EMPLOYMENT AGREEMENT
Exhibit
10.2
This
Employment Agreement (this "Agreement") is entered into as of April 2, 2007
(the
"Effective Date"), by and between Internap Network Services Corporation (the
"Company" or "Internap") and Xxxxxxx Xxxx ("Executive") (collectively the
"Parties").
1. Position
and Duties.
Executive shall serve as Vice President and General Counsel for the Company,
with such duties, authorities and responsibilities as are commensurate with
such
position. Executive initially shall report to the Chief Executive Officer.
Executive shall work from the Company’s offices in Atlanta,
Georgia.
2. Base
Salary.
Executive shall receive an annual base salary of $240,000 ("Base Salary").
Payment of Base Salary shall be subject to standard payroll tax withholdings
and
deductions. Executive's Base Salary shall be paid semi-monthly in accordance
with the Company's standard payroll practices. Executive's Base Salary may
be
increased from time to time by the Company's Chief Executive Officer (“CEO”) and
in consultation with the Company's Board of Directors or the Compensation
Committee of such Board of Directors (in either case, the "Board") in their
sole
and absolute discretion.
3. Performance-Based
Bonus. Executive
will be eligible to participate in Internap’s annual incentive bonus plan as in
effect for any calendar year during the Term ("Incentive Plan"). Executive’s
entitlement to a bonus under the Incentive Plan will be based on the Company’s
achievements of its goals and Executive’s individual performance, as determined
by the Company or the Board, as the case may be, in their sole and absolute
discretion. Executive’s initial bonus opportunity under the Incentive Plan will
be up to 45% of Executive’s annual Base Salary, subject to the terms and
conditions of the Incentive Plan. Executive will be entitled to earn the full
bonus opportunity for 2007 based on the company achievement of goals under
the
Incentive Plan during the applicable Incentive Plan year.
4. Equity
Compensation.
The
Company and Executive acknowledge that the CEO shall recommend to the Board
that
the Company issue to Executive 30,000 restricted shares of the Company’s common
stock, which, if approved by the Board, shall vest in annual increments of
25%
commencing on the first anniversary of the date of issuance, subject to the
terms and conditions of the relevant equity compensation plan(s) and related
restricted stock agreement(s) (the "Restricted Shares").
5. Employee
Benefits.
Executive shall be entitled to participate in all employee benefit, welfare
and
other plans and programs generally applicable to employees of the Company.
Except as provided herein, the Company reserves the right to modify Executive’s
compensation and benefits from time to time, as it deems necessary in its sole
and absolute discretion, so long as Executive continues to receive healthcare
and life insurance benefits that are comparable to other similarly situated
employees.
6. Vacation.
Executive shall accrue twenty (20) days of combined vacation/sick leave
annually. Executive also shall receive three (3) personal days each year.
Executive shall have the right to carry over unused vacation from any one-year
period to any other subsequent one-year period.
7. Nature
of Employment.
Executive’s employment with the Company shall be at-will. Both Executive and the
Company shall have the right to terminate the employment relationship at any
time, with or without cause, and with or without advance notice.
8. Severance
Payments.
Upon
Executive’s termination of employment (i) by the Company without Cause (as
defined herein), or (ii) by Executive for Good Reason (as defined herein),
Executive shall receive a cash severance payment equal to Executive’s
then-current annual Base Salary. Payment of the severance amount set forth
in
this Section 8 shall be subject to standard payroll tax withholdings and
deductions.
Upon
Executive’s termination of employment (i) by the Company without Cause, or (ii)
by Executive for Good Reason, all of Executive’s unvested Restricted Shares and
other equity awards if any, shall cease vesting and shall be subject to
repurchase and/or termination in accordance with the terms of the applicable
restricted stock agreement.
Notwithstanding
anything contained herein to the contrary, Executive shall not be entitled
to
any benefits or rights under this Section 8 to the extent Executive also is
eligible for payments and/or benefits under Section 9 hereof.
9. Change
in Control Payments and Acceleration.
If
Executive’s employment is involuntarily terminated by the Company without Cause
or Executive voluntary terminates his employment for Good Reason, in either
case
within 12 months after
a
Change in Control, then (i) the Company shall pay Executive a cash severance
payment equal to the sum of Executive’s then-current annual Base Salary plus the
maximum target Bonus under the Incentive Plan and (ii) all of Executive’s
unvested Restricted Shares, if any, shall become fully vested and free of
restrictions. Payment of the payments set forth in this Section 9 shall be
subject to standard payroll tax withholdings and deductions.
For
purposes of this Agreement, "Change in Control" shall mean the happening of
any
of the following events:
(i)
An
acquisition by any individual, entity or group (within the meaning of Section
13
(d) (3) or 14 (d) (2) of the Exchange Act) (an "Entity") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30%
or
more of either (A) the then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (B) the combined voting power of
the
then outstanding voting securities of the Company entitled to vote generally
in
the election of directors (the "Outstanding Company Voting Securities");
excluding, however, the following: (1) any acquisition directly from the
Company, other than an acquisition by virtue of the exercise of a conversion
privilege unless the security being so converted was itself acquired directly
from the Company, (2) any acquisition by the Company, (3) any acquisition by
any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, or (4) any acquisition by any
corporation pursuant to a transaction which complies with clauses (A), (B)
and
(C) of subsection (ii) of this Section;
(ii)
The
approval by the stockholders of the Company of a merger, reorganization or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (each, a "Corporate Transaction") or, if consummation
of
such Corporate Transaction is subject, at the time of such approval by
stockholders, to
the
consent of any government or governmental agency, the obtaining of such consent
(either explicitly or implicitly by consummation); excluding however, such
a
Corporate Transaction pursuant to which (A) all or substantially all of the
individuals and entities who are the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Corporate Transaction will beneficially own, directly
or indirectly, more than 60% of, respectively, the outstanding shares of common
stock, and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may be,
of
the corporation resulting from such Corporate Transaction (including, without
limitation, a corporation or other Person which as a result of such transaction
owns the Company or all or substantially all of the Company’s assets either
directly or through one or more subsidiaries (a "Parent Company")) in
substantially the same proportions as their ownership, immediately prior to
such
Corporate Transaction, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (B) no Entity (other than the
Company, any employee benefit plan (or related trust) of the Company, such
corporation resulting from such Corporate Transaction or, if reference was
made
to equity ownership of any Parent Company for purposes of determining whether
clause (A) above is satisfied in connection with the applicable Corporate
Transaction, such Parent Company) will beneficially own, directly or indirectly,
50% or more of, respectively, the outstanding shares of common stock of the
corporation resulting from such Corporate Transaction or the combined voting
power of the outstanding voting securities of such corporation entitled to
vote
generally in the election of directors unless such ownership resulted solely
from ownership of securities of the Company prior to the Corporate Transaction,
and (C) individuals who were members of the Incumbent Board will immediately
after the consummation of the Corporate Transaction constitute at least a
majority of the members of the board of directors of the corporation resulting
from such Corporate Transaction (or, if reference was made to equity ownership
of any Parent Company for purposes of determining whether clause (A) above
is
satisfied in connection with the applicable Corporate Transaction, of the Parent
Company); or
(iii)
The
approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.
For
purposes of this Agreement, “Cause” shall mean:
(i)
Executive’s conviction (including a plea of guilty or nolo contendere) of a
crime involving theft, fraud, dishonesty or moral turpitude;
(ii)
violation by Executive of the Company’s Code of Conduct or other material
policies;
(iii)
gross omission or gross dereliction of any statutory, common law or other duty
of loyalty to the Company or any of its affiliates; or
(iv)
repeated failure to carry out the duties of Executive’s position despite
specific instructions to do so.
Executive
shall not be deemed to have been terminated for “Cause” until there shall have
been delivered to him written notice, not less than ten (10) days prior to
the
proposed termination date, specifying the basis for such
termination.
For
purposes of this Agreement, Good Reason shall mean any one of the following
events which occurs without Executive’s written consent: (i) any material
diminution in Executive’s title, authority or responsibility; (ii) any
material reduction in Executive’s then current total compensation from that
compensation paid by the Company in the prior fiscal year; or (iii) a change
of
more than fifty (50) miles Executive's permanent workplace without Executive's
consent.
10. Parachute
Payments.
If any
cash compensation payment, employee benefits or acceleration of vesting of
stock
options or other stock awards Executive would receive in connection with a
Change in Control ("Payment") would (i) constitute a “parachute payment”
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), and (ii) but for this sentence, be subject to the
excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then
such Payment shall be equal to the Reduced Amount. The “Reduced Amount” shall be
either (x) the largest portion of the Payment that would result in no
portion of the Payment being subject to the Excise Tax or (y) the largest
portion, up to and including the total, of the Payment, whichever amount, after
taking into account all applicable federal, state and local employment taxes,
income taxes, and the Excise Tax (all computed at the highest applicable
marginal rate), results in Executive’s receipt, on an after-tax basis, of the
greater amount of the Payment notwithstanding that all or some portion of the
Payment may be subject to the Excise Tax. If a reduction in payments or benefits
constituting “parachute payments” is necessary so that the Payment equals the
Reduced Amount, reduction shall occur in the following order unless Executive
elects in writing a different order: reduction of cash payments; reduction
of
employee benefits; and cancellation of accelerated vesting of stock awards.
In
the event that acceleration of vesting of stock award compensation is to be
reduced, such acceleration of vesting shall be cancelled in the reverse order
of
the date of grant of Executive’s stock awards unless Executive elects in writing
a different order for cancellation. The accounting firm engaged by the
Company
for general audit purposes as of the day prior to the effective date of the
Change in Control shall perform the foregoing calculations. If the accounting
firm so engaged by the Company is serving as accountant or auditor for the
individual, entity or group effecting the Change in Control, the Company shall
appoint a nationally recognized accounting firm to make the determinations
required hereunder. The Company shall bear all expenses with respect to the
determinations by such accounting firm required to be made hereunder. The
accounting firm engaged to make the determinations hereunder shall provide
its
calculations, together with detailed supporting documentation, to the Company
and Executive within fifteen (15) calendar days after the date on which
Executive’s right to a Payment arises (if requested at that time by the Company
or Executive) or at such other time as requested by the Company or Executive.
If
the accounting firm determines that no Excise Tax is payable with respect to
a
Payment, either before or after the application of the Reduced Amount, it shall
furnish the Company and Executive with an opinion reasonably acceptable to
Executive that no Excise Tax will be imposed with respect to such Payment.
Any
good faith determination of the accounting firm made hereunder shall be final,
binding and conclusive upon the Company and Executive.
11. Release.
Notwithstanding anything to the contrary contained in this Agreement, upon
termination of Executive’s employment, unless Executive shall have executed and
provided the Company with an effective release in a form reasonably satisfactory
to the Company by which Executive releases the Company from any and all claims
of any kind, Executive shall not receive any severance payments or benefits
provided under this Agreement.
12. Confidentiality. Executive
agrees that information not generally known to the public to which he will
be
exposed as a result of his employment by the Company is confidential
information that belongs to the Company. This includes information developed
by
Executive, alone or with others, or entrusted to the Company by its customers
or
others. The Company’s confidential information includes, without limitation,
information relating to the Company’s trade secrets, research and development,
inventions, know-how, software, procedures, accounting, marketing, sales,
creative and marketing strategies, employee salaries and compensation, and
the
identities of customers and active prospects to the extent not publicly
disclosed (collectively, "Confidential Information"). Executive will hold the
Company’s Confidential Information in strict confidence, and not disclose or use
it during the No Disclosure Term (as defined below), except as authorized by
the
Company and for the Company’s benefit.
For
purposes of this Agreement, “No Disclosure Term” shall mean during the time
period Executive is employed by the Company and for a period of two (2) years
after Executive’s employment is terminated.
Executive
further acknowledges and agrees that in order to enable the Company to perform
services for its customers or clients, such customers or clients may furnish
to
the Company certain Confidential Information, that the goodwill afforded to
the
Company depends upon the Company and its employees preserving the
confidentiality of such information, and that such information shall be treated
as Confidential Information of the Company for all purposes under this Agreement
subject to the No Disclosure Term.
Executive
agrees that if Executive breaches this Section 11: (i) the Company would suffer
irreparable harm; (ii) it would be difficult to determine damages, and money
damages alone would be an inadequate remedy for the injuries suffered by the
Company, and (iii) if the Company seeks injunctive relief to enforce this
Agreement, Executive will waive and will not (a) assert any defense that the
Company has an adequate remedy at law with respect to the breach, (b) require
that the Company submit proof of the economic value of any Trade Secret or
Confidential Information, or (c) require the Company to post a bond or any
other
security.
13. No
Restrictions.
Executive represents to the Company that he has not executed or is not bound
by
any non-competition covenant or non-solicitation covenant or any other
undertaking similar to either of the foregoing that would prevent him from
performing the duties and responsibilities of the position set forth in Section
1 of this Agreement.
14. General
Provisions.
This
Agreement is intended to bind and inure to the benefit of and be enforceable
by
Executive, the Company and their respective successors, assigns, heirs,
executors, administrators, except that Executive may not assign any of his
duties hereunder and Executive may not assign any of his rights hereunder
without the written consent of the Company, which shall not be withheld
unreasonably.
This
Agreement, together with the Exhibits, constitutes the complete, final and
exclusive embodiment of the entire agreement between the Parties with regard
to
the subject matter hereof. It is entered into without reliance on any promise
or
representation, written or oral, other than those expressly contained herein,
and it supersedes any other such promises or representations.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Georgia, without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof and shall
have
no force or effect. This Agreement may not be amended or modified otherwise
than
by a written agreement
executed
by the Parties hereto or their respective successors and legal representatives.
The invalidity or unenforceability of any provision of this Agreement shall
not
affect the validity or enforceability of any other provision of this Agreement.
If any provision in this Agreement is determined to be invalid, illegal, or
unenforceable, in whole or in part, the remaining provisions and any partially
enforceable provisions shall remain in full force and effect.
Executive
agrees that any claim arising out of or relating to this Agreement shall be
brought in a state or federal court of competent jurisdiction in Georgia.
Executive consents to the personal jurisdiction of the state and/or federal
courts located in Georgia. Executive waives (i) any objection to jurisdiction
or
venue, or (ii) any defense claiming lack of jurisdiction or improper venue,
in
any action brought in such courts.
A
failure
of Executive or the Company to insist upon strict compliance with any provision
of this Agreement or the failure to assert any right Executive or the Company
may have hereunder shall not be deemed to be a waiver of such provision or
right
or any other provision or right of this Agreement.
This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original but all of which together will constitute one and the same
instrument.
IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective
Date.
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INTERNAP
NETWORK SERVICES
CORPORATION
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XXXXXXX
XXXX
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By:
/s/
Xxxx Xxxxxxx
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/s/
Xxxxxxx Xxxx
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Name:
Xxxx Xxxxxxx
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Xxxxxxx
Xxxx
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Title:
Vice President, Human Resources
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