Document:

EXHIBIT
10.9

 

 

Revised Employment Agreement between Nexsan
Technologies, Inc. and Gregg

Pugmire

 

November 21, 2007

 

Dear Gregg,

 

This agreement (the “Agreement”) replaces
and supersedes the employment agreement you and Nexsan Technologies, Inc.
(the “Company”) signed on November 15,
2006. This Agreement sets forth the terms and conditions of your employment by
the Company and your compensation. We encourage you to keep a copy for your own
records, as it reflects your new employment status with the Company.

 

We agree that:

 

On and after execution of this Agreement, you will
continue in your employment as EVP of Business Development of the Company
pursuant to the terms and conditions set forth herein. You report to the Chief
Executive Officer (“CEO”) of the Company. The
scope of your job as EVP Business Development is to grow the Company’s Assureon
business through the use of an “Overlay” team that will both support the VARs
via our existing VAR sales team, and directly sell to named strategic accounts
such as OEMs and others. You will have measurable targets / goals, in line with
our financial projections, as a prime means of assessing your performance.
These goals will be communicated separately and may change from time to time at
the Company’s discretion. Your responsibilities may be changed by the CEO
unilaterally from time to time. The terms of your employment and the benefits
currently provided by the Company are as follows:

 

1.                                       Current Salary. 
Your annual base salary is $170,000.00. You will continue to be eligible
for a quarterly bonuses target of $30,000 per quarter based on meeting key
parameters such as Assureon and European revenue taken from the official
cashflow projections of record multiplied by 1.2 for SATA and other storage
revenue, and by 1.0 for Assureon sales with no upside limit to the Assureon
part. Assureon gross margins may also be considered in the calculation of your
quarterly bonus. The exact percentage split and parameters for the bonus
calculation will be determined by the CEO and notified to you. Except as
provided in Section 6, you must be employed on the last of the calendar
quarter to receive a bonus payment for that quarter. Your bonus for a calendar
quarter will be paid within a reasonable period (not to exceed 45 days)
beginning 45 days after the last day of the calendar quarter. Your salary and
bonus may be subject to review from time to time at the Company’s discretion.

 

2.                                       Other Compensation. 
In addition to your salary and bonus, you will receive a Change of
Control Bonus that is described in full in Appendix 1 at the end of this
document or IPO Bonus Shares as described in full in Appendix 2. You understand
that the amount in these bonuses are roughly 25% of the amounts that would be
payable to the CEO in the same circumstances. The Change of Control Bonus
replaced the ISO plan that had previously been offered to you, which was now
cancelled as part of the agreement you signed on November 15, 2006.

 

 

 

3.                                       Benefits. 
You will continue to participate in regular health insurance, bonus and
other employee benefit plans established by the Company for its employees from
time to time.

 

Except as provided below,
the Company reserves the right to change or otherwise modify, in its sole
discretion, the preceding terms of employment, as well as any of the terms set
forth herein at any time in the future.

 

4.                                       Confidentiality. 
As an employee of the Company, you have access to certain confidential
information of the Company and you may, during the course of your employment,
develop certain information or inventions that will be the property of the
Company. To protect the interests of the Company, you will need to sign the
Company’s standard “Employee Invention Assignment and Confidentiality Agreement”.
During the period that you render services to the Company, you agree to not
engage in any employment, business or activity that is in any way competitive
with the business or proposed business of the Company. You will disclose to the
Company in writing any other gainful employment, business or activity that you
are currently associated with or participate in that competes with the Company.
You will not assist any other person or organization in competing with the
Company or in preparing to engage in competition with the business or proposed
business of the Company.

 

5.                                       At Will Employment. 
You are an at-will employee of the Company, which means the employment
relationship can be terminated by either of us for any reason, at any time,
with or without prior notice and with our without cause. Any statements or
representations to the contrary (and, indeed, any statements contradicting any
provision in this letter) should be regarded by you as ineffective. Further,
your participation in any stock option or benefit program is not to be regarded
as assuring you of continuing employment for any particular period of time. Any
modification or change in your at-will employment status may only occur by way
of a written employment agreement signed by you and the CEO of the Company.

 

6.                                       Severance Payments. 
If you terminate your employment for Good Reason (as defined below)
following a Change of Control of the Company (as defined in Appendix 1) or if
your employment is terminated by the Company without Cause (as defined below),
you will

 

(i)                                     receive 6 months of base salary
continuation payable per the Company’s normal pay periods, provided, however,
that if you are a “specified employee” (as determined in accordance with
Treasury Regulation Section 1.409A-1(i) or any written Company policy
implementing such regulation) at the time of your termination of employment,
then the total amount of the base salary continuation payments that is
otherwise payable to your during the six-month period following his termination
of employment shall be reduced if necessary so that the total amount of base
salary continuation payments during such six-month period does not exceed the
amount described in Treasury Regulation Section 1.409A-1(b)(9)(iii)(A) and
the amount, if any, by which your base salary continuation payments are reduced
pursuant to this proviso shall be paid to you in a lump sum payment six months
after your termination of employment,

 

2

 

(ii)                                  receive 2/3rds of your maximum quarterly
bonus for two quarters paid at the time such quarterly bonuses would have been
paid if you had remained in employment with the Company, and

 

(iii)                               continue to participate in the Company’s
benefit plans (other than any tax qualified retirement plan or any deferred
compensation plan) for a period of 6 months following your termination of
employment.

 

For purposes of this Section 3, a termination of
employment means a separation from service (as defined in regulations under Section 409A
of the Internal Revenue Code of 1986, as amended),

 

“Cause” means (i) an unauthorized use or disclosure of
the Company’s confidential information or trade secrets, which use or
disclosure causes material harm to the Company, (ii) a material breach of
any agreement between you and the Company, (iii) a material failure to
comply with the Company’s written policies or rules of which you had
notice, (iv) commission of a felony under the laws of the United States or
any state thereof or a misdemeanor involving moral turpitude, (v) a
failure to perform assigned duties after receiving written notification of such
failure from the CEO provided that such assigned duties are commensurate with
your position as EVP Business Development and are reasonable in nature, (vi) irresponsible,
unauthorized acts or any willful misconduct, gross negligence or willful
failure to act which has, or can reasonably be expected to have, a material
adverse effect on the business, financial condition or performance, reputation
or prospects of the Company, or (vii) any other errors, acts or omissions
which constitute cause under applicable state law.

 

“Good Reason” means a material diminution in your base salary or a
material diminution in your authority, duties or responsibilities; provided,
however, that an act or omission will not constitute Good Reason unless (i) you
give the Company (or its successor) written notice of the act or omission
claimed to constitute Good Reason within ninety (90) days after the occurrence
or failure that you claim constitutes Good Reason, (ii) the Company or its
successor fails to remedy the act or omission claimed to constitute Good Reason
within thirty (30) days of the Company or its successor receives such notice
and (iii) you terminate your employment within twelve (12) months after
the act or omission that constitutes Good Reason.

 

7.                                       Arbitration. 
If there’s a dispute, you and the Company shall submit to mandatory and
exclusive binding arbitration of any controversy or claim arising out of, or
relating to, this Agreement or any breach hereof, provided, however,
that the parties retain their right to, and shall not be prohibited, limited or
in any other way restricted from, seeking or obtaining equitable relief from a
court having jurisdiction over the parties. Such arbitration shall be governed
by the Federal Arbitration Act and conducted through the American Arbitration
Association in the State of California, Los Angeles County, before a single
neutral arbitrator, in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association in
effect at that time.

 

3

 

8.                                       Release from Prior
Agreements.  By signing this agreement, you acknowledge
that you have no claim for any salary, bonus, stock option or other
compensation remaining from prior employment agreements with the Company,
written or verbal, including the options for 400,000 shares mentioned in your
original employment agreement.

 

Thanks for your
contributions to helping make Nexsan a great company,

 

 

 

Signed and agreed this
21st day of November, 2007.

 

 

 

	
  Nexsan Technologies, Inc

  	
   

  	
  Employee

  
	
   

  	
   

  	
   

  
	
  /s/ Philip Black

  	
   

  	
  /s/ Gregg Pugmire

  
	
  Philip Black, CEO

  	
   

  	
  Gregg Pugmire

  

 

4

 

APPENDIX 1 - CHANGE OF CONTROL
BONUS

 

A.                                   If you (i) remain employed by the
Company through the closing date of a Change of Control (the “COC Date”)
or (ii) if your employment is terminated by the Company within
three (3) months preceding the signing by the Company of a definitive
binding agreement which agreement is performed and results in a COC, subject to
normal closing terms and conditions, unless the Company establishes that the
principal reason for your termination of employment is for a reason unrelated
to the COC, you will receive a Change of Control Bonus on or as soon as
practicable following the COC Date in the amount determined in B below.

 

B.                                     The amount of the Change of Control Bonus
payable to you in the event of a Change of Control is determined based on the
Sales Price (as defined below) received in connection with a COC as follows:

 

	
  Sales Price

  	
   

  	
  Change of Control Bonus

  
	
  (in millions)

  	
   

  	
  (in thousands)

  
	
  Less
  than $85

  	
   

  	
  $

  	
       250

  
	
  $

  	
      85

  	
   

  	
  $

  	
       260

  
	
  $

  	
    100

  	
   

  	
  $

  	
       472

  
	
  $

  	
    125

  	
   

  	
  $

  	
       824

  
	
  $

  	
    150

  	
   

  	
  $

  	
    1,177

  
	
  $

  	
    175

  	
   

  	
  $

  	
    1,529

  
	
  $

  	
    200

  	
   

  	
  $

  	
    1,882

  
	
  $

  	
    225

  	
   

  	
  $

  	
    2,234

  
	
  $

  	
    250

  	
   

  	
  $

  	
    2,587

  
	
  $

  	
    300

  	
   

  	
  $

  	
    3,292

  

 

For Sales Price in
between listed values, lineal interpolation will be used to determine the
amount of the Change of Control Bonus.

 

C.                                     For purposes of this Appendix 1, the term
“Sales
Price” means the gross equity valuation of the Company
immediately prior to the closing of the transaction constituting a COC
determined based on the consideration (in cash or property) paid in connection
with such transaction, but without any reduction to reflect the Company’s
liability for the payment of this Change of Control Bonus or any similar bonus
payable to any other employee of the Company or Nexsan Corporation (“Holdings”)
on account of consummation of a COC.

 

The term “Change of Control” or “COC” means any of the following
events: A sale of all or substantially all of Holdings’ or the Company’s
assets. Any person or entity acquiring more than 50% of Holdings’ or the
Company’s common and preferred stock, other than a person who is a then-current
Major Shareholder. (For purposes of this definition, a Major Shareholder shall
be Beechtree Capital and its associated Nexsan investors, VPVP, RRE or GESFID
and their respective affiliates, or any other person or entity controlled,
directly or indirectly, by such Major Shareholder.)

 

5

 

D.                                    Notwithstanding the foregoing, you will
not be entitled to receive:

 

1.                                       any portion of the Change of Control
Bonus if there is an IPO prior to the Change of Control Date and you receive
the IPO Bonus pursuant to Appendix 2, or

 

2.                                       the portion of the Change of Control
Bonus that exceeds $300,000 (the “Variable Change of Control Bonus”)
unless the stockholders of Holdings holding at least 75% of the voting
power of Holdings’ stock immediately prior to the COC authorize and approve the
payment of the Variable Change of Control Bonus in accordance with regulations
issued under Section 280G of the Internal Revenue Code of 1986, as
amended. Holdings and the Company will use their best efforts (i) to
submit the Variable Change of Control Bonus to Holding’s stockholders for
approval during the six-month period ending on the COC Date and (ii) to
recommend that the shareholders approve and authorize the payment of the
Variable Change of Control Bonus to you.

 

6

 

APPENDIX 2 - IPO BONUS SHARES

 

A.                                   If you (i) remain employed by the
Company through the effective date of an IPO
(the “IPO Date”) or
(ii) if your employment is terminated by the Company within three (3) months
prior to the IPO Date, unless the Company establishes that the principal reason
for your termination of employment is for a reason unrelated to the IPO, you
will receive IPO Bonus Shares equal to the number of whole shares of common stock
of Holdings (if the IPO is for Holdings’ common stock) or the number of whole
shares of common stock of the Company (if the IPO is for the Company’s common
stock) determined by dividing the IPO Bonus Value determined in Section B
below by the IPO price (as defined below), with any fraction of a share rounded
to the nearest whole share. Such IPO Bonus Shares will be delivered to you on
the next business day following the IPO Date. Notwithstanding the foregoing,
the IPO Bonus Shares granted hereunder shall remain subject to substantial risk
of forfeiture until such shares service vest in accordance with the provisions
set forth in D below. The certificates representing nonvested IPO Bonus Shares
shall be held (together with a stock power executed by you in blank) in escrow
by the Company until such IPO Bonus Shares become nonforfeitable or are
forfeited.

 

B.                                     The amount of the IPO Bonus Value will be
determined based on the Pre-IPO Value as defined below):

 

	
  Pre-IPO
  Value

  	
   

  	
  IPO
  Bonus Value

  
	
  (in millions)

  	
   

  	
  (in thousands)

  
	
  Less
  than $85

  	
   

  	
  $

  	
       250

  
	
  $

  	
      85

  	
   

  	
  $

  	
       422

  
	
  $

  	
    100

  	
   

  	
  $

  	
       633

  
	
  $

  	
    125

  	
   

  	
  $

  	
       986

  
	
  $

  	
    150

  	
   

  	
  $

  	
    1,338

  
	
  $

  	
    175

  	
   

  	
  $

  	
    1,691

  
	
  $

  	
    200

  	
   

  	
  $

  	
    2,043

  
	
  $

  	
    225

  	
   

  	
  $

  	
    2,396

  
	
  $

  	
    250

  	
   

  	
  $

  	
    2,748

  
	
  $

  	
    300

  	
   

  	
  $

  	
    3,453

  
	
  $

  	
    350

  	
   

  	
  $

  	
    4,158

  

 

For Pre-IPO Values in
between listed values, lineal interpolation will be used to deter-mine the
amount of the IPO Bonus Value.

 

C.                                     For purposes of this Appendix 2, the term
“Pre-IPO
Value” means the gross equity valuation of Holdings
immediately prior to the IPO Date determined based on the IPO Price, but
without any reduction to reflect the Company’s or Holdings’ liability for the
payment of the IPO Stock Bonus or any similar cash or stock bonus payable to
any other employee of the Company on account of an IPO. Notwithstanding the
foregoing, if there is a substantial new equity financing or acquisition that
results in the issuance of at least $5 million in equity securities of Holdings
(or in securities that are convertible into equity securities of Holdings) on
or after the Agreement Date, the Pre-IPO Value shall be reduced by the amount
raised in such equity

 

7

 

financing or the value
(determined at the time of such acquisition) of the equity securities
(including securities that are convertible into equity securities) issued in
such acquisition.

 

“IPO” means an initial public offering of the
common stock of Holdings or the Company.

 

“IPO Price” means the price at which a share of
common of stock of the Company or Holdings, as applicable, is offered in an
IPO.

 

D.                                    If your employment is terminated for any
reason prior to September 15, 2008, the portion of your IPO Bonus Shares
that have not service vested as, described below, will be forfeited and
returned to the Company. You will service vest in you IPO Bonus Shares in
sixteen (16) equal quarterly installments beginning on December 15, 2004
and ending on September 15, 2008. To the extent that your IPO Bonus Shares
have service vested prior to the IPO Date, such shares shall be vested and
nonforfeitable when issued and the remaining IPO Bonus Shares shall vest and
become nonforfeitable in accordance with the service vesting scheduled
described above.

 

E.                                      The Company shall withhold from the IPO
Bonus Shares the number of shares of stock having a fair market value on the
date the IPO Bonus Shares are delivered to you (or, if later, when such shares
become service vested) equal to the amount of Federal, state and local income
and employment taxes to be withheld by the Company with respect to the delivery
or vesting of your IPO Bonus Shares, and the Company shall pay cash equal to
the fair market value of such withheld shares to the appropriate tax
authorities to satisfy such tax obligations related to the stock transaction.

 

F.                                      Notwithstanding the foregoing, you will
not be entitled to receive the IPO Bonus Shares if a Change of Control occurs
prior to the effective date of an IPO and you receive (or are entitled to
receive) the Change of Control Bonus pursuant to Appendix 1.

 

8EXHIBIT 10.10

 

Revised Employment Agreement
between Nexsan Technologies, Inc.

and Gene Spies

 

November 21, 2007

 

Dear Gene,

 

This
agreement (the “Agreement”) replaces and
supersedes the employment agreement you and Nexsan Technologies, Inc. (the
“Company”) signed on May 16,
2005 and amended on January 18, 2007. 
This Agreement sets forth the terms and conditions of your employment by
the Company and your compensation.  We
encourage you to keep a copy for your own records, as it reflects your new
employment status with the Company.

 

We
agree that:

 

On and
after execution of this Agreement, you will continue in your employment with
the Company as its Chief Financial Officer pursuant to the terms and conditions
set forth herein.  You report to the CEO
as the Chief Financial Officer.  Your
responsibilities may be changed by the CEO unilaterally from time to time.  The terms of your employment and the benefits
currently provided by the Company are as follows:

 

1.             Amended Salary and Bonus. 
Your annual base salary is $175,000.00. 
You also are eligible for an annual bonus (based on calendar year) of
$75,000.  The bonus will be paid at the
same percentage that the CEO receives on his annual bonus.  The bonus will also be paid at the same time
as the CEO receives his bonus, but not later than March 15th following the
end of the year for which the bonus is paid. 
Your salary and bonus may be subject to review from time to time at the
Company’s discretion.

 

2.             Other Compensation. 
In addition to your salary and bonus, you will receive a Change of
Control Bonus that is described in full in Appendix 1 at the end of this
document or IPO Bonus Shares as described in full in Appendix 2.  You understand that the amount in these
bonuses are roughly 25% of the amounts that would be payable to the CEO in the
same circumstances.  The Change of
Control Bonus replaced the ISO plan that had previously been offered to you,
which was now cancelled as part of the agreement you signed on January 18,
2007.

 

3.             Benefits. 
You will continue to participate in regular health insurance, bonus and
other employee benefit plans established by the Company for its employees from
time to time.  Except as provided below,
the Company reserves the right to change or otherwise modify, in its sole
discretion, the preceding terms of employment, as well as any of the terms set
forth herein at any time in the future.

 

4.             Confidentiality. 
As an employee of the Company, you have access to certain confidential
information of the Company and you may, during the course of your employment,
develop certain information or inventions that will be the property of the
Company.  To protect the interests of the
Company, you will need to sign the Company’s standard “Employee Invention
Assignment and Confidentiality Agreement”. 
During the period that you render services to the Company, you agree to
not engage in any employment, business or activity that is 

 

 

 

in any way competitive with the business or proposed
business of the Company.  You will
disclose to the Company in writing any other gainful employment, business or
activity that you are currently associated with or participate in that competes
with the Company.  You will not assist
any other person or organization in competing with the Company or in preparing
to engage in competition with the business or proposed business of the Company.

 

5:            At Will Employment. 
You are an at-will employee of the Company, which means the employment
relationship can be terminated by either of us for any reason, at any time,
with or without prior notice and with or without cause.  Any statements or representations to the
contrary (and, indeed, any statements contradicting any provision in this
letter) should be regarded by you as ineffective.  Further, your participation in any stock option
or benefit program is not to be regarded as assuring you of continuing
employment for any particular period of time. 
Any modification or change in your at-will employment status may only
occur by way of a written employment agreement signed by you and the Chief
Executive Officer of the Company.

 

6.             Severance Payments. 
If you terminate your employment for Good Reason (as defined below)
following a Change of Control of the Company (as defined in Appendix 1) or if
your employment is terminated by the Company without Cause (as defined below),
you will

 

(i)                                     receive 6 months of base salary
continuation payable per the Company’s normal pay periods; provided, however,
that if you are a “specified employee” (as determined in accordance with
Treasury Regulation Section 1.409A-1(i) or any written Company policy
implementing such regulation) at the time of your termination of employment,
then the total amount of the base salary continuation payments that is
otherwise payable to your during the six-month period following his termination
of employment shall be reduced if necessary so that the total amount of base
salary continuation payments during such six-month period does not exceed the
amount described in Treasury Regulation Section 1.409A-1(b)(9)(iii)(A) and
the amount, if any, by which your base salary continuation payments are reduced
pursuant to this proviso shall be paid to you in a lump sum payment six months
after your termination of employment,

 

(ii)                                  receive 50% of the bonus you would have
received if you had remained in employment with the Company through the end of
the year paid at the time such bonus would have been paid if you had remained
in employment with the Company, and

 

(iii)                               continue to participate in the Company’s
benefit plans (other than any tax qualified retirement plan or any deferred
compensation plan) for a period of 6 months following your termination of
employment.

 

For
purposes of this Section 3, a termination of employment means a separation
from service (as defined in regulations under Section 409A of the Internal
Revenue Code of 1986, as amended).

 

 

2

 

“Cause” means (i) an
unauthorized use or disclosure of the Company’s confidential information or
trade secrets, which use or disclosure causes material harm to the Company, (ii) a
material breach of any agreement between you and the Company, (iii) a
material failure to comply with the Company’s written policies or rules of
which you had notice, (iv) commission of a felony under the laws of the
United States or any state thereof or a misdemeanor involving moral turpitude, (v) a
failure to perform assigned duties after receiving written notification of such
failure from the CEO, provided that such assigned duties are commensurate with
your position as EVP Business Development and are reasonable in nature, (vi) irresponsible,
unauthorized acts or any willful misconduct, gross negligence or willful
failure to act which has, or can reasonably be expected to have, a material
adverse effect on the business, financial condition or performance, reputation
or prospects of the Company, or (vii) any other errors, acts or omissions
which constitute cause under applicable state law.

 

“Good Reason” means (i) a
material diminution in your base salary, (ii) a material diminution in
your position, duties or responsibilities, (iii) a change in your
principal work location by more than 25 miles or (iv) failure of a
successor company to assume this Agreement; provided, however, that an act or
omission will not constitute Good Reason unless (x) you give the Company
(or its successor) written notice of the act or omission claimed to constitute
Good Reason within ninety (90) days after the occurrence or failure that you
claim constitutes Good Reason, (y) the Company or its successor fails to
remedy the act or omission claimed to constitute Good Reason within thirty (30)
days of the Company or its successor receives such notice and (z) you
terminate your employment within twelve (12) months after the act or omission
that constitutes Good Reason.

 

7.             Arbitration. 
If there is a dispute, you and the Company shall submit to mandatory and
exclusive binding arbitration of any controversy or claim arising out of, or
relating to, this Agreement or any breach hereof, provided, however, that the
parties retain their right to, and shall not be prohibited, limited or in any
other way restricted from, seeking or obtaining equitable relief from a court
having jurisdiction over the parties. 
Such arbitration shall be governed by the Federal Arbitration Act and
conducted through the American Arbitration Association in the State of
California, Los Angeles County, before a single neutral arbitrator, in
accordance with the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association in effect at that time.

 

8.             Release from Prior Agreements. 
By signing this agreement, you acknowledge that you have no claim for
any salary, bonus, stock option or other past compensation remaining from prior
employment agreements with the Company, written or verbal, including the
options 400,000 shares mentioned in your original employment agreement.

 

 

3

 

Thanks for your contribution to helping make Nexsan a great company,

 

Signed and agreed this 21st day of November, 2007

 

	
  Nexsan Technologies, Inc.

  	
   

  	
  Employee

  
	
   

  	
   

  	
   

  
	
  /s/ Philip Black

  	
   

  	
  /s/ Gene Spies

  
	
   

  	
   

  	
   

  
	
  Philip Black, CEO

  	
   

  	
  Gene Spies

  

 

4

 

APPENDIX 1 - CHANGE OF CONTROL BONUS

 

A.            If you (i) remain
employed by the Company through the closing date of a Change of Control (the “COC Date”) or (ii) if your
employment is terminated by the Company within three (3) months preceding
the signing by the Company of a definitive binding agreement which agreement is
performed and results in a COC, subject to normal closing terms and conditions,
unless the Company establishes that the principal reason for your termination
of employment is for a reason unrelated to the COC, you will receive a Change
of Control Bonus on or as soon as practicable following the COC Date in the
amount determined in B below.

 

B.            The amount of the
Change of Control Bonus payable to you in the event of a Change of Control is
determined based on the Sales Price (as defined below) received in connection
with a COC as follows:

 

	
  Sales Price

  	
   

  	
  Change of Control Bonus

  
	
  (in millions)

  	
   

  	
  (in thousands)

  
	
  Less than $85

  	
   

  	
  $ 250

  
	
  $ 85

  	
   

  	
  $ 260

  
	
  $100

  	
   

  	
  $ 472

  
	
  $125

  	
   

  	
  $ 824

  
	
  $150

  	
   

  	
  $1,177

  
	
  $175

  	
   

  	
  $1,529

  
	
  $200

  	
   

  	
  $1,882

  
	
  $225

  	
   

  	
  $2,234

  
	
  $250

  	
   

  	
  $2,587

  
	
  $300

  	
   

  	
  $3,292

  

 

For Sales Price in between listed values, lineal interpolation will be
used to determine the amount of the Change of Control Bonus.

 

C.            For purposes of this
Appendix 1, the term “Sales Price”
means the gross equity valuation of the Company immediately prior to the
closing of the transaction constituting a COC determined based on the
consideration (in cash or property) paid in connection with such transaction,
but without any reduction to reflect the Company’s liability for the payment of
this Change of Control Bonus or any similar bonus payable to any other employee
of the Company or Nexsan Corporation (“Holdings”)
on account of consummation of a COC.

 

The term “Change of Control”
or “COC” means any of the following
events: A sale of all or substantially all of Holdings’ or the Company’s
assets.  Any person or entity acquiring
more than 50% of Holdings’ or the Company’s common and preferred stock, other
than a person who is a then-current Major Shareholder.  (For purposes of this definition, a Major
Shareholder shall be Beechtree Capital and its associated Nexsan investors,
VPVP, RRE or GESFID and their respective affiliates, or any other person or
entity controlled, directly or indirectly, by such Major Shareholder.

 

5

 

D.            Notwithstanding
the foregoing, you will not be entitled to receive:

 

1.                                       any portion of the Change of Control
Bonus if there is an IPO prior to the Change of Control Date and you receive
the IPO Bonus pursuant to Appendix 2, or

 

2.                                       the portion of the Change of Control
Bonus that exceeds $300,000 (the “Variable Change of Control
Bonus”) unless the stockholders of Holdings holding at least 75%
of the voting power of Holdings’ stock immediately prior to the COC authorize
and approve the payment of the Variable Change of Control Bonus in accordance
with regulations issued under Section 280G of the Internal Revenue Code of
1986, as amended.  Holdings and the
Company will use their best efforts (i) to submit the Variable Change of
Control Bonus to Holding’s stockholders for approval during the six-month
period ending on the COC Date and (ii) to recommend that the shareholders
approve and authorize the payment of the Variable Change of Control Bonus to
you.

 

6

 

APPENDIX 2 - IPO BONUS SHARES

 

A.            If you (i) remain
employed by the Company through the effective date of an IPO (the “IPO Date”) or (ii) if your
employment is terminated by the Company within three (3) months prior to
the IPO Date, unless the Company establishes that the principal reason for your
termination of employment is for a reason unrelated to the IPO, you will
receive IPO Bonus Shares equal to the number of whole shares of common stock of
Holdings (if the IPO is for Holdings’ common stock) or the number of whole
shares of common stock of the Company (if the IPO is for the Company’s common
stock) determined by dividing the IPO Bonus Value determined in Section B
below by the IPO price (as defined below), with any fraction of a share rounded
to the nearest whole share.  Such IPO
Bonus Shares will be delivered to you on the next business day following the
IPO Date.  Notwithstanding the foregoing,
the IPO Bonus Shares granted hereunder shall remain subject to substantial risk
of forfeiture until such shares service vest in accordance with the provisions
set forth in D below.  The certificates
representing nonvested IPO Bonus Shares shall be held (together with a stock
power executed by you in blank) in escrow by the Company until such 1PO Bonus Shares
become nonforfeitable or are forfeited.

 

B.            The amount of the
IPO Bonus Value will be determined based on the Pre-IPO Value (as defined
below):

 

	
  Pre-IPO Value

  	
   

  	
  IPO Bonus Value

  
	
  (in millions)

  	
   

  	
  (in thousands)

  
	
  Less than $85

  	
   

  	
  $250

  
	
  $85

  	
   

  	
  $422

  
	
  $100

  	
   

  	
  $633

  
	
  $125

  	
   

  	
  $986

  
	
  $150.

  	
   

  	
  $1,338

  
	
  $175

  	
   

  	
  $1,691

  
	
  $200

  	
   

  	
  $2,043

  
	
  $225

  	
   

  	
  $2,396

  
	
  $250

  	
   

  	
  $2,748

  
	
  $300

  	
   

  	
  $3,453

  
	
  $350

  	
   

  	
  $4,158

  

 

For Pre-IPO Values in between listed values, lineal interpolation will
be used to deter-mine the amount of the IPO Bonus Value.

 

C.            For purposes of this
Appendix 2, the term “Pre-IPO Value” means the gross equity valuation of
Holdings immediately prior to the IPO Date determined based on the IPO Price,
but without any reduction to reflect the Company’s or Holdings’ liability for
the payment of the IPO Stock Bonus or any similar cash or stock bonus payable
to any other employee of the Company on account of an IPO.  Notwithstanding the foregoing, if there is a
substantial new equity financing or acquisition that results in the issuance of
at least $5 million in equity securities of Holdings (or in securities that are
convertible into equity securities of Holdings) on or after the Agreement Date,
the Pre-IPO Value shall be reduced by the amount raised in such equity 

 

7

 

financing or the value (determined at the time of such acquisition) of
the equity securities (including securities that are convertible into equity
securities) issued in such acquisition.

 

“IPO” means an initial public
offering of the common stock of Holdings or the Company.

 

“IPO Price” means the price at
which a share of common of stock of the Company or Holdings, as applicable, is
offered in an IPO.

 

D.            If your employment
is terminated for any reason prior to May 16, 2009, the portion of your
IPO Bonus Shares that have not service vested as, described below, will be
forfeited and returned to the Company. 
You will service vest in you IPO Bonus Shares in sixteen (16) equal
quarterly installments beginning on August 16, 2005 and ending on May 16,
2009.  To the extent that your IPO Bonus
Shares have service vested prior to the IPO Date, such shares shall be vested
and nonforfeitable when issued and the remaining IPO Bonus Shares shall vest
and become nonforfeitable in accordance with the service vesting scheduled
described above.

 

E.             The Company shall
withhold from the IPO Bonus Shares the number of shares of stock having a fair
market value on the date the IPO Bonus Shares are delivered to you (or, if
later, when such shares become service vested) equal to the amount of Federal,
state and local income and employment taxes to be withheld by the Company with
respect to the delivery or vesting of your IPO Bonus Shares, and the Company
shall pay cash equal to the fair market value of such withheld shares to the
appropriate tax authorities to satisfy such tax obligations related to the
stock transaction.

 

F.             Notwithstanding the
foregoing, you will not be entitled to receive the IPO Bonus Shares if a Change
of Control occurs prior to the effective date of an IPO and you receive (or are
entitled to receive) the Change of Control Bonus pursuant to Appendix 1.

 

8

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