EXECUTIVE EMPLOYMENT AGREEMENT
THISEXECUTIVEEMPLOYMENT AGREEMENT("Agreement")ismadeand enteredintoas of July15,2015 (the"EffectiveDate"),by and between MusclePharmCorporation,a NevadaCorporation(the"Company"),and Brian Casutto,anindividual("Executive").TheCompany andExecutivearesometimesreferredto herein as a "party" or collectively as the "parties."
RECITALS
WHEREAS,Executive iswilling to continue to be employed by the Company and provide services to theCompany underthetermsand conditionsstated herein,as of July 15,2015 (the"StartDate");and
WHEREAS,the Company and Executivenowmutually desire to enterintothis Agreement as approved by the Board.
NOW,THEREFORE,in considerationoftheforegoing,ofthemutualcovenants andagreementshereincontained,and for other good and valuable consideration, thereceiptand sufficiencyof whichare hereby acknowledged, the parties,intendingto be legallybound, agree as follows:
| 1. | Employment andDuties |
1.1 Employment.The CompanyherebyagreestoemployExecutive asExecutiveVicePresident-Sales & OperationsoftheCompanyandExecutiveherebyaccepts suchemployment as ofthe Start Datepursuantto theterms,covenantsandconditionsset forthherein.Executive shallreport directly to a persontobe determinedbytheChairmanof theBoardof Directors of theCompany.Inaccordancewith Section5.2(Termination bytheCompanyWithoutCause),andsubjecttotheseveranceprovisionssetforthinSection 6.3, to the extent applicable,theExecutiveshallbe anemployeeatwilloftheCompany.
1.2 Duties.Executiveshallhavethe overall responsibility as theExecutiveVicePresident-Sales & Operations of the Company and itsoperations,andshallperform all duties andresponsibilitiesand havesuchpowers which are commonlyincidentto the offices and positionsheldby him,aswellas anyadditionalresponsibilities andauthorityas may be from time totimeassigned or delegatedtohimby the ChiefExecutiveOfficer of theCompanyorthe Presidentandthe Board.Executiveshallperformthedutiesassignedtohim tothe best ofhisabilityandinamanner,satisfactoryto theCompany.
1.3 TimeandEfforts.Executive will devotehisfull businesstime,efforts, attention,andenergies to the business of theCompanyandto theperformance ofExecutive'sdutieshereunderduring the Term (as defined below),and will not engageinanyotherbusiness, professionoroccupationforcompensationorotherwisewhich would conflictorinterfere with the performance ofsuchservices,eitherdirectly or indirectly, withoutthepriorwrittenconsentoftheCompany;provided that,nothing hereinshallprecludeExecutivefrom(i) continuing toserveonanyboard of directors or trusteesofany"notfor profit" organization,(ii) beinginvolvedin charitableactivities,or(iii)managinghis personalandfamilypassiveinvestments;provided,further that,ineach case,andintheaggregate,suchactivities shallnotmateriallyconflict with orinterferewiththe performanceofExecutive'sdutieshereunder orconflictwithhisdutyofloyaltyand/orfiduciary dutiesowedto theCompany.
| 2. | Term |
Unlessearlier terminated as providedinSection5,theCompanyshall employExecutivein the capacitysetforthhereinfor atermcommencingonthe Start Date andendingonDecember31,2017(the·'ExpirationDate").Suchperiod,as may be terminated earlier or extended, to be referred to herein as the"Term".
| 3. | Compensation |
Ascompensation for theservicesto be rendered byExecutivefor and on behalfoftheCompanyhereunder,Executiveshall beentitled to the following:
3.1 Base Salary. Executiveshall receivean annual basesalary of$300,000. Salarypaymentsshall be subject to allapplicablefederal andstatewithholding,payroll,andothertaxes,and all applicable deductions for benefits as may berequiredbylaworExecutive'sauthorization.Executive'sBase Salarywill be reviewedatleast annually by the Compensation Committee(the"Committee”) of the Board and may beincreased atthe discretion of theCommittee.
3.2 Bonus.In addition to Base Salary,Executive shallbeeligible toreceiveone ormore cash bonuses to be determined by the Committee in itssolediscretion basedonperformance criteriatobeadoptedby theCommittee,with a potential bonus pool of up to$300,000peryear(tobeadjustproratedforcalendaryear2015),which may be adjusted at the discretion of theCommittee. Any such bonusor bonusesshallbesubjectto all applicable federal andstatewithholding,payrolland other taxes, and allapplicabledeductionsforbenefitsas may berequiredbylaw,andshallbe paid toExecutiveno later thanthe15thdayofthethirdcalendarmonth followingtheend ofthefiscalyear (or other performanceperiod) withrespectto which the bonus relates.
3.3 EquityCompensation.Executiveshallbe entitled toreceive 50,000sharesofthecompany’scommonstockwithinthirty(30) daysoftheEffectiveDate. The restrictedstockagreementpertaining tosuch grantof restrictedshares shallcontainathree(3) year vestingscheduleand other customarytermsandconditionsinaccordancewiththeCompany'sprior practices.Inaddition tothegrantprovided inthisSection3.3,Executive may,asdeterminedbythe Committeeinitsdiscretion,periodically receivegrantsofstock options,restrictedstock orotherequity-related awardsfromthe Company'svariousequitycompensation plans,subjectto the termsandconditionsthereof.
3.4 CompensationCommittee.Any bonusandanyequity considerationto beprovidedtoExecutiveshallbe reviewed and determined by theCommittee on an annualbasistosetperformancecriteria forpurposesof compliance withtherequirements of Sectionl62(m) of theInternal RevenueCode of1986,as amended (the"Code").
3.5 Expenses.TheCompanyshallreimburse ExecutiveforallreasonablebusinessexpensesincurredbyExecutiveinthe performanceofhisduties,ifExecutiveprovidesadequatedocumentation requiredbylawandby thepoliciesandproceduresoftheCompany,asadopted and amendedfrom time to time,ifinno eventshallExecutivesubmitanyrequired documentation later thansixty(60) days after the end of thecalendaryearinwhichsuchexpensewasincurred.Any suchreimbursementshallbe made assoonasreasonably practicable but in noevent,later thanthe 15th dayofthe third month following the calendaryear inwhichtheapplicable expense wasincurred.Executiveacknowledgesandagrees thatall suchexpenseswillbesubject totheoversight of
the Audit Committee ofthe Board.The Company shall alsoprovideExecutivewithalaptopcomputer and cellphoneforhisbusiness use during the Term.
3.6 Vacation.Executive shallbeentitledtoaccrue four(4) weeks of paidvacationeachyearpursuant to the termsand provisions oftheCompany’s vacationleavepolicies asin effectfrom timetotime.Althoughunusedvacationmaybecarried over from year toyear,themaximumcap onaccrualshall be equaltoonehundred fiftypercent (150%) oftheannual accrual.
3.7 Benefits.Executive shall beentitledto participatein andreceive all benefitsmadeavailable bythe Companyto its executiveofficers,subjectto and on aconsistentbasiswiththe terms, conditionsandoverall administrationofsuchplans andarrangements,including withoutlimitation,medical,dental,vision,lifeanddisabilityinsuranceplansandcoverage,and definedbenefit,definedcontribution orother401(k)program,includingall Companymatchingprovisions.Executive shallbe entitled to ataxablemonthlyvehicleallowanceof $1,000, and amiscellaneousexpense allowanceofupto $5,000.
| 4. | Confidential Information; Non-Compete;Non-Solicitation |
4.1 ConfidentialInformation. Executive acknowledges that, during hisemployment,hewill haveaccesstoand willreceiveinformationwhichconstitutestradesecrets,isof aconfidential nature,isofsignificant valueto theCompanyand/orisa foundation onwhichthe businessoftheCompanyispredicated.WithrespecttoallsuchConfidentialInformation (as defined hereafter),Executiveagrees,duringthe Term andthereafter,not todisclose suchConfidential Informationtoanypersonotherthananemployee,counsel,oradvisoroftheCompanyor apersontowhomdisclosureisreasonablynecessaryorappropriateabouttheperformancebyExecutiveofhis dutieshereundernor tousesuchConfidential Informationfor anypurposeotherthantheperformanceofhisdutieshereunder.ForpurposesofthisAgreement,theterm"ConfidentialInformation"includesalldataormaterial (regardless of form) withrespectto theCompanyor anyofitsassets,prospects,businessactivities,officers,directors,employees,borrowers, orclients whichis:(a) a tradesecret,as defined bytheUniformTradeSecretsAct;(b)provided,disclosed,ordelivered toExecutivebytheCompany,anyofficer,director,employee,agent,attorney, accountant,consultant,orotherpersonorentityemployedbytheCompanyinanycapacity,anyclient, borrower,advisor,or businessassociate oftheCompany,oranypublicauthorityhavingjurisdictionovertheCompanyorany businessactivityconductedbytheCompany;or (c) produced,developed,obtainedor preparedbyoronbehalfofExecutiveortheCompany(whetherornotsuch informationwasdevelopedinthe performanceofthisAgreement).Notwithstandingtheforegoing,the term"ConfidentialInformation"shall notincludeanyinformation,data,ormaterialwhich,atthe time of disclosure oruse, wasgenerallyavailableto the publicotherthan bya breachofthisAgreement,wasavailableto the party towhomdisclosedonanon-confidentialbasisby disclosure or access providedbytheCompanyorathird partywithoutbreachinganyobligationsof the Companyorsuchthird party,orwas otherwise developedorobtainedlegallyandindependentlybythepersontowhomdisclosed without abreachofthisAgreement.This Section4.1shallnotpreclude Executive fromdisclosingConfidential Information ifcompelledtodosobylaworvalidlegalprocess,providedthatifExecutivebelieves Executiveis socompelledbylaworvalidlegalprocess,Executivewillnotifythe Companyinwritingsufficiently inadvanceofanysuchdisclosure toallowtheCompanythe opportunity todefend,limit,or otherwiseprotectitsinterestsagainstsuchdisclosureunlesssuch noticeisprohibitedbylaw.Therights andobligationsofthepartiesunderthisparagraphshallsurvivetheexpirationorterminationofthisAgreementforanyreason.
4.2 Non-Competition. Aspartof theconsiderationforthe compensationandbenefits to be paidto Executive hereunder,andinordertoprotect theConfidentialInformation,businessgoodwill, andbusiness opportunities of the Company,Executiveagrees that, during theTermand for aperiodoftwelve (12)monthsaftertheterminationofExecutive'semployment andthisAgreement,hewillnot,directlyorindirectly,engageinorbecomeinterestedfinanciallyin,as aprincipal,employee,partner, contractor, shareholder, agent, manager,owner,advisor,lender,guarantor, officer, ordirector,anybusiness (otherthan the Company)thatisengagedinthe nutritionalsupplementindustryand/orrelatedproducts;provided,however,thatExecutive shall be entitled to continue toinvestin stocks, bonds, or other securities in any such business (without otherwise participating in such business) if: (a) such stocks, bonds, or other securities are listed on any United States securities exchange or are publicly traded in an over the counter market; and such investment does not exceed, in the case of any capital stock of any one issuer, five percent of the issued and outstanding capital stock, or in the case of bonds or other securities, five percent of the aggregate principal amount thereof issued and outstanding; or (b) such investment is completely passive and no control or influence over the management or policies of such business is exercised. The Executive here by agrees that in addition to any other remedies available to the Company at law or in equity, in the event of a breach of this Section 4.2 by the executive, the Company shall no longer be obligated to make any severance payments to the Executive.
4.3 Non-Solicitation.Executiveagrees thathewillnot,atanytime during theTerm, oratanytimewithin twelve (12)monthsafter the termination ofhisemployment,forhisownaccountor benefit or for theaccountor benefitofany otherperson,firmor entity,directlyorindirectly,solicitforemployment anyemployee of theCompany(oranyperson who wasanemployeeoftheCompany inthe90-dayperiodbeforesuchsolicitation)orinduceanyemployee of theCompany(oranypersonwhowasanemployee oftheCompanyinthe90-dayperiodbeforesuchinducement)to terminatehisemployment withtheCompany.Notwithstandingthe above,the restrictionsrelating topersonsemployedinthe90-dayperiodreferencedinthe parentheticals in theimmediatelyprecedingsentenceshallnotapplyto a personwhowas apartytoanemploymentagreement withtheCompany and whoterminateshisemploymentfor Good Reasonoristerminated by the Company without Cause. The rights and obligations of the parties under this Section 4.3 shall survive the expiration or termination of this Agreement for any reason.
4.4 ProprietaryMatters.Executiveexpressly agreesthatanyandallimprovements,inventions,discoveries,processes,orknow-how thatare generated orconceivedbyExecutiveduringtheTerm, whetherconceived duringExecutive'sregularworkinghoursor otherwise,willbe thesoleandexclusivepropertyoftheCompany.Whenever requested bytheCompany(eitherduringtheTerm orthereafter),Executivewillassignorexecuteanyandall applications,assignmentsand/or otherdocuments, and doallthingswhichtheCompanyreasonablydeemsnecessaryorappropriate,in ordertopermitthe Companyto:(a)assignandconvey,orotherwisemakeavailabletothe Company,thesoleandexclusiveright,title, andinterestinandtosaidimprovements,inventions,discoveries,processesorknow-how;or(b)applyfor,obtain,maintain,enforceanddefendpatents,copyrights,trade names, ortrademarksof theUnitedStatesorofforeigncountries forsaidimprovements,inventions,discoveries,processes,orknow-how. However,theimprovements,inventions,discoveries,processes,orknow-howgeneratedorconceivedbyExecutiveandreferredtointhisSection4.4 (except those whichmaybeincludedinthe patents,copyrights, orregistered tradenamesortrademarksof the Company)willnotbeexclusivepropertyoftheCompanyatanytime afterhavingbeendisclosed orrevealedorhaveotherwisebecomeavailabletothe publicorto a thirdpartyon anon-confidentialbasis otherthanbyabreachofthisAgreement,or aftertheyhavebeenindependentlydevelopedordiscussedwithoutabreachofthisAgreement byathirdparty whohasnoobligationtotheCompany.
The rights andobligations ofthe partiesunder thisSection 4.4shall survive theexpirationor termination ofthisAgreementforanyreason.
4.5 InjunctiveRelief.Executiveacknowledgesandagreesthatanyviolation of Sections 4.1,4.2,4.3or4.4ofthis Agreement wouldresultin irreparable harmtothe Companyand,therefore,agreesthat,in theeventofanactual,suspected, orthreatenedbreachofSections4.1,4.2, 4.3 or 4.4 ofthis Agreement, theCompanyshallbe entitledto aninjunction restrainingExecutivefromcommitting or continuingsuchactual,suspectedorthreatened breach.Theparties acknowledge and agreethat the right tosuchinjunctivereliefshallbecumulativeandshallnot beinlieuof,orbeconstruedas a waiver oftheCompany'srightto pursue, anyotherremediestowhichitmaybeentitledin laworinequity.Theparties agree thatforpurposes ofSections4.1,4. 2,4.3and4.4ofthisAgreement,the term"Company"shallincludetheCompanyanditsaffiliates.
| 5. | Termination |
Executive'semploymentby theCompanyandthisAgreementmaybeterminatedbeforetheexpirationoftheTerm,withoutbreachofthis Agreement, inaccordance withtheprovisionsset forthbelow:
5.1 TerminationbytheCompanyforCause.TheCompanymayterminateExecutive'semploymentandthis AgreementforCause(asdefinedbelow),butonlyafter:(i)givingExecutivewrittennoticeof thefailure or conductwhichtheCompanybelievestoconstituteCause;and (ii) withrespectto elements (a)through(e)below,providingExecutiveareasonableopportunity,andin noeventmore thantwenty(20)days,tocuresuchfailureor conduct,unlessthe Board determinesin its goodfaithjudgmentthatsuchfailureorconductisnotreasonablycapableofbeingcured. Intheevent Executivedoesnotcurethe allegedfailureorconductwithinthe timeframeprovided forsuchcurebytheCompany,theCompanyshallsend himwrittennoticespecifyingtheeffectivedate oftermination.The failure bytheCompanytoset forth inthe noticereferencedinthisSection 5.1anyfact orcircumstance whichcontributestoashowingofCauseshallnotwaiveanyrightoftheCompanyto assert, orprecludetheCompanyfromasserting,such factorcircumstance inenforcingitsrightshereunder.Forpurposes ofthisAgreement,the term"Cause"means:
(a) conviction ofafelony oracrimeinvolvingfraudormoralturpitude;or
(b) theft,materialactofdishonesty orfraud,intentionalfalsificationofanyemployment or Corporationrecords,orcommissionofany criminalactwhichimpairsparticipant'sabilityto performappropriateemploymentduties fortheCorporation;or
(c) intentionalorrecklessconductorgrossnegligencemateriallyharmfultotheCorporation orthesuccessortotheCorporationaftera Change inControl,includingviolationofanon-competitionor confidentiality agreement;or
(d) willful failuretofollowlawfulinstructionsofthepersonorbodytowhichparticipant reports;or
| (e) | grossnegligenceorwillfulmisconduct in theperformance ofparticipant'sassignedduties.Causeshallnotincludemereunsatisfactoryperformanceintheachievementof participant’s job objectives. |
Ifthe CompanyterminatesExecutive's employment forCause,thenExecutiveshallbe entitled to receivethepaymentsandbenefitsset forthinSection 6.1below.
TheCompany maysuspend Executive withpaypending aninvestigationauthorized by theCompanyor a governmental authority or adeterminationwhether Executivehasengagedinacts oromissions constituting Cause, andsuchpaidsuspensionshallnotconstitute Good Reasonora termination of Executive'semployment.
| 5.2 | TerminationbytheCompany Without Cause. |
(a) The Companymayterminate the employment of Executive andthisAgreement at any time during the Term of this Agreement without Cause bygivingExecutivewrittennotice of such termination,to theextentpermitted by law, tobeimmediatelyeffective following the giving of such writtennotice,inwhich case Executive shallreceivethe compensation,severance,and benefit continuation required by Section 6.3 below; provided,however,that ifCompany terminatesExecutive'semployment without Cause duringtheProtection Period (as definedbelow),thenExecutiveshallbe entitled toreceivethe paymentsand benefits setforthinSection 6.4 below.
(b) ForpurposesofthisAgreement,the term''Protection Period"meansthe period oftimecommencing on thedateof the first occurrence of a ChangeinControl(asdefinedbelowin Section5.2(c))andcontinuing untilthe earlier ofthe(i) thesecondanniversaryofthefirst occurrence oftheChangeinControland (ii)the Termofthis Agreement; and thesix(6)monthperiod prior tosuchChangeinControldateiftheExecutiveisterminated withoutCauseorterminatesfor GoodReasonand ineither casesuch termination(x) wasrequestedby the thirdpartythat effectuatestheChangeinControl,or (y) occursinconnection withorinanticipationof aChangeinControl,itbeingagreed that anysuchactiontakenfollowingstockholderapprovalofa transaction whichifconsummated would constitute aChangeinControlshallbedeemed to beinanticipationof aChangeinControlprovidedsuchtransaction isactually consummated.
(c) Forpurposesof this Agreement,the term"Changein Control"meansthe happeningofanyof the followingevents:
| i. | atenderoffer (orseriesof relatedoffers)shallbe made and consummatedfortheownership of 50%or moreoftheoutstanding voting securities oftheCompany,unlessas aresult ofsuchtender offer more than50% oftheoutstanding votingsecuritiesofthesurvivingor resultingcorporation shallbe owned in theaggregatebythe stockholders of the Company (as ofthe time immediately prior to thecommencement of such offer),anyemployeebenefit planoftheCompany oritssubsidiaries, andtheiraffiliates; |
ii. the Company shallbe mergedor consolidated with anothercorporation, unlessas aresultof suchmergerorconsolidation morethan50%oftheoutstandingvotingsecuritiesofthesurvivingorresultingcorporationshallbeownedin theaggregatebythestockholdersoftheCompany (as ofthe time immediately prior tosuchtransaction),anyemployee benefit planoftheCompanyor itssubsidiaries, andtheir affiliates;
(iii) theCompany shall sell substantially all ofitsassetstoanother corporation that isnot whollyownedbythe Company,unlessas aresultofsuchsalemore than50% of such assets shallbeownedinthe aggregateby thestockholdersoftheCompany (as ofthe time
immediately prior tosuchtransaction),any employeebenefit planoftheCompany oritssubsidiariesand their affiliates; or
(iv) a person (as defined below)shallacquire 50% or more of theoutstanding voting securities oftheCompany(whether directly, indirectly,beneficiallyorofrecord),unlessas aresultof such acquisitionmore than 50%ofthe outstanding votingsecurities of the surviving orresulting corporationshallbe owned in theaggregateby thestockholders of the Company (as ofthe timeimmediatelypriortothe first acquisition ofsuch securitiesbysuchperson), anyemployee benefit planofthe Corporationoritssubsidiaries, andtheiraffiliates.
5.3 TerminationbytheCompanyDue toInabilityto PerformorDeath. Executive'semploymentandthisAgreementmaybe terminated bytheCompany as follows:
(a) Totheextentpermittedbyla w,upon noticetoExecutiveinthe eventofExecutive'sInabilityto Perform. ForthisPurpose,the term"Inabilityto Perform"meansandshallbe deemed tohaveoccurredifExecutivehasbeendeterminedunder theCompany'slong-term disability plan to be eligible forlong-termdisabilitybenefitsor, in the event theCompanydoes not maintainsucha plan orin theabsence of Executive'sparticipation inor application for benefitsundersucha plan,such termshallmeantheinabilityofExecutive,despite anyreasonableaccommodation required bylaw,due to bodilyinjuryor disease or any other physical or mental incapacity,to perform theservicesrequiredhereunderfor a period ofninety(90) consecutive days; or
| (b) | Immediatelyupon thedeath ofExecutive. |
5.4 Termination byExecutivefor Good Reason. ExecutivemayterminatehisemploymentandthisAgreement atanytime for Good Reason (as defined below). A terminationofemploymentandthis Agreement by Executive for Good Reason shall entitle ExecutivetopaymentsandotherbenefitsasspecifiedinSection 6.3, unless such terminationoccurs duringthe Protection Period inwhich casethe paymentsandbenefitsinSection6.4shallapply.Forpurposesofthis Agreement, the term"Good Reason"means,subjectto thenoticeand cure provisionsherein,anyofthe followingactionsiftaken withoutExecutive'spriorwrittenconsent:(a)theassignmenttotheExecutiveofanydutiesinconsistent with the position intheCorporation thatExecutive heldimmediatelypriortothe assignment;(b) a ChangeofControlresultinginasignificantadverse alterationinthestatusorconditions ofExecutive'sparticipation with theCorporationorother natureofExecutive'sresponsibilitiesfrom thoseineffectprior tosuchChange ofControl,includinganysignificantalterationinHolder'sresponsibilitiesimmediatelypriortosuchChangeinControl;(c) the failure by theCompanyto continue to provide theExecutivewith benefitssubstantiallysimilar tothoseenjoyedby theExecutiveprior tosuchfailure;or(d) anyotheractionorinactionthatconstitutesamaterial breachbytheCompanyof thisAgreement.To exercise theoptionto terminateemploymentfor Good Reason,Executivemust provide writtennoticeto theCompany ofExecutive'sbelief that Good Reasonexistswithinsixty(60)daysoftheinitialexistenceoftheGood Reasoncondition, and thatnoticeshalldescribeinreasonable detail the condition(s) believed to constitute Good Reason. TheCompanythenshallhavethirty (30) daystoremedytheGoodReasoncondition(s). If not remedied within that30-dayperiodorif theCompanynotifiesExecutivethatit doesnotintendtocuresuchcondition(s)beforethe end ofthat30-dayperiod,Executivemaysubmitanoticeoftermination to theCompany;provided,however,thatthenoticeofterminationinvokingExecutive'soption toterminateemploymentfor GoodReasonmust begivennolaterthan one hundred(100) daysafter the date the GoodReason condition firstarose;otherwise,Executiveshallbedeemedtohave acceptedthecondition(s),ortheCompany'scorrection ofsuchcondition(s),thatmayhavegivenrisetothe existenceofGood Reason.
5.5 Termination by Executive Without GoodReason.Executivemayalsoterminatehisemployment andthisAgreementwithout Good Reasonbyprovidingatleast ninety(90)days'written
noticeof suchtermination to theCompany.Inthe event ofaterminationpursuanttothisSection 5.5,Executiveshallbeentitledtopaymentsand otherbenefitsasspecifiedinSection 6.1below.AttheCompany'soption,theCompanymayacceleratethe dateofExecutive'sterminationofemployment by payingtoExecutive the BaseSalaryandvalueofthe benefitsthatExecutivewouldhavereceived duringthe period bywhichthe dateoftermination is soaccelerated andsuchaccelerationshallnot changethecharacterization of thetermination byExecutiveasaterminationwithoutGood Reason.
5.6 Return ofConfidential Informationand Company Property.Upon terminationofExecutive’s employmentfor any reason, Executive shall immediately returnall ConfidentialInformationandother Companyprope11ytotheCompany.
| 6. | Effect of Termination |
6.1 Termination bythe CompanyforCauseor TerminationbyExecutive WithoutGood Reason.In theevent Executive’s employment andthisAgreementareterminated pursuant toSections 5.1 or 5.5 above:
(a) TheCompanyshall payto Executive, orhisrepresentatives,onthe dateoftermination ofemploymentonlythat portionoftheBaseSalaryprovidedinSection 3.1thathas beenaccruedthroughthe date of termination,anyaccruedbutunpaidvacation pay provided inSection3.6,anyaccruedbenefitsprovidedin Section3.7,andanyexpensereimbursementsdueand owingtoExecutiveas ofthedate of termination;and
(b) Executiveshallnotbeentitledto:(i)anyother salaryorcompensation;(ii)anybonus pursuanttoSection3.2;(iii) anyequityconsideration pursuanttoSection3.3; nor(iv) anyadditionalbenefitspursuanttoSection3.7;and
| (c) | Executiveshall returnthelaptopcomputerandcellulartelephonewithinfive |
(5)businessdays ofthedateof termination.
| 6.2 | TerminationbytheCompanyDue toExecutive'sInabilitytoPerformorDeath.Intheevent Executive's employmentandthisAgreementareterminated pursuantto |
Section5.3above,theCompany shallpaytoExecutive,orhisrepresentatives,allofthefollowing:
(a) Thepayments,ifany,referred to inSection6.1(a)aboveas of thedateoftermination; and
(b) Subject to compliance withSection409AoftheCode,anamountequaltothegreaterof (i) onehundredpercent (100%) ofExecutive'stargetbonusfortheyearinwhichthedate ofterminationoccursor (ii) abonus forsuchyearasmaybedetermined bytheCommitteein itssolediscretion. Thisamountshallbe paidintheformof alumpsum,less applicablestatutorydeductionsandwithholdings,as soonaspracticableafterthe dateoftermination,butnolater thanMarch15oftheyear immediatelyfollowingtheyearinwhichthedate ofterminationoccurs;and
| (c) | ForaterminationduetoInabilitytoPerformonly,andprovidedthatExecutive |
orhisrepresentativesignsa Release (asdefined in Section17),then theCompanyshallpayExecutive a severanceequal tosix(6)months ofExecutive’sBaseSalary at thetimeof termination.This severanceamount shallbepaid toExecutive inequalregular installmentsoverthesix (6)month periodpursuant to theCompany'sregular payroll periods,lessapplicablestatutorydeductionsand tax withholdings.Thefirst installmentshallbe paid toExecutiveonthe first payroll periodafterthedateof terminationand aftertheeffectivedateofthe Release;and
(d) ShouldExecutive orhisrepresentativestimelyelecttocontinuecoverageunderagrouphealthinsuranceplansponsoredbytheCompanyor one ofitsaffiliates andtimelymakethepremiumpayments,reimburseExecutiveona monthly basisfor the costof continuedcoverageundertheConsolidated OmnibusBudget ReconciliationActofl985 ("COBRA") or other applicable law forExecutiveandanyeligibledependentsuntil theearlierof (i) thedateExecutiveisnolongerentitledtocontinuationcoverageunderCOBRA or (ii) fortwelve(12)monthsafterthedate oftermination.
6.3 Terminationby theCompanyWithoutCauseand Withouta ChangeinControlor by Executivefor Good ReasonWithouta ChangeinControl.In theeventExecutive's employmentisterminatedpursuantto Sections 5.2or5.4above at any timeinwhichtherehasnotbeenaqualifyingChangeinControltermination, theCompanyshallpayExecutiveonthedateofterminationthe paymentsreferredtoinSection6.1(a)above,and provided thatExecutivesignsa Release (as definedinSection17),Executiveshallalso receiveallof thefollowing:
(a) Aseverance packageequaltothelesserof(i)twelve (12)months ofExecutive’s BaseSalaryatthetimeofterminationand(ii)the Base SalaryremainingundertheTermof thisAgreement.ThisseveranceamountshallbepaidtoExecutiveinequalregularinstallments over thetwelve (12)monthperiod pursuantto the Company's regularpayrollperiods,lessapplicablestatutorydeductions andtaxwithholdings.ThefirstinstallmentshallbepaidtoExecutiveonthefirstpayroll period after thedateofterminationand aftertheeffectivedateofthe Release;and
(b) Subjecttocompliance with Section 409AoftheCode,anamountequal tothegreaterof (i)(A)ifthedate ofterminationoccursbetweenJanuary1and June30,then twenty-fivepercent(25%)ofExecutive'stargetbonus forthe yearinwhich the dateof termination occursor(B)ifthe date ofterminationoccursbetweenJuly1andDecember31,thenfiftypercent (50%)of Executive'starget bonusfortheyearinwhichthedateofterminationoccurs; and (ii) a bonusforsuchyear asmaybedeterminedbytheCommitteeinitssolediscretion.This amountshallbepaid intheformofalumpsum,less applicablestatutorydeductionsandwithholdings,as soonaspracticable afterthedate oftermination,butnolaterthanMarch15oftheyearimmediatelyfollowingtheyearinwhichthedateoftermination occurs;
(c) Should Executiveorhisrepresentativestimelyelectto continue coverageunder agrouphealthinsuranceplansponsoredby theCompanyoroneofitsaffiliates andtimelymakethepremiumpayments,reimburse Executiveonamonthlybasisforthecost ofcontinued coverageundertheCOBRAforExecutiveandanyeligibledependentsuntiltheearlierof(i)thedateExecutiveisnolongerentitledtocontinuationcoverageunderCOBRAor(ii)fortwelve(12)monthsafterthedateoftermination;and
(d) Unlessotherwiseprovided intheequityawardagreement,allstock optionsandotherstockincentiveawardsheldbyExecutivewillbecomefullyvestedandimmediatelyexercisableand all restrictionsonanyrestrictedstockheldbyExecutivewillbe removed; provided,however,Executive shallnotbereleasedfrom theblack-outperiods forthenextfinancialreportingquarter
followingthe dateof termination or Securities Exchange Act of1934, as amended(the"ExchangeAct"),trading obligationstypicallyrequiredfor an executivein thisposition.
6.4 TerminationbytheCompanyWithoutCauseAfter aChange inControlor byExecutivefor Good Reason AfteraChangeinControl. IntheeventExecutive'semploymentis terminated pursuantto Sections5.2 or 5.4aboveduring theProtectionPeriod,the CompanyshallpayExecutiveon the date ofterminationthepaymentsreferredtoinSection6.1(a) above, andprovidedthatExecutivesignsaRelease (asdefined inSection17), Executiveshallalsoreceiveallofthefollowing:
(a) Subject tocompliance with Section 409A of theCode,a severancepackageequaltooneyearofExecutive'sBase Salaryimmediatelyprior to theChangeinControl.ThisseveranceamountshallbepaidtoExecutive inequalregular installmentsover a12-monthperiod pursuant totheCompany'sregularpayrollperiods,lessapplicablestatutorydeductionsand taxwithholdings.Thefirstinstallmentshallbe paid toExecutiveonthe firstpayrollperiodafter the date ofterminationandaftertheeffectivedateoftheRelease;and
(b) Subject tocompliancewith Section 409AoftheCode,an amountequaltothegreaterof (i) onehundred percent(100%)ofExecutive'stargetbonusfor theyearinwhich thedateof termination occurs or(ii) abonus forsuchyearasmaybedeterminedbytheCommitteeinitssolediscretion.This amountshallbepaid in the form ofalumpsum,lessapplicablestatutorydeductionsand withholdings,assoonaspracticableafterthe dateoftermination,butnolaterthan March15oftheyearimmediatelyfollowingtheyearinwhichthedateofterminationoccurs;and
(c) A one-timecashpaymentof fivehundredthousanddollars($500,000.00),lessapplicablestatutorydeductionsandtaxwithholdings,tobepaidwithinthirty(30)daysofthe dateoftermination;and
(d) ShouldExecutive orhisrepresentativestimelyelecttocontinue coverageunderagrouphealthinsuranceplansponsored bytheCompanyor one ofitsaffiliatesandtimelymakethepremiumpayments,reimburseExecutive onamonthlybasisforthecost of continued coverageundertheCOBRAforExecutiveandanyeligibledependentsuntil the earlierof (i)thedateExecutiveisnolongerentitledto continuationcoverageunderCOBRAor(ii)fortwelve(12)monthsafterthedateoftermination;and
(e) Allstockoptionsandother incentiveawardsheldbyExecutivewillbecomefullyvestedandimmediatelyexercisable andallrestrictionsonanyrestrictedstockheldbyExecutivewillberemoved;provided,however,Executiveshallnotbereleasedfromtheblack-outperiodsforthenextfinancialquarterfollowing thedate of terminationorExchangeAct,tradingobligations typicallyrequired for anexecutiveinthisposition.
| 7. | Successors and Assigns |
This Agreementispersonal in nature,andneither thisAgreementnoranypartof anyobligationhereinshallbe assignablebyExecutive.TheCompanyshallbeentitled to assign thisAgreement toanyaffiliate oftheCompanyor anypersonorentitythatassumestheownershipandcontrolofthe business oftheCompany.ThisAgreementshallinuretothebenefitofandshallbebindingupontheparties andtheirsuccessorsandassigns.
| 8. | Severability |
Shouldany term, provision,covenantor condition of this Agreement be heldto bevoidorinvalid,thesameshall not affectanyother term,provision,covenantorconditionof this Agreement,butsuchremaindershallcontinuein fullforceandeffectas though eachsuchvoidedterm,provision, covenant,orcondition isnotcontained herein.
| 9. | Governing Law and Venue |
This Agreementshallbegoverned by andconstruedinaccordancewiththelawsof the State ofColorado, excluding itschoice-of-lawprinciples.SubjecttoSections 4.5and10,andwithoutinanywaylimitingtheapplicabilityofbindingarbitration,eachoftheparties submitsto theexclusivejurisdictionofanystate orfederal courtsittingin Denver,Colorado inany actionorproceedingarising outofor relating tothis Agreementand furtheragreesthatall claimsinrespectoftheactionorproceeding may beheard anddeterminedinanysuchcourt to theextent that anycourt proceedingisnecessary inconnectionwithSections4.5and10,andfurther agreesnotto bringanyactionorproceedingarising outoforrelatingto this Agreementinanyothercourt.Eachoftheparties agreesthat afinaljudgmentinany action orproceedingsobroughtshallbe conclusiveandmay beenforcedbysuiton the judgmentorinanyothermannersoprovided byla w.
l0. Binding Arbitration
Except asprovidedinSection4.5, any and alldisputeswhich involve orrelate inanywayto thisAgreementand/ortoExecutive'semployment,Executive'sterminationofemploymentwiththeCompany orterminationof thisExecutive's,whetherinitiatedbyExecutive orbytheCompanyandwhether based oncontract, tort,statute,or commonlaw,shallbe submitted to andresolved byfinalandbindingarbitration as the exclusive methodfor resolving allsuchdisputes. The arbitrationshallbeprivateand confidentialand conducted in Denver,Colorado pursuantto theFederal Arbitration Actand applicable Coloradolaw,andpursuant to theapplicablerules oftheAmericanArbitrationAssociation("AAA")relating toemploymentdisputes,unlessthepartiesotherwisemutuallyagreeto modifytheAAA Rules.
Thepartydemanding arbitrationshallsubmita writtenclaimto the otherparty,settingoutthebasisoftheclaimorclaims,withinthe timeperiodof anyapplicablestatuteoflimitationsrelating tosuch claim(s). Iftheparties cannotmutuallyagreeuponanarbitrator,thenthepartiesshallselectaneutralarbitratorthrough theprocedures establishedby the AAA.ThearbitratorshallhavethepowersprovidedundertheColorado CodeofCivilProcedurerelating tothe arbitration ofdisputes,exceptasexpresslylimitedorotherwiseprovided inthisAgreement.Theparties shallhave therighttoreasonable discovery asmutuallyagreedoras determined bythearbitrator,includingatleast onedepositioneach,itbeingthegoalofthepartiestoresolveanydisputes asexpeditiouslyand economicallyasreasonablypracticable. Thepartiesagreetoshareequallyinthepaymentoftheadministrationcosts of the AAAarbitration,includingpaymentofthe fees forthearbitrator,andanyother costsdirectlyrelatedtotheadministrationofthe arbitration. Thepartiesshallotherwiseberesponsiblefor theirownrespectivecosts andattorneys' feesrelatingto thedispute,suchas depositioncosts,expertwitnessesandsimilarexpenses,exceptasotherwiseprovidedinthisAgreement totheprevailing party.
The arbitratormay award, if properly proven,anydamagesor remedy that a party couldrecover ina civillitigation,andshall award costsandreasonableattorneys' feesto the prevailing party.The award of the arbitratorshallbe issued inwriting, setting forththe basisfor the decision, and shall be binding on thepartiestothefullestextent permittedby law,subject to anylimitedstatutoryright toappealasprovidedbylaw. Judgment upon theaward ofthearbitratormay beenteredinany courthavingproperjurisdiction andenforced asprovided by law.
Thisagreementtoarbitrateis freely negotiated betweenExecutive and the Company and ismutuallyenteredintobetween theparties.Eachparty understandsand agreesthat itisgiving upcertainrightsotherwise affordedto itbycivilcourt actions, includingbut not limitedtothe right toa jury trial;provided,however,thateitherparty mayseekprovisionalremediesinacourtof competentjurisdictionasprovided pursuantto applicable law.
| 11. | Section Headings |
The sectionheadings hereinareinsertedonly as amatterof convenience andreferenceandin
noway define,limitor describethescope ofthis Agreementorthe intentof anyprovisionshereof.
| 12. | Compliance with Section 409A of the Code |
Notwithstanding anythingherein to the contrary,(a)ifat thetimeof Executive's termination of employmentwith theCompany Executiveisa "specified employee" as such termisdefinedinSection409Aof the Code and the regulationsthereunder,and the deferral ofthecommencementofanypaymentsorbenefitsotherwise payablehereunderas aresultofsuch terminationof employmentisnecessary in order to preventanyaccelerated or additionaltaxunderSection 409A of theCode,then theCompanywill defer the commencement of thepaymentofanysuchpayments or benefitshereunder(withoutanyreduction insuchpaymentsorbenefits ultimatelypaid or provided to Executive)until thedate that is six (6) months following Executive's termination of employment withtheCompany(or the earliest date asis permitted underSection 409A oftheCode) and (b)ifany otherpaymentsof moneyorother benefitsduetoExecutivehereundercould cause the applicationofan accelerated or additional taxunderSection 409A of theCode,such payments or other benefitsshallbedeferredifdeferral willmakesuchpayment or other benefits compliantunderSection 409A of the Code,orotherwisesuchpayment orotherbenefits shall be restructured, to the extent possible,inamanner,determinedbytheBoard,that doesnotcausesuchan accelerated or additional tax.Inthe eventthat paymentsunder thisAgreementare deferred pursuant to this Section12 inorder to prevent any acceleratedtaxor additionaltaxunder Section 409A of theCode,thensuchpaymentsshallbepaid at the timespecifiedunderthisSection12without anyinterestthereon.TheCompanyshallconsult withExecutiveingood faithregardingthe implementationof this Section12;provided thatneitherthe Companynorany ofitsemployees orrepresentativesshallhaveanyliability toExecutive withrespect thereto.Notwithstanding anything to the contrary herein,aterminationofemploymentshallnot bedeemed tohaveoccurredfor purposes ofanyprovisionofthis Agreement providingfor the paymentof amounts orbenefitsuponor followingatermination of employmentunlesssuch terminationisalsoa"Separationfrom Service" assuch termisdefined in Section 409A oftheCodeandtheregulations and guidance promulgated thereunder and, for purposes of anysuch provisionofthisAgreement,referencestoa“resignation,”“termination,” “terminationof employment,” orliketermsshall mean Separation fromService.For purposes of Section 409AoftheCode,eachpaymentmadeunderthis Agreement shallbe designatedas a "separatepayment"withinthemeaningofthe Section 409A ofthe
Code. Notwithstanding anythingtothecontraryherein,exceptto the extentany expense, reimbursement orin-kindbenefit provided pursuant to thisAgreementdoes notconstitute a "deferral of compensation" withinthe meaningof Section409AoftheCode: (x)the amountof expenses eligible forreimbursementorin-kindbenefitsprovided toExecutiveduringany calendar year winnotaffecttheamount ofexpenseseligibleforreimbursementorin-kindbenefits provided toExecutiveinany other calendar year, (y) thereimbursements forexpenses for which Executiveisentitled tobereimbursedshallbemadeon orbefore the lastdayof thecalendar yearfollowing thecalendaryearinwhichthe applicableexpenseisincurred, and (z)the right to paymentorreimbursementor in-kindbenefits hereunder maynot be liquidatedor exchangedforanyotherbenefit.
| 13. | Entire Agreement |
This Agreementcontainstheentire agreementofthepartiesrelatingtothesubjectmatterhereof, andthisAgreement supersedes andreplaces inallrespectsthe Original Agreement.Further,thepartiesheretohave made noagreements,representations,or warrantiesrelating to thesubjectmatterofthisAgreementthatarenotset forth otherwiseherein. Inthisregard,each of the partiesrepresentsand warrants totheotherparty thatsuchpartyisnot relyingon any promises orrepresentationsthat do notappear in writingherein.Each ofthepartiesfurtheragrees andunderstandsthat this Agreement can beamendedormodifiedonlybya written agreement signed by allparties.
| 14. | Notice |
Allnoticesrequired orpermitted under thisAgreementshallbe in writingandshallbe deemed effective: (a) upondelivery,ifdeliveredinperson; (b)upondelivery to FederalExpressorothersimilarcourierservice,markedfornext daydelivery,addressedas setforthbelow;(c)upondepositinUnitedStates Mailifsentbyregistered orcertifiedmail,returnreceiptrequested,addressed assetforth below;or (d)upon beingsentby facsimiletransmission,provided an originalismailed thesameday byregisteredor certifiedmail,returnreceiptrequested:
If to the Company: MusclePharm Corporation
Attn: Chief Executive Officer
4721 Ironton Street, Building A
Denver, Colorado 80239
Facsimile (800) 490-7165
Ifto Executive:
Brian Casutto
| 15. | Attorneys' Fees |
Intheeventthat anyparty shallbringan actionor proceedinginconnectionwiththe performance, breach or interpretation of this Agreement, then the prevailing party inanysuchactionor proceeding,asdetermined bythe arbitrator,court, or otherbody havingjurisdiction,shallbe entitled to recover fromthe losingpartyallreasonablecosts and expenses ofsuchaction or proceeding,including
reasonable attorneys' fees,court costs,costsofinvestigation,expert witness fees,and othercostsreasonably related tosuch action orproceeding.
| 16. | Assistance with Claims |
Executive agreesthat,forthe period beginningon the StartDate,andcontinuingfor a reasonable period after the terminationor expiration ofthisAgreement for anyreason,Executivewill assist the Companyin the defenseof anyclaimsthatmay be madeagainst the Company and will assisttheCompanyinthe prosecution ofany claims that maybemade bythe Company, to the extent such claims mayrelate toservices performedbyExecutive for the Company.Executive agrees to promptlyinformthe CompanyifExecutivebecomes awareof anylawsuitsorpotentialclaimsthatmaybefiledagainsttheCompany. For all assistanceoccurringafterterminationof Executive's employment by theCompany,the Company agrees to providereasonablecompensation to Executive forsuchassistance. Executive also agreesto promptlyinformthe Companyifasked toassistin anyinvestigationof the Company (oritsactions)that may relate toservicesperformedby Executive for the Company,regardlessof whether a lawsuithasbeenfiled against theCompany with respect tosuchinvestigation.
| 17. | ReleaseofClaims |
Executiveshallnot beentitledto receivetheseverancepayandbenefits underSections 6.2, 6.3, and6.4,asapplicable,unless(a) Executive executes and returns to the Company a Release(asdefined below)on or before the 50th day followingthedateofterminationor suchshortertimeasmaybeprescribedinthe Release,(b) suchReleaseshallnot havebeentimelyrevoked byExecutive,and(c)the dateoftermination constitutes aSeparationfromService,and providedfurther,however,that ifExecutiveviolateshiscontinuingobligationsunderSections4.1, 4.2, 4.3,or4.4,Executiveshallnot be entitledto receivesuchseverance pay or benefits andExecutiveshall immediatelyrepay to the Companyuponwrittendemandanyseverancepayorbenefitsthat already have been paid to Executive.Forpurposes ofthisAgreement,theterm"Release"meansa waiver andreleaseof claimsbyExecutivein the form prescribed by the Company, which formmayinclude,withoutlimitation, anagreementby Executivenotto disparage theCompany,itsaffiliates, and otherrelatedpersonsor entities,butwhichformshallnotincludeareleaseand waiver of claims for (i) indemnificationorfor coverageunderofficer anddirector liabilitypolicies,if applicable,(ii)claimswithrespecttothereimbursementofbusinessexpenses or with respecttobenefitswhichareineachcasetocontinueineffectafter terminationorexpirationofthis Agreementinaccordance withthetermsofthisAgreement,(iii)claimshemay have as aholderof options to acquire equitysecuritiesoftheCompany(whichshallbegovernedby the documents by which Executive wasgrantedsuchoptions)and(iv)claimshemayhaveas astockholderof the Company.
| 18. | Dodd-Frank Act and Other ApplicableLegal Requirements |
Executive agrees(i) to abide byanycompensationrecovery,recoupment,anti-hedging,or otherpolicy applicable to executives oftheCompany anditsaffiliates, asmaybeineffectfrom time totime,asapprovedbythe Board or adulyauthorized committee thereof or asrequiredby the Dodd-FrankWallStreetReformandConsumerProtectionAct of 2010 (the"Dodd-FrankAct")orotherapplicablelaw,and(ii)thatthe termsandconditionsofthisAgreementshallbe deemed automaticallyamendedasmaybenecessaryfromtimetotimetoensurecompliance by Executiveandthis Agreementwithsuchpolicies,theDodd-FrankAct,or otherapplicablelaw.
| 19. | Counterparts |
ThisAgreement maybeexecuted inanynumberofcounterparts, eachof whichshallbedeemed tobe anoriginal,but all of which together shall constitute but one and the same instrument.
EXECUTIVEHAS BEEN ADVISED THATHESHOULD SEEK INDEPENDENT REVIEW ANDADVICE FROMLEGAL COUNSEL AND TAX ADVISORS AS TO THE SCOPE AND POTENTIALTAXES WHICHCOULD ARISE FROMTHEAGREEMENT.
(Signature PageFollows)
IN WTINESS WHEREOF, this Agreement is executed as of the day and year first above written.
MusclePharm Corporation
By:/s/ Richard Estalella
Name: Richard Estalella
Title: President
Executive
By:/s/ Brian Casutto
Name: Brian Casutto
