EMPLOYMENT AGREEMENT
Exhibit
10.29
Employment
Agreement (this "Agreement") dated as of June 15, 2005 (the "Effective Date"),
by and between Internap Network Services Corporation (the "Company") and
Xxxxx
Xxxx Xxxxxxx ("Executive") (collectively the "Parties").
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1. Position
and Duties.
Executive shall
serve as the Vice President of Engineering & Chief Technology Officer for
the Company, with such duties, authorities and responsibilities as are
commensurate with such position. Executive shall report to the Company's
Chief
Executive Officer (“CEO”) and shall work from the Company's offices in Atlanta,
Georgia.
2. Base
Salary.
Executive shall
receive an annual base salary of $ 180,000 ("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
or decreased from time to time by the CEO 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 discretion.
3. Performance-Based
Bonus.
Executive shall
participate in the Company’s Annual Incentive Plan (“Bonus”) for Executive and
other senior executive officers. The Executive’s Bonus maximum target for 2005
shall be 45% of Executive's Base Salary, depending on individual and Company
performance metrics. Performance metrics for and target amount of the Bonus
for
2006 and each subsequent calendar year shall be established on or before
March
31 of the year to which the Bonus relates. The CEO, in consultation with
the
Board and in their sole and reasonable discretion, shall determine, on or
before
March 31 of the year in which the Bonus would be payable, whether a Bonus
is
payable and, if so, the amount of such Bonus. Unless otherwise determined
by the
Board, all Bonus payments shall be made on the Company's first regular payroll
date following such determination and shall be subject to standard payroll
tax
withholdings and deductions. To be eligible for a Bonus, Executive must be
continuously employed by the Company through the date on which the Bonus
is
paid. Executive recognizes and agrees that: (a) the Company may in its sole
discretion and with reasonable notice to Executive determine that any Bonus,
if
payable, may be paid in whole or in part in the Company’s common stock or other
equity securities, including restricted stock and stock options; and (b)
the
Company may in its sole discretion suspend or discontinue any bonus program
at
any time without any liability on the part of the Company.
4. 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
5. 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.
6. 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.
7. Severance
Payments. Upon
Executive's
involuntary termination by the Company of employment without Cause (as defined
below), Executive shall receive a cash severance payment equal to the product
of
(x) the number of days that Executive is an employee of the Company, divided
by
365 (provided that the foregoing ratio shall never exceed one (1) and (y)
Executive’s then-current Base Salary. Payment of such severance amounts shall be
subject to standard payroll tax withholdings and deductions. In
addition to the
severance benefits provided above, upon Executive's involuntary termination
of
employment without Cause, all of Executive’s unvested Options and Additional
Equity Compensation shall lapse and expire, and all of Executive’s vested
Options shall remain exercisable no later than three months after the date
of
termination. No payment or acceleration of Options or Additional Equity
Compensation shall be made pursuant to this Section 8 unless prior to or
concurrent with such payment a valid release has been executed and delivered
by
Executive and becomes effective in accordance with Section 11 hereof.
Notwithstanding the immediately preceding sentence, Executive shall not be
entitled to any benefits or rights under this Section 8 if Executive also
is eligible for payments and/or benefits under Section 9 hereof.
8. Change
in Control Payments and Acceleration.
Upon Executive's
involuntary termination of employment without Cause (as defined below) or
voluntary termination of employment for Good Reason, in either case within
12
months after
a Change in
Control, (i) the Company shall pay Executive a cash severance payment equal
to
two times the sum of Executive's then-current Base Salary and maximum target
Bonus and (ii) all of Executive’s unvested Options and Additional Equity
Compensation shall become vested, free of restrictions and immediately
exercisable for the remaining term of the relevant grant or award.
Payment
of such
severance payments shall be subject to standard payroll tax withholdings
and
deductions.
No
payment or acceleration of Options or Additional Equity Compensation shall
be
made unless prior to or concurrent with such payment a valid release has
been
executed and delivered by Executive and becomes effective in accordance with
Section 11 hereof.
Executive
will
continue to receive the healthcare and life insurance coverages in effect
on his
date of termination for twenty-four (24) months after the date of termination
pursuant to this Section 9 just as if he had remained an active employee
of the
Company, subject to Executive paying the customary employee portion of such
coverages, provided that if the Company cannot continue to cover Executive
under
its plans, the Company will separately provide Executive with comparable
coverages or pay Executive in a lump sum the costs of such
coverages.
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
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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 (iii) of this Section;
(ii)
A change in
the composition of the Board such that the individuals who, as of the Effective
Date, constitute the Board (such Board shall be hereinafter referred to as
the
"Incumbent Board") cease for any reason to constitute at least a majority
of the
Board; provided, however, that for purposes of this definition, any individual
who becomes a member of the Board subsequent to the Effective Date, whose
election, or nomination for election, by the Company’s stockholders was approved
by a vote of at least a majority of those individuals who are members of
the
Board and who were also members of the Incumbent Board (or deemed to be such
pursuant to this proviso) shall be considered as though such individual were
a
member of the Incumbent Board; and provided, further however, that any such
individual whose initial assumption of office occurs as a result of or in
connection with either an actual or threatened election contest (as such
terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or
other actual or threatened solicitation of proxies or consents by or on behalf
of an Entity other than the Board shall not be so considered as a member
of the
Incumbent Board;
(iii)
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
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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
(iv)
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 written
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 significant diminution
in Executive's title, authority or responsibility, including any change in
the
reporting relationship between Executive and the CEO; (ii) any significant
reduction in Executive's then current total compensation from that compensation
paid in the prior fiscal year or calendar year; or (iii) a change of more
than fifty (50) miles from Executive's permanent workplace without
Executive's consent.
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9. 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.
10.
Release.
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, Executive shall not receive any severance payments or benefits provided
under this Agreement.
11.
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
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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 except as authorized by the Company and for the Company’s
benefit.
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.
12.
Non-Competition. Executive
recognizes and agrees that Internap has many substantial, legitimate business
interests that can be protected only by his agreement not to compete with
Internap under certain circumstances. These interests include, without
limitation and on a national basis, Internap's contacts and relationships
with
its clients and active prospects, Internap's reputation and goodwill in the
industry, and Internap's rights in its Confidential Information. Therefore,
Executive agrees that during the term of his employment with Internap and
for a
period of one (1) year after his employment ends for any reason whatsoever
and
except as provided in the paragraph immediately following, he shall not,
voluntarily or involuntarily, directly or indirectly, on his own behalf or
on
the behalf of another, whether as an employee, contractor, consultant, director
or agent or in another capacity, engage in the businesses of (i) managed
high
performance Internet connectivity, (ii) hosting or collocation services,
(iii)
virtual private network services (iv) content distribution network services
or
(v) any other line of business in which the company is then engaged for (x)
any
account that is a customer of Internap or its affiliates unless he is providing
substantially different services to any such customer from the services he
provided to Internap or (y) any competitor of Internap or its
affiliates.
If,
within one year
after commencement of Executive’s employment with the Company, Executive
voluntarily terminates such employment or such employment is terminated for
any
reason by the Company, the non-compete period shall be equal to the number
of
days that Executive was an employee of the Company prior to such termination.
Executive
also
agrees that during the term of his employment with Internap and for a period
of
one (1) years after such employment ends for any reason whatsoever, he shall
not
directly or indirectly employ or seek to employ any person employed by Internap
nor directly or indirectly solicit or induce any such person to leave Internap.
Executive
acknowledges that the breach or threatened breach of the above noncompetition
and/or nondisclosure provisions would cause irreparable injury to Internap
that
could not be adequately compensated by money damages. Internap may obtain
a
restraining order and/or injunction prohibiting my breach or threatened breach
of the noncompetition and/or nondisclosure provisions, in addition to any
other
legal or equitable remedies that may be available. Executive agrees that
the
above noncompetition provision, including its duration, scope and geographic
extent, is fair and reasonably necessary to protect Internap's client
relationships, goodwill, Confidential Information and other protectable
interests.
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Provided
that
Executive has been employed with the Company for at least one year, if Executive
wishes to compete with the Company during the one-year period after his
termination of employment, Executive will submit a bona fide written offer
of
employment he has received from a prospective employer to the Company’s Chief
Executive Officer and General Counsel, who will analyze such proposed employment
in light of the then current facts and circumstances. The Chief Executive
Officer may, in his sole and reasonable discretion, provide a written waiver
of
all or a portion of the non-compete limitations imposed on Executive. If
such
written waiver is unreasonably withheld, Executive shall remain subject to
the
non-compete limitations. The non-solicitation obligations set forth above
are
not subject to the potential waiver described in the preceding sentence and
will
remain in full force and effect pursuant to its terms. Executive will fully
defend, indemnify and hold harmless the Company for any claims brought against
it by Executive or third parties as a result of any decision the Company
makes
not to waive Executive's non-compete obligations.
13. No
Restrictions.
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
Delaware, 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. Any invalid or unenforceable provision shall
be
modified so as to be rendered valid and enforceable in a manner consistent
with
the intent of the Parties insofar as possible.
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.
From
and after the
Effective Date, this Agreement shall supersede any employment, severance,
change
of control or other agreement, whether oral or written,
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between
the Parties
with respect to the subject matter hereof (other than arrangements effected
under compensation plans generally applicable to other senior executive officers
of the Company).
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.
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IN
WITNESS WHEREOF, the Parties have executed this Agreement effective as of
the
day and year first above written.
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By
/s/ Xxxxx
X. Xxxx
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/s/
Xxxx
Xxxxxxx
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Xxxxx
X.
Xxxx
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Vice
President Human Resources
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