EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), dated as of January 4, 2001
between NEXSAN CORPORATION ("Company") and DIAMOND LAUFFIN ("Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to employ Executive as its Executive Vice
President, 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 the
Executive Vice President, 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 $250,000 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, 2,000,000 (Two Million) 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: 32 South Wendy Drive
Newbury Park, CA 91320
If to Company:
Nexsan Corporation
C/O Beechtree Capital, Ltd.
1 Rockefeller Plaza
New York, NY 10020
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and to
RubinBaum LLP
30 Rockefeller Plaza
New York, NY 10112
Attention: Michael J. Emont, 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
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/ Martin Boddy
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Title: CEO
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/s/ Diamond Lauffin
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DIAMOND LAUFFIN
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