Document:

Exhibit

Exhibit 10.5

TRANSITION AGREEMENT AND RELEASE
This Separation Agreement and Release (“Agreement”) is made by and between Mark F. Anderson (“Employee”) and Palo Alto Networks, Inc. (the “Company”) (collectively referred to as the “Parties” or individually referred to as a “Party”).
RECITALS
WHEREAS, Employee was employed at-will by the Company;
WHEREAS, Employee signed an Employee Invention Assignment and Confidentiality Agreement with the Company (the “Confidentiality Agreement”) and a Directors and Officers Indemnification Agreement (“D&O Indemnification Agreement”);
WHEREAS, the Company and Employee have entered into various restricted stock and restricted stock unit award agreements (collectively the “Stock Agreements”) covering Employee equity awards (the “Equity Awards”);
WHEREAS, Employee resigned from employment with the Company effective October 31, 2018 and will seamlessly and without interruption continue as an advisor under an Advisor Agreement with the Company, attached hereto as Exhibit A (the “Advisor Agreement”) until May 1, 2019, or such earlier date the Advisor Agreement is terminated as set forth therein (the “Separation Date”); and
WHEREAS, pursuant to the Advisor Agreement, Employee is entitled to receive certain cash compensation and continued vesting of Equity Awards under the Stock Agreements;    
WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that the Employee may have against the Company and any of the Releasees as defined below, including, but not limited to, any and all claims arising out of or in any way related to Employee’s employment with or separation from the Company.
NOW, THEREFORE, in consideration of the mutual promises made herein, the Company and Employee hereby agree as follows:
COVENANTS
1.Employee Transition & Consideration.
		
	a.
	October 31, 2018 will be the last day of employment with the Company (the “Employment End Date”). Effective immediately following the Employment End Date, Employee will seamlessly and without interruption continue with the Company in the role of Advisor. The Advisor Agreement sets forth the terms of the advisory service.

		
	b.
	Subject to his execution and non-revocation of this Agreement, and to his compliance with the terms and conditions of the Advisor Agreement and this Agreement, the Company will provide Employee with the compensation set forth in the Advisor Agreement. Employee acknowledges that without this 

Agreement, he is otherwise not entitled to continue services and receive the Equity Vesting as set forth in the Advisor Agreement.
		
	c.
	Employee’s participation in the Company’s benefit plans will cease as of the Employment End Date, provided Employee may election continuation coverage under COBRA. 

		
	d.
	Upon the Separation Date, Employee agrees to sign the Supplemental Release Agreement, attached hereto as Exhibit B.

2.Payment of Salary and Receipt of All Benefits.  Employee acknowledges and represents that, other than the consideration set forth in this Agreement, the Company has paid or provided all salary, wages, bonuses, accrued vacation/paid time off, leave, housing allowances, relocation costs, interest, severance, outplacement costs, fees, reimbursable expenses, commissions, stock, stock options, vesting, and any and all other benefits and compensation due to Employee.  Employee further acknowledges and represents that he has received any leave to which he was entitled or which he requested, if any, under the California Family Rights Act and/or the Family Medical Leave Act, or any other applicable law or requirement, and that he did not sustain any workplace injury, during his employment with the Company.
3.Release of Claims.  Employee agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to Employee by the Company and its current and former officers, directors, employees, agents, investors, attorneys, shareholders, administrators, affiliates, benefit plans, plan administrators, professional employer organization or co-employer,  insurers, trustees, divisions, subsidiaries, and predecessor and successor corporations and assigns (collectively, the “Releasees”) arising out of or in any way connected with Employee's employment relationship with, or the  termination of Employee's employment with the Company.  Employee, on his own behalf and on behalf of his respective heirs, family members, executors, agents, and assigns, hereby and forever releases the Releasees from, and agrees not to sue concerning, or in any manner to institute, prosecute, or pursue, any claim, complaint, charge, duty, obligation, demand, or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Employee may possess against any of the Releasees arising from any omissions, acts, facts, or damages 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;
b.    any and all claims relating to, or arising from, Employee’s right to purchase (except Employee’s right to purchase or acquire Equity Awards as provided in this Agreement and the Advisor Agreement), 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; harassment; retaliation; breach of contract, both express and implied; breach of covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; fraud; negligent or intentional 

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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; conversion; and disability benefits;
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 Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the Equal Pay Act; the Fair Labor Standards Act, except as prohibited by law; the Fair Credit Reporting Act; the Age Discrimination in Employment Act of 1967; the Older Workers Benefit Protection Act; the Employee Retirement Income Security Act of 1974; the Worker Adjustment and Retraining Notification Act; the Family and Medical Leave Act, except as prohibited by law; the Immigration Reform and Control Act, the National Labor Relations Act, the Sarbanes-Oxley Act of 2002; the Uniformed Services Employment and Reemployment Rights Act; the California Family Rights Act; the California Labor Code, except as prohibited by law; the California Workers’ Compensation Act, except as prohibited by law; and the California Fair Employment and Housing Act;
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;
g.    any claim for any loss, cost, damage, or expense arising out of any dispute over the non-withholding or other tax treatment of any of the proceeds received by Employee as a result of this Agreement; and
h.    any and all claims for attorneys’ fees and costs.
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, nor any rights to indemnification set forth in the Company’s Certificate of Incorporation, Bylaws, the D&O Indemnification Agreement or the Delaware General Corporation Law.  This release does not release claims that cannot be released as a matter of law, including, but not limited to, any Protected Activity (as defined below).  This release of claims does not apply to any indemnification rights owed to Employee by the Company pursuant to any contract or statute (including, without limitation, California Labor Code Section 2802), or under any common law.
4.Acknowledgment of Waiver of Claims under ADEA.  Employee understands and 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 understands and agrees 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 understands and acknowledges that the consideration given for this waiver and release is in addition to anything of value to which Employee was already entitled.  Employee further understands and 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 twenty-one (21) days within which to consider this Agreement; (c) he  has seven (7) days following his execution of this Agreement to revoke this Agreement; (d) this Agreement shall not be effective until after the revocation period has expired; and (e) nothing in this Agreement prevents or precludes Employee from challenging or seeking a determination in good faith of the 

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validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties, or costs for doing so, unless specifically authorized by federal law.  In the event Employee signs this Agreement and returns it to the Company in less than the 21-day period identified above, Employee hereby acknowledges that he has freely and voluntarily chosen to waive the time period allotted for considering this Agreement. Employee acknowledges and understands that revocation must be accomplished by a written notification to the person executing this Agreement on the Company’s behalf that is received prior to the Effective Date. The Parties agree that changes, whether material or immaterial, do not restart the running of the 21-day period.
5.California Civil Code Section 1542.  Employee acknowledges that he has been advised to consult with legal counsel and is familiar with the provisions of California Civil Code Section 1542, a statute that otherwise prohibits the release of unknown claims, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
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.
6.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 of the other Releasees.  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 of the other Releasees.
7.Application for Employment.  Employee understands and agrees that, as a condition of this Agreement, Employee shall not be entitled to any employment with the Company, and Employee hereby waives any right, or alleged right, of employment or re-employment with the Company.  Employee further agrees not to apply for employment with the Company.
8.Trade Secrets and Confidential Information/Company Property.  Employee reaffirms and agrees to observe and abide by the terms of the Confidentiality Agreement, specifically including the provisions therein regarding nondisclosure of the Company’s trade secrets and confidential and proprietary information, and non-solicitation of Company employees.  Employee’s signature below constitutes his certification under penalty of perjury that he has returned all documents and other items provided to Employee by the Company (with the exception of a copy of any applicable Employee Handbook and personnel documents specifically relating to Employee), developed or obtained by Employee in connection with his employment with the Company, or otherwise belonging to the Company.
9.No Cooperation.  Subject to Section 27 governing Protected Activity, Employee agrees that he will not knowingly encourage, 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 any of the Releasees, unless under a subpoena or other court order to do so or as related directly to the ADEA waiver in this Agreement.  Employee agrees both to immediately notify the Company upon receipt of any such subpoena or court order, and to furnish, within three (3) business 

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days of its receipt, a copy of such subpoena or other court order.  If approached by anyone for counsel or assistance in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints against any of the Releasees, Employee shall state no more than that he cannot provide counsel or assistance.
10.Non-Disparagement.  Employee agrees to refrain from any disparagement, defamation, libel, or slander of any of the Releasees, and agrees to refrain from any tortious interference with the contracts and relationships of any of the Releasees.  Employee shall direct any inquiries by potential future employers to the Company’s human resources department, which shall use its best efforts to provide only the Employee’s last position and dates of employment.  The Company agrees that it will refrain from any disparagement, defamation, libel, or slander of Employee,  Employee understands and acknowledges that the Company’s obligations under this Section 10 apply only to its current officers and directors (as of the date hereof) and only for so long as they serve in such capacity at the Company.
11.Breach.  In addition to the Attorneys’ Fees Section below, Employee acknowledges and agrees that any material breach of this Agreement, unless such breach constitutes a legal action by Employee challenging or seeking a determination in good faith of the validity of the waiver herein under the ADEA, or of any provision of the Confidentiality Agreement shall entitle the Company immediately to recover and/or cease providing the consideration provided to Employee under this Agreement, except as provided by law. Except as provided by law, Employee shall also be responsible to the Company for all costs, attorneys’ fees, and any and all damages incurred by the Company in (a) enforcing Employee’s obligations under this Agreement or the Confidentiality Agreement, including the bringing of any action to recover the consideration, and (b) defending against a claim or suit brought or pursued by Employee in violation of the terms of this Agreement.
12.No Admission of Liability.  Employee understands and acknowledges that this Agreement constitutes a compromise and settlement of any and all actual or potential disputed claims by Employee.  No action taken by the Company hereto, 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 actual or potential claims or (b) an acknowledgment or admission by the Company of any fault or liability whatsoever to Employee or to any third party.
13.Non-Solicitation.  Employee agrees that through December 31, 2019, Employee shall not directly or indirectly solicit any of the Company’s employees to leave their employment at the Company.
14.Costs.  The Parties shall each bear their own costs, attorneys’ fees, and other fees incurred in connection with the preparation of this Agreement.
15.ARBITRATION.  EXCEPT AS PROHIBITED BY LAW, THE PARTIES AGREE THAT ANY AND ALL DISPUTES ARISING OUT OF THE TERMS OF THIS AGREEMENT, THEIR INTERPRETATION, EMPLOYEE’S EMPLOYMENT WITH THE COMPANY OR THE TERMS THEREOF, OR ANY OF THE MATTERS HEREIN RELEASED, SHALL BE SUBJECT TO BINDING ARBITRATION UNDER THE FEDERAL ARBITRATION ACT (THE “FAA”).  THE FAA’S SUBSTANTIVE AND PROCEDURAL RULES SHALL GOVERN AND APPLY TO THIS ARBITRATION AGREEMENT WITH FULL FORCE AND EFFECT, AND ANY STATE COURT OF COMPETENT JURISDICTION MAY STAY PROCEEDINGS PENDING ARBITRATION OR 

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COMPEL ARBITRATION IN THE SAME MANNER AS A FEDERAL COURT UNDER THE FAA. EMPLOYEE AGREES THAT, TO THE FULLEST EXTENT PERMITTED BY LAW, EMPLOYEE MAY BRING ANY SUCH ARBITRATION PROCEEDING ONLY IN EMPLOYEE’S INDIVIDUAL CAPACITY. ANY ARBITRATION WILL OCCUR IN SANTA CLARA COUNTY, CALIFORNIA, BEFORE JAMS, PURSUANT TO ITS EMPLOYMENT ARBITRATION RULES & PROCEDURES (“JAMS RULES”), EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION. THE PARTIES AGREE THAT THE ARBITRATOR SHALL HAVE THE POWER TO DECIDE ANY MOTIONS BROUGHT BY ANY PARTY TO THE ARBITRATION, INCLUDING MOTIONS FOR SUMMARY JUDGMENT AND/OR ADJUDICATION, AND MOTIONS TO DISMISS AND DEMURRERS, APPLYING THE STANDARDS SET FORTH UNDER THE CALIFORNIA CODE OF CIVIL PROCEDURE. THE PARTIES AGREE THAT THE ARBITRATOR SHALL ISSUE A WRITTEN DECISION ON THE MERITS. THE PARTIES ALSO AGREE THAT THE ARBITRATOR SHALL HAVE THE POWER TO AWARD ANY REMEDIES AVAILABLE UNDER APPLICABLE LAW, AND THAT THE ARBITRATOR MAY AWARD ATTORNEYS’ FEES AND COSTS TO THE PREVAILING PARTY, WHERE PERMITTED BY APPLICABLE LAW.  THE ARBITRATOR MAY GRANT INJUNCTIONS AND OTHER RELIEF IN SUCH DISPUTES. THE DECISION OF THE ARBITRATOR SHALL BE FINAL, CONCLUSIVE, AND BINDING ON THE PARTIES TO THE ARBITRATION. 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. EMPLOYEE UNDERSTANDS THAT THE PARTIES TO THE ARBITRATION SHALL EACH PAY AN EQUAL SHARE OF THE COSTS AND EXPENSES OF SUCH ARBITRATION, AND EACH PARTY SHALL SEPARATELY PAY FOR ITS RESPECTIVE COUNSEL FEES AND EXPENSES; PROVIDED, HOWEVER, THAT THE ARBITRATOR MAY AWARD ATTORNEYS’ FEES AND COSTS TO THE PREVAILING PARTY, EXCEPT AS PROHIBITED BY LAW.  THE PARTIES HEREBY AGREE TO WAIVE THEIR RIGHT TO HAVE ANY DISPUTE BETWEEN THEM RESOLVED IN A COURT OF LAW BY A JUDGE OR JURY. NOTWITHSTANDING THE FOREGOING, THIS SECTION WILL NOT PREVENT EITHER PARTY FROM SEEKING INJUNCTIVE RELIEF (OR ANY OTHER PROVISIONAL REMEDY) FROM ANY COURT HAVING JURISDICTION OVER THE PARTIES AND THE SUBJECT MATTER OF THEIR DISPUTE RELATING TO THIS AGREEMENT AND THE AGREEMENTS INCORPORATED HEREIN BY REFERENCE. SHOULD ANY PART OF THE ARBITRATION AGREEMENT CONTAINED IN THIS SECTION CONFLICT WITH ANY OTHER ARBITRATION AGREEMENT BETWEEN THE PARTIES, INCLUDING, BUT NOT LIMITED TO THE ARBITRATION SECTION OF THE CONFIDENTIALITY AGREEMENT, THE PARTIES AGREE THAT THIS ARBITRATION AGREEMENT IN THIS SECTION SHALL GOVERN.
16.Tax Consequences.  The Company makes no representations or warranties with respect to the tax consequences of the payments and any other consideration provided to Employee or made on his behalf under the terms of this Agreement.  Employee agrees and understands that he is responsible for payment, if any, of local, state, and/or federal taxes on the payments and any other consideration provided hereunder by the Company and any penalties or assessments thereon.  Employee further agrees to indemnify and hold the Company harmless from any claims, demands, deficiencies, penalties, interest, assessments, executions, judgments, or recoveries by any government agency against the Company for any amounts claimed due on account of (a) Employee’s failure to pay, or Employee’s delayed payment of, federal or state taxes, or (b) damages sustained by the Company by reason of any such claims, including attorneys’ fees and costs.  The Parties agree and acknowledge that the payments 

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made pursuant to Section 1 of this Agreement are not related to sexual harassment or sexual abuse and not intended to fall within the scope of 26 U.S.C. Section 162(q).
17.Section 409A.  The Company intends that all payments under the Agreement are exempt from, or comply with, the requirements of Section 409A of the Internal Revenue Code of 1986 as amended and the final Treasury Regulations and official IRS guidance thereunder (collectively, “Section 409A”). To the extent it is necessary to avoid subjecting Employee to an additional tax under Section 409A, payment of all or a portion of the severance-related amounts described in this Agreement and any other separation payments or separation benefits, that in each case, when considered together are considered deferred compensation for purposes of Section 409A (collectively, “Deferred Payments”) will be delayed until the date that is six months and one day following Employee’s separation from service; provided, however, that in the event of Employee’s death following Employee’s separation from service but before the six month anniversary of Employee’s separation from service, then any payments delayed in accordance with this sentence will be payable in a lump sum as soon as administratively practicable after the date of Employee’s death, and any other payments or benefits due will be payable in accordance with the payment schedule applicable to them. Employee and the Company agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Employee under Section 409A. However, the Company does not guarantee that any payments or benefits under this Agreement or otherwise comply with Section 409A and Employee is solely responsible for the payment of all taxes owed on account of all such payments and benefits.
18.Authority.  The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it to the terms and conditions of this Agreement.  Employee represents and warrants that he has the capacity to act on his own behalf and on behalf of all who might claim through his to bind them to the terms and conditions of this Agreement.  Each Party warrants and represents that there are no liens or claims of lien or assignments in law or equity or otherwise of or against any of the claims or causes of action released herein.
19.No Representations.  Employee represents that he has had an opportunity to consult with an attorney, and has carefully read and understands the scope and effect of the provisions of this Agreement.  Employee has not relied upon any representations or statements made by the Company that are not specifically set forth in this Agreement.
20.Severability.  In the event that any provision or any portion of any provision hereof or any surviving agreement made a part hereof becomes or is declared by a court of competent jurisdiction or arbitrator to be illegal, unenforceable, or void, this Agreement shall continue in full force and effect without said provision or portion of provision.
21.Attorneys’ Fees.  Except with regard to a legal action challenging or seeking a determination in good faith of the validity of the waiver herein under the ADEA, in the event that either Party brings an action to enforce or effect its rights under this Agreement, the prevailing Party shall be entitled to recover its costs and expenses, including the costs of mediation, arbitration, litigation, court fees, and reasonable attorneys’ fees incurred in connection with such an action.

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22.Entire Agreement.  This Agreement, along with the Advisor Agreement, represent the entire agreement and understanding between the Company and Employee concerning the subject matter of this Agreement and Employee’s employment with and separation from the Company and the events leading thereto and associated therewith, and supersede and replace any and all prior agreements and understandings concerning the subject matter of this Agreement and Employee’s relationship with the Company, with the exception of the Confidentiality Agreement, the D&O Indemnification Agreement and the Stock Agreements.
23.No Oral Modification.  This Agreement may only be amended in a writing signed by Employee and the Company’s Chief Executive Officer.
24.Governing Law.  With the exception of the arbitration requirements set forth above, this Agreement shall be governed by the laws of the State of California, without regard for choice-of-law provisions.  To the extent that any lawsuit is permitted under this Agreement, Employee hereby expressly consents to personal and exclusive jurisdiction and venue of the state and federal courts in the State of California.
25.Effective Date.  Employee understands that this Agreement shall be null and void if not executed by Employee within twenty-one (21) days, as set forth above.  Employee shall not sign this Agreement until after  the Employment End Date.   Each Party has seven (7) days after that Party signs this Agreement to revoke it.  This Agreement will become effective on the eighth (8th) day after Employee signed this Agreement, so long as it has been signed by the Parties and has not been revoked by either Party before that date (the “Effective Date”).
26.Counterparts.  This Agreement may be executed in counterparts, and each counterpart shall be deemed an original and all of which counterparts taken together  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.  The counterparts of this Agreement may be executed and delivered by facsimile, photo, email, PDF, or other electronic transmission or signature.
27.Protected Activity Not Prohibited.  Employee understands that nothing in this Agreement shall in any way limit or prohibit Employee from engaging in any Protected Activity, including filing a charge, complaint, or report with, or otherwise communicating, cooperating, or participating in any investigation or proceeding that may be conducted by, any federal, state or local government agency or commission, including the Securities and Exchange Commission, the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, and the National Labor Relations Board (“Government Agencies”). Employee understands that in connection with such Protected Activity, Employee is permitted to disclose documents or other information as permitted by law, without giving notice to, or receiving authorization from, the Company. Notwithstanding the foregoing, Employee agrees to take all reasonable precautions to prevent any unauthorized use or disclosure of any information that may constitute Company confidential information under the Confidentiality Agreement to any parties other than the Government Agencies. Employee further understands that “Protected Activity” does not include the disclosure of any Company attorney-client privileged communications or attorney work product. Any language in the Confidentiality Agreement regarding Employee’s right to engage in Protected Activity that conflicts with, or is contrary to, this section is superseded by this Agreement. In addition, pursuant to the Defend Trade Secrets Act of 2016, Employee is notified that an individual will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (a) is made in 

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confidence to a federal, state, or local government official (directly or indirectly) or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (b) is made in a complaint or other document filed in a lawsuit or other proceeding, if (and only if) such filing is made under seal. In addition, an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the individual’s attorney and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.
28.Voluntary Execution of Agreement.  Employee understands and agrees that he executed this Agreement voluntarily, without any duress or undue influence on the part or behalf of the Company or any third party, with the full intent of releasing all of his claims against the Company and any of the other Releasees.  Employee acknowledges that Employee:
		
	(a)
	has read this Agreement;

		
	(b)
	has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of Employee’s own choice or has elected not to retain legal counsel;

		
	(c)
	understands the terms and consequences of this Agreement and of the releases it contains; and

		
	(d)
	is fully aware of the legal and binding effect of this Agreement.

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.
	
					
	 
	 
	 
	MARK F. ANDERSON, an individual

	 
	 
	 
	 
	 

	Dated:
	10/31/18
	 
	/s/ MARK F. ANDERSON

	 
	 
	 
	Mark F. Anderson

	 
	 
	 
	 
	 

	
					
	 
	 
	 
	PALO ALTO NETWORKS, INC.

	 
	 
	 
	 
	 

	Dated:
	11/12/18
	 
	By:
	/s/ NIKESH ARORA

	 
	 
	 
	 
	Nikesh Arora

	 
	 
	 
	 
	Chief Executive Officer

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EXHIBIT A

ADVISOR AGREEMENT

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EXHIBIT B

SUPPLEMENTAL RELEASE AGREEMENT
This Supplemental Release Agreement is made by and between Mark F. Anderson (“Advisor”) and Palo Alto Networks, Inc. (the “Company”) (collectively referred to as the “Parties” or individually referred to as a “Party”).

1.Consideration. In consideration for the Equity Vesting (as defined in the Advisor Agreement), Advisor hereby extends Advisor’s release and waiver of claims to any claims that may have arisen between the Effective Date (as defined in Advisor’s Transition Agreement and Release (the “Transition Agreement”)) and the Supplemental Release Effective Date (as defined below). 

2.Incorporation of Terms of Transition Agreement. The undersigned Parties further acknowledge that the terms of the Transition Agreement, including Sections 2 (Payment of Salary and Receipt of All Benefits), 3 (Release of Claims), 8 (Trade Secrets and Confidential Information/Company Property), 9 (No Cooperation), 10 (Nondisparagement), 11 (Breach), 13 (Non-Solicitation), Section 22 (Entire Agreement), and Section 27 (Protected Activity) shall apply to this Supplemental Release Agreement. 

3.Supplemental Release Effective Date. Advisor understands that this Supplemental Release Agreement shall be null and void if not executed by Advisor, and returned to the Company, within 21 days after the Separation Date (as defined in the Transition Agreement).  Each Party 7 days after that Party signs this Supplemental Release Agreement to revoke it. This Supplemental Release Agreement will become effective on the 8th day after Advisor signed this Supplemental Release Agreement, so long as it has been signed by the Parties and has not been revoked by either Party before that date (the “Supplemental Release Effective Date”). 

4.Voluntary Execution of Agreement. Advisor understands and agrees that Advisor executed this Supplemental Release Agreement voluntarily, without any duress or undue influence on the part or behalf of the Company or any third party, with the full intent of releasing all of Advisor’s claims against the Company and any of the other Releasees (as defined in the Transition Agreement). Advisor acknowledges that:

		
	(a)
	Advisor has read this Supplemental Release Agreement;

		
	(b)
	Advisor cannot sign the Supplemental Release Agreement before the Separation Date;

		
	(c)
	Advisor has been represented in the preparation, negotiation, and execution of this Supplemental Release Agreement by legal counsel of Advisor’s own choice or has elected not to retain legal counsel;

		
	(d)
	Advisor understands the terms and consequences of this Supplemental Release Agreement and of the releases it contains; and

		
	(e)
	Advisor is fully aware of the legal and binding effect of this Supplemental Release Agreement.

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

        	
					
	 
	 
	 
	MARK F. ANDERSON, an individual

	 
	 
	 
	 
	 

	Dated:
	11/6/18
	 
	/s/ MARK F. ANDERSON

	 
	 
	 
	Mark F. Anderson

	 
	 
	 
	 
	 

	
					
	 
	 
	 
	PALO ALTO NETWORKS, INC.

	 
	 
	 
	 
	 

	Dated:
	11/12/18
	 
	By:
	/s/ NIKESH ARORA

	 
	 
	 
	 
	Nikesh Arora

	 
	 
	 
	 
	CEO

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PALO ALTO NETWORKS, INC.
ADVISOR AGREEMENT
This Advisor Agreement (the “Advisor Agreement”) is entered into by and between Palo Alto Networks, Inc. (the “Company”) and Mark F. Anderson (the “Advisor”), effective as of immediately following the end of Advisor’s employment with the Company (the “Effective Date”), subject to the following sentence.  As a condition to the effectiveness of this Advisor Agreement, Advisor agrees that the Transition Agreement and Release (the “Transition Agreement”), which is incorporated herein by reference, must be effective and irrevocable within 10 days following Advisor’s termination of employment (the “Deadline”).  If the Transition Agreement is not effective and irrevocable by the Deadline, then this Advisor Agreement automatically terminates.  Any capitalized term not otherwise defined in this Advisor Agreement shall have the meaning set forth in the Transition Agreement.
1.Advisory Relationship. During the term of this Advisor Agreement, Advisor will serve as an advisor to the Company and provide services (the “Services”) to the Company as described on Appendix A attached to this Advisor Agreement.
2.Term.    Advisor shall provide Services under this Advisor Agreement from the Effective Date through May 1, 2019 (the “Term”).  Advisor may terminate the Advisor Agreement for convenience prior to the expiration of the Term upon thirty days’ notice.  The Company may terminate this Advisor Agreement if Advisor has breached this Advisor Agreement and Advisor has not cured such breach within 10 business days after being notified in writing of the breach by the Company.  Notwithstanding the foregoing, if Advisor accepts full-term employment prior to the Term date, then this Advisor Agreement automatically terminates.
3.Compensation.  In exchange for the Services to be rendered to Company hereunder, Company shall provide Advisor, as full and complete compensation for the Services rendered hereunder, the compensation set forth in Appendix A.  
4.Expenses.   The Company shall pay for Advisor’s reasonable travel-related expenses for such travel that Advisor incurs at the Company’s specific request.  The Company shall have no obligation to reimburse Advisor for local travel.  Except for such costs and expenses specifically incurred by Advisor at the Company’s request or with the Company’s prior written approval, the Company shall not be responsible for any other costs and expenses incurred by Advisor in performing the Services for the Company.
5.Independent Contractor.  Advisor’s relationship with the Company during the Term will be that of an independent contractor and not that of an employee.  Advisor will not be eligible for any employee benefits.  Notwithstanding the foregoing, as a result of the compensation being in lieu of severance and thus incident to Advisor’s employment, the Company will report all compensation paid to Advisor as “wages” within the meaning of Section 3401(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and accordingly such wages will be subject to regular withholdings by the Company.  Advisor will have no authority to enter into contracts that bind the Company or create obligations on the part of the Company.

1

6.Consulting or other Services for Competitors.  Advisor agrees that, during the Term of this Advisor Agreement, he will not perform consulting or other services for any company, person or entity whose business or proposed business in any way involves products or services which could reasonably be determined to be competitive with the products or services or proposed products or services of the Company.
7.Conflicts with this Agreement.       Advisor represents and warrants that Advisor is not under any pre-existing obligation in conflict, or in any way inconsistent, with the provisions of this Advisor Agreement, and that Advisor’s performance of this Advisor Agreement and the Services will not breach any invention assignment, proprietary information, confidentiality or other agreement with any other party, including any entity that employs or employed Advisor prior to the Effective Date or for which Advisor performed services prior to the Effective Date.  Advisor represents that he will not bring to the Company or use in the performance of the Services any documents, materials, or intangibles of a former employer or third party that are not generally available to the public.  Advisor will not knowingly infringe upon any copyright, patent, trade secret or other proprietary right of any former client, employer or third party in the performance of the services required by this Advisor Agreement.
8.Miscellaneous.
(a)Amendments and Waivers.  Any term of this Advisor Agreement may be amended or waived only with the written consent of the parties.
(b)Sole Agreement.  This Advisor Agreement, including Appendix A hereto, the Indemnification Agreement, the Stock Agreements, and the Transition Agreement constitute the sole agreement of the parties and supersedes all oral negotiations and prior writings with respect to the subject matter hereof, including, but not limited to, Advisor’s employment letter with the Company dated May 23, 2012.  For clarity, Advisor will be covered under the Indemnification Agreement through end of the Term of this Agreement, and the tail of the Indemnification Agreement shall continue as if the end of the Term of this Agreement was the date Advisor ceased to be an officer of the Company.
(c)Notices.  Any notice required or permitted by this Advisor Agreement shall be in writing and delivered personally, by confirmed facsimile transmission, by courier or by an internationally-recognized delivery service, and in each instance will be deemed given upon receipt.  All notices will be addressed to the party to be notified at such party’s address as set forth below or as subsequently modified by written notice.
(d)Choice of Law.  The validity, interpretation, construction and performance of this Advisor Agreement shall be governed by the laws of California, without giving effect to the principles of conflict of laws.
(e)Severability.    If one or more provisions of this Advisor Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith.  In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Advisor Agreement, (ii) the balance 

2

of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.
(f)Counterparts.    This Advisor 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.
(g)Resolution of Disputes; Jurisdiction.    Sections 15 and 24 of the Transition Agreement are incorporated herein by reference.

[remainder of page blank]

[signature page to follow]

3

The parties have executed this Advisor Agreement as of the date set forth above.

	
					
	 
	 
	Palo Alto Networks, Inc.
	 

	 
	 
	By:
	/s/ NIKESH ARORA
	 

	 
	 
	Name:
	Nikesh Arora
	 

	 
	 
	Title:
	CEO
	 

	 
	 
	Address:
	3000 Tannery Way
	 

	 
	 
	 
	Santa Clara, CA 95054
	 

	 
	 
	 
	 
	 

	 
	 
	Advisor
	 

	 
	 
	By:
	/s/ MARK F. ANDERSON
	 

	 
	 
	 
	(Signature)
	 

	 
	 
	 
	 
	 

	 
	 
	 
	Mark F. Anderson
	 

	 
	 
	 
	(Print Name)
	 

	 
	 
	 
	 
	 

	 
	 
	Address:
	15600 Glen Una Dr.
	 

	 
	 
	 
	Los Gatos, CA 95030
	 

    

[signature page of Advisor Agreement]

4

APPENDIX A
DESCRIPTION OF SERVICES
Services:  
Advisor will perform such reasonable transition advisory services reasonably requested by the Company’s Chief Executive Officer.
The Services shall in all cases be at a level equal to 20% or less of Advisor’s services as an employee during the 36-month period prior to the Effective Date.  Accordingly, a “separation from service” within the meaning of Section 409A occurred as of the Employment End Date.
Compensation:
Upon the Effective Date of the Transition Agreement, Advisor will be paid a lump sum payment equal to $[______]1, less withholdings.
During the Term, Advisor will continue to be paid his current base salary (which is $775,000) annually.  This compensation will be paid through the Company’s payroll and will be reduced by regular withholdings.
Further, the vesting of all equity awards under the Stock Agreements shall continue to vest during the Term (the “Equity Vesting”), subject to Advisor’s execution and non-revocation of the Supplemental Release Agreement (as attached as Exhibit B to the Transition Agreement).  If the Supplemental Release Agreement is not effective and irrevocable within 30 days following the Separation Date, then all rights to the Equity Vesting shall be forfeited and the Company can claw-back any Equity Vesting that occurred after the Employment End Date.  The Company may require any shares settled after the Employment End Date to be held in an account with a captive broker with no-sale instructions until the Supplemental Release Effective Date to enforce this paragraph. 
Notwithstanding anything herein to the contrary, for the avoidance of doubt, if Advisor accepts full-time employment with another employer during the Term, this Advisor Agreement terminates automatically and all the compensation herein shall cease.  
	
					
	ADVISOR
	 
	PALO ALTO NETWORKS, INC.

	By:
	/s/ MARK F. ANDERSON
	 
	By:
	/s/ NIKESH ARORA

	 
	(Signature)
	 
	 
	(Signature)

	 
	 
	 
	 
	 

____________________________
1 This is the amount to cover 6 months of COBRA.

5

	
					
	Name:
	Mark F. Anderson
	 
	Name/Title:
	Nikesh Arora, CEO

	Date:
	10/15/18
	 
	Date:
	10/15/18

    

6EX-10.1

 Exhibit 10.1 

EMPLOYMENT AGREEMENT 

THIS EMPLOYMENT AGREEMENT (this “Agreement”), by and between Schmitt Industries, Inc., an Oregon corporation (the
“Company”), and David W. Case (“Executive”), is entered into this 26th day of November, 2018, and is effective as of October 16, 2018 (the “Effective Date”).

 RECITALS 
 A. The
Company is engaged primarily in the business of designing, manufacturing and selling high precision test and measurement products for a wide variety of manufacturing, industrial and commercial applications, and Executive has experience in such
business. 
 B. Executive previously served as President and Chief Executive Officer of the Company, and is being appointed to serve as
Special Advisor to the Board of Directors of the Company. 
 C. The Company desires to employ Executive, and Executive desires to accept such
employment, pursuant to the terms and conditions set forth in this Agreement. 
 AGREEMENT 

NOW, THEREFORE, in consideration of the mutual promises, terms, covenants, and conditions set forth herein and the performance of each, it is
hereby agreed as follows: 
 1. EMPLOYMENT AND DUTIES. 

(a) EMPLOYMENT. The Company hereby employs Executive, and Executive hereby agrees to act, as Special Advisor to the Board of Directors of the
Company. As such, Executive shall have responsibilities, duties, and authority reasonably accorded to, expected of, and consistent with Executive’s position and Executive shall report directly to the Board of Directors of the Company (the
“Board”). Executive hereby accepts this employment upon the terms and conditions herein contained and, subject to Section l(c) hereof, agrees to devote his best efforts and substantially all of his business time and attention to promote
and further the business of the Company. 
 (b) TERM. The term of this Agreement shall be for a period of six (6) months from the
Effective Date (the “Term”). During the Term, Executive shall faithfully adhere to, execute, and fulfill all lawful policies established by the Company. 

(c) OTHER ACTIVITIES. Executive shall not, during the Term, be engaged in any other business activity pursued for gain, profit, or other
pecuniary advantage if such activity interferes in any material respect with Executive’s duties and responsibilities hereunder. The foregoing limitations shall not be construed as prohibiting Executive from (i) making personal investments
in such form or manner as will neither require his services in the operation or affairs of the companies or enterprises in which such investments are made nor subject Executive to any conflict of interest with respect to his duties to the Company,
(ii) serving on any civic or charitable boards or committees, or (iii) serving, with the written approval of the Board, as a director of one or more corporations, in each case so long as any such activities do not significantly interfere
with the performance of Executive’s responsibilities under this Agreement. In addition, Executive shall comply with the restrictions listed in Section 3 of this Agreement. 

 (d) PLACE OF PERFORMANCE. Executive shall not be required by the Company or in the
performance of his duties to relocate his primary residence. 
 2. COMPENSATION. For all services rendered by Executive, the Company shall compensate
Executive as follows: 
 (a) BASE SALARY. As of the Effective Date, the base salary payable to Executive shall be Two Hundred Thousand
Dollars ($200,000) per year, payable on a regular basis in accordance with the Company’s standard payroll procedures, but not less than monthly. 

(b) BONUS COMPENSATION. Upon execution of this Agreement, Executive shall be paid a signing bonus of Twenty Thousand Dollars ($20,000). 

(c) EXECUTIVE PERQUISITES, BENEFITS, AND OTHER COMPENSATION. Executive shall be entitled to receive additional benefits and compensation from
the Company in such form and to such extent as specified below: 
 (i) REIMBURSEMENT FOR EXPENSES. The Company shall provide reimbursement to
Executive for business travel and other out-of-pocket expenses reasonably incurred by Executive in the performance of his services under this Agreement. All reimbursable
expenses shall be appropriately documented in reasonable detail by Executive upon submission of any request for reimbursement and shall be in a format and manner consistent with the Company’s expense reporting policy. Such expenses shall be
submitted to the Company’s Chief Financial Officer for approval or to such other officer of the Company as the Board may from time to time direct. 

(ii) PAID TIME OFF. Paid time off in accordance with the applicable policy of the Company as in effect on the date of this Agreement. 

(iii) OTHER EXECUTIVE PERQUISITES. The Company shall provide Executive with other executive perquisites as may be made available to or deemed
appropriate for Executive by the Board or a committee of the Board and participation in all other Company-wide employee benefits (including group insurance, pension, retirement, and other plans and programs) as are available to the Company’s
executive officers on the date of this Agreement. 
 3. NON-COMPETITION AGREEMENT. 

(a) NON-COMPETITION. Executive shall not, during the period of his employment by or with the Company,
and during the Non-compete Period (as hereinafter defined) for any reason whatsoever, directly or indirectly, for himself or on behalf of or in conjunction with any other person: 

(i) OTHER ACTIVITIES. Engage, as an officer, director, shareholder, owner, principal, partner, lender, joint venturer, employee, independent
contractor, consultant, advisor, or sales representative, in any Competitive Business within the Restricted Territory; 
 (ii) SOLICITATION
OF EMPLOYEES. Call upon any person who is, at that time, within the Restricted Territory, an employee of the Company or any of its subsidiaries, in a managerial capacity for the purpose or with the intent of enticing such employee away from or out
of the employ of the Company or any of its subsidiaries; 
 (iii) SOLICITATION OF CUSTOMERS. Call upon any person or entity that is, at that
time, or that has been, within one (1) year prior to that time, a customer of the Company or any of its subsidiaries, within the Restricted Territory for the purpose of soliciting or selling products or services in direct competition with the
Company or any of its subsidiaries within the Restricted Territory; 

  
 2 

 (iv) SOLICITATION OF ACQUISITION CANDIDATES. Call upon any prospective acquisition candidate
(that is, a business that the Company may have an interest in acquiring), on Executive’s own behalf or on behalf of any person, which candidate was, to Executive’s knowledge after due inquiry, either called upon by the Company, or for
which the Company made an acquisition analysis, for the purpose of acquiring such candidate. 
 (b) CERTAIN DEFINITIONS. As used in this
Agreement, the following terms shall have the meanings ascribed to them: 
 (i) COMPETITIVE BUSINESS shall mean any Person that is engaged in
designing, manufacturing and selling high precision test and measurement products for manufacturing, industrial and commercial applications or any other business in which the Company is engaged; 

(ii) PERSON shall mean any individual, corporation, limited liability company, partnership, firm, or other business of whatever nature; 

(iii) RESTRICTED TERRITORY shall mean North America, Europe and China; and 

(iv) SUBSIDIARY shall mean the Company’s consolidated subsidiaries, including corporations, partnerships, limited liability companies, and
any other business organization in which the Company holds at least a fifty percent (50%) equity interest. 
 (v) NON-COMPETE PERIOD shall mean the longer of (i) the two (2) year period immediately following the termination of Executive’s employment with the Company or (ii) the time during which severance
payments are being made by the Company to Executive in accordance with this Agreement; provided, however, that if the Executive’s employment is terminated by the Company without Good Cause, Executive terminates his employment with Good Reason,
or Executive terminates his employment after a Change in Control pursuant to Section 4(b)(vi)(B), then the Non-compete Period shall be eliminated immediately following the termination of his employment
with the Company. 
 (c) ENFORCEMENT. Because of the difficulty of measuring economic losses to the Company as a result of a breach of the
foregoing covenants, and because of the immediate and irreparable damage that could be caused to the Company for which it would have no other adequate remedy, Executive agrees that the foregoing covenants may be enforced by the Company in the event
of breach by him, by injunctions and restraining orders. 
 (d) REASONABLE RESTRAINT. It is agreed by the parties that the foregoing
covenants in this Section 3 impose a reasonable restraint on Executive in light of the activities and business of the Company (including the Company’s subsidiaries) on the date of the execution of this Agreement and the current plans of
the Company (including the Company’s subsidiaries); but it is also the intent of the Company and Executive that such covenants be construed and enforced in accordance with the changing activities, business, and locations of the Company
(including the Company’s subsidiaries) throughout the term of this covenant, whether before or after the date of termination of the employment of Executive. For example, if, during the term of this Agreement, the Company (including the
Company’s subsidiaries) engages in new and different activities, enters a new business, or establishes new locations for its current activities or business in addition to or other than the activities or business enumerated above or the
locations currently established therefor, then Executive will be precluded from soliciting the customers or employees of such new activities or business or from such new location and from directly competing with such new business within the
Restricted Territory through the term of these covenants. 

  
 3 

 (e) OTHER ACTIVITIES. It is further agreed by the parties that, in the event that Executive
shall cease to be employed hereunder and enters into a business or pursues other activities not in competition with the Company (including the Company’s subsidiaries), or similar activities or business in locations, the operation of which,
under such circumstances, does not violate this Section 3, and in any event such new business, activities, or location are not in violation of this Section 3 or of Executive’s obligations under this Section 3, if any, Executive
shall not be chargeable with a violation of this Section 3 if the Company (including the Company’s subsidiaries) shall thereafter enter the same, similar, or a competitive (i) business, (ii) course of activities, or
(iii) location, as applicable. 
 (f) SEPARATE COVENANTS. The covenants in this Section 3 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any other covenant. Moreover, in the event any court of competent jurisdiction shall determine that the scope, time, or territorial restrictions set forth are unreasonable,
then it is the intention of the parties that such restrictions be enforced to the fullest extent that the court deems reasonable, and the Agreement shall thereby be reformed. 

(g) INDEPENDENT AGREEMENT. All of the covenants in this Section 3 shall be construed as an agreement independent of any other provision in
this Agreement, and the existence of any claim or cause of action of Executive against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of such covenants; except as
provided in Section 4(d) below. It is specifically agreed that the Non-compete Period following termination of employment as defined in this Section 3, during which the agreements and covenants of
Executive made in this Section 3 shall be effective, shall be computed by excluding from such computation any time during which Executive is in violation of any provision of this Section 3. 

4. AT-WILL EMPLOYMENT; TERMINATION; RIGHTS ON TERMINATION. 

(a) AT-WILL EMPLOYMENT. Executive’s employment with the Company shall be at-will. The Executive may terminate his employment at any time for any reason (subject to the notice requirements provided in this Agreement) and the Company may terminate Executive’s employment with the
Company at any time and for any reason (subject to the severance provisions of this Agreement). This at-will employment relationship cannot be changed except by written authorization by the Board. 

(b) TERMINATION. Executive’s employment under this Agreement may be terminated in any one of the followings ways: 

(i) DEATH OF EXECUTIVE. The employment of Executive shall terminate immediately upon Executive’s death. In the event of such termination,
all options to purchase Common Stock of the Company held by Executive shall thereupon vest and shall be exercisable for the maximum period of time, up to their full term, that will not cause Executive with respect to such options to be subject to
any excise tax under Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”) notwithstanding the termination of employment. All restricted stock and/or restricted stock units (or comparable forms of equity
compensation, if any) held by the Executive which, as of the date of the death of Executive, are not then subject to any performance conditions for vesting, shall be fully vested and shall not be subject to any risk of forfeiture or repurchase as of
the date of Executive’s death. In addition, Executive’s estate shall be paid severance in the amount of One Hundred Thousand Dollars ($100,000). The payment described in this Section, if payable, will be paid within ten (10) days
after the Executive’s death. 

  
 4 

 (ii) DISABILITY OF EXECUTIVE. The Company may terminate Executive’s employment in the
event the Executive is disabled. The Executive shall be disabled if the Executive is unable to engage in any substantial gainful activity by reason of a medically determined physical or mental impairment expected to last at least twelve consecutive
months or result in death, or if the Executive is determined to be disabled under a Company disability plan with a similar definition of disability. In the event Executive’s employment under this Agreement is terminated as a result of
Executive’s disability, Executive shall receive from the Company, in a lump-sum payment due within ten (10) days of the effective date of termination, an amount equal to One Hundred Thousand Dollars
($100,000). In the event of such termination, all options to purchase Common Stock of the Company held by Executive shall thereupon vest and shall be exercisable for the maximum period of time, up to their full term, that will not cause Executive
with respect to such options to be subject to any excise tax under Section 409A notwithstanding the termination of employment. All restricted stock and/or restricted stock units (or comparable forms of equity compensation, if any) held by the
Executive which, as of the date of the disability of Executive, are not then subject to any performance conditions for vesting, shall be fully vested and shall not be subject to any risk of forfeiture or repurchase as of the date of Executive’s
termination due to disability (as defined in this paragraph). 
 (iii) TERMINATION BY THE COMPANY FOR GOOD CAUSE. The Company may terminate
Executive’s employment upon ten (10) days prior written notice to Executive for “Good Cause,” which shall mean any one or more of the following: (A) Executive’s willful and material breach of this Agreement which has
not been cured by the Executive within thirty (30) days following written notice of such breach from the Company; (B) Executive’s gross negligence in the performance or intentional nonperformance (continuing for thirty (30) days
after receipt of written notice of need to cure) of any of Executive’s material duties and responsibilities hereunder; (C) Executive’s willful dishonesty, fraud, or misconduct with respect to the business or affairs of the Company,
which materially and adversely affects the operations or reputation of the Company; (D) Executive’s conviction of a felony crime involving dishonesty or moral turpitude; or (E) a confirmed positive illegal drug test result. In the
event of a termination by the Company for Good Cause, Executive shall have no right to any severance compensation. 
 (iv) TERMINATION BY THE
COMPANY WITHOUT GOOD CAUSE OR BY EXECUTIVE WITH GOOD REASON. The Company may terminate Executive’s employment without Good Cause upon the approval of a majority of the members of the Board, excluding Executive if Executive is a member of the
Board. Executive may terminate his employment under this Agreement for Good Reason upon thirty (30) days prior notice to the Company. 

(A) RESULT OF TERMINATION BY THE COMPANY WITHOUT GOOD CAUSE OR BY EXECUTIVE WITH GOOD REASON. Should the Company terminate Executive’s
employment without Good Cause or should Executive terminate his employment with Good Reason, the Company shall pay to Executive, on a monthly basis, the amounts that otherwise would have been paid to him for the Term had there been no termination of
his employment. In addition, if the Company terminates Executive’s employment without Good Cause or Executive terminates his employment with Good Reason, Employee shall be paid severance in the amount of One Hundred Thousand Dollars ($100,000),
payable in equal monthly amounts over six (6) months, commencing at the end of the Term. The amounts payable under the preceding two sentences shall commence on the first payroll date following Executive’s “separation from
service” from the Company within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and shall be treated as a series of separate payments under Treasury Regulations Section 1.409A-2(b)(2)(iii). Further, if the Company terminates Executive’s employment without Good Cause or Executive terminates his employment with Good Reason, (1) all options to purchase Common
Stock of the Company held by Executive shall vest thereupon and shall be exercisable for the maximum period of time, up to their full 

  
 5 

 
term, that will not cause Executive with respect to such options to be subject to any excise tax under Section 409A notwithstanding the termination of employment, (2) all restricted
stock and/or restricted stock units (or comparable forms of equity compensation, if any) held by Executive which, as of the effective date of the termination of Executive, are not then subject to any performance conditions for vesting, shall be
fully vested and shall not be subject to any risk of forfeiture or repurchase as of the date of termination, (3) all restricted stock and/or restricted stock units (or comparable forms of equity compensation, if any) held by Executive which, as
of the effective date of the termination of Executive, is subject to performance conditions for vesting, shall be fully vested and treated as if the performance conditions for such award had been fully met at target and shall not be subject to any
risk of forfeiture or repurchase as of the date of termination, and (4) Executive shall be entitled to receive all other unpaid benefits due and owing through Executive’s last day of employment. Further, any termination by the Company
without Good Cause or by Executive for Good Reason shall operate to eliminate the Non-compete Period set forth in Section 3. 

(B) DEFINITION OF GOOD REASON. Executive shall have “Good Reason” to terminate employment upon the occurrence of any of the
following events, without Executive’s written approval: (1) Executive suffers a material reduction in authority, responsibilities, or duties as provided herein; (2) Executive’s annual base salary as set forth in this Agreement is
reduced by any amount; (3) Executive is required to render his or her primary employment services from a location more than 25 miles from the Company’s headquarters at the time Executive began his employment with the Company; (4) the
Company takes steps to deny Executive a reasonable opportunity to maintain Executive’s total compensation as set forth in Section 2 of this Agreement; or (5) the Company breaches a material provision of this Agreement. In order for an
event to justify termination for Good Reason, the Executive must give written notice to the Company of such event within 90 days of its first occurrence and the Company must have 30 days to cure, if possible. 

(v) RESIGNATION BY EXECUTIVE WITHOUT GOOD REASON. Executive may, without cause, and without Good Reason terminate his own employment under this
Agreement, effective thirty (30) days after written notice is provided to the Company or such earlier time as any such resignation may be accepted by the Company. If Executive resigns or otherwise terminates his employment without Good Reason,
Executive shall receive no severance compensation. 
 (vi) PAYMENTS UPON EXPIRATION OF THE TERM. At the end of the Term, Employee shall be
paid severance in the amount of One Hundred Thousand Dollars ($100,000), payable in equal monthly amounts over six (6) months. The amounts payable under the preceding sentence shall commence on the first payroll date following Executive’s
“separation from service” from the Company within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and shall be treated as a series of separate payments under Treasury Regulations Section 1.409A-2(b)(2)(iii). Notwithstanding the foregoing or anything to the contrary in this Agreement, the severance payments set forth in this Section 4(b)(vi) shall not be paid if Executive’s
employment is terminated for any reason other than the expiration of the Term because payments to be made in such circumstances are covered in other sections of this Agreement. 

(c) PAYMENTS TO TERMINATION DATE. Upon termination of Executive’s employment under this Agreement for any reason provided above, Executive
shall be entitled to receive all compensation earned and all benefits and reimbursements due through the effective date of termination. Additional compensation subsequent to termination, if any, will be due and payable to Executive only to the
extent and in the manner expressly provided above. All other rights and obligations of the Company and Executive under this Agreement shall cease as of the effective date of termination, except that the Company’s obligations under
Section 8 (relating to indemnification of Executive) and Executive’s obligations under Section 3 (relating to non-competition), Section 5 (relating to return of Company property),
Section 6 (relating to inventions), Section 7 (relating to trade secrets), and Section 9 (relating to prior agreements) shall survive such termination in accordance with their terms. 

  
 6 

 (d) FAILURE TO PAY EXECUTIVE. If termination of Executive’s employment arises out of
the Company’s failure to pay Executive on a timely basis the amounts to which he is entitled under this Agreement or as a result of any other breach of this Agreement by the Company, as determined by a court of competent jurisdiction or
pursuant to the provisions of Section 14, the Company shall pay all amounts and damages to which Executive may be entitled as a result of such breach, including interest thereon and all reasonable legal fees and expenses and other costs
incurred by Executive to enforce his rights hereunder. Further, none of the provisions of Section 3 (relating to non-competition) shall apply in the event Executive’s employment under this Agreement
is terminated as a result of a breach by the Company. 
 (e) CONDITIONS PRECEDENT FOR PAYMENT OF SEVERANCE. In consideration for
Company’s obligations to make any payments to Executive pursuant to Section 4, upon termination of Executive’s employment with Company for any reason other than Executive’s death, Executive shall sign and not revoke a release in
a form satisfactory to the Company (the “Release”). Company shall present the Release to Executive within ten (10) days of termination, and Executive shall have up to forty-five (45) days to consider whether to sign the Release;
in the event Executive executes the Release, Executive shall have an additional eight (8) calendar days in which to expressly revoke Executive’s execution of the Release in writing. In the event that Executive fails to execute the Release
within the forty-five (45) days following termination, or in the event Executive formally revokes the Executive’s Release within eight (8) calendar days of his signing of the Release, then Executive shall not be entitled to any
payments or benefits under Section 4 of this Agreement. The Company shall make any payments to Executive in accordance with the terms of Section 4 prior to Executive’s failure to execute the Release within forty-five (45) days or
prior to his revocation; provided that if Executive does not sign the Release or if Executive revokes the Release during any statutory revocation period, Executive shall immediately reimburse Company for any and all such payments. 

(f) DELAY IN SEVERANCE PAYMENTS. To the extent required under Section 409A, any severance payments due under this Section 4 shall be
delayed until the first date such payment may be made in compliance with Section 409A(a)(2)(B). 
 5. RETURN OF COMPANY PROPERTY. All records,
designs, patents, business plans, financial statements, manuals, memoranda, lists, and other property delivered to or compiled by Executive by or on behalf of the Company (or its subsidiaries) or its representatives, vendors, or customers that
pertain to the business of the Company (or its subsidiaries) shall be and remain the property of the Company and be subject at all times to its discretion and control. Likewise, all correspondence, reports, records, charts, advertising materials,
and other similar data pertaining to the business, activities, or future plans of the Company (or its subsidiaries) that is collected by Executive shall be delivered promptly to the Company without request by it upon termination of Executive’s
employment. 
 6. INVENTIONS. Executive shall disclose promptly to the Company any and all significant conceptions and ideas for inventions,
improvements, and valuable discoveries, whether patentable or not, which are conceived or made by Executive, solely or jointly with another, during the period of employment or within one (1) year thereafter, and which are directly related to
the business or activities of the Company (or its subsidiaries) and which Executive conceives as a result of his employment by the Company. Executive hereby assigns and agrees to assign all his interests therein to the Company or its nominee.
Whenever requested to do so by the Company, Executive shall execute any and all applications, assignments, and other instruments that the Company shall deem necessary to apply for and obtain Letters Patent of the United States or any foreign country
or to otherwise protect the Company’s interest therein. 

  
 7 

 7. TRADE SECRETS. Executive agrees that he will not, during or after the period of employment under
this Agreement, disclose the specific terms of the Company’s relationships or agreements with its respective significant vendors or customers, or any other significant and material trade secret of the Company, whether in existence or proposed,
to any person, firm, partnership, corporation, or business for any reason or purpose whatsoever. 
 8. INDEMNIFICATION. In the event Executive is made
a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (other than an action by the Company against Executive), by reason of the fact that he is or was performing
services under this Agreement, then the Company shall indemnify Executive against all expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement, as actually and reasonably incurred by Executive in connection
therewith to the maximum extent permitted by applicable law; provided, however, the Executive must deliver a written undertaking to the Company that if it is subsequently determined by a court of law in a final,
non-appealable judgment, that the Executive was not entitled to indemnification under applicable law, then the Executive will repay all amounts. The advancement of expenses shall be mandatory. In the event
that both Executive and the Company are made a party to the same third-party action, complaint, suit, or proceeding, the Company agrees to engage competent legal representation, and Executive agrees to use the same representation, provided that if
counsel selected by the Company shall have a conflict of interest that prevents such counsel from representing Executive, Executive may engage separate counsel and the Company shall pay all attorneys’ fees of such separate counsel. Further,
while Executive is expected at all times to use his best efforts to faithfully discharge his duties under this Agreement, Executive cannot be held liable to the Company for errors or omissions made in good faith if Executive has not exhibited gross,
willful, and wanton negligence and misconduct or performed criminal and fraudulent acts that materially damage the business of the Company. Notwithstanding this Section 8, the provision of any written indemnification agreement applicable to the
directors or officers of the Company to which Executive shall be a party shall apply rather than this Section 8 to the extent inconsistent with this Section 8. 

9. NO PRIOR AGREEMENTS. Executive hereby represents and warrants to the Company that the execution of this Agreement by Executive and his employment by
the Company and the performance of his duties hereunder will not violate or be a breach of any agreement with a former employer, client, or any other person or entity. Further, Executive agrees to indemnify the Company for any claim, including, but
not limited to, attorneys’ fees and expenses of investigation, by any such third party that such third party may now have or may hereafter come to have against the Company based upon or arising out of any
non-competition, invention, or secrecy agreement between Executive and such third party that was in existence as of the date of this Agreement. 

10. ASSIGNMENT; BINDING EFFECT. Executive understands that he is being employed by the Company on the basis of his personal qualifications, experience,
and skills. Executive agrees, therefore, that he cannot assign all or any portion of his performance under this Agreement. Subject to the preceding two (2) sentences and the express provisions of Section 11 below, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective heirs, legal representatives, successors, and assigns. 

11. COMPLETE AGREEMENT. This Agreement is not a promise of future employment. Executive has no oral representations, understandings, or agreements with
the Company or any of its officers, directors, or representatives covering the same subject matter as this Agreement. This written Agreement is the final, complete, and exclusive statement and expression of the agreement between the Company and
Executive and of all the terms of this Agreement, and it cannot be varied, contradicted, or supplemented by evidence of any prior or contemporaneous oral or written agreements. This written Agreement may not be later modified except by a further
writing signed by a duly authorized officer of the Company and Executive, and no term of this Agreement may be waived except by writing signed by the party waiving the benefit of such term. This Agreement hereby supersedes any other employment
agreements or understandings, written or oral, between the Company and Executive. 

  
 8 

 12. NOTICE. Whenever any notice is required hereunder, it shall be given in writing addressed as
follows: 
  

			
	 To the Company:
	  	 Schmitt Industries, Inc.

		  	 2765 NW Nicolai Street

		  	 Portland, Oregon 97210

		  	 Attention: Executive Chairman

		
	 With a copy to:
	  	 Holland & Knight LLP

		  	 2300 U.S. Bancorp Tower

111 SW Fifth Avenue

		  	 Portland, Oregon 97204

		  	 Attention: Mark von Bergen, Esq.

		
	 To Executive:
	  	 David W. Case

		  	 2765 NW Nicolai Street

		  	 Portland, Oregon 97210

 Notice shall be deemed given and effective when hand delivered or the first business day after being deposited with a
reputable, nationally recognized overnight delivery service or when actually received. Either party may change the address for notice by notifying the other party of such change in accordance with this Section 12. 

13. SEVERABILITY; HEADINGS. If any portion of this Agreement is held invalid or inoperative, the other portions of this Agreement shall be deemed valid
and operative and, so far as is reasonable and possible, effect shall be given to the intent manifested by the portion held invalid or inoperative. The Section headings herein are for reference purposes only and are not intended in any way to
describe, interpret, define or limit the extent or intent of the Agreement or of any part hereof. 
 14. MEDIATION/ARBITRATION. All disputes arising
out of this Agreement shall be resolved as set forth in this Section 14. If any party hereto desires to make any claim arising out of this Agreement (“Claimant”), then such party shall first deliver to the other party
(“Respondent”) written notice (“Claim Notice”) of Claimant’s intent to make such claim explaining Claimant’s reasons for such claim in sufficient detail for Respondent to respond. Respondent shall have ten
(10) business days from the date the Claim Notice was given to Respondent to object in writing to the claim (“Notice of Objection”), or otherwise cure any breach hereof alleged in the Claim Notice. Any Notice of Objection shall
specify with particularity the reasons for such objection. Following receipt of the Notice of Objection, if any, Claimant and Respondent shall immediately seek to resolve by good faith negotiations the dispute alleged in the Claim Notice, and may,
at the request of either party, utilize the services of an independent mediator. If Claimant and Respondent are unable to resolve the dispute in writing within ten (10) business days from the date negotiations began, then without the necessity
of further agreement of Claimant or Respondent, the dispute set forth in the Claim Notice shall be submitted to binding arbitration (except for claims arising out of Sections 3 or 7 hereof), initiated by either Claimant or Respondent pursuant to
this Section. Such arbitration shall be conducted before a panel of three (3) arbitrators in Portland, Oregon, in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association
(“AAA”) then in effect, provided that the parties may agree to use arbitrators other than those provided by the AAA. The arbitrators shall not have the authority to add to, detract from, 

  
 9 

 
or modify any provision hereof nor to award punitive damages to any injured party. The arbitrators shall have the authority to order back-pay, severance
compensation, vesting of options (or cash compensation in lieu of vesting of options), vesting and the removal of restrictions on restricted stock and/or restricted stock units (or comparable forms of equity compensation, if any) that, as of the
effective date of the termination of Executive, are not then subject to any performance conditions for vesting, reimbursement of costs, including those incurred to enforce this Agreement, and interest thereon in the event the arbitrators determine
that Executive was terminated without disability or without Good Cause, as defined in Sections 4(b) and 4(c) hereof, respectively, or that the Company has otherwise materially breached this Agreement. A decision by a majority of the arbitration
panel shall be final and binding. Judgment may be entered on the arbitrators’ award in any court having jurisdiction. The direct expense of any mediation or arbitration proceeding and, to the extent Executive prevails, all reasonable legal fees
shall be borne by the Company. 
 15. NO PARTICIPATION IN SEVERANCE PLANS. Except as contemplated by this Agreement, Executive acknowledges and agrees
that the compensation and other benefits set forth in this Agreement are and shall be in lieu of any compensation or other benefits that may otherwise be payable to or on behalf of Executive pursuant to the terms of any severance pay arrangement of
the Company or any affiliate thereof, or any other similar arrangement of the Company or any affiliates thereof providing for benefits upon involuntary termination of employment. 

16. GOVERNING LAW. This Agreement shall in all respects be construed according to the laws of the State of Oregon, notwithstanding the conflict of laws
provisions of such state. 
 17. COUNTERPARTS; FACSIMILE. This Agreement may be executed by facsimile and in two (2) or more counterparts, each
of which shall be deemed an original and all of which together shall constitute but one and the same instrument. 
 18. SECTION 409A. 

(a) This Agreement is intended to satisfy the requirements of Section 409A of the Code with respect to amounts subject thereto, and shall
be interpreted and construed consistent with such intent. Furthermore, if either party notifies the other in writing that, based on the advice of legal counsel, one or more of the provisions of this Agreement contravenes any regulations or Treasury
guidance promulgated under Section 409A of the Code or causes any amounts to be subject to interest or penalties under Section 409A of the Code, the parties shall promptly and reasonably consult with each other (and with their legal
counsel), and shall use their reasonable best efforts, to reform the provisions hereof to (a) maintain to the maximum extent practicable the original intent of the applicable provisions without violating the provisions of Section 409A of
the Code or increasing the costs to the Company of providing the applicable benefit or payment and (b) to the extent practicable, to avoid the imposition of any tax, interest or other penalties under Section 409A of the Code upon Executive
or the Company. 
 (b) This Agreement is intended, to the maximum extent possible, to meet the short term deferral exception and/or be a
separation pay plan due to an involuntary separation from service under Treasury Regulation Sections 1.409A-1(b)(4) and 1.409A-1(b)(9)(iii) and therefore exempt from
Code Section 409A. 

  
 10 

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

			
	SCHMITT INDUSTRIES, INC.
		
	By:	 	 /s/ Michael R. Zapata

	Name:	 	Michael R. Zapata
	Title:	 	Executive Chairman and President
	
	EXECUTIVE:
	
	 /s/ David W. Case

	David W. Case

  
 11

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