AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT
EXHIBIT 10.1
AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT
This Amended and Restated Change Of Control Agreement (the “Agreement”) is made as of
April 6, 2006 between Dot Hill Systems Corp., a Delaware corporation (the “Company”), and
Xxxx Xxxxxxxxxxx (“Employee”).
Whereas, the Company and the Employee previously entered into that certain Change Of
Control Agreement dated August 23, 2001 (the “Prior Agreement”);
Whereas, the Company and the Employee desire to amend and restate the Prior Agreement
in its entirety as set forth below; and
Whereas, in order to provide an incentive for Employee to participate actively in the
affairs and maximize the value of the Company, the Company is willing to provide Employee with
certain benefits on the terms and conditions set forth below.
Now Therefore, for good and valuable consideration, the sufficiency of which is
hereby acknowledged, Employee and the Company (each, a “Party,” and collectively, the “Parties”)
agree that the Prior Agreement is hereby amended and restated in its entirety as set forth below
and agree as follows:
1. Benefits in the Event of a Change of Control. If a Change of Control (defined below)
occurs then, without further action by Employee or the Company, Employee shall be entitled to the
benefits set forth below:
(a) As of immediately prior to such Change of Control, the vesting applicable to all options
to purchase shares of the Company’s capital stock (“Options”) and all shares of the Company’s
capital stock which are subject to the company’s right to repurchase such shares (“Restricted
Stock”) held by Employee as of the effective date of such Change of Control shall be accelerated in
full such that Employee shall have the right to exercise in accordance with the terms thereof all
or any portion of such Options (notwithstanding any vesting schedule set forth in such Options) and
any such Company repurchase rights with respect to such Restricted Stock shall lapse in full; and
(b) Employee shall be entitled to a lump sum cash payment in an amount equal to one hundred
twenty-five percent (125%) of Employee’s annual base salary in effect as of the date of such Change
of Control (the “Lump Sum Payment”), subject to applicable withholdings as required by applicable
law, payable on the Effective Date specified in a Release delivered by Employee to the Company
following such Change of Control in the form attached to Employee’s Employment Agreement with the
Company dated August 2, 1999 (the “Employment Agreement”). The Lump Sum Payment provided for in
this Section 1(a)(ii) shall be reduced by the amount of any cash severance payment made to Employee
by the Company pursuant to paragraph 10 of the Employment Agreement. Any payments made pursuant to
paragraph 10 of the Employment Agreement shall be reduced by the amount of any cash payments made
hereunder.
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For purposes of this Agreement, “Change of Control” shall mean: (1) a dissolution or
liquidation of the Company; (2) any sale or transfer of all or substantially all of the assets of
the Company; (3) any merger, consolidation or similar transaction in which the holders of the
Company’s outstanding voting securities immediately prior to such transaction do not hold,
immediately following such transaction, securities representing fifty percent (50%) or more of the
combined voting power of the outstanding securities of the surviving entity; or (4) the acquisition
by any person (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), in a single transaction or series of related
transactions, of beneficial ownership (within the meaning of Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of securities representing fifty percent (50%) or
more of the combined voting power of the then-outstanding securities of the Company, excluding in
any case shares of capital stock of the Company purchased from the Company in a transaction the
principal purpose of which is to raise capital for the Company.
2. Golden Parachute Taxes. In the event that any payment or distribution by the Company,
or the grant of any benefit by the Company, to or for the benefit of Employee (whether paid or
payable, distributed or distributable or granted or to be granted pursuant to the terms of this
Agreement or otherwise) (collectively, “Benefits”) would be nondeductible by the Company for
federal income tax purposes because of Section 280G of the Internal Revenue Code (the “Code”)
and/or would cause Employee to be liable for an excise tax pursuant to Section 4999 of the Code,
then the Benefits paid, distributed or granted to Employee under this Agreement shall equal (i) the
full amount of such Benefits or (ii) the Reduced Amount (as defined below), whichever of the
foregoing amounts is determined by the Company to result, on an after-tax basis, in the receipt by
Employee of the greatest amount of such Benefits, notwithstanding that all or some portion of the
Benefits may be taxable under Section 4999 of the Code. In making its determination pursuant to
the preceding sentence, the Company shall take into account all applicable Federal, state, and
local employment and income taxes, as well as the excise tax imposed by Section 4999 of the Code.
For purposes of this Section 4, the “Reduced Amount” shall be the maximum amount payable to
Employee that would result in no portion of the Benefits being (i) nondeductible by the Company
under Section 280G of the Code or (ii) subject to an excise tax liability under Section 4999 of the
Code. Notwithstanding the foregoing and any other provision contained herein, in the event (as a
result of Benefits to be received under this Agreement or any other plan or arrangement between the
Employee and the Company) of any required reduction, as a result of Section 4999 of the Code, of
Benefits to be received by Employee, reduction shall be made from such other plan or arrangement
prior to any reduction relating to Benefits to be received by Employee under this Agreement.
3. Application of Code Section 409A. If the Company determines that any of the Benefits
fail to satisfy the distribution requirement of Section 409A(a)(2)(A) of the Code as a result of
Section 409A(a)(2)(B)(i) of the Code, the payment of such benefit shall be accelerated to the
minimum extent necessary so that such benefit is not subject to the provisions of Section
409A(a)(1) of the Code. (It is the intention of the preceding sentence to apply the short-term
deferral provisions of Section 409A of the Code, and the regulations and other guidance thereunder,
to the Benefits, and the payment schedule as revised after the application of the preceding
sentence shall be referred to as the “Revised Payment Schedule.”) However, if there is no Revised
Payment Schedule that would avoid the application of Section 409A(a)(1) of the Code, the payment of
such benefits shall not be paid pursuant to a Revised Payment Schedule
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and instead shall be delayed to the minimum extent necessary so that such benefits are not subject
to the provisions of Section 409A(a)(1) of the Code. The Board may attach conditions to or adjust
the amounts paid pursuant to this Section 3 to preserve, as closely as possible, the economic
consequences that would have applied in the absence of this Section 3; provided, however, that no
such condition or adjustment shall result in the payments being subject to Section 409A(a)(1) of
the Code.
4. General Provisions.
(a) This Agreement shall be governed by the laws of the State of California (without regard to
principles of conflict of laws).
(b) Any notice, demand or request required or permitted to be given by either the Company or
Employee pursuant to the terms of this Agreement shall be in writing and shall be deemed given when
delivered personally or deposited in the U.S. mail, First Class with postage prepaid, and addressed
to the parties at such addresses as have been previously furnished by the Parties or such other
address as a Party may request by notifying the other in writing.
(c) The rights and obligations of Employee under this Agreement may not be transferred or
assigned without the prior written consent of the Company.
(d) This Agreement is meant to supplement the terms of stock option agreement(s) or other
agreement(s) pursuant to which Employee acquired the Options, as well as any written employment
agreement between the Company and Employee. To the extent that the terms and conditions of this
Agreement are inconsistent with those found in such stock option agreement(s) or other agreement(s)
(employment or otherwise), the terms and conditions of this Agreement shall be controlling.
(e) Any Party’s failure to enforce any provision or provisions of this Agreement shall not in
any way be construed as a waiver of any such provision or provisions, nor prevent any Party from
thereafter enforcing each and every other provision of this Agreement. The rights granted the
Parties herein are cumulative and shall not constitute a waiver of any Party’s right to assert all
other legal remedies available to it under the circumstances.
(f) Employee agrees upon request to execute any further documents or instruments necessary or
desirable to carry out the purposes or intent of this Agreement.
(g) In case any provision of this Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in any way be affected
or impaired.
(h) This Agreement, in whole or in part, may be modified, waived or amended upon the written
consent of the Company and Employee.
(i) Notwithstanding anything to the contrary herein, nothing contained in this Agreement shall
in any way alter Employee’s rights under the Employment Agreement except for the last sentence of
paragraph 1(b) above.
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(j) This Agreement may be executed in one or more counterparts, each of which shall be deemed
an original, but all of which shall constitute one instrument.
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In Witness Whereof, the undersigned have set their hand as of the date first above written.
Employee
|
Dot Hill Systems Corp. | |||||
/s/ Xxxx Xxxxxxxxxxx
|
/s/ Xxxx X. Xxxxx | |||||
Xxxx Xxxxxxxxxxx
|
Xxxx X. Xxxxx, | |||||
| Interim Chief Financial Officer, Vice | ||||||
| President of Finance, and Corporate | ||||||
| Controller and Assistant Secretary |
[Signature Page To Change Of Control Agreement]
