THIS EMPLOYMENT
AGREEMENT (this “ Agreement ”) is entered into
as of April 19, 2007 by and between Jeff Benck (the “
Executive ”), and QLogic Corporation, a Delaware
corporation (the “ Corporation ”), effective as
of the Executive’s initial day of employment by the
Corporation (the “ Effective Date ”).
THE PARTIES ENTER
THIS AGREEMENT on the basis of the following facts, understandings
and intentions:
A.
The Corporation desires that the Executive be employed by the
Corporation to carry out the duties and responsibilities described
below, all on the terms and conditions hereinafter set
forth.
B.
The Executive is willing to accept such employment on such terms
and conditions.
NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants and promises of the parties,
the parties hereto agree as follows:
1.
Retention and Duties .
1.1
Retention . The Corporation does hereby hire, engage and
employ the Executive for the Period of Employment (as defined in
Section 2) on the terms and conditions expressly set forth in
this Agreement. The Executive does hereby accept and agree to such
hiring, engagement and employment, on the terms and conditions
expressly set forth in this Agreement.
1.2
Duties . During the Period of Employment, the Executive
shall serve the Corporation as its President and Chief Operating
Officer. The Executive shall have duties consistent with such
positions, and such other duties as reasonably assigned from time
to time by the Corporation’s Chief Executive Officer. The
Executive shall also be subject to the corporate policies of the
Corporation as they are in effect from time to time throughout the
Period of Employment (including, without limitation, the
Corporation’s insider trading and business ethics policies,
as they may change from time to time). The Executive shall report
directly to the Chief Executive Officer. The other executive
officers of the Corporation, other than the Chief Financial Officer
and General Counsel, shall report directly to the Executive. As the
Corporation’s Chief Operating Officer, the Executive shall be
principally responsible for, without limitation, without limiting
the Executive’s other duties to the Corporation, and without
limiting the authority of the Chief Executive Officer or the
Corporation’s Board of Directors (the “Board
”), the overall operations of the Corporation and its
subsidiaries.
1.3 No
Other Employment; Minimum Time Commitment . Throughout the
Period of Employment, the Executive shall both (i) devote
substantially all of the Executive’s business time, energy
and skill to the performance of the Executive’s duties for
the Corporation, and (ii) hold no other job. The Executive
agrees that any investment or direct involvement in, or
any
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appointment to
or continuing service on the board of directors or similar body of,
any corporation or other entity must be first approved in writing
by the Corporation. The foregoing provisions of this
Section 1.3 shall not prevent the Executive from investing in
real estate for the Executive’s own account or from investing
in non-competitive publicly-traded securities to the extent
permitted by Section 7(b). The Executive agrees that, as of
the Effective Date, Exhibit A to this Agreement sets
forth a complete and accurate description of (i) any
investment or direct involvement of the Executive in any other
corporation or business that reasonably could be construed as
falling outside of the scope of the foregoing permitted investments
and involvement, and (b) any board of directors or similar
body of any corporation or other entity on which the Executive is a
member. The Corporation may require the Executive to resign from
membership on any board or similar body of any entity, on which he
may now or in the future serve, if the Corporation determines that
the Executive’s membership on such board or similar body
interferes (interference shall include, without limitation, giving
rise to conflicts or competitive activity) with the performance of
the Executive’s duties hereunder.
1.4 No
Breach of Contract . The Executive hereby represents to the
Corporation that the execution and delivery of this Agreement by
the Executive and the Corporation and the performance by the
Executive of the Executive’s duties hereunder shall not
constitute a breach of, or otherwise contravene, the terms of any
other agreement or policy to which the Executive is a party or
otherwise bound (including, without limitation, any
confidentiality, trade secret or similar agreement with any other
person or entity).
1.5
Location . The Executive acknowledges that the
Corporation’s principal executive offices are currently
located in Aliso Viejo, California. The Executive’s principal
place of employment shall be the Corporation’s principal
executive offices, as they may be
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moved from time
to time at the discretion of the Corporation. The Executive agrees
that the Executive will be regularly present at the
Corporation’s principal executive offices and that the
Executive may be required to travel from time to time in the course
of performing the Executive’s duties for the
Corporation.
2. Period
of Employment . The
“ Period of Employment ” shall, unless sooner
terminated as provided herein, be a period of one year commencing
on the Effective Date and ending at the close of business on the
day prior to the first anniversary of the Effective Date (the
“ Initial Term ”). Prior to the expiration of
the Initial Term, the Executive and the Corporation’s Chief
Executive Officer shall negotiate in good faith regarding the
Executive’s possible role and responsibilities for continued
employment by the Corporation following the Initial Term. If, prior
to the expiration of the Initial Term, the Executive and the Chief
Executive Officer do not reach an agreement regarding the
Executive’s role and responsibilities following the Initial
Term, or the Corporation’s Board of Directors fails to
approve the terms and conditions of the Executive’s
employment that are to apply following the Initial Term, then the
Executive shall have the option to terminate his employment by the
Corporation, and such termination shall be deemed to be for Good
Reason as defined in Section 5.5 (and so triggering the
benefits set forth in Section 5.3(b)). The parties understand
and agree that the Executive’s rights under the Change in
Control Agreement (as defined in Section 5.3(b)) shall be
determined pursuant to the terms of such agreement and that the
expiration of the Initial Term does not itself constitute
“Good Reason” or “Cause” as such terms are
defined under the Change in Control Agreement.
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3.1 Base
Salary . The Executive’s base salary for the
Period of Employment (the “ Base Salary ”) shall
be at an annual rate of $400,000.
The
Executive’s Base Salary determined in accordance with the
foregoing shall be paid in accordance with the Corporation’s
regular payroll practices in effect from time to time, but not less
frequently than in monthly installments. The Corporation may
increase (but it will not decrease) the Base Salary
rate.
3.2
Incentive Bonus. The Executive will be eligible to
participate in the QLogic Incentive Program. The Executive’s
incentive target for the Corporation’s fiscal year ending in
2008 will be the product of (i) 70%, and (ii) the annual
Base Salary rate, and (iii) a fraction, the numerator of which
is the number of days between the Effective Date and the last day
of the Corporation’s fiscal year ending in 2008, and the
denominator of which is 365. All of the generally-applicable terms
and conditions of the QLogic Incentive Program shall apply,
including, without limitation, the requirement that the Executive
continue to be employed through the last day of the fiscal year to
be entitled to receive an incentive payment.
3.3 Initial
Stock Option Grant . The Corporation will recommend to the
Compensation Committee of the Board that Executive be granted a
nonqualified stock option (the “ Option ”) under
the QLogic Corporation 2005 Performance Incentive Plan (the
“Plan”) to purchase 180,000 shares of Common Stock of
the Corporation at a price per share equal to the fair market value
as of the grant date. Such grant shall be effective upon the
Effective Date. The Option will be exercisable only to the extent
that it is vested. The Option will vest as to 25% of the shares
subject thereto on the first anniversary of the Effective Date, and
the remaining shares subject thereto shall vest ratably on a
quarterly basis (6-1/4% per quarter) over the three
years
5
following the
first anniversary of the Effective Date). The maximum term of the
Option will be ten (10) years. The Option shall be evidenced
by an option agreement in substantially the form attached hereto as
Exhibit B (the “ Option Agreement
”), and shall be subject to all of the terms and conditions
of the Plan and such Option Agreement.
3.4 Initial
RSU Grant . The Corporation will recommend to the
Compensation Committee of the Board that Executive be granted
restricted stock units (“RSUs”) representing 30,000
shares of Common Stock of the Corporation at the next regular date
for the grant of such RSUs that occurs on or after the Effective
Date. Such RSUs will vest 25% on each of the first four
anniversaries of the grant date. The RSUs shall be evidenced by an
RSU agreement substantially in the form of the RSU Agreement
attached hereto as Exhibit C (the “ RSU
Agreement ”), and shall be subject to all of the terms
and conditions of the Plan and such RSU Agreement.
3.5 Sign-On
Bonus . The Corporation will pay Executive a sign-on bonus
of $260,000 (less applicable taxes) on Executive’s first
regular paycheck from the Corporation. If, prior to the first
anniversary of the Effective Date, the Corporation terminates
Executive’s employment with Cause, or the Executive
voluntarily terminates his employment with the Corporation other
than for Good Reason, Executive will repay the entire sign-on
bonus. Executive agrees that the Corporation is authorized to
satisfy any repayment obligation by deduction from
Executive’s earnings, accrued vacation or any other cash
compensation payable to Executive, to the full extent allowed by
law, and/or collect such repayment directly from the
Executive.
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3.6
Relocation Assistance . The Corporation will reimburse
the Executive for rental of a furnished corporate apartment in the
Aliso Viejo, California area up to a maximum rental amount of
$4,000 per month. Such rental reimbursement shall end upon the
earlier of (i) four months following the Effective Date or
(ii) Executive occupying a home purchased in the Orange
County, California area.
The Corporation
will provide or reimburse Executive for up to three round trip
airline tickets from North Carolina to Orange County, California
for one family visit to assist in relocation. The Corporation shall
provide (or reimburse Executive for) one round trip airfare ticket
per month in the four months following the Effective Date for
Executive to return to North Carolina to assist in moving his
family to Orange County, California.
If Executive sells
his home in North Carolina during the first twelve months following
the Effective Date, the Corporation will reimburse Executive for
all reasonable and customary seller costs associated with such
sale; provided, however, that the real estate commission reimbursed
for such sale shall not exceed 6% of the sale price. In the event
the Executive purchases a home in the Orange County, California
area within the first twelve months following the Effective Date,
the Corporation will reimburse Executive for the actual expenses
incurred by Executive for moving his family, as well as all
reasonable and customary closing costs associated with the purchase
of a home in the Orange County, California area; provided, however,
that the reimbursement for loan fees shall not exceed 1%, and
further provided that no reimbursement shall be made for loan
discount points.
In addition, the
Corporation shall pay to the Executive a relocation allowance in
the amount of $25,000.
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4.1 Health
and Welfare . During the Period of Employment, the
Executive shall be entitled to participate in all employee pension
and welfare benefit plans and programs made available by the
Corporation to the Corporation’s senior-level employees
generally, as such plans or programs may be in effect from time to
time.
4.2
Reimbursement of Business Expenses . The Executive is
authorized to incur reasonable expenses in carrying out the
Executive’s duties for the Corporation under this Agreement
and reimbursement for all reasonable business expenses the
Executive incurs during the Period of Employment in connection with
carrying out the Executive’s duties for the Corporation,
subject to the Corporation’s expense reimbursement policies
in effect from time to time.
4.3 PTO and
Other Leave . During the Period of Employment, the
Executive shall accrue and be entitled to take paid time off
(“ PTO ”) at the rate of three weeks per year in
accordance with the Corporation’s standard policies in effect
from time to time, including the Corporation’s policies
regarding PTO accruals. The Executive shall also be entitled to all
other holiday and leave pay generally available to other employees
of the Corporation.
5.1
Termination by the Corporation . The Executive’s
employment by the Corporation, and the Period of Employment, may be
terminated at any time by the Corporation: (i) with Cause (as
defined in Section 5.5), or (ii) without Cause, or
(iii) in the event of the
8
Executive’s death, or (iv) in the
event that the Board determines in good faith that the Executive
has a Disability (as defined in Section 5.5).
5.2
Termination by the Executive . The Executive’s
employment by the Corporation, and the Period of Employment, may be
terminated at any time by the Executive, on no less than thirty
(30) days prior written notice to the Corporation (unless
Executive terminates his employment for Good Reason, in which case
the procedures set forth below with respect to Good Reason will
apply, or unless otherwise mutually agreed in writing).
5.3
Benefits Upon Termination . If the Executive’s
employment by the Corporation is terminated during the Period of
Employment for any reason by the Corporation or by the Executive,
the Corporation shall have no further obligation to make or provide
to the Executive, and the Executive shall have no further right to
receive or obtain from the Corporation, any payments or benefits
except:
(a) the
Corporation shall pay the Executive (or, in the event of his death,
the Executive’s estate) any Accrued Obligations (as defined
in Section 5.5); and
(b) If,
during the Period of Employment, the Executive’s employment
is terminated as contemplated by Section 2, by the Corporation
without Cause or by the Executive for Good Reason (as defined in
Section 5.5) (and, in each case, other than due to either
(x) the Executive’s death, or (y) a good faith
determination by the Board that the Executive has a Disability),
the Corporation shall, subject to the conditions set forth in the
following paragraph, also pay the Executive severance benefits of
(i) continued Base Salary for the remainder of the Period of
Employment; (ii) a lump sum payment equal to one year’s Base
Salary; (iii) if not previously vested, acceleration of
vesting effective as of his last day of employment of the
first
9
25% of the
Option referred to in Section 3.3 and the first 25% of the
RSUs referred to in Section 3.4; and (iv) Company-paid
medical benefits for the Executive and his dependents for a number
of months following termination of employment equal to the number
of months described in (i) above plus 12. Subject to the conditions
set forth in the following paragraph and in Section 5.6 below,
the lump sum amount described in clause (ii) above shall be
paid to the Executive (without interest) no later than 10 business
days following the date on which the release referred to in
Section 5.4 becomes effective by its terms.
Any obligation of
the Corporation pursuant to Section 5.3(b) to pay a severance
benefit in the circumstances described therein is further subject
to the following two conditions precedent: (i) such severance
obligation shall be paid only if the Executive has remained in
compliance with all of the provisions of Section 5.6 and
Sections 7 through 12, and such obligation shall terminate
immediately if the Executive either (A) is for any reason not
in compliance with one or more of the provisions of
Section 5.6, and Sections 7 through 12, or (B) has
in the past breached one or more of the provisions of
Sections 7 through 12; and (ii) the Executive’s
satisfaction of the release obligations set forth in
Section 5.4. For purposes of the preceding sentence, if the
Executive is not in compliance with one or more provisions of
Section 5.6, and Sections 7 though 12, and a cure is
reasonably possible in the circumstances, the Executive will not be
deemed to have breached such provision(s) unless the Executive is
given notice and a reasonable opportunity (in no case shall more
than a 10-day cure period be required) to cure such breach and such
breach is not cured within such time period. The parties agree that
a cure will not be reasonably possible in all circumstances
including, without limitation, a material breach of confidentiality
or similar occurrence.
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The
foregoing provisions of this Section 5.3 shall not affect:
(i) the Executive’s receipt of benefits otherwise due
terminated employees under group insurance coverage consistent with
the terms of the applicable Corporation welfare benefit plan;
(ii) the Executive’s rights under the Consolidated
Omnibus Budget Reconciliation Act to continue participation in
medical, dental, hospitalization and life insurance coverage;
(iii) the Executive’s receipt of benefits otherwise due
in accordance with the terms of the Corporation’s 401(k) plan
(if any); or (iv) any rights that the Executive may have under
and with respect to a stock option or restricted stock award, to
the extent that such award was granted before the date that the
Executive’s employment by the Corporation terminates and to
the extent expressly provided in the written agreement evidencing
such award.
The
Executive has concurrently entered into a change in control
severance agreement in the form attached hereto as
Exhibit D (the “ Change in Control
Agreement ”). Pursuant to the terms of the Change in
Control Agreement, if the Executive should be entitled to benefits
under both this Agreement and the Change in Control Agreement as a
result of a termination of employment, then the “Severance
Benefits” (as defined in the Change in Control Agreement)
shall be reduced by the benefit payable under this
Section 5.3(b).
5.4
Release; Exclusive Remedy .
(a) This
Section 5.4 shall apply notwithstanding anything else
contained in this Agreement to the contrary. As a condition
precedent to any Corporation obligation to the Executive pursuant
to Section 5.3(b), the Executive shall, upon or promptly
following his last day of employment with the Corporation, provide
the Corporation with a valid, executed, written Release (as defined
in Section 5.5) (in substantially the form attached to the Change
in Control
11
Agreement) and
such release shall have not been revoked by the Executive pursuant
to any revocation rights afforded by applicable law. The
Corporation shall have no obligation to make any payment to the
Executive pursuant to Section 5.3(b) unless and until the
Release contemplated by this Section 5.4 becomes irrevocable
by the Executive in accordance with all applicable laws, rules and
regulations.
(b) The
Executive agrees that the payments contemplated by Section 5.3
shall constitute the exclusive and sole remedy for any termination
of his employment and the Executive covenants not to assert or
pursue any other remedies, at law or in equity, with respect to any
termination of employment. The Corporation and Executive
acknowledge and agree that there is no duty of the Executive to
mitigate damages under this Agreement. All amounts paid to the
Executive pursuant to Section 5.3 shall be paid without regard
to whether the Executive has taken or takes actions to mitigate
damages.
5.5 Certain
Defined Terms.
(a) As
used herein, “Accrued Obligations” means:
(i) any Base
Salary that had accrued but had not been paid (including accrued
and unpaid vacation time) prior to the date of termination;
and
(ii) any Incentive
Bonus that had become payable (i.e., an Incentive Bonus for which
all conditions for payment, such as continued employment had been
satisfied) pursuant to Section 3.2 but had not been paid;
and
(ii) any
reimbursement due to the Executive pursuant to Section 4.2 for
expenses incurred by the Executive prior to the date the Period of
Employment terminates.
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(b) As
used herein, “ Cause ” shall mean the reasonable
and good faith determination by a majority of the Board based on
its reasonable belief at the time, that, during the Period of
Employment, any of the following events or contingencies exists or
has occurred:
(i) the Executive
has been negligent in the discharge of the Executive’s duties
to the Corporation or one of its affiliates, has refused to perform
stated or assigned duties or is incompetent in or (other than by
reason of a Disability or analogous condition) incapable of
performing those duties; provided however that the Board shall
provide the Executive with written notice detailing the basis on
which it believes it has or may have Cause to terminate his
employment under this clause (i), and to the extent such
circumstances are curable by Executive, following receipt of which
the Executive shall have at least 10 business days in which to cure
such circumstances so as to eliminate grounds for a Cause
termination; or
(ii) the Executive
has committed or engaged in an act of moral turpitude, theft,
embezzlement or fraud, , an unauthorized disclosure or use of
inside information, customer lists, trade secrets or other
confidential information, or in connection with his position,
duties and authority with the Corporation, been dishonest or
committed a breach of confidentiality; or
(iii) the
Executive has breached a fiduciary duty to, or willfully and
materially violated any other duty, law, rule, regulation or policy
of, the Corporation or an affiliate; or has been convicted of, or
plead guilty or nolo
13
contendere to,
a felony or misdemeanor (other than minor traffic violations or
similar offenses); or
(iv) the Executive
has materially breached any of the material provisions of any
agreement with the Corporation or a subsidiary; or
(v) the Executive
has engaged in unfair competition with, or otherwise acted
intentionally in a manner injurious to the reputation, business or
assets of, the Corporation or a subsidiary; or
(vi) the
Executive’s execution and delivery of this Agreement or the
performance by the Executive of the Executive’s duties
hereunder constitutes a breach of, or otherwise contravenes, the
terms of any other agreement or policy to which the Executive is a
party or otherwise bound in a way that is materially injurious to
the Corporation.
(c) As
used herein, “ Disability ” shall mean a
physical or mental impairment which substantially limits a major
life activity of the Executive and which renders the Executive
unable to perform the essential functions of the Executive’s
position, even with reasonable accommodation which does not impose
an undue hardship on the Corporation, for thirty (30) days in
any consecutive twelve (12) month period. The Board reserves
the right, in good faith, to make the determination of whether or
not a Disability exists for purposes of this Agreement based upon
information supplied by the Executive and/or his medical personnel,
as well as information from medical personnel (or others) selected
by the Corporation or its insurers.
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(d) As
used herein, “ Good Reason ” shall
mean the occurrence of one or more of the following without the
Executive’s written consent:
(i) a material
breach of this Agreement by the Corporation, including any breach
of the terms relating to the Executive’s compensation;
or
(ii) a materially
significant diminution in the Executive’s position, duties
and authority; or
(iii) the
relocation of the Executive’s offices, as assigned to him by
the Corporation, more than fifty (50) miles outside of Aliso
Viejo, California; or
(iv) the failure
of the Corporation to obtain the assumption in writing of its
obligations to perform this Agreement by any successor to all or
substantially all of the assets or business of the Corporation
within fifteen (15) days upon a merger, consolidation, sale or
similar transaction.
provided , however , that none of the events
specified in clause (i) or (ii) above shall constitute Good
Reason unless the Executive shall have notified the Corporation in
writing describing the events which constitute Good Reason and the
Corporation shall have failed to cure such event within a
reasonable period, not to exceed ten (10) days, after the
Corporation’s actual receipt of such written notice. The
Executive’s continued employment shall not constitute a
consent to, or a waiver of rights with respect to, any
circumstances constituting Good Reason herein; provided ,
however , that if the Executive does not terminate
employment and claim Good Reason for such termination within sixty
(60) days after the Executive has knowledge of an event or
circumstance that would constitute Good Reason, then the Executive
shall be deemed to
15
have waived his
right to claim Good Reason as to that specific event or
circumstance (except that the event or circumstance may be
considered for purposes of determining whether any subsequent,
separate, event or circumstance constitutes Good Reason; for
example, and without limitation, a reduction in the
Executive’s authorities that is deemed waived by operation of
this clause may be considered for purposes of determining whether
any subsequent reduction in the Executive’s authorities (when
taken into consideration with the first reduction) constitutes a
“materially significant diminution” in the nature or
status of the Executive’s authorities).
(f) As
used herein, “ Release ” shall mean a written
release, discharge and covenant not to sue entered into by the
Executive on behalf of himself, his descendants, dependents, heirs,
executors, administrators, assigns, and successors, and each of
them, of and in favor of the Corporation, its parent (if any), the
Corporation’s subsidiaries and affiliates, past and present,
and each of them, as well as its and their trustees, directors,
officers, agents, attorneys, insurers, employees, stockholders,
members, representatives, assigns, and successors, past and
present, and each of them (the “releasees”), with
respect to and from any and all claims, wages, demands, rights,
liens, agreements, contracts, covenants, actions, suits, causes of
action, obligations, debts, costs, expenses, attorneys’ fees,
damages, judgments, orders and liabilities of whatever kind or
nature in law, equity or otherwise, whether now known or unknown,
suspected or unsuspected, and whether or not concealed or hidden,
which he may then own or hold or he at any time theretofore owned
or held or may in the future hold as against any or all of said
releasees, arising out of or in any way connected with the
Executive’s employment relationship with each and every
member of the Company Group (as defined in Section 7(a)) (as
defined in Section 7) with which the Executive has had such a
relationship, or the termination of his employment or any other
transactions, occurrences, acts or omissions or any loss, damage
or
16
injury
whatever, known or unknown, suspected or unsuspected, resulting
from any act or omission by or on the part of said releasees, or
any of them, committed or omitted prior to the date of such release
including, without limiting the generality of the foregoing, any
claim under Section 1981 of the Civil Rights Act of 1866,
Title VII of the Civil Rights Act of 1964, the Age Discrimination
in Employment Act, the Americans with Disabilities Act, the Family
and Medical Leave Act of 1993, the California Fair Employment and
Housing Act, the California Family Rights Act, any other claim
under any other federal, state or local law or regulation, and any
other claim for severance pay, bonus or incentive pay, sick leave,
holiday pay, vacation pay, life insurance, health or medical
insurance or any other fringe benefit, medical expenses, or
disability (except that such release shall not constitute a release
of any Corporation obligation to the Executive that may be due to
the Executive pursuant to Section 5.3(b) upon the
Corporation’s receipt of such release). The Release shall
also contain the Executive’s warrant that he has not
theretofore assigned or transferred to any person or entity, other
than the Corporation, any released matter or any part or portion
thereof and that he will defend, indemnify and hold harmless the
Corporation and the aforementioned releasees from and against any
claim (including the payment of attorneys’ fees and costs
actually incurred whether or not litigation is commenced) that is
directly or indirectly based on or in connection with or arising
out of any such assignment or transfer made, purported or claimed.
Notwithstanding anything contained above to the contrary, the
Executive shall not be required to release any rights he has to
benefits otherwise due terminated employees under group insurance
coverage consistent with the terms of the applicable Corporation
welfare benefit plan; rights under COBRA; rights to receipt of
benefits otherwise due him under the Corporation’s 401(k)
plan (if any); rights to be indemnified or to have expenses paid
and/or advanced to him in connection with any claims against him as
to
17
which he has
been indemnified by the Corporation under its charter documents,
state corporate or similar law, any indemnification agreement with
the Corporation during his tenure as an officer of the Corporation,
or under any Corporation insurance policy providing such coverage;
or any post-employment rights under any equity award
agreement.
5.6
Resignation From Boards . Upon or promptly following any
termination of Executive’s employment with the Corporation,
the Executive agrees to resign from (i) each and every board
of directors (or similar body, as the case may be) of the
Corporation and each of its affiliates on which the Executive may
then serve (if any), and (ii) each and every office of the
Corporation and each of its affiliates that the Executive may then
hold, and all positions that he may have previously held with the
Corporation and any of its affiliates.
(a) If upon
the expiration of the Initial Term the Executive terminates his
employment with the Corporation under the circumstances described
in Section 2, and as of the date of his termination of
employment, the Executive is a “specified employee,” as
defined in Section 409A of the Code
(“Section 409A”), the Executive shall not be
entitled to any payments under Sections 5.3(b)(i) and 5.3(b)(ii)
until the earlier of (i) the date which is six months after
his termination of employment, or (ii) the date of the
Executive’s death. At the end of such six-month period (or
upon the Executive’s death during the six-month period), the
payments under Section 5.3(b)(i) and Section 5.3(b)(ii) shall
be paid as soon as feasible in a lump sum.
(b) If, after
April 1, 2008, (i) the Executive terminates his
employment with the Corporation under circumstances satisfying any
of subsections (i) through (iv) of the definition of Good
Reason set forth in Section 5.5(d)), or (ii) the
Corporation terminates the Executive’s employment without
Cause, and in either case as of the date of his termination of
employment
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the Executive
is a “specified employee,” the payments to Executive
during the period ending on the earlier of (A) the date which
is six months after his termination of employment or (B) the
date of his death shall not exceed the “Interim Payment
Limit,” as defined below. The Interim Payment Limit is two
times the lesser of (aa) Executive’s annualized
compensation from the Corporation for calendar 2007, or
(bb) the maximum amount that may be taken into account under a
qualified plan pursuant to Code Section 401(a)(17). Payments
up to the Interim Payment Limit shall first be made as that portion
(up to 100%) of the lump sum payment under Section 5.3(b)(ii)
that does not exceed the Interim Payment Limit, and any remaining
payments of continued salary under Section 5.3(b)(i) up to the
Interim Payment Limit shall be shall be paid according to the
Corporation’s customary payroll practices. At the end of such
six-month period (or upon the Executive’s death during the
six-month period), any remaining unpaid amounts under
Section 5.3(b)(i) and Section 5.3(b)(ii) shall be paid as
soon as feasible in a lump sum.
(c) The
provisions of this Section 5.7 are intended to satisfy Code
Section 409A and the regulations thereunder, and shall be
interpreted and applied in a manner consistent with Code
Section 409A and such regulations.
6.
Means and Effect of Termination . Any termination of the
Executive’s employment under this Agreement shall be
communicated by written notice (a “Notice of
Termination”) from the terminating party to the other party.
The Notice of Termination shall indicate the specific provision(s)
of this Agreement relied upon in effecting the termination. No
termination of Executive’s employment by the Corporation
shall be considered to be for Cause unless it is made pursuant to a
Notice of Termination. Any termination of Executive’s
employment by the Corporation (other than on account of
Executive’s death or a good faith determination by the Board
that the Executive has a Disability) not made pursuant to a Notice
of
19
Termination
shall be considered a termination without Cause. No termination of
Executive’s employment by the Executive shall be considered
to be for Good Reason unless it is made pursuant to a Notice of
Termination. Any termination of Executive’s employment by the
Executive not made pursuant to a Notice of Termination shall be
considered a termination without Good Reason.
7.
Non-Competition . The Executive acknowledges and
recognizes the highly competitive nature of the businesses of the
Corporation, the amount of sensitive and confidential information
involved in the discharge of the Executive’s position with
the Corporation, and the harm to the Corporation that would result
if such knowledge or expertise was disclosed or made available to a
competitor. Based on that understanding, the Executive hereby
expressly agrees as follows:
(a) As
a result of the particular nature of the Executive’s
relationship with the Corporation, in the capacities identified
earlier in this Agreement, for the Period of Employment the
Executive hereby agrees that he will not, directly or indirectly,
(i) engage in any business for the Executive’s own
account or otherwise derive any personal benefit from any business
that competes with the business of the Corporation or any of its
affiliates (the Corporation and its subsidiaries are referred to,
collectively, as the “ Company Group ”),
(ii) enter the employ of, or render any services to, any
person engaged in any business that competes with the business of
any entity within the Company Group, or (iii) acquire a
financial interest in any person engaged in any business that
competes with the business of any entity within the Company Group,
directly or indirectly, as an individual, partner, member,
shareholder, officer, director, principal, agent, trustee or
consultant. For purposes of this Agreement, businesses in
competition with the Company Group shall include, without
limitation, businesses which any entity within the
20
Company Group
may conduct operations, and any businesses which any entity within
the Company Group has specific plans to conduct operations in the
future and as to which the Executive is aware of such planning,
whether or not such businesses have or have not as of that date
commenced operations.
(b) Notwithstanding
anything to the contrary in this Agreement, the Executive may,
directly or indirectly, own, solely as an investment, securities of
any person which are publicly traded on a national or regional
stock exchange or on an over-the-counter market if the Executive
(i) is not a controlling person of, or a member of a group
which controls, such person, and (ii) does not, directly or
indirectly, beneficially own one percent (1%) or more of any class
of securities of such person.
8.
Confidentiality . As material part of the consideration
for the Corporation’s commitment to the terms of this
Agreement, the Executive hereby agrees that the Executive will not
at any time (whether during or after the Executive’s
employment with the Corporation), other in the course of the
Executive’s duties hereunder, or unless compelled by lawful
process after written notice to the Corporation of such notice
along with sufficient time for the Corporation to try and overturn
such lawful process, disclose or use for the Executive’s own
benefit or purposes or the benefit or purposes of any other person,
firm, partnership, joint venture, association, corporation or other
business organization, entity or enterprise, any trade secrets, or
other confidential data or information relating to customers,
development programs, costs, marketing, trading, investment, sales
activities, promotion, credit and financial data, financing
methods, or plans of any entity within the Company Group;
provided , however , that the foregoing shall not
apply to information which is generally known to the industry or
the public, other than as a result of the Executive’s breach
of this covenant. The Executive further agrees that the Executive
will
21
not retain or
use for his account, at any time, any trade names, trademark or
other proprietary business designation used or owned in connection
with the business of any entity within the Company
Group.
9.
Inventions and Developments .
(a) All
inventions, policies, systems, developments or improvements
conceived, designed, implemented and/or made by the Executive,
either alone or in conjunction with others, at any time or at any
place during the Period of Employment, whether or not reduced to
writing or practice during such Period of Employment, which
directly or indirectly relate to the business of any entity within
the Company Group, or which were developed or made in whole or in
part using the facilities and/or capital of any entity within the
Company Group, shall be the sole and exclusive property of the
Company Group. The Executive shall promptly give notice to the
Corporation of any such invention, development, patent or
improvement, and shall at the same time, without the need for any
request by any person or entity within the Company Group, assign
all of the Executive’s rights to such invention, development,
patent and/or improvement to the Company Group. The Executive shall
sign all instruments necessary for the filing and prosecution of
any applications for, or extension or renewals of, letters patent
of the United States or any foreign country that any entity in the
Company Group desires to file.
(b) All
copyrightable work by the Executive during the Period of Employment
that relates to the business of any entity in the Company Group is
intended to be “work made for hire” as defined in
Section 101 of the Copyright Act of 1976, and shall be the
property of the Company Group. If the copyright to any such
copyrightable work is not the property of the Company Group by
operation of law, the Executive will, without further
consideration, assign to
22
the Company
Group all right, title and interest in such copyrightable work and
will assist the entities in the Company Group and their nominees in
every way, at the Company Group’s expense, to secure,
maintain and defend for the Company Group’s benefit
copyrights and any extensions and renewals thereof on any and all
such work including translations thereof in any and all countries,
such work to be and to remain the property of the Company Group
whether copyrighted or not.
10.
Anti-solicitation . The Executive promises and agrees
that during the Period of Employment and for a period of one
(1) year thereafter, the Executive will not, directly or
indirectly, individually or as a consultant to, or as an employee,
officer, stockholder, director or other owner or participant in any
business, influence or attempt to influence customers, vendors,
suppliers, joint venturers, associates, consultants, agents, or
partners of any entity within the Company Group, either directly or
indirectly, to divert their business away from the Company Group,
to any individual, partnership, firm, corporation or other entity
then in competition with the business of any entity within the
Company Group.
11.
Soliciting Employees . The Executive promises and agrees
that during the Period of Employment and for a period of two
(2) years thereafter, the Executive will not, directly or
indirectly, individually or as a consultant to, or as an employee,
officer, stockholder, director or other owner of or participant in
any business, solicit (or assist in soliciting) any person who is
then, or at any time within six (6) months prior thereto was,
an employee of an entity within the Company Group, who earned
annually $50,000 or more as an employee of such entity during the
last six (6) months of his or her own employment to work for
(as an employee, consultant or otherwise) any business, individual,
partnership, firm, corporation, or other entity whether or not
engaged in competitive business with any entity in the Company
Group.
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12.
Return of Property . The Executive agrees to truthfully
and faithfully account for and deliver to the Corporation all
property belonging to the Corporation, any other entity in the
Company Group, or any of their respective affiliates, which the
Executive may receive from or on account of the Corporation, any
other entity in the Company Group, or any of their respective
affiliates, and upon the termination of the Period of Employment,
or the Corporation’s demand, the Executive shall immediately
deliver to the Corporation all such property belonging to the
Corporation, any other entity in the Company Group, or any of their
respective affiliates.
13.
Withholding Taxes . Notwithstanding anything else herein
to the contrary, the Corporation may withhold (or cause there to be
withheld, as the case may be) from any amounts otherwise due or
payable under or pursuant to this Agreement such federal, state and
local income, employment, or other taxes as may be required to be
withheld pursuant to any applicable law or regulation.
14.
Assignment . This Agreement is personal in its nature
and neither of the parties hereto shall, without the consent of the
other, assign or transfer this Agreement or any rights or
obligations hereunder; provided , however , that in
the event of a merger, consolidation, or transfer or sale of all or
substantially all of the assets of the Corporation with or to any
other individual(s) or entity, this Agreement shall, subject to the
provisions hereof, be binding upon and inure to the benefit of such
successor and such successor shall discharge and perform all the
promises, covenants, duties, and obligations of the Corporation
hereunder.
15.
Number and Gender . Where the context requires, the
singular shall include the plural, the plural shall include the
singular, and any gender shall include all other
genders.
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16.
Section Headings . The section headings of, and
titles of paragraphs and subparagraphs contained in, this Agreement
are for the purpose of convenience only, and they neither form a
part of this Agreement nor are they to be used in the construction
or interpretation thereof.
17.
Governing Law . This Agreement, and all questions
relating to its validity, interpretation, performance and
enforcement, as well as the legal relations hereby created between
the parties hereto, shall be governed by and construed under, and
interpreted and enforced in accordance with, the laws of the State
of California, notwithstanding any California or other conflict of
law provision to the contrary.
18.
Severability . If any provision of this Agreement or the
application thereof is held invalid, the invalidity shall not
affect other provisions or applications of this Agreement which can
be given effect without the invalid provisions or applications and
to this end the provisions of this Agreement are declared to be
severable.
19.
Entire Agreement . The Executive has contemporaneously
entered into this Agreement, a change of control severance
agreement, certain equity award agreements attached to this
Agreement, a confidentiality agreement and an inventions agreement
(collectively, the “Employment Agreements”). The
Employment Agreements embody the entire agreement of the parties
hereto respecting the matters within the scope of the Employment
Agreements. This Agreement supersedes all prior and contemporaneous
agreements of the parties hereto that directly or indirectly bears
upon the subject matter hereof. Any prior negotiations,
correspondence, agreements, proposals or understandings relating to
the subject matter hereof shall be deemed to have been merged into
this Agreement, and to the extent inconsistent
25
herewith, such
negotiations, correspondence, agreements, proposals, or
understandings shall be deemed to be of no force or effect. There
are no representations, warranties, or agreements, whether express
or implied, or oral or written, with respect to the subject matter
hereof, except as expressly set forth herein.
20.
Modifications . This Agreement may not be amended,
modified or changed (in whole or in part), except by a formal,
definitive written agreement expressly referring to this Agreement,
which agreement is executed by both of the parties
hereto.
21.
Waiver . Neither the failure nor any delay on the part
of a party to exercise any right, remedy, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, power or privilege
preclude any other or further exercise of the same or of any right,
remedy, power or privilege, nor shall any waiver of any right,
remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have
granted such waiver.
22.
Resolution of Disputes .
(a) Any
controversy arising out of or relating to the Executive’s
employment (whether or not before or after the expiration of the
Period of Employment), any termination of the Executive’s
employment, this Agreement, the other Employment Agreements, any
attachments or exhibits to any such agreements, the enforcement or
interpretation of any such an agreement, or because of an alleged
breach, default, or misrepresentation in connection with any of the
provisions of such an agreement, including (without limitation) any
state or federal statutory claims, shall be submitted to
arbitration in Orange County, California, before a sole
26
arbitrator (the
“ Arbitrator ”) selected from judicial
arbitration mediation services (“ JAMS ”), or if
JAMS is no longer able to supply the arbitrator, such arbitrator
shall be selected from the American Arbitration Association
(“ AAA ”), and shall be conducted in accordance
with the provisions of California Code of Civil Procedure
§§ 1280 et seq . as the exclusive remedy of
such dispute; provided , however , that provisional
injunctive relief may, but need not, be sought in a court of law
while arbitration proceedings are pending, and any provisional
injunctive relief granted by such court shall remain effective
until the matter is finally determined by the Arbitrator. Final
resolution of any dispute through arbitration may include any
remedy or relief that the Arbitrator deems just and equitable,
including any and all remedies provided by applicable state or
federal statutes. At the conclusion of the arbitration, the
Arbitrator shall issue a written decision that sets forth the
essential findings and conclusions upon which the
Arbitrator’s award or decision is based. Any award or relief
granted by the Arbitrator hereunder shall be final and binding on
the parties hereto and may be enforced by any court of competent
jurisdiction.
(b) The
parties acknowledge and agree that they are hereby waiving any
rights to trial by jury in any action, proceeding or counterclaim
brought by either of the parties against the other in connection
with any matter whatsoever arising out of or in any way connected
with any of the matters referenced in the first sentence of the
first paragraph of this Section 22.
(c) The
parties agree that Corporation shall be responsible for payment of
the forum costs of any arbitration hereunder, including the
Arbitrator’s fee. The parties further agree that in any
proceeding with respect to such matters, the prevailing party will
be entitled to recover its reasonable attorney’s fees and
costs from the non-prevailing party (other than forum costs
associated with the arbitration which in any event shall be paid by
the Corporation).
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(d) Without
limiting the remedies available to the parties and notwithstanding
the foregoing provisions of this Section 22, the Executive and
the Corporation acknowledge that any breach of any of the covenants
or provisions contained in Sections 5.6, and 7 through 12
could result in irreparable injury to either of the parties hereto
for which there might be no adequate remedy at law, and that, in
the event of such a breach or threat thereof, the non-breaching
party shall be entitled to obtain a temporary restraining order
and/or a preliminary injunction and a permanent injunction
restraining the other party hereto from engaging in any activities
prohibited by any covenant or provision in Sections 5.6, and 7
through 12 or such other equitable relief as may be required to
enforce specifically any of the covenants or provisions of
Sections 5.6, and 7 through 12.
(a) All
notices, requests, demands and other communications required or
permitted under this Agreement shall be in writing and shall be
deemed to have been duly given and made if (i) delivered by
hand, (ii) otherwise delivered against receipt therefor, or
(iii) sent by registered or certified mail, postage prepaid,
return receipt requested. Any notice shall be duly addressed to the
parties as follows:
(i) if to
the Corporation:
Qlogic
Corporation
26650 Aliso Viejo Parkway
Aliso Viejo, CA 92656
Attention: General Counsel
28
O’Melveny
& Myers LLP
610 Newport Center Drive, Suite 1700
Newport Beach, CA 92660
Attention: Gary Singer, Esq.
(ii) if to the
Executive at the last address of the Executive on the books of the
Corporation.
(b) Any
party may alter the address to which communications or copies are
to be sent by giving notice of such change of address in conformity
with the provisions of this Section 23 for the giving of
notice. Any communication shall be effective when delivered by
hand, when otherwise delivered against receipt therefor, or five
(5) business days after being mailed in accordance with the
foregoing.
24.
Legal Counsel; Mutual Drafting . Each party recognizes
that this is a legally binding contract and acknowledges and agrees
that they have had the opportunity to consult with legal counsel of
their choice. Each party has cooperated in the drafting,
negotiation and preparation of this Agreement. Hence, in any
construction to be made of this Agreement, the same shall not be
construed against either party on the basis of that party being the
drafter of such language.
25.
Provisions that Survive Termination . The provisions of
5.3, 5.4, 5.5, 5.6, 7 through 24, 26, and this Section 25
shall survive any termination of the Period of
Employment.
29
26.
Counterparts . This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original
as against any party whose signature appears thereon, and all of
which together shall constitute one and the same instrument. This
Agreement shall become binding when one or more counterparts
hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as the signatories.
Photographic copies of such signed counterparts may be used in lieu
of the originals for any purpose.
IN WITNESS
WHEREOF , the Corporation and the Executive have executed this
Agreement on April 19, 2007.
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“CORPORATION”
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Qlogic
Corporation
a Delaware corporation
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By:
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/s/
H.K. Desai
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Title:
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Chairman and Chief Executive
Officer
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“EXECUTIVE”
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/s/ Jeff Benck
Jeff
Benck
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30
Member of
family-owned LLC
QLOGIC CORPORATION
2005 PERFORMANCE INCENTIVE PLAN
TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTION
These Terms and
Conditions of Nonqualified Stock Option (these “Terms”)
apply to a particular stock option (“Option”) to
purchase shares of Common Stock of QLogic Corporation (the
“Corporation”) if incorporated by reference in the
Notice of Grant Agreement (“Grant Notice”)
corresponding to that particular grant. The recipient of the Option
identified in the Grant Notice is referred to as the
“Grantee.” The per share exercise price of the Option
as set forth on the Grants tab on the CEFS website
(www.ubs.com/cefs/qlgc) is referred to as the “Exercise
Price.” The effective date of grant of the Option as set
forth on the Grants tab on the CEFS website is referred to as the
“Award Date.” The Option was granted under and subject
to the QLogic Corporation 2005 Performance Incentive Plan (the
“Plan”) and these Terms. Capitalized terms are defined
in the Plan if not defined herein. The Option has been granted to
the Grantee in addition to, and not in lieu of, any other form of
compensation otherwise payable or to be paid to the Grantee. The
Grant Notice and these Terms are collectively referred to as the
“Option Agreement” applicable to the Option, or this
“Option Agreement.”
2.
Vesting; Limits on Exercise; Incentive Stock Option Status
.
Subject to
adjustment under Section 7.1 of the Plan and further subject
to early termination under Section 5 of these Terms and
Section 7.4 of the Plan, the Option shall become vested as
follows: (1) 25% of the total number of shares of Common Stock
subject to the Option shall vest on the first anniversary of the
Award Date; and (2) an additional 6.25% of the total number of
shares of Common Stock subject to the Option shall vest on the last
day of each calendar quarter following the calendar quarter in
which the first vesting date occurs until the Option is vested as
to all of the shares of Common Stock subject thereto. The Option
may be exercised only to the extent the Option is vested and
exercisable.
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Cumulative Exercisability
. To the extent that the
Option is vested and exercisable, the Grantee has the right to
exercise the Option (to the extent not previously exercised), and
such right shall continue, until the expiration or earlier
termination of the Option.
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•
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No Fractional Shares
. Fractional share
interests shall be disregarded, but may be cumulated.
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Minimum Exercise
. No fewer than 100
shares of Common Stock may be purchased at any one time, unless the
number purchased is the total number at the time exercisable under
the Option.
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•
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Nonqualified Stock Option
. The Option is a
nonqualified stock option and is not, and shall not be, an
incentive stock option within the meaning of Section 422 of
the Code.
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3.
Continuance of Employment/Service Required; No
Employment/Service Commitment .
The vesting
schedule requires continued employment or service through each
applicable vesting date as a condition to the vesting of the
applicable installment of the Option and the rights and benefits
under this Option Agreement. Employment or service for only a
portion of the vesting period, even if a substantial portion, will
not entitle the Grantee to any proportionate vesting or avoid or
mitigate a termination of rights and benefits upon or following a
termination of employment or services as provided in Section 5
below or under the Plan.
Nothing contained
in this Option Agreement or the Plan constitutes a continued
employment or service commitment by the Corporation or any of its
Subsidiaries, affects the Grantee’s status, if he or she is
an employee, as an employee at will who is subject to termination
without cause, confers upon the Grantee any right to remain
employed by or in service to the Corporation or any Subsidiary,
interferes in any way with the right of the Corporation or any
Subsidiary at any time to terminate such employment or service, or
affects the right of the Corporation or any Subsidiary to increase
or decrease the Grantee’s other compensation.
4.1 Method of
Exercise of Option .
The Corporation
has established a web – based system for managing and
exercising Options. Currently, UBS Financial Services, Inc. manages
Option exercises. In order to exercise an Option, the Grantee must
contact UBS either by logging on to the UBS OneSource website
(http://www.ubs.com/onesource/qlgc) or by calling the UBS Call
Center at 1-866-756-4421. UBS will request from the Grantee
information regarding the Option to be exercised, the method of
payment of the exercise price and the order type. In addition, the
Grantee may elect to have income taxes withheld at higher than the
statutory rate. In order to comply with the terms of the Plan, the
Grantee also must deliver:
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payment in full for the Exercise
Price of the shares to be purchased in cash, check or by electronic
funds transfer, or utilizing the UBS same day sale
procedures;
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any
written statements or agreements required pursuant to
Section 8.1 of the Plan; and
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satisfaction of the tax withholding
provisions of Section 8.5 of the Plan.
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The
Administrator also may, but is not required to, authorize a
non-cash payment alternative by notice and third party payment in
such manner as may be authorized by the Administrator. For other
methods of payment for exercise, contact the
Administrator.
4.2
Responsibility for Taxes . The ultimate liability for any and
all tax, social insurance and payroll tax withholding legally
payable by an employee under applicable law (including without
limitation laws of foreign jurisdictions)(“Tax-Related
Items”) is and remains Grantee’s responsibility and
liability and the Corporation (a) makes no representations or
undertakings regarding the treatment of any Tax-Related Items in
connection with any aspect of the Option, including the grant,
vesting or exercise of the Option and the subsequent sale of
the
2
shares of
Common Stock subject to the Option; and (b) does not commit to
structure the terms of the grant or any aspect of the Option to
reduce or eliminate Grantee’s liability for Tax-Related
Items.
Prior
to exercise of the Option, Grantee shall pay or make adequate
arrangements satisfactory to the Administrator to satisfy all
withholding obligations of the Corporation. In this regard, Grantee
authorizes the Corporation to withhold all applicable Tax-Related
Items legally payable by Grantee from his or her wages or other
cash compensation paid to Grantee by the Corporation or from
proceeds of sale. Alternatively, or in addition, if permissible
under local law, the Corporation may sell or arrange for the sale
of shares of Common Stock that Grantee is due to acquire to meet
the minimum withholding obligations for Tax-Related Items. Finally,
Grantee shall pay to the Corporation any amount of any Tax-Related
Items that the Corporation may be required to withhold as a result
of Grantee’s participation in the Plan or Grantee’s
purchase of shares of Common Stock that cannot be satisfied by the
means previously described.
5. Early
Termination of Option .
5.1 Expiration
Date. Subject to earlier termination as provided below in this
Section 5, the Option will terminate on the tenth (10
th ) anniversary of the Award Date (the
“Expiration Date”).
5.2 Possible
Termination of Option upon Change in Control. The Option is
subject to termination in connection with a Change in Control Event
or certain similar reorganization events as provided in
Section 7.4 of the Plan.
5.3
Termination of Option upon a Termination of Grantee’s
Employment or Services. Subject to earlier termination on the
Expiration Date of the Option or pursuant to Section 5.2
above, if the Grantee ceases to be employed by or ceases to provide
services to the Corporation or a Subsidiary, the following rules
shall apply (the last day that the Grantee is employed by or
provides services to the Corporation or a Subsidiary is referred to
as the Grantee’s “ Severance Date
”):
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other than as expressly provided
below in this Section 5.3, (a) the Grantee will have
until the date that is 3 months after his or her Severance
Date to exercise the Option (or portion thereof) to the extent that
it was vested on the Severance Date, (b) the Option, to the extent
not vested on the Severance Date, shall terminate on the Severance
Date, and (c) the Option, to the extent exercisable for the
3-month period following the Severance Date and not exercised
during such period, shall terminate at the close of business on the
last day of the 3-month period; if the termination of the
Grantee’s employment or services is the result of the
Grantee’s death or Total Disability (as defined below),
(a) the Grantee (or his or her beneficiary or personal
representative, as the case may be) will have until the date that
is 12 months after the Grantee’s Severance Date to
exercise the Option, (b) the Option, to the extent not vested
on the Severance Date, shall terminate on the Severance Date, and
(c) the Option, to the extent exercisable for the 12-month
period following the Severance Date and not exercised during such
period, shall terminate at the close of business on the last day of
the 12-month period;
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if
the Grantee’s employment or services are terminated by the
Corporation or a Subsidiary for Cause (as defined below), the
Option (whether vested or not) shall terminate on the Severance
Date.
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For purposes of
the Option, “ Total Disability ” means a
“permanent and total disability” (within the meaning of
Section 22(e)(3) of the Code or as otherwise determined by the
Administrator).
For purposes of
the Option, “ Cause ” means that the
Grantee:
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(1)
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has
been negligent in the discharge of his or her duties to the
Corporation or any of its Subsidiaries, has refused to perform
stated or assigned duties or is incompetent in or (other than by
reason of a disability or analogous condition) incapable of
performing those duties;
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(2)
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has
been dishonest or committed or engaged in an ac
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