Exhibit 10.4

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into this
November 22, 2016, by and among Nexsan Corporation (the “Company”), Robert B.
Fernander (“Executive”), and, solely as to Sections 3, 4, 9(b) and 10, Imation
Corporation (“Imation”), effective as of the consummation (the “Closing”) of the
transactions contemplated by that certain Stock Purchase Agreement by and
between Imation and NXSN Acquisition Corp. (“Purchaser”) (the “Stock Purchase
Agreement”).

 

RECITALS

 

WHEREAS, Imation has entered into the Stock Purchase Agreement, pursuant to
which Imation will contribute to the Company all of the issued and outstanding
capital stock of Connected Data, Inc. and then sell all of the shares of common
stock of the Company to Purchaser;

 

WHEREAS, Executive has substantial business knowledge and expertise in the
conduct of the business of the Company, and the Company desires to retain the
knowledge, expertise and experience of Executive to assist in the operations and
management of the Company; and

 

WHEREAS, the Company desires to employ Executive, and Executive is willing to be
employed by the Company as of the Closing, in each case on the terms and
conditions set forth herein, and with both Executive and the Company
understanding that this Agreement and the terms and conditions set forth herein
are conditioned on the Closing and the full funding of the Severance Payment (as
defined below) into escrow immediately upon the Closing in accordance with
Section 9(b) hereof, and if the Closing does not occur, or if the full funding
into escrow of the Severance Payment immediately upon the Closing does not
occur, then this Agreement shall be null and void.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein and for other good and valuable consideration, the receipt of which is
mutually acknowledged, the Company and Executive agree as follows:

 

1.          Employment; Term. The Company hereby agrees to employ Executive, and
Executive hereby accepts such employment with the Company, in each case, on the
terms and subject to the conditions hereinafter set forth. Executive’s
employment for purposes of this Agreement shall commence on the Closing.
Executive shall be employed by the Company at will for a period of six (6)
months from the Closing (“Term”), subject to the provisions of Sections 8, 9 and
10 below.

 

2.          Position.

 

(a)          During the Term, Executive shall serve as the Interim Chief
Executive Officer of the Company. In such position, Executive shall have such
executive duties and authority as shall be determined from time to time by the
Board of Directors (the “Board”).

 

(b)          During the Term, Executive will devote his full business time and
his best efforts to the performance of Executive’s duties hereunder (except for
paid time off provided for hereunder and periods of illness or incapacity) and
will not engage in any other business, profession or occupation for compensation
or otherwise which would conflict or interfere with the rendition of such
services to the Company either directly or indirectly, without the prior written
consent of the Board. Notwithstanding the foregoing, it shall not be a breach of
this Section 2(b) for the Executive to be concurrently employed as the Interim
CEO of Imation.

 

 

 

 

3.          Base Salary. As compensation for services rendered to the Company
during the Term, Executive shall receive a base salary at the aggregate annual
rate of $600,000, less applicable taxes and withholdings (hereinafter referred
to as the “Base Salary”). The Base Salary shall be payable in accordance with
the Company’s standard payroll schedule and procedures including applicable
withholdings or deductions. The Base Salary will be subject to adjustment
pursuant to the Company’s employee compensation policies in effect from time to
time or as otherwise determined by the Board. The Base Salary shall be payable
one-third (1/3, or $200,000) by Imation and two-thirds (2/3, or $400,000) by the
Company. The Base Salary shall be paid through the Company’s payroll, and
Imation shall wire its portion to the payroll provider designated by the Company
within three (3) days prior to the date of payment thereof; and the Company and
its agents shall hold any such wire transfers made to the Company or its agents
for the benefit of Executive until the net amounts of same are paid to Executive
and any lawful deductions from same are deposited as employment tax deposits
with the appropriate depositary institution(s).

 

4.          Change in Control Payment. Upon the consummation of (a) a sale of
all or substantially all of the assets of the Company; (b) a transfer, merger,
consolidation, or sale in which a majority of the outstanding equity immediately
prior to the transaction is held by another person or entity, or group of
persons or entities, immediately after the transaction; (c) a refinancing that
is a deemed a “Liquidity Event” by the Board; or (d) the first public offering
of the equity securities of the Company or a successor thereto for cash pursuant
to an effective registration statement under the Securities Act of 1933, as
amended, registered on Form S-1 (each, a “Liquidity Event”), in which the amount
of the relevant purchase price, investment or transaction or refinancing
proceeds is between $7 million and $37 million, Executive shall be entitled to
three percent (3%) of the Total Enterprise Value (as defined below) with respect
to the Liquidity Event (the “CIC Payment”) as long as Executive (i) is employed
by the Company at the time of the Liquidity Event; or (ii) was employed by the
Company in the six (6) months preceding the Liquidity Event; provided, however,
with respect to the foregoing clause (ii), in the event of a Liquidity Event
arising under (c) or (d) above, that Executive shall be entitled to receive the
CIC Payment to the extent payment thereof occurs prior to March 15 of the
calendar year following the year in which the Liquidity Event occurs, and if
payment of the CIC Payment would be made later than such date, Executive shall
only be entitled to receive the CIC Payment to the extent payment thereof would
not result in the assessment of taxes and/or penalties on Executive pursuant to
Section 409A of the Code. For the avoidance of doubt, a Liquidity Event shall
not include refinancing through a new debt facility or a new equity investment,
unless preferred shareholders of the Company receive liquidation preferences in
an event that is deemed a Liquidity Event by the Board. For purposes of this
Section 4, “Total Enterprise Value” shall mean the market value of the Company,
after taking into account both holders of debt and equity. The CIC Payment shall
be payable fifty percent (50%) by Imation and fifty percent (50%) by the
Company. Such CIC Payment shall be paid through the Company’s payroll, and
Imation shall wire its fifty percent (50%) portion to the payroll provider
designated by the Company within three (3) days prior to the date of payment
thereof; and the Company and its agents shall hold any such wire transfers made
to the Company or its agents for the benefit of Executive until the net amounts
of same are paid to Executive and any lawful deductions from same are deposited
as employment tax deposits with the appropriate depositary institution(s).

 

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5.          Employee Benefits and Paid Time Off. During the Term, Executive
shall be entitled to participate in the Company’s employee benefit plans as in
effect from time to time, on the same basis as those benefits are generally made
available to other peer executives of the Company and in accordance with the
terms of those plans as may be in existence from time to time. In addition to
those employee benefits, Executive will be entitled to accrue paid time off
(“PTO”) in accordance with the Company’s PTO policy. The Company hereby reserves
the right to alter its policies and/or amend its employee benefits plans and
programs at its sole discretion.

 

6.          Expense Reimbursement. During the Term, reasonable business expenses
(including travel expenses) incurred by Executive in the performance of
Executive’s duties hereunder shall be reimbursed by the Company in accordance
with Company policies in effect from time to time. Executive will be expected to
reimburse the Company for any expenses paid by the Company that would not be
eligible for reimbursement if paid by Executive. The Company acknowledges that
Executive resides and will primarily perform work in Austin, Texas, and will
regularly be travelling on Company business to and from his home base in Austin,
Texas, and all travel expense related to such business travel will be
reimbursable travel expense.

 

7.          Code Section 409A. A termination of employment shall not be deemed
to have occurred for purposes of any provision of this Agreement providing for
the payment of any amounts or benefits upon or following a termination of
employment unless such termination is also a “separation from service” within
the meaning of Section 409A of the Code and, for purposes of any such provision
of this Agreement, references to a “termination,” “termination of employment” or
like terms shall mean “separation from service.” Notwithstanding any other
provision herein, if Executive is deemed on the date of termination to be a
“Specified Employee,” as that term is defined in Section 409A of the Code, then
with regard to any payment or the provision of any benefit under this Agreement
that is considered deferred compensation under Section 409A of the Code payable
on account of a “separation from service” and that is not exempt from
Section 409A of the Code as involuntary separation pay or a short-term deferral
(or otherwise), such payment or benefit shall be made or provided at the date
which is the earlier of (i) the expiration of the six (6)-month period measured
from the date of such “separation from service” of Executive, and (ii) the date
that is ten (10) days after the date of Executive’s death (the “Delay Period”).
Upon the expiration of the Delay Period, all payments and benefits delayed
pursuant to this Section (whether they would have otherwise been payable in a
single sum or in installments in the absence of such delay) shall be paid or
reimbursed to Executive in a lump sum without interest, and any remaining
payments and benefits due under this Agreement shall be paid or provided in
accordance with the normal payment dates specified for them herein.

 

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8.          Termination by the Company for Cause or by Your Resignation. In the
event that Executive’s employment is terminated for Cause during the Term or by
Executive’s resignation during the Term, the Company shall have no further
financial obligations to Executive under this Agreement except for payment to
Executive of (a) Executive’s accrued, but unpaid wages or other benefits earned
through the date of separation to which Executive is otherwise legally entitled,
(b) any accrued but unused paid time off, (c) any unreimbursed expenses in
accordance with the Company’s policies, and (d) any other vested benefits or
vested amounts due and owed to Executive under the terms of any plan, program or
arrangement of the Company on the same basis as those benefits are generally
made available to other peer executives of the Company and in accordance with
the terms of those plans as may be in existence from time to time (collectively,
“Accrued Rights”). For purposes of this Agreement, “Cause” shall mean (i) the
willful and material failure by Executive to perform Executive’s material duties
with respect to the Company or its affiliates following Executive’s failure to
correct such failure within thirty (30) days after Executive’s receipt of
written notice of breach from the Company specifying the particulars of such
breach sufficiently to permit its cure; (ii) the willful or intentional engaging
by Executive in conduct within the scope of Executive’s employment that causes
material and demonstrable injury, monetarily or otherwise, to the Company; (iii)
Executive’s conviction for, or a plea of nolo contendere to, the commission of a
felony of any type or any crime related to the Company involving dishonesty,
misappropriation, breach of fiduciary duty, or moral turpitude; (iv) Executive
obtaining any personal profit not disclosed to and approved by the Board in
connection with any transaction entered into by, or on behalf of, or in relation
to, the Company; or (v) a material breach of Executive’s covenants set forth in
this letter agreement or violating any of the terms of the Company’s established
rules or policies which, if curable, is not cured to the Board’s reasonable
satisfaction within fifteen (15) days after written notice thereof to Executive,
it being agreed and understood that any such notice of material breach or
violation shall specify the particulars of any such breach or violation
sufficiently to permit its cure.

 

9.          Termination by the Company Without Cause or by Executive for Good
Reason. In the event that Executive’s employment is terminated by the Company
without Cause during the Term or by the Executive for Good Reason (as defined
below) during the Term, the Company shall have no further financial obligations
to Executive (or, as the case may be, to Executive’s heirs, devisees or estate)
under this Agreement except for payment to Executive of the following as
conditioned below:

 

(a)          Executive’s Accrued Rights; and

 

(b)          Subject to (i) the obligations and restrictions set forth in
subparagraph (c) below, and (ii) Executive’s execution and return of a severance
agreement, which shall, among other things, release the Company (and its
officers, directors, employees, agents, parents, affiliated entities, and
successors and assigns of any of them) from any and all claims, and which shall
be in a form and containing reasonable terms in the reasonable discretion of the
Board (the “Severance Agreement”), within twenty-one (21) days following the
Company’s presenting Executive with such Severance Agreement; and (iii)
Executive’s non-revocation of and continued compliance with the Severance
Agreement, Executive shall be entitled to a severance payment equal to $450,000,
subject to all applicable taxes and withholdings (“Severance Payment”), payable
as a lump sum on the Company’s next normal payroll processing at least five (5)
days following the expiration date of any revocation period (if applicable)
under the Severance Agreement. The Severance Payment shall be payable fifty
percent (50%) by Imation and fifty percent (50%) by the Company. Such Severance
Payment shall be paid through the Company’s payroll, and Imation shall wire its
fifty percent (50%) portion to the payroll provider designated by the Company
within three (3) days prior to the date of payment thereof; and the Company and
its agents shall hold any such wire transfers to the Company or its agents for
the benefit of Executive until the net amounts of same are paid to Executive and
any lawful deductions from same are deposited as employment tax deposits with
the appropriate depositary institution(s). Immediately upon Closing, the Company
and Imation shall deposit the gross amounts of their respective portions of the
Severance Payment with an escrow agent acceptable to Executive; and the escrow
agent’s maintaining and disbursement of such monies shall be in accordance with
and subject to escrow instructions acceptable to Executive. The parties shall
work in good faith to put in place an escrow agreement in connection with the
foregoing.

 

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(c)          Continuing Obligations. Notwithstanding the termination of
Executive’s employment, Executive agrees that the Severance Payment is intended
solely to provide a financial cushion while Executive searches for new
non-competitive employment and, therefore, Executive’s entitlement to obtain or
keep such monies is expressly conditioned upon and limited by the following:

 

(i)          Non-Disparagement. Following Executive’s employment with the
Company, Executive agrees not to defame, disparage or criticize the Company, its
business plan, procedures, products, services, development, finances, financial
condition, capabilities or other aspect of its business, or any of its officers,
directors, agents or assigns (and their direct and indirect shareholders,
members and partners, and directors and officers) in any medium (whether oral,
written, electronic or otherwise, whether currently existing or hereafter
created), to any person or entity, without limitation in time. Notwithstanding
the foregoing sentence, Executive may confer in confidence with Executive’s
advisors and make truthful statements as required by law or to the Board.

 

(ii)         Non-Solicitation and Non-Competition. Any right to receiving or
keeping any portion of the Severance Payment is expressly conditioned on
Executive refraining from violating any of the restrictive covenants in this
Agreement, including, but not limited to Sections 11 (Non-Solicitation) and 12
(Non-Competition) below. Thus, for purposes of clarification and without
limitation, if Executive were to violate the non-competition provision below in
Section 12 by commencing employment with a direct competitor in the data storage
industry in a prohibited geographic area during the Restricted Period, Executive
would be required to return any part of the Severance Payment already received
(including any lump sum payment) and any right to receiving additional payments
toward the maximum Severance Payment shall cease.

 

(iii)        Proprietary and Confidential Information. Any right to receiving or
keeping any portion of the Severance Payment is further conditioned on Executive
continuing compliance with the Proprietary Information and Inventions Agreement
and not otherwise misusing any Company confidential, proprietary or trade secret
information.

 

For purposes of this Agreement, “Termination by the Company Without Cause” shall
include but shall not be limited to the following circumstances: (a) Executive’s
death; or (b) Executive’s Disability, which shall be deemed to have occurred
when in the good faith judgment of the Board, Executive becomes physically or
mentally incapacitated and is therefore unable for a period of four (4)
consecutive months or for an aggregate of six (6) months in any twelve (12)
consecutive month period to perform Executive’s duties (such incapacity is
referred to herein as “Disability”). The Company will also comply with any
applicable federal and state disability and leave laws.

 

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For purposes of this Section 9 of the Agreement, Executive shall be entitled to
terminate employment for “Good Reason” by written notice to the Company of such
termination within sixty (60) days after any of the following events occur: (a)
a material diminution occurs in the Executive’s title or duties as Interim Chief
Executive Officer; (b) the Company requires that the Executive change his
primary residence away from Austin, Texas, without giving Executive at least
nine (9) months’ advance notice, or without a reasonable increase in Executive’s
compensation commensurate with the increased cost of living in the new locale to
which the Company has requested the Executive to relocate, or without providing
reasonable relocation benefits to make the Executive whole for all reasonable
costs relative to the requirement that he relocate his family residence from
Austin, Texas to elsewhere; or (c) a Change in Control (as defined below)
occurs. If any such events occur, then Executive shall be deemed to have been
constructively discharged and Executive shall have the right to terminate his
employment for Good Reason and receive the severance benefits described in this
Agreement, provided that Executive notifies the Board of his election to
terminate employment for Good Reason within sixty (60) days following any such
event and the Board has not cured such event within ten (10) business days after
the Board receives such notification. Notwithstanding anything herein to the
contrary, if Executive’s employment terminates during the Term due to the Good
Reason trigger set forth in the foregoing subsection (c), (i) Imation shall be
solely responsible for payment of the Severance Payment, (ii) such Severance
Payment shall be paid through the Company’s payroll, and Imation shall wire the
Severance Payment to the payroll provider designated by the Company within three
(3) days prior to the date of payment thereof, and (iii) the Company and its
agents shall hold any such wire transfers to the Company or its agents for the
benefit of Executive until the net amounts of same are paid to Executive and any
lawful deductions from same are deposited as employment tax deposits with the
appropriate depositary institution(s).

 

For purposes of this Section 9 of the Agreement, “Change in Control” means the
occurrence of any of the following events that qualifies as a “change in control
event” (within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(i))
with respect to the Company:

 

(1)a majority of the members of the Board is replaced during any twelve (12)
month period by directors whose appointment or election is not endorsed by a
majority of the members of the Board before the date of the appointment or
election;

 

(2)any one person, or more than one person acting as a group (as determined
under Treasury Regulation Section 1.409A-3(i)(5)(vii)(C)) acquires substantially
all of the Company’s assets (an “Asset Sale”), unless the individuals who
comprise the Board immediately prior to such Asset Sale constitute a majority of
the board of directors or other governing body of either the entity that
acquired such assets in such Asset Sale or its parent; or

 

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(3)any other transaction is consummated with respect to the Company that
qualifies as a “change in control event” (within the meaning of Treasury
Regulation Section 1.409A-3(i)(5)(i)).

 

10.         Termination Upon Expiration of Term. Executive’s employment under
this Agreement shall automatically expire upon the expiration of the Term. In
the event of such termination upon the expiration of the Term, the Company shall
have no further financial obligations to Executive (or, as the case may be, to
Executive’s heirs, devisees or estate) under this Agreement except for payment
to Executive of the Accrued Rights and the Severance Payment described in and
pursuant to the terms and conditions of Section 9; provided, that
notwithstanding anything herein to the contrary, (i) Imation shall be solely
responsible for payment of the Severance Payment in the event of a termination
of Executive’s employment upon expiration of the Term, (ii) such Severance
Payment shall be paid through the Company’s payroll, and Imation shall wire the
Severance Payment to the payroll provider designated by the Company within three
(3) days prior to the date of payment thereof, and (iii) the Company and its
agents shall hold any such wire transfers to the Company or its agents for the
benefit of Executive until the net amounts of same are paid to Executive and any
lawful deductions from same are deposited as employment tax deposits with the
appropriate depositary institution(s).

 

11.         Non-Solicitation.

 

(a)          During the Restricted Period (as defined below), Executive shall
not, whether on Executive’s own behalf or on behalf of or in conjunction with
any Person, directly or indirectly;

 

(i)          solicit or encourage any employee of the Company or its affiliates
to leave the employment of the Company or its affiliates;

 

(ii)         hire any such employee who was employed by the Company or its
affiliates as of the date of Executive’s termination of employment with the
Company or who left the employment of the Company or its affiliates coincident
with, or within one (1) year prior to or after, the termination of Executive’s
employment with the Company;

 

(iii)        solicit or encourage any person that serves as a contractor or
consultant of the Company or its affiliates to discontinue providing services to
the Company or any affiliate of the Company;

 

(iv)        call on, solicit or service any customer or client of the Company or
its affiliates with the intent of selling or attempting to sell any service or
product the same or substantially similar to the services or products sold by
the Company or its affiliates; or

 

(v)         in any way materially interfere with the relationship between the
Company or its affiliates and any customer, supplier, licensee or other business
relation (or any prospective customer, supplier, licensee or other business
relationship) of the Company or any of its affiliates (including, without
limitation, by making any negative or disparaging statements or communications
regarding the Company, any of its affiliates or any of their operations,
officers, directors or investors).

 

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(b)          It is expressly understood and agreed that although Executive and
the Company consider the restrictions contained in this Section to be
reasonable, if a final judicial determination is made by an arbitrator or court
of competent jurisdiction that the time or territory or any other restriction
contained in this Agreement is an unenforceable restriction against Executive,
the provisions of this Agreement shall not be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such maximum
extent as such court may judicially determine or indicate to be enforceable.
Alternatively, if any court of competent jurisdiction or arbitrator finds that
any restriction contained in this Agreement is unenforceable, and such
restriction cannot be amended so as to make it enforceable, such finding shall
not affect the enforceability of any of the other restrictions contained herein.

 

(c)          For purposes of this Agreement, “Restricted Period” shall mean the
period commencing on the Closing and ending twelve (12) months following the
conclusion of Executive’s employment or the cessation of severance payments,
whichever is shorter, whether such employment ends prior to or at the conclusion
of the Term.

 

(d)          The existence of any claim or cause of action by Executive against
the Company or any of its affiliates, whether predicated on this Agreement or
otherwise, will not constitute a defense to the enforcement by the Company of
the provisions of Sections 11, 12 or 13, which Sections will be enforceable
notwithstanding the existence of any breach by the Company. Notwithstanding the
foregoing, Executive will not be prohibited from pursuing such claims or causes
of action against the Company. Executive consents to the Company notifying any
future employer of Executive’s obligations under Section 11, 12 and 13 of this
Agreement and Company agrees to provide Executive copies of any such written
notices contemporaneously with any such transmittal to others.

 

(e)          In the event of any breach or violation by Executive of this
Section 11, the Restricted Period will be tolled until such breach or violation
has been duly cured.1

 

12.          Non-Competition.

 

(a)          During the Restricted Period, Executive shall not (without the
express written agreement of the Board), whether on Executive’s own behalf or on
behalf of or in conjunction with any other person or entity, directly or
indirectly whether as owner, partner, investor, consultant, agent, executive,
co-venturer or otherwise (other than through ownership of publicly-traded
capital stock of a corporation which represents less than two percent (2%) of
the outstanding capital stock of such corporation), (i) compete with the Company
or any parent, subsidiary or affiliate hereof in any business activities
relating to the data storage industry in any state in the United States which
the Company or any parent, subsidiary or affiliate thereof conducts business or
sells products or services relating to the data storage industry, or (ii)
undertake any planning for any business competitive with the Company or any
parent, subsidiary or affiliate thereof relating to the data storage industry in
any state in the United States which the Company or any parent, subsidiary or
affiliate thereof conducts such business or sells such products or services.

 

 

1 The non-prevailing party to any action or proceeding to enforce any provision
of this Agreement or to obtain damages as a result of a breach of this Agreement
or to enjoin any breach of this Agreement shall reimburse the prevailing party
for any and all reasonable costs and expenses (including attorneys’ fees)
incurred by the prevailing party in connection with such action or proceeding.

 

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(b)          It is expressly understood and agreed that although Executive and
the Company consider the restrictions contained in this Section to be
reasonable, if a final judicial determination is made by an arbitrator or court
of competent jurisdiction that the time or territory’ or any other restriction
contained in this Agreement is an unenforceable restriction against Executive,
the provisions of this Agreement shall not be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such maximum
extent as such court may judicially determine or indicate to be enforceable.
Alternatively, if any court of competent jurisdiction or arbitrator finds that
any restriction contained in this Agreement is unenforceable, and such
restriction cannot be amended so as to make it enforceable, such finding shall
not affect the enforceability of any of the other restrictions contained herein
or any other provision of this Agreement.

 

(c)          The existence of any claim or cause of action by Executive against
the Company or any of its affiliates, whether predicated on this Agreement or
otherwise, will not constitute a defense to the enforcement by the Company of
the provisions of Sections 11, 12 or 13, which Sections will be enforceable
notwithstanding the existence of any breach by the Company. Notwithstanding the
foregoing. Executive will not be prohibited from pursuing such claims or causes
of action against the Company. Executive consents to the Company notifying any
future employer of Executive’s obligations under Sections 11, 12, and 13 of this
Agreement and Company agrees to provide Executive copies of any such written
notices contemporaneously with any such transmittal to others.

 

(d)          In the event of a breach or violation by Executive of this
Section 12 the Restricted Period will be tolled until such breach or violation
has been duly cured.

 

(e)          The non-prevailing party to any action or proceeding to enforce any
provision of this Agreement or to obtain damages as a result of a breach of this
Agreement or to enjoin any breach of this Agreement shall reimburse the
prevailing party for any and all reasonable costs and expenses (including
attorneys’ fees) incurred by the prevailing party in connection with such action
or proceeding.

 

13.         Specific Performance. Executive acknowledges and agrees that the
Company’s remedies at law for a breach or threatened breach of any of the
provisions of Sections 11 or 12 would be inadequate and the Company would suffer
irreparable damages as a result of such breach or threatened breach. In
recognition of this fact, Executive agrees that, in the event of such a breach
or threatened breach, in addition to any remedies at law. the Company shall be
entitled to equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction or any other equitable
remedy that may then be available under the laws of the State of Texas.

 

14.         Proprietary Information and Inventions Agreement. Executive will be
required, as a condition of employment with the Company, to sign the Company’s
Proprietary Information and Inventions Agreement, a copy of which is attached
hereto as Exhibit A.

 

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(a)          For the avoidance of doubt, the Proprietary Information and
Inventions Agreement does not prohibit or restrict Executive (or Executive’s
attorney) from responding to any inquiry about the Agreement or its underlying
facts and circumstances by the Securities and Exchange Commission (SEC), the
Financial Industry Regulatory Authority (FINRA), any other self-regulatory
organization or governmental entity, or making other disclosures that are
protected under the whistleblower provisions of federal law or regulation.
Executive understands and acknowledges that he does not need the prior
authorization of the Company to make any such reports or disclosures and that he
is not required to notify the Company that he has made such reports or
disclosures.

 

(b)           Executive understands that Executive may, without informing the
Company prior to any such disclosure, disclose Proprietary Information, as
defined in the Proprietary Information and Inventions Agreement (i) in
confidence to a federal, state, or local government official, either directly or
indirectly, or to an attorney, solely for the purpose of reporting or
investigating a suspected violation of law or (ii) in a complaint or other
document filed in a lawsuit or other proceeding, if such filing is made under
seal. Additionally, without informing the Company prior to any such disclosure,
if Executive files a lawsuit against the Company for retaliation for reporting a
suspected violation of law, Executive may disclose Proprietary Information to
his attorney and use the Proprietary Information in the court proceeding or
arbitration, provided that Executive files any document containing the
Proprietary Information under seal and does not otherwise disclose the
Proprietary Information, except pursuant to court order. Without prior
authorization of the Company, however, the Company does not authorize Executive
to disclose to any third party (including any government official or any
attorney Executive may retain) any communications that are covered by the
Company’s attorney-client privilege.

 

15.         Miscellaneous.

 

(a)          Tax Matters. All forms of compensation referred to in this letter
agreement are subject to reduction to reflect applicable withholding and payroll
taxes and other deductions required by law. You are encouraged to obtain your
own tax advice regarding your compensation from the Company. You agree that the
Company does not have a duty to design its compensation policies in a manner
that minimizes your tax liabilities, and you will not make any claim against the
Company or the Board related to tax liabilities arising from your compensation.

 

(b)          Governing Law; Arbitration.

 

(i)          Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas or applicable federal law, except
that the Federal Arbitration Act shall govern the arbitration clauses of this
Agreement.

 

(ii)         Arbitration of all Disputes. All complaints, causes of action,
disputes, claims or controversies (“claims”) between Executive and Company,
including any past, present, or future claims, whether or not arising out of
Executive’s employment (or its termination), that the Company may have against
Executive or that Executive may have against any the Company or its officers,
directors, employees or agents, parent, subsidiary affiliated entities, or
successors and assigns of any of them, will be resolved through binding
arbitration. The claims covered by this arbitration agreement include all
disputes that the Company or Executive could otherwise pursue in state or
federal court including, but not limited to, claims based on any state, federal,
or local statute, regulation or ordinance (including claims for employment
discrimination, retaliation or harassment, claims for unpaid wages or violation
of state or federal wage and hour laws), as well as common law claims (including
claims for breach of contract or breach of the implied covenant of good faith
and fair dealing, wrongful discharge, defamation, misrepresentation, fraud, and
infliction of emotional distress).

 

 10 

 

 

The following claims are not subject to arbitration under this Agreement: (1)
claims for workers’ compensation benefits, state disability benefits, state
unemployment benefits; (2) administrative charges filed with a federal, state or
local government office or agency, such as the Equal Employment Opportunity
Commission (“EEOC”) or any comparable state anti-discrimination agency, or the
National Labor Relations Board (“NLRB”); and (3) any claims that, as a matter of
law, cannot legally be subject to arbitration. Nothing in these provisions shall
preclude either Executive or the Company from seeking temporary or injunctive
relief in a court prior to determining the claim in arbitration.

 

To the maximum extent permitted by law, Executive hereby waives any right to
bring on behalf of persons other than Executive, or to otherwise participate
with other persons in, any class or collective action (a type of lawsuit in
which one or several persons sue on behalf of a larger group of persons).

 

The arbitration shall be conducted by a single neutral arbitrator in accordance
with the then-current Employment Arbitration and Mediation Procedures of the
American Arbitration Association (“AAA”), which can be viewed at
http://www.adr.org/employment. The Company will provide Executive with a copy of
these rules upon request. The arbitration shall take place in the county of the
state in which Executive is or was last employed by the Company, with the
understanding the such location is currently Austin, Texas. The Company will pay
the arbitrator’s fee and will bear all administrative charges by AAA. All
parties shall be entitled to engage in reasonable pre-hearing discovery to
obtain information to prosecute or defend the asserted claims. Any disputes
between the parties regarding the nature or scope of discovery shall be decided
by the arbitrator. The arbitrator shall hear and issue a reasoned written ruling
upon any dispositive motions brought by either party, including but not limited
to, motions for summary judgment or summary adjudication of issues.

 

After the hearing, the arbitrator shall issue a reasoned written decision
setting forth the award, if any, and explaining the basis therefore. The
arbitrator shall have the powder to award any type of relief that would be
available in court. The arbitrator’s award shall be final and binding upon the
parties and may be entered as a judgment in any court of competent jurisdiction.
In the event of any conflict in the arbitration procedures set forth in this
Agreement and the AAA rules specified above, the AAA rules shall control.

 

Notwithstanding the foregoing, and regardless of what is provided by AAA’s
rules, to the extent that it is legally permissible to do so, the arbitrator
will not have authority or jurisdiction to consolidate claims of different
employees into one proceeding, nor shall the arbitrator have authority or
jurisdiction to hear the arbitration as a class action. As noted above,
Executive has waived any right to bring any class or collective action. To the
extent that the class or collective action waiver described above is not
enforceable, the issue of whether to certify any alleged or putative class for a
class action proceeding must be decided by a court of competent jurisdiction.
The arbitrator will not have authority or jurisdiction to decide class
certification or collective action issues. Until any class certification or
collective action issues are decided by the court, all arbitration proceedings
shall be stayed, and the arbitrator shall take no action with respect to the
matter. However, once any issues regarding class certification or collective
action have been decided by the court, the arbitrator will have authority to
decide the substantive claims.

 

 11 

 

 

This arbitration provision is governed by the Federal Arbitration Act (9 U.S.C.
§ 1, et seq.) and evidences a transaction involving commerce. If the Federal
Arbitration Act is held not to apply, the arbitration law of the State of Texas
shall apply. We intend that this Agreement be limited to those claims that may
legally be subject to a pre-dispute arbitration agreement under applicable law.
A court or arbitrator construing this Agreement may therefore modify or
interpret it to render it enforceable.

 

(c)          Entire Agreement/Amendments. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof and those
incorporated herein.

 

(d)          No Waiver. The failure of a party to insist upon strict adherence
to any term of this Agreement on any occasion shall not be considered a waiver
of such party’s rights or deprive such party of the right thereafter to insist
upon strict adherence to that term or any other term of this Agreement.

 

(e)          Severability. In the event that any one or more of the provisions
of this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not be affected thereby.

 

(f)          Assignment. This Agreement and all of Executive’s rights and duties
hereunder, shall not be assignable or delegable by Executive. Any purported
assignment or delegation by Executive in violation of the foregoing shall be
null and void ab initio and of no force or effect. This Agreement may be
assigned by the Company to a person or entity that, is an affiliate or a
successor in interest to substantially all of the business operations of the
Company. Any assignment of this Agreement by the Company or Executive shall not
release the Company or Executive, respectively, of its or his obligations under
this Agreement.

 

(g)          Successors; Binding Agreement. This Agreement shall inure to the
benefit of and be binding upon personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees,

 

(h)          Prior Agreements. This Agreement supersedes all prior agreements
and understandings (including verbal agreements) between Executive and the
Company or Imation and/or their affiliates regarding the terms and conditions of
Executive’s employment with the Company and/or its affiliates.

 

 12 

 

 

(i)          Corporate Opportunities. Executive will submit to the Board all
business, commercial and investment opportunities or offers presented to
Executive or of which Executive becomes aware which relate to the businesses of
the Company or its subsidiaries as such businesses of the Company or its
subsidiaries exist at any time during the period in which Executive is employed
by the Company (“Corporate Opportunities”). Unless approved by the Board,
Executive will not accept or pursue, directly or indirectly, any Corporate
Opportunities on Executive’s own behalf.

 

(j)          Counterparts. This Agreement may be executed by facsimile or PDF
signature and in two (2) or more counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.

 

(k)          Executive’s Representations. Executive hereby represents and
warrants to the Company that (i) he has entered into this Agreement of his own
free will for no consideration other than as referred to herein, (ii) the
execution, delivery and performance of this Agreement by Executive does not and
will not conflict with, breach, violate or cause a default under any contract,
agreement, instrument, order, judgment or decree to which Executive is a party
or by which Executive is bound, (iii) Executive is not a party to or bound by
any employment, noncompetition, confidentiality or other similar agreement with
any other Person except prior employers, and Executive represents and warrants
that none of said prior agreements prohibit or in any way interfere with
Executive’s performance under this Agreement, and (iv) upon the execution and
delivery of this Agreement by the Company, this Agreement will be the valid and
binding obligation of Executive, enforceable in accordance with its terms.
Executive hereby acknowledges and represents that Executive has had the
opportunity to consult with independent legal counsel regarding Executive’s
rights and obligations under this Agreement and that Executive fully understands
the terms and conditions contained herein, and that the parties have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.

 

(l)          Time of the Essence. Time shall be of the essence in connection
with all payments promised in this Agreement.

 

[Signature Page Follows]

 

 13 

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

 

  “COMPANY”       Nexsan Corporation

 

  By: /s/ Danny Zheng   Name: Danny Zheng   Title: Secretary

 

  “IMATION” (solely as to Sections 3, 4, 9(b) and 10)       Imation Corp.

 

  By: /s/ Joseph A. De Perio   Name: Joseph A. De Perio   Title: Non-Executive
Chairman

 

  “EXECUTIVE”       /s/ Robert B. Fernander   Robert B. Fernander

 

 14 

 

  

Exhibit A

 

PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

 

The following confirms my agreement with Nexsan Corporation (“Company”) and I,
Robert B. Fernander, that is a material part of the consideration for my
employment by Company:

 

1.          I have not entered into, and I agree I will not enter into, any
agreement either written or oral in conflict with this Agreement or my
employment with Company. I will not violate any agreement with or rights of any
third party or. except as expressly authorized by Company in writing hereafter,
use or disclose any own or any third party’s confidential information or
intellectual property when acting within the scope of my employment or otherwise
on behalf of Company. Further, I have not retained anything containing any
confidential information of a prior employer or other third party, whether or
not created by me.

 

2.          Company shall own all right, title and interest (including all
intellectual property rights of any sort throughout the world) relating to any
and all inventions, works of authorship, designs, know-how, ideas and
information made or conceived or reduced to practice, in whole or in part, by me
in connection with my employment with Company to and only to the fullest extent
allowed by law (“Inventions”) and I will promptly disclose all Inventions to
Company. This provisions in this Agreement requiring you to assign, or offer to
assign, any of your rights in an Invention shall not apply to an Invention that
you developed entirely on your own time without using the Company’s equipment,
supplies, facilities, or trade secret information except for those inventions
that either (A) Relate at the time of conception or reduction to practice of the
invention to the Company’s business, or actual or demonstrably anticipated
research or development of the Company; or (B) Result from any work performed by
the you for Company. Without disclosing any third party confidential
information. I will disclose anything I believe is excluded by this Agreement so
that the Company can make an independent assessment. I hereby make all
assignments necessary to accomplish the foregoing. I shall assist Company, at
Company’s expense, to further evidence, record and perfect such assignments, and
to perfect, obtain, maintain, enforce, and defend any rights specified to be so
owned or assigned. I irrevocably designate and appoint Company as my agent and
attorney-in-fact, coupled with an interest and with full power of substitution;
to act for and in my behalf to execute and file any document and to do all other
lawfully permitted acts to further the purposes of the foregoing. If I wish to
clarify anything created by me prior to my employment that relates to Company’s
actual or proposed business, I have listed it on the attached disclosure in a
manner that does not violate any third party rights or disclose any confidential
information. Without limiting the above or Company’s other rights and remedies,
if, when acting within the scope of my employment or otherwise on behalf of
Company, I use or disclose my own or any third party’s confidential information
or intellectual property (or if any Invention cannot be fully made, used,
reproduced, or distributed without using or violating the foregoing). Company
will have and I hereby grant Company a perpetual, irrevocable, worldwide,
royalty-tree, fully paid-up, non-exclusive, sublicensable right and license to
exploit and exercise all such confidential information and intellectual property
rights.

 

 15 

 

 

3.          To the extent allowed by law, the foregoing paragraph includes all
rights of paternity, integrity, disclosure and withdrawal and any other rights
that may be known as or referred to as “moral rights,” “artist’s rights,” “droit
moral” or the like (collectively “Moral Rights”). To the extent I retain any
such Moral Rights under applicable law, I hereby ratify and consent to any
action that may be taken with respect to such Moral Rights by or authorized by
Company and agree not to assert any Moral Rights with respect thereto. I will
confirm any such ratifications, consents and agreements from time to time as
requested by Company.

 

4.          I agree that all Inventions and all other business, technical and
financial information (including, without limitation, the identity of and
information relating to customers or employees) I develop, learn or obtain
during the my employment that relate to Company or the business or demonstrably
anticipated business of Company or that are received by or for Company in
confidence, constitute “Proprietary Information.” I will hold in confidence and
not disclose or. except within the scope of my employment, use any Proprietary
Information. Upon termination of my employment, I will promptly return to
Company all items containing or embodying Proprietary Information (including all
copies), except that I may keep my personal copies of (i) my compensation
records, (ii) materials distributed to shareholders or Directors generally (to
the extent I remain a Director) and (iii) this Agreement. I also recognize and
agree that I have no expectation of privacy with respect to Company’s
telecommunications, networking or information processing systems (including,
without limitation, stored computer files, email messages and voice messages)
and that my activity and any files or messages on or using any of those systems
may be monitored at any time without notice.

 

5.          I agree that my obligations under this Agreement shall continue in
effect after termination of my employment, regardless whether such termination
is voluntary or involuntary on my part, and that Company is entitled to
communicate my obligations under this Agreement to any future employer or
potential employer of mine, provided that I receive a copy of such
communications in a timely manner.

 

6.          This Agreement is fully assignable and transferable by Company, but
any purported assignment or transfer by me is void. I also understand that any
breach of this Agreement will cause irreparable harm to Company for which
damages would not be an adequate remedy, and, therefore, Company will be
entitled to injunctive relief with respect thereto in addition to any other
remedies and without any requirement to post bond.

 

I HAVE READ THIS PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT CAREFULLY AND
I UNDERSTAND AND ACCEPT THE OBLIGATIONS WHICH IT IMPOSES UPON, ME WITHOUT
RESERVATION.

 

November 22, 2016   /s/ Robert B. Fernander     Robert B. Fernander      
Accepted and Agreed to:    

 

 

/s/ Danny Zheng   By: Danny Zheng   Title: Secretary  

 

 16 

 

 

Disclosure of Inventions

 

Title   Date   Identifying Number
or Brief Description                                                            
                                                 

 

Disclosure of Advisory Activities

 

Title     I-O Switch     SSG     FLM TV                                        
     

  

__ No inventions or improvements

 

__ Additional Sheets Attached

 

Signature of Employee: /s/ Robert B. Fernander  

 

Print Name of Employee: Robert B. Fernander  

 

Date: November 22, 2016

 

 17