EXHIBIT 10.4

QLOGIC CORPORATION
2005 PERFORMANCE INCENTIVE PLAN
TERMS AND CONDITIONS OF FY2016 PERFORMANCE SHARES -B

(THREE-YEAR CLIFF VEST: MS. KING)

1.

General.

Subject to these Terms and Conditions of FY2016 Performance Shares – B (these
“Terms”) and the QLogic Corporation 2005 Performance Incentive Plan (including
any applicable sub-plan, the “Plan”), QLogic Corporation (including its
Subsidiaries, the “Corporation”) has granted to the Grantee (as defined below) a
credit of performance shares under the Plan (the “Performance Share Award” or
“Award”) with respect to the number of performance shares provided in the Notice
of Grant Agreement (“Grant Notice”) corresponding to that particular Award grant
(subject to adjustment as provided in Section 7.1 of the Plan and to adjustment
based on the level of achievement under, and as specified in, the Performance
Objectives) (the “Performance Shares”). As used herein, the term “performance
shares” means a non-voting unit of measurement which is deemed for bookkeeping
purposes to be equivalent to one outstanding share of the Corporation’s Common
Stock (subject to adjustment as provided in Section 7.1 of the Plan) solely for
purposes of the Plan and these Terms.  The recipient of the Award identified in
the Grant Notice is referred to as the “Grantee.”  The effective date of grant
of the Award as set forth on the Grants tab on the UBS One Source website
(www.ubs.com/onesource/qlgc) is referred to as the “Award Date.”  Capitalized
terms are defined in the Plan if not defined herein.  The Award 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 Performance
Shares shall be used solely as a device for the determination of the payment to
eventually be made to the Grantee if such Performance Shares vest pursuant to
Section 2.  The Performance Shares shall not be treated as property or as a
trust fund of any kind.

The Grant Notice and these Terms are collectively referred to as the
“Performance Share Award Agreement” applicable to the Performance Shares, or
this “Performance Share Award Agreement.”

2.

Vesting.

Subject to adjustment under Section 7.1 of the Plan, and further subject to
early termination under Section 6 of these Terms, the Award shall vest and
become non-forfeitable as follows: (i) no portion of the Performance Share Award
shall be earned or vest until the Compensation Committee of the Board of
Directors (“Compensation Committee”) has approved a calculation of the level of
achievement for each of the performance objectives (the “Performance
Objectives”) for the applicable fiscal year(s), (ii) once the Compensation
Committee has approved the level of achievement under each of the Performance
Objectives, the Compensation Committee shall approve the related number of
Performance Shares earned by the Grantee based on that level of achievement, and
(iii) except as expressly provided in Exhibit A, the total number of Performance
Shares earned by the Grantee shall vest on the later of (x) the third
anniversary of the Award Date and (y) the date the Compensation Committee
approves the calculations set forth in clauses (i) and (ii) of this Section 2
(such determination in each case to be made by the Compensation Committee within
two and one-half months after the end of the Performance Period).  The
Performance Objectives approved by the Compensation Committee and the weighting
assigned to each objective are set forth in Exhibit A to these Terms.          

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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 Award and the rights and benefits under this Performance
Share Award 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
6 below or under the Plan.

Nothing contained in this Performance Share Award Agreement or the Plan
constitutes a continued employment or service commitment by the Corporation,
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, interferes in any
way with the right of the Corporation at any time to terminate such employment
or service, or affects the right of the Corporation to increase or decrease the
Grantee’s other compensation. In jurisdictions that do not recognize an at will
employment relationship, the prior sentence is subject to Grantee’s contract of
employment and applicable law.

4.

No Stockholder Rights.

The Grantee shall have no rights as a stockholder of the Corporation, no
dividend rights  and no voting rights with respect to the Performance Shares and
any shares of Common Stock underlying or issuable in respect of such Performance
Shares until such shares of Common Stock are actually issued to and held of
record by the Grantee.  No adjustments will be made for dividends or other
rights of a holder for which the record date is prior to the date of issuance of
the stock certificate.  

5.

Delivery of Vested Performance Shares; Tax Withholding.

5.1Delivery of Vested Performance Shares.

On or as soon as administratively practical following each vesting of the
applicable portion of the Award pursuant to Section 2 (and, except as provided
in the “Change in Control Agreements” provision of Exhibit A below, in all
events not later than two and one-half months after the date the original
Performance Period is scheduled to end), the Corporation shall deliver to the
Grantee a number of shares of Common Stock (either by delivering one or more
certificates for such shares or by entering such shares in book entry form, as
determined by the Corporation in its discretion) equal to the number of
Performance Shares subject to this Award that vest on the applicable vesting
date, unless such Performance Shares terminate prior to the given vesting date
pursuant to Section 6.  The Corporation’s obligation to deliver shares of Common
Stock with respect to vested Performance Shares is subject to the condition
precedent that the Grantee or other person entitled under the Plan to receive
any shares with respect to the vested Performance Shares (a) deliver to the
Corporation any representations or other documents or assurances required
pursuant to Section 8.1 of the Plan and (b) make arrangements satisfactory to
the Corporation to pay or otherwise satisfy the tax withholding requirements
with respect to the vested Performance Shares.  The Grantee shall have no
further rights with respect to any Performance Shares that are paid or that
terminate pursuant to Section 6.

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The Corporation has established a web – based system for managing Performance
Share Awards.  Currently, UBS Financial Services, Inc. (“UBS”) manages
Performance Share Awards.  In the event that the Grantee wishes to sell shares
of Common Stock granted pursuant to a vested Performance Share Award, 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
Common Stock to be sold and the order type.    

5.2Responsibility 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 Award,
including the grant or vesting of the Award and the subsequent sale of the
shares of Common Stock subject to the Award; and (b) does not commit to
structure the terms of the grant or any aspect of the Award to reduce or
eliminate Grantee’s liability for Tax-Related Items.

Upon the granting of the Performance Share Award or the vesting or payment of
shares of the Common Stock in respect of Performance Share Award or any other
event in respect of the Performance Share Award that triggers withholding
obligations of the Corporation or its Subsidiaries, the Corporation shall have
the right at its option to (a) require the Grantee to pay or provide for payment
in cash of the amount of any taxes that the Corporation may be required to
withhold with respect to such withholding event, or (b) deduct from any amount
payable to the Grantee the amount of any taxes which the Corporation may be
required to withhold with respect to such withholding event.  In any case where
a tax is required to be withheld in connection with the Performance Share Award
or the delivery of shares of Common Stock under this Performance Share Award
Agreement, the Administrator may, in its sole discretion, direct the Corporation
to reduce the number of shares subject to the Performance Share Award  or shares
to be delivered pursuant to such Award by (or otherwise reacquire) the
appropriate number of whole shares, valued at their then fair market value (with
the “fair market value” of such shares determined in accordance with the
applicable provisions of the Plan), to satisfy such withholding obligation at
the minimum applicable withholding rates. 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 in connection with the Award that cannot be satisfied by
the means previously described.

6.

Early Termination of Employment/Service.

The Grantee’s Performance Shares shall terminate to the extent such units have
not become vested prior to the first date the Grantee is no longer employed by
or providing services to the Corporation or one of its Subsidiaries, regardless
of the reason for the termination of the Grantee’s employment or service with
the Corporation or such Subsidiary, whether with or without cause, voluntarily
or involuntarily.  If the Grantee is employed by or in service to a Subsidiary
and that entity ceases to be a Subsidiary, such event shall be deemed to be a
termination of employment or service of the Grantee for purposes of this
Agreement, unless the Grantee otherwise continues to be employed by or in
service to the Corporation or another of its Subsidiaries following such
event.  If any unvested Performance Shares are terminated hereunder, such
Performance Shares shall automatically terminate and be cancelled as of the
applicable termination date without payment of any consideration by the
Corporation and without any other action

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by the Grantee, or the Grantee’s beneficiary or personal representative, as the
case may be.  The Administrator shall be the sole judge of whether the Grantee
continues to render employment or services for purposes of this Performance
Share Award Agreement; provided, that the employment or service relationship
shall not be considered terminated in the case of any statutory leave.

7.

Restrictions on Transfer.

Subject to applicable law, neither the Performance Share Award, nor any interest
therein or amount or shares payable in respect thereof may be sold, assigned,
transferred, pledged or otherwise disposed of, alienated or encumbered, either
voluntarily or involuntarily.  The transfer restrictions in the preceding
sentence shall not apply to (a) transfers to the Corporation, or (b) transfers
by will or the laws of descent and distribution.

8.

Adjustment.

Upon the occurrence of certain events relating to the Corporation’s stock
contemplated by Section 7.1 of the Plan, the Administrator shall make
adjustments if appropriate in the number of Performance Shares then outstanding
and the number and kind of securities that may be issued in respect of the
Performance Share Award.  

9.

Data Privacy Consent.

Grantee explicitly and unambiguously consents to the collection, use, transfer
and processing, in electronic or other form, of Grantee’s personal data as
described in this document by and among, as applicable, the Corporation or its
affiliates (or their agents) for the exclusive purpose of implementing,
administering and managing Grantee’s participation in the Plan.

Grantee further understands that the Corporation or its affiliates (or their
agents) hold certain personal information about Grantee, including, but not
limited to, Grantee’s name, home address and telephone number, date of birth,
social insurance number or other identification number, salary, nationality, job
title, any shares of stock held in the Corporation and details of all Awards or
other entitlements to shares of Common Stock awarded, canceled, exercised,
vested, unvested or outstanding in Grantee’s favor, for the purpose of
implementing, administering and managing the Plan (“Data”).  Grantee understands
that Data may be transferred to any third parties assisting in the
implementation, administration and management of the Plan, that these recipients
may be located in Grantee’s country, or elsewhere, and that the recipient’s
country may not have the same level of data privacy laws and protections as
Grantee’s country. Grantee authorizes the recipients to receive, possess, use,
retain and transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing Grantee’s participation in the Plan,
including any requisite transfer of such Data as may be required to a broker or
other third party with whom Grantee may elect to deposit any shares of Common
Stock acquired upon vesting of the Award.  Grantee understands that Data will be
held only as long as is necessary to implement, administer and manage Grantee’s
participation in the Plan.  Grantee understands that he or she may, at any time,
view Data, request additional information about the storage and processing of
Data, require any necessary amendments to Data or withdraw the consents herein
by contacting the Corporation’s human resources department. Grantee understands
that withdrawal of consent may affect Grantee’s ability to exercise or realize
benefits from the Award.

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10.

Nature of Grant. 

In accepting the grant of the Award, Grantee acknowledges that: (i) the Plan is
established voluntarily by the Corporation, it is discretionary in nature and it
may be modified, suspended or terminated by the Corporation at any time, as
provided in the Plan and these Terms; (ii) the grant of the Award is voluntary
and occasional and does not create any contractual or other right to receive
future grants of performance shares, or benefits in lieu of performance shares
even if performance shares have been granted repeatedly in the past; (iii) all
decisions with respect to future grants will be at the sole discretion of the
Corporation; (iv) Grantee’s participation in the Plan shall not create a right
to further employment or service and shall not interfere with the ability of the
Corporation to terminate Grantee’s employment or service relationship at any
time with or without cause  (subject to Grantee’s contract of employment or
service, if one exists, and applicable law); (v) Grantee’s participation in the
Plan is voluntary; (vi) in the event that Grantee is not an employee of the
Corporation, the Award grant will not be interpreted to form an employment
contract or relationship with the Corporation, and furthermore, the Award grant
will not be interpreted to form an employment contract with the Corporation and
any of its affiliates; (vii) the future value of the underlying shares of Common
Stock is unknown and cannot be predicted with certainty; (viii) if Grantee vests
in his or her Award and shares of Common Stock are no longer restricted, the
value of those shares of Common Stock acquired upon vesting may increase or
decrease in value, even below the price at which such Award was originally
granted; and (ix) no claim or entitlement to compensation or damages arises from
termination of the Award or diminution in value of the Award or shares of Common
Stock acquired pursuant to the Award whether such compensation is claimed by way
of damages for wrongful dismissal or other breach of contract or by way of
compensation for loss of office or employment or otherwise howsoever. Grantee
irrevocably releases the Corporation and its affiliates from any such claim that
may arise and Grantee shall not be entitled to any compensation or damages
whatsoever or however described by reason of any termination, withdrawal or
alteration of rights or expectations under the Plan.  

11.

Clawback Policy.  

Notwithstanding anything else contained herein or in the Plan to the contrary,
but subject to applicable law, this Performance Share Agreement is subject to
the Company’s clawback policy, as well as the “clawback” provisions of
applicable law, rules and regulations, as each may be adopted and in effect from
time to time (collectively, the “Clawback Policy”).  The provisions of the
Clawback Policy are in addition to (and not in lieu of) any rights to repayment
the Company may have under Section 304 of the Sarbanes-Oxley Act of 2002 and
other applicable laws.

12.

Notices.

Any notice to be given under the terms of this Performance Share Award Agreement
shall be in writing and addressed to the Corporation at its principal office to
the attention of the Secretary, and to the Grantee at the address last reflected
on the Corporation’s payroll records or at Grantee’s place of work, or at such
other address as either party may hereafter designate in writing to the
other.  Any such notice shall be delivered in person or by pre-paid post/mail
shall be enclosed in a properly sealed envelope addressed as aforesaid.  Any
such notice shall be given only when received, but if the Grantee is no longer
employed by or in service to the Corporation, shall be deemed to have been duly
given five business days after the date posted/mailed in accordance with the
foregoing provisions of this Section 12.

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13.

Plan. 

The Award and all rights of the Grantee under this Performance Share Award
Agreement are subject to the terms and conditions of the Plan, incorporated
herein by this reference.  The Grantee agrees to be bound by the terms of the
Plan and this Performance Share Award Agreement.  The Grantee acknowledges
having read and understanding the Plan and this Performance Share Award
Agreement.  Unless otherwise expressly provided in other sections of this
Performance Share Award Agreement, provisions of the Plan that confer
discretionary authority on the Board or the Administrator do not and shall not
be deemed to create any rights in the Grantee unless such rights are expressly
set forth herein or are otherwise in the sole discretion of the Board or the
Administrator so conferred by appropriate action of the Board or the
Administrator under the Plan after the date hereof.

14.

Entire Agreement.

This Performance Share Award Agreement and the Plan together constitute the
entire agreement and supersede all prior understandings and agreements, written
or oral, of the parties hereto with respect to the subject matter hereof.  The
Plan and this Performance Share Award Agreement may be amended pursuant to
Section 8.6 of the Plan.  Such amendment must be in writing and signed by the
Corporation.  The Corporation may, however, unilaterally waive any provision
hereof in writing to the extent such waiver does not adversely affect the
interests of the Grantee hereunder, but no such waiver shall operate as or be
construed to be a subsequent waiver of the same provision or a waiver of any
other provision hereof.

15.

Governing Law.

This Performance Share Award Agreement shall be governed by and construed and
enforced and executed in accordance with the laws of the State of Delaware
without regard to conflict of law principles thereunder.

16.

Effect of this Agreement.

Subject to the Corporation’s right to terminate the Award pursuant to Section
7.2 of the Plan, this Performance Share Award Agreement shall be assumed by, be
binding upon and inure to the benefit of any successor or successors to the
Corporation.

17.

Limitation on Grantee’s Rights.  

Participation in the Plan confers no rights or interests other than as herein
provided.  This Performance Share Award Agreement creates only a contractual
obligation on the part of the Corporation as to amounts payable and shall not be
construed as creating a trust.  Neither the Plan nor any underlying program, in
and of itself, has any assets.  The Grantee shall have only the rights of a
general unsecured creditor of the Corporation with respect to amounts credited
and benefits payable, if any, with respect to the Performance Shares, and rights
no greater than the right to receive the Common Stock as a general unsecured
creditor with respect to Performance Shares, as and when payable hereunder.

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18.

Section Headings. 

The section headings of this Performance Share Award Agreement are for
convenience of reference only and shall not be deemed to alter or affect any
provision hereof.

19.

Construction.  

It is intended that the terms of the Award will not result in the imposition of
any tax liability pursuant to Section 409A of the Code.  The Performance Share
Award Agreement shall be construed and interpreted consistent with that intent.

20.

Acceptance.

In accepting the grant of the Award, Grantee acknowledges receipt of a copy of
the Plan, the Grant Notice and these Terms.  Grantee has read and understands
the terms and provisions thereof, and has accepted the Award subject to all
terms and conditions of the Plan, the Grant Notice and these Terms.  Grantee
acknowledges that there may be adverse tax consequences upon vesting of the
Award or disposition of the shares of Common Stock acquired upon vesting of the
Award and that Grantee should consult a tax adviser prior to such exercise or
disposition.

 

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EXHIBIT A

Metric: QLogic Corporation (“QLogic”) TSR vs. NASDAQ Composite Index TSR over
three-year period

 

o

Max of 200% of target number of Performance Shares set forth in Grant Notice

 

Percentage payout (of target number of Performance Shares) determined as
follows:

 

Target performance (100%) = QLogic TSR equal to NASDAQ Composite Index TSR

 

Under performance = award reduced at 2.5 to 1 rate, subject to threshold

 

o

10 points of underperformance = 75% payment

 

o

20 points of underperformance = 50% payment

 

o

30 points of underperformance = 25% payment (Threshold)

 

o

>30 points of underperformance = 0% payment

 

Over performance = award increased at 2 to 1 rate

 

o

10 points of overperformance = 120% payment

 

o

20 points of overperformance = 140% payment

 

o

30 points of overperformance = 160% payment

 

o

40 points of overperformance = 180% payment

 

o

50 points of overperformance = 200% payment

 

o

>50 points of overperformance = 200% payment

 

Key Terms

 

o

Performance Period: August 20, 2015 through August 20, 2018 (subject to earlier
termination as provided below under “Termination of Executive Officer Status”
and “Change in Control Vesting”)

 

o

Measure performance (Total Shareholder Return: TSR) on a dividend reinvested
basis

 

o

Nasdaq Composite Index: XCMP, or, if not available any substitute comparable
index

 

o

Achievement measured using the average closing stock price for the 30 trading
days immediately prior to the first day of the Performance Period and using the
average closing stock price for the 30 trading days immediately prior to, and
through, the last day of the Performance Period

 

o

Performance is measured (i) Percentage increase in QLogic over Performance
Period minus (ii) Percentage Increase in the XCMP or substitute comparable index
over the Performance Period.  (For example, if QLogic increased 30% and the XCMP
or substitute comparable index increased 20%, it would equate to 10 points of
over performance which would equal an MSU multiplier of 120% of target)

 

o

Payout percentage will be prorated for point performance between the levels
stated above

 

o

Vesting on the later of (i) the third anniversary of the Award Date and (ii)
Compensation Committee approval of the calculation of level of achievement for
the Performance Period as provided in Section 2 above, subject to the Grantee’s
continued employment or service through the vesting date.

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o

Termination of Executive Officer Status.  Notwithstanding the foregoing, if,
during the Performance Period and prior to a Change in Control (as defined
below), the Grantee ceases for any reason to serve as an “officer” (as defined
for purposes of Section 16 of the Exchange Act) of QLogic, the Performance
Period shall end on the last trading day before the date of such cessation of
the Grantee’s employment or service as an officer of QLogic and the number of
earned Performance Shares for the Performance Period shall be determined in
accordance with the provisions of this Exhibit A based on the NASDAQ Composite
TSR and the QLogic TSR as of such date.  Such number of earned Performance
Shares shall vest on the vesting date provided in Section 2 of this Performance
Share Award Agreement, subject to the Grantee’s continued employment or service
through the vesting date. 

 

o

Change in Control Vesting.  Notwithstanding the foregoing, in the event of a
Change in Control of QLogic during the Performance Period at a time when the
Grantee is serving as an “officer” (as defined for purposes of Section 16 of the
Exchange Act) of QLogic, the Performance Period shall end on the last trading
day before the date the Change in Control transaction is completed and the
number of earned Performance Shares for the Performance Period shall be
determined in accordance with the provisions of this Exhibit A based on the
NASDAQ Composite TSR and the QLogic TSR as of such date, provided, however, that
QLogic’s TSR shall be determined based on the price established for a share of
QLogic common stock in the Change in Control (as opposed to the average closing
stock price for the 30 trading days preceding such date).  Such number of earned
Performance Shares shall vest on the vesting date provided in Section 2 of this
Performance Share Award Agreement, subject to the Grantee’s continued employment
or service through the vesting date (except as provided in the next paragraph in
the case of a Qualifying Termination).  In the event the Award is not assumed by
the acquiring or successor entity in the Change in Control and is accelerated
pursuant to Section 7.2 of the Plan, such acceleration shall apply to the number
of earned Performance Shares as determined under this paragraph (and not the
target number of Performance Shares).  For purposes hereof, “Change in Control”
and “Qualifying Termination” (and related defined terms included within those
terms) shall have the same meanings as set forth in the form of Change in
Control Severance Agreement most recently filed by QLogic with the Securities
and Exchange Commission as of the Award Date.

 

o

Change in Control Agreements.  Notwithstanding the foregoing, if a Qualifying
Termination of the Grantee’s service occurs during the period beginning six (6)
months before the Change in Control and ending twenty-four (24) months after the
Change in Control, the number of earned Performance Shares determined pursuant
to the preceding paragraph shall fully vest on the date of such Qualifying
Termination (or, if later, the date of the Change in Control).  In the event of
a Qualifying Termination prior to the Change in Control, the Award, to the
extent cancelled or otherwise terminated upon or prior to the Change in Control
as provided herein, shall be reinstated to the extent necessary to give

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effect to the accelerated vesting provided in this paragraph.  Notwithstanding
Section 5.1 of the Performance Share Award Agreement, Performance Shares that
accelerate pursuant to a change in control severance or similar agreement shall
be paid as soon as practicable following (and in all events within sixty (60)
days following) the Grantee’s termination of employment (or, in the case of a
termination that occurs prior to the Change in Control, the date of the Change
in Control).         

  

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