exv10w2







	 	 	 	 	 



Exhibit 10.2




EMPLOYMENT AGREEMENT





     This 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 Hanif Jamal (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 Change of Control
Agreement between Executive and the Company entered into on July 14, 2006 (the “Prior Agreement”).



Recitals




     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 Agreement in their entirety
as set forth herein, effective as of the date set forth above, and to set forth the terms and
conditions of Executive’s continued employment with the Company.



Agreement




     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. Employment.




     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.



     1.2 Title. The Executive shall have the title of Senior Vice President & Chief Financial
Officer (“CFO”) of the Company and shall serve in such other capacity or capacities as the Board of
Directors of the Company (the “Board”) or the Company’s Chief Executive Officer may from time to
time prescribe with Executive’s consent.



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     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 CFO, consistent with the bylaws of the Company and as required by the Board and the
Chief Executive Officer.



     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 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 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



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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 Two Hundred Seventy
Thousand dollars ($270,000) 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. Termination. 




     4.1 Termination. If the Executive’s employment is terminated for any reason (either by the
Company, by the Executive, or due to the Executive’s death or 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,



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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.



5. Change of Control Bonus




     5.1 Change of Control Bonus Benefits. 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 applicable.




     5.2 Change of Control. For purposes of this Agreement, “Change of Control” means: (i) a
dissolution or liquidation of the Company; (ii) any sale or transfer of all or substantially all of
the assets of the Company; (ii) 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 (iv) 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.



     5.3 Parachute Payment. If any payment or benefit the Executive would receive pursuant to a
Change of Control or otherwise (“Payment”) would (i) constitute a “parachute payment” within the
meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax
imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be either (x) the
largest portion of the Payment that would result in no portion of the Payment being subject to the
Excise Tax or (y) the full Payment, whichever amount, after taking into account all applicable
federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the
highest applicable marginal rate), results in the Executive’s receipt, on an after-tax basis, of
the greater amount of the Payment notwithstanding that all or some portion of the Payment may be
subject to the Excise Tax. If a reduction in payments or



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benefits constituting “parachute payments” is necessary pursuant to the preceding sentence,
reduction shall occur in the following order: reduction of cash payments; cancellation of
accelerated vesting of stock awards; reduction of employee benefits. In the event that
acceleration of vesting of stock award compensation is to be reduced, such acceleration of vesting
shall be cancelled in the reverse order of the date of grant of the Executive’s stock awards.



     The accounting firm engaged by the Company for general audit purposes as of the day prior to
the effective date of the Change of Control shall perform the foregoing calculations. If the
accounting firm so engaged by the Company is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, then the Company shall appoint a nationally
recognized accounting firm to make the determinations required hereunder. The Company shall bear
all expenses with respect to the determinations by such accounting firm required to be made
hereunder.



     The accounting firm engaged to make the determinations hereunder shall provide its calculations,
together with detailed supporting documentation, to Executive and the Company within fifteen (15)
calendar days after the date on which the Executive’s right to a Payment is triggered (if requested
at that time by the Executive or the Company) or such other time as requested by Executive or the
Company. If the accounting firm determines that no Excise Tax is payable with respect to a
Payment, either before or after the application of the Reduced Amount, it shall furnish the
Executive and the Company with an opinion reasonably acceptable to Executive that no Excise Tax
will be imposed with respect to such Payment. Any good faith determinations of the accounting firm
made hereunder shall be final, binding and conclusive upon the Executive and the Company, except as
set forth below.



     If, notwithstanding any reduction described in this Section 5.3, the IRS determines that the
Executive is liable for the Excise Tax as a result of the receipt of the payment of benefits as
described above, then the Executive shall be obligated to pay back to the Company, within thirty
(30) days after a final IRS determination or in the event that the Executive challenges the final
IRS determination, a final judicial determination, a portion of the payment equal to the “Repayment
Amount.” The Repayment Amount with respect to the payment of benefits shall be the smallest such
amount, if any, as shall be required to be paid to the Company so that the Executive’s net
after-tax proceeds with respect to any payment of benefits (after taking into account the payment
of the Excise Tax and all other applicable taxes imposed on such payment) shall be maximized. The
Repayment Amount with respect to the payment of benefits shall be zero if a Repayment Amount of
more than zero would not result in the Executive’s net after-tax proceeds with respect to the
payment of such benefits being maximized. If the Excise Tax is not eliminated pursuant to this
paragraph, the Executive shall pay the Excise Tax.



     Notwithstanding any other provision of this Section 5.3, if (i) there is a reduction in the payment
of benefits as described in this section, (ii) the IRS later determines that the Executive is
liable for the Excise Tax, the payment of which would result in the maximization of the Executive’s
net after-tax proceeds (calculated as if the Executive’s benefits had not previously been reduced),
and (iii) the Executive pays the Excise Tax, then the Company shall pay to the Executive those
benefits which were reduced pursuant to this section contemporaneously or as



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soon as
administratively possible after the Executive pays the Excise Tax so that the Executive’s net
after-tax proceeds with respect to the payment of benefits is maximized.



6. Exclusive Benefits. 




     The Executive acknowledges and agrees that, except as expressly provided herein and except for
benefits due to the Executive (or the Executive’s dependants) under the terms of the Executive’s
benefit plans, he is not entitled to receive any additional compensation from the Company,
including but not limited to salary, bonus payments, or severance payments.



7. Confidential And Proprietary Information; Nonsolicitation. 




     7.1 As a condition of employment the Executive agrees to execute and abide by the Confidential
Information and Inventions Agreement between Executive and the Company dated July 5, 2006.



     7.2 While employed by the Company and for one (1) year thereafter, the Executive agrees that
in order to protect the Company’s Confidential Information (as defined in the Executive’s
Confidential Information and Inventions Agreement) from unauthorized use, that the Executive will
not without the consent of the Company, either directly or through others, solicit or attempt to
solicit, engage or hire (a) any employee, consultant or independent contractor of the Company to
terminate his or her relationship with the Company in order to become an employee, consultant or
independent contractor to or for any other person or business entity; or (b) the business of any
customer, supplier, service provider, vendor or distributor of the Company which, at the time of
termination or one (1) year immediately prior thereto, was doing business with the Company or
listed on Company’s customer, supplier, service provider, vendor or distributor list.



8. Assignment of Inventions.




     The Executive hereby assigns to the Company any and all right, title, and interest in any invention
which he has developed during the period which the Executive has acted as a consultant to the
Company or has been employed by the Company which (i) relates to the Company’s business or
anticipated research or development, (ii) resulted from any work performed for the Company by the
Executive, or (iii) was developed by Executive using the Company’s facilities or resources.



9. Assignment And Binding Effect. 




     This Agreement shall be binding upon and inure to the benefit of the Executive and the Executive’s
heirs, executors, personal representatives, assigns, administrators and legal representatives.
Because of the unique and personal nature of the Executive’s duties under this Agreement, neither
this Agreement nor any rights or obligations under this Agreement shall be assignable by the
Executive. This Agreement shall be binding upon and inure to the benefit of the Company and its
successors, assigns and legal representatives.



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10. Choice Of Law. 




     This Agreement is made in Carlsbad, California. This Agreement shall be construed and interpreted
in accordance with the internal laws of the State of California (without giving effect to
principles of conflicts of law).



11. Integration. 




     This Agreement contains the complete, final and exclusive agreement of the Parties relating to the
terms and conditions of the Executive’s employment and the termination of the Executive’s
employment, and supersedes all prior and contemporaneous oral and written employment agreements or
arrangements between the Parties and between the Executive and the Company, including but not
limited to the Prior Agreement. To the extent this Agreement conflicts with the Confidential
Information and Inventions Agreement between Executive and the Company dated July 5, 2006, the
Confidential Information and Inventions Agreement controls.



12. Amendment. 




     This Agreement cannot be amended or modified except by a written agreement signed by the Executive
and the Chairman of the Board (if not the Executive) or other representative specifically
authorized by the Board to execute any such amendment or modification to this Agreement on behalf
of the Company.



13. Survival of Certain Provisions. 




     Sections 3.4, 6 through 11, 13 through 17, 19 and 22 shall survive the termination of this
Agreement.



14. Waiver. 




     No term, covenant or condition of this Agreement or any breach thereof shall be deemed waived,
except with the written consent of the Party against whom the wavier is claimed, and any waiver or
any such term, covenant, condition or breach shall not be deemed to be a waiver of any preceding or
succeeding breach of the same or any other term, covenant, condition or breach.



15. Severability. 




     The finding by a court of competent jurisdiction of the unenforceability, invalidity or illegality
of any provision of this Agreement shall not render any other provision of this Agreement
unenforceable, invalid or illegal. Such court shall have the authority to modify or replace the
invalid or unenforceable term or provision with a valid and enforceable term or provision which
most accurately represents the Parties’ intention with respect to the invalid or unenforceable term
or provision. Any such invalid or unenforceable term or provision shall be revised to the minimum
extent necessary to make any such term or provision valid or enforceable in accordance with the
Parties’ intentions with respect to such term or provision.



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16. Interpretation; Construction. 




     The headings set forth in this Agreement are for convenience of reference only and shall not be
used in interpreting this Agreement. This Agreement has been drafted by legal counsel representing
the Company, but the Executive has been encouraged to consult with, and has
consulted with, the Executive’s own independent counsel and tax advisors with respect to the terms
of this Agreement. The Parties acknowledge that each Party and its counsel has reviewed and
revised, or had an opportunity to review and revise, this Agreement, and the normal rule of
construction to the effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement.



17. Representations And Warranties. 




     The Executive represents and warrants that the Executive is not restricted or prohibited,
contractually or otherwise, from entering into and performing each of the terms and covenants
contained in this Agreement, and that Executive’s execution and performance of this Agreement will
not violate or breach any other agreements between the Executive and any other person or entity.



18. Counterparts; Facsimile. 




     This Agreement may be executed in two counterparts, each of which shall be deemed an original, all
of which together shall contribute one and the same instrument. Facsimile signatures shall be
treated the same as original signatures.



19. Arbitration. 




     To ensure the rapid and economical resolution of disputes that may arise in connection with the
Executive’s employment with the Company, the Executive and the Company agree that any and all
disputes, claims, or causes of action, in law or equity, arising from or relating to Executive’s
employment, or the termination of that employment, will be resolved, to the fullest extent
permitted by law, by final, binding and confidential arbitration in San Diego, California conducted
by the Judicial Arbitration and Mediation Services/Endispute, Inc. (“JAMS”), or its successors,
under the then current rules of JAMS for employment disputes; provided that the arbitrator shall:
(a) have the authority to compel adequate discovery for the resolution of the dispute and to award
such relief as would otherwise be permitted by law; and (b) issue a written arbitration decision
including the arbitrator’s essential findings and conclusions and a statement of the award. Both
the Executive and the Company shall be entitled to all rights and remedies that either the
Executive or the Company would be entitled to pursue in a court of law. Nothing in this Agreement
is intended to prevent either the Executive or the Company from obtaining injunctive relief in
court to prevent irreparable harm pending the conclusion of any such arbitration. Notwithstanding
the foregoing, Executive and the Company each have the right to resolve any issue or dispute
involving confidential, proprietary or trade secret information, or intellectual property rights or
the non-solicitation provision hereunder, by Court action instead of arbitration.



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20. Trade Secrets Of Others. 




     It is the understanding of both the Company and the Executive that the Executive shall not divulge
to the Company and/or its subsidiaries any confidential information or trade secrets belonging to
others, including the Executive’s former employers. Consistent with the foregoing, the Executive
shall not provide to the Company and/or its Affiliates, any documents or copies of documents
containing such information.



21. Advertising Waiver. 



     During the Term the Executive agrees to permit the Company and/or its Affiliates, and persons or
other organizations authorized by the Company and/or its Affiliates, to use, publish and distribute
advertising or sales promotional literature concerning the products and/or services of the Company
and/or its Affiliates, or the machinery and equipment used in the provision thereof, in which the
Executive’s name and/or pictures of the Executive taken in the course of the Executive’s provision
of services to the Company and/or its Affiliates, appear. The Executive hereby waives and releases
any claim or right the Executive may otherwise have arising out of such use, publication or
distribution.



22. Specific Enforcement.




     If necessary and where appropriate, the Company shall have the right to enforce the provisions
of Sections 2.2, 2.3, 7, 8 and 20 of this Agreement by injunction, specific performance or other
equitable relief without bond and without prejudice to any other rights and remedies the Company
may have for a breach of such Sections of this Agreement.



     In Witness Whereof, the Parties have executed this Agreement as of the date first
above written.



	 	 	 	 	 	 	 
	Executive

	 	 
	 	Dot Hill Systems Corp.
	 	 
	 
	 	 	 	 	 	 
	/s/ Hanif Jamal
	 	 	 	/s/ Dana Kammersgard	 	 
	 

	 	 	 	 	 	 
	Hanif Jamal

	 	 	 	Dana Kammersgard, Chief Executive
Officer and President	 	 





[Signature Page to Employment Agreement]



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