95110
	Attn: Michael Hirahara, VP, Global Real Estate & Facilities
	with a copy to:
	Brocade Communications Systems, Inc.
	1745 Technology Drive
	San Jose, California 95110
	Attn: Richard Deranleau, CFO

	And a copy to:
	SSL Law Firm LLP
	575 Market Street, Suite 2700
	San Francisco, California 94105
	Attn: Jodi Fedor
Land:	The real property described on Exhibit A attached hereto.
Building:	The building located at 1600 Technology Drive, San Jose, California
Premises:	The entire Building as depicted on Exhibit B attached hereto.
Project:	The Land and Building
Rentable Area of the Premises:	One Hundred Ninety-Three Thousand Nine Hundred Seventy-Seven (193,977) rentable square feet (the “Rentable Area”).
Tenant’s Use of the Premises:	General office, research and development uses, laboratory and/or administrative use; provided, however, that notwithstanding anything to the contrary set forth hereinabove, and as more particularly set forth in the Lease, Tenant shall be responsible for operating and maintaining the Premises pursuant to, and in no event may Tenant’s “Permitted Use,” as that term is defined in Section 4(a) of this Lease, violate, (A) all “Laws,” as that term is set forth in Section 5(c)(v) of this Lease, and (B) all applicable zoning, building codes and the “Encumbrances,” as that term is set forth in Section 4(a) of this Lease.
Lease Term:	The period commencing on the Commencement Date and ending on the day immediately preceding the second anniversary of the Commencement Date (the “Initial Term”); with the right to extend for four (4) additional six (6) month terms (each a “6-Month Extension Term”), and subsequently for two (2) additional five (5) year terms (each, a “5-Year Extension Term” and collectively with the 6-Month Extension Terms, the “Extension Terms”), all in accordance with Section 2. The Initial Term and any Extension Term(s) shall collectively be defined as the “Term”.

Commencement Date:	The Closing Date (as defined in the Purchase Agreement) for Landlord’s acquisition of the Project from Tenant’s affiliate, Brocade Communications Systems Skyport LLC (“Seller”). Landlord and Tenant currently anticipate that the Closing Date shall occur on or before January 28, 2010.
Monthly Base Rent:

Period	Monthly NNN Rent / sq. ft.		Monthly NNN Rent Total
Lease Year One	$	1.35	$	261,868.95
Lease Year Two	$	1.39	$	269,628.03
First Extension Term (if any)	$	1.43	$	277,387.11
Second Extension Term (if any)	$	1.43	$	277,387.11
Third Extension Term (if any)	$	1.47	$	285,146.19
Fourth Extension Term (if any)	$	1.47	$	285,146.19
Fifth Extension Term (if any)		Fair Market Rental Value, as determined in accordance with Section 2(b)(ii)
Sixth Extension Term (if any)		Fair Market Rental Value, as determined in accordance with Section 2(b)(ii)

Security Deposit:	None
Landlord’s Broker:	None
Tenant’s Broker:	Studley, whose fee or commission (if any) will be paid by Tenant pursuant to a separate agreement between Studley and Tenant

Purchase Agreement: Real Estate Sale Agreement dated as of January 25, 2010, by and between Seller, as seller, and Landlord, as purchaser.

The foregoing Basic Lease Information is hereby incorporated into and made a part of this Lease. Each reference in this Lease to any of the Basic Lease Information shall mean the respective information hereinabove set forth and shall be construed to incorporate all of the terms provided under the particular paragraph pertaining to such information. In the event of any conflict between any Basic Lease Information and the Lease, the latter shall control.

LANDLORD:
CA-SKYPORT III LIMITED PARTNERSHIP, a Delaware limited partnership
By:	LH GP Holdings LLC, a Delaware limited liability company
By:
Name:
Its:
TENANT:
BROCADE COMMUNICATIONS SYSTEMS, INC., a Delaware corporation
By:
Name:
Its:

LEASE AGREEMENT

THIS LEASE AGREEMENT (this “Lease”) is made and entered into as of January 28, 2010, by and between CA-SKYPORT III LIMITED PARTNERSHIP, a Delaware limited partnership (“Landlord”), and BROCADE COMMUNICATIONS SYSTEMS, INC., a Delaware corporation (“Tenant”).

1. PREMISES.

(a) Premises. Upon and subject to the terms, covenants and conditions hereinafter set forth, Landlord hereby leases to Tenant, and Tenant hereby hires from Landlord, the “Premises” (as defined in the Basic Lease Information).

(b) Common Area. The term “Project Common Area” or “Common Area” shall mean all areas and facilities within the Project that are defined in the Skyport Plaza (Adjusted Parcel II) Declaration of Common Easements, Covenants, Conditions and Restrictions (the “Declaration”) as “Parcel II Common Area”, and that are located outside the perimeter footings of any buildings now or hereafter located in the Project, and any other areas within the Project that are reasonably designated as Common Areas by Landlord; provided, however, as long as Tenant leases one hundred percent (100%) of the Building, no portion of the Building or any other building now or hereafter located in the Project shall be designated as a Common Area. Landlord and Tenant acknowledge that pursuant to the Declaration, the EOP Owner (as defined in the Declaration) is responsible for the maintenance, repair, insurance and replacement of the Common Area, all on the terms and conditions of, and subject to the allocation and assessment of costs incurred as provided in, the Declaration. Accordingly, (i) neither Landlord nor Tenant shall be responsible for maintenance, repair, insurance or replacement of the Common Area, provided that Landlord shall use commercially reasonable efforts to enforce the obligations of the EOP Owner under the Declaration, and (ii) Tenant shall be responsible for payment, as an “Expense” hereunder, of all “Assessments” attributable to the “Brocade Parcel” pursuant to the terms of Article IV of the Declaration, provided, however, that any portion of Assessments that is attributable to a Capital Expenditure (as defined in Section 7(d) below) shall be amortized over the useful life of the capital item in question as determined in accordance with the Practice Standard (as defined in Section 3(b)((i)(D)(1)(v)), together with interest on the unamortized balance at the Amortization Rate (as defined in Section 3(b)(i)(D)(1)(v)), and only the annual amortized portion of such cost shall be included in Expenses and payable by Tenant in any year. Costs that are chargeable to Brocade Owner or otherwise made the responsibility of the Brocade Owner under the Declaration which are not Assessments, and which do not result from the actions of Tenant, shall not be the responsibility of Tenant hereunder.

2. TERM AND POSSESSION.

(a) Term. The initial term of this Lease (the “Term”) shall commence on the Commencement Date specified in the Basic Lease Information (the “Commencement Date”), and shall expire on the day immediately preceding the second anniversary of the Commencement Date (the “Expiration Date”), subject to Tenant’s right to extend the Term pursuant to Section 2(b).

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(b) Options To Extend the Term.

(i) 6-Month Extension Terms. The Tenant originally named in this Lease (the “Original Tenant”), and any other “Qualifying Party,” as that term is defined in Section 2(b)(iii) below, shall have the right to extend the Term for each of the 6-Month Extension Terms (as defined in the Basic Lease Information) upon the initial Expiration Date or the Expiration Date as extended by any previous Extension Term, as applicable, by giving written notice (“Exercise Notice”) to Landlord at least twelve (12) months prior to the Expiration of the immediately preceding Term. The Monthly Base Rent during each of the 6-Month Extension Terms shall be as shown in the Basic Lease Information.

(ii) 5-Year Extension Terms. If Tenant exercises all of the 6-Month Extension Terms, then Original Tenant and any other Qualifying Party subsequently shall have the right to further extend the Term for each of the 5-Year Extension Terms (as defined in the Basic Lease Information) upon the Expiration Date as extended by any previous Extension Term by giving the Exercise Notice to Landlord not more than fifteen (15) and not less than twelve (12) months prior to the then Expiration Date, provided that, as of the date of delivery of the Exercise Notice, Tenant is not in Default under this Lease after expiration of any applicable notice and cure period. The Monthly Base Rent during each 5-Year Extension Term shall be the “Fair Market Rental Value” as that term is defined in Exhibit E, attached hereto, as such Fair Market Rental Value is determined pursuant to Exhibit E, attached hereto. The calculation of the “Fair Market Rental Value” for the 5-Year Extension Terms shall be derived from a review of, and comparison to, the “Net Equivalent Lease Rates” of the “Comparable Transactions,” as provided for in Exhibit E, and thereafter, the Fair Market Rental Value shall be stated as a “Net Equivalent Lease Rate” for each year of the subject 5-Year Extension Term.

(A) The Fair Market Rental Value shall be determined as follows:

(1) Within fifteen (15) days after receipt of Tenant’s Exercise Notice, and at least ninety (90) days prior to the commencement of the applicable Extension Term, Landlord shall deliver to Tenant a good faith written proposal of the Fair Market Rental Value. Within twenty-one (21) days after receipt of Landlord’s proposal, Tenant shall notify Landlord in writing (a) that Tenant accepts Landlord’s proposal or (b) that Tenant elects to submit the determination of Fair Market Rental Value to arbitration in accordance with this Section 2(b)(ii)(A). If Tenant does not give Landlord a timely notice in response to Landlord’s proposal, Landlord’s proposal of Fair Market Rental Value shall be binding upon Tenant.

(2) If Tenant timely elects to submit the determination of Fair Market Rental Value to arbitration, Landlord and Tenant shall first negotiate in good faith in an attempt to determine the Fair Market Rental Value. If Landlord and Tenant are able to agree within thirty (30) days following the delivery of Tenant’s notice to Landlord electing arbitration (or if Tenant accepts Landlord’s initial proposal), then such agreement shall constitute a determination of Fair Market Rental Value for purposes of this Section, and the parties shall immediately execute an amendment to this Lease stating the Monthly Base Rent for the applicable Extended Term. If Landlord and Tenant are unable to agree on the Fair Market

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Rental Value within such negotiating period, then within fifteen (15) days after the expiration of such negotiating period, the parties shall meet and concurrently deliver to each other in envelopes their respective good faith estimates of the Fair Market Rental Value (set forth on a net effective rentable square foot per annum basis consistent with Exhibit E). If the higher of such estimates is not more than one hundred five percent (105%) of the lower, then the Fair Market Rental Value shall be the average of the two. Otherwise, the dispute shall be resolved by arbitration in accordance with this Section 2(b)(ii)(A).

(3) Within seven (7) days after the exchange of estimates, the parties shall select as an arbitrator an independent appraiser or real estate broker with at least five (5) years of experience in appraising or leasing office space in Santa Clara County (a “Qualified Appraiser”). If the parties cannot agree on a Qualified Appraiser, then within a second period of seven (7) days, each shall select a Qualified Appraiser and within ten (10) days thereafter the two appointed Qualified Appraisers shall select an independent Qualified Appraiser and the independent Qualified Appraiser shall be the sole arbitrator. If one party shall fail to select a Qualified Appraiser within the second seven (7) day period, then the Qualified Appraiser chosen by the other party shall be the sole arbitrator.

(4) Within twenty-one (21) days after submission of the matter to the arbitrator, the arbitrator shall determine the Fair Market Rental Value by choosing whichever of the estimates submitted by Landlord and Tenant the Qualified Appraiser judges to be more accurate. The Qualified Appraiser shall notify Landlord and Tenant of its decision, which shall be final and binding. If the Qualified Appraiser believes that expert advice would materially assist him, the Qualified Appraiser may retain one or more qualified persons to provide expert advice. The fees of the Qualified Appraiser and the expenses of the arbitration proceeding, including the fees of any expert witnesses retained by the Qualified Appraiser, shall be paid by the party whose estimate is not selected. Each party shall pay the fees of its respective counsel and the fees of any witness called by that party.

(B) To the extent that a binding decision has not been completed or reached prior to the expiration of any preceding period for which Monthly Base Rent has been determined, Tenant shall pay Monthly Base Rent at the previous Monthly Base Rent, with an adjustment to be made once Fair Market Rental Value is ultimately determined by binding appraisal.

(iii) Terms Applicable to All Extension Terms. From and after the commencement of each Extension Term, all of the other terms, covenants and conditions of the Lease shall also apply; provided, however, that references to the Term shall be deemed to include the then-applicable Extension Term, and during the second 5-Year Extension Term Tenant shall have no further rights to extend the Term. The rights contained in this Section 2(b) may be exercised by (i) Original Tenant, or (ii) any “Affiliate,” as that term is defined in Section 9(g) of this Lease, who becomes an assignee of Original’s Tenant’s entire interest in this Lease in accordance with the terms of Section 9(g) of this Lease, or (iii) any “Transfer Entity” pursuant to a “Permitted Transfer,” as those terms are defined in Section 9(e) of this Lease (the parties identified in (i), (ii) and (iii) individually, a “Qualifying Party” and collectively “Qualifying Parties”).

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(c) Condition of the Premises / As-Is Sale to Landlord. Prior to the Commencement Date, Tenant owned the Project. On the sale of the Project to Landlord, Tenant shall remain in possession and occupancy of the Premises during the Term, subject to the terms and conditions of this Lease. Landlord and Tenant acknowledge that Landlord has purchased the Project from Tenant on an “as-is”, with all faults and defects basis in accordance with the Purchase Agreement. From and after the Commencement Date, the terms of this Lease shall govern and control the respective rights and obligations of Landlord and Tenant with regard to the physical condition of the Premises (provided that the foregoing shall not be deemed a waiver of any of Landlord’s rights as Purchaser under the Purchase Agreement, including as such rights may relate to any breach of the terms of the Purchase Agreement by Tenant, or any representations or warranties made by Tenant, in each case as Seller under the Purchase Agreement). Accordingly, in the event of any conflict between the express terms and conditions of this Lease and the terms and conditions of the Purchase Agreement, the express terms and conditions of this Lease shall prevail. Tenant acknowledges that Landlord has not made any representation or warranty with respect to the condition of the Premises, Building, Project or Common Area, or with respect to the suitability or fitness of the Premises, Building, Project or Common Area for the conduct of Tenant’s Permitted Use or for any other purpose. By remaining in occupancy of the Premises as of the Commencement Date, Tenant shall be deemed to have accepted the Premises, Land, Project and Common Area (i) on an “as-is”, with all faults and defects basis, and (ii) as suitable for the purpose herein intended.

3. RENT.

(a) Monthly Base Rent. Commencing on the Commencement Date and continuing throughout the Term of this Lease, Tenant shall pay the monthly base rent specified in the Basic Lease Information (“Monthly Base Rent”), on the first day of each month, in advance, in lawful money of the United States (without any prior demand therefor and without deduction or offset whatsoever, except as expressly provided in this Lease), to Landlord at the address specified in the Basic Lease Information or to such other place as Landlord may from time to time designate in writing. If any Rent payment date (including the Commencement Date) falls on a day of the month other than the first day of such month or if any payment of Rent is for a period which is shorter than one month, the Rent for any fractional month shall accrue on a daily basis for the period from the date such payment is due to the end of such calendar month or to the end of the Term at a rate per day which is equal to 1/365 of the applicable annual Rent. All other payments or adjustments required to be made under the terms of this Lease that require proration on a time basis shall be prorated on the same basis.

(b) Additional Charges for Expenses and Taxes. In addition to Monthly Base Rent, commencing on the Commencement Date and throughout the Term, Tenant shall pay to Landlord or to third parties (as applicable) all Additional Charges (as defined below) as and when payable as provided in this Section 3(b), at the place where the Monthly Base Rent is payable, and Landlord shall have the same remedies for a Default in the payment of Additional Charges as for a Default in the payment of Monthly Base Rent.

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(i) Definitions of Additional Charges: For purposes of this Lease, the following terms shall have the meanings hereinafter set forth:

(A) “Additional Charges” shall mean Expenses payable by Tenant pursuant to Section 3(b)(iii) and Real Estate Taxes payable by Tenant pursuant to Section 3(b)(ii) (the foregoing collectively sometimes being referred to herein as “Additional Charges for Expenses and Taxes”), and all other charges and other amounts whatsoever payable by Tenant under this Lease.

(B) “Tax Year” shall mean each twelve (12) consecutive month period commencing January 1st of the calendar year during which the Commencement Date of this Lease occurs, provided that Landlord, upon notice to Tenant, may change the Tax Year from time to time to any other twelve (12) consecutive month period and, in the event of any such change, Real Estate Taxes (as hereinafter defined) shall be equitably adjusted for the Tax Years involved in any such change.

(C) “Real Estate Taxes” shall mean all federal, state, county, or local governmental or municipal taxes, assessments, charges, fees and other impositions of every kind and nature, whether general, special, ordinary or extraordinary, levied upon or with respect to the Project or Landlord’s personal property used in the operation of the Project or Landlord’s interest in the Project. Real Estate Taxes shall include, without limitation, all general real property taxes and general and special assessments, charges, fees or assessments for transit and/or parking, housing, police, fire or other governmental services or purported benefits to the Building or Project, service payments in lieu of taxes, and any tax, fee or excise on the act of entering into this Lease, or on the use or occupancy of the Project or any part thereof by Tenant, or on the rent payable under this Lease, including, without limitation, any business or gross income tax or excise tax with respect to the receipt of such rent, or upon or with respect to the possession, leasing, operating, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or any portion thereof, that are now or hereafter levied or assessed against Landlord by the United States of America, the State of California, or any political subdivision, public corporation, district or any other political or public entity, and shall also include any other tax, fee or other excise, however described, that may be levied or assessed as a substitute for, or as an addition to, in whole or in part, any other Real Estate Taxes, whether or not now customary or in the contemplation of the parties on the date of this Lease, it being acknowledged by Tenant and Landlord that Proposition 13 was adopted by the voters of the State of California in the June 1978 election (“Proposition 13”) and that assessments, taxes, fees, levies and charges may be imposed by governmental agencies for such services as fire protection, street, sidewalk and road maintenance, refuse removal and for other governmental services formerly provided without charge to property owners or occupants, and, in further recognition of the decrease in the level and quality of governmental services and amenities as a result of Proposition 13. Real Estate Taxes shall also include (i) any governmental or private assessments or the Project’s contribution towards a governmental or private cost-sharing agreement for the purpose of augmenting or improving the quality of services and amenities normally provided by governmental agencies; and (ii) any assessment, tax, fee, levy or charge, upon this

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Lease (but not upon the Purchase Agreement or any deed or other document to which Tenant is a party pursuant to the Purchase Agreement and any transfer tax applicable to the sale of the Property from Tenant to Landlord shall be excluded from the definition of Real Estate Taxes), creating or transferring the leasehold interest in the Premises to Tenant. Real Estate Taxes shall not include (1) franchise, transfer, inheritance or capital stock taxes, or (2) federal or state income taxes, or (3) penalties incurred as a result of Landlord’s failure to make payments of, and/or to file any tax or informational returns with respect to, any Real Estate Taxes (except to the extent such failure results from Tenant’s failure to make payment of Real Estate Taxes either prior to the Commencement Date (during the period of Tenant’s ownership of the Project) or as and when required hereunder, or to provide information or otherwise cooperate with Landlord in connection therewith). Real Estate Taxes shall also include reasonable legal fees, costs and disbursements incurred in connection with proceedings to contest, determine or reduce Real Estate Taxes; provided that such fees, costs and disbursements do not exceed the actual savings in Real Estate Taxes obtained by Tenant as a result of such proceeding over the Term. If any assessments are levied on the Building or Project, Tenant shall have no obligation to pay more than that amount of annual installments of principal and interest that would become due during the Term had Landlord elected to pay the assessment in installment payments, even if Landlord pays the assessment in full. If Landlord receives a refund of Real Estate Taxes, or a credit against its future Taxes, attributable to Real Estate Taxes paid with respect to any calendar year or portion thereof during the Term, then Landlord shall pay to Tenant an amount equal to that portion of the refund attributable to any period during the Term, net of any reasonable expenses incurred by Landlord in achieving such refund, and if this Lease shall have expired, or is otherwise terminated prior to Landlord’s receipt of any such refund or credit to which this sentence would otherwise apply, then Landlord shall refund in cash any such refund or credit due to Tenant within thirty (30) days after Landlord’s receipt of such refund. Landlord’s obligation to so refund to Tenant any such refund or credit of Real Estate Taxes shall survive such expiration or termination.

(D) “Expenses”

(1) “Expenses” shall mean the total costs and expenses and amounts of every kind and nature paid or incurred (without duplication) by Landlord in connection with the management, operation, maintenance, security, improvement, replacement and repair of the Premises, Building, Project and Project Common Area, including, without limitation, the following:

(i) If and to the extent not paid directly by Tenant, (a) the cost of air conditioning, electricity, steam, heating, mechanical, ventilating, elevator systems, access control and/or security systems, and all other utilities and services, and (b) the cost of supplies and equipment and maintenance and service contracts in connection therewith.

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(ii) If and to the extent not paid directly by Tenant, the cost of repairs and general maintenance and cleaning of the Premises, Building, Project, and Common Area.

(iii) The cost of fire, extended coverage, boiler, sprinkler, public liability, property damage, rent, and earthquake and flood (in the case of earthquake and flood, if Landlord elects to obtain it) and other insurance for the Premises, Building, Project and/or Common Areas obtained by Landlord (to the extent permitted by Section 10(f)), all including, without limitation, insurance premiums and deductible amounts paid by Landlord (provided, that the cost of such premiums and deductibles shall be consistent with Section 10(f), and any deductible amount paid by Landlord which relates to a Capital Expenditure shall be amortized over the useful life of the repair in question in the same manner as a capital expenditure, all as described in Section 3(b)(i)(D)(1)(v)).

(iv) Fees, charges and other costs directly related to the operation of the Building and/or Project (as distinct from the operation of the legal entity which owns the Building and/or Project), including management fees, consulting fees, legal fees and accounting fees, fees of all independent contractors engaged by Landlord directly related to the operation of the Building and/or Project or reasonably charged by Landlord if Landlord performs management services in connection with the Building and/or Project, (though the management fee shall not exceed the cap noted in Section 3(b)(i)(D)(2)(ff)).

(v) The cost of any Capital Expenditures, as provided in Section 7(d) below. The costs of any such Capital Expenditures incurred by Landlord (whether performed by Landlord or Tenant) shall be amortized over the useful life of the capital item in question as determined in accordance with general industry practice with respect to the operation of and accounting for commercial office buildings in San Jose, California (the “Practice Standard”), together with interest on the unamortized balance at the greater of (x) the rate paid by Landlord on funds borrowed from an institutional lender specifically for the purpose of making such capital improvements, repairs or replacements; or (y) 8% per annum (such greater amount being defined as the “Amortization Rate”), and only the annual amortized portion of such cost shall be included in Expenses for any year. Any “deductible” amounts relating to Capital Expenditures required to be paid by Tenant hereunder in connection with any insurance policy carried by Landlord shall be amortized over the useful life of the restoration work to which such deductible amount relates in accordance with the Practice Standard, in the same manner as other Capital Expenditures that are included in Expenses as provided above.

(vi) Any expenses paid or incurred by Landlord in connection with the management, operation, maintenance and repair of

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the Premises, Building or Project Common Area and any other Expenses paid or incurred by Landlord for the benefit of the Project as a whole, including, but not limited to, the cost of maintaining any traffic improvements, surface parking lots (including pothole repair, re-sealing and striping) and facilities located in the Project Common Area, the cost of any security provided by Landlord for all or any portions of the Project Common Area, and any costs allocated to the Project Common Area (or the Project as a whole) including costs for the Project which Landlord may incur together with one or more other buildings or properties, whether pursuant to the Declaration or any other conditions, covenants and restrictions, any reciprocal easement agreement, any common area agreement or otherwise, which shared costs and expenses shall be prorated between the Project and the other buildings or properties in accordance with the terms of such agreement or otherwise on an equitable basis.

(vii) Any other reasonable expenses of any other kind whatsoever reasonably incurred in managing, operating, maintaining and repairing the Building, including, but not limited to, costs incurred or assessed pursuant to any ground lease or other Encumbrances.

(2) Notwithstanding anything to the contrary in Section 3(b)(i)(D)(1), Expenses shall not include, and in no event shall Tenant have any obligation to pay for pursuant to this Section 3(b), or Sections 5, 7, or 12, (aa) the acquisition cost of the Land and the initial construction cost of the Project; (bb) the cost of providing tenant improvements to Tenant or any other tenant and costs of preparing any other premises in the Project for occupancy by any other tenant, including brokerage commissions, attorneys fees and other fees incurred in connection with the leasing thereof; (cc) costs of financing, mortgaging or hypothecating any of Landlord’s interest in the Project or any part thereof or debt service (including, but without limitation, interest, principal and any impound payments) required to be made on any mortgage or deed of trust recorded with respect to all or any portion of the Project, other than debt service and financing charges imposed with respect to amortization of Capital Expenditures pursuant to Section 3(b)(i)(D)(1)(v) above; (dd) the cost of special services, goods or materials provided to other tenants to the extent such special services, good or materials are in excess of the services, goods or materials Landlord is obligated to provide to Tenant or generally to other tenants in the Project at Landlord’s expense; (ee) depreciation of the Project; (ff) the portion of a management fee payable to Landlord or any other entity managing the Building, Common Area or Project (including, without limitation, pursuant to the Declaration) in excess of one and one-half percent (1.5%) of Monthly Base Rent on an annualized basis; (gg) penalties resulting from Landlord’s failure to comply with applicable Laws other than with respect to compliance with such Laws which are expressly Tenant’s responsibility under this Lease;

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(hh) costs for which Landlord has the right to receive reimbursement from others; (ii) costs to correct any construction or design defects in the original construction of the “Base Building,” as that term is defined in Section 7(a) below; (jj) costs covered by warranty; (jj) intentionally omitted; (kk) liabilities and losses relating to the abatement or cleanup of Hazardous Materials brought onto the Project by parties other than Tenant or any Tenant Party; (ll) advertising or promotional expenditures; (mm) leasing or sales commissions; (nn) repairs, restoration or other work occasioned by condemnation or casualty, to the extent of amounts paid or payable under insurance policies maintained by Landlord with respect to the Premises, Building or Project; (oo) wages, salaries, fees or fringe benefits (“Labor Costs”) paid to executive personnel or officers or partners of Landlord (provided, however, that if such individuals provide services directly related to the operation or maintenance of the Property that, if provided directly by a general manager or property manager or his or her general support staff, would normally be chargeable as an operating expense of a comparable building, and if such individuals are within job categories specifically identified to and approved by Tenant in writing prior to the Commencement Date, then the Labor Costs of such individuals may be included in Expenses to the extent of the percentage of their time that is spent providing such services to the Project); (pp) costs to remedy Building or Project conditions which are in violation of applicable Laws as of the Commencement Date, including without limitation any Capital Expenditures to correct any such conditions, provided that certain of such costs, as set forth in Section 5(a) below, may be the direct responsibility of Tenant); (qq) Landlord’s general overhead expenses in excess of the property management fee; (rr) legal fees, accountants’ fees and other expenses associated with the defense of Landlord’s title to or Landlord’s interest in the Project or any part thereof; (ss) charitable or political contributions of Landlord; (tt) interest and penalties arising out of Landlord’s failure to make timely payments of its obligations to third parties, to the extent not caused by Tenant’s failure to make such payments when due under this Lease; (uu) reserves for future Expenses or Real Estate Taxes that would be incurred subsequent to the then current accounting year, except as expressly provided herein and provided further that such exclusion shall not affect accruals made in accordance with the Practice Standard with respect to the operation of and accounting for commercial buildings in the San Jose, California, vicinity; (vv) except as already covered by item (ff) above, any amounts paid to any person, firm or corporation related or otherwise affiliated with Landlord or any general partner, officer of director of Landlord or any of its general partners, to the extent that such amounts materially exceed arms-length competitive prices paid by owners of first-class office buildings in the San Jose, California metropolitan area for the services or goods provided; (ww) costs incurred by Landlord which are associated with the operation of the business of the legal entity which constitutes Landlord as the same is separate and apart

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from the cost of the management, maintenance, repair, preservation, ownership and operation of the Project, including legal entity formation and legal entity accounting; (xx) costs of selling, or syndicating, any of Landlord’s interest in the Building or any part thereof; (yy) costs incurred in connection with any claims by employees of Landlord for wrongful termination or other breach of a contract of employment or any form of discriminatory or other tortious conduct; (zz) costs directly resulting from the gross negligence of Landlord, its employees, agents and contractors; (aaa) the cost to reconfigure or otherwise modify the size, design or layout of the parking facility; (bbb) intentionally omitted; (ccc) Landlord’s title insurance, automobile insurance, key man and other life insurance, long and short-term disability insurance and health insurance, except only for group plans providing reasonable benefits to persons identified and approved pursuant to Section 3(b)(i)(D)(2)(oo) who are employed and engaged on a substantially full time basis in operating and managing the Building (or the Building’s proportionate share thereof based on such employees’ time spent engaged in operating and managing the Building); and (ddd) costs incurred by Landlord solely as a result of Landlord’s breach of this Lease, except to the extent such costs reflect costs that would have been incurred by Landlord absent such breach and that would have been includable in Expenses.

(E) “Expense Year” shall mean each twelve (12) consecutive month period commencing January 1 of the calendar year during which the Commencement Date of this Lease occurs, provided that Landlord, upon notice to Tenant, may change the Expense Year from time to time to any other twelve (12) consecutive month period, and, in the event of any such change, Expenses shall be equitably adjusted for the Expense Years involved in any such change.

(ii) Payment of Real Estate Taxes: Commencing on the Commencement Date, Tenant shall pay to Landlord as Additional Charges one-twelfth (1/12th) of Real Estate Taxes for each Tax Year on or before the first day of each month during such Tax Year, in advance, in an amount reasonably estimated by Landlord and billed by Landlord to Tenant. Landlord shall have the right initially to determine monthly estimates and, in good faith, to revise such estimates from time to time. With reasonable promptness (not to exceed one hundred eighty (180) days) after the later of the expiration of such Tax Year or Landlord’s receipt of tax bills for such Tax Year (or Landlord’s receipt of supplemental tax bills for prior years during the Term), Landlord shall furnish Tenant with a statement (herein called a “Tax Statement”) setting forth the amount of Real Estate Taxes for such Tax Year (or any such prior year); any Tax Statement will be accompanied by a true and correct copy of the tax bills upon which the Tax Statement is based. If the actual Real Estate Taxes for such Tax Year (or prior year) exceeds the estimated Real Estate Taxes paid by Tenant for such Tax Year, Tenant shall pay to Landlord the difference between the amount paid by Tenant and the actual Real Estate Taxes on or before the earlier of thirty (30) days after the receipt of a Tax Statement or fifteen (15) days prior to the delinquency date for the Real Estate Tax payment reflected in the applicable Tax Statement. If the total amount paid by Tenant for

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any such Tax Year shall exceed the actual Real Estate Taxes for such Tax Year, such excess shall be credited against the next installment of Real Estate Taxes due from Tenant to Landlord hereunder, or if the Term has ended then Landlord shall reimburse Tenant for such overage on or before the thirtieth (30th) day following the Expiration Date. Notwithstanding anything to the contrary contained herein, no delay by Landlord in providing a Tax Statement shall be deemed a default by Landlord or a waiver of Landlord’s right to require payment of the actual or estimated sums of Real Estate Taxes or Tenant’s right to receive reimbursement of overpaid Real Estate Taxes.

(iii) Payment of Expenses: Commencing on the Commencement Date, Tenant shall pay to Landlord as Additional Charges one-twelfth (1/12th) of the Expenses for each Expense Year on or before the first day of each month of such Expense Year, in advance, in an amount reasonably estimated by Landlord based on historic actual expenses and (as applicable) any budgets provided by the EOP Owner pursuant to the Declaration, with any adjustments from historic amounts explained in detail in Landlord’s estimate, and billed by Landlord to Tenant. Landlord’s annual statement of estimated Expenses for any year shall be set forth in reasonable detail, and shall contain a line-item breakdown of material component costs by Expense Categories (as defined below). Landlord shall have the right initially to determine monthly estimates and to revise such estimates from time to time. With reasonable promptness (not to exceed ninety (90) days) after the expiration of each Expense Year, Landlord shall furnish Tenant with a statement (herein called an “Expense Statement”), setting forth in reasonable detail the Expenses for such Expense Year showing at least the following major categories and subcategories of Expenses (“Expense Categories”), to the extent any of the same are included in Expenses in a particular Expense Year: administration; cleaning; engineering; repairs and maintenance; HVAC; elevator; security/safety; insurance; management fees; costs and assessments against the Project under the Declaration (with any detail and/or breakdown provided by the EOP Owner pursuant to the Declaration); and a detailed breakdown of all capital costs included in Expenses for such year. If the actual Expenses for such Expense Year exceeds the estimated Expenses paid by Tenant for such Expense Year, Tenant shall pay to Landlord the difference between the amount paid by Tenant and the actual Expenses within thirty (30) days after the receipt of an Expense Statement. If the total amount paid by Tenant for any such Expense Year shall exceed the actual Expenses for such Expense Year, such excess shall be credited against the next installment of the estimated Expenses due from Tenant to Landlord hereunder or if the Term has ended then Landlord shall reimburse Tenant for such overage on or before the thirtieth (30th) day following the Expiration Date. Notwithstanding anything to the contrary contained herein, no delay by Landlord in providing an Expense Statement shall be deemed a default by Landlord or a waiver of either Landlord’s right to require payment of the actual or estimated sums of Expenses or Tenant’s right to receive a reimbursement of overpaid Expenses.

(iv) Other: To the extent any item of Real Estate Taxes or Expenses is payable by Landlord in advance of the period to which it is applicable (e.g. insurance and tax escrows required by any Mortgagee), or to the extent that prepayment is customary for the service or matter, Landlord may (i) include such items in Landlord’s estimate for periods prior to the date such item is to be paid by Landlord and (ii) to the extent

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Landlord has not collected the full amount of such item prior to the date such item is to be paid by Landlord, Landlord may include the balance of such full amount in a revised monthly estimate for Additional Charges. If the Commencement Date or Expiration Date shall occur on a date other than the first day of a Tax Year and/or Expense Year, Real Estate Taxes and Expenses, for the Tax Year and/or Expense Year in which the Commencement Date or Expiration Date, as applicable, occurs shall be prorated on a daily basis based upon the number of days in such Tax Year and/or Expense Year as set forth in Section 3(a) above.

(v) Audit: Landlord shall maintain at all times during the term of this Lease, at an office of Landlord located in Santa Clara County, California (and, if not available in Santa Clara County, Landlord will provide accurate copies thereof in Santa Clara County for Tenant’s review), full, complete and accurate books of account and records with respect to Expenses and Real Estate Taxes, and shall retain such books and records, as well as contracts, bills, vouchers, and checks, and such other documents as are reasonably necessary to properly audit the Expenses and Real Estate Taxes. If Tenant shall dispute the amount set forth in any statement provided by Landlord hereunder, the Tenant shall have the right, not later than sixty (60) days following receipt of such statement and upon the condition that Tenant shall first pay to Landlord the full amount in dispute, to notify the Landlord of such dispute and to request an audit in writing, and within sixty (60) days of the Landlord’s receipt of the Tenant’s written notice the Tenant shall cause the Landlord’s books and records with respect to Expenses and Real Estate Taxes for such fiscal year to be audited by a reputable, independent, third party certified public accountant experienced in performing such type of audits selected by the Tenant and subject to the Landlord’s approval which shall not be unreasonably withheld or delayed. Such auditor shall execute a commercially reasonable confidentiality agreement with respect to Landlord’s records and the results of any such audit. The applicable Expense Statement(s) and/or Tax Statement(s) shall be appropriately adjusted on the basis of such audit. If such audit discloses a liability for a refund in excess of six percent (6%) of the actual Expenses or Real Estate Taxes, as applicable, for the fiscal year just ended, the cost of such audit shall be borne by the Landlord, otherwise the cost of such audit shall be paid by the Tenant. If the Tenant shall not request an audit in accordance with the provisions of this Section within sixty (60) days after receipt of the statement provided pursuant to this Section, such statement shall be final and binding for all purposes. The Tenant acknowledges and agrees that any information revealed in the above described audit may contain proprietary and sensitive information and that significant damage could result to the Landlord if such information were disclosed to any party other than the Tenant’s auditors, executives, financial managers and consultants, lenders and tenants, any potential assignee or subtenant of the Premises, and each of the foregoing’s legal counsel, executives and financial managers, all of whom the Tenant shall require to keep confidential any information discovered through such audit. Except to the extent required by an order of a court with proper jurisdiction (in which event, the Tenant shall give the Landlord reasonable prior notice prior to any such disclosure required of the Tenant), Tenant shall not in any manner disclose, provide or make available any information revealed by the audit to any person or entity (other than those listed above) without the Landlord’s prior written consent, which consent may be withheld in the Landlord’s sole and absolute discretion. The information disclosed by the

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audit will be used by the Tenant solely for the purpose of evaluating the Landlord’s books and records in connection with this Section. Notwithstanding the foregoing, the audit rights set forth in this Section shall not be used by Tenant to contest the amount of Assessments charged under the Declaration (as opposed to the method of amortization of any portion that would be a Capital Expenditure or the characterization of any portion as a Capital Expenditures, which are subject to audit pursuant to this Section), which amounts may be audited by Tenant through the terms of Section 4.11 of the Declaration, provided that (i) Landlord shall take appropriate action and use commercially reasonable efforts to allow Tenant to exercise such audit rights, and will cooperate in a commercially reasonable manner in any such audit pursued by Tenant, and (ii) to the extent that Tenant achieves a reimbursement of any previously paid Assessments through any such audit, Landlord shall reimburse such amounts to Tenant to the extent that Tenant previously paid Expenses or Real Estate Taxes that are attributable to such reimbursed Assessments.

(c) “Rent”. As used herein, the term “Rent” shall include all Monthly Base Rent and Additional Charges (including, without limitation, Additional Charges for Expenses and Taxes pursuant to Section 3(b)). If the Commencement Date occurs on a day other than the first day of a calendar month, or the Expiration Date occurs on a day other than the last day of a calendar month, then the Monthly Base Rent and any applicable Additional Charges for such fractional month shall be prorated as set forth in Section 3(a) above.

(d) Late Charges. Tenant recognizes that late payment of any Monthly Base Rent and/or Additional Charges will result in administrative expenses to Landlord, the extent of which additional expense is extremely difficult and economically impractical to ascertain. Tenant therefore agrees that if Tenant has not paid any installment of any Monthly Base Rent and/or Additional Charges ten (10) business days after it is due, the amount of such unpaid Monthly Base Rent and/or Additional Charges shall be increased by a late charge to be paid to Landlord by Tenant in an amount equal to one percent (1%) of the amount of the delinquent Monthly Base Rent and/or Additional Charges plus any reasonable attorneys’ fees incurred by Landlord in order to collect such Rent or other charges not paid by Tenant; provided that, the first time during any calendar year during the Term that Tenant does not pay any Monthly Base Rent and/or Additional Charges when due, Tenant shall be afforded a grace period of ten (10) business days following written notice from Landlord that a payment has not been timely made prior to the imposition of such late charge. In addition, any outstanding Monthly Base Rent, Additional Charges, late charges and other outstanding Rent amounts that are not paid prior to the expiration of applicable grace or cure periods provided hereunder shall accrue interest from the date due until paid to Landlord at an annualized rate of the lesser of (i) the greater of (a) 10% or (b) The Federal Reserve Discount Rate plus 5%, or (ii) the maximum rate permitted by law (the “Default Rate”). Tenant agrees that such amount is a reasonable estimate of the loss and expense to be suffered by Landlord as a result of such late payment by Tenant.

(e) Taxes Directly Payable by Tenant. Prior to delinquency Tenant shall pay all taxes levied or assessed upon Tenant’s equipment, furniture, fixtures and other personal property located in or about the Premises. If and to the extent that the assessed value of Landlord’s property is increased by the inclusion therein of a value placed upon Tenant’s equipment, furniture, fixtures or other personal property, Tenant shall pay to Landlord, within thirty (30) days after written demand accompanied by reasonably detailed back-up documentation, the taxes so levied against Landlord, or the proportion thereof resulting from said increase in assessment, as an Additional Charge.

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4. USE.

(a) Use of the Premises and Common Area. Tenant may use and occupy the Premises for the purposes specified in the Basic Lease Information (“Permitted Use”), subject to the terms and conditions of this Lease, and for no other use or purpose without the prior written consent of Landlord, which consent Landlord shall not unreasonably withhold, condition or delay. Tenant shall be entitled to the use on a nonexclusive basis, in accordance with the limitations and restrictions in this Lease, of the Project Common Area with other occupants of the Project, if any. It is the intention of Landlord and Tenant that Tenant be able to use the Premises in the same manner during the Term as it did prior to the Commencement Date. Accordingly, Tenant shall have the use of the telecommunications and fiber optic lines, infrastructure and facilities located on the Land and serving the Premises, utility lines and infrastructure located on the Project up to the point to connection to the public utility in the public right of way, exterior signage located on the Project, and Antennae located on or adjacent to the Building and also of the equipment located within Garage B (as defined in the Declaration and listed on Exhibit C attached hereto (the “Exterior Equipment”) (all of the foregoing, including the Exterior Equipment, being collectively defined as the “Existing Facilities”), at no additional charge to Tenant. Notwithstanding anything to the contrary in the Basic Lease Information or in this Lease, Tenant understands and agrees that certain conditions, covenants and restrictions, easements, licenses, access agreements and other encumbrances recorded in the official records of Santa Clara County (collectively, any ground lease and any such other encumbrances, including the Declaration and Master CC&Rs defined below, are sometimes collectively referred to herein as the “Encumbrances”) may encumber the Land and/or Project now or in the future, including, without limitation, (i) the Declaration, and (ii) Skyport Plaza Declaration of Common Easements, Covenants, Conditions and Restrictions (the “Master CC&Rs”). Tenant further understands that Tenant’s occupancy and use of the Premises and use of the Common Area may be restricted by such Encumbrances. Landlord may, from time to time, promulgate reasonable and customary rules and regulations as reasonably deemed necessary and appropriate for the operation and maintenance of a single tenant building such as the Building.

(b) Rights under Declaration. During the Term of the Lease, Tenant shall have the right to exercise (on behalf of Landlord) all of the rights of the “Brocade Owner” under the Declaration to the extent not in conflict with the express terms of this Lease and to the extent relating to Tenant’s use and operation of the Premises, use of the Common Area, and/or any Expenses, Real Estate Taxes or other amounts payable by Tenant hereunder, including, without limitation, the right to audit Assessments charged to the Brocade Owner as provided in Section 4.11 of the Declaration. The parties agree that Tenant shall not have the right of Brocade Owner to reconfigure the common areas as provided in the Declaration.

(c) No Nuisance or Waste. Tenant shall not use or allow the Premises to be used for any unlawful purpose, nor shall Tenant cause or maintain or permit any nuisance in, on or about the Premises or Project. Tenant shall not commit or suffer the commission of any waste in, on or about the Premises.

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5. COMPLIANCE WITH LAWS.

(a) Tenant’s Compliance Obligations. Tenant shall not use the Premises or permit anything to be done in or about the Premises, or do or permit anything to be done by Tenant or any of Tenant’s employees, agents, affiliates, principals, licensees, assigns, subtenants, successors or contractors (each of the foregoing including Tenant, a “Tenant Party” and collectively, the “Tenant Parties”) within the portions of the Project outside the Premises, which will in any way conflict with any Laws (as defined below), and Tenant shall operate its business at the Premises in compliance at all times with all Laws; provided, however, that Tenant’s obligation to comply with Laws is subject to Section 31 below relating to Hazardous Materials. Additionally, Tenant shall, at its sole cost and expense, correct any condition in the Premises, Building or Project necessary to remedy any non-compliance with Laws; provided, however, that if any such compliance requirement (i) relates to the “Base Building” (as defined in Section 7(a) below), (ii) requires a Capital Expenditure (as defined in Section 7(d) below), and (iii) is not triggered by Tenant’s installation after the Commencement Date of any improvements or Alterations in the Premises or use of any such improvements or Alterations, or by Tenant’s specific use of the Premises (as opposed to general office use) (such requirement satisfying clauses (i), (ii) and (iii) being defined as a “Capital Compliance Obligation”), then the terms of Section 7(d) shall apply. Capital Compliance Obligations shall not include, and Tenant shall bear the entire cost of, compliance requirements that are triggered by Tenant’s installation after the Commencement Date of any improvements or Alterations in the Premises or use of any such improvements or Alterations, or by Tenant’s specific use of the Premises (as opposed to general office use) (such requirements being defined as the “Tenant Compliance Work”), and Section 7(d) shall not apply to Tenant Compliance Work. Tenant may elect, instead of performing any Tenant Compliance Work triggered by Tenant’s installation or use of any improvements or Alterations in the Premises, to remove or modify the improvements or Alterations triggering the requirement prior to the expiration or earlier termination of this Lease; and (2) Tenant may elect, instead of performing Tenant Compliance Work caused by Tenant’s specific use of the Premises (as opposed to general office use), to discontinue the specific use triggering the non-compliance.

(b) Landlord’s Compliance Obligations. Landlord’s only obligations with respect to compliance of the Premises, Building, Project or Common Area with applicable Laws are (i) as set forth in Section 7(d), and (ii) to use commercially reasonable efforts to enforce any obligations of the EOP Owner under the Declaration.

(c) General.

(i) In the case of any conflict between the provisions of this Section 5 and Section 31 below with respect to Hazardous Materials, Section 31 shall control.

(ii) Any alterations that are Tenant’s responsibility pursuant to Section 5(a) shall be made in accordance with Section 6 below, at Tenant’s sole cost and expense.

(iii) The allocation of Landlord’s costs with respect to Landlord Compliance Work performed by Landlord shall be as set forth in Section 3(b).

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(iv) Landlord and Tenant shall each have the right to contest any alleged violation of Laws in good faith, including, without limitation, the right to apply for and obtain a waiver or deferment of compliance, the right to assert any and all defenses allowed by Law and the right to appeal any decisions, judgments or rulings to the fullest extent permitted by Law. Landlord and Tenant shall each, with respect to its obligations under this Section 5, make all repairs, additions, alterations or improvements necessary to comply with the terms of any final order or judgment, after the exhaustion of any and all rights to appeal or contest.

(v) As used herein, the term “Laws” shall mean any and all present and future laws, statutes, ordinances, resolutions, regulations, proclamations, orders or decrees of any municipal, county, state or federal government or other governmental or regulatory authority with jurisdiction over the Project, or any portion thereof, whether currently in effect or adopted in the future and whether or not in the contemplation of the parties hereto, and shall include, without limitation, all Laws relating to health and safety (including, without limitation, the California Occupational Safety and Health Act of 1973 and the California Safe Drinking Water and Toxic Enforcement Act of 1986, including posting and delivery of notices required by such Laws with respect to the Premises), disabled accessibility (including, without limitation, the Americans with Disabilities Act, 42 U.S.C. section 12101 et seq.), Hazardous Materials, and all present and future life safety, fire, sprinkler, seismic retrofit, transportation demand management plan, building code and municipal code requirements. Tenant shall promptly deliver to Landlord a copy of any notice received from any governmental agency in connection with the Premises.

(d) Insurance Requirements. Tenant shall not do or permit anything to be done in or about the Premises or at the Project or bring or keep anything therein which will in any way increase the rate of any insurance upon the Project or any of its contents (unless Tenant agrees to pay for such increase) or cause a cancellation of any insurance on the Project or otherwise violate any requirements, guidelines, conditions, rules or orders with respect to such insurance. Tenant shall at its sole cost and expense promptly following notice to Tenant comply with the requirements of the Insurance Services Office (ISO), board of fire underwriters, or other similar body now or hereafter constituted relating to or affecting Tenant’s use or occupancy of the Project (other than in situations where compliance involves repair, maintenance or replacement of items that Landlord is expressly required to repair, maintain or replace under this Lease).

6. ALTERATIONS.

(a) Landlord Consent. Tenant shall not make or suffer to be made any alterations, additions or improvements (herein referred to individually as an “Alteration,” and collectively as the “Alterations”) in, on or to the Premises or Land or any part thereof without the prior written consent of Landlord. Tenant’s request for approval of any such proposed Alterations shall be accompanied by a full set of complete plans and specifications for such proposed Alterations for Landlord’s review. If Landlord fails to approve or disapprove any proposed Alterations within twenty (20) calendar days after receipt of Tenant’s written request for approval, Landlord shall be deemed to have approved such Alterations. Any Alterations in, on or to the Premises, except for Tenant’s Personal Property (as defined below) shall be the

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property of Tenant during the Term and shall become Landlord’s property at the end of the Term without compensation to Tenant, provided that, concurrent with and as a condition to Landlord’s approval of any Alterations of a non-customary general office nature, Landlord may require that Tenant remove such Alterations at the expiration or earlier termination of the Lease. If Tenant fails to complete any required removal and/or to repair any damage caused by the removal of any improvement or Alterations in the Premises as set forth herein, Landlord may (as its sole remedy for such failure by Tenant to remove), upon not less than five (5) business days’ notice to Tenant, do so and may charge the cost thereof to Tenant. Landlord shall exercise good faith business judgment in reviewing any request by Tenant for Landlord’s consent to Alterations and shall not unreasonably withhold, condition or delay its consent to Alterations. “Tenant’s Personal Property” shall mean, collectively, any trade fixtures, furniture, trade equipment and other personal property located in the Premises or installed by the Tenant which may be removed from the Premises without injury thereto (including, without limitation, demountable partitions, laboratory fixtures and equipment, refrigerators and other kitchen appliances, computer racking and similar demountable fixtures, but excluding wiring, conduit and fiber optic cabling and similar infrastructure related to telephone, telecommunications or similar communications systems). Tenant’s Personal Property shall remain the property of the Tenant during the Term and Tenant’s rights with respect to the removal of Tenant’s Personal Property are as set forth in Section 23 below.

(b) Permitted Alterations. Notwithstanding Section 6(a), Tenant may make Alterations to the Premises without Landlord’s prior consent so long as such Alterations (i) do not have a material adverse effect on the Base Building (including Base Building Systems), (ii) are not visible from the exterior of the Premises and do not otherwise affect the exterior appearance of the Building, (iii) are consistent with Tenant’s Permitted Use hereunder; (iv) do not require any application to a political jurisdiction for rezoning, general plan amendment, variance, conditional use permit or architectural review approval, (v) will not materially interfere with the use and occupancy of any other portion of the Project by Landlord, or by any other party with the right to use any portion of the Project, and (vi) comply with any ground lease and any other Encumbrances (any such Alterations being defined herein as “Permitted Alterations”). Tenant shall be required to notify Landlord in writing before making any Permitted Alterations and within thirty (30) days after completion of such Permitted Alterations.

(c) Construction of Alterations. All Alterations shall be made by Tenant, at Tenant’s sole cost and expense, and, other than Permitted Alterations, shall be made in accordance with plans and specifications reasonably approved by Landlord, and with a contractor reasonably approved by Landlord.

7. REPAIR AND MAINTENANCE.

(a) Landlord’s Obligations to Repair and Maintain. Landlord shall pay for Capital Expenditures relating to the Base Building as set forth in Section 7(d) below. As used herein, the “Base Building” shall mean and refer to (i) the roof of the Building (excluding the roof membrane), (ii) the exterior walls, windows and window frames of the Building, and (iii) the floor and ceiling slabs and other structural portions of the Building, including, without limitation, the foundation, curtain wall, exterior glass, mullions, columns, beams and shafts (including elevator shafts), and (iv) the components of the Building Systems (as defined in Section 7(b)) below) which are more particularly described on Exhibit F (the “Base Building Systems”). The Base Building shall not include any interior tenant improvements.

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(b) Tenant’s Obligations to Repair and Maintain. At all times during the Lease Term, and, subject to reimbursement from Landlord for Capital Expenditures to the extent provided in Section 7(d) below, at Tenant’s sole cost and expense, Tenant shall repair and maintain the Premises, the Building (including, without limitation, the Building Systems (defined below), any telecommunications or other cabling, and all improvements, fixtures and furnishings therein), the Existing Facilities (to the extent not required to be repaired and maintained by the EOP Owner under the Declaration) and the Exterior Equipment, in the same order, repair and condition as existed as of the Commencement Date (ordinary wear and tear excepted), including promptly and adequately repairing the same and, to the extent repair is not reasonably practicable, replacing the same (the “Tenant Maintenance Obligations”). Tenant shall maintain and operate the items subject to the Tenant Maintenance Obligations in accordance with all applicable Laws and applicable permits to operate the same, and in accordance with any applicable manufacturer specifications. As used herein, the term “Building Systems” shall mean mechanical, electrical, plumbing, sanitary, sprinkler, heating ventilation and air conditioning, internal security, fire/life safety and elevator systems and emergency generators serving the Building (excluding the Exterior Equipment). Tenant agrees that the overhauls of the Base Building chiller systems that have been commenced by Tenant prior to the date hereof (which may include replacement of gaskets, seals, bearings, and vanes, and rebalancing of any rotating parts of the chiller) shall be completed by Tenant at Tenant’s sole cost and expense.

(c) Maintenance Service Contracts and Standards. In connection with the Tenant Maintenance Obligations contained in Section 7(b), Tenant shall, at its own cost and expense, enter into regularly scheduled preventive maintenance service contracts with maintenance contractors approved by Landlord, in its reasonable discretion, for servicing all of the Base Building Systems, and shall provide copies of such contracts to Landlord at Landlord’s request. At Landlord’s request, Tenant shall use reasonable efforts to cause maintenance service contracts to specifically name Landlord as a third party beneficiary, with the right to receive copies of all notices delivered under such contract and the ability to exercise Tenant’s rights thereunder, at Landlord’s sole election, upon Tenant’s default or upon any termination or expiration of the Lease. Except as provided in the preceding sentence, no maintenance service contracts shall be binding on Landlord. Landlord acknowledges that the maintenance service contracts and contractors currently in place with respect to the Project are acceptable to Landlord. Tenant shall regularly, in accordance with commercially reasonable standards, generate and maintain preventive maintenance records relating to the Base Building Systems. At the expiration or earlier termination of this Lease, and from time to time upon Landlord’s request during the Term, Tenant shall deliver a copy of the preventative maintenance records to Landlord.

(d) Capital Expenditures. If Tenant reasonably and in good faith determines that (i) a Capital Compliance Obligation is required under Section 5(a), or (ii) a Capital Expenditure (defined below) is required in connection with the Base Building, subject to the terms of this Section 7(d), then Landlord shall reimburse Tenant for the entire cost of any such Capital Expenditure within thirty (30) days after receipt of a bill or statement therefor from Tenant accompanied by reasonably detailed back-up documentation. Unless such Capital

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Expenditure was required to remedy Building conditions which are in violation of applicable Laws as of the Commencement Date (in which event Landlord shall bear the entire cost), Landlord may include the amortized portion of such reimbursed costs in “Expenses” chargeable to Tenant in each month during the Lease Term in accordance with and to the extent allowed by Section 3(b)(i)(D)(1)(v). ). Landlord shall not be required to pay for any Capital Expenditure to the extent required by or arising from Tenant’s breach of the terms of this Lease, including any failure of Tenant to perform the Tenant Maintenance Obligations, or to maintain service contracts with respect thereto, to the extent required by the terms of Section 7(b) and 7(c), above. As used herein, a “Capital Expenditure” shall mean an expenditure that would generally be deemed to be capital in nature, and would not generally be categorized as an “expense” item, as determined in accordance with the Practice Standard. Prior to making any Capital Expenditure, Tenant shall notify Landlord that it deems that a Capital Expenditure is required. Landlord shall have the right to approve any Capital Expenditure in advance (which approval shall not be unreasonably withheld, provided that it shall be reasonable for Landlord to withhold consent to a Capital Expenditure that is not reasonably required or commercially prudent at the time Tenant proposes to make it, taking into account, among other things, Tenant’s use of the Premises, the condition of the Building and Project, any cost savings that could be expected to result from such expenditure, and the potential economic and non-economic effects on the Tenant and the Building and Project of a delay in making such expenditure), including approval of the manner in which the particular item is sourced, constructed, repaired or installed, and Landlord’s failure within thirty (30) days after written notice from Tenant (or, in the event of emergency, within two (2) business days after written notice from Tenant, which notice for this purpose only may be given verbally to Landlord’s property manager for the Building, with a hard copy to follow within 24 hours by one of the other approved methods of delivery of notices) to disapprove any such Capital Expenditure shall be deemed approval. In connection with any non-emergency Capital Expenditure, Tenant shall bid the applicable job to at least three (3) qualified reputable contractors or vendors, and shall select the lowest qualified bid, and any emergency Capital Expenditure shall be performed at a reasonable competitive price taking into account any timing and other issues presented by the emergency.

(e) Waiver. Tenant hereby waives any and all rights under and benefits of subsection 1 of Section 1932 and Sections 1941 and 1942 of the California Civil Code or under any similar law, statute, or ordinance now or hereafter in effect.

8. LIENS. Tenant shall keep the Premises and Project free from any liens arising out of any work performed, material furnished or obligations incurred by or on behalf of Tenant (other than work performed by Landlord). Tenant shall protect, defend, indemnify, and hold Landlord harmless from and against any claims, liabilities, judgments or costs (including, without limitation, reasonable attorneys’ fees and costs) arising out of the same or in connection therewith. In the event that Tenant shall not, within twenty (20) days following notice to Tenant of the imposition of any such lien, cause the same to be released of record by payment or posting of a proper bond, Landlord shall have, in addition to all other remedies provided herein and by law, the right, but not the obligation, to cause the same to be released by such means as it shall reasonably deem proper, including without limitation by the payment of the claim giving rise to such lien or by the posting of a bond. All such sums paid by Landlord and all expenses reasonably incurred by Landlord in connection therewith shall be considered Additional Charges and shall be payable to Landlord by Tenant within ten (10) business days following demand

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therefor (accompanied by reasonably detailed back-up documentation). Landlord shall have the right at all times to post and keep posted on the Premises any notices permitted or required by law, or which Landlord shall deem proper, for the protection of Landlord, the Premises, the Project and any other party having an interest therein, from mechanics’ and materialmen’s liens.

9. ASSIGNMENT AND SUBLETTING.

(a) Landlord’s Consent Required. Except as otherwise provided in this Section 9, Tenant shall not directly or indirectly, voluntarily or by operation of law, sell, assign, encumber, pledge or otherwise transfer or hypothecate all or any part of the Premises or Tenant’s leasehold estate hereunder (collectively, “Assignment”), or permit the Premises to be occupied by anyone other than Tenant or sublet the Premises or any portion thereof (the foregoing, including without limitation any license or use agreement, any sub-sublease or subsequent subletting by any subtenant, sub-subtenant or other occupant of any portion of the Premises, and similar occupancy rights, collectively, “Sublease”), without Landlord’s prior written consent in each instance, which consent shall not be unreasonably withheld, conditioned or delayed. If Landlord consents to the Sublease or Assignment, Tenant may thereafter enter into a valid Sublease or Assignment upon the terms and conditions set forth in this Section 9. Without limitation as to other reasonable grounds for withholding consent, the parties hereby agree that it shall be reasonable under this Lease and under any applicable Law for Landlord to withhold consent to any proposed Assignment or Sublease where one or more of the following apply:

(i) The transferee is of a character or reputation or engaged in a business which is not consistent with the quality of the Building or the Project;

(ii) The transferee is either a governmental agency or instrumentality thereof; provided, however, that Tenant shall be entitled to assign, sublet or otherwise transfer to a governmental agency or instrumentality thereof to the extent Landlord has leased or has permitted the lease of space in the Project to a comparable (in terms of security, foot traffic, prestige, eminent domain and function oriented issues) governmental agency or instrumentality thereof in comparably located space of comparable size;

(iii) The transferee is not a party of reasonable financial worth and/or financial stability in light of the responsibilities to be undertaken in connection with the Assignment or Sublease, as applicable, on the date consent is requested.

(b) Request for Consent. If Tenant desires at any time to enter into an Assignment of this Lease or a Sublease of the Premises or any portion thereof for which Landlord’s consent is required, it shall first give written notice to Landlord of its desire to do so, which notice shall contain (i) the name and address of the proposed assignee, subtenant or occupant; (ii) the name and nature of the proposed assignee’s, subtenant’s, or occupant’s business to be carried on in the Premises; (iii) the material terms and provisions of the proposed Assignment or Sublease (including, without limitation, a description of the portion of the Premises to be subleased or occupied, if applicable); and (iv) such financial and other information as Landlord may, within five (5) business days following Tenant’s delivery of the materials described in clauses (i) through (iii) above, reasonably request concerning the proposed assignee, subtenant or occupant.

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(c) Landlord’s Response. At any time within ten (10) business days after Landlord’s receipt of the notice specified in Section 9(b) (including all required information and documentation), Landlord may by written notice to Tenant elect either (i) to consent to the Sublease or Assignment; or (ii) to disapprove the Sublease or Assignment (in which case, Landlord shall provide reasonably detailed explanation for its disapproval).

(d) No Release or Deemed Approval. No consent by Landlord to any Assignment or Sublease by Tenant shall relieve Tenant of any obligation to be performed by Tenant under this Lease, whether arising before or after the Assignment or Sublease. The consent by Landlord to any Assignment or Sublease shall not relieve Tenant from the obligation to obtain Landlord’s express written consent to any other Assignment or Sublease. Any Assignment or Sublease that is not in compliance with this Section 9 shall be void and, at the option of Landlord, shall constitute a material Default by Tenant under this Lease. The acceptance of Monthly Base Rent or Additional Charges by Landlord from a proposed assignee or sublessee shall not be deemed consent to such Assignment or Sublease by Landlord.

(e) Reorganization; Permitted Transfers. Notwithstanding anything to the contrary contained in this Section 9, Tenant may enter into any of the following transfers (a “Permitted Transfer”) without Landlord’s prior written consent so long as Tenant notifies Landlord promptly following such Permitted Transfer: (1) Tenant may assign its interest in the Lease to a corporation, partnership, professional corporation, limited liability company, or limited liability partnership (“Transfer Entity”) which results from a stock sale, merger, consolidation or other reorganization; and (2) Tenant may assign this Lease to a Transfer Entity which purchases or otherwise acquires all or substantially all of the assets of Tenant.

(f) Assumption by Assignee. Each assignee pursuant to an Assignment as provided in this Section 9 shall assume all obligations of Tenant under this Lease that arise or accrue from and after the effective date of such Assignment, and shall be and remain liable jointly and severally with Tenant for the payment of Monthly Base Rent and Additional Charges, and for the performance of all the terms, covenants, conditions and agreements herein contained on Tenant’s part to be performed for the Term. No Assignment shall be binding on Landlord unless the assignee or Tenant shall deliver to Landlord a counterpart of the Assignment and an instrument in recordable form that contains a covenant of assumption by the assignee satisfactory in substance and form to Landlord, consistent with the requirements of this Section 9(f), but the failure or refusal of the assignee to execute such instrument of assumption shall not release or discharge the assignee from its liability as set forth herein.

(g) Affiliate Transfers. Tenant shall have the right, without Landlord’s consent but with written notice to Landlord promptly thereafter, to enter into an Assignment of Tenant’s interest in this Lease or a Sublease of all or any portion of the Premises to an Affiliate (as defined below) of Tenant, provided that in connection with an Assignment that is not a Sublease, the Affiliate delivers to Landlord prior to the effective date of such Assignment a written notice of the Assignment and an assumption agreement whereby the Affiliate assumes and agrees to perform, observe and abide by the terms, conditions, obligations, and provisions of

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this Lease arising from and after the effective date of the assignment. As used in this Section 9(g), the term “Affiliate” shall mean and collectively refer to a corporation or other entity which controls, is controlled by or is under common control with Tenant, by means of an ownership of either (aa) more than fifty percent (50%) of the outstanding voting shares of stock or partnership or other ownership interests, or (bb) stock, or partnership or other ownership interests, which provide the right to control the operations, transactions and activities of the applicable entity.

10. INSURANCE AND INDEMNIFICATION.

(a) Landlord Indemnity. To the fullest extent permitted by Law, and except to the extent caused by the negligence or willful misconduct of Tenant Parties after the Commencement Date or Tenant’s breach of this Lease, Landlord shall indemnify and hold Tenant harmless from and defend Tenant against any and all claims or liability for any loss, injury or damage to any person or property whatsoever (including any reasonable attorneys’ fees, but excluding any loss of business or profits or other consequential damages), which may be imposed upon, incurred by or asserted against Tenant by a third-party occurring in, on, or about the Premises, Building, Project and Common Area that occur by reason of the negligence or willful misconduct of Landlord Parties after the Commencement Date; provided, however, that (i) the forgoing indemnity shall not include claims to the extent insured or required to be insured by Tenant under this Lease, and (ii) the foregoing shall not negate, limit or affect any express and/or specific limitation on Landlord’s liability set forth in this Lease including, without limitation, in Section 10(b) and in Section 18(d).

(b) Tenant Release. To the fullest extent permitted by Law, and notwithstanding anything to the contrary in this Lease, Landlord shall not be liable to Tenant, and Tenant hereby waives all claims against Landlord, (i) for any loss, death, injury or damage to person or property occurring in or on the Premises for any reason whatsoever; or (ii) that occur by reason of the negligence or willful misconduct of Tenant Parties after the Commencement Date. Tenant shall be required to maintain the insurance described in Section 10(d) below during the Term.

(c) Tenant Indemnity. To the fullest extent permitted by Law, and except to the extent caused by the negligence or willful misconduct of Landlord or Landlord’s employees, agents, affiliates, principals, licensees, assigns, successors or contractors (collectively, “Landlord Parties”) or Landlord’s breach of this Lease, Tenant shall indemnify and hold Landlord harmless from and defend Landlord against any and all claims or liability for any loss, injury, death or damage to any person or property whatsoever (including any reasonable attorneys’ fees) which may be imposed upon, incurred by or asserted against Landlord by a third-party: (i) occurring in or on the Premises; or (ii) occurring in, on, or about any other portion of the Project to the extent such injury or damage is caused, after the Commencement Date, by the negligence or willful misconduct of the Tenant Parties; provided, however, that the foregoing indemnity shall not include claims to the extent insured or required to be insured by Landlord under this Lease. In the event of a discrepancy between the terms of this Section 10(c) and the terms of Section 31 of the Lease concerning Hazardous Material liability, the latter shall control.

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(d) Tenant Insurance Requirements. Tenant shall procure at its cost and expense and keep in effect during the Term the following insurance:

(i) Commercial general liability insurance with respect to the Premises and Project on an occurrence form, including contractual liability, with a minimum combined single limit of liability of Four Million Dollars ($4,000,000) per occurrence. The limits of such insurance shall not limit the liability of Tenant hereunder, and Tenant is responsible for ensuring that the amount of liability insurance carried by Tenant is sufficient for Tenant’s purposes.

(ii) “All risk” property insurance (including, without limitation, boiler and machinery (if applicable), sprinkler damage, vandalism and malicious mischief), with earthquake sprinkler leakage endorsement, insuring (A) the existing leasehold improvements within the Premises (the “Leasehold Improvements”), (B) Tenant’s Personal Property, and (C) all Alterations constructed on or after the Commencement Date. Such insurance shall be in an amount equal to full replacement cost of the aggregate of the foregoing and shall provide coverage comparable to the coverage in the standard ISO All Risk form, when such form is supplemented with the coverages required herein.

(iii) During the course of construction of any Alterations, Tenant shall purchase and keep in force Comprehensive Builder’s Risk/Course of Construction insurance, with the same requirements as property insurance policies described above but with appropriate adjustments to reflect that the Alterations are under construction.

(iv) Worker’s compensation insurance as may be required by law.

(v) Tenant shall carry and maintain during the entire Term, at Tenant’s sole cost and expense, increased amounts of the insurance required to be carried by Tenant pursuant to this Section 10(d).

Insurance required to be carried by Tenant under this Section 10(d) shall be in financially responsible companies licensed to do business in California and rated “A” IX or better in “Best’s Insurance Guide”. In addition, commercial general liability insurance shall name Landlord, any Mortgagee (of whom Tenant has received written notice from Landlord), any ground lessor (of whom Tenant has received written notice from Landlord), and such other parties as Landlord may reasonably request in writing as additional insureds (by endorsement in a form reasonably acceptable to Landlord), shall specifically include the liability assumed hereunder by Tenant, and shall provide that it is primary insurance, and not excess over or contributory with any other valid, existing and applicable insurance in force for or on behalf of Landlord, and shall provide that Landlord and any other additional insured shall receive thirty (30) days’ written notice from the insurer prior to any cancellation or material reduction in coverage (with any reduction that causes such insurance to not comply with the requirements of this Lease being conclusively deemed material, without limitation as to other changes that may be deemed material). Tenant shall deliver copies of certificates of such policies naming the additional insureds thereof to Landlord on or before the Commencement Date, and thereafter at least ten (10) days before the expiration dates of expiring policies, and at Landlord request shall deliver copies of such

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policies. If Tenant shall fail to procure such insurance, or to deliver such certificates, Landlord may, at its option, procure same for the account of Tenant, and the cost thereof shall be paid to Landlord as Additional Charges within ten (10) days after delivery to Tenant of bills therefor accompanied by reasonably detailed back-up documentation.

(e) Survival. The provisions of this Section 10 shall survive the expiration or termination of this Lease with respect to any claims or liability occurring or arising prior to such expiration or termination.

(f) Landlord Insurance. Landlord shall carry commercial general liability insurance with respect to the Project and Building during the Term, and shall further insure the Building and the Project and Exterior Equipment during the Term (for the full replacement) against loss or damage due to fire and other casualties covered within the classification of fire and extended coverage, vandalism coverage and malicious mischief, sprinkler leakage, water damage and special extended coverage. Such coverage shall be in such amounts, from such companies, and on such other terms and conditions, as Landlord may from time to time reasonably determine but in all events materially consistent with the practices of landlords of Comparable Buildings. Additionally, at the option of Landlord, such insurance coverage may include the risks of earthquakes and/or flood damage, terrorist acts and additional hazards, a rental loss endorsement and one or more loss payee endorsements in favor of the holders of any mortgages or deeds of trust encumbering the interest of Landlord in the Building or the ground or underlying lessors of the Building, or any portion thereof. Notwithstanding the foregoing provisions of this Section 10(f), the coverage and amounts of insurance carried by Landlord in connection with the Building shall, at a minimum, be comparable to the coverage and amounts of insurance which are carried by reasonably prudent landlords of buildings comparable to and in the vicinity of the Building (provided that in no event shall Landlord be required to carry earthquake insurance), and Worker’s Compensation and Employer’s Liability coverage as required by applicable Law. Tenant shall, at Tenant’s expense, comply with all of Landlord’s insurance company requirements pertaining to the use of the Premises. Notwithstanding the foregoing obligations of Landlord to carry insurance, Landlord may modify the foregoing coverages if and to the extent it is commercially reasonable to do so. In addition to and without limiting the foregoing requirements, Landlord shall also carry all insurance required to be carried by the “Brocade Owner” under the Declaration.

11. WAIVER OF SUBROGATION. Notwithstanding anything to the contrary in this Lease, the parties hereto release each other and their respective principals, affiliates, agents (including any contractor retained by Landlord to install, maintain or monitor a fire or security alarm for the Building), employees, successors and assignees from all liability for loss or damage to the Premises, or any improvements thereto, or the Building or Project or any personal property of such party therein, that is caused by or results from a risk (i) that is actually insured against, to the extent of receipt of payment under such policy (unless the failure to receive payment under any such policy results from a failure of the insured party to comply with or observe the terms and conditions of the insurance policy covering such liability, in which event such release shall not be so limited), (ii) that is required to be insured against under this Lease, or (iii) that would normally be covered by the standard form of “special” or “all risk-extended coverage” property insurance, in each such case without regard to the negligence or willful misconduct of the party so released. Landlord and Tenant shall each obtain from their respective

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insurers under all policies of fire, theft, and other property insurance maintained by either of them at any time during the Term insuring or covering the Building, the Premises, or the Project or any portion thereof of its contents therein, a waiver of all rights of subrogation which the insurer of one party might otherwise, if at all, have against the other party and Landlord and Tenant shall each indemnify the other against any loss or expense, including reasonable attorneys’ fees, resulting from the failure to obtain such waiver.

12. SERVICES AND UTILITIES.

(a) Landlord Responsibilities. Landlord shall provide Tenant with access to the Premises 24 hours per day, 7 days per week, subject to any security services provided by Tenant.

(b) Tenant Responsibilities. Tenant shall directly arrange for the provision to the Premises of, and pay directly, all utilities and services not expressly Landlord’s responsibility pursuant to Section 12(a) above, including, without limitation, electricity, water, gas, HVAC, garbage pick-up, sewer service, internal security services, janitorial service, and telephone, cable and digital communications service. Upon request by Tenant, Landlord shall reasonably cooperate with Tenant in connection with Tenant’s efforts to obtain the foregoing utilities and services.

(c) No Excessive Load. Tenant will not without the written consent of Landlord, which consent may be withheld in Landlord’s reasonable discretion, use any apparatus or device in the Premises which, when used, puts an excessive load on the Building or its structure or Building Systems, including, without limitation, electronic data processing machines and machines using excess lighting or voltage in excess of the amount for which the Building is designed; nor connect with electric current, except through existing electrical outlets in the Premises, or water pipes or gas outlets, any apparatus or device for the purposes of using gas, electrical current or water. If Tenant shall require water or electrical current or any other resource in excess of that usually furnished or supplied for use of the Premises as it currently is used, Tenant shall first obtain the consent of Landlord, which consent will not be unreasonably withheld, conditioned or delayed, but which Landlord may refuse if in Landlord’s reasonable judgment such excess would adversely affect the Building Systems.

(d) No Liability. Landlord shall not be in default hereunder, nor be deemed to have evicted Tenant, nor be liable for any damages directly or indirectly resulting from, nor shall Tenant be relieved from performance of any covenant on its part to be performed hereunder, nor shall the rental herein reserved be abated except as expressly provided for in Section 12(e), by reason of (i) the installation or use of any equipment in connection with the foregoing utilities and services; (ii) failure to furnish, or delay or interruption in furnishing, any services to be provided by Landlord when such failure, delay or interruption is caused by Acts of God or the elements, casualty, natural disaster, acts of the government, labor strikes or disturbances of any kind, shortages of materials or labor, war, terrorist attack, or any other conditions or causes beyond the reasonable control of Landlord (any of the foregoing, “Force Majeure”), or by the making of repairs or improvements to the Premises or to the Building; or (iii) the limitation, curtailment, rationing or restriction on use of water, electricity, gas or any other form of energy, or any other service or utility whatsoever serving the Premises, the

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Building or the Project. Furthermore, Landlord shall be entitled to cooperate with the mandatory requirements of national, state or local governmental agencies or utilities suppliers in connection with reducing energy or other resources consumption.

(e) Abatement Right. If the Premises, the Exterior Equipment or Garage B (as defined in the Declaration) (or a material portion of any of the foregoing) ceases to be usable for Tenant’s business and Tenant ceases to use the Premises due to an interruption in any utility or service, then Tenant shall give Landlord notice of such event (an “Abatement Event”), and if such Abatement Event which (A) is within Landlord’s reasonable control to correct and continues for more than five (5) consecutive business days after such notice; or (B) is not within Landlord’s reasonable control to correct and continues for more than ten (30) consecutive business days after such notice (either such period as applicable, the “Eligibility Period”), then Tenant shall be entitled to an abatement of Monthly Base Rent and Additional Charges for Expenses and Taxes beginning on the first business day immediately following the expiration of such Eligibility Period, and ending on the date on which such service is restored. If the entire Premises have not been rendered unusable by such service interruption, the amount of rent abatement shall be equitably prorated. In no event shall any Mortgagee (defined in Section 15) be or become liable for any default of Landlord under this Section 12; except to the extent that such loss of service continues following such Mortgagee succeeding to Landlord’s interest hereunder.

13. TENANT’S CERTIFICATES. Each party, at any time and from time to time, within ten (10) business days from receipt of written notice from the other party, will execute, acknowledge and deliver to the other party (and, at Landlord’s request, in the case of a certificate to be executed by Tenant, to any prospective purchaser, ground or underlying lessor or Mortgagee or any other party acquiring an interest in Landlord or a lender of Landlord), a certificate in a form reasonably acceptable to the certifying party and containing such information as is customary or as may reasonably be required by any of such persons with respect to the structure of this Lease and the presence or absence of defaults hereunder. It is intended that any such certificate of Tenant delivered pursuant to this Section 13 may be relied upon by any prospective purchaser, ground or underlying lessor or Mortgagee, or such other party and that any such certificate of Landlord delivered pursuant to this Section 13 may be relied upon by prospective subtenant or assignee of Tenant acquiring an interest in Tenant.

14. HOLDING OVER. If Tenant (directly or through any successor in interest of Tenant) remains in possession of all or any portion of the Premises after the expiration or termination of this Lease with or without the written consent of Landlord, such tenancy shall be from month-to-month only, and shall not constitute a renewal hereof or an extension for any further term. In such event, Tenant shall continue to comply with or perform all the terms and obligations of Tenant under this Lease (including, without limitation, payment of Additional Charges), except that the Monthly Base Rent during Tenant’s holding over shall be one hundred fifty percent (150%) of the Monthly Base Rent and Additional Charges for Expenses and Taxes payable in the last full month prior to the termination or expiration of this Lease. Tenant acknowledges that, in Landlord’s marketing and re-leasing efforts for the Premises, Landlord is relying on Tenant’s vacation of the Premises on the Expiration Date. If Landlord has entered into a new lease or amendment (a “New Lease”) with a third party tenant (a “New Tenant”) and Landlord is unable to deliver possession of the Premises to the New Tenant, or to perform

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improvements for such New Tenant, as a result of Tenant’s holdover and Tenant fails to vacate the Premises within thirty (30) days after notice from Landlord to Tenant setting forth the impact of Tenant’s holding over on any such New Lease, then Tenant shall indemnify Landlord against all actual and direct damages (including consequential but not punitive damages) that Landlord suffers as a result of Tenant’s holdover.

15. SUBORDINATION. Without the necessity of any additional document being executed by Tenant for the purpose of effecting a subordination, this Lease shall be subject and subordinate at all times to: (i) all ground leases or underlying leases which may now exist or hereafter be executed affecting all or any portion of the Project, (ii) the Encumbrances currently in effect or, provided Tenant has reasonably approved same in writing, that Landlord may enter into in the future, and (iii) the lien of any mortgage or deed of trust which may now exist or hereafter be executed in any amount for which all or any portion of the Project, ground leases or underlying leases, or Landlord’s interest or estate in any of said items, is specified as security (any of the foregoing, a “Mortgage”, and the beneficiary or mortgagee under any of the foregoing, a “Mortgagee”); provided, however, that Landlord shall have the right to subordinate or cause to be subordinated any such ground leases or underlying leases or any such Mortgages to this Lease at Landlord’s option. Notwithstanding the foregoing, this Lease shall not be subject or subordinate to any ground or underlying lease or to any Mortgage first encumbering the Project after execution of this Lease, unless the ground lessor or Mortgagee executes a reasonable recognition and non-disturbance agreement (a “Non-Disturbance Agreement”) that provides that neither this Lease, nor Tenant’s rights nor Tenant’s possession of the Premises on the terms and conditions of this Lease will be disturbed during the Term so long as Tenant is not in Default under any of the terms, covenants, conditions or agreements of this Lease. In the event that any ground lease or underlying lease terminates for any reason or any Mortgage is foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any subordination, attorn to and become the Tenant of the successor in interest to Landlord. Tenant covenants and agrees to execute and deliver within ten (10) business days following demand by Landlord and in the form requested by Landlord and reasonably acceptable to Tenant, a Non-Disturbance Agreement and/or any customary additional documents evidencing the priority or subordination of this Lease with respect to any ground leases or underlying leases or the lien of any such Mortgage, which documents may, at any ground lessor’s or Mortgagee’s request, provide, without limitation, that the ground lessor, Mortgagee and/or any person acquiring title by reason of a foreclosure sale or an exercise of a power of sale or by deed expressly in lieu of foreclosure shall not: (i) have any liability for any act, omission, default or breach by Landlord under this Lease occurring prior to the time of such acquisition by such Mortgagee or person except to the extent that any such act, omission, breach or default continues following such entity’s acquisition of title and is capable of cure by such entity; (ii) be subject to any claim or offset which Tenant may have had against Landlord which arose prior to such foreclosure, trustee sale or deed-in-lieu, other than those offsets which may be expressly set forth in this Lease; (iii) be bound by any payment of Rent or any part thereof more than one month in advance (other than overpayment due to the estimates of Additional Charges for Expenses and Taxes being in excess of the actual Additional Charges for Expenses and Taxes); (iv) be bound by any material amendment or material modification to this Lease made after Tenant enters into any such subordination and non-disturbance agreement with such Mortgagee and without the written consent of such Mortgagee; (v) be obligated for the return of any security deposit or other thing of value now or hereafter given to Landlord to secure the performance by Tenant of its

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obligations under this Lease or any one or more of such obligations, except to the extent such security deposit or thing of value has been received by such Mortgagee or person; and (vi) be obligated to perform any repair or restoration of the Project required as a result of any damage, destruction or condemnation, except to the extent that such repair is required of Landlord under the Lease.

16. RE-ENTRY BY LANDLORD. Landlord reserves and shall at all reasonable times, upon no less than 24 hours’ prior notice (except in the case of an emergency), and subject to Tenant’s reasonable security precautions and the right of Tenant to accompany Landlord at all times (except in case of emergency), have the right to re-enter the Premises to inspect the Premises, to supply any service to be provided by Landlord to Tenant hereunder (unless Tenant is supplying such service), to post notices of nonresponsibility or as otherwise required or allowed by this Lease or by law, and to alter, improve or repair the Premises and any portion of the Building to the extent such alteration, improvement or repair is requested by Tenant hereunder or is the obligation of Landlord hereunder or is required to cure Tenant’s Default hereunder or to otherwise exercise any of Landlord’s rights or remedies hereunder, or the performance of such work is otherwise agreed to by Landlord and Tenant (and Landlord may for that purpose erect, use, and maintain scaffolding, pipes, conduits, and other necessary structures in and through the Premises where reasonably required by the character of the work to be performed and provided that the performance of any such work is coordinated in advance with Tenant to the extent commercially practicable). Further, Landlord shall have the right to re-enter the Premises, during normal business hours only, upon no less than 24 hours’ prior notice, with a Tenant escort at all times, and subject to Tenant’s reasonable security precautions, to show the Premises to prospective purchasers, Mortgagees or tenants. Landlord’s entry into the Premises in accordance with this Section 16 shall not be construed or deemed to be a forcible or unlawful entry into, or a detainer of the Premises, or an eviction, actual or constructive, of Tenant from the Premises or any portions thereof, and Tenant shall not be entitled to an abatement or reduction of Monthly Base Rent or Additional Charges in connection therewith, except as expressly set forth below. For each of the aforesaid purposes, Landlord shall at all times have and retain a key with which to unlock all of the doors in, upon and about the Premises, excluding Tenant’s vaults and safes, or special security areas (designated in advance), and Landlord shall have the right to use any and all means which Landlord may deem necessary or proper to open said doors in an emergency, in order to obtain entry to any portion of the Premises, and any entry to the Premises, or portion thereof obtained by Landlord by any of said means, or otherwise, shall not under any emergency circumstances be construed or deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction, actual or constructive, of Tenant from the Premises or any portions thereof. Landlord shall use commercially reasonable efforts during re-entry to minimize any interference with Tenant’s Permitted Use of the Premises or its business conducted therein. Notwithstanding anything to the contrary set forth herein, if (a) any entry into or closure of the Premises by Landlord pursuant to this Section (i) is not made necessary by the acts or omissions of Tenant or any Tenant Party (including, without limitation, any Default) or by events described in Sections 19 or 20, and (ii) either (A) is made necessary by events or conditions within Landlord’s reasonable control and continues for more than five (5) consecutive business days, or (B) is made necessary by events or conditions outside Landlord’s reasonable control and continues for more than thirty (30) consecutive business days; and (b) during the period of, and as a result of, such entry or closure, the Premises (or a material portion thereof) is rendered unusable by Tenant for the conduct of its business, then Tenant shall be entitled to an abatement

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of Monthly Base Rent and Additional Charges for Expenses and Taxes beginning on the first business day immediately following the expiration of such five (5) or thirty (30) business day period, as applicable, and ending on the earlier to occur of the date on which such entry or closure terminates, which abatement shall be based on the rentable square footage of the portion of the Premises so rendered unusable.

17. INSOLVENCY OR BANKRUPTCY. The appointment of a receiver to take possession of all or substantially all of the assets of Tenant, or an assignment of Tenant for the benefit of creditors, or any action taken or suffered by Tenant under any insolvency, bankruptcy, reorganization or other debtor relief proceedings, whether now existing or hereafter amended or enacted (any of the foregoing, an “Insolvency Proceeding”), shall at Landlord’s option constitute a Default (as defined in Section 18(a) below) by Tenant (provided that, with respect to a petition in bankruptcy, or receiver attachment, or other remedy pursued by a third party, such event shall not constitute a breach of this Lease so long as it is discharged within sixty (60) days).

18. DEFAULT.

(a) Tenant Default. The failure to perform or honor any covenant, condition or representation made under this Lease shall constitute a “Default” hereunder by Tenant upon expiration of the appropriate grace or cure period provided in this Section 18(a). Tenant shall have a period of ten (10) days from the date of written notice from Landlord (which notice shall be deemed to be the notice required by Section 1161 of the California Code of Civil Procedure; provided, however, that no such notice shall be deemed a forfeiture or termination of this Lease unless Landlord expressly so elects in such notice) within which to cure any failure to (i) pay Monthly Base Rent or Additional Charges, or (ii) observe or perform according to the provisions of Articles 4, 13 or 15 of this Lease. Tenant shall have a period of thirty (30) days from the date of receipt of written notice from Landlord (which notice shall be deemed to be the notice required by Section 1161 of the California Code of Civil Procedure; provided, however, that no such notice shall be deemed a forfeiture or termination of this Lease unless Landlord expressly so elects in such notice) within which to cure any other curable failure to perform any obligations under this Lease; provided, however, that with respect to any curable failure to perform a non-monetary obligation that cannot reasonably be cured within thirty (30) days, the cure period shall be extended for an additional period of time reasonably required to cause such cure if Tenant commences to cure within thirty (30) days from Landlord’s notice and continues to prosecute diligently the curing thereof. Notwithstanding the foregoing, if a specific time for performance or a different cure period is specified elsewhere in this Lease with respect to any specific non-monetary obligation of Tenant, such specific performance or cure period shall apply with respect to a failure of such obligation in lieu of, and not in addition to, the cure period provided in this Section 18(a).

(b) Landlord Remedies. Upon a Default of this Lease by Tenant, Landlord shall have the following rights and remedies in addition to any other rights or remedies available to Landlord at law or in equity:

(i) The rights and remedies provided by California Civil Code, Section 1951.2 or successor code section, including but not limited to the right to recover

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from Tenant: (A) the worth at the time of award of the unpaid Rent and other amounts which had been earned at the time of termination; (B) the worth at the time of award of the amount by which the unpaid Rent which would have been earned after termination until the time of award exceeds the amount of such Rent loss that the Tenant proves could have been reasonably avoided; (C) the worth at the time of award of the amount by which the unpaid Rent for the balance of the Term after the time of award exceeds the amount of such Rent loss that the Tenant proves could be reasonably avoided; and (D) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which, in the ordinary course of things, would be likely to result therefrom. The “worth at the time of award” of the amounts referred to in (A) and (B) shall be computed with interest at twelve percent (12%) per annum or the highest lawful rate, whichever is the lower. The “worth at the time of award” of the amount referred to in (C) shall be computed by discounting such amount at the “discount rate” of the Federal Reserve Bank of San Francisco in effect as of time of award plus one percent (1%).

(ii) The rights and remedies provided by California Civil Code, Section 1951.4 (lessor may continue lease in effect after lessee’s breach and abandonment and recover rent as it becomes due, if lessee has the right to sublet or assign, subject only to reasonable limitations). Accordingly, Landlord may continue this Lease in effect and to enforce all of its rights and remedies under this Lease, including the right to recover Monthly Base Rent and Additional Charges as they become due, for so long as Landlord does not terminate Tenant’s right to possession. Acts of maintenance or preservation, efforts to relet the Premises or the appointment of a receiver upon Landlord’s initiative to protect its interest under this Lease shall not constitute a termination of Tenant’s rights to possession;

(iii) The right to terminate this Lease by giving notice to Tenant in accordance with applicable law;

(iv) If Landlord elects to terminate this Lease, the right and power to enter the Premises and remove therefrom all persons and property and, to store such property in a public warehouse or elsewhere at the cost of and for the account of Tenant, and to sell such property and apply such proceeds therefrom pursuant to applicable California law.

(c) Landlord Default. Landlord shall have a period of thirty (30) days from the date of written notice from Tenant within which to cure any default of Landlord under this Lease; provided, however, that with respect to any default that cannot reasonably be cured within thirty (30) days, the default shall not be deemed to be uncured if Landlord commences to cure within thirty (30) days from Tenant’s notice and continues to prosecute diligently the curing thereof. Tenant agrees to deliver to any Mortgagee a copy of any notice of default served upon the Landlord in the manner prescribed by Section 24 hereof; provided that prior to such notice Tenant has been notified in writing of the address of such Mortgagee (or in the manner prescribed by a Non-Disturbance Agreement entered into between Tenant and such Mortgagee). Notwithstanding anything set forth in this Lease to the contrary, in no event shall Landlord be deemed in default of this Lease to the extent such default is the result of a breach by Tenant of any of Tenant’s representations or warranties contained in the Purchase Agreement.

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(d) Tenant’s Remedies. Notwithstanding any other provision of this Lease, any judgment against Landlord in connection with a breach or default by Landlord under the terms of this Lease shall be recoverable only from the interest of Landlord in the Building (including, but not limited to, net proceeds obtained by Landlord from any sale of any portion of the Building, rents, and third-party claims held by Landlord relating to the Building). Landlord, or if Landlord is a partnership its partners whether general or limited, or if Landlord is a corporation its directors, officers or shareholders, or if Landlord is a limited liability company its members or managers, shall never be personally liable for any such judgment. Landlord’s interest in the Building shall include any insurance proceeds received by Landlord which are not controlled by any Mortgagee.

(e) No Consequential Damages. Notwithstanding any general contrary provision herein, but without negating or limiting any express remedies of either party provided herein, except as expressly set forth in Article 14 above, neither Landlord nor the Landlord Parties nor Tenant nor the Tenant Parties shall be liable under any circumstances for injury or damage to, or interference with, Tenant’s or Landlord’s (as applicable) business, including but not limited to, loss of profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill or loss of use, in each case, however occurring.

19. DAMAGE AND DESTRUCTION.

(a) Restoration or Termination.

(i) Damage to Building. If the Building is damaged by fire or other casualty under circumstances where, pursuant to Landlord’s Repair Notice (defined below), the Premises can be made tenantable with all damage required to be repaired by Landlord hereunder so repaired on or before the date which is the earlier of (x) the date that is one hundred eighty (180) days after the commencement of such repairs, and (y) the date which is four (4) months prior to the Expiration Date (including any then-exercised Extension Term), then Landlord shall diligently rebuild the same using materials and workmanship that is substantially equal to or better in quality than those originally incorporated into the Premises; provided, however, notwithstanding anything to the contrary contained in this Lease, in no event shall Landlord have any obligation to repair or restore (or any rights to proceeds from insurance carried by Tenant with respect to) the Leasehold Improvements or any Alterations constructed after the Commencement Date. If Landlord rebuilds the Premises in accordance with this Section 19(a)(i), then this Lease shall remain in full force and effect except that Tenant shall be entitled to a proportionate reduction of Monthly Base Rent and Additional Charges for Expenses and Taxes for the period of time during which such repairs to be made hereunder by Landlord are being made and, as a result of such repairs, Tenant’s Permitted Use or access to the Premises are adversely affected, which reduction in Rent shall be based upon the proportion that the area of the Premises rendered untenantable by such damage bears to the total area of the Building, and such reduction in Rent shall continue until Tenant has been given

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reasonably sufficient time, and reasonably sufficient access to the Premises, to install any Leasehold Improvements and any Alterations performed after the Commencement Date (to the extent Tenant elects to restore them) and Tenant’s Personal Property to the extent reasonably necessary to conduct its business and to move into the Premises. The provisions of this Lease, including this Article 19, constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part of the Premises, the Building or the Project, and any statute or regulation of the State of California, including, without limitation, Sections 1932(2) and 1933(4) of the California Civil Code, with respect to any rights or obligations concerning damage or destruction in the absence of an express agreement between the parties, and any other statute or regulation, now or hereafter in effect, shall have no application to this Lease or any damage or destruction to all or any part of the Premises, the Building or the Project.

(ii) Restoration or Termination. Within forty-five (45) days after Tenant notifies Landlord in writing of the fire or other casualty to the Building, Landlord shall notify Tenant whether or not, in Landlord’s reasonable opinion (based upon Landlord’s architect and/or contractor’s good faith review), such repairs can be made (without payment of overtime or other premiums) on or before the date which is the earlier of (x) the date that is one hundred eighty (180) days after the commencement of such repairs, and (y) the date which is four (4) months prior to the Expiration Date and Landlord’s reasonable estimate of the time needed for such repairs (“Landlord’s Repair Notice”). If such repairs cannot be made (without payment of overtime or other premiums) by a date which is the earlier of (x) the date that is one hundred eighty (180) days after the commencement of such repairs and (y) the date which is four (4) months prior to the Expiration Date, Landlord shall have the option, within thirty (30) days after the date Landlord delivers the Landlord’s Repair Notice, to elect either to: (i) notify Tenant of Landlord’s intention to repair such damage and diligently prosecute such repairs, in which event this Lease shall continue in full force and effect and the Monthly Base Rent and Additional Charges for Expenses and Taxes shall be reduced as provided in Section 19(a); or (ii) notify Tenant of Landlord’s election to terminate this Lease as of a date specified in such notice, which date shall not be less than thirty (30) days nor more than sixty (60) days after such notice is given by Landlord and this Lease shall terminate on the date specified in such notice. If, pursuant to Landlord’s Repair Notice, restoration or repair of the Building will not be completed by a date which is the earlier of (x) the date that is one hundred eighty (180) days after the commencement of such repairs and (y) the date which is four (4) months prior to the Expiration Date, Tenant shall have the right to terminate this Lease within thirty (30) days following receipt of Landlord’s Repair Notice, by providing Landlord with written notice of its election to do so which notice shall specify a date for termination of the Lease, which date shall be not less than thirty (30) nor more than sixty (60) days after such notice is given by Tenant and this Lease shall terminate on the date specified in such notice. In such event (and also in the event Landlord terminates the Lease pursuant to this Section 19(a)(ii)), Tenant shall have no liability for payment of the deductible under Landlord’s insurance relating to such damage. In case of termination by either event, the Monthly Base Rent and Additional Charges for Expenses and Taxes shall be reduced by a proportionate amount based upon the extent to which such damage interfered with Tenant’s Permitted Use of the Premises, and Tenant shall pay such reduced Monthly Base Rent and Additional Charges for

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Expenses and Taxes up to the effective date of such termination. Landlord agrees to refund to Tenant any Monthly Base Rent and Additional Charges for Expenses and Taxes previously paid for any period of time subsequent to the effective date of such termination.

(b) Uninsured Casualty. Notwithstanding Section 19(a), and subject to the termination right in Section 19(c), in the event of a Major Casualty (as defined below) to the Building (i) by a casualty of a type not required to be insured against by Landlord under the terms of this Lease and which is not in fact insured by Landlord, or (ii) under circumstances where the net insurance proceeds (plus applicable deductibles that are included in Expenses) obtained as a result of such casualty are ninety-five percent (95%) or a lesser percentage of the cost of restoration, rebuilding or replacement (including circumstances in which Landlord has been required by any Mortgagee to utilize insurance proceeds to pay down the Mortgage), and provided that Landlord carried the insurance required hereunder, this Lease shall automatically terminate unless (x) Landlord elects in writing, within forty-five (45) days after the date Tenant notifies Landlord in writing of such damage, to reconstruct the Building (in which event Tenant may still have the right to terminate this Lease in accordance with Section 19(a)(ii) or 19(c)), or (y) Tenant agrees in writing to directly fund such shortfall. A “Major Casualty” shall mean a casualty that renders unusable twenty percent (20%) or more of the rentable square footage of the Building, or for which the cost of restoration would exceed five percent (5%) of the replacement cost of the Building.

(c) Termination Right For Substantial Casualty. Notwithstanding anything to the contrary contained in this Lease, if during the Term, the Premises or a substantial portion thereof is damaged or destroyed by fire or other casualty, Tenant shall have the option to terminate this Lease as of the date of such damage or destruction by written notice to the other party given within forty-five (45) days after Tenant notifies Landlord in writing of such damage or destruction, in which event Landlord shall make a proportionate refund to Tenant of such Monthly Base Rent and Additional Charges for Expenses and Taxes as may have been paid in advance. For purposes of this Section 19(c), a substantial portion of the Premises shall mean that, pursuant to Landlord’s Repair Notice, the damage cannot be completed (without payment of overtime or other premiums) within one hundred eighty (180) days after the commencement of the repairs.

(d) Tenant’s Additional Termination Right. If Tenant had the right to terminate this Lease pursuant to the provisions of Section 19(a) but declined to exercise such right, and the Landlord’s repairs are not actually completed within one hundred twenty (120) days following the expiration of the period for such repairs set forth in Landlord’s Repair Notice (without any delay or extension of such period beyond an additional sixty (60) days for Force Majeure), Tenant shall have the additional right to terminate this Lease following the end of such period until such time as such repairs are complete, by notice to Landlord (the “Damage Termination Notice”), effective as of a date set forth in the Damage Termination Notice.

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20. EMINENT DOMAIN.

(a) Taking of the Premises. If all or any part of the Premises are condemned or taken for a public or quasi-public use, then any award or compensation arising out of such condemnation shall be paid to Landlord, and Tenant hereby irrevocably assigns any rights of Tenant in and to any award or compensation to Landlord. Tenant shall execute, acknowledge and deliver to Landlord upon demand such document or instruments evidencing such assignment. Tenant shall have no claim against Landlord for any part of such award or compensation, whether or not attributable to the value of the unexpired term of this Lease. However, Tenant shall be entitled to petition the condemning authority for the following, so long as such claims do not diminish the award available to Landlord or its ground lessor, and such claims are payable separately to Tenant: (i) the then unamortized value of any Alterations paid for by Tenant from its own funds (as opposed to any allowance provided by Landlord) which Tenant has the right to remove upon termination of this Lease; (ii) the value of Tenant’s trade fixtures; (iii) Tenant’s relocation costs; and (iv) Tenant’s goodwill, loss of business and business interruption. If, after condemnation of less than all of the Premises, the remaining portion may be used, in Tenant’s reasonable judgment, for the Permitted Use, then Monthly Base Rent and Additional Charges for Expenses and Taxes shall be reduced for the balance of the Term in the proportion that the rentable area of the portion of the Premises taken bears to the total rentable area of the Premises immediately prior to such taking. If the entire Premises are condemned or taken, or if less than all are taken and, in Tenant’s reasonable judgment, the remaining portion cannot be used for the Permitted Use, then Tenant may terminate this Lease by written notice to Tenant. In addition, in the event of a taking of twenty percent (20%) of the rentable area of the Premises or more, Tenant will have the right to terminate this Lease. If this Lease is not so terminated, Landlord shall repair and restore the Premises continuing under this Lease at Landlord’s cost and expense; provided, however, that Landlord shall not be required to repair or restore any injury or damage to the Tenant’s Personal Property. The sale of all or any part of the Premises, Building or Project, as applicable, under threat of the exercise of the power of eminent domain to an entity which possesses such power shall constitute a condemnation and taking for purposes of this Lease.

(b) Restoration or Termination. Notwithstanding Section 20(a), Landlord shall not be obligated to expend more in connection with such correction than the amount of that portion of the severance damages received in the condemnation which is allocated by the court or the condemnor to the expenses of the repair or reconstruction of the Premises or of that portion of the Building or Project requiring correction (or, if the Building or Project also requires repair and reconstruction in areas other than the area of the correction necessary to serve the Premises, then an equitable portion of the amount of severance damages allocated to all such repair and reconstruction). However, if Landlord does not have sufficient proceeds to substantially complete the restoration of the Premises required herein, and if Landlord elects not to fund the shortfall, Landlord shall so notify Tenant (the “Insufficient Proceeds Notice”), and Tenant, within thirty (30) days after receipt of the Insufficient Proceeds Notice, shall have the right to terminate this Lease by the giving of written notice to Landlord. If Tenant does not terminate the Lease, then Landlord shall restore the Premises to the extent possible using the proceeds made available to Landlord for such purpose. Any termination of this Lease pursuant to this Section 20 shall be effective as of the date of vesting of title pursuant to the condemnation or taking, and Landlord shall make a proportionate refund to Tenant of any Monthly Base Rent and recurring Additional Charges that have been paid in advance.

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(c) Temporary Taking. Notwithstanding anything to the contrary contained in this Section 20, if there is a condemnation or taking for a public or quasi-public use of the temporary use or occupancy of any part of the Premises during the Term, this Lease shall be and remain unaffected by such Taking and Tenant shall continue to pay in full all Monthly Base Rent and Additional Charges payable hereunder by Tenant during the Term. In such event, Tenant shall be entitled to receive that portion of any award which represents compensation for the use or occupancy of the Premises during the Term, and Landlord shall be entitled to receive that portion of any award which represents the cost of restoration of the Premises and the use and occupancy of the Premises after the end of the Term. If such temporary taking is for a period longer than one hundred twenty (120) days and unreasonably interferes with Tenant’s Permitted Use, then Tenant shall have the right to terminate this Lease, and Landlord shall be entitled to receive the entire award for the temporary taking, except for that portion which represents compensation for the use or occupancy of the Premises during the period of time prior to such termination.

(d) Waiver of Statutory Provisions. Landlord and Tenant understand and agree that the provisions of this Section 20 are intended to govern fully the rights and obligations of the parties in the event of a condemnation or taking of all or any portion of the Premises. Accordingly, the parties each hereby waives any right to terminate this Lease in whole or in part under Sections 1263.260, 1265.120 and 1265.130 of the California Code of Civil Procedure or under any similar Law now or hereafter in effect.

21. SALE BY LANDLORD. If Landlord sells or otherwise conveys its interest in the Premises, Landlord shall be relieved of its obligations under this Lease from and after the date of sale or conveyance (including, without limitation, the obligations of Landlord under Section 31), provided that the successor owner assumes in writing the obligations to be performed by Landlord on and after the effective date of the transfer, whereupon Tenant shall attorn to such successor owner.

22. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to be performed by Tenant under any of the terms of this Lease shall be performed by Tenant at Tenant’s sole cost and expense and without any abatement of Monthly Base Rent or Additional Charges except as is expressly set forth in this Lease. If a Default by Tenant occurs and is not cured within applicable grace or cure periods, then Landlord may, but shall not be obligated so to do, and without waiving or releasing Tenant from any obligations of Tenant, make any payment or perform any act on Tenant’s part to be made or performed as provided in this Lease in order to cure any such Default. All sums so paid and costs so incurred by Landlord, together with interest thereon at the Default Rate from the date Landlord makes such payment or incurs such cost, shall be payable as Additional Charges to Landlord within twenty (20) days after receipt by Tenant of a bill or statement therefor accompanied by reasonably detailed back-up documentation.

23. SURRENDER OF PREMISES.

(a) Delivery of Premises. At the end of the Term or any renewal thereof or other sooner termination of this Lease, Tenant will peaceably deliver to Landlord possession of the Premises, together with all improvements or additions upon the Premises or belonging to

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Landlord, by whomsoever made, in substantially the same condition as on the Commencement Date, or first installed, subject to the parties’ obligations under this Lease and to normal wear and tear. Tenant shall have no right or obligation to remove any of the alterations or improvements located within the Premises or elsewhere on the Project or Common Area on the Commencement Date, including, without limitation, the Leasehold Improvements. Tenant shall have the right, but not the obligation, to remove any Permitted Alterations on or before the expiration or earlier termination of the Term, provided that Tenant repairs any damage caused by such removal and restores the applicable portions of the Premises to its original condition as of the Commencement Date. Subject to Section 36, upon the expiration or earlier termination of this Lease, Tenant, at Tenant’s sole cost and expense, shall remove all Tenant’s Personal Property, including, without limitation, all of Tenant’s trade fixtures, and Tenant shall repair any damage caused by such removal, provided that at Tenant’s sole election Tenant may leave in place (or remove) racks located in the laboratories that are bolted and seismically braced. Upon such expiration or sooner termination of the Term, Tenant shall upon demand by Landlord, at Tenant’s sole cost and expense, forthwith and with all due diligence remove any Alterations made by or for the account of Tenant after the Commencement Date (other than Permitted Alterations, which Tenant shall not be required to remove), designated by Landlord to be removed (provided, however, that upon the written request of Tenant prior to installation of such Alterations, Landlord shall advise Tenant at that time whether or not such specific Alterations must be removed upon the expiration or sooner termination of this Lease, and to the extent Landlord has not promptly stated that such specific Alteration is to be removed, Tenant shall not be obligated to remove such Alteration pursuant to this Section 23(a)), and restore the applicable portions of the Premises to its original condition as of the Commencement Date, subject to all of the foregoing. Any Tenant’s Personal Property, Alterations, or other personal property not removed by Tenant as permitted or required herein shall be deemed abandoned and may be stored, removed and disposed of by Landlord at Tenant’s expense, and Tenant waives all claims against Landlord for any damages resulting from Landlord’s retention and/or disposition of such property. In the event that this Lease is terminated by Landlord or Tenant pursuant to Section 19 or Section 20, Tenant shall have access to the Project following the termination of the Lease (if necessary) to allow Tenant to perform the work required by this Section 23(a) following reasonable prior notice to Landlord. Tenant shall use all commercially reasonable efforts to minimize interference with Landlord’s use of the Premises during any such periods of access following the termination of the Lease. Subject to the terms of this Section 23, Landlord hereby grants Tenant the right to perform the work necessary to surrender the Premises in the condition required by this Section 23. All obligations of Tenant under this Section 23 not fully performed as of the expiration or earlier termination of the Lease shall survive the expiration or earlier termination of the Lease.

(b) Condition of the Project Upon Surrender. In addition to the above requirements of this Article 23, upon the expiration of the Term, or upon any earlier termination of this Lease, Tenant shall, surrender the Premises in satisfaction of the terms and conditions of Section 7(b) above. Furthermore, the improvements to be surrendered by Tenant (the “Surrendered Improvements”) shall be in compliance with, and Tenant having complied with, Tenant’s obligations under this Lease to maintain and deliver such Surrender Improvements in as good order and condition as when Tenant installed or took possession thereof and as thereafter improved or altered by Landlord and/or Tenant, reasonable wear and tear, and repairs which are specifically made the responsibility of Landlord hereunder, excepted.

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(c) Declaration Restoration Obligations. Landlord hereby assumes and agrees to perform as and when required, all obligations of the “Brocade Owner” or Tenant or any Tenant Party under the Declaration with respect to the removal and/or restoration of any improvements, installations, equipment, conduit or other property, including, without limitation, all obligations under Section 2.6.2.9 of the Declaration.

(d) No Merger. The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of Landlord, terminate all or any existing subleases or subtenancies, or may, at the option of Landlord, operate as an assignment to it of any or all such subleases or subtenancies.

24. NOTICES. Except as otherwise expressly provided in this Lease, any bills, statements, notices, demands, requests or other communications given or required to be given under this Lease shall be effective only if rendered or given in writing, sent by certified mail, return receipt requested, reputable overnight carrier, or delivered personally, (i) to Tenant, at Tenant’s address set forth in the Basic Lease Information; or (ii) to Landlord at Landlord’s address set forth in the Basic Lease Information; or (iii) to such other address as either Landlord or Tenant may designate as its new address for such purpose by notice given to the other in accordance with the provisions of this Section 24. Any such bill, statement, notice, demand, request or other communication shall be deemed to have been rendered or given on the date the return receipt indicates delivery of or refusal of delivery if sent by certified mail, the day upon which delivery of the notice from a reputable overnight carrier is accepted and signed for, or on the date a reputable overnight carrier indicates refusal of delivery, or upon the date personal delivery is made to the applicable address; provided, however, that if delivery is so effected either (x) on a weekend or holiday or (y) after 5:00 p.m. Pacific time on any day, notice shall be deemed given on the next succeeding business day. If Tenant is notified in writing of the identity and address of any Mortgagee or ground or underlying lessor, Tenant shall give to such Mortgagee or ground or underlying lessor notice of any default by Landlord under the terms of this Lease in writing sent by registered or certified mail.

25. ABANDONMENT. Tenant shall not abandon the Premises and/or cease performing its financial, insurance and maintenance obligations under this Lease at any time during the Term. If Tenant shall abandon and/or cease performing its financial, insurance and maintenance obligations under this Lease, or surrender the Premises or be dispossessed by process of law, or otherwise, any personal property belonging to Tenant and left on the Premises shall, at the option of Landlord, be deemed to be abandoned and title thereto shall thereupon pass to Landlord. For purposes of this Section 25, “abandonment” shall mean departure from the Premises, leaving the same unsecured or leaving the Premises in such a condition so as to threaten the integrity of or serious damage to the Premises, Common Area, Building, Project or Building Systems. “Abandonment” shall not include vacation of the Premises where Tenant continues to pay all Rent due hereunder and has properly secured the same and where no threat of harm to Building Systems or Common Area is posed by any condition created or allowed by Tenant in the Premises.

26. ATTORNEYS’ FEES. If Tenant or Landlord brings any action for any relief against the other, declaratory or otherwise, arising out of this Lease, including any suit by Landlord for the recovery of Rent or possession of the Premises and whether such litigation

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sounds in tort or in contract, the losing party shall pay to the prevailing party a reasonable sum for attorneys’ fees and costs (including without limitation collection agency costs, court costs, and fees of appraisers, experts and accountants). As used herein, attorneys’ fees and costs shall include, without limitation, attorneys’ fees, costs, and expenses incurred in connection with any (i) post judgment motions; (ii) contempt proceedings; (iii) garnishment, levy, and debtor and third party examination; (iv) discovery; and (v) bankruptcy litigation.

27. CORPORATE AUTHORITY. Tenant hereby represents and warrants that (a) Tenant is duly incorporated or otherwise established or formed and validly existing under the laws of its state of incorporation, establishment or formation, (b) Tenant has and is duly qualified to do business in the state in which the Project is located, (c) Tenant has full corporate, partnership, trust, association or other appropriate power and authority to enter into this Lease and to perform all Tenant’s obligations hereunder, and (d) each person (and all of the persons if more than one signs) signing this Lease on behalf of Tenant is duly and validly authorized to do so. Landlord hereby represents and warrants that (a) Landlord is duly incorporated or otherwise established or formed and validly existing under the laws of its state of incorporation, establishment or formation, (b) Landlord has and is duly qualified to do business in the state in which the Project is located, (c) Landlord has full corporate, partnership, trust, association or other appropriate power and authority to enter into this Lease and to perform all Landlord’s obligations hereunder, and (d) each person (and all of the persons if more than one signs) signing this Lease on behalf of Landlord is duly and validly authorized to do so.

28. PARKING. Tenant shall have the exclusive right to all rights of the “Brocade Owner” under the Declaration with respect to parking (both in Garage B and in surface areas) and use of Garage B, and to all related access and other rights under the Declaration, all on the terms and conditions of the Declaration and subject to Encumbrances.

29. REAL ESTATE BROKERS. Each party represents that it has not had dealings with any real estate broker, finder or other person with respect to this Lease in any manner, except for any broker named in the Basic Lease Information, whose fees or commission, if earned, shall be paid by Tenant pursuant to a separate written agreement between Tenant and Tenant’s Broker. Each party shall hold harmless the other party from all damages resulting from any claims that may be asserted against the other party by any other broker, finder or other person with whom the other party has or purportedly has dealt.

30. EXTERIOR SIGNAGE. Tenant shall be entitled to the exterior signage existing at the Project as of the Commencement Date, which signage shall be maintained and repaired by Tenant at Tenant’s sole cost and expense. Any additional or new signage shall be subject to the terms and conditions of the Declaration. Upon the expiration or earlier termination of this Lease, Tenant shall, at Tenant’s sole cost and expense, cause Tenant’s exterior signage to be removed and shall cause the areas in which such exterior signage was located to be restored to the condition existing immediately prior to the placement of such exterior signage (excepting normal wear and tear caused by the sun, rain and other elements to which such Tenant’s exterior signage is exposed). If Tenant fails to timely remove such exterior signage or to restore the areas in which such exterior signage was located, as provided in the immediately preceding sentence, then Landlord may perform such work, and all costs incurred by Landlord in so performing shall be reimbursed by Tenant to Landlord within thirty (30) days after Tenant’s receipt of an invoice therefor.

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31. HAZARDOUS MATERIAL LIABILITY.

(a) Definition of Hazardous Materials. The term “Hazardous Materials” means any substances, material, waste, pollutant or contaminant listed or defined as hazardous or toxic under the Resource Conservation and Recovery Act, the Comprehensive Environmental Response Compensation and Liability Act and/or other federal laws governing the environment, together with their implementing regulations, guidelines, rules or orders, and all state, regional, county, municipal and other local laws, regulations, ordinances, rules or orders that are equivalent or similar to the federal laws recited above or that purport to regulate materials due to their actual or potential radioactivity, biological properties, toxicity or actual or potential carcinogenic, mutagenic or teratogenic properties or actual or potential harm to humans, animals and/or the environment. The term “Hazardous Materials” shall include, without limitation, asbestos, petroleum, including crude oil or any fraction thereof, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel (or mixtures of natural gas and such synthetic gas), but expressly excludes mold.

(b) Tenant Indemnity. Subject to Section 31(d) below, Tenant releases Landlord from any liability for, waives all claims against Landlord and shall indemnify, defend and hold harmless Landlord, its employees, members, partners, agents, subsidiaries and affiliates against any and all claims, suits, loss, costs (including costs of investigation, clean up, monitoring, restoration and reasonable attorneys’ fees), damage or liability, whether foreseeable or unforeseeable, by reason of clean up, property damage, personal injury or death arising from any Hazardous Materials that are released at, in, on or under the Premises by Tenant or any Tenant Party during the Term. For the purposes of Lease, “release” shall not include the natural migration or natural movements of Hazardous Materials which were present in the soil, groundwater, landscaping or improvements at the Project (whether or not a part of the improvements as originally constructed) as of the Commencement Date. The provisions of this Tenant Indemnity shall survive the termination of this Lease.

(c) Landlord Indemnity. Subject to Section 31(d) below, Landlord releases Tenant from any liability for, waives all claims against Tenant and shall indemnify, defend and hold harmless Tenant, its employees, members, partners, agents, subsidiaries and affiliates against any and all claims, suits, loss, costs (including costs of investigation, clean up, monitoring, restoration and reasonable attorneys’ fees), damage or liability, whether foreseeable or unforeseeable, by reason of clean up, property damage, personal injury or death arising from any Hazardous Materials that are released at, in, on or under the Premises by Landlord or any Landlord Party during the Term, except to the extent caused by the release of Hazardous Materials at, in, on or under the Project by Tenant or any Tenant Party during the Term. The provisions of this Landlord Indemnity shall survive the termination of the Lease.

(d) Limited Effect of this Section 31. Notwithstanding anything to the contrary set forth above, the provisions of this Section 31 shall not modify in any respect the agreement of the parties as set forth in the Purchase Agreement relating to Hazardous Materials existing in the soil or the groundwater, landscaping or improvements as of the Commencement Date.

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32. SATELLITE ANTENNAE. During the Term of this Lease, Tenant shall have the right to continue to operate any existing satellite antennae (“Antennae”) on the roof of the Building in its current location(s), in accordance with all relevant regulatory approvals. In the event that Tenant desires to install new Antennae or move any Antennae, such work shall be considered “Alterations” for all purposes under this Lease, and the installation and removal thereof, and Landlord’s rights to consent with respect thereto, shall be governed by the applicable terms and conditions of this Lease, provided that such installation shall be subject to all relevant regulatory approvals and any new Antenna location shall be mutually approved by Landlord and Tenant. Tenant shall not be charged additional rent for roof space. Tenant shall maintain and repair the Antennae at its sole cost and expense and shall be responsible for any damage caused by the installation of the Antennae or, except to the extent cause by the acts or omissions of Landlord, related to the Antennae.

33. MISCELLANEOUS.

(a) Defined Terms. The term “Premises” wherever it appears herein includes and shall be deemed or taken to include (except where such meaning would be clearly repugnant to the context) the space demised and improvements now or at any time hereafter comprising or built in the space hereby demised. The section headings herein are for convenience of reference and shall in no way define, increase, limit or describe the scope or intent of any provision of this Lease. The term “Landlord” shall include Landlord and its successors and assigns. In any case where this Lease is signed by more than one person, the obligations hereunder shall be joint and several. The term “Tenant” or any pronoun used in place thereof shall indicate and include the masculine or feminine, the singular or plural number, individuals, firms or corporations, and their and each of their respective successors, executors, administrators, and permitted assigns, according to the context hereof.

(b) General Provisions. Time is of the essence of this Lease and all of its provisions. This Lease shall in all respects be governed by the laws of the State of California. This Lease, together with its exhibits, contains all the agreements of the parties hereto and supersedes any previous negotiations. There have been no representations made by the Landlord or Tenant or understandings made between the parties other than those set forth in this Lease and its exhibits. This Lease may not be modified except by a written instrument by the parties hereto.

(c) Construction. The language in all parts of this Lease shall in all cases be construed as a whole and in accordance with its fair meaning and not restricted for or against any party, regardless of which party may have drafted the provision in question, it being agreed that this is a negotiated agreement. Accordingly, any rule of law or legal decision that would require interpretation of any ambiguities in this Lease against the party drafting it is not applicable and is waived. If for any reason whatsoever any of the provisions hereof shall be unenforceable or ineffective, all of the other provisions shall be and remain in full force and effect.

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(d) Quiet Enjoyment. Upon Tenant paying the Monthly Base Rent and Additional Charges and performing all of Tenant’s obligations under this Lease, Tenant shall have quiet and peaceful enjoyment of the Premises during the Term as against all persons or entities lawfully claiming by, through or under Landlord; subject, however, to the provisions of this Lease.

(e) Waiver. If either Landlord or Tenant waives the performance of any term, covenant or condition contained in this Lease, such waiver shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein. Furthermore, the acceptance of Monthly Base Rent or Additional Charges by Landlord shall not constitute a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, regardless of Landlord’s knowledge of such preceding breach at the time Landlord accepted such Monthly Base Rent or Additional Charges. Failure by a party to enforce any of the terms, covenants or conditions of this Lease for any length of time shall not be deemed to waive or to decrease the right of such party to insist thereafter upon strict performance by the other party. Waiver by a party of any term, covenant or condition contained in this Lease may only be made by a written document signed by such party.

(f) Successors and Assigns. Subject to the provisions of Section 9, the terms, covenants and conditions contained herein shall be binding upon and inure to the benefit of the parties hereto and their respective legal and personal representatives, successors and assigns.

34. OFAC COMPLIANCE. Each of Landlord and Tenant represents, warrants and covenants to and for the benefit of the other as follows for so long as this Lease remains in effect: (i) it is not acting, and will not act, directly or indirectly, for or on behalf of any person, group, entity or nation named by any Executive Order or the United States Department of the Treasury as a terrorist, “Specially Designated and Blocked Persons”, or other banned or blocked person, group, entity, nation or transaction pursuant to any law, order, rule, or regulation that is enforced or administered by the Office of Foreign Asset Control (“OFAC”) of the United States Department of the Treasury; and (ii) it is not engaged, and will not be engaged, directly or indirectly, in any dealings or transactions, and is not and will not be otherwise associated with, any such person, group, entity or nation, in an unlawful manner.

35. LEASED EXTERIOR EQUIPMENT. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Exterior Equipment during the Lease Term, at no additional cost to Tenant, upon the terms and conditions set forth in this Lease. Landlord makes no representation or warranty as to the condition of the Exterior Equipment.

36. OPTIONAL SALE OF CUBICLES. At Tenant’s sole option, Tenant may elect to sell, and Landlord (in the event Tenant exercises such option) hereby agrees to purchase from Tenant on the Expiration Date all then-existing furniture cubicle systems (approximately 665), for the sum of One Dollar ($1.00), by execution and deliver of the Bill of Sale attached hereto as Exhibit D. Landlord further understands and agrees that all such furniture cubicle systems would be sold in their “as-is” condition, and that Tenant would make no representation or warranty, express or implied, with respect to the existence, condition, usefulness or suitability for any use of any such property.

41.

[Remainder of page intentionally left blank.]

42.

IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date first above written.

LANDLORD:
CA-SKYPORT III LIMITED PARTNERSHIP, a Delaware limited partnership
By:	LH GP Holdings LLC, a Delaware limited liability company
By:
Name:
Its:
TENANT:
BROCADE COMMUNICATIONS SYSTEMS, INC., a Delaware corporation
By:
Name:
Its:

43.

EXHIBIT A

Land

Real property in the City of San Jose, County of Santa Clara, State of California, described as follows:

PARCEL ONE:

ALL OF PARCEL A, AS SAID PARCEL IS SHOWN UPON THAT CERTAIN PARCEL MAP FILED FOR RECORD IN THE OFFICE OF THE RECORDER OF THE COUNTY OF SANTA CLARA ON NOVEMBER 18, 2003 IN BOOK 766 OF MAPS AT PAGES 14, 15, 16, 17 AND 18.

PARCEL TWO:

ANY AND ALL EASEMENTS BENEFITING PARCEL ONE ABOVE DESCRIBED PURSUANT TO SKYPORT PLAZA DECLARATION OF COMMON EASEMENTS, COVENANTS, CONDITIONS AND RESTRICTIONS, EXECUTED BY SPIEKER PROPERTIES, L.P., A CALIFORNIA LIMITED PARTNERSHIP, AND RECORDED FEBRUARY 14, 2001 AS INSTRUMENT NO. 15560409, AS AMENDED BY FIRST AMENDMENT TO SKYPORT PLAZA DECLARATION OF COMMON EASEMENTS, COVENANTS, CONDITIONS AND RESTRICTIONS EXECUTED BY SKYPORT PLAZA OWNERS ASSOCIATION RECORDED OCTOBER 26, 2001 AS INSTRUMENT NO. 15929606, SECOND AMENDMENT TO SKYPORT PLAZA DECLARATION OF COMMON EASEMENTS, COVENANTS, CONDITIONS AND RESTRICTIONS EXECUTED BY SKYPORT PLAZA OWNER’S ASSOCIATION, RECORDED OCTOBER 22, 2002 AS INSTRUMENT NO. 16552265, THIRD AMENDMENT TO SKYPORT PLAZA DECLARATION OF COMMON EASEMENTS, COVENANTS, CONDITIONS AND RESTRICTIONS EXECUTED BY SKYPORT PLAZA OWNER’S ASSOCIATION, RECORDED SEPTEMBER 12, 2003 AS INSTRUMENT NO. 17343456, AND FOURTH AMENDMENT TO SKYPORT PLAZA DECLARATION OF COMMON EASEMENTS, COVENANTS, CONDITIONS AND RESTRICTIONS EXECUTED BY SKYPORT PLAZA OWNERS ASSOCIATION, RECORDED ON NOVEMBER 18, 2003 AS INSTRUMENT NO. 17480072 AND CORRECTED AND RE-RECORDED ON DECEMBER 4, 2003 AS INSTRUMENT NO. 17502811, OFFICIAL RECORDS OF SANTA CLARA COUNTY.

PARCEL THREE:

ANY AND ALL EASEMENTS BENEFITING PARCEL ONE ABOVE DESCRIBED PURSUANT TO THOSE CERTAIN “SKYPORT PLAZA (ADJUSTED PARCEL II) DECLARATION OF COMMON EASEMENTS, COVENANTS, CONDITIONS AND RESTRICTIONS” EXECUTED BY EOP-SKYPORT I L.L.C., A DELAWARE LIMITED LIABILITY COMPANY AND BROCADE COMMUNICATION SYSTEMS SKYPORT L.L.C., A DELAWARE LIMITED LIABILITY COMPANY, RECORDED NOVEMBER 18, 2003 AS INSTRUMENT NO. 17480071, AND CORRECTED AND RE-RECORDED ON DECEMBER 4, 2003 AS INSTRUMENT NO. 17502810 OFFICIAL RECORDS OF SANTA CLARA COUNTY.

APN: 230-29-119

Exhibit A

A-1

EXHIBIT B

Premises

Exhibit B

B-1

EXHIBIT C

Leased Exterior Equipment

Outside Enclosure:

EG2: 800kW Emergency Generator

EG3: 1000kW Emergency Generator

Inside Garage:

ATS3: Automatic Transfer Switch

ATS4: Automatic Transfer Switch

UPS3: 500kW UPS

UPS4: 500kW UPS

EG4: 1000kW Emergency Generator

LN2: Liquid Nitrogen Tank

Air Compressor: Air Compressor and Air Dryer

Exhibit C

C-1

EXHIBIT D

BILL OF SALE

For good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, Brocade Communications Systems, Inc., a Delaware corporation (“Seller”), does hereby sell, transfer, and convey, without warranty, to             , a                      (“Buyer”), all existing furniture cubicle systems currently located within the Premises (as defined in that certain Lease by and between Seller and Buyer dated as of January     , 2010).

DATED                     

Seller:	BROCADE COMMUNICATIONS SYSTEMS, INC., a Delaware corporation
	By:
	Its:

Exhibit D

D-1.

EXHIBIT E

MARKET RENT ANALYSIS

When determining Fair Market Rental Value, the following rules and instructions shall be followed.

1. RELEVANT FACTORS. The “Fair Market Rental Value,” as used in this Lease, shall be derived from an analysis (as such derivation and analysis are set forth in this Exhibit E) of the “Net Equivalent Lease Rates,” of the “Comparable Transactions”. The “Fair Market Rental Value,” as used in this Lease, shall equal the annual rent per rentable square foot as would be applicable on the commencement of the applicable Extension Term, at which tenants, are, pursuant to transactions consummated during the period from twelve (12) months to three (3) months prior to the commencement of the applicable Extension Term (provided that reasonable adjustments shall be made to reflect any perceived changes which will occur in the Fair Market Rental Value following the date of any particular Comparable Transaction up to the date of the commencement of the applicable Extension Term), leasing non-sublease, non-encumbered, non-equity space comparable in location and quality to the Premises and consisting of no less than 100,000 rentable square feet for a minimum term of five (5) years (with appropriate adjustments to reflect the actual length of the applicable Extension Term), in an arm’s-length transaction, in Comparable Buildings (as defined below) (transactions satisfying the foregoing criteria shall be known as the “Comparable Transactions”). The terms of the Comparable Transactions shall be calculated as a Net Equivalent Lease Rate pursuant to the terms of this Exhibit E and shall take into consideration only the following terms and concessions: (i) the rental rate and escalations for the Comparable Transactions; (ii) the amount of parking rent per parking permit paid in the Comparable Transactions; (iii) for each such Comparable Transaction the base rent shall be adjusted to a triple net base rent using reasonable estimates of operating expenses and taxes for each such Comparable Transaction; (iv) rental abatement concessions, if any, being granted such tenants in connection with such comparable space; (v) tenant improvements or allowances provided or to be provided for such comparable space, taking into account the value of the existing improvements in the Premises, such value to be based upon the age and quality of such improvements, disregarding the fact that they were built out specifically for Tenant; (vi) the measurement standard used in the Premises and in Comparable Transactions; (vii) the amount, type and location of parking provided in each such Comparable Transaction; (viii) the level of services provided by the landlord in each such Comparable Transaction and the level of control and rights of the tenant over the building in each Comparable Transaction; and (ix) all other monetary concessions, if any, being granted such tenants in connection with such Comparable Transactions.

3. TENANT IMPROVEMENT ALLOWANCE. If, in determining the Fair Market Rental Value for an Extension Term, a tenant improvement or comparable allowance for the improvement of the Premises is granted to Tenant as a component of the Fair Market Rental Value (the “Extension Term TI Allowance”), Landlord may, at Landlord’s sole option, elect to grant all or a portion of the Extension Term TI Allowance in accordance with the following: (i) to grant some or all of the Extension Term TI Allowance from Landlord in the form as

Exhibit E

E-1

described above (i.e., as an improvement allowance), and/or (ii) to grant an offset against the rental rate component of the Fair Market Rental Value all or a portion of the Extension Term TI Allowance against the Rent next due and owing during such Extension Term (in which case such portion of the Extension Term TI Allowance provided in the form of a rental offset shall not be received by Tenant). To the extent Landlord elects not to grant the entire Extension Term TI Allowance as a tenant improvement allowance, the offset under item (ii), above, shall equal the amount of the tenant improvement allowance not granted to Tenant as a tenant improvement allowance pursuant to the preceding sentence.

4. COMPARABLE BUILDINGS. For purposes of this Lease, the term “Comparable Buildings” shall mean first-class office buildings located in the metropolitan area of San Jose, California (i.e., in the cities of San Jose, Mountain View, Sunnyvale and Santa Clara), which are comparable in size, age (considering any material upgrades or renovation), and location to the Building.

5. METHODOLOGY FOR REVIEWING AND COMPARING THE COMPARABLE TRANSACTIONS. In order to analyze the Comparable Transactions based on the factors to be considered in calculating Fair Market Rental Value, and given that the Comparable Transactions may vary in terms of length or term, rental rate, concessions, etc., the following steps shall be taken into consideration to “adjust” the objective data from each of the Comparable Transactions. By taking this approach, a “Net Equivalent Lease Rate” for each of the Comparable Transactions shall be determined using the following steps to adjust the Comparable Transactions, which will allow for an “apples to apples” comparison of the Comparable Transactions.

5.1. The contractual rent payments for each of the Comparable Transactions should be arrayed monthly or annually over the lease term. All Comparable Transactions should be adjusted to simulate a net rent structure, wherein the tenant is responsible for the payment of all property operating expenses in a manner consistent with this Lease. This results in the estimate of Net Equivalent Rent received by each landlord for each Comparable Transaction being expressed as a periodic net rent payment.

5.2 Any free rent or similar inducements received over time should be deducted in the time period in which they occur, resulting in the net cash flow arrayed over the lease term.

5.3 The resultant net cash flow from the lease should be then discounted (using a 8% annual discount rate) to the lease commencement date, resulting in a net present value estimate.

5.4 From the net present value, up front inducements (improvements allowances and other concessions) should be deducted. These items should be deducted directly, on a “dollar for dollar” basis, without discounting since they are typically incurred at lease commencement, while rent (which is discounted) is a future receipt.

Exhibit E

E-2

5.5 The net present value should then amortized back over the lease term as a level monthly or annual net rent payment using the same annual discount rate of 8.0% used in the present value analysis. This calculation will result in a hypothetical level or even payment over the option period, termed the “Net Equivalent Lease Rate” (or constant equivalent in general financial terms).

6. USE OF NET EQUIVALENT LEASE RATES FOR COMPARABLE TRANSACTIONS. The Net Equivalent Lease Rates for the Comparable Transactions shall then be used to reconcile, in a manner usual and customary for a real estate appraisal process, to a conclusion of Fair Market Rental Value which shall be stated as a Net Equivalent Lease Rate applicable to each year of the Extension Term.

Exhibit E

E-3

EXHIBIT F

COMPONENTS OF BASE BUILDING SYSTEMS

• HVAC – main air handlers, boilers, chiller plant and equipment associated with comfort cooling including all VAV’s, but expressly excluding HVAC equipment relating to specialty systems.

• Electrical - base electrical systems other than “Secondary Distribution Systems” (defined as all electrical feeds from customary electrical panels), and not including electrical panels on the two above-standard additional risers that previously were installed by Tenant.

• Life Safety systems including but not limited to fire alarm detection system, public address system, fire sprinkler, emergency lighting and exit lighting.

• Base plumbing systems for domestic (as opposed to chilled) water and all controls appurtenant thereto, not including plumbing located in or serving Tenant’s laboratory areas.

• Elevators

Exhibit F

F-1

EX-10.12

Exhibit 10.12

Amendment Number 2

to

OEM Purchase and License Agreement

Between EMC Corporation and Brocade Communications, Inc.

OEM Agreement Number OEM 051208 Dated May 20, 2008

This Amendment Number 2 (“the Amendment”) to the OEM Purchase and License Agreement (the “Agreement”) dated May 20, 2008 BROCADE Communications Systems, Inc., a Delaware corporation with an office located at 1745 Technology Drive, San Jose, California 95110, and BROCADE Communications Switzerland SarL., a Geneva corporation with principal offices at 29 Route de l’Aeroport, Case Postale 105, CH-1215, Geneva 15, Switzerland, and BROCADE Communications Services Switzerland, SarL,, a Geneva corporation with principal offices at 29 Route de l’Aeroport, Case Postale 105, CH-1215, Geneva 15, Switzerland (collectively, “BROCADE”), and EMC Corporation, 176 South Street, Hopkinton, MA 01748 together with its designated Subsidiaries (“EMC”), and commences on the date accepted and executed by BROCADE (“Effective Date”).

RECITALS

WHEREAS, the parties wish to amend the Agreement so as to 1) define Marketing Development Funding; and 2) revise Product Discontinuance requirements;

NOW THEREFORE, in consideration of the above and the other respective promises of the parties set forth herein, the parties hereto agree as follows:

1.0 Add the following terms and conditions to Section 5.4, Marketing Development Funds.

Brocade and EMC have agreed to marketing development funding for the period October 1, 2009 through September 30, 2011 and will automatically renew for additional successive one-year terms unless either party provides [**] days’ notice of termination prior to any renewal periods. The terms and conditions for the program are contained in the “EMC Marketing Development Fund (MDF) Program Guidelines” effective October 1, 2009 (“MDF Guidelines”). Key terms included in the MDF Guidelines as of October 1, 2009 are:

• Brocade will provide to EMC MDF funds in the amount of [**]% of EMC’s previous calendar quarter’s net sell-through of Brocade hardware and software, exclusive of service and maintenance, as calculated by Brocade. Brocade agrees to provide EMC an itemized breakdown of EMC’s net quarterly sell-through no later than (10) business days after the close of EMC’s quarter. Net revenue is defined as gross sell through revenue less Sales Promotions, Deals desk, Growth Programs, Rebates and current funded headcount. Current funded headcount is defined as the [**] program management resources presently employed at EMC that support Brocade activity. Brocade will remit payment to EMC thirty (30) days after the close of the previous EMC quarter end.

• EMC will hold the MDF funds.

• EMC will provide Brocade a monthly report of all approved MDF expenditures no later than ten business days’ after the end of the previous month. If MDF expenditures have not been pre-approved by Brocade for such submitted expenses, Brocade reserves the right to withhold crediting EMC for such unapproved expenditures on the next quarterly payment to EMC.

[**] 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.

• MDF funds expire at the end of each [**] month period from issuance. If EMC and Brocade fail to spend the funds [**] months from the time of issuance, Brocade will withhold crediting EMC for the value of the expired funds on the next quarterly payment to EMC.

• Partner Agreement Termination. For MDF funds not expended upon termination of this MDF Program, EMC shall have [**] months from the termination effective date to reconcile activities conducted prior to the termination effective date and to expend all remaining funds. EMC agrees to return such unexpended funds to Brocade, in the form of a check, no later than [**] calendar days after the end of such [**] month period. Upon termination of our OEM PURCHASE AND LICENSE AGREEMENT, dated May 20, 2008, EMC agrees to return unexpended funds to Brocade within [**] calendar days of the termination effective date.

If there is conflict between the terms and conditions in this Section 5.4 and the “EMC Marketing Development Fund (MDF) Program Guidelines effective October 1, 2009” (“MDF Guidelines”) as updated from time to time by mutual agreement of the parties, the MDF Guidelines shall prevail.

2.0 Delete Section 8.4, Product Discontinuance, in its entirety, and replace with the following language:

8.4 Product Discontinuance: Brocade reserves the right to discontinue Products by notifying EMC in writing at least [**] days prior to the discontinuance date, subject to a mutually agreed upon end of life plan. Prior to such discontinuance date, EMC may place with Brocade [**] purchase order for such discontinued Product including Spares. Such [**] purchase orders may specify that the requested Products be shipped to EMC or EMC’s Customers over the [**] day period following the discontinuance date.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment Number 2 to OEM Purchase and License Agreement by their duly authorized representatives. This Agreement shall not be effective until executed by Brocade and accepted by an authorized representative of EMC.

Executed and agreed to:		Accepted and agreed to:
BROCADE Communication Systems, Inc. “BROCADE”		EMC Corporation (EMC)
By:	/s/ Charles Leeming	By:	/s/ Michael P. Kerovac
Name:	Charles Leeming	Name:	Michael P. Kerovac
Title:	VP, OEM Sales	Title:	Sr. VP GPO
Signed & Effective Date: 1/29/10		Date: 2/02/10

BROCADE Communication Switzerland, SarL
By:	/s/ Ulrich Plechschmidt
Name:	Ulrich Plechschmidt
Title:	Vice President EMEA
Date: 01- February - 2010

[**] 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.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Michael Klayko, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended January 30, 2010 of Brocade Communications Systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 2, 2010

/s/    Michael Klayko

Michael Klayko

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Richard Deranleau, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended January 30, 2010 of Brocade Communications Systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 2, 2010

/s/    Richard Deranleau

Richard Deranleau

Chief Financial Officer

(Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

AND CHIEF FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael Klayko, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of Brocade Communications Systems, Inc. for the fiscal quarter ended January 30, 2010 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Brocade Communications Systems, Inc.

Date: March 2, 2010

By:	/s/    Michael Klayko
	Michael Klayko
	Chief Executive Officer

I, Richard Deranleau, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of Brocade Communications Systems, Inc. for the fiscal quarter ended January 30, 2010 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Brocade Communications Systems, Inc.

Date: March 2, 2010

By:	/s/    Richard Deranleau
	Richard Deranleau
	Chief Financial Officer