AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
This
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
(“Agreement”) is made and
entered into as of the 1st day of February, 2018 (the
“Effective
Date”), by and between MusclePharm Corporation, a
Nevada corporation headquartered at 0000 Xxxxxxx Xxxxxx, Xxxxxxx,
XX 00000 (“Company”) and Xxxx
Xxxxxxx (“Executive”). Until the
Effective Date, the Executive’s November 18, 2016 Amended and
Restated Executive Employment Agreement with the Company (the
“Earlier
Agreement”) will remain in force and effect and
continue to govern the Executive’s employment with the
Company.
W I T N E S E T H:
WHEREAS, the
Company and the Executive desire to amend and restate the Earlier
Agreement by entering into this Agreement; and
WHEREAS, the
Company desires to continue to employ the Executive and the
Executive desires to continue to be employed by the Company
pursuant to the terms and conditions set forth in this
Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree to be bound, as of the Effective
Date, as follows:
1. Employment
and Duties. The Company agrees to continue to employ the
Executive and the Executive agrees to continue to serve as the
Company’s President and Chief Executive Officer and as the
Chairman of the Board of Directors of the Company (the
“Board”). The duties and
responsibilities of the Executive shall include the duties and
responsibilities as the Board may from time to time assign to the
Executive that are consistent with the duties normally expected of
a chief executive officer or similar most senior
position.
The
Executive shall devote sufficient portions of his working time and
efforts during the Company’s normal business hours to the
business and affairs of the Company and its subsidiaries and to the
diligent and faithful performance of the duties and
responsibilities duly assigned to him pursuant to this Agreement.
Provided that none of his additional activities materially
interferes with the performance of the duties and responsibilities
of the Executive, nothing in this Section 1 shall prohibit the
Executive from: (A) serving as a director or member of a committee
of up to two (2) entities that do not, in the good faith
determination of the Board, compete or present the appearance of
competition with the Company or otherwise create, or could create,
in the good faith determination of the Board, a conflict of
interest or appearance of a conflict of interest with the business
of the Company; (B) delivering lectures, fulfilling speaking
engagements, and any writing or publication relating to his area of
expertise; (C) serving as a director or trustee of any
governmental, charitable or educational organization; (D) engaging
in additional activities in connection with personal investments
and community affairs, including, without limitation, professional
or charitable sports and/or coaching, nutrition or similar
organization committees, boards, memberships or similar
associations or affiliations; or (E) performing coaching or
advisory activities.
2. Term.
The term of this Agreement shall commence on the Effective Date
and, subject to Section
12 below, continue for a period of three (3) years following
the Effective Date and shall be automatically renewed for
successive one (1) year periods thereafter unless either party
provides the other party with written notice of his or its
intention not to renew this Agreement at least three (3) months
prior to the expiration of the initial term or any renewal term of
this Agreement. As used herein, “Employment Period” shall
mean the initial three (3) year term plus any one (1) year
renewals.
3. Place
of Employment. The Executive’s services shall be
performed at the Company’s headquarters at 0000 Xxxxxxx
Xxxxxx, Xxxxxxx, XX 00000.
4. Base
Salary. The Company agrees to initially pay the Executive,
effective as of the Effective Date, a base salary at an annual rate
(“Base
Salary”) of Seven Hundred Thousand Dollars
($700,000.00). The Executive’s Base Salary shall be increased
to an annual rate of Seven Hundred and Fifty Thousand Dollars
($750,000.00) effective January 1, 2020. The Board may elect to
further increase the Executive’s Base Salary on each
anniversary of the Effective Date. The Base Salary shall be paid in
periodic installments in accordance with the Company’s
regular payroll practices.
5. Incentive
Compensation. The Executive shall be eligible to receive
each of the following:
(a) Cash-Based
Incentives. The Executive shall be eligible to receive
cash-based incentive bonuses based upon the achievement of
specified performance goals, as set forth in Attachment A
(“Cash-Based
Incentives”).
(b) Equity-Based
Incentives. The Executive shall be eligible for grants of
equity awards available to senior executive officers of the Company
under the Company’s equity plan, as the Board or the
Compensation Committee of the Board (“Compensation Committee”)
may from time to time determine. Each equity award granted to the
Executive shall specify in the applicable award agreement that upon
termination of the Executive’s employment for any reason by
the Company or by the Executive, any unvested portion of the equity
awards shall immediately vest.
(c) Performance
Bonus. The Executive will be
eligible to receive a 2018 performance bonus in an amount equal to
75% of the Executive’s then current Base Salary if the
Company has, for the 2018 fiscal year: (i) maintained at least a
32% gross profit margin, and (ii) recognized revenue of at least
$111,000,000.00 (the “2018 Bonus
Conditions”). Any 2018
performance bonus will be paid to the Executive in full no later
than two and one-half months following the end of the 2018 fiscal
year. Notwithstanding the foregoing, if the 2018 Bonus Conditions
are not satisfied, the Board may nonetheless elect to award the
Executive a performance bonus for the 2018 fiscal year of up to 75%
of his then current Base Salary. Further, the Board in its sole
discretion will have the ability to award the Executive additional
bonuses based on the Company’s and/or the Executive’s
achievement of other mutually agreed upon targets. The Company will
negotiate in good faith with the Executive to devise a mutually
agreeable performance bonus plan for the 2019 fiscal year and
fiscal years thereafter. Any performance bonus(es) due pursuant to
this Section 5(c), including any performance bonus(es) due for the
2019 fiscal year and fiscal years thereafter pursuant to the terms
of such plans as the Executive and the Company may agree, shall be
referred to as the “Performance
Bonus.”
6. Post-Employment
Compensation. Upon termination of employment for any reason,
the Executive (or, following his death, the Executive’s
heirs, administrators or executors) shall be entitled to: (A) all
unpaid Base Salary earned through the date of termination (the
“Date of
Termination”) to be paid as required by law; (B) any
and all reasonable expenses paid or incurred by the Executive in
connection with and related to the performance of his duties and
responsibilities for the Company during the period ending on the
Date of Termination, to the extent unpaid, to be paid according to
Section 8; (C) any
accrued but unused vacation time through the Date of Termination in
accordance with Company policy; (D) any unpaid Cash-Based
Incentives or Performance Bonus, to the extent earned as of the
Date of Termination, to be paid according to Attachment A, or Section 5(c), respectively; and
(E) all vested equity awards earned prior to the Date of
Termination (collectively, the “Accrued Compensation”).
The Company shall deduct, from all payments made hereunder, all
applicable taxes, including income tax, FICA and FUTA, and other appropriate
deductions.
7. Clawback
Rights. The Cash-Based Incentives, Performance Bonus and any
and all stock-based compensation (such as options and equity
awards) (collectively, the “Clawback Benefits”) shall
be subject to “Clawback Rights” as
follows: during the period that the Executive is employed by the
Company and upon the termination of the Executive’s
employment and for a period of three (3) years thereafter, if there
is a restatement of any financial results from which any Clawback
Benefits paid to the Executive shall have been determined, the
Executive agrees to repay any amounts which were determined by
reference to any Company financial results which were later
restated (as defined below), to the extent the Clawback Benefits
amounts paid exceed the Clawback Benefits amounts that would have
been paid, based on the restatement of the Company’s
financial information. All Clawback Benefits amounts resulting from
such restated financial results shall be retroactively adjusted by
the Compensation Committee to take into account the restated
results, and any excess portion of the Clawback Benefits resulting
from such restated results shall be immediately surrendered to the
Company and if not so surrendered within ninety (90) days of the
revised calculation being provided to the Executive by the
Compensation Committee following a publicly announced restatement,
the Company shall have the right to take any and all action to
effectuate such adjustment. The calculation of the revised Clawback
Benefits amount shall be determined by the Compensation Committee
in good faith and in accordance with applicable law, rules and
regulations. All determinations by the Compensation Committee with
respect to the Clawback Rights shall be final and binding on the
Company and the Executive. The Clawback Rights shall terminate
following a Qualifying Transaction (as defined in Attachment A), subject to
applicable law, rules and regulations. For purposes of this
Section 7, a
restatement of financial results that requires a repayment of a
portion of the Clawback Benefits amounts shall mean a restatement
resulting from material non-compliance of the Company with any
financial reporting requirement under the federal securities laws
and shall not include a restatement of financial results resulting
from subsequent changes in accounting pronouncements or
requirements which were not in effect on the date the financial
statements were originally prepared (“Restatements”). The
parties acknowledge it is their intention that the foregoing
Clawback Rights that relate to Restatements conform in all respects
to the provisions of the Xxxx-Xxxxx Xxxx Street Reform and Consumer
Protection Act of 2010 (“Xxxx-Xxxxx Act”) and
require recovery of all “incentive-based” compensation,
pursuant to the provisions of the Xxxx- Xxxxx Act and any and all
rules and regulations promulgated thereunder from time to time in
effect. Accordingly, the terms and provisions of this Agreement
shall be deemed automatically amended from time to time to assure
compliance with the Xxxx-Xxxxx Act and such rules and regulations
as hereafter may be adopted and in effect.
8. Expenses.
The Executive shall be entitled to prompt reimbursement by the
Company for all reasonable ordinary and necessary travel,
entertainment, and other expenses incurred by the Executive while
employed (in accordance with the policies and procedures
established by the Company for its senior executive officers) in
the performance of his duties and responsibilities under this
Agreement; provided, that the Executive
shall properly account for such expenses in accordance with Company
policies and procedures.
9. Other
Benefits. During the term of this Agreement, the Executive
shall be eligible to participate in incentive, stock purchase,
savings, retirement (401(k)), and welfare benefit plans, including,
without limitation, health, medical, dental, vision, life
(including accidental death and dismemberment) and disability
insurance plans (collectively, “Benefit Plans”), in
substantially the same manner and at substantially the same levels
as the Company makes such opportunities available to the
Company’s managerial or salaried executive employees and/or
its senior executive officers.
The
Company shall pay one hundred percent (100%) of the cost for any
group medical, vision and/or dental coverage elected by and for the
Executive and fifty percent (50%) of the additional incremental
cost for any group medical, vision and/or dental coverage elected
by the Executive for the Executive’s family.
The
Executive shall be entitled to air travel, including travel by
first class or by private plane, as is reasonable and necessary for
the performance of his duties and responsibilities, in accordance
with the Company’s policies as approved by the
Board.
10.
Vacation. During
the term of this Agreement, the Executive shall be entitled to
accrue, on a pro rata basis, thirty (30) paid vacation days per
year. Vacation shall be taken at such times as are mutually
convenient to the Executive and the Company and no more than
fifteen (15) consecutive days shall be taken at any one time
without Company approval in advance.
11. Reserved.
12. Termination
of Employment.
(a) Death.
If the Executive dies during the Employment Period, this Agreement
and the Executive’s employment with the Company shall
automatically terminate and the Company’s obligations to the
Executive’s estate and to the Executive’s Qualified
Beneficiaries shall be those set forth in Section 6.
(b)
Disability. In the
event that, during the term of this Agreement, the Executive shall
be prevented from performing his essential functions hereunder to
the full extent required by the Company by reason of Disability (as
defined below), this Agreement and the Executive’s employment
with the Company shall automatically terminate. The Company’s
obligation to the Executive under such circumstances shall be those
set forth in Section
6. For purposes of this Agreement, “Disability” shall mean a
physical or mental disability that prevents the performance by the
Executive, with or without reasonable accommodation, of his
essential functions hereunder for an aggregate of one hundred
twenty (120) days or longer during any twelve (12) consecutive
months. The determination of the Executive’s Disability shall
be made by an independent physician who is reasonably acceptable to
the Company and the Executive (or his representative), be final and
binding on the parties hereto and be made taking into account such
competent medical evidence as shall be presented to such
independent physician by the Executive and/or the Company or by any
physician or group of physicians or other competent medical experts
employed by the Executive and/or the Company to advise such
independent physician.
(c) Cause.
(1) At
any time during the Employment Period, the Company may terminate
this Agreement and the Executive’s employment hereunder for
Cause. For purposes of this Agreement, “Cause” shall mean: (a)
the willful and continued failure of the Executive to perform
substantially his duties and responsibilities for the Company
(other than any such failure resulting from the Executive’s
death or Disability) after a written demand by the Board for
substantial performance is delivered to the Executive by the
Company, which specifically identifies the manner in which the
Board believes that the Executive has not substantially performed
his duties and responsibilities, which willful and continued
failure is not cured by the Executive within thirty (30) days
following his receipt of such written demand; (b) the
Executive’s conviction of, or plea of guilty or nolo contendere to, a felony; or (c)
the Executive’s fraud, dishonesty or gross misconduct which
is materially and demonstratively injurious to the Company.
Termination under clauses (b) or (c) of this Section 12(c)(1) shall not be
subject to cure.
(2) For
purposes of this Section
12(c), no act, or failure to act, on the part of the
Executive shall be considered “willful” unless done, or
omitted to be done, by him in bad faith and without reasonable
belief that his action or omission was in, or not opposed to, the
best interest of the Company. Between the time the Executive
receives written demand regarding substantial performance, as set
forth in subparagraph (1)(a) above, and prior to an actual
termination for Cause, the Executive will be entitled to appear
(with counsel) before the full Board to present information
regarding his views on the Cause event. After such hearing,
termination for Cause must be approved by a majority vote of the
full Board (other than the Executive). After providing the written
demand regarding substantial performance, the Board may suspend the
Executive with full pay and benefits until a final determination by
the full Board has been made.
(3) Upon
termination of this Agreement for Cause, the Company shall have no
further obligations or liability to the Executive or his heirs,
administrators or executors with respect to compensation and
benefits thereafter, except for the Company’s obligation to
provide the Executive with the Accrued Compensation in accordance
with Section
6.
(d) For
Good Reason or Without Cause.
(1) At
any time during the term of this Agreement and subject to the
conditions set forth in Section 12(d)(2) below, the
Executive may terminate this Agreement and the Executive’s
employment with the Company for “Good Reason.” For
purposes of this Agreement, “Good Reason” shall mean
the occurrence of any of the following events without the
Executive’s written consent: (A) the assignment to the
Executive of duties that are significantly different from, and/or
that result in a substantial diminution of, the duties that he
assumed on the Effective Date (including reporting to anyone other
than solely and directly to the Board); (B) the assignment to the
Executive of a title that is different from and subordinate to the
title President and Chief Executive Officer and/or Chairman of the
Board of the Company; or (C) material breach by the Company of this
Agreement.
(2) The
Executive shall not be entitled to terminate this Agreement for
Good Reason unless and until he shall have delivered written notice
to the Company within ninety (90) days of the date upon which the
facts giving rise to Good Reason occurred of his intention to
terminate this Agreement and his employment with the Company for
Good Reason, which notice specifies in reasonable detail the
circumstances claimed to provide the basis for such termination for
Good Reason, and the Company shall not have eliminated the
circumstances constituting Good Reason within thirty (30) days of
its receipt from the Executive of such written notice.
(3) If,
prior to (but not in connection with or anticipation of) a
Qualifying Sale (as defined below), or more than twelve (12) months
following a Qualifying Sale, the Executive terminates this
Agreement and his employment with the Company for Good Reason or
the Company terminates this Agreement and the Executive’s
employment with the Company without Cause (a “Non-Qualifying Sale
Termination”), then, in addition to the Company
providing the Executive with the Accrued Compensation, following
the Executive’s Date of Termination and subject to the
conditions of Section
12(i) and in accordance with the payment terms set forth in
Section
12(i):
(i) the
Company shall, for a period of twelve (12) months beginning on the
Payment Commencement Date (as defined below), continue to pay to
the Executive, in accordance with the Company’s customary
payroll practices, his then current Base Salary as
severance pay;
(ii) if
the Executive is eligible for and timely elects to continue
receiving group medical and/or dental insurance under the
continuation coverage rules known as COBRA, the Company will
continue to pay the share of the premium for such coverage that it
paid immediately prior to the Date of Termination until the earlier
of (x) the end of the twelfth (12th) month after the
Date of Termination, and (y) the date the covered
individual’s COBRA continuation coverage expires, unless, as
a result of a change in legal requirements, the Company’s
provision of payments for COBRA will violate the nondiscrimination
requirements of applicable law, in which case this benefit will not
apply;
(iii)
the Executive will receive the Performance Bonus for the fiscal
year in which his Date
of Termination occurs, paid in a lump sum on the Payment
Commencement Date;
(iv)
the vesting schedule of each outstanding option to purchase shares
of common stock of the Company held by the Executive shall be
accelerated in part so that the option shall become exercisable for
an additional number of shares equal to 25% of the original number
of shares of common stock subject to the option; and
(v)
unvested shares, or units, if any, with respect to each restricted
stock or stock unit award held by the Executive shall become vested
such that the number of unvested shares or units shall be reduced
by 25% of the original number of shares or units subject to such
restricted stock or stock unit award; provided that the vesting
will not accelerate the distribution of shares underlying equity
awards if such acceleration of distribution would trigger taxation
under Section 409A of the Code.
(4) If,
within twelve (12) months following a Qualifying Sale (or prior to,
but in connection with or anticipation of, a Qualifying Sale), the
Executive terminates this Agreement and his employment with the
Company for Good Reason or the Company terminates this Agreement
and the Executive’s employment with the Company without Cause
(a “Qualifying Sale
Termination”), then, in addition to the Company
providing the Executive with the Accrued Compensation, following
the Date of Termination and subject to the conditions of
Section 12(i) and
in accordance with the payment terms set forth in Section 12(i):
(i) the
Company shall, on the Payment Commencement Date, pay to the
Executive an amount equal to two hundred percent (200%) of his then
current Base Salary as severance pay;
(ii) if
the Executive is eligible for and timely elects to continue
receiving group medical and/or dental insurance under the
continuation coverage rules known as COBRA, the Company will
continue to pay the share of the premium for such coverage that it
paid immediately prior to the Date of Termination until the earlier
of (x) the end of the 18th month after the
Date of Termination, and (y) the date the covered
individual’s COBRA continuation coverage expires, unless, as
a result of a change in legal requirements, the Company’s
provision of payments for COBRA will violate the nondiscrimination
requirements of applicable law, in which case this benefit will not
apply;
(iii)
the Executive will receive, in a lump sum on the Payment
Commencement Date, an amount equal to two hundred percent (200%) of
the Performance Bonus for the fiscal year in which his Date of
Termination occurs;
(iv)
each outstanding option to purchase shares of common stock of the
Company held by the Executive shall vest and become immediately
exercisable in full; and
(v)
each restricted stock or stock unit award held by the Executive
shall be deemed to be fully vested and free from repurchase and
forfeiture provisions, and, to the extent applicable, will no
longer be subject to a right of repurchase by or forfeiture to the
Company; provided that the vesting will not accelerate the
distribution of shares underlying equity awards if such
acceleration of distribution would trigger taxation under Section
409A of the Code.
(5) The
Executive shall not be required to mitigate the amount of any
payment provided for in this Section 12(d) by seeking other
employment or otherwise, nor shall the amount of any payment
provided for in this Section 12(d) be reduced by any
compensation earned by the Executive as the result of employment by
another employer or business or by profits earned by the Executive
from any other source at any time before and after the Date of
Termination. The Company’s obligation to make any payment
pursuant to, and otherwise to perform its obligations under, this
Agreement shall not be affected by any offset, counterclaim or
other right that the Company may have against the Executive for any
reason.
(6) For
purposes of this Agreement, “Qualifying Sale” shall
mean the sale of all or substantially all of (A) the assets of the
Company or (B) the outstanding common stock of the Company, whether
by merger, consolidation, sale or other transfer of shares of
common stock (other than a merger or consolidation where the
stockholders of the Company prior to the merger or consolidation
are the holders of a majority of the voting securities of the
entity that survives such merger or consolidation); provided, that
for the avoidance of doubt, that such sale also constitutes a
“change in control event” described in Section
1.409A-3(i)(5)(v) or (vii) of the Treasury Regulations with respect
to the Company.
(e) Without
“Good Reason” by the Executive. At any time
during the term of this Agreement, the Executive shall be entitled
to terminate this Agreement and the Executive’s employment
with the Company without Good Reason by providing prior written
notice of at least thirty (30) days to the Company. Upon
termination by the Executive of this Agreement or the
Executive’s employment with the Company without Good Reason,
the Company shall have no further obligations or liability to the
Executive or his heirs, administrators or executors with respect to
compensation and benefits thereafter, except for the
Company’s obligation to provide the Executive with the
Accrued Compensation in accordance with Section 6.
(f) Due
to Expiration of the Employment Period by Notice of
Non-Renewal.
(1) If
(A) this Agreement and the employment of the Executive terminate
due to expiration of the Employment Period by notice of non-renewal
by the Company, and (B) the Date of Termination occurs prior to
(but not in connection with or anticipation of) a Qualifying Sale
or more than twelve (12) months following a Qualifying Sale, and
provided that the Executive would otherwise have been willing and
able to continue his employment under the terms of this
Agreement but for the Company’s decision not to renew, then
such termination will be treated as a Non-Qualifying Sale
Termination and the Executive will be eligible to receive the
severance benefits set forth in Section 12(d)(3).
(2) If
(A) this Agreement and the employment of the Executive terminate
due to expiration of the Employment Period by notice of non-renewal
by the Company, and (B) the Date of Termination occurs within 12
months following a Qualifying Sale (or prior to, but in connection
with or anticipation of, a Qualifying Sale), and provided that the
Executive would otherwise have been willing and able to continue
his employment under
the terms of this Agreement but for the Company’s decision
not to renew, then such termination will be treated as a Qualifying
Sale Termination and the Executive will be eligible to receive the
severance benefits set forth in Section 12(d)(4).
(g)
Any termination of the Executive’s employment by the Company
or by the Executive (other than termination by reason of the
Executive’s death) shall be communicated by written Notice of
Termination to the other party of this Agreement. For purposes of
this Agreement, a “Notice of Termination”
shall mean a written notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment
under the provision so indicated, provided, however, failure to
provide timely notification shall not affect the employment status
of the Executive.
(h) Release.
The obligation of the Company to make the payments and provide the
benefits to the Executive under Section 12(d)(3), 12(d)(4), 12(f)(1) or 12(f)(2) is conditioned upon
the Executive executing and not revoking a Release within sixty
(60) days following the Date of Termination. The Company shall
commence or make, as applicable, the payments under Section 12(d)(3), 12(d)(4), 12(f)(1) or 12(f)(2) on the first payroll
period following the date the Release becomes irrevocable (such
date, the “Payment Commencement Date”); provided,
however, that if the 60th day following the Date of Termination
falls in the calendar year following the year of the
Executive’s termination of employment, the Payment
Commencement Date shall be the first payroll period of such later
calendar year; and provided further that the payment of any amounts
pursuant to Section
12(d)(4), 12(d)(5), 12(f)(1) or 12(f)(2) shall be subject to
the terms and conditions set forth in Section 15.
13. Confidential
Information.
(a) Disclosure
of Confidential Information. The Executive recognizes,
acknowledges and agrees that he has had and will continue to have
access to secret and confidential information regarding the
Company, its subsidiaries and their respective businesses
(“Confidential
Information”), including but not limited to, its
products, methods, formulas, software code, patents, sources of
supply, customer dealings, data, know-how, trade secrets and
business plans, provided such information is not in or does not
hereafter become part of the public domain, or become known to
others through no fault of the Executive. The Executive
acknowledges that such information is of great value to the
Company, is the sole property of the Company, and has been and will
be acquired by him in confidence. In consideration of the
obligations undertaken by the Company herein, the Executive will
not, at any time, during or after his employment hereunder, reveal,
divulge or make known to any person, any information acquired by
the Executive during the course of his employment, which is treated
as confidential by the Company, and not otherwise in the public
domain. The provisions of this Section 13 shall survive the
termination of the Executive’s employment
hereunder.
(b) The
Executive affirms that he does not possess and will not rely upon
the protected trade secrets or confidential or proprietary
information of any prior employer(s) in providing services to the
Company or its subsidiaries.
(c) In
the event that the Executive’s employment with the Company
terminates for any reason, the Executive shall deliver forthwith to
the Company any and all originals and copies, including those in
electronic or digital formats, of Confidential Information;
provided, however,
the Executive shall be entitled to retain (i) papers and other
materials of a personal nature, including, but not limited to,
photographs, correspondence, personal diaries, calendars and
rolodexes, personal files and phone books, (ii) information showing
his compensation or relating to reimbursement of expenses, (iii)
information that he reasonably believes may be needed for tax
purposes and (iv) copies of plans, programs and agreements relating
to his employment, or termination thereof, with the
Company.
14. Non-Solicitation.
The Executive hereby agrees and covenants that he shall not,
without the prior written consent of the Company, directly or
indirectly, whether on the Executive’s own behalf or on
behalf of any other person or entity or otherwise howsoever,
recruit or solicit, or attempt to recruit or solicit, any employee
or independent contractor of the Company to leave the employment
(or independent contractor relationship) thereof, whether or not
any such employee or independent contractor is party to an
employment agreement, for the purpose of competing with the
business of the Company. The Executive agrees that this
non-solicitation restriction shall be enforceable during the
Employment Period and, in the event Executive’s employment
with the Company is terminated pursuant to Sections 12(b), (c) (d), (f), or (g) for a period of twelve (12)
months following the Date of Termination.
15. Section
409A.
The
provisions of this Agreement are intended to comply with or are
exempt from Section 409A of the Code (“Section 409A”) and the
related Treasury Regulations and shall be construed in a manner
consistent with the requirements for avoiding taxes or penalties
under Section 409A. The Company and the Executive agree to work
together in good faith to consider amendments to this Agreement and
to take such reasonable actions necessary, appropriate or desirable
to avoid imposition of any additional tax under Section 409A or
income recognition prior to actual payment to the Executive under
this Agreement.
It is
intended that any expense reimbursement made under this Agreement
shall be exempt from Section 409A. Notwithstanding the foregoing,
if any expense reimbursement made under this Agreement shall be
determined to be “deferred compensation” subject to
Section 409A (“Deferred Compensation”),
then (a) the right to reimbursement or in-kind benefits is not
subject to liquidation or exchange for another benefit, (b) the
amount of expenses eligible for reimbursement, or in-kind benefits,
provided during any taxable year shall not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in
any other taxable year (provided that this clause (b) shall not be
violated with regard to expenses reimbursed under any arrangement
covered by Section 105(b) of the Code solely because such expenses
are subject to a limit related to the period the arrangement is in
effect) and (c) such payments shall be made on or before the last
day of the taxable year following the taxable year in which the
expense was incurred.
With
respect to the time of payments of any amount under this Agreement
that is Deferred Compensation, references in the Agreement to
“termination of employment” and substantially similar
phrases, including a termination of employment due to the
Executive’s Disability, shall mean “Separation from Service”
from the Company within the meaning of Section 409A (determined
after applying the presumptions set forth in Treasury Regulation
Section 1.409A-1 (h)(1)). Each installment payable hereunder shall
constitute a separate payment for purposes of Treasury Regulation
Section 1.409A-2(b), including Treasury Regulation Section
1.409A-2(b)(2)(iii). Each payment that is made within the terms of
the “short-term deferral” rule set forth in Treasury
Regulation Section 1.409A-1(b)(4) is intended to meet the
“short-term deferral” rule. Each other payment is
intended to be a payment upon an involuntary termination from
service and payable pursuant to Treasury Regulation Section
1.409A-1 (b)(9)(iii), et. seq., to the maximum extent permitted by
that regulation, with any amount that is not exempt from Code
Section 409A being subject to Code Section 409A.
Notwithstanding
anything to the contrary in this Agreement, if the Executive is a
“specified employee” within the meaning of Section 409A
at the time of the Executive’s termination, then any
severance payments or separation benefits or other compensation
that constitute deferred compensation subject to Code Section 409A,
as determined by the Company (together, the “Deferred Separation
Benefits”) will accrue during the six (6)-month period
following Executive’s termination of employment and will
become payable in one lump sum cash payment on the date six (6)
months and one (1) day following the date of the Executive’s
termination of employment. All subsequent Deferred Separation
Benefits, if any, will be payable in accordance with the payment
schedule applicable to each payment or benefit. Notwithstanding
anything herein to the contrary, if the Executive dies following
termination but prior to the six (6) month anniversary of the
Executive’s termination date, then any payments delayed in
accordance with this paragraph will be payable in a lump sum as
soon as administratively practicable after the date of the
Executive’s death and all other Deferred Separation Benefits
will be payable in accordance with the payment schedule applicable
to each payment or benefit.
16. Miscellaneous.
(a) The
Executive acknowledges that the services to be rendered by him
under the provisions of this Agreement are of a special, unique and
extraordinary character and that it would be difficult or
impossible to replace such services. Furthermore, the parties
acknowledge that monetary damages alone would not be an adequate
remedy for any breach by the Executive of Section 13 or Section 14 of this Agreement.
Accordingly, the Executive agrees that any breach or threatened
breach by him of Section
13 or Section
14 of this Agreement shall entitle the Company, in addition
to all other legal remedies available to it, to apply to any court
of competent jurisdiction to seek to enjoin such breach or
threatened breach. The parties understand and intend that each
restriction agreed to by the Executive hereinabove shall be
construed as separable and divisible from every other restriction,
that the unenforceability of any restriction shall not limit the
enforceability, in whole or in part, of any other restriction, and
that one or more or all of such restrictions may be enforced in
whole or in part as the circumstances warrant. In the event that
any restriction in this Agreement is more restrictive than
permitted by law in the jurisdiction in which the Company seeks
enforcement thereof, such restriction shall be limited to the
extent permitted by law. The remedy of injunctive relief herein set
forth shall be in addition to, and not in lieu of, any other rights
or remedies that the Company may have at law or in
equity.
(b) Neither
the Executive nor the Company may assign or delegate any of their
rights or duties under this Agreement without the express written
consent of the other; provided, however, that the
Company shall have the right to delegate its obligation of payment
of all sums due to the Executive hereunder, provided that such
delegation shall not relieve the Company of any of its obligations
hereunder.
(c) During
the term of this Agreement, the Company (i) shall indemnify and
hold harmless the Executive and his heirs and representatives to
the maximum extent provided by the laws of the State of California
and by Company’s bylaws and (ii) shall cover the Executive
under the Company’s directors’ and officers’
liability insurance on the same basis as it covers other senior
executive officers and directors of the Company.
(d) This
Agreement constitutes and embodies the full and complete
understanding and agreement of the parties with respect to the
Executive’s employment by the Company, and supersedes all
prior or contemporaneous understandings and agreements, whether
oral or written, between the Executive and the Company related
thereto, including without limitation the Earlier Agreement, and
shall not be amended, modified or changed except by an instrument
in writing executed by the party to be charged. The invalidity or
partial invalidity of one or more provisions of this Agreement
shall not invalidate any other provision of this Agreement. No
waiver by either party of any provision or condition to be
performed shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same time or any prior or
subsequent time. For the avoidance of doubt, nothing herein shall
supersede the Transaction Bonus Agreement between the Executive and
the Company entered into contemporaneously with this Agreement, and
the obligations of the Company as set forth in the Transaction
Bonus Agreement shall be in addition to its obligations to the
Executive as set forth herein and shall continue after the
termination of this Agreement for any reason.
(e) This
Agreement shall inure to the benefit of, be binding upon and
enforceable against, the parties hereto and their respective
successors, heirs, beneficiaries and permitted
assigns.
(f) The
headings contained in this Agreement are for convenience of
reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g)
All notices, requests, demands and other communications required or
permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given when personally delivered, sent by
registered or certified mail, return receipt requested, postage
prepaid, or by reputable national overnight delivery service (e.g.,
Federal Express) for overnight delivery to the party at the address
set forth in the preamble to this Agreement, or to such other
address as either party may hereafter give the other party notice
of in accordance with the provisions hereof. Notices shall be
deemed given on the sooner of the date actually received or the
third business day after deposited in the mail or one business day
after deposited with an overnight delivery service for overnight
delivery.
(h) This
Agreement shall be governed by and construed in accordance with the
internal laws of the State of California, and each of the parties
hereto irrevocably consents to the jurisdiction and venue of the
federal and state courts located in the State of California for any
disputes arising out of this Agreement, or the Executive’s
employment with the Company. The prevailing party in any dispute
arising out of this Agreement shall be entitled to his or its
reasonable attorney’s fees and costs.
(i) This
Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one of the same instrument. The
parties hereto have executed this Agreement as of the date set
forth above.
(j) The
Executive represents and warrants to the Company, that he has the
full power and authority to enter into this Agreement and to
perform his obligations hereunder and that the execution and
delivery of this Agreement and the performance of his obligations
hereunder will not conflict with any agreement to which the
Executive is a party.
(k) The
Company represents and warrants to the Executive that it has the
full power and authority to enter into this Agreement and to
perform its obligations hereunder and that the execution and
delivery of this Agreement and the performance of its obligations
hereunder will not conflict with any agreement to which the Company
is a party.
[Signature
page follows immediately]
IN
WITNESS WHEREOF, the Executive and the Company have caused this
Amended and Restated Executive Employment Agreement to be executed
as of the date first above written.
MUSCLEPHARM
CORPORATION
By:/s/ Xxxxxxx Xxxx
Name:
Xxxxxxx Xxxx
Title:
Lead Director
XXXX
XXXXXXX
/s/ Xxxx
Xxxxxxx
Executive
Attachment A
The
Executive shall be entitled to receive cash based incentive
bonuses, in each case subject to the achievement of the performance
goals set forth in this Attachment A, in each case as
determined by the Compensation Committee in its sole discretion,
and subject to the Executive’s remaining employed by the
Company through the achievement of the applicable performance goal
or the grant of the applicable award of restricted
stock.
Cash-Based Incentive Bonuses
The
Executive shall be entitled to receive the following cash-based
incentive bonuses, in each case, payable as soon as reasonably
practicable following the achievement of the applicable performance
goal, but in no event later than two and one-half months following
the end of the fiscal year in which such goal is
achieved:
(i)
Two Hundred and
Fifty Thousand Dollars ($250,000), if the Xxxxxxx Xxxxxxxxx matter
is settled in a satisfactory manner; and
(ii)
One Hundred
Thousand Dollars ($100,000), if the Company equals or exceeds a
total of $1 million in net sales associated with the MP Organic
line before the end of the fiscal year ending December 31,
2017.
