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EMPLOYMENT AGREEMENT

Employment Agreement

EMPLOYMENT AGREEMENT | Document Parties: QLOGIC CORP | Jeff Benck You are currently viewing:
This Employment Agreement involves

QLOGIC CORP | Jeff Benck

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Title: EMPLOYMENT AGREEMENT
Governing Law: California     Date: 4/25/2007
Industry: Semiconductors     Law Firm: O?Melveny & Myers LLP     Sector: Technology

EMPLOYMENT AGREEMENT, Parties: qlogic corp , jeff benck
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EXHIBIT 10.1

EMPLOYMENT AGREEMENT

     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.  Compensation .

      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

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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. Benefits .

      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. Termination .

      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

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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

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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

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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

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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

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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

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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

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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.

      5.7 Code Section 409A .

     (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

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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

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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.

23


 

      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.

24


 

      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).

27


 

          (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.

23. Notices .

          (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


 

with a copy to:

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.

 

 

 

 

 

 

 

 

 

“CORPORATION”

 

 

 

 

 

 

 

 

 

 

 

Qlogic Corporation
a Delaware corporation

 

 

 

 

 

 

 

 

 

 

 

By:

 

          /s/ H.K. Desai

 

 

 

 

 

 

 

 

 

 

 

 

 

Print Name:

 

  H.K. Desai

 

 

 

 

 

 

 

 

 

 

 

 

 

 Title:

 

  Chairman and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

“EXECUTIVE”

 

 

 

 

 

 

 

 

 

           /s/ Jeff Benck

 

Jeff Benck

 

 

30


 

Exhibit A
(Section 1.3)

Member of family-owned LLC

 


 

Exhibit B

QLOGIC CORPORATION
2005 PERFORMANCE INCENTIVE PLAN
TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTION

1. General .

     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.

 

 

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.

 

 

 

 

 

 

No Fractional Shares . Fractional share interests shall be disregarded, but may be cumulated.

 

 

 

 

 

 

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.

 

 

 

 

 

 

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.

 

 


 

 

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. Manner of Exercise.

      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:

 

 

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;

 

 

 

 

 

 

any written statements or agreements required pursuant to Section 8.1 of the Plan; and

 

 

 

 

 

 

satisfaction of the tax withholding provisions of Section 8.5 of the Plan.

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 ”):

 

 

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;

3


 

 

 

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.

     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:

 

(1)

 

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;

 

 

 

 

 

(2)

 

has been dishonest or committed or engaged in an ac


 
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