Document:

exv10w1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (including Attachments A & B) (the “2004 Employment
Agreement”) which is dated as of this 3rd day of June 2004, (the “Effective
Date”) by and between General Dynamics Corporation (the “Corporation”) and
Nicholas D. Chabraja, (a “Party” or collectively the “Parties”).

Recitals

WHEREAS, Mr. Chabraja is currently the Corporation’s Chief Executive Officer
and the Chairman of its Board of Directors (the “Board”) and has been since
June 1, 1997; and

WHEREAS, the Corporation entered into an Employment Agreement with Mr. Chabraja
on August 7, 2002, providing for his employment through December 31, 2005; and

WHEREAS, the Board, on behalf of the Corporation’s shareholders, in recognition
of Mr. Chabraja’s continued exceptional performance and superb leadership,
strongly desires to extend Mr. Chabraja’s tenure as its Chairman and Chief
Executive Officer through April 30, 2008; and

WHEREAS, Mr. Chabraja agrees to continue his employment in only this capacity.

Terms & Conditions

NOW THEREFORE, the Parties agree as follows:

	1.	 	Position and Term. The Corporation desires that Mr. Chabraja
continue his employment as Chairman and Chief Executive Officer, and Mr.
Chabraja agrees to continue his employment, from the Effective Date
through April 30, 2008.
	 
	2.	 	Annual Salary. Mr. Chabraja will continue to receive an annual
salary of not less than his current annual salary. During this Agreement,
the Compensation Committee of the Board may from time to time increase Mr.
Chabraja’s annual salary as it, in its sole discretion, deems appropriate.
	 
	3.	 	Incentive Compensation. Mr. Chabraja will continue to be eligible
for annual bonuses and incentive compensation awards. In making this
determination, the Compensation Committee of the Board will annually
review the Corporation’s actual performance as compared to its strategic
and operational plans. The Compensation Committee of the Board will also
consider Mr. Chabraja’s total compensation in relationship to the
performance pay levels of other chief executive officers of industrial
concerns and in the aerospace and defense industry.
	 
	4.	 	Other Benefits and Perquisites. Mr. Chabraja will be eligible for
all other benefits and perquisites the Corporation provides to its senior
executive officers. These benefits include participation in the
Corporation’s qualified and non-qualified retirement plans, the
Corporation’s qualified and non-qualified 401(k) Savings and Stock
Incentive plans, and group health, life and disability coverage.
Additionally, Mr. Chabraja will continue to have use of the Corporation’s
aircraft, consistent in all cases with the Corporation’s Board resolutions
and the Corporation’s policies regarding the use of aircraft.

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	5.	 	Termination of Employment between the Effective Date and April 30,
2008.

	a.	 	If Mr. Chabraja’s employment ends prior to April 30, 2008, by
reason of his Voluntary Resignation or death, the Corporation agrees
to provide him the following amounts and benefits:

	i.	 	The Corporation will pay Mr. Chabraja or his
designated beneficiary, as the case may be, his annual salary
earned through his last day of Active Employment (including
unused vacation and personal days); and
	 
	ii.	 	The Corporation will pay Mr. Chabraja or his
designated beneficiary, as the case may be, a pro rated
payment equal to his immediately prior year’s annual bonus or
100% of the current year’s target bonus, whichever is greater.
The pro-ration of such amount will be from the first day of
the year in which he voluntarily resigns or dies through his
last day of Active Employment (i.e., not including any period
attributable to the payment of unused vacation and/or personal
days). Any such payments to Mr. Chabraja, or his designated
beneficiary, as the case may be, will be made at the same time
and manner as the Corporation makes similar payments to its
other senior executive officers.
	 
	iii.	 	The Corporation will provide Mr. Chabraja (or his
survivors, as appropriate) with the benefits enumerated in
Section 6 (c) through (h) listed below.

	b.	 	Termination due to Disability, by the Corporation Without
Cause or as a Result of or Breach by the Corporation of Its
Obligations. In the event Mr. Chabraja’s employment is
terminated: (i) due to his Disability; (ii) by the Corporation,
without cause, or (iii) by Mr. Chabraja due to the Corporation’s
breach of its obligations hereunder and its failure to cure such
breach within thirty (30) days of written notice thereof, the
Corporation agrees to provide Mr. Chabraja the following:

	i.	 	The Corporation will continue to pay Mr. Chabraja
an amount equal to the annual salary he is earning at the time
of his termination for the remaining term of this Agreement;
and
	 
	ii.	 	The Corporation will continue to pay Mr. Chabraja
an amount equal to the annual bonus and incentive compensation
he would have earned had he continued his employment for the
remaining term of this Agreement. Such amounts must be the
greater of his prior year’s annual bonus or 100% of the
current year’s target bonus. Payments to Mr. Chabraja will be
made at the same time and manner as the Corporation makes
similar payments to its other senior executive officers; and
	 
	iii.	 	The Corporation will provide Mr. Chabraja with
the benefits enumerated in Section 6 (c) through (h) listed
below.

	c.	 	Termination due to a Change in Control. In the event
that Mr. Chabraja’s employment is terminated (either in fact or
constructively) as a result of a “Change in Control”, the
Corporation agrees that Mr. Chabraja will be treated

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	 	 	for purposes of this Agreement as having terminated employment
“Without Cause” under Section 5 (b) above. Where the Severance
Protection Agreement between the Corporation and Mr. Chabraja dated
April 12, 1999, as may be hereafter amended from time to time, and
this Agreement provide for payment covering the same benefit, the
Corporation will provide Mr. Chabraja with the benefit most
favorable to him, otherwise, Mr. Chabraja is entitled to retain the
benefits under both agreements.

	d.	 	Termination “For Cause”. In the event Mr. Chabraja’s
employment by the Corporation is terminated “For Cause”, in full
satisfaction of its obligations hereunder, the Corporation will:

	i.	 	pay Mr. Chabraja his annual salary earned through
his last day of Active Employment (including unused vacation
and personal days);
	 
	ii.	 	provide to Mr. Chabraja the retirement benefits
enumerated in Attachment A, the 2002 Retirement Benefits
Agreement; and
	 
	iii.	 	provide to Mr. Chabraja such other benefits as
are required by law.

	6.	 	Expiration on or after April 30, 2008. If Mr. Chabraja maintains
his Active Employment through April 30, 2008, the Corporation, at its sole
expense, will:

	a.	 	pay Mr. Chabraja any remaining earned but unpaid annual
salary (including any earned but unpaid vacation and/or personal
days); and
	 
	b.	 	pay Mr. Chabraja a prorated bonus for the 2008 calendar year
in an amount not less than two thirds (2/3) of Mr. Chabraja’s 2007
bonus, which shall be paid to Mr. Chabraja’s on or before his last
day of Active Employment (including any earned but unpaid vacation
and/or personal days). In addition, any equity award Mr. Chabraja
receives for the 2007 calendar year shall not be prorated as may
otherwise be required under the Corporation’s Executive
Compensation program, as amended; and
	 
	c.	 	direct a buy-out of Mr. Chabraja’s residence located in
McLean, Virginia, in an amount which is equal to the greater of:

	i.	 	the residence’s appraised value on or about April
1, 2008, or
	 
	ii.	 	the residence’s original cost, plus all
subsequent improvements Mr. Chabraja made, as defined in the
Corporation’s Relocation Policy; and

	d.	 	reimburse Mr. Chabraja for the cost of transporting and
storing (up to six (6) months) his household furnishings and
personal effects from McLean, Virginia to anywhere in the 48
contiguous United States of America; and
	 
	e.	 	secure at its sole expense executive office space in the
Chicago, Illinois area with administrative support for a period of
not less than two (2) years; and
	 
	f.	 	provide Mr. Chabraja and his then eligible dependents with
continued participation in the Corporation’s medical plans at then
active employee cost for up to six (6) months, following which, Mr.
Chabraja will be eligible to elect continued coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), as
amended, by paying the full cost; and

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	g.	 	provide to Mr. Chabraja the retirement benefits enumerated in
Attachment A, the 2004 Retirement Benefits Agreement; and
	 
	h.	 	provide Mr. Chabraja with usage of a corporate provided
aircraft as stated in Attachment B, the Aircraft Usage Agreement.

	7.	 	Definitions. For purposes of this Agreement, the terms below will
have the following definitions:

	a.	 	“Active Employment” means a period of employment during which
services are required to be performed. The continued payment of
amounts in lieu of annual salary, annual bonuses, unused vacation,
unused personal days will not be considered a period of Active
Employment.
	 
	b.	 	“Change in Control” means a change in control as defined in
Section 1 of the Severance Protection Agreement, as amended, dated
April 12, 1999, between the Corporation and Mr. Chabraja as such
agreement may be amended from time to time.
	 
	c.	 	“For Cause” means the termination of Mr. Chabraja’s
employment as a direct result of any of the following acts: (i) the
commission of a felony or a crime involving dishonesty or fraud
which materially and adversely affects the Corporation or any of its
affiliates, (ii) a material violation of the Corporation’s standards
of business ethics and conduct, or (iii) individually filing or
participating in a lawsuit against the Corporation during Active
Employment with the Corporation.
	 
	d.	 	“Disability” means if, as a direct result of an illness or
injury, Mr. Chabraja is unable, in the sole opinion of the
Compensation Committee of the Corporation’s Board of Directors, to
adequately perform the tasks of his position for the entire balance
of his Employment Agreement.
	 
	e.	 	“Voluntary Resignation” or “Voluntarily Resigns” means a
termination of Mr. Chabraja’s employment resulting from his decision
to cease performing services for the Corporation.

	8.	 	Tax Liability. Following Mr. Chabraja’s termination of employment
(for any reason other than a termination of employment “For Cause”), the
Corporation will provide Mr. Chabraja with one (1) round of federal and
state tax gross ups (determined using the top marginal rate and tax rates
for federal and applicable state taxes) for amounts imputed to Mr.
Chabraja pursuant to this Agreement (but specifically excluding annual
salary, bonuses, equity awards and amounts paid pursuant to Attachment A).
Any tax gross up will be included in Mr. Chabraja’s taxable income and
included in the Corporation’s tax reporting consistent with its policies
and procedures for other executives.
	 
	9.	 	Miscellaneous. This Agreement will be construed and enforced in
accordance with the laws of the State of Delaware. Notwithstanding
anything in this Agreement or the Corporation’s policies to the contrary,
unless both Parties agree in writing, all issues, disputes, controversies
and/or enforcement actions by and between the Parties hereto (whether such
issue is ‘at law’ or ‘in equity’) shall be resolved solely by an action
brought in a court of competent jurisdiction in the State of Delaware

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	 	 	and, for that purpose, the Parties hereby submit to the jurisdiction of
the State of Delaware.
	 
	10.	 	Notice. Any notice required under this Agreement (or an
Attachment hereto) will be made in writing addressed to the Corporation in
care of the Senior Vice President, Human Resources (with a copy to the
Senior Vice President and General Counsel) at the Corporation’s
headquarters and to Mr. Chabraja at his home address as noted in the
Corporation’s employee records.
	 
	11.	 	Termination. Mr. Chabraja shall have the right to terminate this
Agreement upon thirty (30) days prior written notice to the Corporation.
Subject to its obligations hereunder, the Corporation shall have the right
to terminate this Agreement upon thirty (30) days prior written notice to
Mr. Chabraja; provided, however, unless Mr. Chabraja waives the effect of
such termination in writing, the Corporation’s termination of this
Agreement (either actual or constructive) shall constitute an immediate
termination of the employment relationship and the Corporation’s
obligations hereunder shall become immediately due and owing without a
right to cure. The Corporation’s obligations hereunder shall survive the
expiration, or earlier termination, of this Agreement
	 
	12.	 	Effect of Prior Agreements. With Mr. Chabraja’s Active Employment
on and after the Effective Date stated above, this Agreement (including
its Attachments) will become effective and his prior employment agreement
(including all attachments thereto) is superseded; provided, however, this
Agreement does not supersede the Severance Protection Agreement between
Mr. Chabraja and the Corporation.
	 
	13.	 	Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability
will not affect the validity, legality or enforceability of any other
provision of this Agreement or the validity, legality or enforceability of
such provision in any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
	 
	14.	 	Amendment and Waiver. The provisions of this Agreement may be
amended or waived only by the written agreement of the Corporation and Mr.
Chabraja, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement will affect the validity, binding effect or
enforceability of this Agreement.
	 
	15.	 	Counterparts. This Agreement may be executed in counterparts;
each of which will be deemed to be an original and both of which together
will constitute one and the same instrument.
	 
	16.	 	Right to Assign. This Agreement is not assignable without the
written consent of each Party.
	 
	17.	 	Successorship. This Agreement will inure to the benefit of Mr.
Chabraja’s estate.

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IN WITNESS WHEREOF, pursuant to the authority granted by the Corporation’s
Board of Directors to the Corporation’s Senior Vice President — Human Resources
& Administration, the Corporation has caused this Employment Agreement to be
executed on behalf of itself and caused the Corporation’s seal to be hereunto
affixed and attested to by the Secretary of the Corporation. In like manner,
the Executive has executed this Agreement on his behalf. This Agreement is
effective as of the first date stated above.

	 	 	 	 	 
	ATTEST:

	 	 	 	GENERAL DYNAMICS CORPORATION
	 
	 	 	 	 
	/s/ DAVID A. SAVNER
	 	By:	 	/s/ WALTER M. OLIVER
	
 

	 	 	 	
 
	

	 	 	 	Senior Vice President — Human Resources & Administration
	 
	 	 	 	 
	ATTEST:

	 	 	 	NICHOLAS D. CHABRAJA
	 
	 	 	 	 
	/s/ DAVID A. SAVNER

	 	 	 	/s/ NICHOLAS D. CHABRAJA

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Attachment A — 2004 Retirement Agreement

WHEREAS, General Dynamics Corporation, a Delaware corporation (the
“Corporation”), and Nicholas D. Chabraja (the “Executive”) (collectively the
“Parties”) entered into an extension of Mr. Chabraja’s Employment Agreement
(the “2004 Employment Agreement”); and

WHEREAS, the Corporation, as part of the 2004 Employment Agreement, has agreed
to pay certain additional supplemental retirement benefits as provided herein.

NOW, THEREFORE, in consideration for Mr. Chabraja’s entering into the 2004
Employment Agreement, the Parties agree to the following terms and conditions
(hereinafter the “2004 Retirement Agreement”) which is incorporated by
reference into Mr. Chabraja’s Employment Agreement as follows:

	1.	 	Agreement Benefit. The Corporation agrees to pay Mr. Chabraja a
monthly single-life benefit at retirement equal to a percentage of his
“Average Monthly Salary”, as defined below. This percentage is thirty
percent (30.0%) as of April 30, 2004, and increases by one-half percentage
point (0.50%) for each completed calendar month of Active Employment
thereafter (such that by April 30, 2008, the percentage will be fifty-four
percent (54.0%)). For purposes of this Attachment A, “Average Monthly
Salary” shall equal the average determined by (i) summing the total of Mr.
Chabraja’s highest aggregate monthly salary and cash executive
compensation bonuses (excluding equity awards) paid during a consecutive
sixty (60) month period within Mr. Chabraja’s last one hundred and twenty
months (120) of Active Employment and (ii) dividing it by sixty (60).
	 
	2.	 	Payment of Benefits.

	 	a.	 	If, after the Effective Date of this Agreement, Mr. Chabraja
(a) Voluntarily Resigns, (b) retires, or (c) is terminated “For
Cause,” he will be entitled to receive the benefit he earned under
Section 1 through the end of the month in which such separation or
retirement occurs. Mr. Chabraja will begin receiving his benefit
under this subparagraph as of the first day of the month following
his separation or retirement.
	 
	 	b.	 	If Mr. Chabraja’s employment with the Corporation terminates
at any time on or after the Effective Date of his 2004 Employment
Agreement, but prior to April 30, 2008, due to (a) his “Disability,”
(b) termination “Without Cause,” or (c) a “Change in Control”, Mr.
Chabraja will be entitled to receive the benefit under Section 1
above as if Mr. Chabraja had maintained his Active Employment and
pensionable earnings through April 30, 2008. Mr. Chabraja will
begin receiving his benefit under this subparagraph as of May 1,
2008.

	3.	 	Survivor Benefit in the Case of Death Prior to Benefit
Commencement. If Mr. Chabraja dies during the term of this 2004
Retirement Agreement, but prior to separating from employment and does not
leave a surviving spouse, no benefit will be paid under this Agreement.
If Mr. Chabraja dies during the term of this 2004 Retirement Agreement,
but prior to separating from employment and leaves a surviving spouse, his
surviving spouse will receive a 50% Contingent Annuitant benefit with a
10-Year Certain feature based on the retirement benefit Mr. Chabraja will
have earned as of his date of death. In the event that Mrs. Chabraja dies
prior to the 10th anniversary of Mr. Chabraja’s death, payments will
continue to Mrs. Chabraja’s designated beneficiary or estate. Payment
will commence on the first day of the month following Mr. Chabraja’s
death.

  
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	4.	 	Form of Payment. All retirement benefits payable pursuant to this
2004 Retirement Agreement will be paid in such form and at such time as
Mr. Chabraja’s elects under the Retirement Program. The Corporation may,
in its sole discretion, accelerate the payment of some or all of the
benefits under this 2004 Retirement Agreement in a form of actuarial
equivalent value. In addition to all of forms of payment under the
Retirement Program, Mr. Chabraja may elect a 100% Contingent Annuitant
option with a 10-Year Certain feature.
	 
	5.	 	No Assignment. No benefit under this 2004 Retirement Agreement
will be subjected in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any attempt so to
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge
the same will be void, and no such benefit will in any manner be liable
for or subject to the debts, liabilities, engagements or torts of the
person entitled to such benefit, except as specifically provided in the
Retirement Program or pursuant to a Qualified Domestic Relations Order as
described in Code Section 414(p).
	 
	6.	 	Payment from General Assets.

	 	a.	 	To the extent a benefit under this 2004 Retirement Agreement
is not otherwise payable from a Retirement Program (or unless
otherwise determined by the Corporation), all benefits payable to
Mr. Chabraja hereunder will be paid by the Corporation from its
general assets. The Corporation will not be obliged to acquire,
designate or set aside any specific assets for payment of the
Supplement. Further, Mr. Chabraja will have no claim whatsoever to
any specific assets or group assets of the Corporation.
	 
	 	b.	 	The Corporation may, in its discretion, designate that the
some or all the benefits payable hereunder will be satisfied from
the assets of a trust, fund, or other segregated group of assets.
But, should these assets prove to be insufficient to satisfy payment
of such benefits or other post-retirement benefits, the Corporation
will remain liable for payment thereof.

	7.	 	Prior Agreement. The 2002 Retirement Agreement is superceded.
	 
	8.	 	Plan Administration. The Board of Directors hereby delegates to
the Senior Vice President, Human Resources and Administration (or his
authorized designee) the power to interpret this Agreement in his sole
discretion and such interpretations will be binding on the Corporation and
Mr. Chabraja. The Retirement Programs actuary will determine all values
and payments required under this 2004 Retirement Agreement based on the
actuarial assumptions used under the Corporation’s Retirement Program.
	 
	9.	 	Income Taxes. Mr. Chabraja and the Corporation agree that all
payments made pursuant to this 2004 Retirement Agreement will be treated
as “wages” for federal and state income tax and employment tax purposes
(including FICA) at such time and in such manner as prescribed by law.
Each Party to this 2004 Retirement Agreement is responsible for the
payment of its own taxes.
	 
	10.	 	Incorporation by Reference. This 2004 Retirement Agreement is be
incorporated by reference into Mr. Chabraja’s Employment Agreement with
the Corporation. The defined terms in this 2004 Retirement Agreement will
have the same meaning provided in Mr. Chabraja’s 2004 Employment
Agreement.

  
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Attachment B — Aircraft Usage Agreement

	1.	 	Flight Hours Earned. As of the Effective Date of this Agreement,
Mr. Chabraja has earned and shall retain the right to two-hundred and
fifty (250) Flight Hours (the “Prior Agreement Flight Hours”) on an
aircraft provided by the Corporation. In addition, on and after the
Effective Date of this Agreement, Mr. Chabraja will earn an additional
fourteen (14.0) Flight Hours for each full month of service under his
Active Employment with the Corporation; provided however, the sum total of
his Prior Agreement Flight Hours and the Flight Hours earned under this
Agreement shall not exceed Five Hundred (500).

	 	a.	 	Termination “For Cause”. Notwithstanding anything in
this Attachment B or Mr. Chabraja’s Employment Agreement to the
contrary, if Mr. Chabraja’s employment with the Corporation is
terminated “For Cause” (as defined in his Employment Agreement) all
Flight Hours will be forfeited.
	 
	 	b.	 	Termination “Without Cause”, Change in Control or
“Disability”. Notwithstanding anything in this Attachment B or
Mr. Chabraja’s Employment Agreement to the contrary, if Mr.
Chabraja’s employment with the Corporation is terminated “Without
Cause”, due to a “Change in Control”, or as a result of a
“Disability”, Mr. Chabraja will be entitled to Five Hundred (500)
Flight Hours regardless of his length of employment.

	2.	 	Acceptable Aircraft. The Corporation will make available to Mr.
Chabraja a large cabin aircraft or larger (e.g., a Gulfstream 350) along
with fuel, trained personnel and basic snack and beverage service. Mr.
Chabraja will be responsible for all food and beverage costs in excess of
basic snack and beverage service.
	 
	3.	 	Right to Use Aircraft. Mr. Chabraja’s right to use the
Corporation’s aircraft is personal in nature and will not inure to the
benefit of his surviving spouse or estate following his death. All of Mr.
Chabraja’s rights under this Attachment B expire upon the earlier to occur
of:

	 	a.	 	his death;
	 
	 	b.	 	one hundred and twenty (120) months after his last day of
Active Employment; or
	 
	 	c.	 	the exhaustion of all his Flight Hours, including any
carryover.

	4.	 	Usage of Flight Hours.

	 	a.	 	annual Limit. Following Mr. Chabraja’s termination of
employment (other than “For Cause”) entitled to any amount of Flight
Hours, Mr. Chabraja may use up to one hundred (100) Flight Hours in
any calendar year. If Mr. Chabraja separates employment in the
middle of a calendar year, the one hundred (100) Credited Flight
Hour maximum will be prorated by the number of completed calendar
months remaining in that year.
	 
	 	b.	 	Carryover of Unused Flight Hours. Subject to
paragraph 3 immediately above, if, for any reason Mr. Chabraja does
not use his entire allotment of Flight Hours within any calendar
year, the unused number of Flight Hours will be carried over to the
subsequent calendar year (subject to an overall maximum usage of one
hundred (100) Flight Hours in any calendar year).

  
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	5.	 	Protocol for Aircraft Usage.

	 	a.	 	In order to obtain the use of a Corporation aircraft, Mr.
Chabraja must request the use of such aircraft at least 24 hours
prior to the requested flight departure for flights that will depart
and arrive within the 48 contiguous United States of America and at
least 48 hours prior to the requested flight departure for all other
flights. Such request must be made to an agreed upon contact at the
Corporation and must specify the requested departure and arrival
locations and the amount of people in the flight party.

	 	i.	 	The Corporation will supply Mr. Chabraja with an
aircraft based upon Corporation aircraft availability. The
size of Mr. Chabraja’s flight party will be limited by
aircraft size and availability.
	 
	 	ii.	 	If a corporate aircraft is available, it will
pick up Mr. Chabraja and his flight party at the nearest
suitable location for that aircraft. The flights will include
the particular aircraft’s basic flight service.

6. Usage of Flight Hours.

	 	a.	 	Mr. Chabraja will be charged against his bank of Flight Hours
for each hour or fraction of an hour Mr. Chabraja’s requested
aircraft is airborne.

	 	i.	 	Aircraft flight time to arrive at a requested
pick-up location within the 48 contiguous United States of
America will not count against Mr. Chabraja’s Flight Hours.
Aircraft flight time (including any “dead heading” time) to
all other pick up locations will count towards the total
number of Flight Hours Mr. Chabraja’s has earned under this
Agreement.

  
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                                                                    EXHIBIT 10.1

                           INDEMNIFICATION AGREEMENT

     This Indemnification Agreement ("AGREEMENT") is entered into with effect on
the 6th day of April 2004 by and between Engenio Information Technologies, Inc.
(formerly LSI Logic Storage Systems, Inc.), a Delaware corporation (the
"COMPANY"), and [EMPLOYEE NAME] ("INDEMNITEE").

                                    RECITALS

     A. The Company and Indemnitee recognize the significant cost of directors'
and officers' liability insurance and the general reductions in the coverage of
such insurance.

     B. The Company and Indemnitee further recognize the substantial increase in
corporate litigation in general, subjecting directors, officers, employees,
agents and fiduciaries to expensive litigation risks at the same time as the
availability and coverage of liability insurance has been severely limited.

     C. Indemnitee does not regard the current protection available as adequate
under the present circumstances, and Indemnitee and other directors, officers,
employees, agents and fiduciaries of the Company may not be willing to continue
to serve in such capacities without additional protection.

     D. The Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the Company and, in part, in
order to induce Indemnitee to continue to provide services to the Company,
wishes to provide for the indemnification and advancing of expenses to
Indemnitee to the maximum extent permitted by law.

     E. In view of the considerations set forth above, the Company desires that
Indemnitee be indemnified by the Company as set forth herein.

     NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:

     1. Indemnification.

          (a) Indemnification of Expenses.  The Company shall indemnify
     Indemnitee to the fullest extent permitted by law if Indemnitee was or is
     or becomes a party to or witness or other participant in, or is threatened
     to be made a party to or witness or other participant in, any threatened,
     pending or completed action, suit, proceeding or alternative dispute
     resolution mechanism, or any hearing, inquiry or investigation that
     Indemnitee in good faith believes might lead to the institution of any such
     action, suit, proceeding or alternative dispute resolution mechanism,
     whether civil, criminal, administrative, investigative or other
     (hereinafter a "CLAIM") by reason of (or arising in part out of) any event
     or occurrence related to the fact that Indemnitee is or was a director,
     officer, employee, agent or fiduciary of the Company, or any subsidiary of
     the Company, or is or was serving at the request of the Company as a
     director, officer, employee, agent or fiduciary of another corporation,
     partnership, joint venture, trust or other enterprise, or by reason of any
     action or inaction on the part of Indemnitee while serving in such capacity
     (hereinafter an "INDEMNIFIABLE EVENT") against any and all expenses
     (including attorneys' fees and all other costs, expenses and obligations
     incurred in connection with investigating, defending, being a witness in or
     participating in (including on appeal), or preparing to defend, be a
     witness in or participate in, any such action, suit, proceeding,
     alternative dispute resolution mechanism, hearing, inquiry or
     investigation), judgments, fines, penalties and amounts paid in settlement
     (if such settlement is approved in advance by the Company, which approval
     shall not be unreasonably withheld) of such Claim and any federal, state,
     local or foreign taxes imposed on Indemnitee as a result of the actual or
     deemed receipt of any payments under this Agreement (collectively,
     hereinafter "EXPENSES"), including all interest, assessments and other
     charges paid or payable in connection with or in respect of such Expenses.
     Such payment of Expenses shall be made by the Company as soon as
     practicable after written demand by Indemnitee therefor is presented to the
     Company.

                                        1
<PAGE>

          (b) Mandatory Payment of Expenses.  Notwithstanding any other
     provision of this Agreement other than Section 8 hereof, to the extent that
     Indemnitee has been successful on the merits or otherwise, including,
     without limitation, the dismissal of an action without prejudice, in
     defense of any action, suit, proceeding, inquiry or investigation referred
     to in Section (1)(a) hereof or in the defense of any claim, issue or matter
     therein, Indemnitee shall be indemnified against all Expenses incurred by
     Indemnitee in connection therewith.

     2. Expenses; Indemnification Procedure.

          (a) Advancement of Expenses.  The Company shall advance all Expenses
     incurred by Indemnitee. Indemnitee hereby undertakes to repay such amounts
     advanced only if, and to the extent that, it shall ultimately be determined
     that Indemnitee is not entitled to be indemnified by the Company as
     authorized hereby. The advances to be made hereunder shall be paid by the
     Company as soon as practicable after written demand by Indemnitee therefor
     to the Company.

          (b) Notice/Cooperation by Indemnitee.  Indemnitee shall, as a
     condition precedent to Indemnitees' right to be indemnified under this
     Agreement, give the Company notice in writing as soon as practicable of any
     Claim made against Indemnitee for which indemnification will or could be
     sought under this Agreement. Notice to the Company shall be directed to the
     Chief Executive Officer of the Company at the address shown on the
     signature page of this Agreement (or such other address as the Company
     shall designate in writing to Indemnitee). In addition, Indemnitee shall
     give the Company such information and cooperation as it may reasonably
     require and as shall be within Indemnitees' power.

          (c) Procedure.  Any indemnification and advances provided for in
     Section 1 and this Section 2 shall be made as soon as practicable after
     receipt of the written request of Indemnitee. If a claim under this
     Agreement, under any statute, or under any provision of the Company's
     Certificate of Incorporation or Bylaws providing for indemnification is not
     paid in full by the Company as soon as practicable after a written request
     for payment thereof has first been received by the Company, Indemnitee may,
     but need not, at any time thereafter bring an action against the Company to
     recover the unpaid amount of the claim and, subject to Section 13 of this
     Agreement, Indemnitee shall also be entitled to be paid for the Expenses of
     bringing such action. It shall be a defense to any such action (other than
     an action brought to enforce a claim for Expenses incurred in connection
     with any action, suit or proceeding in advance of its final disposition)
     that Indemnitee has not met the standards of conduct which make it
     permissible under applicable law for the Company to indemnify Indemnitee
     for the amount claimed. However, Indemnitee shall be entitled to receive
     interim payments of Expenses pursuant to Subsection 2(a) unless and until
     such defense may be finally adjudicated by court order or judgment from
     which no further right of appeal exists. It is the parties' intention that
     if the Company contests Indemnitee's right to indemnification, the question
     of Indemnitee's right to indemnification shall be for the court to decide,
     and neither the failure of the Company (including its Board of Directors,
     any committee or subgroup of the Board of Directors, independent legal
     counsel, or its stockholders) to have made a determination that
     indemnification of Indemnitee is proper in the circumstances because
     Indemnitee has met the applicable standard of conduct required by
     applicable law, nor an actual determination by the Company (including its
     Board of Directors, any committee or subgroup of the Board of Directors,
     independent legal counsel, or its stockholders) that Indemnitee has not met
     such applicable standard of conduct, shall create a presumption that
     Indemnitee has or has not met the applicable standard of conduct. In
     addition to the foregoing, for purposes of this Agreement, the termination
     of any Claim by judgment, order, settlement (whether with or without court
     approval) or conviction, or upon a plea of nolo contendere, or its
     equivalent, shall not create a presumption that Indemnitee did not meet any
     particular standard of conduct or have any particular belief or that a
     court has determined that indemnification is not permitted by applicable
     law.

          (d) Notice to Insurers.  If, at the time of the receipt by the Company
     of a notice of a Claim pursuant to Section 2(b) hereof, the Company has
     liability insurance in effect which may cover such Claim, the Company shall
     give prompt notice of the commencement of such Claim to the insurers in
     accordance with the procedures set forth in the respective policies. The
     Company shall thereafter take all

                                        2
<PAGE>

     necessary or desirable action to cause such insurers to pay, on behalf of
     Indemnitee, all amounts payable as a result of such action, suit,
     proceeding, inquiry or investigation in accordance with the terms of such
     policies.

          (e) Selection of Counsel.  In the event the Company shall be obligated
     hereunder to pay the Expenses of any Claim, the Company shall be entitled
     to assume the defense of such Claim with counsel approved by Indemnitee,
     which approval shall not be unreasonably withheld, upon the delivery to
     Indemnitee of written notice of its election so to do. After delivery of
     such notice, approval of such counsel by Indemnitee and the retention of
     such counsel by the Company, the Company will not be liable to Indemnitee
     under this Agreement for any fees of counsel subsequently incurred by
     Indemnitee with respect to the same Claim; provided that, (i) Indemnitee
     shall have the right to employ Indemnitees' counsel in any such Claim at
     Indemnitee's expense and (ii) if (A) the employment of counsel by
     Indemnitee has been previously authorized by the Company, (B) Indemnitee
     shall have reasonably concluded that there is a conflict of interest
     between the Company and Indemnitee in the conduct of any such defense, or
     (C) the Company shall not continue to retain such counsel to defend such
     Claim, then the fees and expenses of Indemnitee counsel shall be at the
     expense of the Company. The Company shall have the right to conduct such
     defense as it sees fit in its sole discretion, including the right to
     settle any claim against Indemnitee without the consent of the Indemnitee.

     3. Additional Indemnification Rights; Nonexclusivity.

          (a) Scope.  The Company hereby agrees to indemnify Indemnitee to the
     fullest extent permitted by law, notwithstanding that such indemnification
     is not specifically authorized by the other provisions of this Agreement,
     the Company's Certificate of Incorporation, the Company's Bylaws or by
     statute. In the event of any change after the date of this Agreement in any
     applicable law, statute or rule which expands the right of a Delaware
     corporation to indemnify a member of its Board of Directors or an officer,
     employee, agent or fiduciary, it is the intent of the parties hereto that
     Indemnitee shall enjoy by this Agreement the greater benefits afforded by
     such change. In the event of any change in any applicable law, statute or
     rule which narrows the right of a Delaware corporation to indemnify a
     member of its Board of Directors or an officer, employee, agent or
     fiduciary, such change, to the extent not otherwise required by such law,
     statute or rule to be applied to this Agreement, shall have no effect on
     this Agreement or the parties' rights and obligations hereunder except as
     set forth in Section 8(a) hereof.

          (b) Nonexclusivity.  The indemnification provided by this Agreement
     shall be in addition to any rights to which Indemnitee may be entitled
     under the Company's Certificate of Incorporation, its Bylaws, any
     agreement, any vote of stockholders or disinterested directors, the General
     Corporation Law of the State of Delaware, or otherwise. The indemnification
     provided under this Agreement shall continue as to Indemnitee for any
     action Indemnitee took or did not take while serving in an indemnified
     capacity even though Indemnitee may have ceased to serve in such capacity.

          4. No Duplication of Payments.  The Company shall not be liable under
     this Agreement to make any payment in connection with any Claim made
     against Indemnitee to the extent Indemnitee has otherwise actually received
     payment (under any insurance policy, Certificate of Incorporation, Bylaw or
     otherwise) of the amounts otherwise indemnifiable hereunder.

          5. Partial Indemnification.  If Indemnitee is entitled under any
     provision of this Agreement to indemnification by the Company for some or a
     portion of Expenses incurred in connection with any Claim, but not,
     however, for all of the total amount thereof, the Company shall
     nevertheless indemnify Indemnitee for the portion of such Expenses to which
     Indemnitee is entitled.

          6. Mutual Acknowledgement.  Both the Company and Indemnitee
     acknowledge that in certain instances, Federal law or applicable public
     policy may prohibit the Company from indemnifying its directors, officers,
     employees, agents or fiduciaries under this Agreement or otherwise.
     Indemnitee understands and acknowledges that the Company has undertaken or
     may be required in the future to undertake with the Securities and Exchange
     Commission to submit the question of indemnification to a

                                        3
<PAGE>

     court in certain circumstances for a determination of the Company's right
     under public policy to indemnify Indemnitee.

     7. Liability Insurance.  To the extent the Company maintains liability
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.

     8. Exceptions.  Any other provision herein to the contrary notwithstanding,
the Company shall not be obligated pursuant to the terms of this Agreement:

          (a) Excluded Action or Omissions.  To indemnify Indemnitee for
     Indemnitee's acts, omissions or transactions from which Indemnitee or the
     Indemnitee may not be relieved of liability under applicable law;

          (b) Claims Initiated by Indemnitee.  To indemnify or advance expenses
     to Indemnitee with respect to Claims initiated or brought voluntarily by
     Indemnitee and not by way of defense, except (i) with respect to actions or
     proceedings brought to establish or enforce a right to indemnification
     under this Agreement or any other agreement or insurance policy or under
     the Company's Certificate of Incorporation or Bylaws now or hereafter in
     effect relating to Claims for Indemnifiable Events, (ii) in specific cases
     if the Board of Directors has approved the initiation or bringing of such
     Claim, or (iii) as otherwise required under Section 145 of the Delaware
     General Corporation Law, regardless of whether Indemnitee ultimately is
     determined to be entitled to such indemnification, advance expense payment
     or insurance recovery, as the case may be;

          (c) Lack of Good Faith.  To indemnify Indemnitee for any expenses
     incurred by Indemnitee with respect to any proceeding instituted by
     Indemnitee to enforce or interpret this Agreement, if a court of competent
     jurisdiction determines that each of the material assertions made by
     Indemnitee in such proceeding was not made in good faith or was frivolous;
     or

          (d) Claims Under Section 16(b).  To indemnify Indemnitee for expenses
     and the payment of profits arising from the purchase and sale by Indemnitee
     of securities in violation of Section 16(b) of the Securities Exchange Act
     of 1934, as amended, or any similar successor statute.

          (e) Disgorgement of Profits and Bonuses Pursuant to Section 304.  To
     indemnifiy Indemnitee for (i) any bonus or other incentive-based or
     equity-based compensation received by Indemnitee or (ii) any profits
     arising from the sale of securities made by Indemnitee that Indemnitee is
     required pursuant to Section 304 of the Sabarnes-Oxley Act of 2002 to
     reimburse to the Company.

     9. Period of Limitations.  No legal action shall be brought and no cause of
action shall be asserted by or in the right of the Company against Indemnitee,
Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of five (5) years from the date of accrual
of such cause of action, and any claim or cause of action of the Company shall
be extinguished and deemed released unless asserted by the timely filing of a
legal action within such five-year period; provided, however, that if any
shorter period of limitations is otherwise applicable to any such cause of
action, such shorter period shall govern.

     10. Construction of Certain Phrases.

          (a) For purposes of this Agreement, references to the "Company" shall
     include, in addition to the resulting corporation, any constituent
     corporation (including any constituent of a constituent) absorbed in a
     consolidation or merger which, if its separate existence had continued,
     would have had power and authority to indemnify its directors, officers,
     employees, agents or fiduciaries, so that if Indemnitee is or was a
     director, officer, employee, agent or fiduciary of such constituent
     corporation, or is or was serving at the request of such constituent
     corporation as a director, officer, employee, agent or fiduciary of another
     corporation, partnership, joint venture, employee benefit plan, trust or
     other enterprise, Indemnitee shall stand in the same position under the
     provisions of this Agreement with respect to the resulting or
                                        4
<PAGE>

     surviving corporation as Indemnitee would have with respect to such
     constituent corporation if its separate existence had continued.

          (b) For purposes of this Agreement, references to "other enterprises"
     shall include employee benefit plans; references to "fines" shall include
     any excise taxes assessed on Indemnitee with respect to an employee benefit
     plan; and references to "serving at the request of the Company" shall
     include any service as a director, officer, employee, agent or fiduciary of
     the Company which imposes duties on, or involves services by, such
     director, officer, employee, agent or fiduciary with respect to an employee
     benefit plan, its participants or its beneficiaries; and if Indemnitee
     acted in good faith and in a manner Indemnitee reasonably believed to be in
     the interest of the participants and beneficiaries of an employee benefit
     plan, Indemnitee shall be deemed to have acted in a manner "not opposed to
     the best interests of the Company" as referred to in this Agreement.

     11. Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.

     12. Binding Effect; Successors and Assigns.  This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company, spouses, heirs,
and personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect by purchase, merger, consolidation or
otherwise) to all, substantially all, or a substantial part, of the business
and/or assets of the Company, by written agreement in form and substance
satisfactory to Indemnitee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place. This Agreement shall
continue in effect with respect to Claims relating to Indemnifiable Events
regardless of whether Indemnitee continues to serve as a director, officer,
employee, agent or fiduciary of the Company or of any other enterprise at the
Company's request.

     13. Attorneys' Fees.  In the event that any action is instituted by
Indemnitee under this Agreement or under any liability insurance policies
maintained by the Company to enforce or interpret any of the terms hereof or
thereof, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee with respect to such action, regardless of whether Indemnitee is
ultimately successful in such action, and shall be entitled to the advancement
of Expenses with respect to such action, unless, as a part of such action, a
court of competent jurisdiction over such action determines that each of the
material assertions made by Indemnitee as a basis for such action was not made
in good faith or was frivolous. In the event of an action instituted by or in
the name of the Company under this Agreement to enforce or interpret any of the
terms of this Agreement, Indemnitee shall be entitled to be paid all Expenses
incurred by Indemnitee in defense of such action (including costs and expenses
incurred with respect to Indemnitee counterclaims and cross-claims made in such
action), and shall be entitled to the advancement of Expenses with respect to
such action, unless, as a part of such action, a court having jurisdiction over
such action determines that each of Indemnitee material defenses to such action
was made in bad faith or was frivolous.

     14. Notice.  All notices and other communications required or permitted
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given (a) five (5) days after deposit with the U.S. Postal
Service or other applicable postal service, if delivered by first class mail,
postage prepaid, (b) upon delivery, if delivered by hand, (c) one business day
after the business day of deposit with Federal Express or similar overnight
courier, freight prepaid, or (d) one day after the business day of delivery by
facsimile transmission, if delivered by facsimile transmission, with copy by
first class mail, postage prepaid, and shall be addressed if to Indemnitee, at
the Indemnitee address as set forth beneath Indemnitee signatures to this
Agreement and if to the Company at the address of its principal corporate
offices (attention: Secretary) or at such other address as such party may
designate by ten days' advance written notice to the other party hereto.

     15. Consent to Jurisdiction.  The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement
                                        5
<PAGE>

shall be commenced, prosecuted and continued only in the Court of Chancery of
the State of Delaware in and for New Castle County, which shall be the exclusive
and only proper forum for adjudicating such a claim.

     16. Severability.  The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including, without limitations, each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.

     17. Choice of Law.  This Agreement shall be governed by and its provisions
construed and enforced in accordance with the laws of the State of Delaware, as
applied to contracts between Delaware residents, entered into and to be
performed entirely within the State of Delaware, without regard to the conflict
of laws principles thereof.

     18. Subrogation.  In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee who shall execute all documents required and shall do all
acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.

     19. Amendment and Termination.  No amendment, modification, termination or
cancellation of this Agreement shall be effective unless it is in writing signed
by both the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.

     20. Integration and Entire Agreement.  This Agreement sets forth the entire
understanding between the parties hereto and supersedes and merges all previous
written and oral negotiations, commitments, understandings and agreements
relating to the subject matter hereof between the parties hereto.

     21. No Construction as Employment Agreement.  Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries.

                                        6
<PAGE>

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

                                          ENGENIO INFORMATION TECHNOLOGIES, INC.

                                          By:
                                          --------------------------------------

                                          Title:
                                          --------------------------------------

                                          1621 Barber Lane
                                          Milpitas, CA 95035

AGREED TO AND ACCEPTED
Signature:
--------------------------------------

Printed Name:
--------------------------------------

Address:
--------------------------------------

--------------------------------------

--------------------------------------

                                        7

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