Document:

Exhibit 10.1

 

OVERLAND
STORAGE, INC.

SUMMARY
SHEET

OF

DIRECTOR
AND EXECUTIVE OFFICER COMPENSATION

 

Non-Employee Director Compensation 

 

Our compensation plan for non-employee directors consists of both a
cash component and an equity component. We pay each non-employee director
$5,000 per quarter, plus $2,500 for each Board meeting attended ($1,250 if held
telephonically), plus reimbursement for expenses. The Chairman of the Board
receives an additional $2,500 per quarter in addition to the non-employee director
fee of $5,000 per quarter.  Members of
the Audit Committee and the Compensation Committee receive a retainer of $500
per quarter in lieu of a fee for committee meetings attended during a quarter
and members of the Nominating and Governance Committee receive $500 for each
committee meeting attended ($250 if held telephonically and no fee if held the
same day as a Board meeting).  Members of
the Special Committee on Shareholder Value will receive $500 for each committee
meeting attended (whether telephonically or in person) since formation of the
committee.  Such fee will not be paid for
committee meeting in joint session with the full board.

 

In addition to the
cash component of compensation, each non-employee director receives stock
options.  Before November 2003, each
non-employee director received a ten-year nonqualified stock option to purchase
50,000 shares at the fair market value upon appointment to the Board (Old
Director Option Program).  These options
vested at the rate of 3,000 shares for each Board meeting held.  To the extent option shares were available
for grant, a new option to purchase 50,000 shares was granted when options held
by a currently serving non-employee director fully vested.  On November 17, 2003, upon shareholder
approval of the company’s 2003 Equity Incentive Plan (2003 Incentive Plan), our
methodology for options and other equity awards granted to non-employee
directors changed to a formula methodology (Current Director Option
Program).  Under the Current Director
Option Program, each non-employee director receives a ten-year nonqualified
stock option to purchase 18,000 shares on the same date as the company’s annual
meeting of shareholders.  These options
are exercisable at fair market value on the date of grant and vest in equal
monthly installments over a 12-month period, as measured from the grant
date.  Non-employee directors who have
existing unvested options granted under the Old Director Option Plan on an
annual meeting date will not receive a new grant under the Current Director
Option Program.  Under the Current
Director Option Program, Messrs. McClendon, Preuss and Norkus each
received an option for 18,000 shares on November 15, 2004.  Mr. Degan did not receive an option
under the Current Director Option Program since he had unvested options granted
under the Old Director Option Program. 
Under the Current Director Option Program, when a new non-employee
director joins the board, or when an existing director’s option fully vests
under the Old Director Option Program, such director will be awarded a new
option for a number of shares determined by multiplying 1,500 by the number of
months remaining until the next scheduled annual meeting date, giving credit
for any partial month.  Such option will
vest at the rate of 1,500 shares per month and will be fully vested at the next
annual meeting date, at which time the director will receive the normal annual
grant.  In connection with his election
to the Board, pursuant to the Current Director Option Program, Mr. Norkus
received an option for 4,500 shares on August 11, 2004.  Mr. Degan was granted an option for
12,000 shares on March 3, 2005 under the Current Director Option Program
when his option under the Old Director Option Program vested in full on the
same date.

 

1

 

Compensation of Executive Officers

 

Our executive officers serve at the discretion of
the Board of Directors. From time to time, the Compensation Committee of the
Board of Directors reviews and determines the salaries that are paid to our
executive officers. The following table sets forth the annual salary rates for
the our current executive officers as of the date of this report on Form 10-Q:

 

	
  Christopher
  Calisi

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  Diane N.
  Gallo

  	
   

  	
  $

  	
  199,500

  	
   

  
	
  W. Michael
  Gawerecki

  	
   

  	
  $

  	
  246,500

  	
   

  
	
  Christie
  Huff

  	
   

  	
  $

  	
  195,000

  	
   

  
	
  George
  Karabatsos

  	
   

  	
  $

  	
  350,000

  	
  (1)

  
	
  Michael S.
  Kerman

  	
   

  	
  $

  	
  225,000

  	
   

  
	
  Vernon A. LoForti

  	
   

  	
  $

  	
  297,750

  	
   

  
	
  Robert J.
  Scroop

  	
   

  	
  $

  	
  220,500

  	
   

  

 

(1) Of this amount,
$175,000  is tied to performance as
described more fully in Employment Arrangements with Current Executive
Officers below.

 

Employment Arrangements with
Current Executive Officers

 

The following discussion summarizes the employment
arrangements between us and our current executive officers as of the date of
this report on Form 10-Q:

 

Mr. Christopher Calisi.  We entered into an employment
agreement with Mr. Calisi on March 12, 2001, pursuant to which Mr. Calisi
is employed as our President and Chief Executive Officer. The employment
agreement has a one-year term, automatically renews for successive one-year
terms, and provides that our Board may unilaterally modify Mr. Calisi’s
compensation at any time.  If we
terminate Mr. Calisi’s employment without cause, then we are obligated to
pay him a severance payment equal to his base salary, payable on a pro-rated
basis according to our normal payroll cycle for the 12 months following
his termination. In addition, he is entitled to receive accelerated vesting for
any stock options that would otherwise have vested during the 12-month period
following his termination. He is also entitled to receive the cash severance
payment if he resigns for good reason because of any of the following events: (i) reduction
in compensation of more than 10%; (ii) change in position or duties so
that his duties are no longer consistent with his previous position; or (iii) change
in principal place of work to more than 50 miles from our current facility
without his approval.

 

In addition, on April 28, 2005, the annual
salary of Mr. Calisi was increased by the Compensation Committee to
$500,000 effective immediately.  On that day, Mr. Calisi also
received (1) a cash bonus of $21,500 effective immediately, (2) a
grant of 50,000 restricted shares of our common stock pursuant to the 2003
Incentive Plan, which vest in installments of 16,667, 16,667 and 16,666 shares
on January 1, 2006, January 1, 2007 and January 1, 2008,
respectively, (3) an option to purchase up to 100,000 shares of our
common stock at the purchase price of $11.00 per share pursuant to the 2003
Incentive Plan, which option is immediately vested as to 11,200 shares, with
the remainder vesting at a rate of 2,775 option shares on the last day of the
month commencing May 31, 2005 through December 31, 2007, and (4) a
grant of an additional 50,000 restricted shares of our common stock (which will
vest as to 12,500, 12,500 and 25,000 shares, respectively, if the volume
weighted daily average stock price for ten consecutive trading days reaches
$20, $25 and $30, respectively, on or before January 1, 2008, provided
that Mr. Calisi is employed by us as Chief Executive Officer on such
dates(s)).  Mr. Calisi continues to be eligible to receive a
performance bonus equivalent to 75% of his base salary pursuant to our MBO and
Bonus Program.  The above referenced
stock option grant to Mr. Calisi accelerates upon a Change in Control as
defined in the 2003 Incentive Plan.  The vesting of shares underling the
stock option and restricted stock grants pursuant to the 2003 Incentive Plan
described above will cease upon termination of Service to Overland, as defined
in the 2003 Incentive Plan.

 

2

 

Ms. Diane N. Gallo.  Ms. Gallo, our
Vice President, Human Resources, is an at-will employee and may be terminated
by us for any reason, with or without notice. 
Ms. Gallo currently earns an annual salary of $199,500. On November 15,
2004, Ms. Gallo was granted a stock option to purchase up to 37,500 shares
of our common stock at the purchase price of $14.29 per share pursuant to the
2003 Incentive Plan, which option became fully vested under the Stock Option
Acceleration Program described below, subject to sale restrictions described
below.

 

Mr. W. Michael Gawarecki.   On September 9,
2005, we entered into an employment agreement with Mr. W. Michael
Gawarecki, our Vice President of Operations, which was effective as of May 16,
2005.  Under the agreement, Mr. Gawarecki
is entitled to a base salary of $246,500 per year and is eligible for
discretionary quarterly bonuses under our MBO and Bonus Plan, which bonuses may
not exceed 40% of Mr. Gawarecki’s quarterly base salary.  Mr. Gawarecki was also eligible to
receive a special bonus related to outsourcing of $100,000, but the conditions
for receiving that bonus were not satisfied. 
Mr. Gawarecki’s current base salary is $246,500.  The term of the agreement will continue until
June 30, 2006 and will not renew unless agreed by the parties in
writing.  If Mr. Gawarecki is
terminated without cause or resigns with good reason, he will be entitled to
receive a severance payment equal to 100% of his then annual base salary,
subject to the execution by him of a general release of claims against us.  This severance will be paid in either a lump-sum
amount or in twelve equal monthly installments without interest, at the
election of Mr. Gawarecki.  Our
obligation to pay severance to Mr. Gawarecki under the agreement
terminates upon the occurrence of a change in control.  On November 15, 2004, Mr. Gawarecki
was granted a stock option to purchase up to 31,400 shares of our common stock
at the purchase price of $14.29 per share pursuant to the 2003 Incentive Plan,
which option became fully vested under the Stock Option Acceleration Program
described below, subject to sale restrictions described below.

 

Ms. Christie Huff.  Ms. Huff, our Vice President of Worldwide
Marketing, is an at-will employee and may be terminated by us for any reason,
with or without notice.  Ms. Huff
currently earns an annual salary of $195,000 per year.  On July 4, 2004, Ms. Huff was
granted a stock option to purchase up to 10,000 shares of our common stock at
the purchase price of $13.24 per share pursuant to the 2003 Incentive Plan,
which option became fully vested pursuant to the Stock Option Acceleration
Program described below.

 

Mr. George Karabatsos.  Mr. Karabatsos, our Vice President of
Worldwide Sales, is an at-will employee and may be terminated by us for any
reason, with or without notice.  Ms. Karabatsos
currently earns an annual salary of $350,000, with $175,000 of that amount
guaranteed as base salary and $175,000 tied to performance.    When Mr. Karabatsos joined Overland on
August 8, 2005, he was granted an option to purchase up to 100,000 shares
of the our common stock at the purchase price of $7.84 per share pursuant to
the 2003 Incentive Plan, which option will vest over a three-year period with
one-third vesting on August 8, 2006 and the remaining two-thirds vesting
monthly over the 24 months following that date in equal installments. The
option will accelerate upon a Change in Control as defined in the 2003
Incentive Plan.  The option has a
ten-year life, subject to continuous service to us.  On his hire date, he was also awarded 15,000
restricted shares of our common stock pursuant to the 2003 Incentive Plan,
which shares will vest in annual installments of 5,000 shares on each of August 8,
2006, August 8, 2007 and August 8, 2008, subject to continuing
service to us.  In addition, we agreed to
reimburse Mr. Karabatsos for up to $20,000 of relocation expenses incurred
by Mr. Karabatsos in his move to San Diego County, and up to $4,000 per
month, for up to three months, for temporary housing.  If Mr. Karabatsos is terminated for
cause within the first twelve months of his employment, he must repay the amount
of his moving and relocation costs and the amount of his signing bonus
(pro-rated on a monthly basis from the first date of his employment).

 

Mr. Michael S. Kerman.  Mr. Kerman, our Vice President and
General Manager of the Appliance Business Unit, is an at-will employee and may
be terminated by us for any reason, with or without notice.  Mr. Kerman currently earns an annual
salary of $225,000 per year.  On August 30,
2004,  Mr. Kerman was granted a
new-hire option to purchase up to 75,000 shares of our common stock at the
purchase price of $13.18 pursuant to the 2003 Incentive Plan, which option
became fully vested under the Stock Option Acceleration Program described
below, subject to sale restrictions described below.  On April 28, 2005, Mr. Kerman was
granted an option to purchase up to 25,000 shares of our common stock at the
purchase price of $10.86 per share pursuant to the 2003 Incentive Plan, which
option will vest monthly in arrears from the date of grant in 36 equal
installments.   The above referenced
stock option grants to Mr. Kerman will accelerate upon a Change in Control
as defined in the 2003 Incentive Plan.  The vesting of shares underling
the stock option grant pursuant to the 2003 Incentive Plan described above will
cease upon termination of Service to us, as defined in the 2003 Incentive Plan.
In addition, we agreed to reimburse Mr. Kerman

 

3

 

for up to $100,000 of relocation expenses incurred by Mr. Kerman
in the event that he is terminated without cause on or before April 29,
2006 and he incurs such expenses related to a relocation outside of San Diego
within six months of his date of termination.

 

Mr. Vernon A. LoForti.  We entered into an employment agreement with Mr. LoForti
on December 4, 2000, pursuant to which Mr. LoForti is employed as our
Vice President and Chief Financial Officer. The employment agreement has a
one-year term, automatically renews for successive one-year terms, and provides
that our Board may unilaterally modify Mr. LoForti’s compensation at any
time.  If we terminate Mr. LoForti’s
employment without cause, then we are obligated to pay him a severance payment
equal to his base salary, payable on a pro-rated basis according to our normal
payroll cycle for the 12 months following his termination. In addition, he
is entitled to receive accelerated vesting for any stock options that would
otherwise have vested during the 12-month period following his termination. He
is also entitled to receive the cash severance payment if he resigns for good
reason because of any of the following events: (i) reduction in
compensation of more than 10%; (ii) change in position or duties so that
his duties are no longer consistent with his previous position; or (iii) change
in principal place of work to more than 50 miles from our current facility
without his approval.  Mr. LoForti
currently earns a salary of $297,750 per year. On November 15, 2004, Mr. LoForti
was granted a stock option to purchase up to 29,700 shares of our common stock
at the purchase price of $14.29 per share pursuant to the 2003 Incentive Plan,
which option became fully vested under the Stock Option Acceleration Program
described below, subject to sale restrictions described below.

 

Mr. Robert J. Scroop.  Mr. Scroop, our
Vice President Engineering, is an at-will employee and may be terminated by us
for any reason, with or without notice.  Mr. Scroop
currently earns an annual salary of $220,500 per year. On November 15,
2004, Mr. Scroop was granted a stock option to purchase up to 29,700
shares of our common stock at the purchase price of $14.29 per share pursuant
to the 2003 Incentive Plan, which option became fully vested under the Stock
Option Acceleration Program described below, subject to sale restrictions
described below.

 

Stock
Option Acceleration Program

 

In July 2005,
our Board of Directors approved the accelerated vesting of all unvested stock
options, held by the company’s officers and employees, with an exercise price
at or above $12.00 per share, effective July 3, 2005. The stock option
acceleration program does not apply to stock options held by our non-employee
directors. The accelerated options were issued under the 2000 Stock Option
Plan, the 2001 Supplemental Stock Option Plan and the 2003 Incentive Plan.  In connection with the acceleration of vesting
of options held by our executive officers, each executive officer agreed not to
sell or transfer any shares subject to accelerated vesting until the original
vesting date would have occurred based on the original vesting schedule (without
giving effect to any future termination of service). The primary purpose of the
accelerated vesting was to eliminate future stock-based employee compensation
expense.

 

Retention
Agreements

 

We entered into retention agreements with Messrs. LoForti, Scroop
and Gawarecki effective January 27, 2000, with Mr. Calisi effective March 12,
2001, with Ms. Gallo effective August 30, 2002, with Mr. Kerman
effective August 30, 2004, with Mr. Karabatsos effective August 8,
2005 and with Ms. Huff effective September 14, 2005.   These agreements provide that the officer
will receive a severance payment if, within two years of the consummation of a
change in control of Overland, he or she is terminated without cause or resigns
with good reason. These severance payments are based on the officer’s base
salary at the time of the consummation of the change in control or the
termination date, whichever is higher, plus his or her target bonus for the
year prior to the consummation of the change in control. The agreements provide
that, upon a change in control, Mr. Calisi would be entitled to receive an
amount equal to 2.5 times his base salary plus target bonus, and Mr. LoForti
would be entitled to receive an amount equal to 2.0 times his base salary plus
target bonus. Ms. Gallo, Ms. Huff, and Messrs. Gawarecki,
Karabatsos, Kerman, and Scroop each would be entitled to an amount equal to
their respective base salary plus target bonus. If any portion of any payment
under any of the agreements would constitute an “excess parachute payment”
within the meaning of Section 280G of the Internal Revenue Code, then that
payment will be reduced to an amount that is one dollar less than the threshold
for triggering the tax imposed by Section 4999 of the Internal Revenue
Code.

 

4

 

MBO and Bonus Plan

 

Our Chief Executive Officer and other executive
officers, except Mr. Karabatsos, participate in our executive bonus plan
which is designed as a performance-based component of their compensation
package. The Compensation Committee tailors the bonus plan for each executive
to be unique to his area of responsibility. For fiscal year 2006, the plan
established by the Compensation Committee has been and will be evaluated and paid
on a quarterly basis, and include two performance measurement points for each
executive officer:

 

•
our actual earnings per share (EPS) in comparison to the target approved by the
Compensation Committee; and

 

•
achievement of individual job performance goals and objectives.

 

No bonuses were paid for
the first fiscal quarter of 2006, as the EPS targets were not achieved.

 

5Exhibit 10.1

 

[Momenta
Pharmaceuticals, Inc. Letterhead]

 

September 7, 2005

 

 

Bennett M. Shapiro

532 LaGuardia Place

Suite 524

New York, NY 10012

 

Re:  Consulting Agreement — Renewal

 

Dear Mr. Shapiro:

 

Reference is made to the
Industry Consulting Agreement effective as of October 4, 2004  (the “Agreement”) between Momenta
Pharmaceuticals, Inc. (“Company”) and you (“Consultant”).  Capitalized terms used herein and not
otherwise defined shall have the meanings given such terms in the
Agreement.  The parties hereby amend the
Agreement as follows:

 

1. 
Company and Consultant hereby agree to extend the term of the Agreement,
as listed in Paragraph 3 of Attachment A, for one additional year, commencing
on October 4, 2005 and terminating on October 3, 2006 (the “1st
Renewal Period”).  The Agreement may be
extended for additional periods by mutual written consent.

 

2.  As full compensation for the consulting
services rendered under the Agreement during the 1st Renewal Period,
Company shall grant Consultant, under Company’s 2004 Stock Incentive Plan and
standard form of Non-Statutory Agreement, a non-statutory option to purchase,
at fair market value on the date of grant, 4,000 shares of the common stock of
Company, exercisable within three (3) years of the date of grant.  Subject to any non-renewal or earlier
termination of this Agreement, the 4,000 shares shall vest over a one-year
period in 12 equal monthly installments, with the first installment vesting one
month from the date of grant.

 

All other terms and conditions
of the Agreement shall remain in full force and effect during the 1st
Renewal Period.

 

If the foregoing is in
conformity with your understanding, please sign both copies of this letter
agreement and return to us for counter-signature, attention:  Lisa Carron Shmerling, Deputy General
Counsel.  This letter agreement shall be
deemed to be binding and effective, upon the terms specified herein, as of the
date of the final signature below.

 

 

	
  Very truly yours,

  
	
   

  
	
  MOMENTA PHARMACEUTICALS,
  INC.

  
	
   

  
	
   

  
	
  By: 

  	
  /s/ Susan K. Whoriskey

  	
   

  
	
   

  	
  Susan K. Whoriskey

  
	
   

  	
  Vice President, Licensing
  and Business Development

  

 

 

	
   

  	
  Agreed and accepted:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bennett M. Shapiro

  	
   

  
	
   

  	
   

  	
  Bennett M. Shapiro

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  9/20/05

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