Document:

HILL - EX. 10.2 - NED Comp Policy

Exhibit 10.2 

Dot Hill Systems Corp.
NON-EMPLOYEE DIRECTOR COMPENSATION POLICY

Each member of the Board of Directors (the “Board”) of Dot Hill Systems Corp. (the “Company”) who is not also serving as an employee of the Company or any of its subsidiaries (each such member, an “Eligible Director”) will receive the compensation described in this Non-Employee Director Compensation Policy for his or her Board service.

This policy may be amended at any time in the sole discretion of the Compensation Committee of the Board.

Annual Cash Compensation

The annual cash compensation amount set forth below is payable in equal quarterly installments, payable in arrears on the last day of each fiscal quarter in which the service occurred. If an Eligible Director joins the Board or a committee of the Board at a time other than effective as of the first day of a fiscal quarter, each annual retainer and fee set forth below will be pro-rated based on the number of days served in the applicable fiscal year, with the pro-rated amount paid for the first fiscal quarter in which the Eligible Director provides the service, and regular full quarterly payments thereafter. All annual cash retainers and fees are vested upon payment.

	
			
	1.
	Annual Board Service Retainer:

	 
	a.
	All Eligible Directors: $50,000 per year 

	 
	b.
	Chairman of the Board: $85,000 per year 

	 
	 
	 

	2.
	Annual Audit Committee Service Fee:

	 
	a.
	Chairman of the Audit Committee: $20,000 per year

	 
	b.
	Member of the Audit Committee: $10,000 per year

	 
	 
	 

	3.
	Annual Nominating and Corporate Governance Committee Service Fee:

	 
	a.
	Chairman of the Nominating and Corporate Governance Committee: $10,000 per year

	 
	b.
	Member of the Nominating and Corporate Governance Committee: $7,000 per year

	 
	 
	 

	4.
	Annual Compensation Committee Service Fee:

	 
	a.
	Chairman of the Compensation Committee: $15,000 per year

	 
	b.
	Member of the Compensation Committee: $10,000 per year

Equity Compensation

The equity compensation set forth below will be granted under the Company’s 2009 Equity Incentive Plan, as amended (the “2009 Plan”), and the Amended and Restated 2000 Non-Employee Directors’ Stock Option Plan (the “Directors’ Plan” and, together with the 2009 Plan, the “Plans”).  All stock options granted pursuant to this policy will be nonstatutory stock options, with an exercise price per share equal to 100% of the Fair Market Value (as defined in the applicable Plan) of the underlying Common Stock of the Company (the “Common Stock”) on the date of grant, and will have a term of seven years 

Exhibit 10.2 

from the date of grant (subject to earlier termination in connection with a termination of service as provided in the applicable Plan).

1. Initial Grant: On (a) the date of each Eligible Director’s initial election to the Board (or, if such date is not a market trading day, the first market trading day thereafter), each Eligible Director automatically will be granted, without further action by the Board or Compensation Committee of the Board, a stock option grant for 50,000 shares of Common Stock under the Directors’ Plan. The shares will vest monthly over a four year period after the date of grant such that the stock option is fully vested on the fourth anniversary of the date of grant and will (i) vest in full upon a Change in Control (as defined in the Directors’ Plan) that is consummated at least one year following the date of grant, or (ii) vest such that a total of 50% of the shares underlying such stock option will become vested upon a Change in Control that is consummated prior to the first anniversary of the date of grant, subject in each instance to the Eligible Director’s Continuous Service (as defined in the Directors’ Plan) through each such vesting date. An Eligible Director who, in the one year prior to his or her initial election to serve on the Board as a non-employee director, served as an employee of the Company or one of its subsidiaries will not be eligible for an initial grant.

2. Annual Grant: On the date of each annual Company stockholder meeting, each Eligible Director automatically will be granted, without further action by the Board or Compensation Committee of the Board, (i) stock options for 15,000 shares of Common Stock under the Directors’ Plan and (ii) stock awards for 10,000 shares of Common Stock under the 2009 Plan.  The shares will vest in full upon the earlier of the first anniversary of the date of grant or the consummation of a Change in Control (as defined in the applicable Plan), subject in each instance to the Eligible Director’s Continuous Service (as defined in the applicable Plan) through each such vesting date.HILL - EX 10.3

Exhibit 10.3
***Text Omitted and Filed Separately
With the Securities and Exchange Commission.
Confidential Treatment Requested
Under 17 C.F.R. Sections 200.80(b)(4) and 240.24b-2.

STRATEGIC SUPPLIER MASTER PURCHASE AGREEMENT
FIRST AMENDMENT

Reference is made to the Strategic Supplier Master Purchase Agreement (the “Agreement”) dated July 12, 2012, by and between Dot Hill Systems Corp. (“Supplier”) and Teradata Operations, Inc. (“Teradata”).  This first amendment (the “First Amendment”) is effective as of April 28, 2015 (“Amendment Date”).  Teradata and Supplier hereby agree as follows:

		
	1.
	 PURPOSE

There are two purposes of this First Amendment.
One purpose is to redefine “failure” for purposes of the Agreement to include [...***...] regardless of the findings of [...***...].  For example, such FRU will be deemed “failures” [...***...].  “[...***...]” would continue to be deemed a “failure.”
The second purpose is to [...***...] of liability as described in Section 8.

		
	2.
	 DEFINITIONS

The capitalized terms not defined herein shall have the meanings ascribed to them in the Agreement.

		
	3.
	 AMENDMENTS 

3.1     Section 5.5 of the Agreement is hereby deleted in its entirety and replaced by the following:
5.5  Epidemic Failures.

(a) Epidemic Failure may only be triggered with respect to a particular FRU type after it has been installed in the field for at least [...***...] in order to achieve statistically relevant quantities.  Thereafter, Epidemic Failure is defined as FRU failures occurring within [...***...]  of shipment by Supplier that are at or above the levels set forth in subsection (b) and that result from defects in material, workmanship, manufacturing process and/or design deficiencies: (i) attributable to Supplier; (ii) attributable to the same or similar root cause (same or similar root cause classification will be done based on failure analysis results provided by the Supplier, each distinguishable root cause will be tracked and measured individually), and (iii) that:

		
	•
	Occur within any [...***...] or;

		
	•
	Occur within any [...***...] .

(b) The levels at which failures shall be deemed Epidemic Failures are as follows:

***Confidential Treatment Requested 

Exhibit 10.3

(i) During the first [...***...] after shipment, Epidemic Failure shall be deemed to occur if the rate of FRU failures is at or above [...***...] percent ([...***...] %) except for hard disk drives (HDD), the FRU failure rate is at or above [...***...] percent ([...***...] %), and;

(ii) The epidemic Failure threshold rate for each category of FRU (non HDD and HDD) shall be [...***...] percent ([...***...] %) during [...***...] and [...***...] percent ([...***...]) for [...***...].  Therefore, for example, the non-HDD FRU epidemic threshold for [...***...] will be [...***...] percent ([...***...] %) and the threshold for [...***...] will be [...***...] percent ([...***...] %).

(c) The FRU Failure Rate shall be calculated as follows:  [...***...]% where “A” is the failure rate, “B” is the cumulative [...***...] (defined below) and “C” is the total in-service installed base of the given FRU at the time the calculation is completed described in the bullet points, above.

(d) Claims for non-compliance will be considered [...***...].  For example, if Supplier’s failure analysis on the FRU determines [...***...] or [...***...], such alleged failures will [...***...].  If Supplier’s failure analysis on the FRU determines [...***...].  Note that if there is no Product error log indicating that a FRU [...***...].

(e)  In the event of an Epidemic Failure, Supplier will (a) correct the known cause on all FRUs to be shipped thereafter and (b) per mutual agreement, promptly repair or replace all affected FRUs or pay Teradata its costs, pre-approved per mutual agreement, of remedying the non-compliance including all parts, labor and other related costs directly related to fixing cause of the Epidemic Failure.

3.2    Exhibit C of the Agreement is hereby supplemented by adding Section 3.14:

3.14     Failure for Quality Metrics.  Wherever “failure” is required for measurement of a quality metric (e.g. Annualized Return Rate (ARR), Annualized Failure Rate (AFR), Mean Time Between Replacement (MTBR), Mean Time Between Failure (MTBF), and Out of Box OOB), an incident will be considered a “failure” if the [...***...] regardless of the [...***...].
3.3    Section 8.2 is hereby deleted in its entirety and the following shall be inserted in its place:

8.2  SUPPLIER’S LIABILITY FOR ANY AND ALL CAUSES WHETHER BASED ON NEGLIGENCE, BREACH OF CONTRACT, WARRANTY, OR OTHER LEGAL THEORY, SHALL NOT EXCEED [...***...] DOLLARS (US $[...***...] OR THE EQUIVALENT OF [...***...].  THIS SECTION 8.2 SHALL NOT APPLY WITH RESPECT TO CLAIMS BROUGHT UNDER SECTIONS [...***...] OR 9 OF THIS AGREEMENT OR FOR CLAIMS INVOLVING THE VIOLATION OF A PARTY’S INTELLECTUAL PROPERTY RIGHTS.

4.  MISCELLANEOUS
Except as specifically amended by this First Amendment, all provisions of the Agreement remain unmodified.  This First Amendment (together with the Agreement) expresses the entire understanding of the parties.  In the event of a conflict between the terms of this First Amendment and the Agreement, the terms of this First 

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***Confidential Treatment Requested 

Exhibit 10.3

Amendment govern and take precedence with respect to the subject matter hereof.  This First Amendment may be executed in any number of counterparts, including, without limitation, executed counterparts delivered by facsimile or other electronic transmission, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.  

AGREED AND ACCEPTED BY:

DOT HILL SYSTEMS CORP.                TERADATA OPERATIONS INC.
By: /s/ Dana W. Kammersgard                By:  /s/ Bruce A. Langos            
Printed:  Dana W. Kammersgard                Printed:  Bruce A. Langos            
Title:  CEO                        Title:  President                    
Date:  5-15-15                        Date:  4/30/15                    

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***Confidential Treatment Requested

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