**Exhibit 10.31**

** **

**SEVERANCE AND CHANGE OFCONTROL AGREEMENT**

** **

THIS SEVERANCEAND CHANGE OF CONTROL AGREEMENT (the “Agreement”) is made effective of **June 21, 2002**, between JNI Corporation, aDelaware corporation (“JNI”), and **Paul Kim**(“Employee”), subject to JNI’s Board of Directors’ approval.

 

RECITALS

 

A.                                   Employeeis presently employed as the **Vice Presidentof Finance** of JNI.

 

B.                                     Employeeand JNI desire to memorialize in writing their understanding regardingseverance payments and vesting of options in the event of a Change in Control.

 

C.                                     Employeeand JNI acknowledge that this Agreement constitutes the entire agreementbetween the parties relating to severance benefits and supersedes any and allother agreements, either oral or in writing, between Employee and JNI and allother subsidiaries or affiliates of JNI with respect to the matters discussedherein.

 

D.                                    JNIdesires to make consistent all of its arrangements with its employees withrespect to the rights and responsibilities of such employees following a changeof control and Employee acknowledges the need for such consistency.

 

AGREEMENT

 

Inconsideration of the promises and of the mutual covenants contained herein, andfor other good and valuable consideration, receipt of which is herebyacknowledged, the parties do hereby agree as follows:

 

1.  Effect of Certain Terminations afterChange in Control.

 

1.1  Severance Package.  If within one (1) year after a Change inControl (as that term is defined below) Employee’s employment is terminatedwithout “Cause,” or Employee resigns for “Good Reason,” then JNI will provideEmployee with the following “Severance Package,” provided Employee complieswith the conditions set forth in section 1.2 below: (i) Employee will receive aseverance payment equal to twelve (12) months’ of Employee’s base salary,payable [in a lump sum within 30 days of such termination without Cause orresignation for Good Reason]; and (ii) accelerated vesting of all optionsgranted to Employee under JNI’s stock option plans that, as of the date of suchtermination without Cause or voluntary resignation for Good Reason, remainunexercised and unvested, to the extent permissible by law.  The acceleration of vesting provision setforth in this section 1.1 is notwithstanding and in addition to any existingvesting provisions set forth in JNI’s stock option plans.

 

----

 

1.2  Conditions to Receive Severance Package.  The Severance Package described above willbe paid provided Employee meets the following conditions: (a) Employee complieswith all surviving provisions of any confidentiality or proprietary rightsagreement signed by Employee; and (b) Employee executes a full general release,in a form acceptable to JNI, releasing all claims, known or unknown, thatEmployee may have against JNI, and any subsidiary or related entity, theirofficers, directors, employees and agents, arising out of or any way related toEmployee’s employment or termination of employment with JNI.

 

1.3  280G.  Notwithstanding section 1.1 above, if it is determined that theamounts payable to Employee under this Agreement, when considered together withany other amounts payable to Employee as a result of a Change in Control, causesuch payments to be treated as excess parachute payments within the meaning ofSection 280G of the Internal Revenue Code, JNI shall reduce the amount payableto Employee under this section 1.1 (to the least extent possible) to an amountthat will not subject Employee to the imposition of tax under Section 4999 ofthe Internal Revenue Code.

 

1.4  Change in Control.  A “Change in Control” means: (i) theacquisition by an individual person or entity or a group of individuals orentities acting in concert, directly or indirectly, through one transaction ora series of related transactions, of more than 50% of the outstanding votingsecurities of JNI; (ii) a merger or consolidated of JNI with or into anotherentity after the stockholders of JNI immediately prior to such transaction holdless than 50% of the voting securities of the surviving entity; or (iii) a saleof all or substantially all of the assets of JNI.

 

1.5  Termination for “Cause.”  For purposes of this Agreement, atermination for “Cause” occurs if Employee is terminated for any of thefollowing reasons: (i) theft, dishonesty, or falsification of any JNI records;(ii) improper disclosure of JNI’s confidential or proprietary information;(iii) Employee’s failure or inability to perform any reasonable assigned dutiesafter written notice from JNI of, and a reasonable opportunity to cure, suchfailure or inability; or (iv) Employee’s conviction of any criminal act whichimpairs his ability to perform his duties as an employee of JNI.  Notwithstanding the foregoing clause (iii),Employee may not be terminated for Cause as a result of his failure or inabilityto perform assigned duties which are substantially inconsistent with  his duties and responsibilities in effectduring the year preceding the Change in Control (or such shorter period of timeas Employee was employed by JNI).

 

1.6  Voluntary Resignation for “Good Reason.”  After a Change in Control, Employee mayterminate Employee’s employment with JNI for “Good Reason” by serving notice ofresignation to JNI with a description of the circumstances giving rise to theGood Reason.  For purposes of this Agreement,“Good Reason” means: (i) Employee’s compensation, including salary, bonus andequity compensation, are reduced from the compensation level in effect forEmployee during the year preceding the Change in Control (or such shorterperiod of time as Employee was employed by JNI); (ii) a material diminution ofEmployee’s title or duties with JNI; or (iii) JNI relocates Employee’sprincipal place of work to a location more than sixty (60) miles from 10945Vista Sorrento Parkway, San Diego, CA 92130, without Employee’s prior writtenapproval.

 

2

----

 

1.7  Payment Upon Death or Disability.  Neither death nor disability shall affectJNI’s obligations hereunder.

 

2.  At-Will Employment.  Employee acknowledges that Employeecontinues as an at-will employee and agrees that nothing in this Agreement isintended to or should be construed to contradict, modify or alter Employee’sat-will employment relationship with JNI.

 

3.  No Other Severance Benefits.  Employee acknowledges and agrees that theSeverance Package provided pursuant to this Agreement is in lieu of any otherseverance benefits to which Employee may be eligible under any other agreementand/or JNI severance plan or practice.

 

4.  General Provisions.

 

4.1  Severability.  If any provision of this Agreement is heldby a court of competent jurisdiction to be invalid, void or unenforceable, theremaining provisions shall nevertheless continue in full force without beingimpaired or invalidated in any way.

 

4.2  Successors and Assigns.  The rights and obligations of JNI under thisAgreement shall inure to the benefit of and shall be binding upon thesuccessors and assigns of JNI.  Employeeshall not be entitled to assign any of his rights or obligations under thisAgreement, other than to his estate as provided in section 1.7.

 

4.3  Applicable Law.  This Agreement shall be interpreted,construed, governed and enforced in accordance with the laws of the UnitedStates of American and the State of California.  Each of the parties irrevocably consents to the exclusivejurisdiction of the federal and state courts located in San Diego, California,as applicable, for any matter arising out of or relating to this Agreement.

 

4.4  Amendments.  No amendment or modification of the terms or conditions of thisAgreement shall be valid unless in subsequent writing and signed by the partiesthereto.

 

IN WITNESSWHEREOF, the parties hereto execute this Agreement, effective as of the datefirst above written.

 
| EMPLOYEE:                                                    |   | JNI CORPORATION |
|--------------------------------------------------------------|--------|-----------------|
|                                                         |   |            |   |
| /s/ Paul H.  Kim       7/10/02 |   |            | By: | /s/ John C.  Stiska |   |
| PAUL H. KIM                                                  |   | Title:          | Interim CEO |   |
|                                                         |   |            |   |   |
|                                                         |   |            | Address: | 10945 Vista  Sorrento Parkway |
|                                                         |   |            |   | San Diego,  CA 92130 |
|                                                              |        |                 |  |  |  |  |  |  |

 

3

----