AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit
10.1
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
This
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
(“Agreement”) is made and
entered into as of the ___ day of November 2016 (the
“Amendment
Date”), by and between MusclePharm Corporation, a
Nevada corporation headquartered at 0000 Xxxxxxx Xxxxxx, Xxxxxxxx
X, Xxxxxx, Xxxxxxxx 00000 (“Company”) and Xxxx
Xxxxxxx (“Executive”). As used
herein, the “Effective Date” of this
Agreement shall mean February 10, 2016, the effective date of the
previous employment agreement by and between the Executive and the
Company (the “Prior
Agreement”).
W I T N E S S E T H :
WHEREAS, the
Company has employed the Executive as its Executive Chairman and
its interim President and Chief Executive Officer pursuant to the
Prior Agreement; and
WHEREAS, the
Company desires to continue to employ the Executive, and the
Executive desires to continue to be employed by the Company, as its
President and Chief Executive Officer and as the Chairman of its
Board of Directors (“Board”), on the terms and
conditions set forth in this Agreement.
NOW,
THEREFORE, in consideration of the foregoing and their respective
covenants and agreements contained in this document, the Company
and the Executive hereby agree 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. 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 or violates the terms of Section 15, 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.
1
2. Term. The term of this
Agreement commenced on the Effective Date and, subject to
Section 13 below,
shall 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 renewals, if
any.
3. Place of Employment. The
Executive’s services shall be performed at the Company's
headquarters at 0000 Xxxxxxx Xxxxxx, Xxxxxxxx X, Xxxxxx, Xxxxxxxx
00000, or in such location or locations as the Board shall
determine, in its sole discretion.
4. Restricted Stock Award. Subject
to approval by the Board, the Executive shall be entitled to a
grant of Two Hundred Thousand (200,000) shares of restricted stock
as soon as practicable following the Amendment Date, which shares
shall be granted under, and subject to the terms and conditions of,
the Company’s 2015 Incentive Compensation Plan (the
“Plan”)
and shall vest in full upon the first anniversary of the grant
date.
5. Base Salary. The Company agrees
to pay the Executive a base salary (“Base Salary”) at an
annual rate of Five Hundred Fifty Thousand Dollars ($550,000.00).
The Board may adjust the Base Salary annually on each anniversary
of the Effective Date (provided that no decrease shall result in a
Base Salary less than the 50th percentile of comparable peer
companies based on independent consultant report retained by the
Company). The Base Salary shall be paid in periodic installments in
accordance with the Company’s regular payroll
practices.
6. Incentive
Compensation.
(a) Cash-Based Incentives. The
Executive shall be eligible to receive a transaction bonus
(“Transaction
Bonus”) as set forth in Attachment A. In addition to
the Transaction Bonus described in Attachment A, Executive shall
be eligible to receive cash-based incentive bonuses based upon the
achievement of specified performance goals, as set forth in
Attachment
B.
(b) Equity-Based Incentives. The
Executive shall be eligible for grants of equity awards available
to senior executive officers of the Company under the Plan, as the
Board or the Compensation Committee of the Board
(“Compensation
Committee”) may from time to time determine. In
addition, the Executive shall be eligible to receive the
equity-based incentive bonuses based upon the achievement of
specified performance goals set forth in Attachment B (the cash- and
equity-based incentive bonuses set forth in Attachment B are collectively
referred to herein as the “Performance Bonuses”).
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.
7. Post-Employment Compensation.
Upon termination of employment for any reason, the Executive shall
be entitled to: (A) all unpaid Base Salary earned through the date
of termination to be paid according to Section 5; (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
termination date, to the extent unpaid, to be paid according to
Section 9; (C) any
accrued but unused vacation time through the termination date in
accordance with Company policy; (D) any unpaid Transaction Bonus or
Performance Bonuses, to the extent earned as of the date of
termination, to be paid according to Attachment A or Attachment B, respectively; and
(E) all vested equity awards earned prior to
termination.
2
Additionally, if
the Executive’s employment is terminated prior to expiration
of the Employment Period (including due to his death or Disability,
as defined in Section 13(b), but excluding the
Executive’s termination by the Company for Cause or by the
Executive without Good Reason as provided in Section 13(d)), the Executive shall
remain eligible to receive the Transaction Bonus if a Qualifying
Sale (as defined in Attachment A) occurs before the
fifth (5th) anniversary of the
Effective Date; provided, that, on a
termination without Cause or a resignation for Good Reason, the
Executive executes and lets become irrevocable an agreement
releasing Company and its affiliates from any releasable liability
associated with this Agreement (other than with respect to amounts
not yet due) within sixty (60) days following the termination of
employment and the Executive complies with his other obligations
under Sections
14 and 15 of this
Agreement.
8. Clawback Rights. The
Transaction Bonus, Performance Bonuses 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. (The parties acknowledge that the nature of
the Transaction Bonus is such that the amounts paid are unlikely to
have been determined based on the financial results.) 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 8, 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.
3
9. 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.
10. 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.
11. 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.
12. Reserved.
13. 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 7.
4
(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
7. 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.
(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 conviction
of, or plea of guilty or nolo
contendere to, a felony; or (c) fraud, dishonesty or gross
misconduct which is materially and demonstratively injurious to the
Company. Termination under clauses (b) or (c) of this Section 13(c)(1) shall not be subject
to cure.
(2) For purposes of
this Section
13(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 obligation to pay the Executive
any unpaid Base Salary earned through the date of termination to be
paid according to Section 4; any unpaid Transaction Bonus
or Performance Bonuses, to the extent earned as of the date of
termination, to be paid according to Attachment A or Attachment B, respectively;
reimbursement of 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 termination date, to the extent unpaid, to be
paid according to Section
9; and any accrued but unused vacation time through the
termination date in accordance with Company policy. The Company
shall deduct, from all payments made hereunder, all applicable
taxes, including income tax, FICA and FUTA, and other appropriate
deductions.
5
(1) At any time during
the term of this Agreement and subject to the conditions set forth
in Section
13(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
Executive’s consent: (A) the assignment to the Executive,
without Executive's consent, 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, without Executive's consent,
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) In the event that
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, the Company shall pay or provide to the Executive (or,
following his death, to the Executive’s heirs, administrators
or executors) the compensation set forth in Section 7 above. The Company
shall deduct, from all payments made hereunder, all applicable
taxes, including income tax, FICA and FUTA, and other appropriate
deductions.
(4) The Executive shall
not be required to mitigate the amount of any payment provided for
in this Section
13(d) by seeking other employment or otherwise, nor shall
the amount of any payment provided for in this Section 13(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 termination
date. 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
(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 obligation to pay the Executive
any unpaid Base Salary earned through the date of termination to be
paid according to Section
5; any unpaid Transaction Bonus or Performance Bonuses, to
the extent earned as of the date of termination, to be paid
according to Attachment
A or Attachment
B, respectively; reimbursement of 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 termination date, to
the extent unpaid, to be paid according to Section 9; any accrued but
unused vacation time through the termination date in accordance
with Company policy; and as to any vested equity compensation, in
accordance with its terms. The Company shall deduct, from all
payments made hereunder, all applicable taxes, including income
tax, FICA and FUTA, and other appropriate deductions.
(f) Reserved.
(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.
(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 14 shall survive the
termination of the Executive’s employment
hereunder.
7
(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.
(a) The Executive
agrees and acknowledges that the Confidential Information that the
Executive has already received and will receive is valuable to the
Company and that its protection and maintenance constitutes a
legitimate business interest of the Company, to be protected by the
non-competition restrictions set forth herein. The Executive agrees
and acknowledges that the non-competition restrictions set forth
herein are reasonable and necessary and do not impose undue
hardship or burdens on the Executive. The Executive also
acknowledges that the products and services developed or provided
by the Company, its affiliates and/or its clients or customers are
or are intended to be sold, provided, licensed and/or distributed
to customers and clients primarily in and throughout the United
States (“Territory”) (to the
extent the Company comes to operate, either directly or through the
engagement of a distributor or joint or co-venturer, or sell a
significant amount of its products and services to customers
located, in areas other than the United States during the term of
the Employment Period, the definition of Territory shall be
automatically expanded to cover such other areas), and that the
Territory, scope of prohibited competition, and time duration set
forth in the noncompetition restrictions set forth below arc
reasonable and necessary to maintain the value of the Confidential
Information, and to protect the goodwill and other legitimate
business interests of, the Company, its affiliates and/or its
clients or customers.
(b) The Executive
hereby agrees and covenants that he shall not, without the prior
written consent of the Company, directly or indirectly, in any
capacity whatsoever, including, without limitation, as an employee,
employer, consultant, principal, partner, shareholder, officer,
director or any other individual or representative capacity (other
than (i) as a holder of less than two percent (2%) of the
outstanding securities of a Company whose shares are traded on any
securities exchange or (ii) as a limited partner, passive minority
interest holder in a venture capital fund, private equity fund or
similar investment entity which holds or may hold an equity or debt
position in portfolio companies that are competitive with the
Company; provided,
however, that the
Executive shall be precluded from serving as an operating partner,
general partner, manager or governing board designee with respect
to such portfolio companies), whether on the Executive’s own
behalf or on behalf of any other person or entity or otherwise
howsoever, within the Territory:
8
(1) Engage, own,
manage, operate, control, be employed by, consult for, participate
in, or be connected in any manner with the ownership, management,
operation or control of any business in direct competition with the
business of the Company;
(2) Recruit, solicit or
hire, or attempt to recruit, solicit or hire, 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;
(3) Attempt in any
manner to solicit from any customer of the Company, with whom the
Executive had significant contact during the last twelve (12)
months of the Executive’s employment by the Company (whether
under this Agreement or otherwise), business of the kind or
competitive with the business done by the Company with such
customer or to persuade or attempt to persuade any such customer to
cease to do business or to reduce the amount of business which such
customer has customarily done or might do with the Company;
or
(4) Interfere with any
relationship, contractual or otherwise, between the Company and any
other party, including, without limitation, any supplier,
distributor, coventurer or joint venturer of the Company, for the
purpose of soliciting such other party to discontinue or reduce its
business with the Company.
Executive
agrees that these non-competition restrictions shall be enforceable
during the Employment Period and, in the event Executive’s
employment with the Company is terminated pursuant to Sections 13(b), (c) or (d), for a period of twelve
(12) months following Executive’s termination from employment
in the Territory.
16. 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.
9
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.
17. 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 14 or Section 15 of this Agreement.
Accordingly, the Executive agrees that any breach or threatened
breach by him of Section 14 or Section 15 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.
10
(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 Nevada 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, supersedes all prior or contemporaneous
understandings and agreements, whether oral or written, between the
Executive and the Company, including without limitation the Prior
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.
(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.
11
(h) This Agreement
shall be governed by and construed in accordance with the internal
laws of the State of Colorado, and each of the parties hereto
irrevocably consents to the jurisdiction and venue of the federal
and state courts located in the State of Colorado 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]
12
IN
WITNESS WHEREOF, the Executive and the Company have caused this
Executive Employment Agreement to be executed as of the date first
above written.
|
|
|
MUSCLEPHARM
CORPORATION
|
|
|
|
By: /s/
Xxxxxxx
Xxxxx
|
|
|
|
|
|
|
|
Name:
Xxxxxxx Xxxxx
|
|
|
|
|
|
|
|
Title:
Lead
Director
|
|
|
|
|
|
|
|
Date
Signed: January 14,
2017
|
|
|
|
|
|
|
|
|
|
|
|
By:
/s/Xxxx Xxxxxxx
|
|
|
|
|
|
|
|
Executive:
Xxxx Xxxxxxx
|
|
|
|
|
|
|
|
Date
Signed: January 14,
2017
|
[Signature
Page to Amended & Restated Employment Agreement]
13
Attachment A
Transaction Bonus
Upon the occurrence of a Qualifying Sale
during Executive’s
employment (or, thereafter to the extent provided in the Agreement), Executive
shall be entitled to a Transaction Bonus equal
to:
(i)
10%
of the Aggregate Purchase Price, if the Aggregate Purchase Price is
in excess of $200 million;
(ii)
7.5%
of the Aggregate Purchase Price, if the Aggregate Purchase Price is
equal to or greater than $175 million but not greater than $200
million; or
(iii)
5%
of the Aggregate Purchase Price, if the Aggregate Purchase Price is
equal to or greater than $150 million but less than $175
million;
provided, however,
that the Qualifying Sale must be consummated on or prior to the
third anniversary of the Effective Date; and provided,
further
that the Aggregate Purchase Price must
equal or exceed $175 million. The Transaction Bonus shall be paid,
if at all, (i) in cash and/or in property in the same proportion
payable to common stockholders of the Company generally in
connection with the Qualifying Sale, or, in the Company’s
sole discretion, solely in cash, and (ii) on or following the
consummation of the Qualifying Sale on the same schedule as, and
under the same terms and conditions applicable to, the
Company’s common stockholders in connection with the
Qualifying Sale, but in no event over a period of longer than five
(5) years following the consummation of the Qualifying Sale. The
Company agrees that it shall not consummate a Qualifying Sale
without arranging for
the payment of the
Transaction Bonus at the closing of the Qualifying Sale or promptly thereafter.
“Qualifying
Sale” shall mean
the sale of all or substantially all of
(i) the assets of the Company or (ii)
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.
“Aggregate Purchase
Price”
means the sum of
all cash paid or
payable and the
fair market value of all
property or securities transferred in connection with a
Qualifying Sale. Amounts paid into escrow, installment payments and contingent payments in connection with a Qualifying Sale shall be
included as part of
the Aggregate Purchase Price; provided,
however, that
the portions of the Transaction Bonus based on amounts paid into escrow, installment payments and
contingent payments will be calculated and paid if and when such
amounts are released directly to the Company or to the
Company’s common stockholders, as
applicable.
A-1
Attachment B
The
Executive shall be entitled to receive cash- and equity-based
incentive bonuses, in each case subject to the achievement of the
performance goals set forth in this Attachment B, 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 caNovember 1,
2016sh-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)
Five Hundred
Thousand Dollars ($500,000), to be paid in connection with the
execution of the Agreement based on the more than Five Million
Dollars ($5,000,000) of savings guaranteed for the fiscal year
ending December 31, 2016;
(ii)
Two Hundred and
Fifty Thousand Dollars ($250,000), if the Xxxxxx Xxxxxxxxxxxxxx
contract is settled in a satisfactory manner;
(iii)
Two Hundred and
Fifty Thousand Dollars ($250,000), if the Xxxxxxx Xxxxxxxxx matter
is settled in a satisfactory manner;
(iv)
Two Hundred and
Fifty Thousand Dollars ($250,000), if the Manchester United matter
is settled in a satisfactory manner; and
(v)
One Hundred
Thousand Dollars ($100,000), if the Company obtains an order for
the MP Organic line that equals or exceeds $1 million before the
end of the fiscal year ending December 31, 2017.
B-1
Equity-Based Incentive Bonuses
Subject
to approval by the Board or the Compensation Committee, the
Executive shall be granted:
(i)
Up to Three Hundred
and Fifty Thousand (350,000) shares of restricted stock, if the
Capstone litigation involving the Company is settled in a
satisfactory manner, to be granted no later than January
31st,
2017
(ii)
Two Hundred
Thousand (200,000) shares of restricted stock, to be earned based
on the achievement of mutually agreeable goals established by the
Board in consultation with the Executive related to the performance
of the Company in 2017, to be issued not later than March 31,
2018
B-2
