Document:

Exhibit 10.4

 

OCCAM NETWORKS, INC.

 

2006 EQUITY INCENTIVE PLAN

 

(As amended November 29, 2007)

 

1.             Purposes of the Plan.  The purposes of this Plan are:

 

·           to attract and retain the best
available personnel for positions of substantial responsibility,

 

·           to provide incentives to individuals
who perform services to the Company, and

 

·           to promote the success of the Company’s
business.

 

The Plan permits the grant of Incentive Stock Options, Nonstatutory
Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation
Rights, Performance Units, Performance Shares and other stock or cash awards as
the Administrator may determine.

 

2.             Definitions.  As used herein, the following definitions
will apply:

 

(a)         “Administrator” means the Board
or any of its Committees as will be administering the Plan, in accordance with Section 4
of the Plan.

 

(b)        “Affiliate” means any corporation
or any other entity (including, but not limited to, partnerships and joint
ventures) controlling, controlled by, or under common control with the Company.

 

(c)         “Annual Revenue” means the
Company’s or a business unit’s net sales for the Performance Period, determined
in accordance with generally accepted accounting principles; provided, however,
that prior to the Performance Period, the Administrator shall determine whether
any significant item(s) shall be excluded or included from the calculation
of Annual Revenue with respect to one or more Participants.

 

(d)        “Applicable Laws” means the
requirements relating to the administration of equity-based awards under U.S.
state corporate laws, U.S. federal and state securities laws, the Code, any
stock exchange or quotation system on which the Common Stock is listed or
quoted and the applicable laws of any foreign country or jurisdiction where
Awards are, or will be, granted under the Plan.

 

(e)         “Award” means, individually or
collectively, a grant under the Plan of Options, Restricted Stock, Restricted
Stock Units, Stock Appreciation Rights, Performance Units, Performance Shares
and other stock or cash awards as the Administrator may determine.

 

 

(f)         “Award Agreement” means the
written or electronic agreement setting forth the terms and provisions
applicable to each Award granted under the Plan.  The Award Agreement is subject to the terms
and conditions of the Plan.

 

(g)        “Board” means the Board of
Directors of the Company.

 

(h)        “Cash Collections” means the
actual cash or other freely negotiable consideration, in any currency, received
in satisfaction of accounts receivable created by the sale of any Company
products or services.

 

(i)          “Change in Control” means the
occurrence of any of the following events:

 

(i)                Any “person” (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial
owner” (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company’s then outstanding
voting securities;

 

(ii)               The consummation of the sale or
disposition by the Company of all or substantially all of the Company’s assets;

 

(iii)              A change in the composition of the
Board occurring within a two-year period, as a result of which fewer than a
majority of the directors are Incumbent Directors.  “Incumbent Directors” means directors who
either (A) are Directors as of the effective date of the Plan, or (B) are
elected, or nominated for election, to the Board with the affirmative votes of
at least a majority of the Incumbent Directors at the time of such election or
nomination (but will not include an individual whose election or nomination is
in connection with an actual or threatened proxy contest relating to the
election of directors to the Company); or

 

(iv)             The consummation of a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity or its parent) at least fifty percent (50%) of the total
voting power represented by the voting securities of the Company or such
surviving entity or its parent outstanding immediately after such merger or
consolidation.

 

(j)          “Code” means the Internal
Revenue Code of 1986, as amended.  Any
reference to a section of the Code herein will be a reference to any successor
or amended section of the Code.

 

(k)         “Committee” means a
committee of Directors or of other individuals satisfying Applicable Laws
appointed by the Board in accordance with Section 4 hereof.

 

(l)          “Common Stock” means the common
stock of the Company.

 

(m)        “Company” means Occam Networks, Inc.,
a Delaware corporation, or any successor thereto.

 

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(n)        “Consultant” means any person,
including an advisor, engaged by the Company or its Affiliates to render
services to such entity.

 

(o)        “Customer Satisfaction MBOs”
means as to any Participant, the objective and measurable individual goals set
by a “management by objectives” process and approved by the Administrator,
which goals relate to the satisfaction of external or internal customer
requirements.

 

(p)        “Determination Date” means the
latest possible date that will not jeopardize the qualification of an Award
granted under the Plan as “performance-based compensation” under Section 162(m) of
the Code.

 

(q)        “Director” means a member of the
Board.

 

(r)         “Disability” means total and
permanent disability as defined in Section 22(e)(3) of the Code, provided that
in the case of Awards other than Incentive Stock Options, the Administrator in
its discretion may determine whether a permanent and total disability exists in
accordance with uniform and non-discriminatory standards adopted by the
Administrator from time to time.

 

(s)         “Earnings Per Share” means as to
any Performance Period, the Company’s Net Income or a business unit’s Pro Forma
Net Income, divided by a weighted average number of Shares outstanding and
dilutive common equivalent Shares deemed outstanding.

 

(t)         “Employee” means any person,
including Officers and Directors, employed by the Company or its
Affiliates.  Neither service as a
Director nor payment of a director’s fee by the Company will be sufficient to constitute
“employment” by the Company.

 

(u)        “Exchange Act” means the
Securities Exchange Act of 1934, as amended.

 

(v)        “Fair Market Value” means, as of
any date, the value of Common Stock as the Administrator may determine in good
faith by reference to the price of such stock on any established stock exchange
or a national market system, including without limitation The Nasdaq National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, on the day of
determination if the Common Stock is so listed on any established stock
exchange or a national market system.  If
the Common Stock is not listed on any established stock exchange or a national
market system, the value of the Common Stock will be determined by the
Administrator in good faith.

 

(w)        “Fiscal Year” means
the fiscal year of the Company.

 

(x)         “Incentive Stock Option” means
an Option that by its terms qualifies and is otherwise intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code
and the regulations promulgated thereunder.

 

(y)        “Net Income” means as to any
Performance Period, the income after taxes of the Company determined in
accordance with generally accepted accounting principles, provided that prior
to the Performance Period, the Administrator shall determine whether any
significant item(s) shall be included or excluded from the calculation of
Net Income with respect to one or more participants.

 

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(z)         “New Orders” means as to any
Performance Period, the firm orders for a system, product, part, or service
that are being recorded for the first time as defined in the Company’s order
recognition policy.

 

(aa)       “Non-Owner Outside Director” means
an Outside Director who is not the beneficial owner of more than 5% of the
Company’s outstanding capital stock.

 

(bb)      “Nonstatutory Stock Option” means
an Option that by its terms does not qualify or is not intended to qualify as
an Incentive Stock Option.

 

(cc)       “Officer” means a person who is an
officer of the Company within the meaning of Section 16 of the Exchange
Act and the rules and regulations promulgated thereunder.

 

(dd)      “Operating Profit” means as to any
Performance Period, the difference between revenue and related costs and
expenses, excluding income derived from sources other than regular activities
and before income deductions.

 

(ee)       “Option” means a stock option
granted pursuant to the Plan.

 

(ff)        “Outside Director” means a
Director who is not an Employee.

 

(gg)      “Parent” means a “parent
corporation,” whether now or hereafter existing, as defined in Section 424(e) of
the Code.

 

(hh)      “Participant” means
the holder of an outstanding Award.

 

(ii)         “Performance Goals” will have
the meaning set forth in Section 11 of the Plan.

 

(jj)         “Performance Period” means any
Fiscal Year of the Company or such other period as determined by the
Administrator in its sole discretion.

 

(kk)       “Performance Share” means an Award
denominated in Shares which may be earned in whole or in part upon attainment
of Performance Goals or other vesting criteria as the Administrator may
determine pursuant to Section 10.

 

(ll)         “Performance Unit” means an
Award which may be earned in whole or in part upon attainment of Performance
Goals or other vesting criteria as the Administrator may determine and which
may be settled for cash, Shares or other securities or a combination of the
foregoing pursuant to Section 10.

 

(mm)     “Period of Restriction” means the
period during which the transfer of Shares of Restricted Stock are subject to
restrictions and therefore, the Shares are subject to a substantial risk of
forfeiture.  Such restrictions may be
based on the passage of time, the achievement of target levels of performance,
or the occurrence of other events as determined by the Administrator.

 

(nn)      “Plan” means this 2006 Equity
Incentive Plan.

 

4

 

(oo)      “Pro Forma Net Income” means as to
any business unit for any Performance Period, the Net Income of such business
unit, minus allocations of designated corporate expenses.

 

(pp)      “Product Shipments” means as to any
Performance Period, the quantitative and measurable number of units of a
particular product that shipped during such Performance Period.

 

(qq)      “Restricted Stock” means Shares
issued pursuant to an Award of Restricted Stock under Section 8 of the
Plan, or issued pursuant to the early exercise of an Option.

 

(rr)        “Restricted Stock Unit”
means a bookkeeping entry representing an amount equal to the Fair Market Value
of one Share, granted pursuant to Section 9.  Each Restricted Stock Unit represents an
unfunded and unsecured obligation of the Company.

 

(ss)       “Return on Designated Assets”
means as to any Performance Period, the Pro Forma Net Income of a business
unit, divided by the average of beginning and ending business unit designated
assets, or Net Income of the Company, divided by the average of beginning and
ending designated corporate assets.

 

(tt)        “Return on Equity” means, as to
any Performance Period, the percentage equal to the value of the Company’s or
any business unit’s common stock investments at the end of such Performance
Period, divided by the value of such common stock investments at the start of
such Performance Period, excluding any common stock investments so designated
by the Administrator.

 

(uu)      “Return on Sales” means as to any
Performance Period, the percentage equal to the Company’s Net Income or the
business unit’s Pro Forma Net Income, divided by the Company’s or the business
unit’s Annual Revenue.

 

(vv)      “Rule 16b-3” means Rule 16b-3
of the Exchange Act or any successor to Rule 16b-3, as in effect when
discretion is being exercised with respect to the Plan.

 

(ww)     “Section 16(b)” means Section 16(b) of
the Exchange Act.

 

(xx)       “Service Provider” means an
Employee, Director or Consultant.

 

(yy)      “Share” means a share of the Common
Stock, as adjusted in accordance with Section 15 of the Plan.

 

(zz)       “Stock Appreciation Right” means
an Award, granted alone or in connection with an Option, that pursuant to Section 7
is designated as a Stock Appreciation Right.

 

(aaa)     “Subsidiary” means a “subsidiary
corporation,” whether now or hereafter existing, as defined in Section 424(f) of
the Code.

 

(bbb)    “Successor Corporation” has the
meaning given to such term in Section 15(c) of the Plan.

 

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3.             Stock Subject to the Plan.

 

(a)         Stock Subject to the Plan.  Subject to the provisions of Section 15 of the Plan, the maximum aggregate
number of Shares that may be awarded and sold under the Plan is 1,700,000 Shares plus (i) any
Shares that, as of the date of stockholder approval of this Plan, have been
reserved but not issued pursuant to any awards granted under the Company’s 2000
Stock Incentive Plan (the “2000 Plan”), and are not subject to any awards
granted thereunder, and (ii) any Shares subject to stock options or
similar awards granted under the 2000 Plan, that expire or otherwise terminate
without having been exercised in full and Shares issued pursuant to awards
granted under the 2000 Plan, that are forfeited to or repurchased by the
Company, and (iii) an annual increase to be added on the first day of the
Company’s fiscal year
beginning in 2007, equal to the lesser of (a) 750,000 shares, (b) three
percent (3%) of the outstanding shares on such date, or (c) an amount
determined by the Board.   The Shares may
be authorized, but unissued, or reacquired Common Stock.

 

(b)        Full Value Awards.  Any Shares subject to Awards granted of
Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares
and Stock Appreciation Rights will be counted against the numerical limits of
this Section 3 as two (2) Shares for every one (1) Share subject
thereto.  Further, if Shares acquired
pursuant to any such Award are forfeited or repurchased by the Company and would
otherwise return to the Plan pursuant to Section 3(c), two (2) times
the number of Shares so forfeited or repurchased will return to the Plan and
will again become available for issuance.

 

(c)         Lapsed Awards.  If an Award expires or becomes unexercisable
without having been exercised in full, or, with respect to Restricted Stock,
Restricted Stock Units, Performance Shares or Performance Units, is forfeited
to or repurchased by the Company, the unpurchased Shares (or for Awards other
than Options and Stock Appreciation Rights), the forfeited or repurchased
Shares which were subject thereto will become available for future grant or
sale under the Plan (unless the Plan has terminated).  With respect to Stock
Appreciation Rights, all of the Shares covered by the Award (that is, Shares
actually issued pursuant to a Stock Appreciation Right, as well as the Shares
that represent payment of the exercise price) will cease to be available under
the Plan.  However, Shares that have actually been
issued under the Plan under any Award will not be returned to the Plan and will
not become available for future distribution under the Plan; provided, however,
that if unvested Shares of Restricted Stock, Restricted Stock Units,
Performance Shares or Performance Units are repurchased by the Company or are
forfeited to the Company, such Shares will become available for future grant
under the Plan.  Shares used to pay the
tax and exercise price of an Award will not become available for future grant
or sale under the Plan.  To the extent an
Award under the Plan is paid out in cash rather than Shares, such cash payment
will not result in reducing the number of Shares available for issuance under
the Plan.  Notwithstanding the foregoing
and, subject to adjustment provided in Section 15, the maximum number of
Shares that may be issued upon the exercise of Incentive Stock Options will
equal the aggregate Share number stated in Section 3(a), plus, to the
extent allowable under Section 422 of the Code, any Shares that become
available for issuance under the Plan under this Section 3(c).

 

6

 

4.             Administration of the Plan.

 

(a)         Procedure.

 

(i)        Multiple Administrative Bodies.  Different Committees with respect to
different groups of Service Providers may administer the Plan.

 

(ii)       Section 162(m).  To the extent that the Administrator
determines it to be desirable to qualify Awards granted hereunder as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the
Plan will be administered by a Committee of two or more “outside directors”
within the meaning of Section 162(m) of the Code.

 

(iii)      Rule 16b-3.  To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions
contemplated hereunder will be structured to satisfy the requirements for
exemption under Rule 16b-3.

 

(iv)      Other Administration.  Other than as provided above, the Plan will
be administered by (A) the Board or (B) a Committee, which committee
will be constituted to satisfy Applicable Laws.

 

(b)        Powers of the Administrator.  Subject to the provisions of the Plan, and in
the case of a Committee, subject to the specific duties delegated by the Board
to such Committee, the Administrator will have the authority, in its discretion:

 

(i)        to determine the Fair Market Value;

 

(ii)       to select the Service Providers to whom
Awards may be granted hereunder;

 

(iii)      to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Award granted hereunder;

 

(iv)      to construe and interpret the terms of the
Plan and Awards granted pursuant to the Plan;

 

(v)       to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating
to sub-plans established for the purpose of satisfying applicable foreign laws;

 

(vi)      to modify or amend each Award (subject to Section 20(c) of the Plan).  Notwithstanding the previous sentence, the
Administrator may not modify or amend an Option or Stock Appreciation Right to
reduce the exercise price of such Option or Stock Appreciation Right after it
has been granted (except for adjustments made pursuant to Section 15), and
neither may the Administrator cancel any outstanding Option or Stock
Appreciation Right and immediately replace it with a new Option or Stock
Appreciation Right with a lower exercise price;

 

(vii)     to authorize any person to execute on
behalf of the Company any instrument required to effect the grant of an Award
previously granted by the Administrator;

 

7

 

(viii)    to allow a Participant to defer the receipt
of the payment of cash or the delivery of Shares that would otherwise be due to
such Participant under an Award pursuant to such procedures as the
Administrator may determine; and

 

(ix)       to make all other determinations deemed
necessary or advisable for administering the Plan.

 

(c)         Effect of Administrator’s Decision.  The Administrator’s decisions, determinations
and interpretations will be final and binding on all Participants and any other
holders of Awards.

 

5.             Eligibility.  Nonstatutory Stock Options, Restricted Stock,
Restricted Stock Units, Stock Appreciation Rights, Performance Units,
Performance Shares and such other cash or stock awards as the Administrator
determines may be granted to Service Providers. 
Incentive Stock Options may be granted only to employees of the Company
or any Parent or Subsidiary of the Company.

 

6.             Stock Options.

 

(a)         Limitations.  Each Option will be designated in the Award
Agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option.  However, notwithstanding such
designation, to the extent that the aggregate Fair Market Value of the Shares
with respect to which Incentive Stock Options are exercisable for the first
time by the Participant during any calendar year (under all plans of the
Company and any Parent or Subsidiary) exceeds $100,000, such Options will be
treated as Nonstatutory Stock Options. 
For purposes of this Section 6(a), Incentive Stock Options will be
taken into account in the order in which they were granted.  The Fair Market Value of the Shares will be
determined as of the time the Option with respect to such Shares is granted.

 

(b)        Number of Shares.  The Administrator will have complete
discretion to determine the number of Options granted to any Participant,
provided that during any Fiscal Year, no Participant will be granted Options
covering more than 75,000 Shares. 
Notwithstanding the foregoing limitation, in connection with a
Participant’s initial service as an Employee, an Employee may be granted
Options covering up to an additional 175,000 Shares.

 

(c)         Term of Option.  The Administrator will determine the term of
each Option in its sole discretion.  Any
Option granted under the Plan will not be exercisable after the expiration of
ten (10) years from the date of grant or such shorter term as may be
provided in the Award Agreement. 
Moreover, in the case of an Incentive Stock Option granted to a
Participant who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of
the Incentive Stock Option will be five (5) years from the date of grant
or such shorter term as may be provided in the Award Agreement.

 

(d)        Option Exercise Price and
Consideration.

 

(i)        Exercise Price.  The per share exercise price for the Shares
to be issued pursuant to exercise of an Option will be determined by the
Administrator, but will be no less than 100% of the Fair Market
Value per Share on the date of grant.  In
addition, in the case
of an 

 

8

 

Incentive Stock Option
granted to an Employee who, at the time the Incentive Stock Option is granted,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price will be no less than 110% of the Fair Market Value per Share on
the date of grant.  Notwithstanding
the foregoing provisions of this Section 6(d), Options may be granted with
a per Share exercise price of less than 100% of the Fair Market Value per Share
on the date of grant pursuant to a transaction described in, and in a manner
consistent with, Section 424(a) of the Code.  The Administrator may not modify or amend an
Option to reduce the exercise price of such Option after it has been granted
(except for adjustments made pursuant to Section 15 of the Plan) nor may
the Administrator cancel any outstanding Option and replace it with a new
Option, Stock Appreciation Right, or other Award with a lower exercise price,
unless, in either case, such action is approved by the Company’s stockholders.

 

(ii)       Waiting Period and Exercise Dates.  At the time an Option is granted, the
Administrator will fix the period within which the Option may be exercised and
will determine any conditions that must be satisfied before the Option may be
exercised.

 

(iii)      Form of Consideration.  The Administrator will determine the
acceptable form(s) of consideration for exercising an Option, including
the method of payment, to the extent permitted by Applicable Laws.

 

(e)         Exercise of Option.

 

(i)        Procedure for Exercise; Rights as a
Stockholder.  Any Option granted hereunder
will be exercisable according to the terms of the Plan and at such times and
under such conditions as determined by the Administrator and set forth in the
Award Agreement.  An Option may not be
exercised for a fraction of a Share.

 

An Option will be
deemed exercised when the Company receives: (i) notice of exercise (in
such form as the Administrator may specify from time to time) from the person
entitled to exercise the Option, and (ii) full payment for the Shares with
respect to which the Option is exercised (together with an applicable
withholding taxes).  No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the Shares are issued, except as provided in Section 15 of the Plan.

 

(ii)       Termination of Relationship as a
Service Provider.  If a Participant
ceases to be a Service Provider, other than upon the Participant’s termination
as the result of the Participant’s death or Disability, the Participant may
exercise his or her Option within such period of time as is specified in the
Award Agreement to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Award Agreement). 
In the absence of a specified time in the Award Agreement, the Option
will remain exercisable for three (3) months following the Participant’s
termination.  Unless otherwise provided
by the Administrator, if on the date of termination the Participant is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option will revert to the Plan. 
If after termination the Participant does not exercise his or her Option
within the time specified by the Administrator, the Option will terminate, and
the Shares covered by such Option will revert to the Plan.

 

9

(iii)          Disability of Participant.  If a Participant ceases to be a Service
Provider as a result of the Participant’s Disability, the Participant may
exercise his or her Option within such period of time as is specified in the
Award Agreement to the extent the Option is vested on the date of termination
(but in no event later than the expiration of the term of such Option as set
forth in the Award Agreement).  In the
absence of a specified time in the Award Agreement, the Option will remain
exercisable for twelve (12) months following the Participant’s
termination.  Unless otherwise provided
by the Administrator, if on the date of termination the Participant is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option will revert to the Plan. 
If after termination the Participant does not exercise his or her Option
within the time specified herein, the Option will terminate, and the Shares
covered by such Option will revert to the Plan.

 

(iv)          Death of Participant.  If a Participant dies while a Service
Provider, the Option may be exercised following the Participant’s death within
such period of time as is specified in the Award Agreement to the extent that
the Option is vested on the date of death (but in no event may the option be
exercised later than the expiration of the term of such Option as set forth in
the Award Agreement), by the Participant’s designated beneficiary, provided
such beneficiary has been designated prior to Participant’s death in a form
acceptable to the Administrator.  If no
such beneficiary has been designated by the Participant, then such Option may
be exercised by the personal representative of the Participant’s estate or by
the person(s) to whom the Option is transferred pursuant to the Participant’s
will or in accordance with the laws of descent and distribution.  In the absence of a specified time in the
Award Agreement, the Option will remain exercisable for twelve (12) months
following Participant’s death.  Unless
otherwise provided by the Administrator, if at the time of death Participant is
not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option will immediately revert to the Plan.  If the Option is not so exercised within the
time specified herein, the Option will terminate, and the Shares covered by
such Option will revert to the Plan.

 

(v)           Other Termination.  A Participant’s Award Agreement may also
provide that if the exercise of the Option following the termination of
Participant’s status as a Service Provider (other than upon the Participant’s
death or Disability) would result in liability under Section 16(b), then
the Option will terminate on the earlier of (A) the expiration of the term
of the Option set forth in the Award Agreement, or (B) the 10th day after
the last date on which such exercise would result in such liability under Section 16(b).  Finally, a Participant’s Award Agreement may
also provide that if the exercise of the Option following the termination of
the Participant’s status as a Service Provider (other than upon the Participant’s
death or disability) would be prohibited at any time solely because the
issuance of Shares would violate the registration requirements under the
Securities Act, then the Option will terminate on the earlier of (A) the
expiration of the term of the Option, or (B) the expiration of a period of
three (3) months after the termination of the Participant’s status as a
Service Provider during which the exercise of the Option would not be in
violation of such registration requirements.

 

(vi)          Administrator Discretion.  The Administrator, in its sole discretion,
may, after an Option is granted, extend the maximum term of an Option (subject
to Section 6(c) regarding Incentive Stock Options) or the
post-termination exercisability period of an Option provided, however, that
such Option shall terminate no later than following the expiration of ten (10) years
from the Grant Date.  Unless otherwise
determined by the Committee, any extension of the 

 

10

 

term or post-termination
exercisability period of an Option pursuant to this Section 6(e)(vi) shall
comply with Section 409A of the Code.

 

7.             Stock Appreciation Rights.

 

(a)           Grant of Stock Appreciation Rights.  Subject to the terms and conditions of the
Plan, a Stock Appreciation Right may be granted to Service Providers at any
time and from time to time as will be determined by the Administrator, in its
sole discretion.

 

(b)           Number of Shares.  The Administrator will have complete
discretion to determine the number of Stock Appreciation Rights granted to any
Participant, provided that during any Fiscal Year, no Participant will be
granted Stock Appreciation Rights covering more than 125,000 Shares.  Notwithstanding the foregoing limitation, in
connection with a Participant’s initial service as an Employee, an Employee may
be granted Stock Appreciation Rights covering up to an additional 200,000
Shares.

 

(c)           Exercise Price and Other Terms.  The Administrator, subject to the provisions
of the Plan, will have complete discretion to determine the terms and
conditions of Stock Appreciation Rights granted under the Plan, provided,
however, that the exercise price will be not less than 100% of the
Fair Market Value of a Share on the date of grant.  The Administrator may not modify or amend a
Stock Appreciation Right to reduce the exercise price of such Stock
Appreciation Right after it has been granted (except for adjustments made
pursuant to Section 15 of the Plan) nor may the Administrator cancel any
outstanding Stock Appreciation Right and replace it with a new Stock
Appreciation Right, Option, or other Award with a lower exercise price, unless,
in either case, such action is approved by the Company’s stockholders.

 

(d)           Stock Appreciation Right Agreement.  Each Stock Appreciation Right grant will be
evidenced by an Award Agreement that will specify the exercise price, the term
of the Stock Appreciation Right, the conditions of exercise, and such other
terms and conditions as the Administrator, in its sole discretion, will
determine.

 

(e)           Expiration of Stock Appreciation
Rights.  A Stock Appreciation Right
granted under the Plan will expire upon the date determined by the
Administrator, in its sole discretion, and set forth in the Award
Agreement.  Notwithstanding the
foregoing, the rules of Section 6(e) also will apply to Stock
Appreciation Rights.

 

(f)            Payment of Stock Appreciation
Right Amount.  Upon exercise of a
Stock Appreciation Right, a Participant will be entitled to receive payment
from the Company in an amount determined by multiplying:

 

(i)            The difference between the Fair
Market Value of a Share on the date of exercise over the exercise price; times

 

(ii)           The number of Shares with respect to
which the Stock Appreciation Right is exercised.

 

At the discretion
of the Administrator, the payment upon Stock Appreciation Right exercise may be
in cash, in Shares of equivalent value, or in some combination thereof.

 

11

 

(g)           Administrator Discretion.  The Administrator, in its sole discretion,
may, after a Stock Appreciation Right is granted, extend the maximum term of a
Stock Appreciation Right or the post-termination exercisability period of a
Stock Appreciation Right provided, however, that such Stock Appreciation Right
shall terminate no later than following the expiration of ten (10) years
from the Grant Date.  Unless otherwise
determined by the Committee, any extension of the term or post-termination
exercisability period of a Stock Appreciation Right pursuant to this Section 7(g) shall
comply with Section 409A of the Code.

 

8.             Restricted Stock.

 

(a)           Grant of Restricted Stock.  Subject to the terms and provisions of the
Plan, the Administrator, at any time and from time to time, may grant Shares of
Restricted Stock to Service Providers in such amounts as the Administrator, in
its sole discretion, will determine.

 

(b)           Restricted Stock Agreement.  Each Award of Restricted Stock will be
evidenced by an Award Agreement that will specify the Period of Restriction,
the number of Shares granted, and such other terms and conditions as the
Administrator, in its sole discretion, will determine.  Notwithstanding the foregoing sentence,
during any Fiscal Year no Participant will receive more than an aggregate of
125,000 Shares of Restricted Stock; provided, however, that in connection with
a Participant’s initial service as an Employee, an Employee may be granted an
aggregate of up to an additional 200,000 Shares of Restricted Stock.  Unless the Administrator determines
otherwise, Shares of Restricted Stock will be held by the Company as escrow
agent until the restrictions on such Shares have lapsed.

 

(c)           Transferability.  Except as provided in this Section 8,
Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated until the end of the applicable Period of
Restriction.

 

(d)           Other Restrictions.  The Administrator, in its sole discretion,
may impose such other restrictions on Shares of Restricted Stock as it may deem
advisable or appropriate.

 

(e)           Removal of Restrictions.  Except as otherwise provided in this Section 8,
Shares of Restricted Stock covered by each Restricted Stock grant made under
the Plan will be released from escrow as soon as practicable after the last day
of the Period of Restriction.  The
Administrator, in its discretion, may accelerate the time at which any
restrictions will lapse or be removed.

 

(f)            Voting Rights.  During the Period of Restriction, Service
Providers holding Shares of Restricted Stock granted hereunder may exercise
full voting rights with respect to those Shares, unless the Administrator
determines otherwise.

 

(g)           Dividends and Other Distributions.  During the Period of Restriction, Service
Providers holding Shares of Restricted Stock will be entitled to receive all
dividends and other distributions paid with respect to such Shares unless
otherwise provided in the Award Agreement. 
If any such dividends or distributions are paid in Shares, the Shares
will be subject to the same restrictions on transferability and forfeitability
as the Shares of Restricted Stock with respect to which they were paid.

 

12

 

(h)           Return of Restricted Stock to
Company.  On the date set forth in
the Award Agreement, the Restricted Stock for which restrictions have not
lapsed will revert to the Company and again will become available for grant
under the Plan.

 

9.             Restricted Stock Units.

 

(a)           Grant.  Restricted Stock Units may be granted at any
time and from time to time as determined by the Administrator.  Each Restricted Stock Unit grant will be
evidenced by an Award Agreement that will specify such other terms and
conditions as the Administrator, in its sole discretion, will determine, including
all terms, conditions, and restrictions related to the grant, the number of
Restricted Stock Units and the form of payout, which, subject to Section 9(d),
may be left to the discretion of the Administrator.  Notwithstanding the anything to the contrary
in this subsection (a), during any Fiscal Year of the Company, no Participant
will receive more than an aggregate of 125,000 Restricted Stock Units;
provided, however, that in connection with a Participant’s initial service as
an Employee, an Employee may be granted an aggregate of up to an additional
200,000 Restricted Stock Units.

 

(b)           Vesting Criteria and Other Terms. 
The Administrator will set vesting criteria in its discretion, which,
depending on the extent to which the criteria are met, will determine the
number of Restricted Stock Units that will be paid out to the Participant.  After the grant of Restricted Stock Units,
the Administrator, in its sole discretion, may reduce or waive any restrictions
for such Restricted Stock Units.  Each
Award of Restricted Stock Units will be evidenced by an Award Agreement that
will specify the vesting criteria, and such other terms and conditions as the
Administrator, in its sole discretion, will determine.

 

(c)           Earning Restricted Stock Units.  Upon meeting the applicable vesting criteria,
the Participant will be entitled to receive a payout as specified in the Award
Agreement.  Notwithstanding the
foregoing, at any time after the grant of Restricted Stock Units, the Administrator,
in its sole discretion, may reduce or waive any vesting criteria that must be
met to receive a payout, provided that, unless the Administrator determines
otherwise, the payout of such accelerated Award shall be structured to comply
with Section 409A of the Code.

 

(d)           Form and Timing of Payment.  Payment of earned Restricted Stock Units will
be made as soon as practicable after the date(s) set forth in the Award
Agreement.  The Administrator, in its
sole discretion, may pay earned Restricted Stock Units in cash, Shares, or a
combination thereof.  Shares represented
by Restricted Stock Units that are fully paid in cash again will be available
for grant under the Plan.

 

(e)           Cancellation.  On the date set forth in the Award Agreement,
all unearned Restricted Stock Units will be forfeited to the Company.

 

10.           Performance Units and Performance
Shares.

 

(a)           Grant of Performance Units/Shares.  Performance Units and Performance Shares may
be granted to Service Providers at any time and from time to time, as will be
determined by the Administrator, in its sole discretion.  The Administrator will have complete
discretion in determining the number of Performance Units/Shares granted to
each Participant provided that during any Fiscal Year, no Participant will receive
more than 125,000 Performance Shares.

 

13

 

Notwithstanding the
foregoing limitation, in connection with a Participant’s initial service as an
Employee, an Employee may be granted up to an additional 200,000 Performance
Shares.

 

(b)           Value of Performance Units/Shares.  Each Performance Unit will have an initial
value that is established by the Administrator on or before the date of
grant.  Each Performance Share will have
an initial value equal to the Fair Market Value of a Share on the date of grant.

 

(c)           Performance Objectives and Other
Terms.  The Administrator will set
performance objectives or other vesting provisions (including, without
limitation, continued status as a Service Provider) in its discretion which,
depending on the extent to which they are met, will determine the number or
value of Performance Units/Shares that will be paid out to the
Participant.  The Administrator may set
performance objectives based upon the achievement of Company-wide, divisional,
or individual goals, or any other basis determined by the Administrator in its
discretion.  Each Award of Performance
Units/Shares will be evidenced by an Award Agreement that will specify the
Performance Period, and such other terms and conditions as the Administrator,
in its sole discretion, will determine.

 

(d)           Earning of Performance
Units/Shares.  After the applicable
Performance Period has ended, the holder of Performance Units/Shares will be
entitled to receive a payout of the number of Performance Units/Shares earned
by the Participant over the Performance Period, to be determined as a function
of the extent to which the corresponding performance objectives or other
vesting provisions have been achieved. 
After the grant of a Performance Unit/Share, the Administrator, in its
sole discretion, may reduce or waive any performance objectives or other
vesting provisions for such Performance Unit/Share, provided that, unless the
Administrator determines otherwise, the payout of such accelerated Award shall
be structured to comply with Section 409A of the Code.

 

(e)           Form and Timing of Payment of
Performance Units/Shares.  Payment of
earned Performance Units/Shares will be made as soon as practicable after the
expiration of the applicable Performance Period.  The Administrator, in its sole discretion,
may pay earned Performance Units/Shares in the form of cash, in Shares (which
have an aggregate Fair Market Value equal to the value of the earned
Performance Units/Shares at the close of the applicable Performance Period) or
in a combination thereof.

 

(f)            Cancellation of Performance
Units/Shares.  On the date set forth
in the Award Agreement, all unearned or unvested Performance Units/Shares will
be forfeited to the Company, and again will be available for grant under the
Plan.

 

11.           Performance Goals.  The granting and/or vesting of Awards of
Restricted Stock, Restricted Stock Units, Performance Shares and Performance
Units and other incentives under the Plan may be made subject to the attainment
of performance goals relating to one or more business criteria within the
meaning of Section 162(m) of the Code and may provide for a targeted
level or levels of achievement (“Performance Goals”) including one or more of
the following measures: (a) Annual Revenue, (b) Cash Collections, (c) Customer
Satisfaction MBOs, (d) Earnings Per Share, (e) Net Income, (f) New
Orders, (g) Operating Profit, (h) Pro Forma Net Income, (i) Return
on Designated Assets, (j) Return on Equity, (k) Return on Sales, and (l) Product
Shipments.  Any 

 

14

 

Performance Goals may be
used to measure the performance of the Company as a whole or a business unit of
the Company and may be measured relative to a peer group or index.  The Performance Goals may differ from Participant
to Participant and from Award to Award. 
Any criteria used may be (i) measured in absolute terms, (ii) compared
to another company or companies, (iii) measured against the performance of
the Company as a whole or a segment of the Company and/or (iv) measured on
a pre-tax or post-tax basis (if applicable). 
Prior to the Determination Date, the Administrator will determine
whether any significant element(s) will be included in or excluded from
the calculation of any Performance Goal with respect to any Participant.

 

12.           [Reserved]

 

13.           Leaves of Absence/Transfer Between
Locations.  Unless the Administrator
provides otherwise, vesting of Awards granted hereunder will be suspended
during any unpaid leave of absence.  A
Service Provider will not cease to be an Employee in the case of (i) any
leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company and its Affiliates.  For purposes of Incentive Stock Options, no
such leave may exceed ninety (90) days, unless reemployment upon expiration of
such leave is guaranteed by statute or contract.  If reemployment upon expiration of a leave of
absence approved by the Company is not so guaranteed, then three (3) months
following the ninety-first (91st) day of such leave any Incentive Stock Option
held by the Participant will cease to be treated as an Incentive Stock Option
and will be treated for tax purposes as a Nonstatutory Stock Option.

 

14.           Transferability of Awards.  Unless determined otherwise by the
Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Participant, only by the Participant. 
With the approval of the Administrator, a Participant may, in a manner
specified by the Administrator, (a) transfer an Award to a Participant’s
spouse or former spouse pursuant to a court-approved domestic relations order
which relates to the provision of child support, alimony payments or marital
property rights, and (b) transfer an Option by bona fide gift and not for
any consideration, to (i) a member or members of the Participant’s
immediate family, (ii) a trust established for the exclusive benefit of
the Participant and/or member(s) of the Participant’s immediate family, (iii) a
partnership, limited liability company of other entity whose only partners or
members are the Participant and/or member(s) of the Participant’s
immediate family, or (iv) a foundation in which the Participant and/or
member(s) of the Participant’s immediate family control the management of
the foundation’s assets.  For purposes of
this Section 14, “immediate family” shall mean the Participant’s spouse,
former spouse, children, grandchildren, parents, grandparents, siblings,
nieces, nephews, parents-in-law, sons-in-law, daughters-in-law,
brothers-in-law, sisters-in-law, including adoptive or step relationships and
any person sharing the Participant’s household (other than as a tenant or employee).

 

15.           Adjustments; Dissolution or
Liquidation; Merger or Change in Control.

 

(a)           Adjustments.  In the event that any dividend or other
distribution (whether in the form of cash, Shares, other securities, or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of Shares or other securities of the Company, or other change in the corporate
structure of the Company affecting the Shares occurs, the Administrator, in
order to prevent diminution or 

 

15

 

enlargement
of the benefits or potential benefits intended to be made available under the
Plan, may (in its sole discretion) adjust the number and class of Shares that
may be delivered under the Plan and/or the number, class, and price of Shares
covered by each outstanding Award, and the numerical Share limits set forth in
Sections 3, 6, 7, 8, 9 and 10.

 

(b)           Dissolution or Liquidation.  In the event of the proposed dissolution or
liquidation of the Company, the Administrator will notify each Participant as
soon as practicable prior to the effective date of such proposed
transaction.  To the extent it has not
been previously exercised, an Award will terminate immediately prior to the
consummation of such proposed action.

 

(c)           Change in Control.  In the event of a Change in Control, each
outstanding Award will be assumed or an equivalent option or right substituted
by the successor corporation or a Parent or Subsidiary of the successor
corporation (the “Successor Corporation”).  In the event that the Successor Corporation
refuses to assume or substitute for the Award, the Participant will fully vest
in and have the right to exercise all of his or her outstanding Options and
Stock Appreciation Rights, including Shares as to which such Awards would not
otherwise be vested or exercisable, all restrictions on Restricted Stock will
lapse, and, with respect to Restricted Stock Units, Performance Shares and
Performance Units, all Performance Goals or other vesting criteria will be
deemed achieved at target levels and all other terms and conditions met.  In addition, if the Successor Corporation
refuses to assume or substitute an Option or Stock Appreciation Right in the
event of a Change in Control, the Administrator will notify the Participant in
writing or electronically that the Option or Stock Appreciation Right will be
fully vested and exercisable for a period of time determined by the
Administrator in its sole discretion, and the Option or Stock Appreciation
Right will terminate upon the expiration of such period.

 

For the purposes
of this subsection (c), an Award will be considered assumed if, following the
Change in Control, the Award confers the right to purchase or receive, for each
Share subject to the Award immediately prior to the Change in Control, the
consideration (whether stock, cash, or other securities or property) or, in the
case of a Stock Appreciation Right upon the exercise of which the Administrator
determines to pay cash or a Performance Share or Performance Unit which the
Administrator can determine to pay in cash, the fair market value of the
consideration received in the merger or Change in Control by holders of Common
Stock for each Share held on the effective date of the transaction (and if
holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the Change in Control is not
solely common stock of the Successor Corporation, the Administrator may, with
the consent of the Successor Corporation, provide for the consideration to be
received upon the exercise of an Option or Stock Appreciation Right or upon the
payout of a Restricted Stock Unit, Performance Share or Performance Unit, for
each Share subject to such Award (or in the case of an Award settled in cash,
the number of implied shares determined by dividing the value of the Award by
the per share consideration received by holders of Common Stock in the Change
in Control), to be solely common stock of the Successor Corporation equal in
fair market value to the per share consideration received by holders of Common
Stock in the Change in Control.

 

Notwithstanding
anything in this Section 15(c) to the contrary, an Award that vests,
is earned or paid-out upon the satisfaction of one or more Performance Goals
will not be considered assumed if the Company or its successor modifies any of
such Performance Goals without the 

 

16

 

Participant’s
consent; provided, however, a modification to such Performance Goals only to
reflect the Successor Corporation’s post-Change in Control corporate structure
will not be deemed to invalidate an otherwise valid Award assumption.

 

16.           Tax Withholding

 

(a)           Withholding Requirements.  Prior to the delivery of any Shares or cash
pursuant to an Award (or exercise thereof), the Company will have the power and
the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, local, foreign or
other taxes required to be withheld with respect to such Award (or exercise
thereof).

 

(b)           Withholding Arrangements.  The Administrator, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may permit a
Participant to satisfy such tax withholding obligation, in whole or in part by
(without limitation) (a) paying cash, (b) electing to have the
Company withhold otherwise deliverable cash or Shares having a Fair Market
Value equal to the amount required to be withheld, (c) delivering to the
Company already-owned Shares having a Fair Market Value equal to the amount
required to be withheld, or (d) selling a sufficient number of
Shares otherwise deliverable to the Participant through such means as the
Administrator may determine in its sole discretion (whether through a broker or
otherwise) equal to the amount required to be withheld. 
The amount of the withholding requirement will be deemed to include any
amount which the Administrator agrees may be withheld at the time the election
is made, not to exceed the amount determined by using the maximum federal,
state or local marginal income tax rates applicable to the Participant with
respect to the Award on the date that the amount of tax to be withheld is to be
determined.  The Fair Market Value of the
Shares to be withheld or delivered will be determined as of the date that the
taxes are required to be withheld.

 

17.           No Effect on Employment or Service.  Neither the Plan nor any Award will confer
upon a Participant any right with respect to continuing the Participant’s
relationship as a Service Provider with the Company, nor will they interfere in
any way with the Participant’s right or the Company’s right to terminate such
relationship at any time, with or without cause, to the extent permitted by
Applicable Laws.

 

18.           Date of Grant.  The date of grant of an Award will be, for
all purposes, the date on which the Administrator makes the determination
granting such Award, or such other later date as is determined by the
Administrator.  Notice of the
determination will be provided to each Participant within a reasonable time
after the date of such grant.

 

19.           Term of Plan.  Subject to Section 23  of the Plan, the Plan will become effective upon its
adoption by the Board.  It will continue
in effect for a term of ten (10) years unless terminated earlier under Section 20  of the Plan.

 

20.           Amendment and Termination of the Plan.

 

(a)           Amendment and Termination.  The Administrator may at any time amend,
alter, suspend or terminate the Plan.

 

17

 

(b)           Stockholder Approval.  The Company will obtain stockholder approval
of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.

 

(c)           Effect of Amendment or Termination.  No amendment, alteration, suspension or
termination of the Plan will impair the rights of any Participant, unless
mutually agreed otherwise between the Participant and the Administrator, which
agreement must be in writing and signed by the Participant and the
Company.  Termination of the Plan will
not affect the Administrator’s ability to exercise the powers granted to it
hereunder with respect to Awards granted under the Plan prior to the date of
such termination.

 

21.           Conditions Upon Issuance of Shares.

 

(a)           Legal Compliance.  Shares will not be issued pursuant to the
exercise of an Award unless the exercise of such Award and the issuance and
delivery of such Shares will comply with Applicable Laws and will be further
subject to the approval of counsel for the Company with respect to such
compliance.

 

(b)           Investment Representations.  As a condition to the exercise of an Award,
the Company may require the person exercising such Award to represent and
warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute
such Shares if, in the opinion of counsel for the Company, such a
representation is required.

 

22.           Inability to Obtain Authority.  The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company’s counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, will relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite
authority will not have been obtained.

 

23.           Stockholder Approval.  The Plan will be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan
is adopted.  Such stockholder approval
will be obtained in the manner and to the degree required under Applicable
Laws.

 

18Exhibit 10.13

QUICKLOGIC CORPORATION

 

CHANGE OF CONTROL SEVERANCE AGREEMENT

 

This Change of Control
Severance Agreement (the “Agreement”) is made and entered into effective as of                     ,
200    (the “Effective Date”), by and between [Executive
Officer] (the “Employee”) and QuickLogic Corporation, a Delaware corporation
(the “Company”).  Certain capitalized
terms used in this Agreement are defined in Section 1 below.

 

R E C I T A L S

 

A.            It is expected that the Company from time to time will consider
the possibility of a Change of Control. 
The Board of Directors of the Company (the “Board”) recognizes that such
consideration can be a distraction to the Employee and can cause the Employee
to consider alternative employment opportunities.

 

B.            The Board believes that it is in the best interests of
the Company and its stockholders to provide the Employee with an incentive to
continue his employment and to maximize the value of the Company upon a Change
of Control for the benefit of its stockholders.

 

C.            In order to provide the Employee with enhanced financial
security and sufficient encouragement to remain with the Company
notwithstanding the possibility of a Change of Control, the Board believes that
it is imperative to provide the Employee with certain severance benefits upon
the Employee’s termination of employment following a Change of Control.

 

AGREEMENT

 

In consideration of the
mutual covenants herein contained and the continued employment of Employee by
the Company, the parties agree as follows:

 

1.             Definition of Terms.  The following terms referred to in this
Agreement shall have the following meanings:

 

(a)           Cause.  “Cause” shall mean (i) any act of
personal dishonesty taken by the Employee in connection with his
responsibilities as an employee which is intended to result in substantial
personal enrichment of the Employee, (ii) Employee’s conviction of a
felony which the Board reasonably believes has had or will have a material
detrimental effect on the Company’s reputation or business, (iii) a willful
act by the Employee which constitutes misconduct and is injurious to the
Company, or (iv) continued willful violations by the Employee of the
Employee’s obligations to the Company after there has been delivered to the
Employee a written demand for performance from the Company which describes the
basis for the Company’s belief that the Employee has not substantially
performed his duties, and a period of thirty (30) days following the date of
delivery of such written demand for the Employee to cure such violations.

 

 

(b)           Change of Control.  “Change of Control” shall mean the occurrence
of any of the following events:

 

(i)       the approval by stockholders of the
Company of a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than fifty percent (50%) of the total
voting power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation;

 

(ii)      the approval by the stockholders of the
Company of a plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially all of the
Company’s assets;

 

(iii)     any “person” (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended) becoming the “beneficial owner” (as defined in Rule 13d-3
under said Act), directly or indirectly, of securities of the Company
representing 50% or more of the total voting power represented by the Company’s
then outstanding voting securities; or

 

(iv)     a change in the composition of the Board,
as a result of which fewer than a majority of the directors are Incumbent
Directors.  “Incumbent Directors” shall
mean directors who either (A) are directors of the Company as of the date
hereof, or (B) are elected, or nominated for election, to the Board with
the affirmative votes of at least a majority of those directors whose election
or nomination was not in connection with any transactions described in
subsections (i), (ii), or (iii) or in connection with an actual or
threatened proxy contest relating to the election of directors of the Company.

 

(c)           Involuntary Termination.  “Involuntary Termination” shall mean (i) without
the Employee’s express written consent, a significant reduction of the Employee’s
duties, position or responsibilities relative to the Employee’s duties,
position or responsibilities in effect immediately prior to such reduction, or
the removal of the Employee from such position, duties and responsibilities,
unless the Employee is provided with comparable duties, position and
responsibilities; (ii) without the Employee’s express written consent, a
substantial reduction, without good business reasons, of the facilities and
perquisites (including office space and location) available to the Employee
immediately prior to such reduction; (iii) without the Employee’s express
written consent, a reduction by the Company of the Employee’s base or target
incentive cash compensation as in effect immediately prior to such reduction; (iv) without
the Employee’s express written consent, a material reduction by the Company in
the kind or level of employee benefits to which the Employee is entitled
immediately prior to such reduction with the result that the Employee’s overall
benefits package is significantly reduced; (v) without the Employee’s
express written consent, the relocation of the Employee to a facility or a
location more than fifty (50) miles from his current location; (vi) any
purported termination of the Employee by the Company which is not effected for
Cause or for which the grounds relied upon are not valid; or (vii) the
failure of the Company to obtain the assumption of this Agreement by any
successors contemplated in Section 6 below ; provided, however, that
such events shall not constitute grounds for an Involuntary Termination 

2

unless
the Employee has provided notice to the Company of the existence of the one or
more of the above conditions within 90 days of its initial existence and the
Company has been provided at least 30 days to remedy the condition.

 

(d)           Severance Benefits Period.  “Severance Benefits Period” shall mean a
period of twelve (12) months following the Termination Date.

 

(e)           Termination Date.  “Termination Date” shall mean the effective
date of any notice of termination delivered by one party to the other hereunder
(so long as such date coincides with or is subsequent to the delivery date of
such notice).

 

2.             Term of Agreement.  This Agreement shall terminate upon the date
that all obligations of the parties hereto under this Agreement have been
satisfied or, if earlier, on the date, prior to a Change of Control, Employee
is no longer employed by the Company.

 

3.             At-Will Employment.  The Company and the Employee acknowledge that
the Employee’s employment is and shall continue to be at-will, as defined under
applicable law.  If the Employee’s
employment terminates for any reason, the Employee shall not be entitled to any
payments, benefits, damages, awards or compensation other than as provided by
this Agreement, or as may otherwise be established under the Company’s then
existing employee benefit plans or policies at the time of termination.

 

4.             Severance Benefits.

 

(a)           Termination Following A Change of
Control.  If the Employee’s
employment with the Company terminates as a result of an Involuntary
Termination at any time three (3) months prior to, or twelve (12) months
after, a Change of Control, Employee shall be entitled to the following
severance benefits provided that Employee enters into and does not revoke a
general release of claims with the Company in substantially the form attached
hereto as Exhibit A within two and one-half months from the date of such
termination of employment:

 

(i)       Employee’s base salary for the Severance
Benefits Period as in effect as of the date of such termination (or if greater,
as in effect immediately prior to the Change of Control), less applicable
withholding, payable in a lump sum within thirty (30) days of the Involuntary
Termination;

 

(ii)      Employee’s incentive cash compensation
computed at 100% of target for the Severance Benefits Period as in effect as of
the date of such termination (or if greater, as in effect immediately prior to
the Change of Control), less applicable withholding, payable in a lump sum
within thirty (30) days of the Involuntary Termination;

 

(iii)     One hundred percent (100%) of any incentive
cash compensation or bonus declared prior to the date of any such termination
for the Employee but not yet paid, if any;

 

(iv)     All stock options, restricted stock units,
restricted stock and other equity compensation awards granted by the Company to
the Employee prior to the Change of Control shall become fully vested and
exercisable as of the date of the termination and, with respect 

 

3

 

to stock options, will
remain exercisable for the lesser of three (3) months following the Termination
Date or the original full stock option term, notwithstanding any shorter period
stated in the stock option agreements and;

 

(v)      If Employee elects to continue his benefits
under the Company’s group health, dental, and/or vision plans through COBRA,
the Company shall reimburse the cost of COBRA continuation coverage for
Employee (and, where applicable, Employee’s dependents) over the Severance
Benefit Period (the “COBRA Continuation Payments”).  Employee will continue to pay the same
portion of the cost of such benefits as he currently pays as of the last day of
his employment with the Company, or, if lesser, the same portion of the cost of
such benefits as he paid immediately prior to the Change of Control.  The COBRA Continuation Payments will cease,
and the Company will have no further obligations with respect to the payment of
any premiums for continuation coverage to Employee, as of the earlier of (a) the
conclusion of the Severance Benefit Period; or (b) the cessation of
Employee’s COBRA eligibility.

 

(b)           Termination Apart from a Change of
Control.  If the Employee’s
employment with the Company terminates other than as a result of an Involuntary
Termination at any time three (3) months prior or twelve (12) months
following a Change of Control, then the Employee shall not be entitled to
receive severance or other benefits hereunder, but may be eligible for those
benefits (if any) as may then be established under the Company’s then existing
severance and benefits plans and policies at the time of such termination.

 

(c)           Accrued Wages and Vacation;
Expenses.  Without regard to the
reason for, or the timing of, Employee’s termination of employment:  (i) the Company shall pay the Employee
any unpaid base salary and incentive cash compensation due for periods prior to
the Termination Date; (ii) the Company shall pay the Employee all of the
Employee’s accrued and unused vacation through the Termination Date; and (iii) following
submission of proper expense reports by the Employee, the Company shall
reimburse the Employee for all expenses reasonably and necessarily incurred by
the Employee in connection with the business of the Company prior to the
Termination Date.  These payments shall
be made promptly upon termination and within the period of time mandated by
law.

 

(d)           Internal Revenue Code Section 409A.
Notwithstanding any other provision of this Agreement, if the Employee is a “specified
employee” under Internal Revenue Code Section 409A and a delay in making
any payment or providing any benefit under this Agreement is required by Code Section 409A
and any Treasury Regulations, and IRS guidance thereunder, or necessary in the
good faith judgment of the Company, to avoid the Employee incurring additional
tax under Section 409A, such payments or benefits shall not be paid or
provided until the end of six (6) months following the date of the
Employee’s separation from service in accordance with Code Section 409A.

 

5.             Limitation on Payments.  In the event that the severance and other
benefits provided for in this Agreement or otherwise payable to the Employee (i) constitute
“parachute payments” within the meaning of Section 280G of the Code, and (ii) would
be subject to the excise tax imposed by Section 4999 of the Code (the “Excise
Tax”), then Employee’s benefits under this Agreement shall be either delivered
in full, or delivered as to such lesser extent which would result in no portion
of such benefits being subject to the Excise Tax, whichever of the foregoing
amounts, taking into 

 

4

 

account the applicable
federal, state and local income taxes and the Excise Tax, results in the
receipt by Employee on an after-tax basis, of the greatest amount of benefits,
notwithstanding that all or some portion of such benefits may be taxable under Section 4999
of the Code.

 

Unless the Company and
the Employee otherwise agree in writing, any determination required under this Section shall
be made in writing by a “Big Four” national accounting firm selected by the
Company (the “Accountants”), whose determination shall be conclusive and
binding upon the Employee and the Company for all purposes.  For purposes of making the calculations
required by this Section, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of Section 280G and 4999
of the Code.  The Company and the
Employee shall furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make a determination under this
Section.  The Company shall bear all costs
the Accountants may reasonably incur in connection with any calculations
contemplated by this Section.

 

6.             Successors.

 

(a)           Company’s Successors.  Any successor to the Company (whether direct
or indirect and whether by purchase, lease, merger, consolidation, liquidation
or otherwise) to all or substantially all of the Company’s business and/or
assets shall assume the Company’s obligations under this Agreement and agree
expressly to perform the Company’s obligations under this Agreement in the same
manner and to the same extent as the Company would be required to perform such
obligations in the absence of a succession. 
For all purposes under this Agreement, the term “Company” shall include
any successor to the Company’s business and/or assets which executes and
delivers the assumption agreement described in this subsection (a) or
which becomes bound by the terms of this Agreement by operation of law.

 

(b)           Employee’s Successors.  Without the written consent of the Company,
Employee shall not assign or transfer this Agreement or any right or obligation
under this Agreement to any other person or entity.  Notwithstanding the foregoing, the terms of
this Agreement and all rights of Employee hereunder shall inure to the benefit
of, and be enforceable by, Employee’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.

 

7.             Notices.

 

(a)           General.  Notices and all other communications
contemplated by this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or when mailed by U.S. registered or
certified mail, return receipt requested and postage prepaid.  In the case of the Employee, mailed notices
shall be addressed to him at the home address which he most recently
communicated to the Company in writing. 
In the case of the Company, mailed notices shall be addressed to its
corporate headquarters, and all notices shall be directed to the attention of
its Secretary.

 

(b)           Notice of Termination.  Any termination or resignation of the
Employee shall be communicated by a notice of termination to the other party
hereto given in accordance with this 

 

5

 

Section.  Such
notice shall indicate the specific termination provision in this Agreement
relied upon, shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination under the provision so indicated,
and shall specify the Termination Date (which shall be not more than 30 days
after the giving of such notice).  The
failure by the Employee to include in the notice any fact or circumstance which
contributes to a showing of Involuntary Termination shall not waive any right
of the Employee hereunder or preclude the Employee from asserting such fact or
circumstance in enforcing his rights hereunder.

 

8.             Arbitration.

 

(a)           Any dispute or controversy arising
out of, relating to, or in connection with this Agreement, or the
interpretation, validity, construction, performance, breach, or termination
thereof, shall be settled by binding arbitration to be held in Santa Clara
County, California, in accordance with the National Rules for the
Resolution of Employment Disputes then in effect of the American Arbitration
Association (the “Rules”).  The
arbitrator may grant injunctions or other relief in such dispute or
controversy.  The decision of the
arbitrator shall be final, conclusive and binding on the parties to the
arbitration.  Judgment may be entered on
the arbitrator’s decision in any court having jurisdiction.

 

(b)           The arbitrator(s) shall apply
California law to the merits of any dispute or claim, without reference to
conflicts of law rules.  The arbitration
proceedings shall be governed by federal arbitration law and by the Rules, without
reference to state arbitration law. 
Employee hereby consents to the personal jurisdiction of the state and
federal courts located in California for any action or proceeding arising from
or relating to this Agreement or relating to any arbitration in which the
parties are participants.

 

(c)           Employee understands that nothing in
this Section modifies Employee’s at-will employment status.  Either Employee or the Company can terminate
the employment relationship at any time, with or without Cause.

 

(d)           EMPLOYEE HAS READ AND UNDERSTANDS
THIS SECTION, WHICH DISCUSSES ARBITRATION. 
EMPLOYEE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT OF, RELATING
TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY,
CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING
ARBITRATION, CONSTITUTES A WAIVER OF EMPLOYEE’S RIGHT TO A JURY TRIAL AND
RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE
EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING
CLAIMS:

 

(i)       ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE
OF EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE
COVENANT OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR
INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL
MISREPRESENTATION; NEGLIGENT OR INTENTIONAL 

 

6

 

INTERFERENCE WITH
CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.

 

(ii)      ANY AND ALL CLAIMS FOR VIOLATION OF ANY
FEDERAL, STATE OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO,
TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991,
THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH
DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR
EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 201, et  seq;

 

(iii)     ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER
LAWS AND REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

 

9.             Miscellaneous Provisions.

 

(a)           No Duty to Mitigate.  The Employee shall not be required to
mitigate the amount of any payment contemplated by this Agreement, nor shall
any such payment be reduced by any earnings that the Employee may receive from
any other source.

 

(b)           Waiver.  No provision of this Agreement may be
modified, waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by the Employee and by an authorized officer of
the Company (other than the Employee). 
No waiver by either party of any breach of, or of compliance with, any
condition or provision of this Agreement by the other party shall be considered
a waiver of any other condition or provision or of the same condition or
provision at another time.

 

(c)           Integration.  This Agreement and any outstanding equity
award agreements referenced herein represent the entire agreement and
understanding between the parties as to the subject matter herein and supersede
all prior or contemporaneous agreements, whether written or oral, with respect
to this Agreement and any equity award agreement.

 

(d)           Choice of Law.  The validity, interpretation, construction
and performance of this Agreement shall be governed by the internal substantive
laws, but not the conflicts of law rules, of the State of California.

 

(e)           Severability.  The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.

 

(f)            Employment Taxes.  All payments made pursuant to this Agreement
shall be subject to withholding of applicable income and employment taxes.

 

(g)           Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.

 

7

 

IN WITNESS WHEREOF, each
of the parties has executed this Agreement, in the case of the Company by its
duly authorized officer, as of the day and year first above written.

 

	
  COMPANY:

  	
  QUICKLOGIC CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  EMPLOYEE:

  	
   

  
	
   

  	
   

  
	
   

  	
  [Executive Officer]

  
				

 

8

 

EXHIBIT A

 

SETTLEMENT AGREEMENT AND RELEASE

 

This Settlement Agreement
and Release (“Agreement”) is made by and between QuickLogic Corporation (the “Company”),
and [EMPLOYEE] (“Employee”).

 

WHEREAS, Employee was
employed by the Company;

 

WHEREAS, the Company and
Employee have entered into a Change of Control Severance Agreement (the “Severance
Agreement”);

 

NOW THEREFORE, in
consideration of the mutual promises made herein, the Company and Employee
(collectively referred to as “the Parties”) hereby agree as follows:

 

1.             Termination.  Employee’s employment from the Company
terminated on                                         .

 

2.             Consideration.  The Company agrees to pay Employee the
severance benefits set forth in Section 4 of the Severance Agreement under
the terms and conditions of the Severance Agreement.

 

3.             Confidential Information.  Employee shall continue to maintain the
confidentiality of all confidential and proprietary information of the Company
and shall continue to comply with the terms and conditions of the
Confidentiality Agreement between Employee and the Company.  Employee shall return all Company property
and confidential and proprietary information in his possession to the Company
on the Effective Date of this Agreement.

 

4.             Payment of Salary.  Employee acknowledges and represents that the
Company has paid all salary, wages, bonuses, accrued vacation, commissions and
any and all other benefits due to Employee.

 

5.             Release of Claims.  Employee agrees that the foregoing
consideration represents settlement in full of all outstanding obligations owed
to Employee by the Company.  Employee, on
behalf of himself and his respective heirs, family members, executors and
assigns, hereby fully and forever releases the Company and its past, present
and future officers, agents, directors, employees, investors, shareholders,
administrators, affiliates, divisions, subsidiaries, parents, predecessor and
successor corporations, and assigns, from, and agrees not to sue or otherwise
institute or cause to be instituted any legal or administrative proceedings
concerning any claim, duty, obligation or cause of action relating to any
matters of any kind, whether presently known or unknown, suspected or
unsuspected, that he may possess arising from any omissions, acts or facts that
have occurred up until and including the Effective Date of this Agreement
including, without limitation,

 

a.             any and all claims relating to or
arising from Employee’s employment relationship with the Company and the
termination of that relationship;

 

A-1

 

b.             any and all claims relating to, or
arising from, Employee’s right to vest in equity awards, right to purchase or
actual purchase of shares of stock of the Company, including, without
limitation, any claims for fraud, misrepresentation, breach of fiduciary duty,
breach of duty under applicable state corporate law, and securities fraud under
any state or federal law;

 

c.             any and all claims for wrongful
discharge of employment; termination in violation of public policy;
discrimination; breach of contract, both express and implied; breach of a
covenant of good faith and fair dealing, both express and implied; promissory
estoppel; negligent or intentional infliction of emotional distress; negligent
or intentional misrepresentation; negligent or intentional interference with
contract or prospective economic advantage; unfair business practices;
defamation; libel; slander; negligence; personal injury; assault; battery;
invasion of privacy; false imprisonment; and conversion;

 

d.             any and all claims for violation of
any federal, state or municipal statute, including, but not limited to,
Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991,
the Age Discrimination in Employment Act of 1967, the Americans with
Disabilities Act of 1990, the Fair Labor Standards Act, the Employee Retirement
Income Security Act of 1974, the Worker Adjustment and Retraining Notification
Act, the California Fair Employment and Housing Act, and Labor Code
section 201, et  seq.
and section 970, et  seq. and all amendments to each such Act as well as the regulations
issued thereunder;

 

e.             any and all claims for violation of
the federal, or any state, constitution;

 

f.              any and all claims arising out of
any other laws and regulations relating to employment or employment
discrimination;  and

 

g.             any and all claims for attorneys’
fees and costs.

 

6.             Employee agrees that the release
set forth in this section shall be and remain in effect in all respects as a
complete general release as to the matters released.  This release does not extend to any
obligations incurred under this Agreement. 
Employee acknowledges and agrees that any breach of this paragraph shall
constitute a material breach of the Agreement and in the case of a breach by
Employee, shall entitle the Company immediately to recover the monetary
consideration discussed in paragraph two (2) above.  Employee shall also be responsible to the
Company for all costs, attorneys’ fees and any and all damages incurred by the
Company (a) enforcing the obligation, including the bringing of any suit
to recover the monetary consideration, and (b) defending against a claim
or suit brought or pursued by Employee in violation of this provision.

 

7.             Acknowledgment of Waiver of
Claims under ADEA.  Employee
acknowledges that he is waiving and releasing any rights he may have under the
Age Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and
release is knowing and voluntary. 
Employee and the Company agree that this waiver and release does not
apply to any rights or claims that may arise under the ADEA after the Effective
Date of this Agreement.  Employee
acknowledges that the consideration given for this waiver and release Agreement
is in addition to anything of value to which Employee was already entitled.  Employee further acknowledges that he has
been advised by this writing that (a) he should consult with an attorney prior
to executing this Agreement; (b) he has 

 

A-2

 

twenty-one (21) days
within which to consider this Agreement; (c) he has seven (7) days following
the execution of this Agreement by the parties to revoke the Agreement; and (d) this
Agreement shall not be effective until the revocation period has expired.  Any revocation should be in writing and
delivered to the Secretary of QuickLogic Corporation at 1277 Orleans Drive,
Sunnyvale, CA 94089 by close of business on the seventh day from the date that
Employee signs this Agreement.

 

8.             Civil Code Section 1542.  Employee represents that he is not aware of
any claims against the Company other than the claims that are released by this
Agreement.  Employee acknowledges that he
has been advised by legal counsel and is familiar with the provisions of
California Civil Code Section 1542, which provides as follows:

 

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

 

9.             Employee, being aware of said code
section, agrees to expressly waive any rights he may have thereunder, as well
as under any other statute or common law principles of similar effect.

 

10.           No Pending or Future Lawsuits.  Employee represents that he has no lawsuits,
claims, or actions pending in his name, or on behalf of any other person or
entity, against the Company or any other person or entity referred to
herein.  Employee also represents that he
does not intend to bring any claims on his own behalf or on behalf of any other
person or entity against the Company or any other person or entity referred to
herein.

 

11.           Application for Employment.  Employee understands and agrees that, as a
condition of this Agreement, he shall not be entitled to any employment with
the Company, its subsidiaries, or any successor, and he hereby waives any
right, or alleged right, of employment or re-employment with the Company.

 

12.           Confidentiality.  Employee agrees to use his best efforts to
maintain in confidence the existence of this Agreement, the contents and terms
of this Agreement, and the consideration for this Agreement (hereinafter
collectively referred to as “Settlement Information”).  Employee agrees to take every reasonable
precaution to prevent disclosure of any Settlement Information to third
parties, and agrees that there will be no publicity, directly or indirectly,
concerning any Settlement Information. 
Employee agrees to take every precaution to disclose Settlement
Information only to those attorneys, accountants, governmental entities, and
family members who have a reasonable need to know of such Settlement
Information.

 

13.           No Cooperation.  Employee agrees he will not act in any manner
that might damage the business of the Company. 
Employee agrees that he will not counsel or assist any attorneys or
their clients in the presentation or prosecution of any disputes, differences,
grievances, claims, charges, or complaints by any third party against the
Company and/or any officer, director, employee, agent, representative,
shareholder or attorney of the Company, unless under a subpoena or other court
order to do so.

 

A-3

 

14.           Non-Disparagement.  Employee agrees to refrain from any
defamation, libel or slander of the Company and its respective officers,
directors, employees, investors, shareholders, administrators, affiliates,
divisions, subsidiaries, predecessor and successor corporations, and assigns or
tortious interference with the contracts and relationships of the Company and
its respective officers, directors, employees, investors, shareholders,
administrators, affiliates, divisions, subsidiaries, predecessor and successor
corporations, and assigns.

 

15.           No Admission of Liability.  Employee understands and acknowledges that
this Agreement constitutes a compromise and settlement of disputed claims.  No action taken by the Company, either
previously or in connection with this Agreement shall be deemed or construed to
be (a) an admission of the truth or falsity of any claims heretofore made
or (b) an acknowledgment or admission by the Company of any fault or
liability whatsoever to the Employee or to any third party.

 

16.           Costs.  The Parties shall each bear their own costs,
expert fees, attorneys’ fees and other fees incurred in connection with this
Agreement.

 

17.           Arbitration.  The Parties agree that any and all disputes
arising out of the terms of this Agreement, their interpretation, and any of
the matters herein released, including any potential claims of harassment,
discrimination or wrongful termination shall be subject to binding arbitration,
to the extent permitted by law, in Santa Clara County, California, before the
American Arbitration Association under its National Rules for the
Resolution of Employment Disputes.  Employee agrees and hereby waives his right to jury trial as to matters
arising out of the terms of this Agreement and any matters herein released to
the extent permitted by law. 
The Parties agree that the prevailing party in any arbitration shall be
entitled to injunctive relief in any court of competent jurisdiction to enforce
the arbitration award.

 

18.           Authority.  Employee represents and warrants that [he/she] has the capacity to act on [his/her]
own behalf and on behalf of all who might claim through [him/her]
to bind them to the terms and conditions of this Agreement.

 

19.           No Representations.  Employee represents that he has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement.  Neither party has relied upon any representations
or statements made by the other party hereto which are not specifically set
forth in this Agreement.

 

20.           Severability.  In the event that any provision hereof
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.

 

21.           Entire Agreement.  This Agreement, the Change of Control
Severance Agreement, the equity award agreements and the Confidentiality
Agreement represent the entire agreement and understanding between the Company
and Employee concerning Employee’s separation from the Company, and supersede
and replace any and all prior agreements and understandings concerning Employee’s
relationship with the Company and his compensation by the Company.

 

A-4

 

22.           No Oral Modification.  This Agreement may only be amended in writing
signed by Employee and the President of the Company.

 

23.           Governing Law.  This Agreement shall be governed by the
internal substantive laws, but not the choice of law rules, of the State of
California.

 

24.           Effective Date.  This Agreement is effective eight (8) days
after it has been signed by both Parties.

 

25.           Counterparts.  This Agreement may be executed in
counterparts, and each counterpart shall have the same force and effect as an
original and shall constitute an effective, binding agreement on the part of
each of the undersigned.

 

26.           Voluntary Execution of Agreement.  This Agreement is executed voluntarily and
without any duress or undue influence on the part or behalf of the Parties
hereto, with the full intent of releasing all claims.  The Parties acknowledge that:

 

a.             They have read this Agreement;

 

b.             They have been represented in the
preparation, negotiation, and execution of this Agreement by legal counsel of
their own choice or that they have voluntarily declined to seek such counsel;

 

c.             They understand the terms and
consequences of this Agreement and of the releases it contains; and

 

d.             They are fully aware of the legal
and binding effect of this Agreement.

 

IN WITNESS WHEREOF, the
Parties have executed this Agreement on the respective dates set forth below.

 

	
   

  	
  [THE COMPANY]

  
	
   

  	
   

  
	
  Dated: [DATE]

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  [EMPLOYEE NAME], an individual

  
	
   

  	
   

  
	
  Dated: [DATE]

  	
   

  

 

A-5

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