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Item 1.01
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Entry into a Material Definitive Agreement.
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Coleman Agreement and Release
On July 31, 2017,
Crossroads Systems, Inc. (the “Company”) entered into an Agreement and Release by and between the Company and Richard
K. Coleman, Jr., the Company’s Chief Executive Officer and President (the “Coleman Agreement”), as well as a
new Employment Agreement between the Company and Mr. Coleman (the “New Employment Agreement”), which was attached as
Exhibit A to the Coleman Agreement. The Coleman Agreement, among other things, (i) terminates Mr. Coleman’s Amended and Restated
Employment Agreement with the Company dated August 1, 2016 (the “2016 Employment Agreement”), as well as Mr. Coleman’s
employment as President and Chief Executive Officer of the Company, each effective as of July 31, 2017, and (ii) provides for Mr.
Coleman’s employment, effective as of August 1, 2017, as Executive Director of the Company’s Board of Directors and
Principal Executive Officer of the Company pursuant to the terms and conditions set forth in the New Employment Agreement.
The Coleman Agreement
provides for Mr. Coleman to receive a lump sum payment equal to $300,000 in full and final satisfaction of all amounts owed to
Mr. Coleman under the 2016 Employment Agreement. The Coleman Agreement also provides for the termination of any stock options or
warrants issued to Mr. Coleman by the Company.
The New Employment
Agreement provides for Mr. Coleman to receive an annual base salary of $75,000. In the event that Mr. Coleman’s employment
is terminated by Mr. Coleman for any reason after completion of six (6) months of the term, for Good Reason (as defined in the
New Employment Agreement) at any time, or by the Company at any time for any reason, the Company will pay to Mr. Coleman (i) payment
of his base salary accrued up to and including the date of termination or resignation, (ii) payment in lieu of any accrued but
unused vacation time, (iii) payment of any unreimbursed expenses, (iv) payments and benefits under any Company benefit plan, program
or policy, and (v) a lump sum payment equal to $320,000.
Retention and Severance Agreements
On July 31, 2017,
the Company also entered into an amended Retention and Severance Agreement with each of Jennifer Crane, the Company’s Chief
Financial Officer, and Mark Hood, the Company’s Executive Vice President (the “Severance Agreements”).
Pursuant to the Severance
Agreements, Ms. Crane and Mr. Hood will each be eligible to earn a retention bonus of $35,000 to be paid in a lump sum payment
within 10 days of December 31, 2017 (the “Retention Bonus”). Ms. Crane’s annual salary will remain $175,000 and
Mr. Hood’s annual salary will remain $225,000. The Severance Agreements also provide for the termination of any stock options
or warrants issued to each of Ms. Crane and Mr. Hood by the Company.
In the event that
Ms. Crane or Mr. Hood’s respective employment is terminated with Cause (as defined in the Severance Agreements) or he or
she voluntarily resigns, each at any time prior to December 31, 2017, he or she will not be eligible for any portion of his or
her Retention Bonus, as applicable. In the event that Ms. Crane or Mr. Hood’s respective employment is terminated without
Cause or for Good Reason (each as defined in the Severance Agreements), they shall be entitled to receive: (i) a severance payment
equal to twelve (12) months of base salary, (ii) a payment for up to six (6) months of the premiums associated with continuation
of health insurance benefits pursuant to COBRA, and (iii) the immediate vesting of all options and all other awards held.