EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit
10.17
THIS EXECUTIVE EMPLOYMENT
AGREEMENT ("Agreement")
is made and
entered as of March __, 2018 and effective as of
January 1, 2018
(the "Effective Date"), by and between MusclePharm Corporation,
a Nevada Corporation
(the "Company"), and Xxxxx Xxxxxxx, an individual ("Executive").
The Company
and Executive are sometimes
referred to herein as a "party" or collectively as the
"parties."
RECITALS
WHEREAS, Executive
is willing to continue to be
employed by the Company and provide services to the
Company under the terms
and conditions stated
herein, as of July 15, 2015
(the "Start Date"); and
WHEREAS, the Company
and Executive now
mutually desire to enter
into this Agreement as approved by the
Board.
NOW, THEREFORE, in
consideration of the
foregoing, of the
mutual covenants and agreements herein contained, and for
other good and valuable consideration, the receipt and
sufficiency of
which are hereby acknowledged, the
parties, intending to be
legally bound, agree as
follows:
1.
Employment and Duties
1.1 Employment.
The Company here by
agrees to employ
Executive as
Executive Vice
President - Sales &
Operations of
the Company
and Executive
hereby accepts such employment as
of the Start Date
pursuant to
the terms, covenants and
conditions set
forth herein.
Executive
shall report directly to a person to be
determined by the
Chairman of
the Board of
Directors of the Company.
In accordance with Section 5.2 (Termination by the
Company Without
Cause), and subject
to the severance
provisions set forth in Section
6.3, to the extent applicable, the
Executive
shall
be an employee
at will of the
Company.
1.2 Duties.
Executive shall
have the overall responsibility
as the Executive Vice President - Sales &
Operations of the Company and its operations,
and shall
perform all duties and
responsibilities and
have such
powers which are commonly
incident
to the offices and positions
held by him,
as well
as any additional responsibilities and authority as may be
from time to time
assigned
or delegated to him
by the Chief Executive Officer
of the Company or
the President and
the Board. Executive
shall perform the duties assigned
to him to the
best of his ability
and in a
manner
satisfactory to the Company.
1.3 Time
and Efforts.
Executive will devote
his full business time,
efforts,
attention,
and energies to the business of the
Company
and to the
performance of Executive's
duties here
under
during the Term (as defined
below), and will not engage in any
other business,
profession or
occupation for compensation
or otherwise
which would conflict
or interfere
with the performance of such
services,
either directly
or indirectly, without the
prior written
consent
of
the Company;
provided that, nothing
herein shall
preclude Executive
from (i) continuing to serve on any
board of directors or
trustees of any
"not for profit"
organization,
(ii) being involved
in charitable
activities, or
(iii) managing
his personal and family
passive investments;
provided, further
that, in each
case, and in
the aggregate,
such activities
shall
not materially conflict
with or interfere
with the performance of Executive's
duties hereunder
or conflict with his
duty of
loyalty
and/or fiduciary
duties owed to the Company.
1
2.
Term
Unless
earlier terminated as provided
in Section 5, the
Company shall
employ Executive
in the capacity set forth herein for
a term commencing on the Start
Date and ending on December 31, 2019 (the
"Expiration
Date").
Such period,
as may be terminated earlier or
extended, to be referred to herein as the "Term".
3.
Compensation
As compensation for the services to be
rendered by Executive
for and on behalf of the
Company hereunder, Executive shall
be entitled to the
following:
3.1 Base
Salary. Executive
shall receive an
annual base salary
of $400,000. Salary
payments shall be
subject to all applicable federal and state
withholding, payroll, and
other
taxes, and all
applicable deductions for benefits as may be required by law
or Executive's authorization. Executive's
Base Salary will be
reviewed at least annually by
the Compensation Committee
(the "Committee")
of the Board and may be
increased at the
discretion of the Committee.
3.2 Bonus.
In addition to Base Salary,
Executive shall be eligible
to receive one or more
cash bonuses to be determined by the Committee in its
sole discretion
based on performance criteria to be
adopted by the Committee, with a potential bonus pool of up to
$350,000 per year
(to be adjust prorated for calendar year 2015),
which may be adjusted at the
discretion of the Committee. Any
such bonus or
bonuses shall
be subject
to all applicable federal and
state withholding,
payroll and other taxes, and all applicable
deductions for
benefits as may be required by
law, and shall
be paid to Executive no
later than the
15th day
of the third calendar month
following
the end of the
fiscal year (or
other performance period) with
respect to which the bonus
relates.
3.3 Compensation
Committee. Any
bonus and any
equity consideration
to be provided
to Executive shall be reviewed
and determined by the Committee
on an annual basis
to set performance criteria for purposes of
compliance with
the requirements
of Section l62(m) of the Internal Revenue Code of 1986,
as amended (the
"Code").
3.4 Expenses.
The Company shall
reimburse Executive for all
reasonable
business
expenses incurred by
Executive
in the performance of his
duties, provided
that Executive
provides
adequate documentation required by law
and
by the policies
and procedures of
the Company, as adopted and
amended from time to
time , provided that in
no event shall
Executive
submit any required
documentation later than sixty
(60) days after the end of the
calendar year in
which such
expense was incurred. Any
such reimbursement
shall be made as soon
as reasonably practicable but in no
event later
than the 15th day
of the third month following the calendar
year in which the applicable
expense was incurred.
Executive acknowledges and agrees
that all such
expenses will
be subject
to the oversight
of the
Audit Committee of the
Board. The Company shall
also provide
Executive with a
laptop
computer and cell phone for his
business use during the
Term.
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3.5 Vacation.
Executive shall be entitled to accrue
four (4) weeks of paid vacation
each year pursuant to the
terms and provisions of the
Company's vacation leave
policies as in
effect from time to
time. Although unused vacation
may be carried
over from year to year,
the maximum
cap on accrual
shall be equal to one hundred
fifty percent (150%) of
the annual accrual.
3.6 Benefits.
Executive shall be entitled
to participate in
and receive
all benefits made
available by the
Company to its executive
officers, subject
to and on a consistent
basis with the terms,
conditions and overall
administration of
such plans
and arrangements, including
without
limitation,
medical, dental,
vision, life and disability
insurance plans and
coverage, and defined benefit,
defined contribution
or other 401(k)
program, including all
Company matching
provisions. Executive shall
be entitled to a taxable
monthly vehicle allowance
of $1,000, and
a miscellaneous
expense allowance of up
to $5,000.
4.
Confidential Information; Non-Compete; Non-Solicitation
4.1 Confidential
Information.
Executive acknowledges that,
during the course of his
employment, he
will have access to and
will receive information
which constitutes
trade secrets,
is
of a confidential
nature, is of significant value to the Company and/or
is a foundation on
which the
business of the Company is
predicated. With respect
to all such
Confidential Information (as defined
hereafter), Executive agrees,
during the Term
and thereafter , not
to disclose
such Confidential
Information to
any
person other than
an employee, counsel,
or advisor of
the Company or a
person
to whom
disclosure
is reasonably
necessary
or appropriate in
connection with the
performance by
Executive of
his duties
hereunder nor
to use
such Confidential
Information for
any purpose
other than
the performance of
his duties hereunder.
For purposes of
this Agreement, the
term "Confidential
Information"
includes all data
or material
(regardless of form) with respect
to the Company
or any of
its assets,
prospects,
business activities, officers,
directors , employees, borrowers, or
clients which is:
(a) a trade secret,
as defined by the Uniform
Trade Secrets
Act; (b)
provided, disclosed,
or delivered
to Executive
by the
Company,
any officer, director, employee, agent,
attorney,
accountant, consultant,
or other
person or
entity
employed by
the Company
in any capacity, any
client, borrower, advisor,
or
business
associate of the Company,
or any
public authority
having jurisdiction
over the
Company
or any business
activity conducted
by the
Company;
or (c) produced, developed, obtained
or prepared by
or on
behalf of Executive
or the Company
(whether or not
such information
was developed
in the performance of this
Agreement). Notwithstanding
the foregoing, the term
"Confidential
Information" shall
not include
any
information,
data, or
material which, at
the time of disclosure or
use, was generally available
to the public other
than by a breach
of this
Agreement, was
available
to the party to whom
disclosed on
a non-confidential
basis
by disclosure or
access provided by the
Company
or a third
party without breaching
any obligations
of the Company
or such third
party, or was
otherwise developed or
obtained
legally
and independently
by the
person to
whom
disclosed without a
breach
of this
Agreement. This
Section 4.1
shall not
preclude Executive from
disclosing
Confidential
Information if compelled
to do so
by law
or valid
legal process, provided
that if Executive believes
Executive is so compelled by
law or
valid legal
process,
Executive will notify
the Company
in writing sufficiently
in advance of any
such
disclosure to allow
the Company
the opportunity to defend,
limit, or
otherwise protect
its interests
against
such disclosure
unless such
notice
is prohibited by
law. The
rights and
obligations of
the parties
under this paragraph shall
survive
the expiration or
termination of this
Agreement for any
reason.
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4.2 Non-Competition.
As part of the consideration
for the
compensation and
benefits to be paid
to Executive hereunder, and
in order to
protect the Confidential
Information,
business goodwill,
and business opportunities of
the Company, Executive
agrees that, during the
Term and for
a period of twelve
(12) months after
the termination
of Executive's employment
and this Agreement, he will
not, directly or
indirectly, engage
in or
become interested
financially in ,
as a principal, employee, partner, contractor, shareholder, agent,
manager, owner,
advisor, lender,
guarantor, officer, or
director,
any
business (other than the
Company) that
is engaged
in the nutritional supplement
industry
and/or
related products; provided, however,
that Executive
shall be entitled to continue
to invest in
stocks, bonds,
or other
securities in any
such business
(without otherwise
participating in such business) if:
(a) such stocks,
bonds, or
other securities
are listed on
any United
States
securities exchange or
are publicly traded in
an over
the counter market;
and such
investment does
not
exceed, in the case of
any capital stock of any one
issuer,
five percent of
the issued
and outstanding capital
stock, or in
the case of bonds or other securities, five
percent of the aggregate
principal amount
thereof issued and
outstanding;
or (b) such investment is
completely passive
and no control
or influence
over the management or
policies of such
business is
exercised. The Executive
here by
agrees that in addition to any
other remedies
available to
the Company
at law or inequity,
in the event of
a breach of this
Section 4.2
by the executive, the Company
shall
no longer
be obligated to make
any severance payments to
the Executive.
4.3 Non-Solicitation.
Executive
agrees that he will
not, at any
time during the Term, or at any
time within
twelve (12) months
after the termination of
his employment, for
his own
account
or benefit or for the
account or
benefit of any other person,
firm
or entity, directly
or indirectly,
solicit
for employment
any employee of
the Company
(or any
person who was an employee of
the Company in
the 90-day
period before such
solicitation) or
induce any employee of
the Company
(or any
person who
was an
employee of
the Company
in the
90-day
period before
such
inducement)
to terminate his employment
with the
Company.
Notwithstanding
the above, the
restrictions
relating to
persons
employed
in the 90-day
period referenced in the
parentheticals in the immediately
preceding sentence shall
not apply to a person
who was a party
to an
employment agreement
with the Company
and who terminates
his employment for Good
Reason or is
terminated by the
Company without
Cause. The
rights and obligations of
the parties under
this Section 4.3 shall
survive the
expiration or termination
of this Agreement for
any
reason.
4.4 Proprietary
Matters.
Executive
expressly agrees that
any and
all improvements, inventions,
discoveries, processes, or
know-how
that are
generated or conceived
by Executive
during the
Term,
whether
conceived during Executive's
regular
working
hours or
otherwise, will be
the sole
and exclusive
property of the
Company.
Whenever requested by
the Company
(either
during the Term
or thereafter), Executive
will assign
or execute
any and
all applications,
assignments
and/or
other documents, and do
all things
which
the Company
reasonably
deems necessary
or appropriate,
in order to permit
the Company
to: (a) assign
and convey,
or otherwise
make available
to the Company,
the sole
and exclusive
right,
title, and interest
in and to
said improvements,
inventions,
discoveries,
processes or
know-how; or
(b) apply
for, obtain,
maintain, enforce
and defend patents, copyrights,
trade names,
or trademarks of the
United States or
of foreign countries
for said improvements, inventions,
discoveries,
processes, or
know-how. However, the
improvements, inventions, discoveries,
processes, or know-how
generated or
conceived by
Executive
and referred to
in this Section
4.4 (except those
which may be
included
in the patents, copyrights, or
registered
trade names
or trademarks
of the Company) will
not be exclusive
property of
the Company
at any time
after having
been disclosed
or revealed or
have otherwise
become available to
the public or
to a third party on
a non-confidential
basis
other than by
a breach of this
Agreement, or
after they
have been independently
developed
or discussed
without a breach
of this
Agreement by a third
party
who has
no
obligation
to the
Company.
4
The rights and
obligations
of the parties
under this
Section 4.4 shall
survive the
expiration
or termination of
this Agreement
for any
reason.
4.5 Injunctive
Relief.
Executive acknowledges and
agrees that
any violation of
Sections 4.1, 4.2,
4.3
or 4.4 of
this Agreement would
result
in irreparable
harm to
the Company
and, therefore, agrees that,
in the event
of an actual,
suspected, or
threatened
breach of
Sections
4.1, 4.2, 4.3 or 4.4 of this Agreement, the Company
shall be entitled to
an injunction
restraining
Executive from committing or
continuing such
actual,
suspected or
threatened breach. The
parties
acknowledge and agree
that the right to such
injunctive relief
shall be cumulative
and shall
not be in lieu
of,
or be
construed as a
waiver of the
Company's
right
to pursue, any other
remedies to which
it may be
entitled
in law or in
equity.
The parties
agree that for our
poses of Sections 4.1, 4.
2, 4.3
and 4.4 of
this Agreement, the
term "Company"
shall include
the
Company and
its affili
ates.
5.
Termination
Executive's
employment
by the Company
and this
Agreement may be
terminated
before
the expiration of the
Term, without
breach of this
Agreement, in accordance
with the provisions set
forth below:
5.1 Termination
by the
Company
for
Cause. The
Company may terminate
Executive's employment
and this
Agreement for Cause (as
defined below), but only
after: ( i)
giving
Executive
written notice of
the failure or conduct
which the Company
believes to
constitute
Cause;
and (ii) with respect
to
elements (a)
through (e) below,
providing Executive a
reasonable opportunity,
and in no
event more
than twenty
(20) days, to
cure such
failure or
conduct, unless the Board
determines in
its good faith
judgment
that such
failure
or conduct is
not
reasonably
capable
of being
cured. In the event
Executive does
not cure
the alleged failure
or conduct within
the time frame
provided for
such cure by
the Company, the Company
shall
send him written
notice specifying the
effective
date of termination.
The failure
by the Company
to set
forth in the notice
referenced in this
Section 5.1
any fact or circumstance
which contributes to a
showing
of Cause shall
not waive any right
of the
Company to
assert, or preclude
the Company
from asserting,
such fact or
circumstance
in enforcing its
rights
hereunder.
For purposes
of this Agreement,
the term "Cause" means:
(a) conviction
of a felony or a crime
involving
fraud or moral
turpitude; or
(b) theft,
material act
of dishonesty or fraud, intentional falsification of any
employment or Corporation
records, or
commission
of any criminal act
which impairs
participant' s
ability to perform appropriate employment
duties for the Corporation; or
(c) intentional
or
reckless conduct or
gross negligence
materially harmful to the
Corporation or the
successor to the
Corporation after
a Change in
Control,
including violation of a
non-competition
or confidentiality agreement;
or
(d) willful
failure to follow lawful
instructions
of the
person
or body
to which participant reports; or
(e) gross
negligence
or willful
misconduct in the performance
of participant's
assigned
duties. Cause shall
not
include me
re unsatisfactory performance
in the achievement
of
participant's
job objectives.
If the
Company terminates
Executive's employment for
Cause, then Executive
shall be entitled to receive the
payments and
benefits set forth in Section
6.1 below.
The Company
may suspend Executive
with pay pending an investigation
authorized by the Company
or a governmental authority or
a determination
whether Executive has
engaged in acts
or omissions constituting
Cause, and such paid suspension shall not constitute
Good Reason or
a termination of Executive's
employment.
5
5.2
Termination
by
the
Company
Without Cause.
(a) The Company may terminate
the employment of Executive and this
Agreement at any time during the Term
of this Agreement without Cause by giving
Executive written
notice of such termination,
to the extent permitted by law, to be immediately
effective following the giving of such
written notice,
in which case Executive shall receive the
compensation,
severance,
and benefit continuation required by
Section 6.3 below; provided, however , that
if Company terminates
Executive's employment without Cause during
the Protection Period (as defined below),
then Executive shall
be entitled to receive
the payments and
benefits set
forth in Section
6.4 below.
(b) For purposes of
this Agreement , the
term ''Protection Period"
mean s the period
of time commencing
on the date of the first occurrence of a Change
in Control (as defined below in
Section 5.2(c))
and continuing until the earlier of the (i)
the second anniversary of the
first occurrence of the Change in Control
and (ii) the Term of this
Agreement; and the six
(6) month period
prior to such Change
in Control
date if the
Executive is
terminated without Cause or
terminates for Good Reason and in
either case such
termination (x) was
requested by the
third party that effectuates the
Change in Control, or (y)
occurs in connection with or in
anticipation
of a Change
in Control, it being
agreed that any such
action taken following stockholder approval of a
transaction which if
consummated would constitute a
Change
in Control
shall be deemed to
be in anticipation of a Change
in Control provided such
transaction is actually
consummated.
(c) For purposes of this
Agreement, the term "Change in Control" means
the happening of any
of the following events:
i. a tender offer
(or series of
related offers)
shall be made and consummated for the
ownership of 50% or more of the
outstanding voting securities
of the Company, unless as
a result of
such tender offer more than 50% of the outstanding voting securities of the
surviving or resulting corporation shall be owned in the aggregate by the
stockholders of the Company (as of the time immediately prior to the
commencement of such offer),
any employee benefit plan of the
Company or its subsidiaries, and their affiliates;
ii. the Company shall be merged or
consolidated with another corporation, unless as a
result of such merger or consolidation more than 50% of
the outstanding voting securities of the
surviving or resulting
corporation shall
be owned in
the aggregate
by the stockholders of the
Company (as of the time immediately prior to such transaction), any
employee benefit plan
of the Company or
its subsidiaries, and
their affiliates;
iii. the
Company shall sell substantially all
of its assets to another
corporation that is not
wholly owned
by the Company, unless as
a result
of such
sale more than 50%
of such assets shall be
owned in the
aggregate by the
stockholders of the
Company (as of the time immediately prior to such transaction), any employee benefit plan of the
Company or its
subsidiaries and their affiliates; or
iv. a
person (as defined below) shall acquire
50% or more of the outstanding
voting securities of the
Company (whether directly, indirectly , beneficially or of
record), unless
as a result of such
acquisition more than
50% of the outstanding voting securities of the surviving or resulting corporation shall be owned
in the aggregate
by the stockholders of the Company (as of
the time immediately prior to the first
acquisition of such
securities by
such person),
any employee benefit
plan of the Corporation or its
subsidiaries, and their affiliates.
5.3 Termination
by the
Company
Due
to Inability
to
Perform or Death.
Executive's employment
and this
Agreement may be
terminated by the
Company as
follows:
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(a) To
the extent permitted by law,
upon notice to Executive
in the event
of Executive's Inability to Perform.
For this purpose, the
term "Inability to Perform" means
and shall
be deemed to have occurred if Executive has been determined
under the Company's long-term
disability plan to be eligible for long-term disability benefits or, in the
event the Company
does not maintain such
a plan or in the absence
of Executive's participation
in or application for
benefits under such
a plan, such
term shall mean the inability of
Executive, despite any reasonable
accommodation required by
law, due to
bodily injury or disease
or any other physical or mental incapacity, to perform
the services
required
hereunder for a
period of ninety
(90) consecutive days;
or
(b)
Immediately upon the
death of Executive.
5.4 Termination
by Executive
for Good
Reason. Executive
may terminate his
employment
and this
Agreement at any time for
Good Reason (as defined below). A termination of employment
and this Agreement by Executive
for Good Reason shall
entitle Executive
to payments and other
benefits as specified
in Section 6.3, unless such
termination occurs
during the Protection Period in
which case
the payments and
benefits in Section
6.4 shall
apply.
For purposes of this
Agreement, the term "Good Reason"
means, subject
to the notice
and cure provisions
herein,
any of the
following actions if
taken without Executive's
prior written
consent:
(a) the assignment
to the Executive of any
duties inconsistent with the
position in the Corporation
that Executive held immediately
prior to
the assignment; (b) a Change of Control
resulting in a
significant adverse alteration in the
status
or conditions of
Executive's
participation with the
Corporation
or other
nature of Executive's responsibilities from
those in effect prior
to such Change of
Control, including any
significant alteration
in Holder's
responsibilities
immediately
prior to such
Change in
Control; (c) the failure by the Company
to continue to provide the
Executive
with benefits substantially similar to
those enjoyed by
the Executive prior
to such failure; or (d)
any other action or inaction that constitutes a material
breach by the
Company
of this Agreement. To
exercise the option
to terminate employment for
Good Reason, Executive
must provide written
notice
to the Company of Executive's
belief that Good Reason
exists
within sixty
(60) days of the
initial existence of the
Good Reason condition, and that notice shall
describe in reasonable
detail the condition(s) believed to constitute
Good Reason. The Company
then shall
have thirty (30) days to
remedy
the Good Reason
condition(s). If not remedied within that 30-day
period
or if the Company notifies Executive that
it does not
intend to cure
such condition(s)
before the end
of that
30-day
period, Executive may
submit a
notice of termination
to the Company;
provided, however, that the notice
of termination invoking
Executive's option
to terminate
employment
for Good Reason
must be given
no later than one
hundred (l00) days after the
date the Good Reason condition
first arose;
otherwise, Executive
shall be
deemed to have
accepted the
condition(s),
or the Company's
correction of such
condition(s),
that may have
given
rise to the
existence of
Good Reason.
5.5 Termination
by Executive Without Good
Reason. Executive
may also terminate
his employment and this Agreement without Good Reason by providing at least
ninety (90) days'
written notice
of such termination to the Company. In
the event of a termination
pursuant to
this Section
5.5, Executive shall
be entitled to payments
and other benefits as
specified in Section 6.1 below.
At the
Company's
option, the Company may accelerate the
date of Executive's
termination
of employment
by paying to
Executive the Base Salary and value of the
benefits that Executive would
have received
during the period by which
the date of termination
is so accelerated and such
acceleration
shall not change
the characterization of the termination by
Executive
as a termination without
Good Reason.
5.6 Return
of
Confidential
Information
and Company
Property.
Upon termination of
Executive's employment
for any reason,
Executive shall
immediately
return
all Confidential
Information and other
Company
property to the
Company.
7
6.
Effect of Termination
6.1 Termination
by
the Company
for
Cause
or Termination
by
Executive
Without
Good Reason. In
the event Executive's
employment and this
Agreement are
terminated pursuant
to Sections 5.1
or 5.5 above:
(a) The
Company shall
pay to Executive, or his
representatives,
on the date of termination
of employment
only that portion of the
Base Salary
provided in
Section 3.1 that
has been accrued
through
the date of termination, any
accrued
but unpaid
vacation pay provided in
Section
3.6, any accrued
benefits provided in
Section
3.7, and any
expense
reimbursements
due and
owing to
Executive as of the
date of termination;
and
(b) Executive
shall not
be entitled
to: (i) any
other
salary or
compensation;
(ii)
any bonus
pursuant to Section
3.2;
(iii) any
equity
consideration pursuant
to Section
3.3; nor
(iv) any
additional
benefits pursuant
to Section 3.7; and
(c) Executive
shall return
the laptop
computer
and cellular
telephone within
five (5) business days of the date of
termination.
6.2 Termination
by the
Company
Due
to Executive'
s
Inability
to Perform
or Death.
In the
event Executive's employment
and this
Agreement
are
terminated pursuant
to Section
5.3 above,
the Company
shall
pay to Executive,
or his
representatives,
all of the
following:
(a) The
payments,
if
any, referred to
in Section 6.1(a)
above as of the
date of termination; and
(b) Subject
to compliance with Section
409A of the
Code, an amount
equal to the
greater
of (i) one
hundred percent (100%) of Executive's
target
bonus for
the year in
which the date
of termination
occurs
or (ii) a bonus
for such
year as
may be
determined by the
Committee
in its sole
discretion.
This amount
shall be
paid in the form
of a lump sum,
less applicable
statutory
deductions and
withholdings,
as soon as
practicable
after the
date of termination, but
no later
than March 15 of
the year
immediately following the
year in which
the date of
termination occurs;
and
(c) For
a termination
due to Inability to
Perform only,
and provided
that
Executive or his
representative signs a Release (as defined in Section 17), then the
Company shall pay Executive a severance equal to six (6) months of
Executive’s Base Salary at the time of termination. This
severance amount shall be paid to Executive in equal regular
installments over the six (6) month period pursuant to the
Company’s regular payroll periods, less applicable statutory
deductions and tax withholdings. The first installment shall be
paid to Executive on the first payroll period after the date of
termination and after the effective date of the Release;
and
(d) Should
Executive or his representatives timely elect
to continue
coverage under a
group health insurance plan sponsored by
the Company
or one of its
affiliates and timely
make the premium payments, reimburse Executive on
a monthly basis
for the cost
of continued coverage under the
Consolidated Omnibus
Budget
Reconciliation Act
of l985 ("COBRA")
or other applicable law for Executive
and any
eligible dependents until
the earlier of (i)
the date Executive
is no
longer
entitled to
continuation coverage under
COBRA or (ii) for twelve
(12 )
months after
the date of
termination.
6.2 Termination
by the Company
Without
Cause
and
Without a Change
in
Control
or by Executive for Good
Reason Without a Change in Control. In the event
Executive's
employment
is terminated pursuant
to Sections
5.2 or 5.4 above at
any time in which there
has not been a
qualifying
Change in
Control termination, the
Company shall
pay Executive
on the
date
of termination the payments referred
to in Section 6.1 (a)
above, and
provided that Executive
signs
a Release (as defined
in Section
17), Executive
shall also receive all of the
following:
8
(a) A
severance package equal to the
lesser
of (i) twelve
(12) months of
Executive's Base
Salary at
the time of
termination and (ii)
the Base Salary remaining
under the
Term of
this Agreement.
This
severance amount shall
be paid to
Executive in
equal regular
installments
over the twelve (12) month
period pursuant to the
Company's regular
payroll periods,
less applicable statutory
deductions and tax
withholdings.
The first
installment
shall be
paid to Executive
on the
first
payroll period
after the date
of termination and after
the effective
date of the
Release; and
(b) Subject
to compliance with Section 409A of the
Code, an amount
equal
to the
greater
of ( i)
(A) if
the date of
termination
occurs between
January 1
and June 30, then
twenty- five percent
(25%) of Executive' s target
bonus for the year
in which the
date of
termination occurs or
(B) if
the date of termination
occurs between
July 1 and December
31, then
fifty percent
(50%) of Executive's
target bonus for
the year
in which the
date of
termination occurs; and (ii) a bonus for
such year
as may be
determined by the
Committee
in its sole
discretion.
This amount shall
be paid in the form
of a lump
sum, less
applicable
statutory
deductions and
withholdings,
as soon as
practicable after the date
of termination, but
no later
than March 15
of the
year immediately
following
the year in
which
the date of
termination occurs;
(c) Should
Executive or his
representatives
timely elect
to continue
coverage under a
group health
insurance plan sponsored
by the Company
or one of
its affiliates
and timely
make the
premium
payments, reimburse
Executive on
a monthly
basis for
the cost of continued coverage under
the COBRA for Executive
and any
eligible
dependents
until the earlier
of (i)
the date
Executive is
no longer
entitled
to continuation
coverage under COB RA
or (ii)
for twelve
(l2)
months
after the date of
termination; and
(d) Unless
otherwise
provided in the equity
award agreement,
all stock options
and other
stock incentive
awards
held
by Executive
will become fully
vested and immediately
exercisable
and all
restrictions on
any restricted stock
held
by Executive
will be
removed; provided,
however, Executive
shall not be
released
from the black-out
periods for the
next financial
reporting
quarter following the
date of termination or
Securities Exchange Act of 1934, as
amended (the
"Exchange
Act"), trading obligations typically
required for an executive in this
position.
6.3 Termination
by the
Company
Without
Cause
After
a Change in
Control
or
by Executive
for Good Reason After a Change in Control. In the
event Executive's
employment is
terminated pursuant to
Sections 5.2 or 5.4 above
during the Protection Period,
the Company
shall pay Executive
on the date of termination
the payments
referred
to in Section 6.1 (a)
above, and provided
that Executive
signs a Release
(as defined in Section 17),
Executive shall
also receive
all of the
following
:
(a) Subject
to compliance with Section 409A
of the Code,
a severance package
equal to
one year
of Executive's
Base Salary
immediately prior to
the Change in Control. This
severance amount shall
be paid to
Executive in equal
regular installments over
a 12-month period pursuant to the Company's
regular
payroll periods,
less applicable statutory
deductions and
tax withholdings.
The
first installment
shall be paid to Executive on the first
payroll period
after the date of
termination
and after
the effective
date
of the Release; and
(b) Subject
to compliance
with Section 409A of
the Code,
an amount equal to the
greater of (i) one hundred percent (100
%) of Executive's
target bonus
for the year in
which the
date of termination occurs or (ii) a
bonus for such
year as
may be
determined by
the Committee
in its sole
discretion. This
amount shall be
paid in the form of
a lump sum,
less applicable statutory
deductions
and withholdings, as
soon as
practicable after the
date of termination,
but no
later
than March 15 of
the year
immediately
following the year in
which the
date of termination
occurs;
and
(c) A
one-time
cash payment
of five hundred
thousand
dollars
($500,000.00), less
applicable statutory
deductions and
tax withholdings,
to be
paid
within
thirty (30)
days of the
date of termination; and
9
(d) Should
Executive or his
representatives timely
elect to
continue
coverage under
a group health insurance plan
sponsored
by the Company or
one of its
affiliates
and timely
make the
premium payments,
reimburse
Executive on a
monthly basis
for the
cost of continued
coverage under the
COBRA for Executive
and any eligible
dependents
until the earlier
of (i)
the date Executive
is no
longer
entitled
to continuation coverage under
CO BRA or
(ii)
for twelve
(12) months
after the date
of termination; and
(e) All stock
options
and other
incentive
awards held
by Executive
will become
fully vested
and immediately
exercisable
and all restrictions
on any restricted
stock held by
Executive will
be removed;
provided,
however,
Executive shall
not be released from
the black-out periods
for the next
financial quarter following
the date of termination or
Exchange
Act, trading
obligations
typically
required for an executive
in this position.
7.
Successors and Assigns
This Agreement is
personal in
nature,
and neither this Agreement nor
any part
of any obligation
here
in shall
be
assignable
by Executive.
The
Company shall
be entitled to
assign this Agreement
to any
affiliate of
the Company
or any person
or entity
that assumes
the ownership and
control
of the business of the
Company.
This
Agreement
shall
inure to the
benefit
of and shall
be binding
upon
the parties
and their
successors
and assigns.
8.
Severability
Should any
term, provision, covenant or condition of
this Agreement be
held to
be void or invalid,
the same
shall
not affect any other
term, provision, covenant
or condition
of
this Agreement
, but such
remainder
shall
continue in full force and
effect as though
each such voided term, provision,
covenant, or
condition is
not contained
herein.
9.
Governing Law and Venue
This Agreement shall
be governed by and
construed
in accordance
with the laws of
the State of California, excluding
its choice-of-law principles. Subject
to Sections 4.5 and 10,
and without
in any
way limiting the
applicability
of binding
arbitration , each
of the
parties submits
to the exclusive
jurisdiction of any state
or federal court
sitting
in Denver, Colorado
in any action
or proceeding arising out
of or
relating to this Agreement and
further agrees
that all
claims in respect of the
action
or proceeding may be heard
and determined
in any
such court to the extent
that any court proceeding is
necessary in
connection
with Sections
4.5 and 10,
and further
agrees not to
bring any
action or
proceeding arising
out of or relating
to this Agreement in
any other court.
Each of
the parties
agrees that a
final
judgment in
any action or proceeding so brought
shall be conclusive and
may be enforced by suit
on the judgment or in
any
other manner so provided
by law.
l 0.
Binding Arbitration
Except as provided in Section 4.5,
any and all disputes which
involve or relate
in any
way to this
Agreement and/or
to Executive'
s employment,
Executive's
termination of employment
with the Company
or termination
of this
Agreement, whether
initiated by
Executive
or by the
Company and whether based
on contract,
tort,
statute,
or common law,
shall be
submitted to and
resolved by
final and binding
arbitration as
the exclusive
method for resolving
all such
disputes. The
arbitration
shall be
private and confidential
and conducted in
Denver, Colorado
pursuant to the
Federal Arbitration
Act and applicable
Colorado
law,
and pursuant to
the applicable
rules of the American
Arbitration Association ("AAA") relating to employment
disputes, unless
the parties otherwise
mutually agree
to modify the
AAA Rules.
The party demanding
arbitration shall
submit a
written claim to the
other party,
setting out
the basis
of the claim
or claims,
within the
time period
of any applicable
statute of
limitations
relating to such
claim(s).
If
the
parties cannot mutually
agree upon an arbitrator then
the
parties shall
select a
neutral arbitrator through
the procedures
established
by the AAA. The arbitrator shall
have the
powers provided under the
Colorado
Code of Civil
Procedure
relating to the
arbitration of disputes,
except as expressly
limited or
otherwise
provided in this
Agreement.
The parties
shall have
the right to reasonable
disco very as mutually agreed or
as determined by the arbitrator,
including at least
one deposition each,
it being
the goal
of the parties to
resolve
any disputes
as expeditiously
and economically as
reasonably
practicable. The
parties agree
to share
equally
in the payment
of the administration costs of
the AAA arbitration, including
payment of the fees for
the arbitrator, and
any other
costs directly
related to
the administration
of
the arbitration.
The parties shall
otherwise
be responsible for
their own respective costs
and attorneys' fees relating to
the dispute,
such
as deposition
costs, expert
witnesses and similar
expenses,
except as
otherwise
provided in this
Agreement to the
prevailing party.
10
The arbitrator may award, if properly proven, any damages
or remedy that a party
could recover in
a civil litigation, and
shall award costs and reasonable attorneys' fees to the prevailing party. The award of the arbitrator shall be
issued in writing, setting
forth the basis for the decision, and shall be binding on
the parties to
the fullest extent
permitted by
law, subject to a limited statutory right to appeal as provided by law.
Judgment upon the award
of the arbitrator may
be entered in any
court having
proper jurisdiction and enforced as provided by law.
This agreement to arbitrate is
freely negotiated between Executive and the Company and is
mutually entered into between
the parties.
Each party understands and agrees that it is
giving up certain rights
otherwise afforded to it by civil court
actions, including but not
limited to the right to a jury
trial; provided, however, that
either party may seek provisional remedies in a
court of competent jurisdiction as provided
pursuant to applicable
law.
11.
Section Headings
The section headings herein are inserted only
as a matter of convenience and reference and
in no way
define, limit
or describe the scope
of this Agreement
or the intent of
any provisions
hereof.
12.
Compliance with Section 409A of the Code
Notwithstanding anything herein to the contrary, (a)
if at the time of
Executive's termination of employment with the Company Executive is a
"specified employee" as such term is
defined in Section 409A of the
Code and the regulations thereunder, and the
deferral of the
commencement of
any payments or benefits
otherwise payable hereunder as
a result
of such
termination of
employment is necessary in
order to prevent any
accelerated or additional
tax under
Section 409A of the
Code, then
the Company will defer the commencement of the
payment
of any
such payments
or benefits hereunder
(without any reduction
in such payments
or benefits ultimately paid or
provided to Executive) until
the date that
is
six (6) months
following Executive's termination of
employment with the
Company
(or the earliest date as
is permitted
under Section 409A of
the Code) and (b) if any
other payments
of money or
other benefits due to
Executive here
under could cause the
application of
an accelerated or additional
tax under Section 409A of the Code ,
such payments or other benefits
shall be
deferred if deferral
will make such
payment or other benefits
compliant under
Section 409A of the Code,
or otherwise such
payment or other
benefits shall be restructured, to the
extent possible, in
a manner,
determined by
the Board,
that does not cause such
an accelerated or additional
tax. In the event that
payments under this Agreement
are deferred pursuant to this Section
12 in
order to prevent any
accelerated tax
or additional tax
under Section 409A of the
Code, then
such payments shall
be paid at the time
specified under this Section 12 without
any interest thereon.
The Company shall
consult with Executive
in good faith regarding
the implementation of this Section 12;
provided that neither the
Company nor any of its
employees or representatives shall
have any liability to
Executive with respect thereto. Notwithstanding anything to the contrary
herein, a termination of
employment shall not
be deemed to
have occurred
for purposes of any
provision of this
Agreement providing for the
payment of amounts or
benefits
upon or following a termination
of employment unless
such termination is
also a "Separation from Service" as such
term is
defined in Section 409A of
the Code
and the regulations and guidance promulgated thereunder
and, for purposes of any such
provision of
this Agreement, reference s to
a "resignation,"
"termination ,"termination of employment," or like terms shall mean
Separation from Service.
For purposes of Section 409A
of the Code,
each payment
made under
this Agreement shall
be designated
as a "separate payment"
within the meaning of
the Section 409A of
the
Code. Notwithstanding anything to
the
contrary herein, except to the
extent any expense,
reimbursement or in-kind
benefit provided pursuant to
this Agreement
does not constitute a "deferral of compensation"
within the meaning
of Section 409A of
the Code: (x) the
amount of expenses eligible
for reimbursement
or in-kind bene fits
provided to Executive during any
calendar year win not
affect the amount
of expenses eligible for
reimbursement or in-kind
benefits provided to
Executive in any other
calendar year, (y) the reimbursements for expenses for which Executive is
entitled to be reimbursed
shall be made
on or before the last day of
the calendar year
following the calendar
year in
which the
applicable expense
is
incurred, and (z) the right to
payment or reimbursement
or in-kind benefits
hereunder may not be
liquidated or exchanged
for any
other benefit.
13.
Entire Agreement
This Agreement contains the
entire agreement of the
parties relating to the
subject matter hereof, and this Agreement
supersedes and replaces
in all respects the
Original Agreement. Further,
the parties
hereto have made no agreements, representations, or
warranties relating to
the subject matter of
this Agreement that are not
set forth otherwise
herein. In this
regard, each of the parties represents and warrants
to the other party
that such party is
not relying on any promises
or representations that do
not appear in
writing herein. Each
of the parties further agrees
and understands
that this Agreement can be
amended or modified only by
a written agreement signed by
all parties.
14.
Notice
All notices
required or permitted under this Agreement shall
be in writing and
shall be deemed
effective: (a) upon delivery, if
delivered
in person; (b) upon delivery
to Federal Express
or other
similar courier service
, marked for next
day delivery
, addressed as
set forth below;
(c) upon
deposit in United
States Mail if
sent by registered or certified mail ,
return receipt requested,
addressed as set forth
below; or (d) upon
being sent by
facsimile transmission
, provided an original is
mailed the same
day by registered or
certified mail,
return receipt requested:
|
If
to the Company:
|
MusclePharm Corporation
Attn: Chief Executive
Officer 0000 XxxXxxx Xxxxxx
Xxxxxxx,
Xx. 00000
Facsimile:
(000) 000-0000
|
|
|
|
|
If to the Executive:
|
Xxxxx
Xxxxxxx
|
|
|
__________________________
__________________________
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15.
Attorneys' Fees
In the event that
any party shall
bring an action or
proceeding in
connection with
the performance, breach or
interpretation of this Agreement, then the prevailing party
in any
such action
or proceeding, as
determined
by the
arbitrator, court, or other body having jurisdiction,
shall be entitled
to recover from the
losing
party all
reasonable costs and
expenses of such
action or proceeding,
including
11
reasonable attorneys' fees, could costs, costs
of investigation, expert witness fees, and other costs reasonably related to such action or proceeding.
16.
Assistance with Claims
Executive agrees that ,
for the period beginning on the Start Date,
and continuing for
a reasonable period after the termination
or expiration of this Agreement
for any reason,
Executive will assist
the Company in the
defense of any
claims that may be
made against the Company and
will assist the
Company in the
prosecution of any claims that
may be made by the
Company, to the extent such claims may relate to services performed by Executive
for the Company.
Executive agrees to promptly
inform the Company if Executive becomes aware of any lawsuits or
potential claims
that may be
filed against the Company.
For all assistance occurring
after termination
of Executive's employment by
the Company,
the Company agrees to provide
reasonable compensation to Executive for such
assistance. Executive also
agrees to promptly
inform the Company if asked to
assist in
any investigation
of the Company (or its
actions) that may relate to services performed by
Executive for the Company, regardless
of whether a lawsuit
has been filed
against the Company with
respect to such investigation.
17.
Release of Claims
Executive shall not
be entitled
to receive the severance
pay and benefits
under Sections 6.2, 6.3,
and 6.4, as
applicable, unless (a)
Executive executes and returns to the Company a Release
(as defined below) on or before the 50th day following the
date of termination or
such shorter time as
may be prescribed
in the Release, (b)
such Release
shall not have been
timely
revoked by Executive,
and (c) the
date of termination constitutes a
Separation
from Service,
and provided
further, however, that
if Executive violates his
continuing obligations
under Sections 4.1, 4.2,
4.3, or 4.4,
Executive
shall not be entitled to receive such
severance pay or
benefits and Executive
shall immediately repay to the Company upon written demand any severance
pay or benefits that
already have been paid to Executive. For purposes
of this Agreement, the term
"Release"
means a waiver
and release of
claims by Executive in
the form prescribed by the Company, which form may
include, without limitation, an
agreement
by Executive not to
disparage the Company,
its affiliates,
and other related
persons or
entities, but
which
form shall
not in c lude a
release and waiver
of claims for (i) indemnification or
for coverage under officer
and director liability
policies, if
applicable, (ii) claims
with respect to the
reimbursement of
business
expenses or with respect
to benefits which
are in each
case to continue in effect after
termination or
expiration of this
Agreement in
accordance with the terms of this
Agreement, (iii)
claims
he may have as
a holder of options to acquire equity securities
of the Company
(which
shall be
governed by the documents by which Executive was
granted
such options)
and (iv)
claims he may have
as a stock holder
of the Company.
18.
Xxxx-Xxxxx Act and Other Applicable Legal Requirements
Executive agrees
(i) to abide by any
compensation recovery,
recoupment,
anti-hedging, or other policy applicable to executives of
the Company and its
affiliates, as may
be in effect
from time to time, as approved by
the Board or a duly authorized
committee thereof or as required by the
Xxxx-Xxxxx Xxxx
Street Reform and Consumer
Protection Act of 2010
(the "Xxxx-Xxxxx
Act")
or other
applicable law, and
(ii) that
the terms and
conditions of
this Agreement shall
be deemed
automatically amended as may
be necessary from time
to time
to ensure
compliance by
Executive and
this Agreement with
such policies, the
Xxxx-Xxxxx Act, or other
applicable law.
12
19.
Counterparts
This
Agreement may be executed in any
number of counterparts, each
of which shall be deemed to be
an original, but all of which together
shall constitute
but one and
the same instrument.
EXECUTIVE
HAS BEEN ADVISED THAT
HE SHOULD SEEK INDEPENDENT REVIEW AND
ADVICE FROM LEGAL COUNSEL AND TAX ADVISORS AS TO THE SCOPE AND
POTENTIAL TAXES WHICH
COULD ARISE FROM THE AGREEMENT.
(Signature Page Follows)
13
Exhibit 10.17
IN WITNESS WHEREOF, this Agreement is executed as of the day and
year first above written:
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MusclePharm
Corporation
By: /s/ Xxxxxxx
Xxxx
Name:
Xxxxxxx J, Xxxx
Title:
Lead Director
Executive
By: /s/ Xxxxx
Xxxxxxx
Name: Xxxxx Xxxxxxx
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14
