Exhibit 10.17
THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT is by and between SAN Holdings, Inc.
(“SANZ”) and Xxxx X. Xxxx (“Xxxx”) and is dated as of August
19, 2002.
Recitals
| X. |
XXXX and Busk are currently parties to an Executive Employment Agreement dated
as of December 19, 2001 (the “Original Agreement”), under which Busk
has served as Chief Operating Officer of SANZ and its wholly-owned subsidiary
(the “Operating Company”). |
| X. |
XXXX and Xxxx mutually desire to amend and restate the Agreement in its
entirety, substituting the terms and conditions set forth herein for the terms
and conditions of the Original Agreement. |
NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are acknowledged, the parties agree as follows:
1.
Duties. Busk’s principal duties shall be as follows:
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i. |
To develop proposed strategies for approaching potential sources of financing,
acquirors, acquisition targets and similar parties (collectively,
“Strategic Transaction Partners”); |
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ii. |
To develop and prepare materials for delivery to and/or presentation to
potential Strategic Transaction Partners; |
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iii. |
To conduct at least preliminary discussions with those potential Strategic
Transaction Partners, and/or intermediaries or advisors who may be instrumental
in identifying or negotiating with Strategic Transaction Partners, in each case
that the Board and executive management of SANZ determine to be
appropriate; |
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iv. |
To conduct such other related activities as the Board or executive management of
SANZ shall request. |
All such activities shall
be subject to the direction and approval of the Board and executive management
of SANZ, specifically Xxxx Xxxxxxx its CEO or his specific designee, with whom
Busk shall consult regularly throughout the Term. Without limiting the
foregoing, Busk shall provide weekly written updates of progress..
2.
Status. Effective immediately, Busk shall cease to hold the offices of Executive Vice
President and Chief Operating Officer of SANZ and the Operating Company, and
shall cease to be an executive officer of either company. While Busk shall
legally remain an employee of the Company for the remainder of the Term (as
defined in Section 3 below), he shall hold himself out only as a director of
SANZ, including when conducting the duties described in Section 1.
3.
Term.
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a) |
Busk shall perform the duties outlined in Section 1 on a substantially full-time
basis from the date hereof through September 30, 2002. Commencing October 1,
2002, through December 31, 2002, Busk may reduce his time commitment to SANZ to
approximately one-half of normal executive hours. The term of Busk’s
employment (the “Term”) shall run to December 31, 2002, whereupon it
shall terminate without action by either party. |
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b) |
Notwithstanding subsection (a) above, if Busk is unable to perform the duties
(or otherwise fails to perform the duties) set forth in Section 1, whether
because of conflicting obligations to another employer or otherwise, either
party may terminate Busk’s employment and the Term upon notice to the other
party, provided that in the event of any such notice by SANZ, Busk shall have
twenty days following notice to cure such failure. |
4.
Compensation.
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a) |
Salary. From the date hereof through October 31, 2002, Busk shall be paid
a salary at an annualized rate of $210,000, paid semi-monthly, and from November
1, 2002 through December 31, 2002, Busk shall be paid a salary at an annualized
rate of $105,000, paid semi-monthly, in each case subject to any earlier
termination of the Term pursuant to Section 3(b). |
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b) |
Success Fee. In the event that, on or before September 30, 2003, SANZ
consummates a Strategic Transaction (as defined below) that was either first
identified by Busk or that was substantially progressed by Busk in the course of
his duties under Section 1, promptly following the closing of such Strategic
Transaction SANZ will pay to Busk a success fee in the amount of 1.0% of the
value thereof, up to a maximum of $100,000. As used herein, a Strategic
Transaction shall mean (i) the raising of additional capital, (ii) a sale of the
Company (whether by merger, sale of stock, or sale of substantially all of the
Company’s assets), (iii) a sale of a division or similar significant
business unit outside of the ordinary course of business, or (iv) a joint
venture or similar transaction in which a third party contributes significant
cash resources to fund operations that are currently funded by SANZ. The value
of a Strategic Transaction shall be computed as follows, in each case net of any
investment banking fees and other out-of-pocket fees and costs incurred by SANZ
(including this success fee), (w) in the case of capital raising, the amount of
cash funded to SANZ at closing, (x) in the case of a sale of the company, the
value of the consideration realized by SANZ stockholders at closing, which in
the case of securities shall take into account any legal restrictions, liquidity
limitations and other factors effecting such value, (y) in the case of a sale of
a division or business unit, the sum of the amount paid at closing for such
assets plus the amount of any liabilities assumed, and (z) in the case of a
joint venture or similar transaction, the amount of cash contributed by the
third party at closing and the amount of any binding and unconditional
commitments for future cash contributions by such party. |
5.
Expenses. SANZ shall promptly reimburse Busk for all reasonable expenses
incurred in the performance of his duties hereunder, subject to SANZ’s
travel and entertainment policies in effect from time to time and following
SANZ’s customary practice.
6.
Benefits. For the duration of the Term, Busk shall be eligible to
participate in all employee health and welfare benefit plans and 401(k) plan on
the same terms (including the same contribution rates) as other employees. Busk
shall accrue vacation at a rate of four weeks per year through October 31, 2002,
whereupon further accrual shall cease.
7.
Treatment of Outstanding Stock Options. The parties acknowledge that Busk
currently holds options to purchase an aggregate of 1,495,677 shares of SANZ
common stock (the “Options”), and that under the current terms of the
applicable option agreements such Options will terminate three months after the
cessation of Busk’s employment by SANZ, whether with or without cause. Each such
Option Agreement is hereby amended to provide that, notwithstanding the earlier
cessation of Busk’s employment, the Options shall terminate on September
30, 2005. The foregoing shall not be deemed to amend or otherwise alter any
provision of any Option relating to the treatment of such Option in the event of
a merger, consolidation or sale or similar corporate event applicable to SANZ.
8.
Corporate Opportunities; Confidentiality, Proprietary Information and
Inventions; Covenants not to Compete.
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a) |
Corporate Opportunities. Busk will offer to SANZ any investment or other
opportunity of which he becomes aware during the Term in the areas of business
in which SANZ operates. If the Board takes no action for 90 days from the date
of receipt of the offer, or refuses the opportunity during such 90-day period,
Busk may pursue such opportunity. |
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b) |
Confidential Information, Proprietary Information and Inventions. Busk
promises to protect SANZ’s Confidential Information as described in the
company’s Proprietary Information and Inventions Agreement, the terms and
conditions of which are incorporated herein by this reference and which shall
survive the termination of this Agreement and the termination of Busk’s
employment with SANZ. |
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c) |
Covenants Not to Compete. Except as provided in Section 8(a) hereof, or
except as agreed by the Board in specific further modification of this
agreement, Busk may not participate in any Competitive Industry (as defined
below) during the Term except through and on behalf of SANZ. For purposes of
this Agreement, a “Competitive Industry” shall mean an industry in
which SANZ either is substantially engaged or has concrete plans to engage in as
a substantial part of its business in the future. In addition: |
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i) |
during the Term and for a period of six months thereafter, Busk shall not own,
manage, operate, control, be employed by, participate in, or be connected in any
manner with the ownership, management, operation or control of any business
operating in the United States which (A) is engaged in the type of business
conducted by SANZ as of the end of the Term; or (B) is or reasonably is likely
to become, directly or indirectly, a material competitor of SANZ with respect to
the lines of business conducted by SANZ as of the end of the Term or lines of
business in which, as of the end of the Term, SANZ has developed concrete plans
to engage in the future as a substantial part of it business. Nevertheless (and
notwithstanding the first sentence of this Section 8(c)), Busk may own less than
five percent of the outstanding equity securities of a company that is engaged
in such business if the equity securities of such company are registered under
the Securities Exchange Act of 1934; |
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ii) |
during the Term and for a period of two years thereafter, Busk shall not induce
(directly or indirectly) or attempt to persuade anyone who at the time is a
then-current employee, agent, manager, consultant, or other participant in
SANZ’s business to terminate such employment or other relationship in order
to enter into any business relationship with Busk, with any business
organization in which Busk is a participant in any capacity whatsoever, or with
any other business organization in competition with SANZ’s business;
and |
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iii) |
during the Term and for a period of two years thereafter, Busk shall not use
contracts, proprietary information, trade secrets, confidential information,
customer lists, mailing lists, goodwill, or other intangible property used or
useful in connection with SANZ’s business. |
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d) |
Consideration. SANZ and Busk acknowledge and agree that the foregoing
covenants are substantially identical to the covenants made by Busk in the
Original Agreement, and that the consideration for such covenants acknowledged
in the Original Agreement (including without limitation the benefits derived by
Busk under the Agreement and Plan of Merger between SANZ and ITIS Services,
Inc.), as well as the extension of the term of the Options provided under
Section 7 hereof, constitute additional and sufficient consideration for the two
year covenant not to compete contained in this Section. |
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i) |
If Busk breaches the obligations set forth in this Section 8, (A) SANZ shall be
entitled to cease any further payments owed to Busk, and (B) the term of the
Options shall immediately terminate. In the event SANZ made payments before it
discovered a breach, SANZ shall be entitled to recovery of amounts paid
subsequent to the breach. |
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ii) |
Busk acknowledges that a breach of this Section 8 would cause SANZ irreparable
harm, and that the damages resulting therefrom would not be readily
quantifiable. Busk therefore agrees that, in the event of such a breach or a
threat of such a breach, SANZ shall be entitled to a preliminary restraining
order and other temporary and permanent injunctive or other equitable relief, in
addition to any other remedy available at law. Nothing in this Agreement shall
be construed to prohibit SANZ from pursuing any other available remedies for
such breach or threatened breach, including the recovery of damages from Busk.
Any termination of this Agreement shall not prejudice any other remedy to which
SANZ or Executive may be entitled, either at law, equity, or under this
Agreement. |
9.
Indemnification. To the fullest extent permitted by applicable law, SANZ
agrees to indemnify, defend and hold Busk harmless from any and all claims,
actions, costs, expenses, damages and liabilities, including, without
limitation, reasonable attorneys’ fees, hereafter or heretofore arising out
of or in connection with activities of SANZ or its directors (including Busk) or
officers, or other agents in connection with and within the scope of this
Agreement, or by reason of the fact that he is or was a director or officer SANZ
or any affiliate of SANZ. To the fullest extent allowed by applicable law, SANZ
shall advance to Busk expenses of defending any such action, claim or
proceeding. However, SANZ shall not indemnify Busk or defend Busk against, or
hold him harmless from any claims, damages, expenses or liabilities, including
attorneys’ fees, resulting from the willful misconduct of Busk. The duty to
indemnify shall survive the expiration or early termination of this Agreement as
to any claims based on facts or conditions that occurred or are alleged to have
occurred before expiration or termination. If at any time or from time to time
Busk’s right to indemnification pursuant to SANZ’s (or any
subsidiary’s) corporate charter or by-laws are greater than the right to
indemnification provided in this Section 9, then the right provided in such
charter or by-laws shall prevail.
10.
Non-Disparagement: You agree that you will not act or assist any action
to diminish or interfere with the Company’s relationship with its
employees, clients, or prospective clients, or the Company’s goodwill,
including through any disparagement of the Company‚s operations or
capabilities. The Company agrees that it will not characterize the cessation of
your employment, in communications with vendors or customers or in any public
disclosure (formal or informal), as resulting from any inadequacy in performance
or any similarly disparaging characterization.
11.
General Provisions.
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a) |
Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado, without regard to the
conflict of law principles thereof. |
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b) |
Entire Agreement; Supersedes Prior Agreements. This Agreement supersedes
any and all other agreements, whether oral or in writing, between the parties
with respect to the employment of Busk by SANZ (with the exception of portions
of such agreements which have been expressly incorporated herein). Without
limiting the foregoing, this Agreement supersedes the Original Agreement without
resulting in any breach thereof and without resulting in any liability
thereunder by either party. Each party to this Agreement acknowledges that no
representations, inducements, promises, or agreements, orally or otherwise, have
been made by either party, or anyone acting on behalf of any party, that are not
embodied in this Agreement, and that no agreement, statement, or promise not
contained in this Agreement shall be valid or binding. |
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c) |
Successors and Assigns. This Agreement, all terms and conditions
hereunder, and all remedies arising herefrom, shall inure to the benefit of and
be binding upon SANZ, any successor in interest to all or substantially all of
the business and/or assets of SANZ (whether by merger, consolidation or
otherwise), and the heirs, administrators, successors and assigns of Busk.
Except as provided in the preceding sentence, the rights and obligations of the
parties hereto may not be assigned or transferred by either party without the
prior written consent of the other party. |
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d) |
Notices. For purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be
deemed given if delivered by hand or overnight courier or mailed by registered
or certified mail (return receipt requested) to the parties at the following
addresses (or at such other addresses for a party as shall be specified by like
notice), and shall be deemed given on the date on which so hand-delivered, or on
the business day following the day on which sent by overnight courier, or on the
third business day following the date on which so mailed: |
If
to Busk: Xxxx X. Xxxx
00 Xxxx Xxxx Xxxx
Xxxxxxxx, XX 00000
If
to SANZ: SAN Holdings, Inc.
Attn: General Counsel
00 Xxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
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e) |
Severability. If any provision of this Agreement is prohibited by or is
unlawful or unenforceable under any applicable law of any jurisdiction as to
such jurisdiction, such provision shall be ineffective to the extent of such
prohibition without invalidating the remaining provisions hereof. |
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f) |
Section Headings. The section headings used in this Agreement are for
convenience only and shall not affect the construction of any terms of this
Agreement. |
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g) |
Survival of Obligations. Termination of this Agreement for any reason
shall not relieve SANZ or Busk of any obligation accruing or arising before such
termination. |
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h) |
Amendments. This Agreement may be amended only by written agreement of
both SANZ and Executive. |
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i) |
Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall constitute an original but all of which, when taken
together, shall constitute only one legal instrument. This Agreement shall
become effective when copies hereof, when taken together, shall bear the
signatures of both parties hereto. It shall not be necessary in making proof of
this Agreement to produce or account for more than one such
counterpart. |
IN
WITNESS WHEREOF, SANZ and Busk have executed this Agreement effective as of the
date first written above.
SAN HOLDINGS, INC.
By: /s/ Xxxx Xxxxxxx
/s/ Xxxx X. Xxxx, III
Xxxx Xxxxxxx, President & CEO
Xxxx X. Xxxx, III
