NAVISITE, INC. Separation Agreement
EXHIBIT
10.52
NAVISITE, INC.
This Separation Agreement (the “Agreement”) is made and entered into by and between
NaviSite, Inc., a Delaware corporation (the “Company”), and you, R. Xxxxxx Xxxxxxxxxxx
(the “Employee”), as of April 13, 2009.
WHEREAS, the Company recognizes that, as is the case with many publicly held corporations, the
possibility of a Change of Control may exist and that such possibility may result in the departure
or distraction of key personnel to the detriment of the Company, its stockholders and its
customers.
WHEREAS, in order to induce you to remain in its employ, the Company agrees that you shall
receive the benefits set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the
parties agree as follows:
1. Certain Definitions. As used herein, the following terms shall have the
meanings set forth below:
(a) “Change of Control” shall mean the first to occur of any of the following:
(i) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange
Act”)) (a “Person”) of beneficial ownership of any capital stock of the Company if,
after such acquisition, such Person beneficially owns (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) 50% or more of either (x) the then-outstanding shares of common stock of
the Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the
then-outstanding securities of the Company entitled to vote generally in the election of directors
(the “Outstanding Company Voting Securities”); provided, however, that for purposes of this
subsection (i), any acquisition directly from the Company shall not constitute a Change of Control;
or
(ii) such time as the Continuing Directors (as defined below) do not constitute a
majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the
Company), where the term “Continuing Director” means at any date a member of the Board (x) who was
a member of the Board on the date of the initial adoption of this Plan by the Board or (y) who was
nominated or elected subsequent to such date by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election or whose election to the Board was
recommended or endorsed by at least a majority of the directors who were Continuing Directors at
the time of such nomination or election; provided, however, that there shall be excluded from this
clause (y) any individual whose initial assumption of office occurred as a result of an actual or
threatened election contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents, by or on behalf of a person other than the Board;
or
(iii) the consummation of a merger, consolidation, reorganization, recapitalization or
share exchange involving the Company or a sale or other disposition of all or substantially all of
the assets of the Company (a “Business Combination”), unless, immediately
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following such Business Combination, each of the following two conditions is satisfied: (x) all or
substantially all of the individuals and entities who were the beneficial owners of the
Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors, respectively, of the resulting
or acquiring corporation in such Business Combination (which shall include, without limitation, a
corporation which as a result of such transaction owns the Company or substantially all of the
Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring
corporation is referred to herein as the “Acquiring Corporation”) in substantially the same
proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, respectively, immediately prior to such Business Combination and (y) no Person
(excluding any employee benefit plan (or related trust) maintained or sponsored by the Company or by
the Acquiring Corporation) beneficially owns, directly or indirectly, 40% or more of the
then-outstanding shares of common stock of the Acquiring Corporation, or of the combined voting
power of the then-outstanding securities of such corporation entitled to vote generally in the
election of directors (except to the extent that such ownership existed prior to the Business
Combination); or
(iv) the liquidation or dissolution of the Company.
Notwithstanding anything to the contrary, the following acquisitions shall not constitute a Change
of Control event: (A) any acquisition directly from the Company (excluding an acquisition pursuant
to the exercise, conversion or exchange of any security exercisable for, convertible into or
exchangeable for common stock or voting securities of the Company, unless the Person exercising,
converting or exchanging such security acquired such security directly from the Company or an
underwriter or agent of the Company), (B) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by the Company, (C) any
acquisition by any corporation pursuant to a Business Combination (as defined below) which complies
with clauses (x) and (y) of subsection (iii) of this definition or (D) any acquisition by Atlantic
Investors, LLC or its affiliates (each such party is referred to herein as “ClearBlue”) of any
shares of common stock.
(b) “Cause” shall mean (i) an intentional act of fraud, embezzlement or theft in
connection with your duties to the Company or in the course of your employment with the Company,
(ii) your willful engaging in gross misconduct which is demonstrably and materially injurious to
the Company, (iii) your willful and continued failure to perform substantially your duties with the
Company or one of its affiliates (other than any such failure resulting from incapacity due to
physical or mental illness), which such failure is not cured within five (5) days after a written
demand for substantial performance is delivered to you by the Company which specifically identifies
the manner in which the Company believes that you have not substantially performed your duties. For
purposes of this Subsection, no act or failure to act on your part shall be deemed “willful” unless
done or omitted to be done by you not in good faith and without reasonable belief that your action
or omission was in the best interest of the Company.
(c) “Date of Termination” shall have the meaning set forth in Section 2(c).
(d) “Disability” shall be deemed to have occurred if, as a result of incapacity due to
physical or mental illness, you shall have been absent from the full time performance of your
duties with the Company for six (6) consecutive months and, within thirty (30) days after written
Notice of Termination by reason of disability is given to you, you shall not have returned to the
full time performance of your duties.
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(e)
“Good Reason” shall mean, without your express written consent, the occurrence after a Change of Control of the Company of any of the following circumstances
unless, in the cases of paragraphs (i), (ii), (iii), (iv), (v) or (vi), such circumstances are
fully corrected prior to the Date of Termination specified in the Notice of Termination given in
respect thereof:
(i) any significant diminution in your
position, duties, responsibilities, power, or office (not solely a change in title) as in effect immediately prior to
a Change of Control (unless such changes are required and solely related to the reporting
structures of an Acquiring Corporation);
(ii) any reduction, without your consent, in your annual base salary as in effect on
the date hereof or as the same may be increased from time to time;
(iii) the failure by the Company to (i) continue in effect any material compensation or
benefit plan in which you participate immediately prior to the Change of Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan, or (ii) continue your participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both in terms of the amount of
benefits provided and the level of your participation relative to other participants, as existed at
the time the Change of Control;
(iv) the failure by the Company to continue to provide you with benefits substantially
similar to those enjoyed by you under any of the Company’s life insurance, medical, health and
accident, or disability plans in which you were participating at the time of the Change of Control,
the taking of any action by the Company which would directly or indirectly materially reduce any of
such benefits, or the failure by the Company to provide you with the number of paid vacation days
to which you are entitled on the basis of years of service with the Company in accordance with the
Company’s normal vacation policy in effect at the time of the Change of Control;
(v) any requirement by the Company or of any person in control of the Company that the
location at which you perform your principal duties for the Company be changed to a new location
that is outside a radius of fifty (50) miles from your principal place of employment at the time of the Change of Control; or
(vi) the failure of the Company to obtain a reasonably satisfactory agreement from any
successor to assume and agree to perform this Agreement, as contemplated in Section 5.
(vii) In order to establish “Good Reason” for a termination, the Employee must provide
notice to the Company of the existence of the condition giving rise to the “Good Reason” within 90
days following the initial existence of the condition, and the Company has 30 days following
receipt of such notice to remedy such condition.
(f) “Notice of Termination” shall have the meaning set forth in Section
2(b).
(g) “Severance Payments” shall have the meaning set forth in Section
3(b)(ii).
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2. Employment Status.
(a) You acknowledge that this Agreement does not constitute a contract of employment or impose
on the Company any obligation to retain you as an employee. You may terminate your employment at
any time, with or without Good Reason.
(b) Any termination of your employment by the Company or by you during the term of this
Agreement shall be communicated by written notice that indicates the specific provision in this
Agreement relied upon and sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision so indicated (“Notice of
Termination”). A Notice of Termination shall be delivered to the other party hereto in
accordance with Section 6.
(c) The “Date of Termination” shall mean (i) if your employment is terminated for
Disability, thirty (30) days after Notice of Termination is given (provided that you shall not have
returned to the full-time performance of your duties during such thirty (30) day period), and (ii)
if your employment is terminated by the Company for Cause or other than for Cause, by you for Good
Reason or for any other reason (other than Disability), the date specified in the Notice of
Termination.
(d) Your right to terminate your employment for Good Reason shall not be affected by your
incapacity due to physical or mental illness. Your continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason under
this Agreement.
3. Compensation Upon Termination. Subject to the terms and conditions of
this
Agreement, you shall be entitled to the following benefits during a period of disability, or upon
termination of your employment, as the case may be, provided that such period of termination occurs
during the term of this Agreement.
(a) Cause and Voluntary Termination other than for Good Reason. If your employment
shall be terminated by the Company for Cause or by you other than for Good Reason, the Company
shall pay you your full base salary and all other compensation through the Date of Termination at
the rate in effect at the time the Notice of Termination is given, plus all other amounts to which
you are entitled under any compensation plan of the Company at the time such payments are due, and
the Company shall have no further obligations to you under this Agreement.
(b) Termination Without Cause; Voluntary Termination for Good Reason. If your
employment with the Company is terminated by the Company (other than for Cause, Disability or your
death) or by you for Good Reason, then you shall be entitled to the benefits below upon
effectiveness (taking into account any applicable statutory revocation periods) of a general waiver
and release from you in favor of the Company, its directors, officers, employees, representatives,
agents and affiliates in a form satisfactory to the Company. Notwithstanding the foregoing, the
Company shall not provide any benefit otherwise receivable by you pursuant to subsections (ii) —
(v) of this paragraph (b) if an equivalent benefit is actually received by you from another employer
during the six (6) month period following your termination, and any such benefit actually received
by you shall be reported to the Company.
(i) The Company shall pay to you your full base salary through the
Date of Termination at the rate in effect at the time of Notice of Termination is given;
(ii) The Company will pay as severance pay to you, severance payments at your
annual base salary in effect on the Date of Termination, less applicable
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withholding (together with the payments provided in paragraph (iii-v) below, the “Severance
Payments”) until the earlier of (A) twelve (12) months following the Date of
Termination, or (B) acceptance by you of a position with another entity that is reasonably
comparable to the position you held with the Company. Severance Payments will be made in accordance
with the Company’s normal payroll procedures;
(iii) The Company will provide a Bonus Payment equal to your target bonus for the
current fiscal year pro rated to your Date of Termination. This Bonus Payment will be made in a
lump sum following the Date of Termination. In addition, the Company will pay you any unpaid bonus
from the prior fiscal year.
(iv) The Company shall pay to you all legal fees and expenses incurred by you in seeking
to obtain or enforce any right or benefit provided by this Agreement; and
(v) for up to a six (6) month period after such termination, the
Company shall provide reimbursement to you for COBRA payments for health and welfare benefits
continuation provided you elect COBRA coverage.
(c) In the event that you become entitled to the Severance Payments, if any of the
Severance Payments will be subject to the tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the “Code”) (or any similar tax that may hereafter be imposed)(the
“Excise Tax”) the Company shall pay to you an additional amount (the “Gross-Up
Payment”) such that the net amount retained by you, after deduction of any Excise Tax
on the Total Payments (as hereinafter defined) and any federal, state and local income tax and
Excise Tax upon the payment provided for by this Subsection, shall be equal to the Total Payments.
For purposes of determining whether any of the Severance Payments will be subject to the Excise Tax
and the amount of such Excise Tax, (a) any other payments or benefits received by you in connection
with a Change of Control of the Company or your termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with the Company, any
person whose actions result in a Change of Control of the Company or any person affiliated
with the Company or such person) (which together with the Severance Payments, constitute the “
Total Payments”) shall be treated as “parachute payments” within the meaning of Section
280G(b)(2) of the Code, and all “excess parachute payments” within the meaning of Section 280G(b)(l) shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected
by the Company’s independent auditors such other payments or benefits (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or in
part) represent reasonable compensation for services actually rendered within the meaning if
Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section
280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax, (b) the amount of the Total
Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (1)
the total amount of the Total Payments or (2) the amount of excess parachute within the meaning of
Section 280G(b)(1) (after applying paragraph (a), above), and (c) the value of any non-cash
benefits or any deferred payment or benefit shall be determined by the Company’s independent
auditors in accordance with the principles of Sections 280G(b)(3) and (4) of the Code. For purposes
of determining the amount of the Gross-Up Payment, you shall be deemed to pay federal income taxes
at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest marginal rate of taxation in
the state and locality of your residence on the Date of Termination, net of the maximum reduction
in federal income taxes, which could be obtained from deduction of such state and local taxes. In
the event that the Excise Tax is subsequently determined to be less than the amount take into
account hereunder at the time of termination of your employment,
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you shall repay to the Company at the
time the amount of such reduction in excise tax is finally
determined the portion of the Gross-Up Payment attributable to such reduction (plus the portion of
the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed
on the Gross-Up Payment being repaid by you if such repayment results in a reduction in Excise Tax
and/or a federal, state and local income tax deduction) plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise
Tax is determined to exceed the amount taken into account hereunder at the time of the termination
of your employment (including by reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall make an additional gross-up
payment in respect of such excess (plus any interest payable with respect to such excess) at the
time that amount of such excess is finally determined.
(d) Payments to the Employee under Section 3 shall be bifurcated into two
portions, consisting of the portion, if any, that includes the maximum amount of the payments that
does not constitute “nonqualified deferred compensation” within the meaning of Section 409A of the
Code and the portion, if any, that includes the excess of the total payments that does
constitute nonqualified deferred compensation. Payments hereunder shall first be made from the
portion that does not consist of nonqualified deferred compensation until such portion is exhausted
and then shall be made from the portion that does constitute nonqualified deferred compensation.
Notwithstanding the foregoing, if the Employee is a “specified employee” as defined in Section
409A(a)(3)(B)(i) of the Code, the commencement of the delivery of the portion that constitutes
nonqualified deferred compensation will be delayed to the date that is 6 months and one day after
the Employee’s termination of employment (the “Earliest Payment Date”). Any payments that
are delayed pursuant to the preceding sentence shall be paid pro rata during the period beginning
on the Earliest Payment Date and ending on the date that is 6 months following the Earliest Payment
Date. The determination of whether, and the extent to which, any of the payments to be made to the
Employee hereunder are nonqualified deferred compensation shall be made after the application of
all applicable exclusions under Treasury Reg. § 1.409A-1(b)(9). Any payments that are intended to
qualify for the exclusion for separation pay due to involuntary separation from service set forth
in Treasury Regulation Section 1.409A-1(b)(9)(iii) must be paid no later than the last day of the
second taxable year of the Employee following the taxable year of the Employee in which the
Employee’s termination of employment occurs.
4. Compensation upon Change of Control. Following a Change of Control of
the
Company, (a) if such Change of Control occurs on or before the six-month anniversary of the date
hereof, 50% of all options and shares of restricted stock granted or issued to you under the
Company’s Amended and Restated 2003 Stock Incentive Plan or any other stock incentive plan of the
Company that are unvested as of such date shall become exercisable and vested in full on the date
of the Change of Control; and (b) if such Change of Control occurs after the six-month anniversary
of the date hereof, all of all options and shares of restricted stock granted or issued to you under
the Company’s Amended and Restated 2003 Stock Incentive Plan or any other stock incentive plan of
the Company that are unvested as of such date shall become exercisable and vested in full on the
date of the Change of Control.
5. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets
of the Company expressly to assume and agree to perform this Agreement to the same extent that the
Company would be required to perform it if no such succession had taken place. Failure of the
Company to obtain an assumption of this Agreement at or prior to the effectiveness of any
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succession shall be a breach of this Agreement and shall constitute Good Reason if you elect to
terminate your employment, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of Termination. As used in
this Agreement, Company shall mean the Company as defined above and any successor to its business
or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or
otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by your
personal or legal representatives, executors, administrators, successors, heirs, distributes,
devisees and legatees. If you should die while any amount would still be payable to you hereunder
if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to your devisee, legatee or other designee or if there
is no such designee, to your estate.
6. Notice. For the purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be duly given when delivered or when
mailed by United States registered or certified mail, return receipt requested, postage prepaid,
addressed to the Company, at 000 Xxxxxxxxx Xxxx, Xxxxxxx, XX 00000, Attention: Chief Financial
Officer, and to you at the address set forth below or to such other address as either the Company
or you may have furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
7. Miscellaneous.
(a) The invalidity or unenforceability of any provision of this Agreement shall not affect
the validity or enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
(b) The validity, interpretation, construction and performance of this Agreement shall be
governed by the laws of the Commonwealth of Massachusetts.
(c) No waiver by you at any time of any breach of, or compliance with, any provision of this
Agreement to be performed by the Company shall be deemed a waiver of that or any other provision at
any subsequent time.
(d) This Agreement may be executed in counterparts, each of which shall be deemed to be an
original but both of which together will constitute one and the same instrument.
(e) Any payments provided for hereunder shall be paid net of any applicable withholding
required under federal, state or local law.
(f) This Agreement sets forth the entire agreement of the parties hereto in respect of the
subject matter contained herein and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement of the parties
hereto in respect of the subject matter contained herein is hereby terminated and cancelled.
(g) This Agreement is intended to comply with the provisions of Section 409A and the Agreement
shall, to the extent practicable, be construed in accordance therewith. Terms defined on the
Agreement shall have the meanings given such terms under Section 409A if and to the extent required
in order to comply with Section 409A. No payments to be made under this Agreement may be
accelerated or deferred except as specifically permitted
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under Section 409A. In the event that the Agreement
shall be deemed not to comply with Section
409A, then neither the Company, the Board nor its or their designees or agents shall be liable to
the Employee or other person for actions, decisions or determinations made in good faith.
*****
If this letter sets forth our agreement on the subject matter hereof, kindly sign and return to the
Company the enclosed copy of this letter, which will then constitute our agreement on this subject.
| NAVISITE, INC. |
||||
| By: | /s/ Xxxxxx Xxxxxx | |||
| Name: | Xxxxxx Xxxxxx | |||
| Title: | CEO | |||
Acknowledged and Agreed this 13 day of April, 2009:
| EMPLOYEE |
||||
| /s/ X. X. Xxxxxxxxxxx | ||||
| Signature |
||||
| /s/ R. Xxxxxx Xxxxxxxxxxx | ||||
| R. Xxxxxx Xxxxxxxxxxx | ||||
000 Xxxxx Xxxx
Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
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