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EXHIBIT 10.13
COMPENSATION PROTECTION AGREEMENT
THIS COMPENSATION PROTECTION AGREEMENT (this "Agreement"), made
effective as of the ___ day of ________, 1998, by and between VERIO INC., a
corporation incorporated under the laws of Delaware (the "Company"), and
____________ ("Protected Officer").
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the possibility of a Change in Control (as hereinafter defined) exists and
that the threat or the occurrence of a Change in Control can result in
significant distractions of its key management personnel because of the
uncertainties inherent in such a situation;
WHEREAS, the Board has determined that it is essential and in the best
interest of the Company and its stockholders to retain the services of Protected
Officer in the event of a threat or occurrence of a Change in Control and to
ensure Protected Officer's continued dedication and efforts in such event
without undue concern for Protected Officer's personal financial and employment
security; and
WHEREAS, in order to induce Protected Officer to remain in the employ
of the Company, particularly in the event of a threat or the occurrence of a
Change in Control, the Company desires to enter into this Agreement with
Protected Officer to provide Protected Officer with certain benefits in the
event Protected Officer's employment is terminated as a result of, or in
connection with, a Change in Control;
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:
1. Term of Agreement. This Agreement shall commence as of _______ __,
1998 (the "Effective Date") and shall continue in effect until the third
anniversary of the Effective Date; provided, that commencing on the third
anniversary of the Effective Date and on each subsequent anniversary thereof,
the term of this Agreement shall automatically be extended for one (1) year
unless either the Company or Protected Officer shall have given written notice
to the other at least ninety (90) days prior thereto that the term of this
Agreement shall not be so extended; and provided, further, that notwithstanding
any such notice by the Company not to extend, the term of this Agreement shall
not expire prior to the expiration of twelve (12) months after the occurrence of
a Change in Control.
2. Definitions.
2.1. Accrued Compensation. "Accrued Compensation" shall mean an
amount which shall include all amounts earned or accrued through the Termination
Date (as hereinafter defined) but not paid as of the Termination Date,
including, without limitation, (i) base salary, (ii) reimbursement for
reasonable and necessary expenses incurred by Protected Officer on behalf of the
Company during the period ending on the Termination Date, and (iii) vacation
pay.
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2.2. Base Amount. "Base Amount" shall mean the amount of Protected
Officer's annual base salary at the rate in effect immediately prior to the
Change in Control, and shall include all amounts of Protected Officer's base
salary that are deferred under the qualified and non-qualified employee benefit
plans of the Company or any other agreement or arrangement.
2.3. Bonus Amount. "Bonus Amount" shall mean the greater of (i) 100% of
the last annual incentive payment paid or payable to Protected Officer prior to
the Termination Date under the Company's cash bonus incentive plan, and (ii)
Protected Officer's incentive target for the fiscal year in which the Change in
Control occurs.
2.4. Cause. A termination of employment is for "Cause" if Protected
Officer has been convicted of a felony involving fraud or dishonesty or the
termination is evidenced by a resolution adopted in good faith by two-thirds of
the Board to the effect that Protected Officer (i) intentionally and continually
failed substantially to perform Protected Officer's reasonably assigned duties
with the Company (other than a failure resulting from Protected Officer's
incapacity due to physical or mental illness or from Protected Officer's
assignment of duties that would constitute Good Reason (as hereinafter
defined)), which failure continued for a period of at least thirty (30) days
after a written notice of demand for substantial performance has been delivered
to Protected Officer specifying the manner in which Protected Officer has failed
substantially to perform, or (ii) intentionally engaged in conduct which is
demonstrably and materially injurious to the Company; provided, that no
termination of Protected Officer's employment shall be for Cause as set forth in
clause (ii) above until (a) there shall have been delivered to Protected Officer
a copy of a written notice setting forth that Protected Officer was guilty of
the conduct set forth in clause (ii) and specifying the particulars thereof in
detail, and (b) Protected Officer shall have been provided an opportunity to be
heard in person by the Board (with the assistance of Protected Officer's counsel
if Protected Officer so desires). No act, nor failure to act, on Protected
Officer's part shall be considered "intentional" unless Protected Officer has
acted, or failed to act, with a lack of good faith and with a lack of reasonable
belief that Protected Officer's action or failure to act was in the best
interest of the Company.
2.5. Change in Control. "Change in Control" shall mean any of the
following:
(a) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any Person (as the
term "person" is used for purposes of Section 13 or 14 of the Securities
Exchange Act of 1934, as amended (the "1934 Act")) immediately after which such
Person has Beneficial Ownership (as the term "beneficial ownership" is defined
under Rule 13d-3 promulgated under the 0000 Xxx) of forty percent (40%) or more
of the combined voting power of the Company's then outstanding Voting
Securities; provided, that in determining whether a Change in Control has
occurred, Voting Securities which are acquired in a Non-Control Acquisition (as
hereinafter defined) shall not constitute an acquisition which would cause a
Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (i)
an
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employee benefit plan (or a trust forming a part thereof) maintained by (1) the
Company or (2) any corporation or other Person of which a majority of its voting
power or its equity securities or equity interest is owned directly or
indirectly by the Company (a "Subsidiary"), (ii) the Company or any Subsidiary,
or (iii) any Person in connection with a Non-Control Transaction (as hereinafter
defined);
(b) The individuals who, as of date this Agreement is approved by
the Board, are members of the Board (the "Incumbent Board"), cease for any
reason to constitute at least a majority of the Board; provided, that if the
appointment, election or nomination for election by the Company's stockholders
of any new director was approved by a vote of at least two-thirds of the
Incumbent Board, such new director shall, for purposes of this Agreement, be
considered a member of the Incumbent Board; and provided, further, that no
individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11 promulgated under the
0000 Xxx) or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board (a "Proxy Contest") including by
reason of any agreement intended to avoid or settle any Election Contest or
Proxy Contest;
(c) Approval by stockholders of the Company of:
(1) A merger, consolidation or reorganization involving the
Company, unless such merger, consolidation or reorganization satisfies the
conditions set forth in clauses (i) and (ii) below (any transaction(s)
meeting the requirements of clauses (i) and (ii) below being referred to
herein as "Non-Control Transactions"):
(i) the stockholders of the Company immediately
before such merger, consolidation or reorganization own, directly
or indirectly, immediately following such merger, consolidation or
reorganization, at least sixty percent (60%) of the combined
voting power of the outstanding voting securities of the
corporation resulting from such merger, consolidation or
reorganization (the "Surviving Corporation") in substantially the
same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization;
and
(ii) the individuals who were members of the
Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation or
reorganization constitute at least a majority of the members of
the board of directors of the Surviving Corporation;
(2) A complete liquidation or dissolution of the Company; or
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(3) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person (other than a
transfer to a Subsidiary); and
(d) Any other event that at least two-thirds of the Incumbent
Board in its sole discretion shall determine constitutes a Change in Control.
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting Securities
as a result of the acquisition of Voting Securities by the Company which, by
reducing the number of Voting Securities outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Person; provided, that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
share acquisition by the Company the Subject Person becomes the Beneficial Owner
of any additional voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.
(e) Notwithstanding anything contained in this Agreement to the
contrary, if Protected Officer's employment is terminated prior to a Change in
Control and the Board determines that such termination (i) was at the request of
a third party who has indicated an intention or taken steps reasonably
calculated to effect a Change in Control and who subsequently effectuates a
Change in Control (a "Third Party") or (ii) otherwise occurred in connection
with, or in anticipation of, a Change in Control which actually occurs, then,
for all purposes of this Agreement, the date of a Change in Control with respect
to Protected Officer shall mean the date immediately prior to the date of such
termination of Protected Officer's employment.
2.6. Company. The "Company" shall mean Verio Inc. and shall include its
"Successors and Assigns" (as hereinafter defined).
2.7. Disability. "Disability" shall mean a physical or mental infirmity
which impairs Protected Officer's ability to substantially perform Protected
Officer's duties with the Company for a period of one hundred eighty (180)
consecutive days; provided, that Protected Officer has not returned to Protected
Officer's full-time employment prior to the Termination Date as stated in the
Notice of Termination (as hereinafter defined).
2.8. Good Reason.
(a) "Good Reason" shall mean the occurrence after a Change in
Control of any of the events or conditions described in subsections (i) through
(viii) hereof:
(i) (A) a change in Protected Officer's status, title,
position or responsibilities (including reporting responsibilities)
which, in Protected Officer's reasonable judgment, represents an
adverse change from
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Protected Officer's status, title, position or responsibilities as in
effect at any time within ninety (90) days preceding the date of a
Change in Control or at any time thereafter; (B) the assignment to
Protected Officer of any duties or responsibilities which, in Protected
Officer's reasonable judgment, are inconsistent with Protected
Officer's status, title, position or responsibilities as in effect at
any time within ninety (90) days preceding the date of a Change in
Control or at any time thereafter; or (C) any removal of Protected
Officer from or failure to reappoint or reelect Protected Officer to
any of such offices or positions, except in connection with the
termination of Protected Officer's employment for Disability, Cause, as
a result of Protected Officer's death or by Protected Officer other
than for Good Reason;
(ii) reduction in Protected Officer's base salary to a level
below that in effect at any time within ninety (90) days preceding the
date of a Change in Control or at any time thereafter (except to the
extent such reduction is part of a comprehensive reduction in salary
applicable to employees of the Company generally so long as the
reduction applicable to Protected Officer is comparable to the
reduction applied to other senior executives of the Company), or any
failure to pay Protected Officer any compensation or benefits to which
Protected Officer is entitled within five (5) days of the date due;
(iii) the Company's requiring Protected Officer to be based at
any place outside a 50-mile radius from Protected Officer's job
location or residence prior to the Change in Control, except for
reasonably required travel on the Company's business which is not
materially greater than such travel requirements prior to the Change in
Control;
(iv) the failure by the Company to (A) continue in effect
(without reduction in benefit level and/or reward opportunities) any
material compensation or employee benefit plan in which Protected
Officer was participating at any time within ninety (90) days preceding
the date of the Change in Control or at any time thereafter, including,
but not limited to, the plans listed on Appendix A (which shall include
vacation policies), unless such plan is replaced with a plan that
provides substantially equivalent compensation or benefits to Protected
Officer, or (B) provide Protected Officer with compensation and
benefits, in the aggregate, at least equal (in terms of benefit levels
and/or reward opportunities) to those provided for under each other
employee benefit plan, program and practice in which Protected Officer
was participating at any time within ninety (90) days preceding the
date of the Change in Control or at any time thereafter or which are
provided to other similarly situated executives of the Company;
(v) the insolvency or the filing (by any party, including the
Company) of a petition for bankruptcy of the Company, which petition is
not dismissed within sixty (60) days;
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(vi) any material breach by the Company of any provision of
this Agreement:
(vii) any purported termination of Protected Officer's
employment for Cause by the Company which does not comply with the
terms of Section 2.4; or
(viii) the failure of the Company to obtain an agreement,
satisfactory to Protected Officer, from any Successors and Assigns (as
hereinafter defined) to assume and agree to perform this Agreement, as
contemplated in Section 6 hereof.
(b) Any event or condition described in this Section 2.8 which
occurs prior to a Change in Control, but which the Board determines (i) was at
the request of a Third Party, or (ii) otherwise arose in connection with, or in
anticipation of, a Change in Control which actually occurs, shall constitute
Good Reason for purposes of this Agreement notwithstanding that it occurred
prior to the Change in Control.
(c) Protected Officer's right to terminate Protected Officer's
employment pursuant to this Section 2.8 shall not be affected by Protected
Officer's incapacity due to physical or mental illness. Protected Officer must
determine whether to invoke the right to terminate employment pursuant to
Section 2.8(a)(i) or 2.8(a)(iii) within ninety (90) days of the change in status
or relocation referred to therein.
2.9. Notice of Termination. Following a Change in Control, "Notice of
Termination" shall mean a written notice from the Company of termination of
Protected Officer's employment which indicates the specific termination
provision in this Agreement relied upon and which sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
Protected Officer's employment under the provision so indicated.
2.10. Pro-Rata Bonus. "Pro-Rata Bonus" shall mean an amount equal to
the Bonus Amount multiplied by a fraction the numerator of which is the number
of days in the fiscal year through the Termination Date and the denominator of
which is 365.
2.11. Successors and Assigns. "Successors and Assigns" shall mean a
corporation or other entity acquiring all or substantially all the assets and
business of the Company (including this Agreement), whether by operation of law
or otherwise.
2.12. Termination Date. "Termination Date" shall mean (i) in the case
of Protected Officer's death, Protected Officer's date of death, (ii) in the
case of Good Reason, the last day of Protected Officer's employment, and (iii)
in all other cases, the date specified in the Notice of Termination; provided,
that if Protected Officer's employment is terminated by the Company for Cause or
due to Disability, the date specified in the Notice of Termination shall be at
least thirty (30) days from the date the Notice of Termination is given to
Protected Officer; and provided, further, that in the case of Disability
Protected Officer shall not have returned to the full-time performance of
Protected Officer's duties during such period of at least thirty (30) days.
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3. Protected Officer Obligations. During the term of this Agreement, and
excluding any periods of vacation and sick leave to which Protected Officer is
entitled, Protected Officer agrees to devote his full time and attention spent
on business matters to the business and affairs of the Company and, to the
extent necessary to discharge the responsibilities assigned to Protected Officer
by the Company that do not constitute Good Reason, to use Protected Officer's
reasonable best efforts to perform faithfully and efficiently such
responsibilities; provided, that it shall not be a violation of this Agreement
for Protected Officer to, without limitation, (i) serve on corporate, civic or
charitable boards or committees, (ii) deliver lectures, fulfill speaking
engagements or teach at educational institutions, (iii) manage personal
investments and (iv) perform such other activities as the Board may approve, so
long as such activities do not interfere materially with the performance of
Protected Officer's responsibilities as an employee of the Company. It is
expressly understood and agreed that to the extent that any such activities have
been conducted by Protected Officer prior to the date of a Change of Control,
the continued conduct of such activities (or the conduct of activities similar
in nature and scope thereto) subsequent to such date shall not thereafter be
deemed to interfere with the performance of Protected Officer's responsibilities
to the Company.
4. Termination of Employment.
4.1. Termination Benefits. If, during the term of this Agreement,
Protected Officer's employment with the Company shall be terminated within
twelve (12) months following a Change in Control, Protected Officer shall be
entitled to the following compensation and benefits:
(a) If Protected Officer's employment with the Company shall be
terminated (i) by the Company for Cause or Disability, (ii) by reason of
Protected Officer's death, (iii) due to Protected Officer's retirement pursuant
to the Company's policies applying to executive officers generally, or (iv) by
Protected Officer other than for Good Reason, the Company shall pay to Protected
Officer the Accrued Compensation;
(b) If Protected Officer's employment with the Company shall be
terminated for any reason other than as specified in Section 4.1(a), Protected
Officer shall be entitled to the following:
(i) the Company shall pay Protected Officer all Accrued
Compensation and a Pro-Rata Bonus;
(ii) the Company shall pay Protected Officer as severance pay
and in lieu of any further compensation for periods subsequent to the
Termination Date, an amount in cash equal to [three (3) times] [two (2)
times] the sum of (A) the Base Amount and (B) the Bonus Amount;
(iii) until the third anniversary of the Date of Termination,
Protected Officer shall have such rights with respect to benefits
provided by the Company, including without limitation life insurance,
disability,
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medical, dental and hospitalization benefits and pension and retirement
benefits as were provided to Protected Officer as of the Effective Date
or, if greater, at any time within ninety (90) days preceding the date
of the Change in Control; and
(iv) the restrictions on any outstanding incentive awards
(including restricted stock and granted performance shares or units)
granted to Protected Officer under the Company's stock option and other
stock incentive plans or under any other incentive plan or arrangement
shall lapse and such incentive award shall become 100% vested, all
stock options and stock appreciation rights granted to Protected
Officer shall become immediately exercisable and shall become 100%
vested and all performance units granted to Protected Officer shall
become 100% vested.
(c) The amounts provided for in Sections 4.1(a) and 4.1(b)(i), and
(ii) shall be paid in a single lump sum cash payment within thirty (30) days
after the Termination Date (or earlier, if required by applicable law).
(d) The Protected Officer shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise, and no such payment shall be offset or reduced by the amount of
any compensation or benefits provided to Protected Officer in any subsequent
employment.
4.2. Other Benefit Policies. The severance pay and benefits provided
for in this Section 4 shall be in lieu of any other severance or termination pay
to which Protected Officer may be entitled under any Company severance or
termination plan, program, practice or arrangement. The Protected Officer's
entitlement to any other compensation or benefits shall be determined in
accordance with the Company's employee benefit plans (including the plans listed
on Appendix A) and other applicable programs, policies and practices then in
effect. The Company may condition the payment to Protected Officer of severance
benefits pursuant to Section 4.1(b)(ii) upon Protected Officer's delivery of a
reasonable form of release in favor of the Company containing customary terms
and conditions for the release of employment related claims. Nothing in this
Agreement shall alter Protected Officer's status as an "at will" employee of the
Company.
5. Notice of Termination. Following a Change in Control, any purported
termination of Protected Officer's employment by the Company shall be
communicated by Notice of Termination to Protected Officer. For purposes of this
Agreement, no such purported termination shall be effective without such Notice
of Termination.
6. Excise Tax Payments.
6.1 In the event that any payment or benefit (within the
meaning of Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended
(the "Code")) to Protected Officer or for Protected Officer's benefit, paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise in connection with, or arising out of, Protected Officer's
employment with the Company or a Change in Control
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(a "Payment" or "Payments"), would be subject to the excise tax imposed by Code
Section 4999, or any interest or penalties are incurred by Protected Officer
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the "Excise
Tax"), then Protected Officer will be entitled to receive an additional payment
(a "Gross-Up Payment") in an amount such that after payment by Protected Officer
of all taxes (including any interest or penalties (other than interest and
penalties imposed by reason of Protected Officer's failure to file timely a tax
return or pay taxes shown due on Protected Officer's return) imposed with
respect to such taxes and the Excise Tax), including any Excise Tax imposed upon
the Gross-Up Payment, Protected Officer retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
6.2 An initial determination as to whether a Gross-Up Payment is
required pursuant to this Agreement and the amount of such Gross-Up Payment
shall be made by the Company. The Company shall provide its determination (the
"Determination"), together with detailed supporting calculations and
documentation, to Protected Officer within fifteen (15) days of the Termination
Date, if applicable, or such other time as requested by Protected Officer
(provided Protected Officer reasonably believes that any of the Payments may be
subject to the Excise Tax). If requested by Protected Officer, the Company shall
furnish Protected Officer, at the Company's expense, with an opinion reasonably
acceptable to Protected Officer from the Company's accounting firm (or an
accounting firm of equivalent stature reasonably acceptable to Protected
Officer) that there is a reasonable basis for the Determination. Any Gross-Up
Payment determined pursuant to this Section 6.2 shall be paid by the Company to
Protected Officer within five (5) days of receipt of the Determination.
6.3 As a result of the uncertainty in the application of Sections
4999 and 280G of the Code, it is possible that a Gross-Up Payment (or a portion
thereof) will be paid which should not have been paid (an "Excess Payment") or a
Gross-Up Payment (or a portion thereof) which should have been paid will not
have been paid (an "Underpayment").
(a) An Underpayment shall be deemed to have occurred (i) upon
notice (formal or informal) to Protected Officer from any governmental taxing
authority that Protected Officer's tax liability (whether in respect of
Protected Officer's current taxable year or in respect of any prior taxable
year) may be increased by reason of the imposition of the Excise Tax on a
Payment or Payments with respect to which the Company has failed to make a
sufficient Gross-Up Payment, (ii) upon a determination by a court, or (iii) by
reason of determination by the Company (which shall include the position taken
by the Company, together with its consolidated group, on its federal income tax
return). If an Underpayment occurs, Protected Officer shall promptly notify the
Company and the Company shall promptly, but in any event at least five (5) days
prior to the date on which the applicable government taxing authority has
requested payment, pay to Protected Officer an additional Gross-Up Payment equal
to the amount of the Underpayment plus any interest and penalties (other than
interest and penalties imposed by reason of Protected Officer's failure to file
timely a tax return or pay taxes shown due on Protected Officer's return)
imposed on the Underpayment.
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(b) An Excess Payment shall be deemed to have occurred upon a
Final Determination (as hereinafter defined) that the Excise Tax shall not be
imposed upon a Payment or Payments (or portion thereof) with respect to which
Protected Officer had previously received a Gross-Up Payment. A "Final
Determination" shall be deemed to have occurred when Protected Officer has
received from the applicable government taxing authority a refund of taxes or
other reduction in Protected Officer's tax liability by reason of the Excise
Payment and upon either (i) the date a determination is made by, or an agreement
is entered into with, the applicable governmental taxing authority which finally
and conclusively binds Protected Officer and such taxing authority, or in the
event that a claim is brought before a court of competent jurisdiction, the date
upon which a final determination has been made by such court and either all
appeals have been taken and finally resolved or the time for all appeals has
expired or (ii) the statute of limitations with respect to Protected Officer's
applicable tax return has expired. If an Excess Payment is determined to have
been made, the amount of the Excess Payment shall be treated as a loan by the
Company to Protected Officer, which loan Protected Officer must repay to the
Company together with interest at the applicable federal rate under Code Section
7872(f)(2); provided, that no loan shall be deemed to have been made and no
amount will be payable by Protected Officer to the Company unless, and only to
the extent that, the deemed loan and payment would either reduce the amount on
which Protected Officer is subject to tax under Code Section 4999 or generate a
refund of tax imposed under Code Section 4999.
6.4 Notwithstanding anything contained in this Agreement to the
contrary, in the event that, according to the Determination, an Excise Tax will
be imposed on any Payment or Payments, the Company shall pay to the applicable
government taxing authorities, as Excise Tax withholding, the amount of the
Excise Tax that the Company has actually withheld from the Payment or Payments.
7. Cooperation. Notwithstanding anything to the contrary contained
herein, payment of the amounts specified in Section 4.1(b)(ii) hereof is
conditional upon Protected Officer cooperating with the Company in connection
with any Change of Control or proposed Change of Control and all matters
relating to Protected Officer's employment with the Company and assisting the
Company as reasonably requested in transitioning Protected Officer's
responsibilities to Protected Officer's replacement as well as upon Protected
Officer refraining from doing or saying anything derogatory about the Company or
its businesses or personnel; provided, that Protected Officer shall not be
required to perform any duties or take any action that would constitute Good
Reason.
8. Confidential Information. Protected Officer shall hold in confidence
for the benefit of the Company all secret or confidential information, knowledge
or data relating to the Company and its businesses, which shall have been
obtained by Protected Officer in the course of Protected Officer's employment by
the Company and which shall not be public knowledge (other than by acts by
Protected Officer in violation of this Agreement) ("Confidential Information").
Whether before or after termination of the Protected Officer's employment with
the Company, Protected Officer shall not, without the prior written consent of
the Company, communicate or divulge any Confidential Information, other than to
the Company and to those persons or entities designated by the Company or
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as otherwise is reasonably necessary for Protected Officer to carry out his or
her responsibilities as an executive of the Company. In no event shall an
asserted violation of the provisions of this Section 8 constitute a basis for
deferring or withholding any amounts otherwise payable to Protected Officer
under this Agreement.
9. Covenant Not to Compete.
9.1. Non-Competition. In the event that Protected Officer receives
severance payments pursuant to Section 4.1(b)(ii), Protected Officer agrees
that, from the date of Protected Officer's receipt of such payment until the
sooner to occur of (i) the end of the twelve month following the Date of
Termination or (ii) the second anniversary of the date of the Change in Control,
Protected Officer will not, directly or indirectly, engage in any business
activity that is or may reasonably be found to be in competition with the
internet access service provider business of the Company and its subsidiaries as
such business may exist at any time from the Effective Date through the
Termination Date, unless Protected Officer can demonstrate that any action that
otherwise would contravene this Section 9.1 was done without use in any way of
Confidential Information; provided, that nothing in this Agreement shall be
deemed to prohibit Protected Officer from owning not more than five percent (5%)
of any class of publicly traded securities of a competitor.
9.2. Non-Solicitation. Protected Officer agrees that from the date
hereof to the sooner to occur of (i) the end of the twelfth month following the
Date of Termination or (ii) the second anniversary of the date of the Change in
Control, Protected Officer will not:
(a) Solicit, raid, entice or induce any employee of the Company to
be employed by any competitor of the Company;
(b) Solicit internet access service provider business for any
competitor from, or transact such business for any competitor with, any person,
firm or corporation which was, at any time during Protected Officer's employment
hereunder, an internet access service customer of the Company; or
(c) Assist a competitor in taking such action.
9.3. Remedies.
(a) Protected Officer agrees that any breach or threatened breach
by Protected Officer of any provision of this Section 9 will entitle the
Company, in addition to any other legal remedies available to it, to apply to
any court of competent jurisdiction to enjoin the breach or threatened breach,
it being acknowledged and agreed that any such material breach will cause
irreparable injury to the Company and that any damages will not provide adequate
remedies to the Company.
(b) In no event shall an asserted violation of the provisions of
this Section 9 constitute a basis for deferring or withholding any amounts
otherwise payable to Protected Officer under this Agreement.
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10. Exclusive Remedy.
10.1. Protected Officer's right to salary continuation and other
severance benefits pursuant to Section 4.1 shall be Protected Officer's sole and
exclusive remedy for any termination of Protected Officer's employment by the
Company other than for Death, Disability or Cause or by Protected Officer for
Good Reason. The payments, severance benefits and severance protections provided
to Protected Officer pursuant to this Agreement are provided in lieu of any
severance payments, severance benefits and severance protections provided in any
other plan or policy of the Company, except as may be expressly provided in
writing under the terms of any plan or policy of the Company, or in a written
agreement between the Company and Protected Officer entered into after the date
of this Agreement. Notwithstanding the foregoing, nothing in this Agreement
shall prevent or limit Protected Officer's continuing or future participation in
any benefit, bonus, incentive or other plan or program provided by the Company
(except for any severance or termination policies, plans, programs or practices)
and for which Protected Officer may qualify, nor shall anything herein limit or
reduce such rights as Protected Officer may have under any other agreements with
the Company (except for any severance or termination agreement). Amounts which
are vested benefits or which Protected Officer is otherwise entitled to receive
under any plan or program of the Company shall be payable in accordance with
such plan or program, except as explicitly modified by this Agreement.
10.2. The Company agrees to pay, to the full extent permitted by
law, all legal fees and expenses which Protected Officer may reasonably incur as
a result of any contest by the Company or others of the validity or
enforceability of, or liability under, any provision of this Agreement which is
ultimately decided in favor of Protected Officer.
11. Successors; Binding Agreement.
11.1. This Agreement shall be binding upon and shall inure to the
benefit of the Company and its Successors and Assigns, and the Company shall
require any Successors and Assigns to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession or assignment had taken place.
11.2. Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by Protected Officer or Protected Officer's
beneficiaries or legal representatives, except by will or by the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by Protected Officer's legal personal representative.
12. Fees and Expenses. The Company shall pay all reasonable legal fees
and related expenses (including the reasonable costs of experts, evidence and
counsel) incurred by Protected Officer as they become due as a result of (a)
Protected Officer's termination of employment (including all such fees and
expenses, if any, incurred in contesting or disputing any such termination of
employment), (b) Protected Officer's
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seeking to obtain or enforce any right or benefit provided by this Agreement
(including, but not limited to, any such fees and expenses incurred in
connection with any Dispute) or by any other plan or arrangement maintained by
the Company under which Protected Officer is or may be entitled to receive
benefits, and (c) Protected Officer's hearing before the Board as contemplated
in Section 2.4; provided, that the circumstances set forth in clauses (a) and
(b) of this Section 12 (other than as a result of Protected Officer's
termination of employment under circumstances described in Section 2.5(d))
occurred on or after a Change in Control.
13. Notice. Notices and all other communications provided for in this
Agreement (including the Notice of Termination) shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, addressed to the respective
addresses last given by each party to the other; provided, that all notices to
the Company shall be directed to the attention of the Board with a copy to the
Secretary of the Company. All notices and communications shall be deemed to have
been received on the date of delivery thereof or on the third business day after
the mailing thereof, except that notice of change of address shall be effective
only upon receipt.
14. Settlement of Claims. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against Protected Officer or others.
15. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by Protected Officer and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreement or
representation, oral or otherwise, express or implied, with respect to the
subject matter hereof has been made by either party which is not expressly set
forth in this Agreement.
16. Governing Law; Arbitration.
(a) This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of Colorado without giving effect to
the conflict of laws principles thereof.
(b) Any controversy or claim arising out of, relating to or in
connection with this Agreement, or the breach thereof, shall be settled by
arbitration administered by the American Arbitration Association ("AAA") in
accordance with its then existing Commercial Arbitration rules and judgment upon
the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof.
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(c) It is the express agreement of the parties that the provisions
of this Section, including the rules of the AAA , as modified by the terms of
this Section 16, shall govern the arbitration of any disputes arising pursuant
to this Agreement. In the event of any conflict between the law of the State of
Colorado, the law of the arbitral location, and the U.S. Arbitration Act (Title
9, U.S. Code), with respect to any arbitration conducted pursuant to this
Agreement, to the extent permissible, it is the express intent of the parties
that the law of Colorado, as modified herein, shall prevail. To the extent this
Section 16 is deemed a separate agreement, independent from this Agreement,
Sections 12, 13, 15, 17 and 18 are incorporated herein by reference. Either
party (the "Initiating Party") may commence an arbitration by submitting a
Demand for Arbitration under the AAA Rules and by notice to the other Party (the
"Respondent") in accordance with Section 13. Such notice shall set forth in
reasonable detail the basic operative facts upon which the Initiating Party
seeks relief and specific reference to the clauses of this Agreement, the amount
claimed, if any, and any nonmonetary relief sought against the Respondent. After
the initial list of issues to be resolved has been submitted, the arbitrators
shall permit either party to propose additional issues for resolution in the
pending proceedings.
(d) The place of arbitration shall be Denver, Colorado, or any
other place selected by mutual agreement.
(e) The parties shall attempt, by agreement, to nominate a sole
arbitrator for confirmation by the AAA. If the parties fail so to nominate a
sole arbitrator within 30 days from the date when the Initiating Party's Demand
for Arbitration has been communicated to the other party, a board of three
arbitrators shall be appointed by the parties jointly or, if the parties cannot
agree as to three arbitrators within 30 days after the commencement of the
arbitration proceeding, then one arbitrator shall be appointed by each of
Protected Officer and the Company within 60 days after the commencement of the
arbitration proceeding and the third arbitrator shall be appointed by mutual
agreement of such two arbitrators. If such two arbitrators shall fail to agree
within 75 days after commencement of the arbitration proceeding upon the
appointment of the third arbitrator, the third arbitrator shall be appointed by
the AAA in accordance with its then existing rules. Notwithstanding the
foregoing, if any party shall fail to appoint an arbitrator within the specified
time period, such arbitrator and the third arbitrator shall be appointed by the
AAA in accordance with its then existing rules. For purposes of this Section 16,
the "commencement of the arbitration proceeding" shall be deemed to be the date
upon which the Demand for Arbitration has been received by the AAA. Any award
shall be rendered by a majority of the members of the board of arbitration.
(f) An award rendered in connection with an arbitration pursuant
to this Section 16 shall be final and binding upon the parties, and any judgment
upon such an award may be entered and enforced in any court of competent
jurisdiction.
(g) The parties agree that the award of the arbitral tribunal will
be the sole and exclusive remedy between them regarding any and all claims
between them with respect to the subject matter of the arbitrated dispute. The
parties hereby waive all jurisdictional defenses in connection with any
arbitration hereunder or the enforcement of
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any order or award rendered pursuant thereto (assuming that the terms and
conditions of this arbitration clause have been complied with).
(h) With respect to any award issued by the arbitrators pursuant
to this Agreement, the parties expressly agree (i) that such order shall be
conclusive proof of the validity of the determination(s) of the arbitrators
underlying such order; and (ii) any federal court sitting in Denver, Colorado,
or any other court having jurisdiction, may enter judgment upon and enforce such
order, whether pursuant to the U.S. Arbitration Act, or otherwise.
(i) The arbitrators shall issue a written explanation of the
reasons for the award and a full statement of the facts as found and the rules
of law applied in reaching their decision to both parties. The arbitrators shall
apportion to each party all costs (other than attorneys' fees) incurred in
conducting the arbitration in accordance with what the arbitrators deem just and
equitable under the circumstances. The prevailing party shall be entitled to
recover its attorneys' fees from the other party. Any provisional remedy which
would be available to a court of law shall be available from the arbitrators
pending arbitration of the dispute. Either party may make an application to the
arbitrators seeking injunctive or other interim relief, and the arbitrators may
take whatever interim measures they deem necessary in respect of the subject
matter of the dispute, including measures to maintain the status quo until such
time as the arbitration award is rendered or the controversy is otherwise
resolved. The arbitrator shall have the authority to award any remedy or relief
that a court of the State of Colorado could order or grant, including, without
limitation, specific performance of any obligation created under this Agreement,
the issuance of an injunction, or the imposition of sanctions for abuse or
frustration of the arbitration process, but specifically excluding punitive
damages (the parties specifically agree that punitive damages shall not be
available in the event of any dispute).
(j) The parties may file an application in any proper court for a
provisional remedy in connection with an arbitrable controversy, but only upon
the ground that the award to which the application may be entitled may be
rendered ineffectual without provisional relief.
17. Severability. The provisions of this Agreement shall be deemed
severable, and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
18. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or otherwise, between the parties hereto
with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and Protected Officer has executed this
Agreement as of the day and year first above written.
VERIO INC.
ATTEST: By:
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Name:
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------------------------- Title:
Secretary -----------------------
PROTECTED OFFICER
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Signature
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Print Name
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