SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit 10.8
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered
into as of April 7, 2010 (the “Effective Date”), by and among Fusion Multisystems, Inc., a Nevada
corporation (the “Company”), Xxxxx Xxxxx, an individual (“Executive”), and Sandusky Investments,
Ltd. (“Sandusky”).
RECITALS:
A. The Company and Executive have previously entered into an Amended and Restated Employment
Agreement between the Company and Executive dated as of December 31, 2008 (the “Prior Agreement”).
B. In connection with Executive’s appointment as the Chief Executive Officer and President of
the Company, the Company and Executive desire to amend and restate the Prior Agreement to set forth
the terms upon which Executive shall be employed as the Company’s Chief Executive Officer and
President.
C. This Agreement shall govern the employment relationship between Executive and the Company
from and after the Effective Date, and supersedes and negates all previous negotiations and
agreements with respect to such relationship.
NOW, THEREFORE, in consideration of the above recitals incorporated herein and the mutual
covenants and promises contained herein and other valuable consideration, the receipt and
sufficiency of which is hereby expressly acknowledged, the parties agree as follows:
1. EMPLOYMENT. Subject to the terms set forth herein, the Company hereby agrees to employ
Executive as its Chief Executive Officer and President. Executive shall report directly to the
Company’s Board of Directors (the “Board”) and shall perform such officer level duties and have
such officer level authority and responsibility as is usual and customary for such positions, plus
any additional officer level duties as may reasonably be assigned from time to time by the Board,
including but not limited to providing services to one or more, of the Company’s subsidiaries or
affiliates (the compensation for such services shall be covered exclusively by Sections 3 through 8
of this Agreement). Executive hereby accepts such employment and agrees to devote substantially all
of Executive’s business time, energy and skill to the performance of Executive’s duties for the
Company. Executive shall be subject to the Company’s policies, procedures and approval practices,
as generally in effect from time-to-time. Among other duties, Executive’s duties shall include
using his reasonable best efforts in the oversight of the Company’s other officers in order to
ensure that the Company’s management conducts the business of the Company in an honest and ethical
manner consistent with high levels of integrity. In order to promote such behavior at all levels
of the Company and to set the appropriate “tone at the top”, Executive shall avoid any conflicts of
interest with the Company as well as the appearance of any conflicts of interest with the Company;
provided that in the event that a
conflict of interest (or appearance thereof) arises outside the control of Executive, Executive
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shall promptly notify the Company thereof and shall have thirty (30) days to resolve such conflict
of interest (or appearance thereof).
2. EMPLOYMENT TERM. Executive’s employment hereunder is “at-will” and either Executive or
the Company may terminate such employment at any time, for any or no reason, subject to the
provisions of Section 8.
3. COMPENSATION.
(a) Base Salary. The Company agrees to pay Executive an initial salary of Two
Hundred Forty-Thousand Dollars ($240,000) per annum, less required deductions and
withholdings (the “Salary”). The Board will review Executive’s Salary annually to determine
whether Executive should receive an adjustment in Salary, provided that Executive’s Salary
shall not be reduced without Executive’s prior written consent. The Salary shall be paid in
installments in accordance with the Company’s usual payroll practices.
(b) Annual Bonus. During the period of employment, Executive shall be entitled to
earn an annual performance-based bonus (“Annual Bonus”) as follows:
(i) Executive will be eligible to receive an Annual Bonus of up to two-thirds (2/3)
of Executive’s then-current Salary, based on Executive’s achievement of performance
objectives as established in good faith by the Board (or any Compensation Committee
of the Board) in writing as soon as reasonably practicable, but no later than the
last day of the first quarter of the applicable fiscal year. To earn any such
Annual Bonus, Executive must be continuously employed by the Company through the end
of the applicable fiscal year.
(ii) Each Annual Bonus earned by Executive, if any, will be due and payable on the
first regular payroll date following the 60th day after the end of the applicable
fiscal year (the “Annual Bonus Payment Date”). For the avoidance of doubt, if
Executive’s employment terminates after the end of an applicable fiscal year but
prior to the Annual Bonus Payment Date, Executive will be paid any earned Annual
Bonus on the Annual Bonus Payment Date. Any Annual Bonus paid to Executive shall be
subject to applicable deductions and withholdings.
4. STOCK VESTING; EQUITY GRANTS.
(a) Vesting. Sandusky owns 5,000,000 shares of the Company’s common stock (the
“Shares”). Other than the Shares, 200,394 shares of the Company’s Series B Preferred Stock
(the “Series B Shares”) and an option purchase 1,726,562 shares of the Company’s common
stock (the “Current Option”), Executive currently owns no other shares of capital stock of
the Company or any securities convertible into or exercisable for shares of capital stock of
the Company. The shares of Series B Preferred Stock held by Executive are fully vested.
Sandusky is an entity formed by Executive for estate
planning purposes and for the benefit of members of his immediate family. Executive is
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the
manager of Sandusky, and Executive hereby represents and warrants to the Company that this
Section 4 is a valid, binding and enforceable obligation of Sandusky.
(i) Sandusky hereby grants to the Company the right (the “Repurchase Right”),
exercisable at any time during the ninety (90)-day period following the date
Executive ceases for any reason to remain in Service (as defined below) to
repurchase at the Purchase Price all or (at the discretion of the Company) any
portion of the Shares in which Sandusky has not acquired a vested interest in
accordance with the vesting provisions of this Section 4(a) (such shares are
referred to as “Unvested Shares”). For purposes of this Agreement, Executive shall
be deemed to remain in “Service” for so long as Executive continues to actually and
physically render services to the Company or any parent or subsidiary corporation,
whether as an employee, a non-employee member of the Board of Directors or an
independent contractor or consultant, solely as determined by and in accordance with
the directives of the Board. By executing this Agreement, each of Sandusky and
Executive agrees to abide by such Board determination.
(ii) The Repurchase Right shall be exercisable by written notice delivered to
Sandusky prior to the expiration of the ninety (90)-day period specified in Section
4(a)(i). The notice shall indicate the number of Unvested Shares to be repurchased
and the date on which the repurchase is to be effected, such date to be not more
than thirty (30) days after the date of notice. To the extent one or more
certificates representing Unvested Shares may have been previously delivered to
Sandusky, then Sandusky shall, prior to the close of business on the date specified
for the repurchase, deliver to the Secretary of the Company the certificates
representing the Unvested Shares to be repurchased, each certificate to be properly
endorsed for transfer. The Company shall, concurrently with the receipt of such
certificates, pay to Sandusky in cash or cash equivalents (including the
cancellation of any purchase-money indebtedness), an amount equal to $1.093 per
Share (as adjusted for stock splits, dividends, combinations and the like).
(iii) The Repurchase Right shall terminate with respect to any Unvested Shares for
which it is not timely exercised under Section 4(a)(ii). In addition, the
Repurchase Right as to Unvested Shares shall terminate, and cease to be exercisable,
in accordance with the terms and conditions set forth in this Section 4(a)(iii).
Accordingly, as, and provided that, the Purchaser continues in continuous Service,
as defined above, the Purchaser shall acquire a vested interest in, and the
Repurchase Right as to certain Unvested Shares, solely to the extent set forth
below, shall lapse with respect to, the Shares in accordance with the following
provisions:
(A) Sandusky acquired a vested interest in and the Repurchase Right lapsed
with respect to 2,500,000 Shares on March 21, 2008; and Sandusky began
acquiring a vested interest in and the Repurchase Right began to lapse with
respect to (and shall continue to acquire a vested interest in and
the Repurchase Right shall continue to lapse with respect to) the balance
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of
the Shares in a series of thirty-six (36) successive equal monthly
installments for each monthly period of continuous Service measured from
March 21, 2008.
(B) If Executive’s employment by the Company is terminated by the Company
pursuant to Section 8(d)(ii) or by Executive pursuant to Section 8(e), in
either case at such time that clause (C) below does not apply, and Executive
has executed (and not revoked) a general release of claims acceptable to the
Company, then Sandusky shall immediately acquire a vested interest in and
the Repurchase Right shall lapse with respect to the lesser of (1) all
remaining Unvested Shares and (2) that number of Unvested Shares that
Sandusky would have vested in had Executive continued in Service for an
additional twelve months.
(C) If there occurs a Change in Control, as defined in Section 4(a)(vi)
below, while Executive is employed by the Company, and if Executive’s
employment by the Company is terminated by the Company or any successor
thereto pursuant to Section 8(d)(ii) or by Executive pursuant to Section
8(e) on or following such Change in Control, then Sandusky shall immediately
acquire a vested interest in, and the Repurchase Right shall lapse with
respect to, all remaining Unvested Shares.
(D) If Executive dies or suffers a Disability (which results in the
termination of Executive’s employment pursuant to Section 8(b)), then
Sandusky shall immediately acquire a vested interest in and the Repurchase
Right shall lapse with respect to all remaining Unvested Shares.
(iv) No fractional shares shall be repurchased by the Company. Accordingly, if the
Repurchase Right extends to a fractional share (in accordance with the vesting
computation provisions of this Section 4(a)) at the time Executive ceases Service,
then such fractional share shall be added to any fractional share in which Sandusky
is at such time vested in order to make one whole vested share no longer subject to
the Repurchase Right.
(v) In the event of any share dividend, share split, recapitalization or other
change affecting the Company’s outstanding common shares as a class effected without
receipt of consideration, then any new, substituted or additional securities or
other property (including money paid other than as a regular cash dividend) that is
by reason of any such transaction distributed with respect to any Shares then
constituting Unvested Shares shall be immediately subject to the Repurchase Right.
Appropriate adjustments to reflect the distribution of such securities or property
shall be made to the number of Shares at the time subject to the Repurchase Right
hereunder and to the price per share to be paid upon the exercise of the Repurchase
Right to reflect the effect of any such transaction upon
the Company’s capital structure; provided, however, that the
aggregate purchase price shall remain the same.
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(vi) “Change in Control” means: (x) any acquisition of the Company by means of
merger or other form of corporate reorganization in which outstanding shares of the
Company are exchanged for securities or other consideration issued, or caused to be
issued, by the acquiring corporation or its subsidiary and in which the holders of
capital stock of the Company immediately prior to the acquisition hold less than 50%
of the voting power of the surviving entity or its parent, (y) a sale of all or
substantially all of the assets of the Company, or (z) the closing of the transfer
(whether by merger, consolidation or otherwise), in one transaction or a series of
related transactions, to a person or group of affiliated persons, of the Company’s
then outstanding securities if, after such closing, such person or group of
affiliated persons would hold 50% or more of the outstanding voting stock of the
Company (other than an equity financing effected primarily for capital raising
purposes).
(vii) The Current Option shall vest in accordance with its terms, provided that the
Current Option is hereby amended such that the definitions of “Good Reason” and
“Cause” set forth therein, are hereby amended in their entirety to conform to the
definitions of such terms set forth in this Agreement.
(b) Executive shall also be eligible to participate in and receive additional equity grants
commensurate with his position and level in any stock option plan, restricted stock plan or
other equity-based or equity related compensation plan, programs or agreements of the
Company made available generally to its senior executives. Executive acknowledges and
agrees, however, that, other than as set forth in the following sentence, any such grants
shall be at the sole discretion of the Board (or any applicable committee of the Board) and
the Company is under no obligation to make any further equity grants to Executive. After
the initial closing of the Company’s currently anticipated Series C preferred stock
financing, if Executive is continuing in Service at the closing of such Series C preferred
stock financing, the Board shall authorize, and Executive shall receive, an option grant to
purchase that number of shares of common stock such that immediately following such grant
Executive shall own (including any shares held by Sandusky and assuming the full exercise of
all option grants held by Executive, but excluding the Series B Shares) in the aggregate not
less than 10% of the Company’s fully-diluted (on an as converted to common stock basis)
capital stock of the Company (which for purposes hereof shall include all shares of capital
stock then outstanding, including any shares issued pursuant to the Series C Financing (up
to a maximum amount of Series C Preferred Shares for purposes of this calculation equal to
that number issued in a financing round of $45 million), any shares of the Company’s common
stock authorized and reserved for future issuance under the Company’s then existing equity
incentive plan, including any increase in the number of such shares in connection with the
Series C Financing, and any shares subject to outstanding non-plan option grants) (the “New
Option”) (as adjusted for stock splits, dividends, combinations and the like after the date
hereof and prior to the grant of the New Option). With respect to the shares of the
Company’s common stock underlying the New Option (the “New Option Shares”),
the option agreement shall provide Executive shall acquire a vested interest in the New
Option Shares, in a series of forty-eight successive equal monthly installments for each
monthly period of continuous Service measured from the Effective Date. With respect to
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the
all future option grants to Executive, including the New Option, the option agreements
covering such grants shall provide for accelerated vesting commensurate with the provisions
set forth in Sections 4(a)(iii)(B), 4(a)(iii)(C) and 4(a)(iii)(D).
(c) Sandusky shall not transfer any Unvested Shares (except to the Company or its assignee)
without the prior written consent of the Company, which consent may be granted, conditioned
or withheld in the Company’s sole discretion.
5. BENEFITS. Executive will be entitled to participate in the employee benefit plans,
including but not limited to any bonus plan, incentive, participation or extra compensation plan,
pension plan, profit-sharing plan, life, medical, dental, disability, or insurance plan or policy
or other plan currently and hereafter maintained by the Company of general applicability to other
senior executives of the Company; provided, however, that Executive’s right to receive equity or
participate in equity plans shall be governed exclusively by Section 4 of this Agreement, and
Executive’s right to receive severance upon a termination of employment for any reason shall be
governed exclusively by Section 8 of this Agreement. If Executive’s employment by the Company is
terminated by the Company pursuant to Section 8(d)(ii) or by Executive pursuant to Section 8(e),
following the Executive’s Separation from Service (as defined below), the Company will pay the
premiums to continue Executive’s and any of Executive’s eligible dependents’ health insurance
coverage under COBRA (provided that Executive is eligible and timely elects COBRA coverage) until
the earlier of eighteen (18) months after Executive’s Separation from Service and the first date
that Executive and Executive’s eligible dependents are covered under another employer’s program,
provided that the Company is providing Executive with health insurance coverage at the time of
Executive’s termination.
6. VACATION. Executive will be entitled to accrue vacation time, in an amount and subject
to the accrual limits determined by the Board annually in its sole discretion; provided that
Executive shall be entitled to accrue not less than four (4) weeks of paid vacation each
twelve-month period, and shall be subject to any maximum vacation accrual policy implemented by the
Company that is applicable to all executive officers. Such vacation shall be scheduled and taken
at the mutual convenience of the Executive and the Company.
7. EXPENSES. Executive shall be entitled to receive reimbursement for all reasonable and
customary documented travel and business expenses incurred in connection with Executive’s
employment, so long as such expenses are incurred and accounted for in accordance with the policies
and procedures as may be established from time to time by the Company. The Company shall reimburse
the Executive for the reasonable legal expenses incurred by the Executive in reviewing, preparing
and negotiating this Agreement.
8. TERMINATION. Notwithstanding anything in this Agreement to the contrary, in the event
of a termination of Executive’s employment by the Company, the following provisions shall apply:
(a) Death. Upon the death of Executive, Executive’s employment with the Company
shall terminate and the Company shall not be obligated to make any further payments to
Executive hereunder, except amounts due as Salary or accrued but unused vacation earned at
the time of Executive’s termination of employment, and reimbursement for any
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expenses
incurred prior to Executive’s termination of employment in accordance with Section 7 hereof
(collectively “Accrued Obligations”), as well as a pro rata portion of Executive’s Annual
Bonus that would otherwise have been payable for the year in which Executive died based on a
percentage of the number of days Executive worked for the Company during the applicable
calendar year. Payment of the portion of Executive’s Annual Bonus shall be made at the time
made to other participants in the Annual Bonus plan, but in no event later than the Annual
Bonus Payment Date.
(b) Disability. In the event that the Board reasonably determines in good faith
that Executive is unable, because of illness, incapacity or injury which is determined to be
total and permanent by a physician selected by the Company or its insurers and acceptable to
Executive or Executive’s legal representative (such agreement as to acceptability not to be
withheld unreasonably), to perform the essential functions of his employment with the
Company, even with reasonable accommodation that does not impose an undue hardship on the
Company, for more than twelve (12) weeks in any rolling one-year period (“Disability”),
unless a longer period is required by federal or state law, in which case that longer period
shall apply, the Board shall have the right to terminate Executive’s employment, and the
Company shall not be obligated to make any further payments to Executive hereunder, except
payment of Accrued Obligations and a pro rata portion of Executive’s Annual Bonus that would
otherwise have been payable for the year in which Executive is terminated due to Disability
based on a percentage of the number of days Executive worked for the Company during the
applicable calendar year. The Board reserves the right, in good faith, to make a reasonable
determination of Disability under this Agreement based on information supplied by the
physician selected as provided herein. Payment of the portion of Executive’s Annual Bonus
due under this Section 8(b) shall be made at the time made to other participants in the
Annual Bonus plan, but in no event later than the Annual Bonus Payment Date. Executive
expressly agrees that the Company shall have the right to permanently replace Executive in
the event he is terminated due to a Disability.
(c) Termination for Cause. The Board may terminate Executive’s employment at any
time immediately upon notice to Executive for “Cause.”
(i) For purposes of this Agreement, “Cause” shall mean any of the following
occurring during Executive’s employment by the Company (except with respect to
clause (e) below): (a) personal dishonesty by Executive involving Company business
or participation in a fraud against the Company, or breach of Executive’s fiduciary
duty to Company; (b) indictment or conviction of a felony or other crime involving
moral turpitude or dishonesty; (c) Executive’s willful refusal to comply with the
lawful requests made of Executive by the Board reasonably related to his employment
by the Company and the performance of his duties with respect thereto (but which
shall not include a request to waive or amend any portion of this Agreement or
terminate this Agreement or to consent to an action
that would result in Executive’s loss of a right under this Agreement); (d) material
violation of the Company’s policies, after written notice to Executive and an
opportunity to be heard by the Board and his failure to fully cure such violations
within a reasonable period of time of not less than thirty (30) days after such
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hearing; (e) threats or acts of violence in the workplace; (f) unlawful harassment
in the course of any business activity of any employee or independent contractor of
the Company; (g) theft or unauthorized conversion by or transfer of any Company
asset or business opportunity to Executive or any third party; and (h) a material
breach by Executive of any material provision of this Agreement or any other
agreement with the Company after written notice to Executive and an opportunity to
be heard by the Board and his failure to fully cure such breach within a reasonable
period of time of not less than thirty (30) days after such hearing.
(ii) In the event that the Board terminates Executive’s employment for Cause, the
Company shall not be obligated to make any further payments to Executive hereunder,
except payment of Accrued Obligations.
(d) Termination Without Cause.
(i) By Executive. Notwithstanding any other provision of this Agreement,
Executive may voluntarily resign from his employment with the Company at any time,
and for any reason or no reason, with or without cause. Upon the effective date of
such resignation (other than a resignation for Good Reason), the Company shall not
be obligated to make any further payments to Executive hereunder, except payment of
Accrued Obligations.
(ii) By Company. Notwithstanding any other provision in this Agreement, the
Board (at its sole discretion) shall have the right to terminate Executive’s
employment at any time, for any reason or no reason, immediately upon notice to
Executive. If the Board terminates Executive’s employment pursuant to this Section
8(d)(ii), the Company shall pay to Executive Accrued Obligations. In addition, if
the Board terminates Executive’s employment pursuant to this Section 8(d)(ii) or if
Executive resigns pursuant to Section 8(e), in either case prior to a Change in
Control, subject to Executive promptly executing (and not revoking) a general
release of all claims arising out of his employment in a form that is acceptable to
the Company within 21 days of Executive’s termination (or such other longer period
as may be required by applicable law), the Company shall pay the Executive one times
his Salary at the annualized rate in effect on the date of his termination. Further,
if the Company (or its successor in a Change in Control) terminates Executive’s
employment pursuant to this Section 8(d)(ii) or if Executive resigns pursuant to
Section 8(e) in either case upon or following a Change in Control, subject to
Executive promptly executing (and not revoking) a general release of all claims
arising out of his employment in a form that is acceptable to the Company (or such
successor) within 21 days of Executive’s termination (or such other longer period as
may be required by applicable law), the Company shall pay the Executive 1.5 times
his Salary and 1.5 times his target
Annual Bonus, in each case at the annualized rate in effect on the date of his
termination. Any severance payment as provided in either of the immediately
preceding two sentences, as applicable, is referred to herein as the “Severance
Payment”. Subject to Section 9(b) below, the Company shall pay the Severance
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Payment in substantially equal installments in accordance with the Company’s
standard payroll practices over a period of twelve or eighteen consecutive months,
as applicable, with the first installment payable in the month following the month
in which Executive’s Separation from Service (as defined below) occurs. (For
purposes of clarity, each such installment shall equal the applicable fraction of
the aggregate Severance Payment. For example, if such installments were to be made
on a monthly basis, each installment would equal one-twelfth (1/12th) or
one-eighteenth (1/18th), as applicable, of the Severance Payment.) Executive’s
right to receive and retain any of the Severance Payment (as a result of a
termination by either the Company without Cause or by Executive for Good Reason) is
contingent upon Executive’s compliance with Executive’s continuing obligations to
the Company under the terms of this Agreement and the Proprietary Information and
Invention Assignment Agreement (as defined below). In the event of termination by
the Company without Cause pursuant to this Section 8(d)(ii), Executive shall have no
duty to mitigate damages.
(e) Executive Resignation for Good Reason. Executive may also resign from his
employment for Good Reason (as defined below). In such event, the Company shall pay
Executive the same Severance Payment specified in Section 8(d)(ii) herein in connection with
a termination without Cause by the Company. In the event of termination by the Executive
for Good Reason pursuant to this Section 8(e), Executive shall have no duty to mitigate
damages.
Resigning with “Good Reason” means Executive’s resignation from employment with the Company
within 90 days after any of the following without Executive’s prior written consent: (i) the
Company’s failure to pay Executive any earned Salary or Annual Cash Bonus or other bonus or
payment that has become due and payable, provided that the Company receives written notice
from Executive of the deficient payment and has been given 30 days to cure; or (ii) prior to
a Change in Control, removal of Executive as Chief Executive Officer and President of the
Company or a reduction in his responsibilities, authority or status to a level below that
customarily accompanying such title, as applicable; or (iii) following a Change in Control,
removal of Executive from the position held by Executive immediately prior to the Change in
Control, provided that continued employment following the Change in Control with
substantially the same responsibility with respect to the Company’s business and operations
shall not constitute “Good Reason” (for example, if Executive’s position with the Company at
the time of the Change in Control is Chief Executive Officer, Executive shall not have been
removed from his position if he is employed by the Company, the acquiring company or one of
its affiliates and Executive has substantially the same responsibilities with respect to the
business of the Company immediately prior to the Change in Control whether as general
manager or president of a division or business unit or otherwise), or a material reduction
in his responsibilities, authority or status as such (which for this purpose shall include a
material reduction in the resources (financial, personnel and other) allocated to the
Company’s business and under Executive’s direction, including reallocation of key personnel
engaged in the Company’s business to other businesses of the acquiring company); or (iv) a
reduction in Executive’s Salary and/or target Annual Bonus unless such reduction is both in
connection with a Company cost-reduction program applied to
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all executive officers and is
not more than 20%; or (v) a relocation of the Company’s principal executive offices by
more-than fifty (50) miles from the current location in Salt Lake City, Utah; or (vi) any
material breach by the Company of a material provision of this Agreement, which the Board
fails to cure within thirty (30) days of receiving written notice from Executive.
9. SECTION 409A.
(a) For purposes of this Agreement, a “Separation from Service” occurs when Executive dies,
retires or otherwise has a termination of employment with the Company that constitutes a
“separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1),
without regard to the optional alternative definitions available thereunder.
(b) If Executive is a “specified employee” within the meaning of Treasury Regulation Section
1.409A-1(i) as of the date of Executive’s Separation from Service, Executive shall not be
entitled to any payment or benefit pursuant to clause (ii) of Section 8(d)(2) or Section
8(e) until the earlier of (i) the date which is six (6) months after his Separation from
Service for any reason other than death, or (ii) the date of Executive’s death. The
provisions of this paragraph shall only apply if, and to the extent, required to avoid the
imputation of any tax, penalty or interest pursuant to Section 409A of the Internal Revenue
Code of 1986 (including the Treasury Regulations and other published guidance related
thereto) (“Section 409A”). Any amounts otherwise payable to Executive upon or in the six
(6) month period following Executive’s Separation from Service that are not so paid by
reason of this Section 9(b) shall be paid (without interest) as soon as practicable (and in
all events within thirty (30) days) after the date that is six (6) months after Executive’s
Separation from Service (or, if earlier, as soon as practicable, and in all events within
thirty (30) days, after the date of Executive’s death).
(c) To the extent that any reimbursement pursuant to this Agreement is taxable to Executive,
Executive shall provide the Company with documentation of the related expenses promptly so
as to facilitate the timing of the reimbursement payment contemplated by this paragraph, and
any reimbursement payment due to Executive pursuant to such provision shall be paid to
Executive on or before the last day of Executive’s taxable year following the taxable year
in which the related expense was incurred. Such reimbursement obligations pursuant to this
Agreement are not subject to liquidation or exchange for another benefit and the amount of
such benefits that Executive receives in one taxable year shall not affect the amount of
such benefits that Executive receives in any other taxable year.
(d) It is intended that any amounts payable under this Agreement and the Company’s and
Executive’s exercise of authority or discretion hereunder shall comply with and avoid
the imputation of any tax, penalty or interest under Section 409A. This Agreement shall be
construed and interpreted consistent with that intent.
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10. NONSOLICITATION/NONDISPARAGEMENT. In the event of the termination of Executive’s
employment for any reason, Executive shall not, for a period of twelve (12) months, directly or
indirectly:
(a) solicit, induce or encourage any employee of the Company or any of its affiliates or
subsidiaries to terminate their employment with the Company or any of its affiliates or
subsidiaries;
(b) make any derogatory public statement concerning the financial performance, products,
services, the Board or management personnel of the Company or any of its affiliates or
subsidiaries, or Executive’s employment; or
(c) use or disclose the Company’s Confidential Information to induce, attempt to induce or
knowingly encourage any Customer of the Company or any of its affiliates or subsidiaries to
divert any business or income from the Company or any of its affiliates or subsidiaries, or
to stop or alter the manner in which they are then doing business with the Company or any of
its affiliates or subsidiaries.
The term “Customer” shall mean any individual or business firm that is, or within the prior
twelve (12) months was, a customer or client of the Company, whether or not such business was
actively solicited by Executive on behalf of the Company or any of its affiliates or subsidiaries
during Executive’s employment. Nothing in Section 10(b) shall prohibit Executive from providing
truthful testimony in any legal, administrative or regulatory proceeding and Executive may at all
times respond truthfully to a lawfully-issued subpoena, court order or governmental inquiry or as
otherwise may be required by law, provided, however, that upon receiving such lawfully-issued
subpoena or court order, Executive shall promptly provide reasonable written notice to Company and
cooperate with the Company to the extent reasonably necessary to protect the confidentiality of any
proprietary or trade secret information of the Company or any of its affiliates or subsidiaries,
and the privacy rights of any employee or director. The restriction set forth in clause (a) or
clause (c) above shall not be deemed to limit or replace (and shall be in addition to) any similar
provision or restriction set for the Executive’s Proprietary Information and Inventions Assignment
Agreement.
11. NONCOMPETITION. During the term of this Agreement, Executive shall not accept or
engage, directly or indirectly, any work, consulting, or other services, for remuneration of any
kind for any other business entity engaged in the Covered Business, without prior written approval
by the Board. Nothing in this Agreement will prevent Executive from: (i) accepting speaking or
presentation engagements in exchange for honoraria; (ii) serving on advisory boards that do not
compete with the Covered Business of the Company (or any of its subsidiaries or affiliates) or
boards of trade associations or boards of charitable organizations so long as such service does not
unduly interfere with the performance of Executive’s duties to the Company and provided that
Executive provides prior written notice to the Board; or (iii) from making or owning, directly or
indirectly, any passive investment in any other business or entity that does not compete with the
Covered Business of the Company. For purposes of this Agreement, the
phrase “Covered Business” shall mean the business conducted or demonstrably anticipated to be
conducted as of the date of any such action by the Company (and its subsidiaries and affiliates).
The phrase “engage, directly or indirectly” means engaging or having an interest in, directly or
11
indirectly, as owner, partner, participant of a joint venture, trustee, proprietor, shareholder,
member, manager, director, officer, employee, independent contractor, capital investor, lender,
consultant, advisor or similar capacity, or by lending or allowing his name or reputation to be
used in connection with, or otherwise participating in or allowing his skill, knowledge or
experience to be used in connection with, the operation, management or control of a business or
enterprise engaged in any aspect of the Covered Business, or being connected with or having any
financial interest in any business or enterprise engaged in the Covered Business, except for the
purposes of performing services on behalf of the Company or any of its subsidiaries or affiliates
pursuant to this Agreement.
12. PROPRIETARY INFORMATION AND INVENTION ASSIGNMENT AGREEMENT. During the term of this
Agreement and at all relevant times thereafter, and as a condition to the receipt of any severance
benefits hereunder, Executive agrees to abide and be bound by that certain proprietary information
and invention assignment agreement between the Company and Executive (the “Proprietary Information
and Invention Assignment Agreement”).
13. INJUNCTIVE RELIEF. Executive agrees that it would be difficult or impossible to
measure the damage to the Company from any breach by Executive of the covenants set forth in
Sections 10, 11, or 12 of this Agreement; that damages to the Company for any such injury would
therefore be an inadequate remedy for any such breach, and that such breach would cause irreparable
harm to the Company. Executive agrees that in the event of a breach of the terms of any such
Section, upon satisfaction of the applicable legal requirements and prerequisites, the Company
shall be entitled, in addition to and without limitation upon all other remedies the Company may
have, to injunctive or other appropriate equitable relief to restrain any such breach.
14. NOTICES. All notices, requests, claims, demands and other communications hereunder
shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt)
by delivery in person, by facsimile or by registered or certified mail (postage prepaid, return
receipt requested) to each other party as follows:
if to the Company to:
|
Fusion Multisystems, Inc. | |
| 6350 South 0000 Xxxx, 0xx Xxxxx | ||
| Xxxx Xxxx Xxxx, Xxxx 00000 | ||
| Telecopier: (000) 000-0000 | ||
| Attention: Chief Legal Officer | ||
with copies to:
|
O’Melveny & Xxxxx LLP | |
| 0000 Xxxx Xxxx Xxxx | ||
| Xxxxx Xxxx, Xxxxxxxxxx 00000 | ||
| Telecopier: (000) 000-0000 | ||
| Attention: Xxxxxx X. Xxxxxxx, Esq. | ||
if to the Executive or Sandusky to:
|
Xxxxx Xxxxx |
12
or to such other address as the person to whom notice is given may have previously furnished to the
other in writing in the manner set forth above.
15. WAIVER OF BREACH. The waiver of any breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach. Each and every right, remedy and
power hereby granted to any party or allowed it by law shall be cumulative and not exclusive of any
other.
16. SEVERABILITY. If any of the provisions of this Agreement or the application thereof to
any party under any circumstances is adjudicated to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision of this Agreement or the application thereof.
17. ENTIRE AGREEMENT. This Agreement, along with any related documents and agreement
(including the Proprietary Information and Invention Assignment Agreement) and referenced herein,
constitutes the entire Agreement between the parties with respect to the subject matter hereof and
supersedes and completely and irrevocably terminates any and all other previous or contemporaneous
communications, representations, understandings, agreements, negotiations and discussions, either
oral or written, between the parties with respect to the subject matter hereof. Without limiting
the generality of the foregoing, the parties expressly agree that this Agreement supersedes the
terms of (i) any offer letter that may have been in existence between the parties and (ii) the
Prior Agreement. The parties acknowledge and agree that there are no written or oral agreements,
understandings, or representations, directly or indirectly related to this Agreement or the
employment, compensation or benefits of Executive that are not set forth herein. Notwithstanding
anything herein to the contrary, nothing in this Agreement shall in any way supersede, limit or
affect any representation, warranty, covenant or term of, any indemnification agreement between the
Company and Executive or the Proprietary Information and Invention Assignment Agreement; provided
that in the event of a conflict between this Agreement and the Proprietary Information and
Invention Assignment Agreement, this Agreement shall govern. Except as set forth in Section 4
hereof, nothing herein shall affect in any way the agreements entered into by Executive and
Sandusky with the Company or any other person(s) with respect to their ownership of the Shares or
any other securities of the Company, including but not limited to the agreements related to the
Prior Option, the Company’s Amended and Restated Investors’ Rights Agreement, the Company’s Amended
and Restated Right of First Refusal and Co-Sale Agreement and the Company’s Amended and Restated
Voting Agreement.
18. AMENDMENT OF AGREEMENT. This Agreement may be altered or amended in any of its
provisions only by the mutual written agreement of the parties hereto. This Agreement may not be
amended orally in any respect.
19. SUCCESSORS. The Agreement shall inure to the benefit of and be binding on the Company
and its successors and assigns, as well as Executive and his estate and Sandusky and its successors
and permitted assigns. Executive may not assign or delegate, in whole or in part,
his duties or obligations under this Agreement. This Agreement may be transferred and assigned by
the Company to any successor of the Company by acquisition, merger, reorganization, amalgamation,
asset sale or otherwise. Upon any assignment of this Agreement by the
13
Company, all obligations of the Company shall terminate, Executive shall become employed by the
assignee in accordance with the terms of this Agreement and the term “Company” as used in this
Agreement shall include only such assignee.
20. RIGHTS CUMULATIVE.
The Company’s rights under this Agreement are cumulative, and the
exercise of one right will not be deemed to preclude the exercise of any other rights.
21. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument. Photographic/facsimile copies of such signed counterparts may be used in lieu of the
originals for any purpose.
22. CONSTRUCTION. Each party has cooperated in the drafting and preparation of this
Agreement, and therefore, the Agreement shall not be construed against either party on the basis
that any particular party was the drafter.
23. VOLUNTARY COUNSEL. Each of Executive and Sandusky agrees and acknowledges that he or
it has read and understood this Agreement prior to signing it, has entered into this Agreement
freely and voluntarily, has been advised to seek legal counsel prior to entering into this
Agreement and has had ample opportunity to do so. Each of Executive and Sandusky acknowledge and
agree that O’Melveny & Xxxxx LLP has represented the Company with respect to this Agreement and has
not represented either Executive or Sandusky.
24. GOVERNING LAW. This Agreement shall be construed in accordance with, and governed in
all respects by, the internal laws of the State of Utah (without giving effect to principles of
conflicts of laws).
25. ARBITRATION.
(a) In exchange for the benefits of the speedy, economical and impartial dispute resolution
procedure of arbitration, the Company and Executive, with the advice and consent of their
selected counsel, choose to forego their right to resolution of their disputes in a court of
law by a judge or jury, and instead elect to treat their disputes, if any, pursuant to the
Federal Arbitration Act and/or Utah Arbitration Act.
(b) Executive and the Company agree that any and all claims or controversies whatsoever
brought by Executive or the Company, arising out of or relating to this Agreement,
Executive’s employment with the Company, or otherwise arising between Executive and the
Company, will be settled by final and binding arbitration in Salt Lake City, Utah or such
other location as may be mutually agreed by parties in accordance with the Employment
Arbitration Rules and Procedures of Judicial Arbitration and Mediation Services, Inc.
(“JAMS”) then in effect. This includes all claims whether arising in tort or contract and
whether arising under statute or common law. Such claims may include, but are not limited
to, those relating to this Agreement, wrongful
termination, retaliation, harassment, or any statutory claims under Title VII of the Civil
Rights Act of 1964, the Civil Rights Act of 1991, the Fair Employment and Housing Act, the
Age Discrimination in Employment Act, the Americans with Disabilities Act, or
14
similar
Federal or state statutes. In addition, any claims arising out of the public policy of
Utah, any claims of wrongful termination, employment discrimination, retaliation, or
harassment of any kind, as well as any claim related to the termination or non-renewal of
Executive’s employment or this Agreement shall be arbitrated under the terms of this
Agreement. The obligation to arbitrate such claims will survive the termination of
Executive’s employment or this Agreement. To the extent permitted by law, the hearing and
all filings and other proceedings shall be treated in a private and confidential manner by
the arbitrator and all parties and representatives, and shall not be disclosed except as
necessary for any related judicial proceedings.
(c) The arbitration will be conducted before an arbitrator to be mutually agreed upon by the
parties from JAMS’ panel of arbitrators. In the event that the parties are unable to
mutually agree upon the arbitrator, JAMS shall provide a slate of five arbitrators with
experience in employment law and each party shall have the opportunity to strike two names
and rank the remaining arbitrators in order of preference. JAMS shall then select the
highest ranked arbitrator to preside over the arbitration. If JAMS is unable to provide an
arbitrator who has experience in employment law, the parties may jointly or separately
petition the court for appointment of an arbitrator with such experience. The arbitrator
will have jurisdiction to determine the arbitrability of any claim. The arbitrator shall
have the authority to grant all monetary or equitable relief (including, without limitation,
injunctive relief, ancillary costs and fees, and punitive damages) available under state and
Federal law. Either party shall have the right to appeal any adverse rulings or judgments
to the JAMS Panel of Retired Appellate Court Justices or as otherwise required by Utah law
for enforcement of arbitration provisions covering the subject matter of the parties’
dispute. Judgment on any award rendered by the arbitrator may be entered and enforced by
any court having jurisdiction thereof. In addition to any other relief awarded, the
prevailing party in any arbitration or court action covered by this Agreement, as determined
by the arbitrator or court in a final judgment or decree, shall be entitled to recover
costs, expenses, and reasonable attorneys’ fees to the extent permitted by law.
(d) Notwithstanding the foregoing, the parties agree to participate in non-binding mediation
in Salt Lake City, Utah, except that either party may file any formal arbitration demand as
necessary to preserve their legal rights as well as any action for provisional injunctive
relief in any court of competent jurisdiction to prevent immediate and irreparable harm and
to ensure that the relief sought by the aggrieved party is not rendered ineffectual pending
the arbitration. The Company shall pay the fees of the mediator and any related
administrative fees or costs charged in connection with any mediation held pursuant to this
Section.
[Remainder of Page Intentionally Left Blank]
15
IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above
written.
“Company”
FUSION MULTISYSTEMS, INC.,
a Nevada corporation
a Nevada corporation
By:
|
/s/ Xxxxx X. Xxxxxxxxx
|
|||
| Chief Legal Officer |
“Executive”
XXXXX XXXXX
/s/ Xxxxx Xxxxx
|
“Sandusky”
SANDUSKY INVESTMENTS, LTD.,
a Nevada LLC
a Nevada LLC
BY:
|
/s/ Xxxxx Xxxxx
|
|||
| Manager |
[Signature Page to Xxxxx Xxxxx Second Amended and Restated Employment Agreement]
