EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), dated as of January 4, 2001,
between NEXSAN CORPORATION ("Company") and XXXXX XXXXXXX ("Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to employ Executive as its Vice President of
Sales and Executive desires to accept such employment, upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
1. EMPLOYMENT
1.1 The Company hereby agrees to employ Executive, and Executive
hereby agrees to accept employment by the Company and to serve, as Vice
President of Sales, effective as of the consummation of the transactions
contemplated by (i) the Exchange Agreement among the Company and the
shareholders of Nexsan Technologies Ltd., and (ii) the Stock Purchase
Agreement among the Company, Beechtree Capital LLC, and the purchasers of
the Company's common stock ("Common Shares") parties thereto (the
"Effective Date").
1.2 The Executive agrees to undertake the duties and responsibilities
inherent in such position and such other duties and responsibilities as the
President, the Chief Executive Officer, or the Board of Directors of the
Company shall from time to time reasonably assign to him. The Executive
shall devote his full-time efforts to the business of the Company so as to
increase the profitability and shareholder value of the Company; and the
Executive shall not be engaged in any other business activity during the
duration of this Agreement, unless written approval is first secured from
the President of the Company. Notwithstanding the foregoing, the Executive
shall not have the authority to accept sales orders or enter into
agreements for the sale of products or services unless the prices and terms
of such sales have been approved by the President or Chief Executive
Officer of the Company.
1.3 Executive shall also serve at the option of the Company as an
officer or director of any other entity controlling, controlled by or under
common control with the Company (an "Affiliate") without additional
compensation. Without limiting the forgoing, during the term of this
Agreement, the Executive consents to being appointed as a member of the
Company's Board of Directors.
1.4 The Executive agrees to abide by the rules, regulations,
instructions, personnel practices and policies of the Company and any
changes therein that may be adopted from time to time by the Company.
2. COMPENSATION
2.1 Base Salary
(a) The Company shall pay Executive a base salary ("Base Salary")
at the rate of $225,000 per year. Base Salary shall be payable in
installments consistent with the Company's payroll practices then in
effect. The Company shall increase the Base Salary annually, on each
anniversary of the Effective Date, by five percent (5%) over the Base
Salary in effect the previous year.
2.2 Restricted Stock Purchase Rights
Contemporaneously herewith, the Executive has been granted the
right to purchase, pursuant to the Restrictive Stock Purchase
Agreement entered by and between the Executive and the Company,
pursuant to the Company's 2001 Stock Plan, 1,200,000 (One Million and
Two Hundred Thousand) Common Shares of the Company.
2.3 Additional Compensation
Nothing contained in this Agreement shall prevent the Board of
Directors of the Company, in its sole and absolute discretion, from,
at any time, increasing Executive's compensation either permanently or
for a limited period, whether in Base Salary or by bonus or otherwise,
if the Board of Directors, in its sole discretion, shall deem it
advisable to do so in order to recognize and fairly compensate the
Executive for services rendered, provided, that nothing in this
sentence shall in any manner obligate the Board of Directors to make
any such increase or provide any such additional benefits.
2.4 Withholdings, Etc.
Payment of all compensation and benefits to Executive hereunder
shall be made in accordance with the relevant Company policies in
effect from time to time, including normal payroll practices, and
shall be subject to all applicable employment and withholding taxes.
3. BENEFITS
Executive shall be entitled to participate in all health care,
insurance, deferred compensation and other employee benefit plans generally
available to executives of the Company, consistent with the terms of those
plans as they may currently exist or be modified
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from time to time. Executive shall also be entitled to a minimum of four(4)
weeks paid vacation annually and holidays and other fringe benefits, all in
accordance with Company policy for executives of the Company, as those
policies may currently exist or be modified from time to time. Unused
vacation time shall accumulate, expire or be payable in accordance with
Company policy applicable to executives of the Company, as then in effect.
4. TERM AND TERMINATION
4.1 Unless earlier terminated as provided herein, the initial term of
this Agreement and of Executive's employment hereunder shall commence on
the Effective Date and shall terminate on the fifth anniversary (the
"Expiration Date") of the Effective Date. Unless this Agreement shall have
been earlier terminated, the term of this Agreement and Executive's
employment will be extended automatically for successive one (1) year terms
commencing on the Expiration Date unless either party elects to terminate
this Agreement by providing written notice to the other party at least one
hundred eighty (180) days prior to the expiration of the Initial Term or
any renewal term of this Agreement.
4.2 This Agreement and Executive's employment hereunder shall
terminate:
(a) upon the death of Executive;
(b) upon written notice to Executive if, as a result of
Executive's incapacity due to physical or mental illness,
Executive shall have been unable to perform Executive's
duties hereunder on a full time basis for a consecutive
period of ninety (90) days or an aggregate of one hundred
twenty (120) days within any twelve-month period;
(c) upon written notice to Executive, for Cause. "Cause" means
(i) any willful, material violation by the Executive of any
law or regulation applicable to the business of the Company
or any Affiliate; (ii) the Executive's conviction for, or
guilty plea - or plea of nolo contendere - to, a felony
(other than a felony related solely to automobile
infractions, unless Executive is incarcerated as a result
thereof); (iii) the Executive's commission of an act of
personal dishonesty which involves personal profit in
connection with the Company or any other entity having a
business relationship with the Company, (iv) gross
carelessness or unjustifiable neglect of Executive's duties
or willful failure to follow the lawful orders of the
President, the Chief Executive Officer, Chief Operating
Officer or of the Board of Directors of the Company; (v) any
material breach by the Executive of this Agreement; (vi) the
Executive's willful violation of any of the policies of the
Company or any Affiliate so as to cause loss,
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damage or injury to the property, reputation or employees of
the Company or any Affiliate, or (vi) any other willful
misconduct by the Executive which is materially injurious to
the business, financial condition or business reputation the
Company or any Affiliate; or
(d) upon written notice given during the 31st month or the 43rd
month after the Effective Date for failure to meet the Sales
Target in the 30th month or by the 42nd month after the
Effective Date, respectively. "Sales Target" means either
(x) the total amount of sales, net of returns, discounts and
allowances, of the Company and its Affiliates on a
consolidated basis, net of intercompany transactions, in the
applicable month, or (y) the average of such total amounts
in the three months ending with the applicable month;
provided that the amount of sales shall be increased by the
amount of valid purchase orders which would have resulted is
sales for the applicable month but for the fault of the
Company. The Sales Target for the 30th month is $5 million
and the Sales Target for the 42nd month is $8 million. For
purposes of this subsection (d), the first month after the
Effective Date shall be deemed to be January 2001.
4.3 Consequences of Termination.
In the event that the Company terminates Executive's employment
pursuant to Section 4.2 then (a) the Executive's Base Salary shall be
prorated as of the date of termination or resignation and such
prorated amount shall be paid to Executive, and (b) the Company shall
make such other and further payments to Executive as may be provided
pursuant to the terms of any employee benefit plan in which Executive
is a participant at the time of termination, to the extent payable
upon such termination in accordance with such plans or applicable
Company policies; provided, that if the Company terminates Executive's
employment pursuant to Section 4.2(d), the Company shall also pay to
Executive severance equal to two times the average monthly Base Salary
for the three months preceding the date of termination.
5. ADDITIONAL AGREEMENTS AND UNDERSTANDINGS
5.1 Employment Location.
The Executive shall perform the employment duties contemplated by
this Agreement from such location as the Company may from time to time
specify. The Executive acknowledges that his duties hereunder entail
substantial travel.
5.2 Reimbursement of Expenses
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Upon submission of itemized expense statements in the manner
specified by the Company, Executive shall be entitled to reimbursement
for reasonable travel and other reasonable business expenses duly
incurred by Executive in the performance of Executive's duties under
this Agreement, all in accordance with the policies and procedures
established by the Company from time to time for the Company's
executives.
5.3 Company Property
Executive agrees that all operating and/or financial data and
projections, plans, contracts, agreements, literature, manuals,
brochures, books, schedules, correspondence and other materials
furnished, disclosed or otherwise made available to Executive by the
Company or its Affiliates or secured through the efforts of Executive,
relating to the business conducted by the Company and/or its
Affiliates, are and shall remain the property of the Company and/or
its Affiliates, and Executive agrees to deliver all such materials,
including all copies or abstracts thereof, to the Company upon the
termination of Executive's employment hereunder, or at any other time
at the Company's request.
5.4 Confidential Information
Executive agrees that, except in the good faith performance of
his duties and responsibilities under this Agreement or as required by
order of a court or governmental agency having jurisdiction, he will
not at any time during or after his employment with the Company use,
reveal, divulge or make known to any person or entity any confidential
or proprietary knowledge or information concerning the Company or its
Affiliates, including without limitation any such information
concerning any equipment, facilities, customers, end users, contracts,
leases, operating and/or financial data and projections, processes,
developments, schedules, lists, plans or other matters relating to the
business of the Company or its Affiliates and will retain all
knowledge and information Executive acquired during his employment
therewith relating to the business of the Company or its Affiliates in
trust in a fiduciary capacity for the sole benefit of the Company, its
Affiliates and their respective successors and assigns. Executive's
obligations under this Section 5.4 shall not apply to any information
that (i) is or becomes known to the general public under circumstances
involving no breach by Executive of this Agreement, (ii) is generally
disclosed to third parties (excluding counsel, accountants, financial
advisors, employees, agents and material creditors of the Company) by
the Company without restriction on such third parties, or (iii) is
approved for release by written authorization of the President of the
Company.
5.5 Developments
(a) Executive will make full and prompt disclosure to the
Company of all inventions, improvements, discoveries, methods,
developments, software, and works of authorship, whether
patentable or not, which are created, made, conceived or reduced
to practice by the Executive or under his direction or jointly
with others during his employment by the
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Company, whether or not during normal working hours or on the
premises of the Company (all of which are collectively referred
to in this Agreement as "Developments").
(b) Executive agrees to assign and does hereby assign to the
Company (or any person or entity designated by the Company) all
his right, title and interest in and to all Developments and all
related patents, patent applications, copyrights and copyright
applications.
(c) Executive agrees to cooperate fully with the Company,
both during and after his employment with the Company, with
respect to the procurement, maintenance and enforcement of
copyrights and patents (both in the United States and foreign
countries) relating to Developments. Executive shall sign all
papers, including, without limitation, copyright applications,
patent applications, declarations, oaths, formal assignments,
assignment of priority rights, and powers of attorney, which the
Company may deem necessary or desirable in order to protect its
rights and interests in any Development.
(d) Notwithstanding anything in this Section 5 to the
contrary, the Company acknowledges that the intellectual property
known as the "Lead Registration Program" shall not be deemed a
Development.
5.6 Non-Competition
While employed hereunder, Executive shall not (i) enter into the
employment of, or act as a consultant, director, officer, or employee
of, or render any service or advice to, any other business,
partnership, association, corporation or other entity which directly
engages in competition in any material respect with any business
presently carried on or under development, or which hereafter during
the period of his employment by the Company shall be carried on or be
under development by the Company and which is then being carried on by
the Company, in the United States or any foreign country where such
business is then or was within the one year period ending on the date
of termination conducted, other than the Company or any Affiliate (a
"Competing Business") or (ii) invest or otherwise acquire any
interest, whether as a shareholder, lender, partner, proprietor,
vendor or otherwise, in any Competing Business (excluding ownership of
less than 2% of a class of securities of a publicly_traded company).
While employed hereunder and for a period of one (1) year after
termination of employment, Executive shall not encourage, solicit, or
attempt to induce (or assist others to encourage, solicit, or attempt
to induce) any customer of the Company or any user of products of the
Company to reduce, restrict, or terminate its business relationship
with the Company or any reseller which is a customer of the Company or
its use of products, or products which incorporate products,
manufactured by the Company, or to shift its business from the Company
or any such reseller to any other supplier of competing goods or
services
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5.7 Non-Solicitation
While employed hereunder and for a period of one (1) year
thereafter, Executive shall not, directly or indirectly, entice,
induce or in any manner influence any person who is, or shall have
been during such period, in the service of the Company or its
Affiliates, to leave such service, or employed or engaged by or
otherwise associated with any person or entity.
5.8 Survival, Rights and Remedies
The provisions of this Section 5 shall survive the termination of
this Agreement and the termination of Executive's employment with the
Company and shall run to and inure to the benefit of the Company and
its successors and assigns. Executive represents, warrants and
acknowledges that he has carefully read this Section 5, that he has
had an opportunity to have the provisions contained herein explained
to him by his attorney, and that he understands the provisions
contained herein. Executive further acknowledges that, by reason of
his training, skills, experience and employment hereunder, the
services to be rendered by him under the provisions of this Agreement
and their value to the Company are of a special, unique and
extraordinary character and that it would be difficult or impossible
to replace such services, and he further acknowledges that a violation
by him of any of the provisions of this Section 5 could cause
continuing material and irreparable injury to the Company and that in
such event money damages would not be readily calculable and the
Company would not have an adequate remedy at law. Executive
acknowledges and agrees that (i) the restrictions under this Section 5
are reasonable and will not interfere with Executive's ability to earn
a livelihood or impose upon him any undue hardship, and (ii) any
breach of the covenants, provisions and restrictions contained in this
Section 5 shall cause, and shall be deemed to be, a fundamental and
material breach of Executive's fiduciary and contractual obligations
to Employer. Therefore, Executive agrees that the Company shall be
authorized and entitled to obtain from any court of competent
jurisdiction, interim and permanent equitable relief, including
without limitation, injunctive relief, in the event of any such breach
or threatened breach of the provisions of this Section 5, and the
prevailing party shall be entitled to payment of reasonable attorneys'
fees and disbursements and any other costs incurred in connection with
any proceedings in connection with such breach or threatened breach.
These rights and remedies shall be cumulative and shall be in addition
to any other rights or remedies whatsoever to which the Company shall
otherwise be entitled hereunder, at law or otherwise, including the
right to seek damages (including any consequential damages) which any
court of competent jurisdiction may deem appropriate.
6. APPLICABLE LAW; ARBITRATION
This Agreement shall in all respects, including all matters of
construction, validity and performance, be governed by and construed and
enforced in accordance with the laws of the State of California. Except as
provided in Section 5.8, any controversy or claim arising under the
provisions of this Agreement or of any breach or alleged breach thereof
shall be subject to mediation under the auspices of the American
Arbitration Association in Los Angeles, California
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or any other location mutually agreeable to the parties, and, if not
resolved thereby, shall be settled by arbitration, before a single
arbitrator sitting in Los Angeles, California or any other location
mutually agreeable to the parties, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and judgment
upon the award rendered by the arbitrator may be entered in any court
having jurisdiction. The arbitrator shall be authorized to decree any and
all relief of an equitable nature, and shall also be authorized to award
damages and costs. Notwithstanding the foregoing, in the extent of a breach
or impending breach of this Agreement, either party may seek an injunction,
restraining order or other equitable relief from any court of competent
jurisdiction.
7. SUCCESSORS
This Agreement and all rights of Executive hereunder shall inure to
the benefit of and be enforceable by Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If Executive should die while any
amounts still are payable to him hereunder if he had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to Executive's devisee, legatee, or other
designee or, if there be no such designee, to Executive's estate.
8. MISCELLANEOUS
8.1 Entire Agreement
This Agreement constitutes the entire agreement between the
parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this
Agreement.
8.2 Notices
Every notice required by the terms of this Agreement shall be
given in writing by serving the same upon the party to whom it was
addressed personally or by registered or certified mail, return
receipt requested, at the address set forth below or at such other
address as may hereafter be designated by notice given in compliance
with the terms hereof:
If to Executive: 00000 Xxxxxxxx Xxxxx
Xxxxx Xxxxxxx, XX 00000
If to Company: Nexsan Corporation
C/O Beechtree Capital, Ltd.
0 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
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and to
RubinBaum LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
or such other address as shall be provided in accordance with the terms hereof.
Such notice shall be effective upon mailing.
8.3 Waivers
No delay or failure by any party hereto in exercising, protecting
or enforcing any of its rights, titles, interests or remedies
hereunder, and no course of dealing or performance with respect
thereto, shall constitute a waiver thereof. The express waiver by a
party hereto of any right, title, interest or remedy in a particular
instance or circumstance shall not constitute a waiver thereof in any
other instance or circumstance. All rights and remedies shall be
cumulative and not exclusive of any other rights or remedies.
8.4 Amendments in Writing
No amendment, modification, waiver, termination or discharge of
any provision of this Agreement, nor consent to any departure
therefrom by either party hereto, shall in any event be effective
unless the same shall be in writing, specifically identifying this
Agreement and the provision intended to be amended, modified waived,
terminated or discharged and signed by the Company and the Executive,
and each such amendment, modification, waiver, termination or
discharge shall be effective only in the specific instance and for the
specific purpose for which given. No provision of this Agreement shall
be varied, contradicted or explained by any oral agreement, course of
dealing or performance or any other matter not set forth in an
agreement in writing and signed by the Company and the Executive.
8.5 Severability
If any provision of this Agreement shall be held invalid, illegal
or unenforceable in any jurisdiction, for any reason, including,
without limitation, the duration of such provision, its geographical
scope or the extent of the activities prohibited or required by it,
then, to the full extent permitted by law, (a) all other provisions
hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in order to carry out the intent of the
parties hereto an nearly as may be possible, (b) such invalidity,
illegality or unenforceability shall not affect the validity, legality
or enforceability of any other provision hereof, and (c) any court or
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arbitrator having jurisdiction thereover shall have the power to
reform such provision to the extent necessary for such provision to be
enforceable under applicable law.
8.6 Counterparts
This Agreement may be executed in counterparts, each of which
counterpart shall be deemed an original, but all of which together
shall constitute one and the same instrument.
8.7 Other Agreements. Executive hereby represents that he is not bound
by the terms of any agreement with any previous employer or other party to
refrain from competing, directly or indirectly, with the business of such
previous employer or any other party. Executive further represents that his
performance of all the terms of this Agreement and as an employee of the
Company does not and will not breach any agreement to keep in confidence
proprietary information, knowledge or data acquired by him in confidence or
in trust prior to his employment with the Company.
IN WITNESS WHEREOF, the parties have executed and entered into this
Agreement on the 4th day of January, 2001
NEXSAN CORPORATION
By: /s/ Xxxxxx Xxxxx
---------------------------------
Title: CEO
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/s/ Xxxxx Xxxxxxx
---------------------------------
XXXXX XXXXXXX
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