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                                                                    EXHIBIT 10.2

                               QLOGIC CORPORATION
                      CHANGE IN CONTROL SEVERANCE AGREEMENT

      THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (this "Agreement") is made and
entered into by and between QLogic Corporation, a Delaware corporation (the
"Company"), and Anthony J. Massetti (the "Executive").

                                    RECITALS

      A. The Board of Directors of the Company has approved the Company entering
into a severance agreement with the Executive.

      B. The Executive is a key executive of the Company.

      C. Should the possibility of a Change in Control of the Company arise, the
Board believes it is imperative that the Company and the Board be able to rely
upon the Executive to continue in his position, and that the Company should be
able to receive and rely upon the Executive's advice, if requested, as to the
best interests of the Company and its stockholders without concern that the
Executive might be distracted by the personal uncertainties and risks created by
the possibility of a Change in Control.

      D. Should the possibility of a Change in Control arise, in addition to his
regular duties, the Executive may be called upon to assist in the assessment of
such possible Change in Control, advise management and the Board as to whether
such Change in Control would be in the best interests of the Company and its
stockholders, and to take such other actions as the Board might determine to be
appropriate.

      E. This Agreement provides the benefits the Executive will be entitled to
receive upon certain terminations of employment in connection with a Change in
Control from and after the Effective Date and supersedes and negates all
previous agreements with respect to such benefits.

      NOW THEREFORE, to help assure the Company that it will have the continued
dedication of the Executive and the availability of his advice and counsel
notwithstanding the possibility, threat, or occurrence of a Change in Control of
the Company, and to induce the Executive to remain in the employ of the Company
in the face of these circumstances and for other good and valuable
consideration, the Company and the Executive agree as follows:

ARTICLE 1. TERM

      This Agreement shall be effective as of November 10, 2006 (the "Effective
Date"). This Agreement will continue in effect through the second anniversary of
the Effective Date. However, upon the first anniversary of the Effective Date
and upon each subsequent anniversary of the Effective Date, the term of this
Agreement shall be extended automatically for one (1) additional year (such that
upon the first anniversary of the Effective Date the term of this Agreement
shall be extended through the third anniversary of the Effective Date and so
on), unless the Committee delivers written notice prior to such anniversary of
the Effective Date to the Executive that this Agreement will not be extended or
further extended, as the case may be, and if such notice is given this Agreement
will terminate at the end of the term then in progress.

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      Notwithstanding the foregoing, in the event a Change in Control occurs
during the original or any extended term of this Agreement, this Agreement will
remain in effect for the longer of: (i) twenty-four (24) months beyond the month
in which such Change in Control occurred; or (ii) until all obligations of the
Company hereunder have been fulfilled, and until all benefits required hereunder
have been paid to the Executive. For purposes of clarity, subject to Section
3.1, benefits shall be payable to the Executive under this Agreement only with
respect to a single Change in Control of the Company. Accordingly, no Change in
Control after the first Change in Control shall be considered for purposes of
this Agreement.

ARTICLE 2. DEFINITIONS

      Whenever used in this Agreement, the following terms shall have the
meanings set forth below:

      (a)   "Accrued Obligations" means:

            (i)   any Base Salary that had accrued but had not been paid
                  (including accrued and unpaid vacation time) prior to the
                  Severance Date; and

            (ii)  any Annual Bonus earned as of the Severance Date with respect
                  to the fiscal year preceding the year in which the Severance
                  Date occurs (if the Executive was employed by the Company on
                  the last day of that fiscal year) that had not previously been
                  paid.

      (b)   "Agreement" means this Change in Control Severance Agreement.

      (c)   "Annual Bonus" means the Executive's annual incentive cash bonus
            opportunity.

      (d)   "Base Salary" means the salary of record paid to the Executive by
            the Company as annual salary (whether or not deferred), but excludes
            amounts received under incentive or other bonus plans.

      (e)   "Beneficiary" means the persons or entities designated or deemed
            designated by the Executive pursuant to Section 8.2.

      (f)   "Board" means the Board of Directors of the Company.

      (g)   "Cause" means the occurrence of any of the following:

            (i)   the Executive is convicted of, or has pled guilty or nolo
                  contendere to, a felony (other than traffic related offenses
                  or as a result of vicarious liability); or

            (ii)  the Executive has engaged in acts of fraud, material
                  dishonesty or other acts of willful misconduct in the course
                  of his duties to the Company; or

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            (iii) the Executive willfully and repeatedly fails to perform or
                  uphold his duties to the Company; or

            (iv)  the Executive willfully fails to comply with reasonable
                  directives of the Board which are communicated to him in
                  writing;

            provided, however, that no act or omission by the Executive shall be
            deemed to be "willful" if the Executive reasonably believed in good
            faith that such acts or omissions were in the best interests of the
            Company.

      (h)   "Change in Control" means any of the following:

            (i)   The acquisition by any individual, entity or group (within the
                  meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a
                  "Person")) of beneficial ownership (within the meaning of Rule
                  13d-3 promulgated under the Exchange Act) of 30% or more of
                  either (1) the then-outstanding shares of common stock of the
                  Company (the "Outstanding Company Common Stock") or (2) the
                  combined voting power of the then-outstanding voting
                  securities of the Company entitled to vote generally in the
                  election of directors (the "Outstanding Company Voting
                  Securities"); provided, however, that, for purposes of this
                  clause (i), the following acquisitions shall not constitute a
                  Change in Control; (A) any acquisition directly from the
                  Company, (B) any acquisition by the Company, (C) any
                  acquisition by any employee benefit plan (or related trust)
                  sponsored or maintained by the Company or any affiliate of the
                  Company or a successor, (D) any acquisition by any entity
                  pursuant to a transaction that complies with clauses (iii)(1),
                  (2) and (3) below, and (E) any acquisition by a Person who
                  owned more than 30% of either the Outstanding Company Common
                  Stock or the Outstanding Company Voting Securities as of the
                  Effective Date or an Affiliate of any such Person;

            (ii)  A change in the Board or its members such that individuals
                  who, as of the later of the Effective Date or the date that is
                  two years prior to such change (the later of such two dates is
                  referred to as the "Measurement Date"), constitute the Board
                  (the "Incumbent Board") cease for any reason to constitute at
                  least a majority of the Board; provided, however, that any
                  individual becoming a director subsequent to the Measurement
                  Date whose election, or nomination for election by the
                  Company's stockholders, was approved by a vote of at least
                  two-thirds of the directors then comprising the Incumbent
                  Board (including for these purposes, the new members whose
                  election or nomination was so approved, without counting the
                  member and his predecessor twice) shall be considered as
                  though such individual were a member of the Incumbent Board,
                  but excluding, for this purpose, any such individual whose
                  initial assumption of office occurs as a result of an actual
                  or threatened election contest with respect to the election or
                  removal of directors or other actual or threatened
                  solicitation of proxies or consents by or on behalf of a
                  Person other than the Board;

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            (iii) Consummation of a reorganization, merger, statutory share
                  exchange or consolidation or similar corporate transaction
                  involving the Company or any of its Subsidiaries, a sale or
                  other disposition of all or substantially all of the assets of
                  the Company, or the acquisition of assets or stock of another
                  entity by the Company or any of its Subsidiaries (each, a
                  "Business Combination"), in each case unless, following such
                  Business Combination, (1) all or substantially all of the
                  individuals and entities that were the beneficial owners of
                  the Outstanding Company Common Stock and the Outstanding
                  Company Voting Securities immediately prior to such Business
                  Combination beneficially own, directly or indirectly, more
                  than 50% of the then-outstanding shares of common stock and
                  the combined voting power of the then-outstanding voting
                  securities entitled to vote generally in the election of
                  directors, as the case may be, of the entity resulting from
                  such Business Combination (including, without limitation, an
                  entity that, as a result of such transaction, owns the Company
                  or all or substantially all of the Company's assets directly
                  or through one or more subsidiaries (a "Parent")) in
                  substantially the same proportions as their ownership
                  immediately prior to such Business Combination of the
                  Outstanding Company Common Stock and the Outstanding Company
                  Voting Securities, as the case may be, (2) no Person
                  (excluding any entity resulting from such Business Combination
                  or a Parent or any employee benefit plan (or related trust) of
                  the Company or such entity resulting from such Business
                  Combination or Parent) beneficially owns, directly or
                  indirectly, 30% or more of, respectively, the then-outstanding
                  shares of common stock of the entity resulting from such
                  Business Combination or the combined voting power of the
                  then-outstanding voting securities of such entity, except to
                  the extent that the ownership in excess of 30% existed prior
                  to the Business Combination, and (3) at least a majority of
                  the members of the board of directors or trustees of the
                  entity resulting from such Business Combination or a Parent
                  were members of the Incumbent Board (determined pursuant to
                  clause (ii) above using the date that is the later of the
                  Effective Date or the date that is two years prior to the
                  Business Combination as the Measurement Date) at the time of
                  the execution of the initial agreement or of the action of the
                  Board providing for such Business Combination; or

            (iv)  Approval by the stockholders of the Company of a complete
                  liquidation or dissolution of the Company other than in the
                  context of a transaction that does not constitute a Change in
                  Control under clause (iii) above.

            Notwithstanding the foregoing, in no event shall a transaction or
            other event that occurred prior to the Effective Date constitute a
            Change in Control.

      (i)   "Code" means the United States Internal Revenue Code of 1986, as
            amended.

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      (j)   "Committee" means the Compensation Committee of the Board.

      (k)   "Company" means QLogic Corporation, a Delaware corporation, or any
            successor thereto as provided in Article 7.

      (l)   "Disability" means disability as defined in the Company's long-term
            disability plan in which the Executive participates at the relevant
            time or, if the Executive does not participate in a Company
            long-term disability plan at the relevant time, such term shall mean
            a "permanent and total disability" within the meaning of Section
            22(e)(3) of the Code.

      (m)   "Effective Date" has the meaning given to such term in Article 1
            hereof.

      (n)   "Exchange Act" means the United States Securities Exchange Act of
            1934, as amended.

      (o)   "Executive" means the individual identified in the first sentence,
            and on the signature page, of this Agreement.

      (p)   "Good Reason" means, without the Executive's express written
            consent, the occurrence of any one or more of the following:

            (i)   A material reduction in the nature or status of the
                  Executive's authorities, duties, and/or responsibilities,
                  (when such authorities, duties, and/or responsibilities are
                  viewed in the aggregate) from their level in effect on the day
                  immediately prior to the start of the Protected Period, other
                  than an insubstantial and inadvertent act that is remedied by
                  the Company promptly after receipt of notice thereof given by
                  the Executive. The change in status of the Company from a
                  publicly-traded company to a company the securities of which
                  are not publicly-traded (including any related termination of
                  the Company's reporting obligations under the Exchange Act)
                  shall not, in and of itself, constitute Good Reason or a
                  material reduction in the nature or status of the Executive's
                  authorities, duties, and/or responsibilities.

            (ii)  A reduction by the Company in either the Executive's Base
                  Salary or the Executive's Annual Bonus opportunity as in
                  effect immediately prior to the start of the Protected Period
                  or as the same shall be increased from time to time.

            (iii) A material reduction in the Executive's relative level of
                  coverage and accruals under the Company's employee benefit
                  and/or retirement plans, policies, practices, or arrangements
                  in which the Executive participates immediately prior to the
                  start of the Protected Period, both in terms of the amount of
                  benefits provided, and amounts accrued. For this purpose, the
                  Company may eliminate and/or modify existing programs and
                  coverage levels; provided, however, that the Executive's level
                  of coverage under all such programs must be at least as great
                  as is provided to other senior executives of the Company.

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            (iv)  The failure of the Company to obtain a satisfactory agreement
                  from any successor to the Company to assume and agree to
                  perform this Agreement, as contemplated in Article 7.

            (v)   The Executive is informed by the Company that his principal
                  place of employment for the Company will be relocated to a
                  location that is more than fifty (50) miles from his principal
                  place of employment for the Company at the start of the
                  corresponding Protected Period.

            The Executive's right to terminate employment for Good Reason shall
            not be affected by the Executive's incapacity due to physical or
            mental illness. 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 ninety (90) days after the
            Executive has knowledge of an event or circumstance that would
            constitute Good Reason, then the Executive shall be deemed to have
            waived his right to claim Good Reason as to that specific fact 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 "material
            reduction" in the nature or status of the Executive's authorities
            from their level in effect on the day immediately prior to the start
            of the Protected Period).

      (q)   "Protected Period" with respect to a Change in Control of the
            Company shall mean the period commencing on the date that is six (6)
            months prior to the date of such Change in Control and ending on the
            date of such Change in Control.

      (r)   "Qualifying Termination" has the meaning given to such term in
            Section 3.2(a).

      (s)   "Severance Benefits" means the payments and/or benefits provided in
            Section 3.3.

      (t)   "Severance Date" means the date on which the Executive's employment
            with the Company and its subsidiaries terminates for any reason
            (whether or not as a result of a Qualifying Termination).

      (u)   "Subsidiary" means any corporation or other entity a majority of
            whose outstanding voting stock or voting power is beneficially owned
            directly or indirectly by the Company.

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ARTICLE 3. SEVERANCE BENEFITS

      3.1. RIGHT TO SEVERANCE BENEFITS. The Executive shall be entitled to
receive from the Company the Severance Benefits described in Section 3.3 if the
Executive has incurred a Qualifying Termination and satisfies the release
requirements set forth in Section 3.7.

      The Executive shall not be entitled to receive Severance Benefits if his
employment terminates (regardless of the reason) before the Protected Period
corresponding to a Change in Control of the Company or more than twenty-four
(24) months after the date of a Change in Control of the Company.

      3.2. QUALIFYING TERMINATION.

      (a)   Subject to Sections 3.2(c), 3.4, and 3.5, the occurrence of any one
            or more of the following events within the Protected Period
            corresponding to a Change in Control of the Company, or within
            twenty-four (24) calendar months following the date of a Change in
            Control of the Company shall constitute a "Qualifying Termination":

            (i)   An involuntary termination of the Executive's employment by
                  the Company for reasons other than Cause;

            (ii)  A voluntary termination of employment by the Executive for
                  Good Reason;

            (iii) A failure or refusal by a successor company to assume by
                  written instrument the Company's obligations under this
                  Agreement, as required by Article 7; or

            (iv)  A repudiation or breach by the Company or any successor
                  company of any of the provisions of this Agreement.

            For purposes of determining any benefits payable hereunder, the date
            on which the succession referred to in clause (iii) becomes
            effective and the date on which the repudiation or breach referred
            to in clause (iv) occurs, as applicable, shall be deemed to be the
            Executive's Severance Date.

      (b)   If more than one of the events set forth in Section 3.2(a) occurs,
            such events shall constitute but a single Qualifying Termination and
            the Executive shall be entitled to but a single payment of the
            Severance Benefits.

      (c)   Notwithstanding anything else contained herein to the contrary, the
            Executive's termination of employment on account of reaching
            mandatory retirement age, as such age may be defined from time to
            time in policies adopted by the Company prior to the commencement of
            the Protected Period, and consistent with applicable law, shall not
            be a Qualifying Termination.

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      (d)   Notwithstanding anything else contained herein to the contrary, the
            Executive's Severance Benefits under this Agreement shall be reduced
            by the severance benefits (including, without limitation, any other
            change-in-control severance benefits and any other severance
            benefits generally) that the Executive may be entitled to under any
            other plan, program, agreement or other arrangement with the Company
            (including, without limitation, any such benefits provided for by an
            employment agreement). For purposes of the foregoing, any cash
            severance benefits payable to the Executive under any other plan,
            program, agreement or other arrangement with the Company shall
            offset the cash severance benefits otherwise payable to the
            Executive under this Agreement on a dollar-for-dollar basis. For
            purposes of the foregoing, non-cash severance benefits to be
            provided to the Executive under any other plan, program, agreement
            or other arrangement with the Company shall offset any corresponding
            benefits otherwise to be provided to the Executive under this
            Agreement or, if there are no corresponding benefits otherwise to be
            provided to the Executive under this Agreement, the value of such
            benefits shall offset the cash severance benefits otherwise payable
            to the Executive under this Agreement on a dollar-for-dollar basis.
            If the amount of other benefits to be offset against the cash
            severance benefits otherwise payable to the Executive under this
            Agreement in accordance with the preceding two sentences exceeds the
            amount of cash severance benefits otherwise payable to the Executive
            under this Agreement, then the excess may be used to offset other
            non-cash severance benefits otherwise to be provided to the
            Executive under this Agreement on a dollar-for-dollar basis. For
            purposes of this paragraph, the Committee shall reasonably determine
            the value of any non-cash benefits.

      3.3. DESCRIPTION OF SEVERANCE BENEFITS. In the event that the Executive
becomes entitled to receive Severance Benefits, as provided in Sections 3.1, 3.2
and 3.8, the Company shall pay and provide to the Executive (in addition to the
Accrued Obligations) the following:

      (a)   The Company will pay to the Executive an amount equal to one and
            one-half (1.5) times the sum of (i) the Executive's Base Salary, and
            (ii) the Executive's Annual Bonus. For purposes of this Section
            3.3(a), the Executive's "Base Salary" shall be deemed to be the
            Executive's highest annualized rate of Base Salary in effect at any
            time after the commencement of the Protected Period and on or before
            the Executive's Severance Date, and the Executive's "Annual Bonus"
            shall be the greater of (x) the Executive's maximum Annual Bonus
            opportunity for the fiscal year in which the Executive's Severance
            Date occurs, and (y) the highest aggregate bonus(es) paid by the
            Company to the Executive for any one of the three (3) full fiscal
            years of the Company immediately preceding the Executive's Severance
            Date. Notwithstanding the foregoing provisions, if the Executive
            would be entitled to a greater cash severance payment in the
            circumstances under the terms of any employment agreement then in
            effect than the amount determined under the first sentence of this
            Section 3.3(a), the Executive shall be entitled to such greater cash
            severance payment only and no additional payment shall be made under
            this Section 3.3(a).

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      (b)   The Company will pay or reimburse the Executive for his premiums
            charged to continue medical coverage pursuant to the Consolidated
            Omnibus Budget Reconciliation Act ("COBRA"), at the same or
            reasonably equivalent medical coverage for the Executive (and, if
            applicable, the Executive's eligible dependents) as in effect
            immediately prior to the Severance Date, to the extent that the
            Executive elects such continued coverage; provided that the
            Company's obligation to make any payment or reimbursement pursuant
            to this clause (ii) shall cease upon the first to occur of (a) the
            second anniversary of the Severance Date; (b) the Executive's death;
            (c) the date the Executive becomes eligible for coverage under the
            health plan of a future employer; or (d) the date the Company or its
            affiliates ceases to offer any group medical coverage to its active
            executive employees or the Company is otherwise under no obligation
            to offer COBRA continuation coverage to the Executive.

      (c)   Notwithstanding any other provision herein or in any other document,
            any stock option or other equity-based award granted by the Company
            to the Executive, to the extent such award is outstanding and has
            not vested as of the Executive's Severance Date, shall automatically
            become fully vested as of the Severance Date. In the event that the
            Executive has a Qualifying Termination during the Protected Period
            related to a Change in Control, any stock option or other
            equity-based award granted by the Company to the Executive, to the
            extent such award had not vested and was cancelled or otherwise
            terminated upon or prior to the date of the related Change in
            Control solely as a result of such Qualifying Termination, shall be
            reinstated and shall automatically become fully vested, and, in the
            case of stock options or similar awards, the Executive shall be
            given a reasonable opportunity to exercise such accelerated portion
            of the option or other award before it terminates.

      3.4. TERMINATION DUE TO DISABILITY, DEATH OR RETIREMENT. Termination of
the Executive's employment due to the Executive's death or Disability is not a
Qualifying Termination, and upon any such termination, the Executive shall be
entitled to payment only of the Accrued Obligations. However, if immediately
prior to the condition or event leading to, or the commencement of, the
Disability of the Executive (but not the death of the Executive), the Executive
would have experienced a Qualifying Termination if he had terminated at that
time, then upon termination of his employment for Disability he shall be
entitled to the benefits provided by this Agreement for a Qualifying
Termination. A voluntary termination of employment by the Executive due to the
Executive's retirement is not a Qualifying Termination, and upon any such
termination, the Executive shall be entitled to payment only of the Accrued
Obligations. However, if immediately prior to the Executive's retirement (but
not death), the Executive would have experienced a Qualifying Termination if he
had terminated at that time, then upon his retirement he shall (subject to
Section 3.2(c)) be entitled to the benefits provided by this Agreement for a
Qualifying Termination.

      3.5. TERMINATION FOR CAUSE OR BY THE EXECUTIVE OTHER THAN FOR GOOD REASON
Termination of the Executive's employment by the Company for Cause or by the
Executive other than for Good Reason does not constitute a Qualifying
Termination. Upon any such termination, the Executive shall be entitled to
payment only of the Accrued Obligations.

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      3.6. NOTICE OF TERMINATION. Any termination of the Executive's employment
by the Company for Cause or by the Executive for Good Reason shall be
communicated by a Notice of Termination. For purposes of this Agreement, a
"Notice of Termination" shall mean a written notice which shall indicate the
specific termination provision in this Agreement relied upon, and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated.

      3.7. RELEASE. This Section 3.7 shall apply notwithstanding anything else
contained in this Agreement to the contrary. As a condition precedent to any
Company obligation to the Executive pursuant to Section 3.3, the Executive (or,
in the event of the Executive's death following a Qualifying Termination, the
Executive's estate) shall, upon or promptly following the Executive's Severance
Date (or, if later, the date of the relevant Change in Control of the Company),
provide the Company with a valid, executed, written release of claims (in the
form attached hereto as Exhibit A or such similar form as the Company may
reasonably require in the circumstances) (the "Release"), and such Release shall
have not been revoked by the Executive (or the Executive's estate, as
applicable) pursuant to any revocation rights afforded by applicable law. The
Company shall have no obligation to make any payment or provide any benefit to
the Executive pursuant to Section 3.3 unless and until the Release contemplated
by this Section 3.7 becomes irrevocable by the Executive (or the Executive's
estate, as applicable) in accordance with all applicable laws, rules and
regulations.

      3.8. EXCLUSIVE REMEDY. The Executive agrees that the payments and benefits
contemplated by Section 3.3 shall, if the Release contemplated by Section 3.7 is
signed and the amounts paid, constitute the exclusive and sole remedy for any
termination of his employment and in such case the Executive covenants not to
assert or pursue any other remedies, at law or in equity, with respect to any
termination of employment. The Company and the Executive acknowledge and agree
that there is no duty of the Executive to mitigate damages under this Agreement,
and there shall be no offset against any amounts due to the Executive under this
Agreement on account of any remuneration attributable to any subsequent
employment that the Executive may obtain.

ARTICLE 4. FORM AND TIMING OF SEVERANCE BENEFITS; TAX WITHHOLDING;

      4.1. FORM AND TIMING OF SEVERANCE BENEFITS. The Severance Benefits
described in Section 3.3(a) shall be paid in cash to the Executive in a single
lump sum as soon as practicable following the Severance Date, but in no event
beyond the later of (a) thirty (30) days from the date of the Executive's
Severance Date, or (b) thirty (30) days after the date that the Release
delivered by the Executive to the Company pursuant to Section 3.7 becomes
irrevocable by the Executive in accordance with applicable law; provided,
however, that payment of any and all Severance Benefits are subject to the
provisions of Section 8.14.

      4.2. WITHHOLDING OF TAXES. Notwithstanding anything else herein to the
contrary, the Company 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.

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ARTICLE 5. SECTION 280G. Notwithstanding any other provision herein, the
Executive shall be covered by the provisions set forth in Exhibit B hereto,
incorporated herein by this reference.

ARTICLE 6. THE COMPANY'S PAYMENT OBLIGATION

      6.1. PAYMENT OF OBLIGATIONS ABSOLUTE. Except as provided in Sections 3.7,
4.2 and in Article 5, the Company's obligation to make the payments and the
arrangements provided for herein shall be absolute and unconditional, and shall
not be affected by any circumstances, including, without limitation, any offset,
counterclaim, recoupment, defense, or other right which the Company may have
against the Executive or anyone else. All amounts payable by the Company
hereunder shall be paid without notice or demand. Each and every payment made
hereunder by the Company shall be final, and the Company shall not seek to
recover all or any part of such payment from the Executive or from whoever may
be entitled thereto, for any reasons whatsoever, except as otherwise provided in
Article 5; provided that the Executive does not revoke the Release or otherwise
take action to render the Release unenforceable.

      6.2. CONTRACTUAL RIGHT TO BENEFITS. This Agreement establishes and vests
in the Executive a contractual right to the benefits to which he is entitled
hereunder. The Company expressly waives any ability, if possible, to deny
liability for any breach of its contractual commitment hereunder upon the
grounds of lack of consideration, accord and satisfaction or any other defense.
In any dispute arising after a Change in Control as to whether the Executive is
entitled to benefits under this Agreement, there shall be a presumption that the
Executive is entitled to such benefits and the burden of proving otherwise shall
be on the Company. However, nothing herein contained shall require or be deemed
to require, or prohibit or be deemed to prohibit, the Company to segregate,
earmark, or otherwise set aside any funds or other assets, in trust or
otherwise, to provide for any payments to be made or required hereunder.

      6.3. PENSION PLANS; DUPLICATE BENEFITS. All payments, benefits and amounts
provided under this Agreement shall be in addition to and not in substitution
for any pension rights under the Company's tax-qualified pension plans,
supplemental retirement plans, nonqualified deferred compensation plans, bonus
plans, and any disability, workers' compensation or other Company benefit plan
distribution that the Executive is entitled to as of his Severance Date.
Notwithstanding the foregoing, this Agreement shall not create an inference that
any duplicate payments shall be required. No payments made pursuant to this
Agreement shall be considered compensation for purposes of any such benefit
plan.

ARTICLE 7. SUCCESSORS AND ASSIGNMENT

      7.1. SUCCESSORS TO THE COMPANY. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
of all or substantially all of the business and/or assets of the Company or of
any division or subsidiary thereof (the business and/or assets of which
constitute at least fifty percent (50%) of the total business and/or assets of
the Company) to expressly assume and agree to perform the Company's obligations
under this Agreement in the same manner and to the same extent that the Company
would be required to perform them if such succession had not taken place.

                                       11
<PAGE>

      7.2. ASSIGNMENT BY THE EXECUTIVE. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees, and legatees.

ARTICLE 8. MISCELLANEOUS

      8.1. EMPLOYMENT STATUS. Except as may be provided under any other written
agreement between the Executive and the Company, the employment of the Executive
by the Company is "at will," and, prior to the effective date of a Change in
Control, may be terminated by either the Executive or the Company at any time,
subject to applicable law.

      8.2. BENEFICIARIES. The Executive may designate one or more persons or
entities as the primary and/or contingent Beneficiaries of any Severance
Benefits owing to the Executive under this Agreement. If the Executive dies
while any amount would still be payable to him hereunder had he continued to
live, all such amounts, unless otherwise provided herein, shall be paid to the
Executive's Beneficiary in accordance with the terms of this Agreement. If the
Executive has not named a Beneficiary, then such amounts shall be paid to the
Executive's devisee, legatee, or other designee, or if there is no such
designee, to the Executive's estate. The Executive may make or change such
designation at any time, provided that any designation or change thereto must be
in the form of a signed writing acceptable to and received by the Committee.

      8.3. GENDER AND NUMBER. Where the context requires herein, the singular
shall include the plural, the plural shall include the singular, and any gender
shall include all other genders.

      8.4. 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.

      8.5. 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.

      8.6. ENTIRE AGREEMENT. This Agreement, together with any employment
agreement and any written agreement evidencing any stock option or other
equity-based incentive award previously granted by the Company, embodies the
entire agreement of the parties hereto respecting the matters within its scope.
As of the Effective Date, this Agreement shall supersede all other agreements of
the parties hereto that are prior to or contemporaneous with the Effective Date
and that directly or indirectly bear upon the subject matter hereof, other than
any prior agreement relating to any right to indemnification the Executive may
have from the Company or the Executive's right to be covered under any
applicable insurance policy, with respect to any liability the Executive
incurred or may incur as an employee, officer or director of the Company or its
affiliates. Any negotiations, correspondence, agreements, proposals or
understandings prior to the Effective Date relating to the subject matter hereof
shall be deemed to have been merged into this Agreement, and to the extent
inconsistent 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. This Agreement is an integrated agreement.

                                       12
<PAGE>

      8.7. MODIFICATION. 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.

      8.8. 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.

      8.9. ARBITRATION. Any controversy arising out of or relating to this
Agreement, its enforcement or interpretation, or because of an alleged breach,
default, or misrepresentation in connection with any of its provisions, or any
other controversy arising out of the Executive's employment, including, but not
limited to, any state or federal statutory claims, shall be submitted to
arbitration in Orange County, California, before a sole arbitrator selected from
Judicial Arbitration and Mediation Services, Inc., Orange, California, or its
successor ("JAMS"), or if JAMS is no longer able to supply the arbitrator, such
arbitrator shall be selected from the American Arbitration Association, and
shall be conducted in accordance with the provisions of California Code of Civil
Procedure Sections 1280 et seq. as the exclusive forum for the resolution of
such dispute; provided, however, that provisional injunctive relief may, but
need not, be sought by either party to this Agreement 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 which 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. The parties
hereto 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
hereto against the other in connection with any matter whatsoever arising out of
or in any way connected with this Agreement or the Executive's employment. The
parties agree hereto that the Company shall be responsible for payment of the
forum costs of any arbitration hereunder, including the Arbitrator's fee. The
Executive and the Company further agree that in any proceeding to enforce the
terms of this Agreement, the prevailing party shall be entitled to its or his
reasonable attorneys' fees and costs (other than forum costs associated with the
arbitration) incurred by it or him in connection with resolution of the dispute
in addition to any other relief granted. Notwithstanding this provision, the
parties hereto may mutually agree to mediate any dispute prior to or following
submission to arbitration.

                                       13
<PAGE>

      8.10. 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 hereto
            as follows:

                  (i) if to the Company:

                        QLogic Corporation
                        26650 Aliso Viejo Parkway
                        Aliso Viejo, California 92656
                        Attn: General Counsel

                        with a copy to:

                        O'Melveny & Myers LLP
                        610 Newport Center Drive, Suite 1700
                        Newport Beach, California 92660
                        Attn: Gary Singer, Esq.

                  (ii) if to the Executive, at the last address of the Executive
            on the books of the Company.

      (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 8.10 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.

      8.11. 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. The Executive agrees and acknowledges that he has read and
understands this Agreement completely, is entering into it freely and
voluntarily, and has been advised to seek counsel prior to entering into this
Agreement and has had ample opportunity to do so.

      8.12. 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 hereto reflected hereon as the signatories. Photographic
copies of such signed counterparts may be used in lieu of the originals for any
purpose.

                                       14
<PAGE>

      8.13. 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.

      8.14. SECTION 409A.

      (a)   Notwithstanding any provision of this Agreement to the contrary, if
            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 upon a termination of his employment until the earlier
            of (i) the date which is six (6) months after his termination of
            employment for any reason other than death, or (ii) the date of the
            Executive's death. Furthermore, with regard to any benefit to be
            provided upon a termination of employment, to the extent required by
            Section 409A, the Executive shall pay the premium for such benefit
            during the aforesaid period and be reimbursed by the Company
            therefor promptly after the end of such period. The provisions of
            this Section 8.14 shall only apply if, and to the extent, required
            to comply with Section 409A.

      (b)   To the extent that this Agreement or any plan, program or award of
            the Company in which the Executive participates or which has been or
            is granted by the Company to the Executive, as applicable, is
            subject to Section 409A, the Company and the Executive agree that
            the terms and conditions of this Agreement and such other plan,
            program or award shall be construed and interpreted to the maximum
            extent reasonably possible, without altering the fundamental intent
            of the agreement, to comply with Section 409A.

                  [Remainder of page intentionally left blank]

                                       15
<PAGE>

      IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the Effective Date.

                                  "COMPANY"

                                  QLogic Corporation,
                                  a Delaware corporation

                                  By:    /s/ Michael L. Hawkins
                                         _______________________________________
                                  Print Name: Michael L. Hawkins
                                  Title: Vice President and General Counsel

                                  "EXECUTIVE"

                                  /s/ Anthony J. Massetti
                                  ______________________________________________
                                  Anthony J. Massetti

                                       16
<PAGE>

                                    EXHIBIT A
                            GENERAL RELEASE AGREEMENT

      1. Release. Anthony J. Massetti ("Executive"), on his own behalf and on
behalf of his descendants, dependents, heirs, executors, administrators, assigns
and successors, and each of them, hereby acknowledges full and complete
satisfaction of and releases and discharges and covenants not to sue QLogic
Corporation (the "Company"), its divisions, subsidiaries, parents, or affiliated
corporations, past and present, and each of them, as well as its and their
assignees, successors, directors, officers, shareholders, partners,
representatives, attorneys, agents or employees, past or present, or any of them
(individually and collectively, "Releasees"), from and with respect to any and
all claims, agreements, obligations, demands and causes of action, known or
unknown, suspected or unsuspected, arising out of or in any way connected with
Executive's employment or any other relationship with or interest in the Company
or the termination thereof, including without limiting the generality of the
foregoing, any claim for severance pay, profit sharing, bonus or similar
benefit, equity-based awards and/or dividend equivalents thereon, pension,
retirement, life insurance, health or medical insurance or any other fringe
benefit, or disability, or any other claims, agreements, obligations, demands
and causes of action, known or unknown, suspected or unsuspected resulting from
any act or omission by or on the part of Releasees committed or omitted prior to
the date of this Agreement, including, without limiting the generality of the
foregoing, any claim under Title VII of the Civil Rights Act of 1964, the
Americans with Disabilities Act, the California Fair Employment and Housing Act,
or the California Family Rights Act, or any other federal, state or local law,
regulation or ordinance (collectively, the "Claims"); provided, however, that
the foregoing release does not apply to any obligation of the Company to
Executive pursuant to any of the following: (1) Section 3 of the Change in
Control Severance Agreement dated as of [_________, 2006] by and between the
Company and Executive (the "Change in Control Agreement"), or (2) any
equity-based awards previously granted by the Company to Executive (as amended
by the Change in Control Agreement). In addition, this release does not cover
any Claim that cannot be so released as a matter of applicable law. Executive
acknowledges and agrees that he has received any and all leave and other
benefits that he has been and is entitled to pursuant to the Family and Medical
Leave Act of 1993.

      2. Acknowledgement of Payment of Wages. Executive acknowledges that he has
received all amounts owed for his regular and usual salary (including, but not
limited to, any bonus or other wages), and usual benefits through the date of
this Agreement.

      3. Waiver of Civil Code Section 1542. This Agreement is intended to be
effective as a general release of and bar to each and every Claim hereinabove
specified. Accordingly, Executive hereby expressly waives any rights and
benefits conferred by Section 1542 of the California Civil Code as to the
Claims. Section 1542 of the California Civil Code provides:

      "A GENERAL RELEASE DOES NOT EXTEND TO A CLAIM WHICH THE CREDITOR DOES NOT
      KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE
      RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR
      HER SETTLEMENT WITH THE DEBTOR."

                                      A-1
<PAGE>

Executive acknowledges that he later may discover claims, demands, causes of
action or facts in addition to or different from those which Executive now knows
or believes to exist with respect to the subject matter of this Agreement and
which, if known or suspected at the time of executing this Agreement, may have
materially affected its terms. Nevertheless, Executive hereby waives, as to the
Claims, any claims, demands, and causes of action that might arise as a result
of such different or additional claims, demands, causes of action or facts.

      4. ADEA Waiver. Executive expressly acknowledges and agrees that by
entering into this Agreement, he is waiving any and all rights or claims that he
may have arising under the Age Discrimination in Employment Act of 1967, as
amended ("ADEA"), which have arisen on or before the date of execution of this
Agreement. Executive further expressly acknowledges and agrees that:

      (a) In return for this Agreement, he will receive consideration beyond
that which he was already entitled to receive before entering into this
Agreement;

      (b) He is hereby advised in writing by this Agreement to consult with an
attorney before signing this Agreement;

      (c) He was given a copy of this Agreement on [____________] and informed
that he had twenty-one (21) days within which to consider the Agreement and that
if he wished to executive this Agreement prior to expiration of such 21-day
period, he should execute the Acknowledgement and Waiver attached hereto as
Exhibit A-1;

      (d) Nothing in this Agreement prevents or precludes Executive from
challenging or seeking a determination in good faith of the validity of this
waiver under the ADEA, nor does it impose any condition precedent, penalties or
costs from doing so, unless specifically authorized by federal law; and

      (e) He was informed that he has seven (7) days following the date of
execution of this Agreement in which to revoke this Agreement, and this
Agreement will become null and void if Executive elects revocation during that
time. Any revocation must be in writing and must be received by the Company
during the seven-day revocation period. In the event that Executive exercises
his right of revocation, neither the Company nor Executive will have any
obligations under this Agreement.

      5. No Transferred Claims. Executive represents and warrants to the Company
that he has not heretofore assigned or transferred to any person not a party to
this Agreement any released matter or any part or portion thereof.

      6. Miscellaneous. The following provisions shall apply for purposes of
this Agreement:

      (a) 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.

                                      A-2
<PAGE>

      (b) 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.

      (c) 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.

      (d) 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.

      (e) 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.

      (f) 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.

      (g) Arbitration. Any controversy arising out of or relating to this
Agreement shall be submitted to arbitration in accordance with the arbitration
provisions of the Change in Control Agreement.

      (h) 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.

                  [Remainder of page intentionally left blank]

                                      A-3
<PAGE>

      The undersigned have read and understand the consequences of this
Agreement and voluntarily sign it. The undersigned declare under penalty of
perjury under the laws of the State of California that the foregoing is true and
correct.

      EXECUTED this ________ day of ________ 20__, at ______________________
County, __________.

                                           "EXECUTIVE"

                                           _____________________________________
                                           Anthony J. Massetti

                                           QLOGIC CORPORATION

                                           By:
                                                 _______________________________
                                                 [NAME]
                                                 [TITLE]

                                      A-4
<PAGE>

                                   EXHIBIT A-1

                            ACKNOWLEDGMENT AND WAIVER

      I, Anthony J. Massetti, hereby acknowledge that I was given 21 days to
consider the foregoing Agreement and voluntarily chose to sign the Agreement
prior to the expiration of the 21-day period.

      I declare under penalty of perjury under the laws of the State of
California that the foregoing is true and correct.

      EXECUTED this ___ day of ____________ 20__, at ___________ County,
_________.

                                                 _______________________________
                                                 Anthony J. Massetti

                                      A-5
<PAGE>

                                    EXHIBIT B

                             SECTION 280G PROVISIONS

1.1   GROSS-UP PAYMENT. In the event it is determined (pursuant to Section 1.2)
      or finally determined (as defined in Section 1.3(c)) that any payment,
      distribution, transfer, or benefit by the Company, or a direct or indirect
      subsidiary or affiliate of the Company, to or for the benefit of the
      Executive or the Executive's dependents, heirs or beneficiaries (whether
      such payment, distribution, transfer, benefit or other event occurs
      pursuant to the terms of this Agreement or otherwise in connection with,
      or arising out of, the Executive's employment with the Company or a change
      in ownership or effective control of the Company or a substantial portion
      of its assets, but determined without regard to any additional payments
      required under this Exhibit B) (each a "Payment" and collectively the
      "Payments") is subject to the excise tax imposed by Section 4999 of the
      Code, and any successor provision or any comparable provision of state or
      local income tax law (collectively, "Section 4999"), or any interest,
      penalty or addition to tax is incurred by the Executive with respect to
      such excise tax (such excise tax, together with any such interest,
      penalty, and addition to tax, hereinafter collectively referred to as the
      "Excise Tax"), then, within 10 days after such determination or final
      determination, as the case may be, the Company shall pay to the Executive
      (or to the applicable taxing authority on the Executive's behalf) an
      additional cash payment (hereinafter referred to as the "Gross-Up
      Payment") equal to an amount such that after payment by the Executive of
      all taxes, interest, penalties, additions to tax and costs imposed or
      incurred with respect to the Gross-Up Payment (including, without
      limitation, any income and excise taxes imposed upon the Gross-Up
      Payment), the Executive retains an amount of the Gross-Up Payment equal to
      the Excise Tax imposed upon such Payment or Payments. This provision is
      intended to put the Executive in the same position as the Executive would
      have been had no Excise Tax been imposed upon or incurred as a result of
      any Payment.

1.2   DETERMINATION OF GROSS-UP.

      (a)   Except as provided in Section 1.3, the determination that a Payment
            is subject to an Excise Tax shall be made in writing by a nationally
            recognized accounting firm or executive compensation consulting firm
            selected by the Company (the "Accounting Firm"). Such determination
            shall include the amount of the Gross-Up Payment and detailed
            computations thereof, including any assumptions used in such
            computations. Any determination by the Accounting Firm will be
            binding on the Company and the Executive.

      (b)   For purposes of determining the amount of the Gross-Up Payment, the
            Executive shall be deemed to pay Federal income taxes at the highest
            marginal rate of Federal individual income taxation in the calendar
            year in which the Gross-Up Payment is to be made. Such highest
            marginal rate shall take into account the loss of itemized
            deductions by the Executive and shall also include the Executive's
            share of the hospital insurance portion of FICA and state and local
            income taxes at the highest marginal rate of individual income
            taxation in the state and locality of the Executive's residence on
            the date that the Payment is made, net of the maximum reduction in
            Federal income taxes that could be obtained from the deduction of
            such state and local taxes.

                                      B-1
<PAGE>

1.3   NOTIFICATION.

      (a)   The Executive shall notify the Company in writing of any claim by
            the Internal Revenue Service (or any successor thereof) or any state
            or local taxing authority (individually or collectively, the "Taxing
            Authority") that, if successful, would require the payment by the
            Company of a Gross-Up Payment. Such notification shall be given as
            soon as practicable but no later than 30 days after the Executive
            receives written notice of such claim and shall apprise the Company
            of the nature of such claim and the date on which such claim is
            requested to be paid; provided, however, that failure by the
            Executive to give such notice within such 30-day period shall not
            result in a waiver or forfeiture of any of the Executive's rights
            under this Exhibit B except to the extent of actual damages suffered
            by the Company as a result of such failure. The Executive shall not
            pay such claim prior to the expiration of the 15-day period
            following the date on which the Executive gives such notice to the
            Company (or such shorter period ending on the date that any payment
            of taxes, interest, penalties or additions to tax with respect to
            such claim is due). If the Company notifies the Executive in writing
            prior to the expiration of such 15-day period (regardless of whether
            such claim was earlier paid as contemplated by the preceding
            parenthetical) that it desires to contest such claim, the Executive
            shall:

            (1)   give the Company any information reasonably requested by the
                  Company relating to such claim;

            (2)   take such action in connection with contesting such claim as
                  the Company shall reasonably request in writing from time to
                  time, including, without limitation, accepting legal
                  representation with respect to such claim by an attorney
                  selected by the Company;

            (3)   cooperate with the Company in good faith in order effectively
                  to contest such claim; and

            (4)   permit the Company to participate in any proceedings relating
                  to such claim;

            provided, however, that the Company shall bear and pay directly all
            attorneys fees, costs and expenses (including additional interest,
            penalties and additions to tax) incurred in connection with such
            contest and shall indemnify and hold the Executive harmless, on an
            after-tax basis, for all taxes (including, without limitation,
            income and excise taxes), interest, penalties and additions to tax
            imposed in relation to such claim and in relation to the payment of
            such costs and expenses or indemnification.

                                      B-2
<PAGE>

            (b)   Without limitation on the foregoing provisions of this Section
                  1.3, and to the extent its actions do not unreasonably
                  interfere with or prejudice the Executive's disputes with the
                  Taxing Authority as to other issues, the Company shall control
                  all proceedings taken in connection with such contest and, in
                  its reasonable discretion, may pursue or forego any and all
                  administrative appeals, proceedings, hearings and conferences
                  with the Taxing Authority in respect of such claim and may, at
                  its or in their sole option, either direct the Executive to
                  pay the tax, interest or penalties claimed and sue for a
                  refund or contest the claim in any permissible manner, and the
                  Executive agrees to prosecute such contest to a determination
                  before any administrative tribunal, in a court of initial
                  jurisdiction and in one or more appellate courts, as the
                  Company shall determine; provided, however, that if the
                  Company directs the Executive to pay such claim and sue for a
                  refund, the Company shall advance an amount equal to such
                  payment to the Executive, on an interest-free basis, and shall
                  indemnify and hold the Executive harmless, on an after-tax
                  basis, from all taxes (including, without limitation, income
                  and excise taxes), interest, penalties and additions to tax
                  imposed with respect to such advance or with respect to any
                  imputed income with respect to such advance, as any such
                  amounts are incurred; and, further, provided, that any
                  extension of the statute of limitations relating to payment of
                  taxes, interest, penalties or additions to tax for the taxable
                  year of the Executive with respect to which such contested
                  amount is claimed to be due is limited solely to such
                  contested amount; and, provided, further, that any settlement
                  of any claim shall be reasonably acceptable to the Executive,
                  and the Company's control of the contest shall be limited to
                  issues with respect to which a Gross-Up Payment would be
                  payable hereunder, and the Executive shall be entitled to
                  settle or contest, as the case may be, any other issue.

            (c)   If, after receipt by the Executive of an amount advanced by
                  the Company pursuant to Section 1.3(a), the Executive receives
                  any refund with respect to such claim, the Executive shall
                  (subject to the Company's compliance with the requirements of
                  this Exhibit B) promptly pay to the Company an amount equal to
                  such refund (together with any interest paid or credited
                  thereof after taxes applicable thereto), net of any taxes
                  (including, without limitation, any income or excise taxes),
                  interest, penalties or additions to tax and any other costs
                  incurred by the Executive in connection with such advance,
                  after giving effect to such repayment. If, after the receipt
                  by the Executive of an amount advanced by the Company pursuant
                  to Section 1.3(a), it is finally determined that the Executive
                  is not entitled to any refund with respect to such claim, then
                  such advance shall be forgiven and shall not be required to be
                  repaid and the amount of such advance shall be treated as a
                  Gross-Up Payment and shall offset, to the extent thereof, the
                  amount of any Gross-Up Payment otherwise required to be paid.

                                      B-3
<PAGE>

            (d)   For purposes of this Exhibit B, whether the Excise Tax is
                  applicable to a Payment shall be deemed to be "finally
                  determined" upon the earliest of: (1) the expiration of the
                  15-day period referred to in Section 1.3(a) if the Company or
                  the Executive's Employer has not notified the Executive that
                  it intends to contest the underlying claim, (2) the expiration
                  of any period following which no right of appeal exists, (3)
                  the date upon which a closing agreement or similar agreement
                  with respect to the claim is executed by the Executive and the
                  Taxing Authority (which agreement may be executed only in
                  compliance with this section), or (4) the receipt by the
                  Executive of notice from the Company that it no longer seeks
                  to pursue a contest (which shall be deemed received if the
                  Company does not, within 15 days following receipt of a
                  written inquiry from the Executive, affirmatively indicate in
                  writing to the Executive that the Company intends to continue
                  to pursue such contest).

1.4   UNDERPAYMENT AND OVERPAYMENT. It is possible that no Gross-Up Payment will
      initially be made but that a Gross-Up Payment should have been made, or
      that a Gross-Up Payment will initially be made in an amount that is less
      than what should have been made (either of such events is referred to as
      an "Underpayment"). It is also possible that a Gross-Up Payment will
      initially be made in an amount that is greater than what should have been
      made (an "Overpayment"). The determination of any Underpayment or
      Overpayment shall be made by the Accounting Firm in accordance with
      Section 1.2. In the event of an Underpayment, the amount of any such
      Underpayment shall be paid to the Executive as an additional Gross-Up
      Payment. In the event of an Overpayment, the Executive shall promptly pay
      to the Company the amount of such Overpayment together with interest on
      such amount at the applicable Federal rate provided for in Section 1274(d)
      of the Code for the period commencing on the date of the Overpayment to
      the date of such payment by the Executive to the Company. The Executive
      shall make such payment to the Company as soon as administratively
      practicable after the Company notifies the Executive of (a) the Accounting
      Firm's determination that an Overpayment was made and (b) the amount to be
      repaid.

1.5   COMPLIANCE WITH LAW. Nothing in this Exhibit B is intended to violate the
      Sarbanes-Oxley Act of 2002, and to the extent that any advance or
      repayment obligation hereunder would constitute such a violation, such
      obligation shall be modified so as to make the advance a nonrefundable
      payment to the Executive and the repayment obligation null and void to the
      extent required by such Act.

                                      B-4Exhibit 10.1

EXECUTIVE COMPENSATION AGREEMENT

THIS EXECUTIVE COMPENSATION AGREEMENT (“Agreement”) is executed as of this 6th day of October, 2006, by and between Kohl’s Department Stores, Inc. (“Company”) and Wes McDonald (“Employee”).

RECITALS

Employee is employed as Executive Vice President and Chief Financial Officer and is a valuable employee of the Company.  The Company and the Employee have agreed to make provision for certain aspects of their relationship during and after the period in which Employee is employed by the Company.

NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Company and Employee (“Parties”), the Parties agree as follows:

ARTICLE I

DEFINITIONS

1.1

“Board” shall mean the Board of Directors of the Company.

1.2

“Cause” shall mean any of the following:  

(i) Employee’s willful failure to substantially perform Employee’s duties after a written demand for performance is delivered to Employee that specifically identifies the manner in which the Company believes that Employee has not substantially performed his/her duties, and Employee has failed to demonstrate substantial efforts to resume performance of Employee’s duties on a continuous basis within thirty (30) calendar days after receiving such demand; provided, however, that failure to meet sales or financial performance objectives, by itself, will not constitute “Cause”; 

(ii) Employee’s willful violation of a material provision of “Kohl’s Ethical Standards and Responsibilities” which is materially injurious to the Company, monetarily or otherwise.  The term “willful” as used herein means any act or omission committed in bad faith or without a reasonable belief that the act or omission was in the best interest of the Company; 

(iii) Any dishonest or fraudulent conduct by Employee which results, or is intended to result, in gain to Employee or Employee’s personal enrichment at the expense of the Company; 

(iv) Any material breach of Articles IV, V, VI or VII, below of this Agreement by Employee; or 

(v) Conviction of Employee, after all applicable rights of appeal have been exhausted or waived, of any crime that materially discredits the Company or is materially detrimental to the Company’s reputation or goodwill.  

1.3

“Change of Control” means the occurrence of any of the following:  

(i) the acquisition (other than from the Company) by any person, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)), other than the Company, a subsidiary of the Company or any employee benefit plan or plans sponsored by the Company or any subsidiary of the Company, directly or indirectly, of beneficial ownership (within the meaning of Exchange Act Rule 13d-3) of thirty-three percent (33%) or more of the then outstanding shares of common stock of the Company or voting securities representing thirty-three percent (33%) or more of the combined voting power of the Company’s then outstanding voting securities ordinarily entitled to vote in the election of directors unless the Incumbent Board (defined below), before such acquisition or within thirty (30) days thereafter, deems such acquisition not to be a Change of Control;  

(ii) individuals who, as of the date of this Agreement, constitute the Board (as of such date, “Incumbent Board”) ceasing for any reason to constitute at least a majority of such Board; provided, however, that any person becoming a director subsequent to the date of this Agreement whose election, or nomination for election by the shareholders of the Company, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be for purposes of this Agreement, considered as though such person were a member of the Incumbent Board but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest which was (or, if threatened, would have been) subject to Exchange Act Rule 14a-12(c);  

(iii) the consummation of any merger, consolidation or share exchange of the Company with any other corporation, other than a merger, consolidation or share exchange which results in more than sixty percent (60%) of the outstanding shares of the common stock, and voting securities representing more than sixty percent (60%) of the combined voting power of then outstanding voting securities entitled to vote generally in the election of directors, of the surviving, consolidated or resulting corporation being then beneficially owned, directly or indirectly, by the persons who were the Company’s shareholders immediately prior to such transaction in substantially the same proportions as their ownership, immediately prior to such transaction, of the Company’s then outstanding Common Stock or then outstanding voting securities, as the case may be; or 

(iv) the consummation of any liquidation or dissolution of the Company or a sale or other disposition of all or substantially all of the assets of the Company.

Following the occurrence of an event which is not a Change of Control whereby there is a successor company to the Company, or, if there is no such successor, whereby the Company is not the surviving corporation in a merger or consolidation, the surviving corporation or successor holding company (as the case may be), for purposes of this Agreement, shall thereafter be referred to as the Company.

1.4

“Company” means Kohl’s Department Stores, Inc.

1.5

“Designated Beneficiary” means the person or persons designated by the Employee, on a form provided by the Company, to receive benefits payable under this Agreement, if any, after the death of Employee.

1.6

“Disability” means the inability of Employee, due to a physical or mental impairment, to perform the essential functions of Employee’s job with the Company, with or without a reasonable accommodation and such inability has or is reasonably anticipated to continue for a period in excess of one hundred eighty (180) calendar days.  A determination of Disability shall be made by the Company, which may, at its sole discretion, consult with a physician or physicians satisfactory to the Company, and Employee shall cooperate with any efforts to make such determination.  Any such determina­tion shall be conclusive and binding on the parties.  Any determination of Disability under this Section 1.6 is not intended to alter any benefits any party may be entitled to receive under any disability insurance policy carried by either the Company or Employee with respect to Employee, which benefits shall be governed solely by the terms of any such insurance policy.

1.7

“Final Expenses” means reimbursement of expenses to which Employee is entitled under programs and policies which the Company has made available to senior executives of the Company and which are in effect at the Company from time to time.

1.8

“Final Pay” means any unpaid base salary with respect to the period prior to the effective date of Employee’s termination of employment together with payment of any vacation that Employee has accrued but not used through the date of Employee’s termination of employment.

1.9

“Good Reason” means any of the following: (i) a significant reduction in the Employee’s status, title, position, responsibilities or base salary which is not agreed to by Employee; (ii) any purported termination of the Employee’s employment for Cause which does not comply with the definition of Cause under this Agreement; or (iii) a mandatory relocation of Employee’s employment with the Company more than 50 miles from the employee’s current principal place of business in Milwaukee, Wisconsin, except for travel reasonably required in the performance of Employee’s duties and responsibilities; provided, however, that no termination shall be for Good Reason unless the Employee has provided the Company with written notice of the conduct alleged to have caused Good Reason within ten (10) days of such conduct and the Company fails to demonstrate substantial efforts to cure any such alleged conduct within thirty (30) calendar days after the Company’s receipt of such written notice from Employee.

1.10

“Health Insurance Continuation” means that, if Employee, following termination from employment, is eligible for, and timely elects to participate in, the Company’s group health insurance plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company will pay the normal monthly employer’s cost of coverage under the Company’s group health insurance plans for full-time employees toward such COBRA coverage for the specified period of time, if any, set forth in Article II of this Agreement.  If the specified period of time provided for in this Agreement is longer than the end of the 18-month period for which Employee is eligible for COBRA, the Company will, until the end of such longer period, pay the normal monthly employer’s cost of coverage under the Company’s group health insurance plans to, at its sole discretion, allow Employee to continue to participate in such plans (if allowed by law and the Company’s policies, plans and programs) or allow Employee to purchase reasonably comparable individual health insurance coverage through the end of such longer period.  Employee acknowledges and agrees that Employee is responsible for paying the balance of any costs not paid for by the Company under this Agreement which are associated with Employee’s participation in the Company’s health insurance plans or individual health insurance and that Employee’s failure to pay such costs may result in the termination of Employee’s participation in such plans or insurance.  Employee acknowledges and agrees that the Company may deduct from any Severance Payment Employee receives pursuant to this Agreement, amounts that Employee is responsible to pay for Health Insurance Continuation.  Any Health Insurance Continuation provided for herein will cease on the date on which Employee becomes eligible for health insurance coverage under another employer’s group health insurance plan, and, within five (5) calendar days of Employee becoming eligible for health insurance coverage under another employer’s group health insurance plan, Employee agrees to inform the Company of such fact in writing.

1.11

“Outplacement Services” means outplacement services from an outplacement service company of the Company’s choosing at a cost not to exceed Twenty Thousand and no/100 Dollars ($20,000.00), payable directly to such outplacement service company

1.12

“Prorated Bonus” means a share of any bonus attributable to the fiscal year of the Company during which the date of termination of Employee’s employment with the Company occurs to which the Employee would be entitled if he/she had worked for the entire fiscal year, as determined in the sole discretion of the Company (pro-rated, as determined by the Company, for the portion of the fiscal year prior to the date of Employee’s termination of employment).

1.13

“Retirement Age” means an Employee is at least fifty-five (55) years old and has completed  ten (10) years or more of service as an Employee of the Company.

1.14

“Unpaid Bonus” means Employee’s unpaid bonus, if any, attributable to any complete fiscal year of the Company ended before the date of Employee’s termination of employment with the Company.

ARTICLE II

COMPENSATION AND BENEFITS 

UPON TERMINATION OF EMPLOYMENT

2.1

Termination By Company for Cause.  If Employee’s employment is terminated by the Company for Cause, Employee shall have no further rights against the Company hereunder, except for the right to receive (i) Final Pay; (ii)  Final Expenses; and (iii) Employee’s Unpaid Bonus.  The payment of the Unpaid Bonus shall be made at the same time as any such bonus is paid to other similarly situated executives of the Company.  Furthermore, under this Section 2.1, vesting of any Company stock options and restricted stock granted to Employee ceases on the date of termination, and any unvested stock options and restricted stock lapse and are forfeited immediately upon termination.  

2.2

Termination by Employee without Good Reason.  If Employee’s employment is terminated by Employee voluntarily without Good Reason, Employee shall have no further rights against the Company hereunder, except for the right to receive (i) Final Pay, (ii) Final Expenses; (iii) Employee’s Unpaid Bonus, payment of which shall be made at the same time as any such bonus is paid to other similarly situated executives of the Company; and (iv) a Severance Payment (defined below), the payment of which is contingent upon (a) Employee’s execution of a written release agreement (in a form satisfactory to the Company) containing, among other things, a general release of claims against the Company and(b) Employee’s failure to revoke such release within the statutory period permitted for such revocation.  For purposes of this Section 2.2, “Severance Payment” means payment of 50 percent (50%) of Employee’s base salary in effect as of the date of Employee’s termination of employment, payable for one (1) year following the effective date of Employee’s termination pursuant to the normal payroll practices of the Company.  The amount of such Severance Payment shall be reduced by the value of any compensation (including, but not limited to, the value of any cash compensation, deferred compensation or equity-based compensation, valued in the sole discretion of the Company) received by Employee from another employer or service recipient during the one-year period following Employee’s termination of employment, and Employee agrees to reimburse the Company for the amount of such reduction.  Employee acknowledges and agrees that he/she has an obligation to use his/her reasonable efforts to secure other employment following his/her termination of employment from the Company and that his/her failure to do so, as determined at the sole discretion of the Company, is a breach of this Agreement subject to Section 8.6, below.   Furthermore, under this Section 2.2, vesting of any Company stock options and restricted stock granted to Employee ceases on the date of termination, and any unvested stock options and restricted stock lapse and are forfeited immediately upon termination.

2.3

Termination Due to Retirement.  If Employee’s employment is voluntarily terminated by Employee after he/she has reached Retirement Age and prior to the termination, Employee certifies to the Company of his/her intention not to continue employment for another employer after such termination, Employee shall have no further rights against the Company hereunder, except for the right to receive (i) Final Pay, (ii) Final Expenses; (iii) Employee’s Unpaid Bonus, (iv) Employee’s Prorated Bonus and (v) a Severance Payment (defined below), the payment of which is contingent upon (a) Employee’s execution of a written release agreement (in a form satisfactory to the Company) containing, among other things, a general release of claims against the Company and (b) Employee’s failure to revoke such release within the statutory period permitted for such revocation.  Payment of the Unpaid Bonus and the Prorated Bonus shall be made at the same time as any such bonuses for such fiscal years are paid to other similarly situated executives of the Company.  For purposes of this Section 2.3, “Severance Payment” means payment of 50 percent (50%) of Employee’s base salary in effect as of the date of Employee’s termination of employment, payable for one (1) year following the effective date of Employee’s termination pursuant to the normal payroll practices of the Company.  Furthermore, under this Section 2.3, vesting of any Company stock options and restricted stock granted to Employee prior to the date of termination shall be as provided in the stock option and restricted stock agreements between Employee and the Company.  

2.4

Termination Due to Employee’s Death.  If Employee’s employment is terminated due to Employee’s death, Employee’s Designated Beneficiary shall have no further rights against the Company hereunder, except for the right to receive (i) Final Pay; (ii) Final Expenses; (iii) Employee’s Unpaid Bonus, and (iv) Employee’s Prorated Bonus.  Payment of the Unpaid Bonus and the Prorated Bonus shall be made to the Employee’s Designated Beneficiary at the same time as any such bonuses for such fiscal years are paid to other similarly situated executives of the Company.  Furthermore, under this Section 2.4, vesting of any Company stock options and restricted stock granted to Employee prior to the date of termination shall be as provided in the stock option and restricted stock agreements between Employee and the Company.

2.5

Termination Due to Disability.  If Employee’s employment is terminated due to Employee’s Disability, Employee shall have no further rights against the Company hereunder, except for the right to receive (i) Final Pay; (ii) Final Expenses, (iii) Employee’s Unpaid Bonus; (iv) Employee’s Prorated Bonus; and (v) a Severance Payment (defined below), the payment of which is contingent upon (a) Employee’s execution of a written release agreement (in a form satisfactory to the Company) containing, among other things, a general release of claims against the Company and (b) Employee’s failure to revoke such release within the statutory period permitted for such revocation.  Payment of the Unpaid Bonus and the Prorated Bonus shall be made to the Employee at the same time as any such bonuses for such fiscal years are paid to other similarly situated executives of the Company.  For purposes of this Section 2.5, “Severance Payment” means six (6) months of Employee’s base salary in effect as of the date of Employee’s termination of employment, payable in equal installments during the six (6) month period following the effective date of Employee’s termination pursuant to the normal payroll practices of the Company, in accordance with the normal payroll practices of the Company.  The amount of such Severance Payment shall be reduced by (x) the value of any compensation (including, but not limited to, the value of any cash compensation, deferred compensation or equity-based compensation, valued in the sole discretion of the Company) received by Employee from another employer or service recipient during the six (6) month period following Employee’s termination of employment and (y) any payments received by Employee under any short-term disability plans, programs or policies offered by the Company during Employee’s absence from the Company prior to Employee’s termination of employment or during the six (6) month period thereafter and employee agrees to reimburse the Company for the amount of any such reductions.  Notwithstanding the foregoing, the amount of the Severance Payment under this Section 2.5 shall not be reduced by the value of any compensation payable under the Company’s Long Term Disability Program or any successor program thereto.  Employee acknowledges and agrees that, upon the cessation, if any, of such Disability during the period for which the Severance Payment is to be made under this Section 2.5, he/she has an obligation to use his/her reasonable efforts to secure other employment and that his/her failure to do so, as determined at the sole discretion of the Board, is a breach of this Agreement subject to Section 8.6, below.  Furthermore, under this Section 2.5, vesting of any Company stock options and restricted stock granted to Employee shall be as provided in the stock option and restricted stock agreements between Employee and the Company.

2.6

Termination By Company Without Cause or By Employee for Good Reason – No Change of Control.  If Employee’s employment is terminated by the Company without Cause or voluntarily by the Employee for Good Reason and such termination does not occur within one (1) year after the occurrence of a Change of Control, Employee shall have no further rights against the Company hereunder, except for the right to receive (i) Final Pay; (ii) Final Expenses; (iii) Employee’s Unpaid Bonus, (iv) Employee’s Prorated Bonus; (v) Outplacement Services; (vi) Health Insurance Continuation for a period of two (2) years following the effective date of Employee’s termination and (vii) a Severance Payment (defined below), the payment of which is contingent upon (a) Employee’s execution of a written release agreement (in a form satisfactory to the Company) containing, among other things, a general release of claims against the Company and(b) Employee’s failure to revoke such release within the statutory period permitted for such revocation.  Payments of the Unpaid Bonus and the Prorated Bonus shall be made at the same time as any such bonuses for such fiscal years are paid to other similarly situated executives of the Company.  For purposes of this Section 2.6, “Severance Payment” means payment of one hundred percent (100%) of Employee’s base salary in effect as of the date of Employee’s termination of employment, payable for two (2) years following the effective date of termination pursuant to the normal payroll practices and schedule of the Company.  The amount of such Severance Payment shall be reduced by the value of any compensation (including, but not limited to, the value of any cash compensation, deferred compensation or equity-based compensation, valued in the sole discretion of the Company) received by Employee from another employer or service recipient during such two-year period following the Employee’s termination and Employee agrees to reimburse the Company for the amount of any such deduction.  Furthermore, under this Section 2.6, any unvested Company stock options or restricted stock granted to Employee prior to the date of termination that are scheduled to vest in the two-year period following the date of Employee’s termination of employment shall immediately vest as of the date of Employee’s termination of employment.

2.7

Termination By Company Without Cause or By Employee for Good Reason - Change of Control.  If Employee’s employment is terminated by the Company without Cause or voluntarily by the Employee for Good Reason and such termination occurs within one (1) year after the occurrence of a Change of Control, Employee shall have no further rights against the Company hereunder, except for the right to receive (i) Final Pay; (ii) Final Expenses; (iii) Employee’s Unpaid Bonus (iv) a Severance Payment (defined below), the payment of which is contingent upon (a) Employee’s execution of a written release agreement (in a form satisfactory to the Company) containing, among other things, a general release of claims against the Company and(b) Employee’s failure to revoke such release within the statutory period permitted for such revocation.; (v) Health Insurance Continuation for the one-year period following the Employee’s termination of employment and (vi) Outplacement Services.  The Unpaid Bonus shall be paid at the same time as any such bonuses are paid to other similarly situated executives of the Company.  Except as otherwise provided in Section 2.8, below, the Severance Payment in this Section 2.7 shall be paid to the Employee in a lump sum no later than thirty (30) days following the Employee’s termination of employment.  For purposes of this Section 2.7, “Severance Payment” means an amount equal to the product of (x) two (2) multiplied by (y) the sum of: (A) Employee’s base salary in effect as of the date of the Employee’s termination of employment (or, if higher, Employee’s base salary immediately prior to the Change of Control) plus (B) an amount equal to the average (calculated at the sole discretion of the Company) annual incentive compensation plan payment paid to the Employee for the three (3) fiscal years ending prior to the fiscal year which includes the date of Employee’s termination.  Furthermore, under this Section 2.7, vesting of any unvested Company stock options and restricted stock granted to Employee prior to the date of determination shall occur immediately upon the date of termination.

2.8

Delay of Payments if Required by Section 409A.  If amounts paid to Employee pursuant to any Section of this Article II would be subject to a penalty under Section 409A of the Internal Revenue Code because Employee is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) and no other exceptions to the penalty are available, such payments will be delayed until the earliest date permissible following the date of Employee’s termination of employment, at which point any such delayed payments will be paid to Employee in a lump sum.

ARTICLE III

RETURN OF RECORDS

Upon termination of employment, for whatever reason, or upon request by the Company at any time, Employee shall immediately return to the Company all documents, records, and materials belonging and/or relating to the Company, and all copies of all such materials.  Upon termination of employment, for whatever reason, or upon request by the Company at any time, Employee further agrees to destroy such records maintained by Employee on Employee’s own computer equipment.

ARTICLE IV

CONFIDENTIALITY

4.1

Acknowledgments.  Employee acknowledges and agrees that, as an integral part of its business, the Company has expended a great deal of time, money and effort to develop and maintain confidential, proprietary and trade secret information to compete against similar businesses and that this information, if misused or disclosed, would be harmful to the Company’s business and competitive position in the marketplace.  Employee further acknowledges and agrees that in Employee’s position with the Company, the Company provides Employee with access to its confidential, proprietary and trade secret information, strategies and other confidential business information that would be of considerable value to competitive businesses.  As a result, Employee acknowledges and agrees that the restrictions contained in this Article  are reasonable, appropriate and necessary for the protection of the Company’s confidential, proprietary and trade secret information.

4.2.

Confidentiality Obligations.  During the term of Employee’s employment with the Company, Employee will not directly or indirectly use or disclose any Confidential Information or Trade Secrets (defined below) except in the interest and for the benefit of the Company.  After the termination, for whatever reason, of Employee’s employment with the Company, Employee will not directly or indirectly use or disclose any Trade Secrets unless such information ceases to be deemed a Trade Secret by means of one of the exceptions set forth in Section 4.3(c), below.  For a period of two (2) years following termination, for whatever reason, of Employee’s employment with the Company, Employee will not directly or indirectly use or disclose any Confidential Information, unless such information ceases to be deemed Confidential Information by means of one of the exceptions set forth in Section 4.3(c), below.

4.3

Definitions.

(a)

Trade Secret.  The term “Trade Secret” shall have that meaning set forth under applicable law.  This term is deemed by the Company to specifically include all Company-created computer source code and any confidential information received from a third party with whom the Company has a binding agreement restricting disclosure of such confidential information.

(b)

Confidential Information.  The term “Confidential Information” shall mean all non-Trade Secret or proprietary information of the Company which has value to the Company and which is not known to the public or the Company’s competitors, generally, including, but not limited to, new products, customer lists, pricing policies and strategies, employment records and policies, operational methods, marketing plans and strategies, advertising plans and strategies, product development techniques and plans, business acquisition and divestiture plans, resources, sources of supply, suppliers and supplier contractual relationships and terms, technical processes, designs, inventions, research programs and results, source code, short-term and long-range planning, projections, information systems, sales objectives and performance, profits and profit margins, and seasonal plans, goals and objectives.

(c)

Exclusions.  Notwithstanding the foregoing, the terms “Trade Secret” and “Confidential Information” shall not include, and the obligations set forth in this Article IV shall not apply to, any information which: (i) can be demonstrated by Employee to have been known by Employee prior to Employee’s employment by the Company; (ii) is or becomes generally available to the public through no act or omission of Employee; (iii) is obtained by Employee in good faith from a third party who discloses such information to Employee on a non-confidential basis without violating any obligation of confidentiality or secrecy relating to the information disclosed; or (iv) is independently developed by Employee outside the scope of Employee’s employment without use of Confidential Information or Trade Secrets.

ARTICLE V

RESTRICTED SERVICES OBLIGATION

5.1

Acknowledgments.  Employee acknowledges and agrees that the Company is one of the leading retail companies in the United States, with department stores throughout the United States, and that the Company compensates executives like Employee to, among other things, develop and maintain valuable goodwill and relationships on the Company’s behalf (including relationships with customers, suppliers and vendors) and to maintain business information for the Company’s exclusive ownership and use.  As a result, Employee acknowledges and agrees that the restrictions contained in this Article V are reasonable, appropriate and necessary for the protection of the Company’s goodwill, customer, supplier and vendor relationships and confidential information and trade secrets.  Employee further acknowledges and agrees that the restrictions contained in this Article V will not pose an undue hardship on Employee or Employee’s ability to find gainful employment.

5.2

Restricted Services Obligation.  For the one (1) year period following termination, for whatever reason, of Employee’s employment with the Company, Employee will not, directly or indirectly, provide Restricted Services (defined below) for or on behalf of any Competitive Business (defined below).  During such one (1) year period, Employee also will not, directly or indirectly, provide any Competitive Business with any advice or counsel in the nature of the Restricted Services.

5.3

Definitions.  For purposes of this Article V, the following are defined terms:

(a)

Restricted Services.  “Restricted Services” shall mean services of any kind or character comparable to those Employee provided to the Company during the eighteen (18) month period immediately preceding Employee’s last date of employment with the Company.

(b)

Competitive Business.  “Competitive Business” shall mean any entity (including related entities) that as of the time of the determination (i) generates, in the aggregate with its related entities, more than One Billion Dollars ($1,000,000,000) in annual revenues; and (ii) operates or owns a Retail Business.  “Competitive Business” shall also include a business that provides a buying office or sourcing services to a Retail Business or is a vendor of Goods to a Retail Business.  “Retail Business” means any business or related businesses engaged in the sale of products at retail which derives at least twenty percent (20%) of its annual revenue from the sale of Goods in the United States and owns or operates retail stores located within twenty-five (25) miles of any store operated by Kohl’s Corporation or any of its subsidiaries.

(c)

Goods.  “Goods” means merchandise that comprises at least five percent (5%) of the Company’s annual revenues during the twelve (12) months prior to Employee’s last date of employment with the Company.

ARTICLE VI

BUSINESS IDEAS; NON-DISPARAGEMENT

6.1

Assignment of Business Ideas.  Employee shall immediately disclose to the Company a list of all inventions, patents, applications for patent, copyrights, and applications for copyright in which Employee currently holds an interest.  The Company will own, and Employee hereby assigns to the Company, all rights in all Business Ideas, as defined in Section 6.2, below.  All Business Ideas which are or form the basis for copyrightable works shall be considered “works for hire” as that term is defined by United States Copyright Law.  Any works that are not found to be “works for hire” are hereby assigned to the Company.  While employed by the Company and for one (1) year thereafter, Employee will promptly disclose all Business Ideas to the Company and execute all documents which the Company may reasonably require to perfect its patent, copyright and other rights to such Business Ideas throughout the world.  After Employee’s employment with the Company terminates, for whatever reason, Employee will cooperate with the Company to assist the Company in perfecting its rights to any Business Ideas including executing all documents which the Company may reasonably require.

6.2

Business Ideas.  The term “Business Ideas” as used in this Agreement means all ideas, inventions, data, software, developments and copyrightable works, whether or not patentable or registrable, which Employee originates, discovers or develops, either alone or jointly with others while Employee is employed by the Company and for one (1) year thereafter and which are (a) related to any business known by Employee to be engaged in or contem­plated by the Company, (b) originated, discovered or developed during Employee’s working hours, or (c) originated, discovered or developed in whole or in part using materials, labor, facilities, Confidential Information, Trade Secrets, or equipment furnished by the Company.

6.3

Non-Disparagement.  Employee agrees not to engage at any time in any form of conduct or make any statements or representations, or direct any other person or entity to engage in any conduct or make any statements or representations, that disparage, criticize or otherwise impair the reputation of the Company, its affiliates, parents and subsidiaries and their respective past and present officers, directors, stockholders, partners, members, agents and employees.  Nothing contained in this Section 6.3 shall preclude Employee from providing truthful testimony or statements pursuant to subpoena or other legal process or in response to inquiries from any government agency or entity.

ARTICLE VII

EMPLOYEE NON-SOLICITATION

During the term of Employee’s employment with the Company and for one (1) year thereafter, Employee shall not directly or indirectly encourage any Company employee to terminate his/her employment with the Company.

ARTICLE VIII

GENERAL PROVISIONS

8.1

Notices.  Any and all notices, consents, documents or communications provided for in this Agreement shall be given in writing and shall be personally delivered, mailed by registered or certified mail (return receipt requested) or sent by courier, confirmed by receipt, and addressed as follows (or to such other address as the addressed party may have substituted by notice pursuant to this Section 8.1):

(a) If to the Company:

Kohl’s Department Stores, Inc.

N56 W17000 Ridgewood Drive

Menomonee Falls, WI  53051

Attn:  General Counsel

(b) If to Employee:

Any notice to be given to the Employee may be addressed to him/her at the address as it appears on the payroll records of the Company or any subsidiary thereof.

Such notice, consent, document or communication shall be deemed given upon personal delivery or receipt at the address of the party stated above or at any other address specified by such party to the other party in writing, except that if delivery is refused or cannot be made for any reason, then such notice shall be deemed given on the third day after it is sent.

8.2

Employee Disclosures and Acknowledgments.

(a)

Prior Obligations.  Following is a list of prior obligations (written and oral), such as confidentiality agreements or covenants restricting future employment or consulting, that Employee has entered into which may restrict Employee’s ability to perform Employee’s duties as an Employee for the Company:

	
	 

	 

	 

	 

	 

 (b)

Confidential Information of Others.  Employee certifies that Employee has not, and will not, disclose or use during Employee’s time as an employee of the Company, any confidential information which Employee acquired as a result of any previous employment or under a contractual obligation of confidentiality or secrecy before Employee became an employee of the Company.

(c)

Scope of Restrictions.  By entering into this Agreement, Employee acknowledges the nature of the Company’s business and the nature and scope of the restrictions set forth in Articles IV, V and VII, above, including specifically Wisconsin’s Uniform Trade Secrets Act, presently § 134.90, Wis. Stats.  Employee acknowledges and represents that the scope of such restrictions are appropriate, necessary and reasonable for the protection of the Company’s business, goodwill, and property rights.  Employee further acknowledges that the restrictions imposed will not prevent Employee from earning a living in the event of, and after, termination, for whatever reason, of Employee’s employment with the Company.  Nothing herein shall be deemed to prevent Employee, after termination of Employee’s employment with the Company, from using general skills and knowledge gained while employed by the Company.

(d)

Prospective Employers.  Employee agrees, during the term of any restriction contained in Articles IV, V and VII, above, to disclose such provisions to any future or prospective employer.  Employee further agrees that the Company may send a copy of this Agreement to, or otherwise make the provisions hereof known to, any such employer.

8.3

Effect of Termination.  Notwithstanding any termination of this Agreement, the Employee, in consideration of his employment hereunder, shall remain bound by the provisions of this Agreement which specifically relate to periods, activities or obligations upon or subsequent to the termination of the Employee’s employment.

8.4

Confidentiality of Agreement. Employee agrees that, with the exception of disclosures pursuant to Section 8.2(d), above, Employee will not disclose, directly or indirectly, the terms of this Agreement to any third party; provided, however, that following Employee’s obtaining a promise of confidentiality for the benefit of the Company from Employee’s tax preparer, accountant, attorney and spouse, Employee may disclose the terms of this Agreement to such of these individuals who have made such a promise of confidentiality.  This provision shall not prevent Employee from disclosing such matters in testifying in any hearing, trial or other legal proceeding where Employee is required to do so.

8.5

Cooperation.  Employee agrees to take all reasonable steps during and after Employee’s employment with the Company to make himself/herself available to and to cooperate with the Company, at its request, in connection with any legal proceedings or other matters in which it is or may become involved.  Following Employee’s employment with the Company, the Company agrees to pay reasonable compensation to Employee and to pay all reasonable expenses incurred by Employee in connection with Employee’s obligations under this Section 8.5.

8.6

Effect of Breach.  In the event that Employee breaches any provision of this Agreement, Employee agrees that the Company may suspend all additional payments to Employee under this Agreement (including any Severance Payment), recover from Employee any damages suffered as a result of such breach and recover from Employee any reasonable attorneys’ fees or costs it incurs as a result of such breach.  In addition, Employee agrees that the Company may seek injunctive or other equitable relief, without the necessity of posting bond, as a result of a breach by Employee of any provision of this Agreement.

8.7

Entire Agreement.  This Agreement contains the entire understanding and the full and complete agreement of the Parties and supersedes and replaces any prior understandings and agreements among the Parties, with respect to the subject matter hereof, including, but not limited to, the Employment Agreement between the Parties dated as of January 3, 2005.

8.8

Headings.  The headings of sections and paragraphs of this Agreement are for convenience of reference only and shall not control or affect the meaning or construction of any of its provisions.

8.9

Consideration.  The benefits provided to Employee under this Agreement constitute the consideration for Employee’s undertakings hereunder.

8.10

Amendment.  This Agreement may be altered, amended or modified only in a writing, signed by both of the Parties hereto.  

8.11

409A Savings Clause.  The term “termination of employment” used in this Agreement shall be construed in accordance with any guidance, rules or regulations promulgated by the Internal Revenue Service in construing the rules and regulations applicable to a “separation of service” under Section 409A of the Internal Revenue Code.  It is the parties’ intention that this Agreement comply with the applicable provisions of Section 409A and any guidance issued thereunder.  The Parties agree to amend this Agreement effective as of the execution date of this instrument to the minimum extent necessary to comply with Section 409A and any guidance issued thereunder such that Employee will avoid the application of the 20% penalty tax under Section 409A.  

8.12

Assignability.  This Agreement and the rights and duties set forth herein may not be assigned by Employee, but may be assigned by the Company, in whole or in part.  This Agreement shall be binding on and inure to the benefit of each party and such party’s respective heirs, legal representatives, successors and assigns.

8.13

Severability.  If any court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, then such invalidity or unenforceability shall have no effect on the other provisions hereof, which shall remain valid, binding and enforceable and in full force and effect, and such invalid or unenforceable provision shall be construed in a manner so as to give the maximum valid and enforceable effect to the intent of the Parties expressed therein.

8.14

Waiver of Breach.  The waiver by either party of the breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by either party.

8.15

Governing Law; Construction.  This Agreement shall be governed by the internal laws of the State of Wisconsin, without regard to (i) its conflicts of law provisions and (ii) any rules of construction concerning the draftsman hereof.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above.

KOHL’S DEPARTMENT STORES, INC.:

/s/ R. Lawrence Montgomery                           

By: R. Lawrence Montgomery , CEO             

EMPLOYEE:

/s/ Wesley S. McDonald

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