AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
This
Amended and
Restated Employment Agreement (the
“Agreement” ) is made and entered into
effective as of December 18, 2008 (the “Effective
Date” ), by and between Dot Hill Systems Corp. , a
Delaware corporation (the “Company” ),
and Dana
Kammersgard (the “Executive”
). The Company and the Executive are hereinafter collectively
referred to as the “Parties” , and
individually referred to as a “Party” .
This Agreement shall replace and supersede that certain Employment
Agreement between Executive and the Company entered into effective
as of August 2, 1999 and the Change of Control Agreement
entered into on April 6, 2006 (together the “
Prior Agreements ”).
A.
The Company desires assurance of the continued association and
services of the Executive in order to retain the Executive’s
experience, skills, abilities, background and knowledge, and is
willing to engage the Executive’s services on the terms and
conditions set forth in this Agreement.
B.
The Executive desires to continue to be in the employ of the
Company, and is willing to accept such continued employment on the
terms and conditions set forth in this Agreement.
C.
The Company and the Executive desire to amend and restate the Prior
Agreements in their entirety as set forth herein, effective as of
the date set forth above, to, among other things, clarify the
application of Section 409A of the Internal Revenue Code of
1986, as amended (the “ Code ”) to the
benefits that may be provided to the Executive.
In consideration
of the foregoing Recitals and the mutual promises and covenants
herein contained, and for other good and valuable consideration,
the Parties, intending to be legally bound, agree as
follows:
1.1 Term.
The Company hereby employs the Executive, and the Executive hereby
accepts employment by the Company, upon the terms and conditions
set forth in this Agreement, until the termination of the
Executive’s employment in accordance with Section 4
below, as applicable (the “Term” ). The
Executive shall be employed at will, meaning that either the
Company or the Executive may terminate this agreement and
Executive’s employment at anytime, for any reason or no
reason, with or without cause, without liability to the other save
for wages earned through the effective date of termination and
severance compensation and benefits provided in Section 4, as
applicable.
1.2 Title.
The Executive shall have the title of Chief Executive Officer and
President ( “CEO” ) of the Company and
shall serve in such other capacity or capacities as the Board
of
Directors of
the Company (the “Board” ) may from time
to time prescribe with Executive’s consent.
1.3
Duties. The Executive shall do and perform all services, acts
or things necessary or advisable to manage and conduct the business
of the Company and which are normally associated with the position
of CEO, consistent with the bylaws of the Company and as required
by the Board.
1.4 Policies
and Practices. The employment relationship between the Parties
shall be governed by the policies and practices established from
time to time by the Company and the Board.
1.5
Location. Unless the Parties otherwise agree in writing, during
the term of this Agreement, the Executive shall perform the
services Executive is required to perform pursuant to this
Agreement at the Company’s offices, located in Carlsbad,
California, or, with the consent of the Company and Executive, at
any other place at which the Company maintains an office; provided,
however, that the Company may from time to time require the
Executive to travel temporarily to other locations in connection
with the Company’s business.
2.
Loyal And Conscientious Performance;
Noncompetition.
2.1
Loyalty. During the Executive’s employment by the
Company, the Executive shall devote Executive’s full business
energies, interest, abilities and productive time to the proper and
efficient performance of Executive’s duties under this
Agreement. Notwithstanding the foregoing, Executive may engage in
personal, investment, civic, and charitable activities to the
extent they do not unreasonably interfere with Executive’s
performance of his duties under this Agreement or violate
paragraphs 2.2 or 2.3 of this Agreement.
2.2 Covenant
not to Compete. Except with the prior written consent of the
Board, the Executive will not, during the Term of this Agreement
and the Consulting Period (as defined in Section 6), engage in
competition with the Company and/or any of its Affiliates, either
directly or indirectly, in any manner or capacity, as adviser,
principal, agent, affiliate, promoter, partner, officer, director,
employee, stockholder, owner, co-owner, consultant, or member of
any association or otherwise, in any phase of the business of
developing, manufacturing and marketing of products or services
which are in the same field of use or which otherwise compete with
the products or services or proposed products or services of the
Company and/or any of its Affiliates. For purposes of this
Agreement, “Affiliate” means, with
respect to any specific entity, any other entity that, directly or
indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with such specified
entity. Ownership by the Executive, as a passive investment, of
less than two percent (2%) of the outstanding shares of a capital
stock of any corporation with one or more classes of its capital
stock listed on a national or foreign securities exchange or
publicly traded on the Nasdaq Stock Market or in the
over-the-counter market shall not constitute a breach of this
paragraph.
2.3 Agreement
not to Participate in Company’s Competitors. During the
Term and the Consulting Period, the Executive agrees not to
acquire, assume or participate in, directly or indirectly, any
position, investment or interest known by Executive to be adverse
or
antagonistic to
the Company, its business or prospects, financial or otherwise or
in any company, person or entity that is, directly or indirectly,
in competition with the business of the Company or any of its
Affiliates. Ownership by the Executive, as a passive investment, of
less than two percent (2%) of the outstanding shares of capital
stock of any corporation with one or more classes of its capital
stock listed on a national or foreign securities exchange or
publicly traded on the Nasdaq Stock Market or in the
over-the-counter market shall not constitute a breach of this
paragraph.
3.
Compensation Of The
Executive.
3.1 Base
Salary. The Company shall pay the Executive a base salary of
Three Hundred Sixty-Seven Thousand Five Hundred dollars ($367,500)
per year, less payroll deductions and all required withholdings
payable in regular periodic payments in accordance with Company
policy (the “Base Salary” ). Such Base
Salary shall be prorated for any partial year of employment on the
basis of a 365-day fiscal year.
3.2 Annual
Discretionary Bonus. In addition to the Executive’s Base
Salary, the Executive will be eligible to receive an annual bonus
pursuant to the Company’s Executive Compensation Plan. The
bonus amount the Executive will actually receive, if any, shall be
determined in the sole and absolute discretion of the Compensation
Committee of the Board by evaluating the Executive’s and the
Company’s performance against milestones and targets
established by the Compensation Committee in its sole and absolute
discretion and set forth in the Executive Compensation Plan. The
good faith determinations of the Compensation Committee with
respect to the amount or payment of any bonus shall be final and
binding. Any bonus that is earned by the Executive under the
Executive Compensation Plan, or any other bonus plan approved by
the Compensation Committee, shall be paid to the Executive during
the Company’s fiscal year immediately following the fiscal
year for which such bonus was earned.
3.3 Changes to
Compensation. The Executive’s compensation may be changed
from time to time by mutual agreement of the Executive and the
Company.
3.4 Employment
Taxes. All of the Executive’s compensation shall be
subject to customary withholding taxes and any other employment
taxes as are commonly required to be collected or withheld by the
Company.
3.5
Benefits. The Executive shall, in accordance with Company
policy and the terms of the applicable plan documents, be eligible
to participate in benefits under any executive benefit plan or
arrangement that may be in effect from time to time and is made
generally available to the Company’s executive or key
management employees, including but not limited to paid vacation
and medical insurance, provided that, the Executive shall receive
not less than four (4) weeks paid vacation per
year.
3.6 Stock Awards. The Company
may grant the Executive stock awards to purchase the
Company’s common stock at such times and on such terms as may
be decided from time to time by the Board, in its sole
discretion.
4.1
Termination. If the Executive’s employment is terminated
(either by the Company, by the Executive, or due to the
Executive’s death or Complete Disability), then the Company
shall pay to Executive or Executive’s heirs the
Executive’s Base Salary, any bonus awarded under
Section 3.2 not previously paid, and any accrued and unused
vacation benefits, each as earned through the date of termination
at the rate then in effect, less standard deductions and
withholdings, and the Company shall thereafter have no further
obligations to the Executive and/or the Executive’s heirs
under this Agreement, except as expressly provided in
Section 4.2.
4.2 Benefits
Upon Termination Without Cause or for Good Reason. Other than a
termination due to Executive’s death or Complete Disability,
in the event the Executive’s employment with the Company is
terminated by the Company without Cause (as defined below) or the
Executive terminates his employment for Good Reason (as defined
below), subject to Executive’s delivery to the Company of a
Release and Waiver in the form attached hereto as
Exhibit A within the applicable time period set forth
therein, but in no event later than forty-five (45) days
following termination of Executive’s employment, and
permitting such Release and Waiver to become fully effective in
accordance with its terms, (the date Executive’s Release
becomes fully effective, the “Release Effective
Date” ), the Company shall provide the Executive with
the following benefits hereunder, as applicable (the “
Severance Benefits ”):
(a) If Executive’s termination occurs prior to the
effective date of a Change of Control, Executive shall be entitled
to severance pay in the form of a single lump sum payment equal to
100% of the Executive’s annual Base Salary then in effect.
Notwithstanding anything to the contrary set forth herein, if
Executive is entitled to Severance Benefits under this
Section 4.2(a), Executive will not be entitled to any benefits
pursuant to Section 5.1(a).
(b) If Executive’s termination occurs following the
effective date of a Change of Control, Executive shall be entitled
to severance pay in the form of a single lump sum payment equal to
100% of the Executive’s annual Base Salary as then in effect,
less the amount of any Change of Control Cash Bonus paid to
Executive pursuant to Section 5.1(a). It is the intent of this
provision that Executive will receive Severance Benefits under this
subsection only if Executive’s annual Base Salary increases
by more than 25% following the effective date of a Change of
Control.
(c) For purposes of calculating the Severance Benefits, the
Executive’s Base Salary shall be calculated based on the rate
in effect prior to any material reduction in Base Salary that would
give the Executive the right to resign for Good Reason, as defined
below. Such Severance Benefits payment shall be subject to standard
deductions and withholdings and paid in accordance with the
Company’s regular payroll policies and practices in the first
payroll period following the Release Effective Date.
4.3
Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
4.3.1 Good Reason. “Good Reason” for the
Executive to terminate the Executive’s employment hereunder
shall mean the occurrence of any of the following events without
the Executive’s consent; provided however, that any
resignation by the Executive due to any of the following conditions
shall only be deemed for Good Reason if: (i) the Executive
gives
the Company
written notice of the intent to terminate for Good Reason within
ninety (90) days following the first occurrence of the condition(s)
that the Executive believes constitutes Good Reason, which notice
shall describe such condition(s); (ii) the Company fails to
remedy, if remediable, such condition(s) within thirty
(30) days following receipt of the written notice (the “
Cure Period ”) of such condition(s) from the
Executive; and (iii) Executive actually resigns his employment
within the first fifteen (15) days after expiration of the
Cure Period.
(i) a material reduction by the Company of the
Executive’s Base Salary as initially set forth herein or as
the same may be increased from time to time;
(ii) the relocation of the Company’s executive
offices or principal business location to a point more than sixty
(60) miles from the Carlsbad, California area, which
relocation requires an increase in the Executive’s one-way
driving distance by more than thirty-five (35) miles; or
(iii) a material breach of this Agreement by the
Company.
4.3.2 Cause. “ Cause ” shall be limited
to the occurrence of any of the following events, as set forth in a
written resolution duly adopted by a majority of the Board: (i)
Executive continuing to engage in conduct which causes material
harm to the Company after having been given thirty (30) days
written notice of such determination by the Board,
(ii) Executive’s indictment for violation of any Law
constituting a felony (including the Foreign Corrupt Practices Act
of 1977) or the foreign equivalent thereof,
(iii) Executive’s continuing failure to perform the
lawful directives of the Board or Executive’s employment
duties and responsibilities to the Company, in each case in all
material respects and after having been given thirty (30) days
written notice of such determination by the Board which written
notice shall specifically identify the directive alleged not to
have been followed or the employment duties which it is alleged
Executive has continually failed to substantially perform, the
basis for the Board’s determination thereof and the specific
corrective action that the Board proposes that Executive take, and
(iv) Executive’s incurable breach of any material element of
the Company’s Confidential Information and Inventions
Agreement. In no event shall Executive’s death or Complete
Disability constitute Cause or the basis for any termination
therefor.
4.3.3 Complete Disability. “Complete
Disability” shall mean the inability of the Executive
to perform the Executive’s duties under this Agreement
because the Executive has become permanently disabled within the
meaning of any policy of disability income insurance covering
employees of the Company then in force. In the event the Company
has no policy of disability income insurance covering employees of
the Company in force when the Executive becomes disabled, the term
Complete Disability shall mean the inability of the Executive to
perform the Executive’s duties under this Agreement by reason
of any incapacity, physical or mental, which the Board, based upon
medical advice or an opinion provided by a licensed physician
acceptable to the Board, determines to have incapacitated the
Executive from satisfactorily performing the Executive’s
usual services for the Company for a period of at least ninety
(90) consecutive days during any 12-month period. Based upon
such medical advice or opinion, the determination of the Board
shall be final and binding, and the date such determination is made
shall be the date of such Complete Disability for purposes of this
Agreement.
5.
Change of Control
Bonus
5.1 Change of
Control Bonus Benefits. Subject to the limitations set forth in
Section 4.2(a), in the event that Executive continues in
employment with the Company through the effective date of a Change
of Control, the Company shall provide the Executive with the
following benefits hereunder:
(a) A lump sum cash payment equal to 125% of the
Executive’s annual Base Salary (the “ Change of
Control Cash Bonus ”). For purposes of calculating
the bonus amount to be paid pursuant this Section 5.1(a), the
Company shall use the Executive’s annual Base Salary as in
effect immediately prior to the Change of Control. Such payment
shall be subject to standard deductions and withholdings and paid
in accordance with the Company’s regular payroll policies and
practices in the first payroll period following the effective date
of the Change of Control; and
(b) As of immediately prior to the Change of Control, the
vesting of all unvested Company equity awards granted to Executive
shall accelerate immediately such that all equity awards will be
immediately fully vested and exercisable, if
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