Exhibit 10.2





 


EXECUTIVE COMPENSATION PLAN 2005




	
   

  	
   

  	
  EFFECTIVE DATE: JANUARY 1, 2005

  
	
   

  	
   

  	
   

  
	
  SUMMARY OF TERMS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Dana Kammersgard

  
	
  Title:

  	
   

  	
  President

  
	
  Base Salary

  	
   

  	
  $350,000

  
	
  On-Plan Bonus Target (as% of Base)

  	
   

  	
  70%

  
	
  Total On-Plan Cash Compensation Target:

  	
   

  	
  $595,000

  



 


PURPOSE


 


The objectives of this Plan are:


 


                        To
maintain focus on retaining revenue related to sales to Sun Microsystems and
the profitability of delivering product to Sun;


                        To
reward for diversification of Dot Hill’s customer base, while maintaining
reasonable margin requirements


                        To
reward for over-achievement of financial goals


 


REPLACEMENT OF EXHIBIT C


 


By signing this Executive Compensation Plan 2005(“Plan”), you hereby
agree that the terms of this Plan shall be in addition to the terms of the
Employment Agreement between you and Dot Hill dated August 2, 1999 (“Employment
Agreement”), and shall replace and supercede the terms of Exhibit C of the
Employment Agreement with respect to your base salary and bonus for the year
2005.  Otherwise, the terms of your
Employment Agreement remain unchanged. 
For any period of time after December 31, 2005, your base salary and
bonus shall be subject to change, as determined by Dot Hill’s Board of
Directors and/or Compensation Committee (“BOD”).


 


BONUS MEASUREMENTS


 


The metrics used to calculate earned bonus are as follows:


 


	
  Bonus Component

  	
   

  	
  Overall Bonus Weighting

  	
   

  	
  Your Bonus Target

  	
   

  
	
  Financial Goals
  Related to Sun Microsystems

  	
   

  	
  50

  	
  %

  	
  122,500

  	
   

  
	
  Financial Goals
  Related to Non-Sun Customers

  	
   

  	
  50

  	
  %

  	
  122,500

  	
   

  
	
  Total

  	
   

  	
  100

  	
  %

  	
  245,000

  	
   

  



 


1





















 


Financial Goals Related to Sun Microsystems


 


The below matrix will be used to determine the percentage to be applied
to your bonus target to derive the bonus earned.


 


 


% of Targeted Bonus Paid for Sun Financial Management


 


	
  % of Budgeted Sun

  Revenue Attained

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Above
  115%

  	
   

  	
  Above

  $262,499

  	
   

  	
  0

  	
  %

  	
  30

  	
  %

  	
  45

  	
  %

  	
  60

  	
  %

  	
  66

  	
  %

  	
  69

  	
  %

  	
  72

  	
  %

  
	
  115%

  	
   

  	
  $262,499

  	
   

  	
  0

  	
  %

  	
  29

  	
  %

  	
  43

  	
  %

  	
  58

  	
  %

  	
  63

  	
  %

  	
  66

  	
  %

  	
  69

  	
  %

  
	
  110%

  	
   

  	
  $251,086

  	
   

  	
  0

  	
  %

  	
  28

  	
  %

  	
  41

  	
  %

  	
  55

  	
  %

  	
  61

  	
  %

  	
  63

  	
  %

  	
  66

  	
  %

  
	
  105%

  	
   

  	
  $239,673

  	
   

  	
  0

  	
  %

  	
  26

  	
  %

  	
  39

  	
  %

  	
  53

  	
  %

  	
  58

  	
  %

  	
  60

  	
  %

  	
  63

  	
  %

  
	
  100%

  	
   

  	
  $228,260

  	
   

  	
  0

  	
  %

  	
  25

  	
  %

  	
  38

  	
  %

  	
  50

  	
  %

  	
  55

  	
  %

  	
  58

  	
  %

  	
  60

  	
  %

  
	
  95%

  	
   

  	
  $216,847

  	
   

  	
  0

  	
  %

  	
  20

  	
  %

  	
  30

  	
  %

  	
  40

  	
  %

  	
  44

  	
  %

  	
  46

  	
  %

  	
  48

  	
  %

  
	
  90%

  	
   

  	
  $205,434

  	
   

  	
  0

  	
  %

  	
  19

  	
  %

  	
  28

  	
  %

  	
  38

  	
  %

  	
  41

  	
  %

  	
  43

  	
  %

  	
  45

  	
  %

  
	
  85%

  	
   

  	
  $194,021

  	
   

  	
  0

  	
  %

  	
  13

  	
  %

  	
  19

  	
  %

  	
  25

  	
  %

  	
  28

  	
  %

  	
  29

  	
  %

  	
  30

  	
  %

  
	
  Below
  85%

  	
   

  	
  Below

  $194,021

  	
   

  	
  0

  	
  %

  	
  0

  	
  %

  	
  0

  	
  %

  	
  0

  	
  %

  	
  0

  	
  %

  	
  0

  	
  %

  	
  0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
  21

  	
  %

  	
  22

  	
  %

  	
  23

  	
  %

  	
  24

  	
  %

  	
  25

  	
  %

  	
  26

  	
  %

  	
  27

  	
  %

  



 


Gross Margin on Sun Revenue


 


 


Financial Goals Not Related to Sun Microsystems


 


As
it is imperative for the long-term success of Dot Hill to diversify its
customer base, this Plan is intended to motivate and reward the executive team
for obtaining new customers.


 


It is also important to manage the margin related to new
customers.  As such, we will use the
following matrix to determine the portion of the bonus


 


 


% of Targeted Bonus Paid for NON-Sun Financial Management


 


	
  % of Budgeted NON Sun

  Revenue Attained

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Above
  115%

  	
   

  	
  Above

  $88,000

  	
   

  	
  0

  	
  %

  	
  50

  	
  %

  	
  75

  	
  %

  	
  100

  	
  %

  	
  125

  	
  %

  	
  150

  	
  %

  	
  200

  	
  %

  
	
  200%

  	
   

  	
  $88,000

  	
   

  	
  0

  	
  %

  	
  38

  	
  %

  	
  56

  	
  %

  	
  75

  	
  %

  	
  94

  	
  %

  	
  113

  	
  %

  	
  150

  	
  %

  
	
  150%

  	
   

  	
  $66,000

  	
   

  	
  0

  	
  %

  	
  35

  	
  %

  	
  53

  	
  %

  	
  70

  	
  %

  	
  88

  	
  %

  	
  105

  	
  %

  	
  140

  	
  %

  
	
  125%

  	
   

  	
  $55,000

  	
   

  	
  0

  	
  %

  	
  31

  	
  %

  	
  47

  	
  %

  	
  63

  	
  %

  	
  78

  	
  %

  	
  94

  	
  %

  	
  125

  	
  %

  
	
  100%

  	
   

  	
  $44,000

  	
   

  	
  0

  	
  %

  	
  25

  	
  %

  	
  38

  	
  %

  	
  50

  	
  %

  	
  63

  	
  %

  	
  75

  	
  %

  	
  100

  	
  %

  
	
  95%

  	
   

  	
  $41,800

  	
   

  	
  0

  	
  %

  	
  20

  	
  %

  	
  30

  	
  %

  	
  40

  	
  %

  	
  50

  	
  %

  	
  60

  	
  %

  	
  80

  	
  %

  
	
  90%

  	
   

  	
  $39,600

  	
   

  	
  0

  	
  %

  	
  19

  	
  %

  	
  28

  	
  %

  	
  38

  	
  %

  	
  47

  	
  %

  	
  56

  	
  %

  	
  75

  	
  %

  
	
  85%

  	
   

  	
  $37,400

  	
   

  	
  0

  	
  %

  	
  13

  	
  %

  	
  19

  	
  %

  	
  25

  	
  %

  	
  31

  	
  %

  	
  38

  	
  %

  	
  50

  	
  %

  
	
  below
  85%

  	
   

  	
  Below

  $37,400

  	
   

  	
  0

  	
  %

  	
  0

  	
  %

  	
  0

  	
  %

  	
  0

  	
  %

  	
  0

  	
  %

  	
  0

  	
  %

  	
  0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
  19

  	
  %

  	
  20

  	
  %

  	
  21

  	
  %

  	
  22

  	
  %

  	
  23

  	
  %

  	
  24

  	
  %

  	
  25

  	
  %

  



 


Gross Margin on NON Sun Revenue


 


 


The maximum bonus earnable by participants is 72% (maximum for Sun
related financial results) plus 200% (maximum for non-Sun related financial
results), or 272% of the targeted bonus.


 


2





















 


EXAMPLE


 


(This is a sample only and does not necessarily reflect an actual
situation.  This is used only for
illustrative purposes and the actual Plan wording applies, not this example.)


 


ASSUMPTIONS


 


•                  Incentive Target is $100,000


•                  Sun revenue for the year ending Dec 31, 2005 is $220,000,000


•                  Margin on Sun revenue is 27%


•                  Non-Sun revenue for the year ending Dec 31, 2005 is $50,000,000


•                  Margin on Non-Sun revenue is 21%


 


CALCULATION


 


•                  Using the Sun Financial Results Table, intersection between $220M and
27% is:  44%


•                  Using the Non Sun Financial Results Table, intersection between $50M
and 21% is: 47%


•                  44% + 47% = 91%


•                  $100,000 x 91% = $91,000


 


 


PAYMENT PROCESS AND TIMING


 


The Company must be profitable inclusive of bonus
accrual in order for the bonus to be paid.


 


Bonus is paid annually as soon as practicable after an audit of the
Company’s fiscal year 2005 results has been completed and after the Dot Hill
Board of Directors and/or Compensation Committee (“BOC”) has approved the
payment.


 


CHANGES


 


This Plan is subject to
change at any time at the Company’s sole discretion.  The Company will endeavor to provide
reasonable advance notice, but is no obligation to do so.


 


TERMINATION


 


You must be an employee in good standing on the last day of the fiscal
year to be eligible for bonus payout.


 


ENTIRE AGREEMENT AND GENERAL


 


This Plan is governed by the laws of the State of California, excluding
choice of law principles.  This Agreement
shall be binding upon, and inure to the benefit of, the successors and assigns
of the parties.  If any provision of this
Plan is found to be invalid or unenforceable, this Plan shall be deemed amended
to delete or modify, as necessary, the invalid or unenforceable provision to
render it consistent with the original intent of the parties.  The failure of a party to require performance
of any obligations under this Plan shall not be deemed a waiver and shall not
affect its right to enforce any provision of this Agreement at a subsequent
time.


 


This Plan constitutes the entire understanding and agreement of the
parties with respect to its subject matter and supersedes all prior and
contemporaneous agreements or understandings between the parties.


 


This Plan does not guarantee payment of any actual amount since it is
conditioned on the factors noted above.


 


This Plan does not modify or amend in any manner
the “at-will” status of the Participant and both parties reaffirm that the
employment relationship between the Company and you as the Participant is one
of employment “at-will” with either party having the right to terminate the
relationship at any time with or without cause.


 


3





















 


Any term or provision of the Plan may be amended, and the observance of
any term of this Agreement may be waived, only by a writing signed by you and
both the CEO and the Chairman of the Compensation Committee


 


Acknowledged and agreed as the Effective Date.


 


	
  /s/ Dana Kammersgard

  	
   

  
	
  Dana Kammersgard

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Jim Lambert

  	
   

  
	
  Jim Lambert, CEO

  	
   

  



 


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