exv10w3



 





Exhibit 10.3



QLOGIC CORPORATION

2005 PERFORMANCE INCENTIVE PLAN

TERMS AND CONDITIONS OF STOCK UNIT AWARD




	1.	 	General.





     Subject to these Terms and Conditions of Stock Unit Award (these “Terms”) and the QLogic
Corporation 2005 Performance Incentive Plan (the “Plan”), QLogic Corporation (the “Corporation”)
has granted to the Grantee (as defined below) a credit of stock units under the Plan (the “Stock
Unit Award” or “Award”) with respect to the number of stock units 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) (the “Stock Units”). As used herein, the term “stock unit”
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 CEFS website (www.ubs.com/cefs/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 Stock Units shall be used solely
as a device for the determination of the payment to eventually be made to the Participant if such
Stock Units vest pursuant to Section 2. The Stock Units 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 “Stock Unit Award
Agreement” applicable to the Stock Units, or this “Stock Unit 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 and Section 7.4 of the Plan, the Award shall vest and
become non-forfeitable with respect to twenty-five (25%) of the total number of Stock Units on each
of the first, second, third and fourth anniversaries of the Award Date.




	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 Stock Unit 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 Stock Unit Award Agreement or the Plan constitutes a continued
employment or service commitment by the Corporation or any of its Subsidiaries,



1









 




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.	 	Dividend and Voting Rights.





     4.1 Limitations on Rights Associated with Stock Units. The Grantee shall have no
rights as a stockholder of the Corporation, no dividend rights and no voting rights with respect
to the Stock Units and any shares of Common Stock underlying or issuable in respect of such Stock
Units 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.	 	Crediting of Vested Stock Unit Awards; Tax Withholding.





     5.1 Crediting of Vested Stock Unit Awards.



     On or as soon as administratively practical following each vesting of the applicable
portion of the total Award pursuant to Section 2 or Section 8, 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 Stock Units subject to this Award that vest on the applicable
vesting date, unless such Stock Units terminate prior to the given vesting date pursuant to Section
6. The Corporation’s obligation to deliver or credit shares of Common Stock with respect to vested
Stock Units 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 Stock Units (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 Stock Units. The Grantee shall have no
further rights with respect to any Stock Units that are paid or that terminate pursuant to Section
6.



     The Corporation has established a web – based system for managing Stock Unit Awards. Currently,
UBS Financial Services, Inc. manages Stock Unit Awards. In the event that the Grantee wishes to
sell shares of Common Stock granted pursuant to a vested Stock Unit 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. In addition, the Grantee may elect to
have income taxes withheld at higher than the statutory rate.



     5.2 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



2









 




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 a Stock Unit Awards or the vesting of shares of the Common Stock in
respect of the Stock Unit Awards, the Corporation (or the Subsidiary last employing the Grantee)
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 or the Subsidiary may be required to withhold with
respect to such payment and/or distribution, or (b) deduct from any amount payable to the Grantee
the amount of any taxes which the Corporation or the Subsidiary may be required to withhold with
respect to such payment and/or distribution. In any case where a tax is required to be withheld in
connection with Stock Unit Awards or the delivery of shares of Common Stock under this Stock Unit
Award Agreement, the Administrator may, in its sole discretion, direct the Corporation or the
Subsidiary to reduce the number of Stock Unit Awards or shares to be delivered 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 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.




	6.	 	Early Termination of Award.





     The Grantee’s Stock Units shall terminate to the extent such units have not become vested
prior to the first date the Grantee is no longer employed by the Corporation or one of its
Subsidiaries, regardless of the reason for the termination of the Grantee’s employment with the
Corporation or a Subsidiary, whether with or without cause, voluntarily or involuntarily. If the
Grantee is employed by a Subsidiary and that entity ceases to be a Subsidiary, such event shall be
deemed to be a termination of employment of the Grantee for purposes of this Agreement, unless the
Grantee otherwise continues to be employed by the Corporation or another of its Subsidiaries
following such event. If any unvested Stock Units are terminated hereunder, such Stock Units 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 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 Stock
Unit Award Agreement.




	7.	 	Restrictions on Transfer.





     Neither the Stock Unit 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



3









 




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.





     The Administrator may accelerate payment and vesting of the Stock Units in such
circumstances as it, in its sole discretion, may determine. In addition, upon the occurrence of
certain events relating to the Corporation’s stock contemplated by Section 7.1 of the Plan
(including, without limitation, an extraordinary cash dividend on such stock), the Administrator
shall make adjustments if appropriate in the number of Stock Units then outstanding and the number
and kind of securities that may be issued in respect of the Stock Unit Award. No such adjustment
shall be made with respect to any ordinary cash dividend for which dividend equivalents are paid
pursuant to Section 4.2.




	9.	 	Data Privacy Consent.





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



     Grantee further understands that the Corporation, its Subsidiaries or affiliates 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 have different data
privacy laws and protections than 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.




	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,



4









 




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 stock units, or benefits in lieu of stock units even if
stock units 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 and shall not interfere with the ability of the
Corporation or its subsidiaries to terminate Grantee’s employment relationship at any time with or
without cause; (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 Subsidiaries or
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
(x) 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 and
Grantee irrevocably releases the Corporation and its Subsidiaries and affiliates from any such
claim that may arise.





	11.	 	Notices.





     Any notice to be given under the terms of this Stock Unit 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 such
other address as either party may hereafter designate in writing to the other. Any such notice
shall be delivered in person or shall be enclosed in a properly sealed envelope addressed as
aforesaid, registered or certified, and deposited (postage and registry or certification fee
prepaid) in a post office or branch post office regularly maintained by the United States
Government. Any such notice shall be given only when received, but if the Grantee is no longer
employed by the Corporation or a Subsidiary, shall be deemed to have been duly given five business
days after the date mailed in accordance with the foregoing provisions of this Section 11.




	12.	 	Plan.





     The Award and all rights of the Grantee under this Stock Unit 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 Stock Unit Award Agreement. The Grantee acknowledges
having read and understanding the Plan and this Stock Unit Award Agreement. Unless otherwise
expressly provided in other sections of this Stock Unit 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.



5









 






	13.	 	Entire Agreement.





     This Stock Unit 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 Stock Unit 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.




	14.	 	Governing Law.





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




	15.	 	Effect of this Agreement.





     Subject to the Corporation’s right to terminate the Award pursuant to Section 7.4 of the
Plan, this Stock Unit Award Agreement shall be assumed by, be binding upon and inure to the benefit
of any successor or successors to the Corporation.




	16.	 	Limitation on Participant’s Rights.





     Participation in the Plan confers no rights or interests other than as herein provided. This
Stock Unit 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 Stock Units, and rights no greater than the right to receive
the Common Stock as a general unsecured creditor with respect to Stock Units, as and when payable
hereunder.




	17.	 	Section Headings.





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



6









 






	18.	 	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 Stock Unit Award Agreement shall be construed
and interpreted consistent with that intent.




	19.	 	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.




7