EMPLOYMENT AGREEMENT
Exhibit
10.1
This
Employment Agreement (this "Agreement") is entered into as of April 2, 2007,
but
to be effective as of April 16, 2007 (the "Effective Date"), by and between
Internap Network Services Corporation (the "Company" or "Internap") and Xxxxxxx
Xxxxxxxx ("Executive") (collectively the "Parties").
1. Position
and Duties.
Executive shall serve as Chief Operating Officer for the Company, with such
duties, authorities and responsibilities as are commensurate with such position.
Executive shall work from the Company’s offices in Atlanta,
Georgia.
2. Base
Salary.
Executive shall receive an annual base salary of $350,000 ("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 50% of Executive’s annual Base Salary, subject to the terms and
conditions of the Incentive Plan and pro-rated for the length of your employment
during the applicable Incentive Plan year.
4. One-time
Signing Bonus.
The
Company will make a one-time signing bonus payment to Executive in the total
amount of $20,000, which shall be payable in twelve (12) equal monthly
installments during the course of Executive’s first year of employment. The
one-time signing bonus payment under this Section 4 will not be considered
as
part of Executive’s Base Salary, bonus potential under the Incentive Plan or
other compensation programs or severance amounts. Notwithstanding anything
to
the contrary contained in this Agreement, if Executive voluntarily terminates
his employment with the Company without Good Reason (as defined below) within
twelve (12) months from the Effective Date, Executive shall immediately repay
to
the Company the full amount of this one-time signing bonus that has theretofore
been paid to Executive.
5. Equity
Compensation.
The
Company and Executive acknowledge that the CEO shall recommend to the Board
that
the Company issue to Executive 125,000 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").
6. 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
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.
7. 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.
8. Relocation.
Executive shall have a budget of (i) up to $100,000, including the tax gross-up
that will be required, to be used for his relocation for expenses under
Internap’s Domestic Relocation Program Benefits attached hereto as Exhibit A
(the “Relocation Program”) other than for expenses set forth in Section 3.8 and
3.8-1 of the Relocation Program and (ii) up to $50,000 to be used for expenses
set forth in Sections 3.8 and 3.8-1 of the Relocation Program, all such expenses
subject to the terms of the Relocation Program that sets forth the relocation
terms and dollar limits applicable to Executive’s circumstances. Notwithstanding
anything to the contrary contained in this Agreement, if Executive voluntarily
terminates his employment with the Company without Good Reason within 12 months
from the date of relocation, Executive shall promptly repay the Company the
amount of all relocation expenses paid by the Company associated with
Executive’s relocation to the Atlanta area no later than 30 days after such
termination date.
9. 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.
10. Severance
Payments.
Upon
Executive’s involuntary termination of employment by the Company without Cause
(as defined below), 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 10 shall be subject to standard payroll tax withholdings
and deductions.
Upon
Executive's involuntary termination of employment without Cause, all of
Executive's unvested Restricted Shares, 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 10 if Executive also is eligible for payments and/or benefits
under
Section 11 hereof.
11. Change
in Control Payments and Acceleration.
If (i)
a Change of Control (as defined below) occurs on or before the first anniversary
of the Effective Date or (ii) 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 (x) the Company shall pay Executive a cash severance
payment equal to one and one-half (1.5) times the sum of Executive’s
then-current annual Base Salary plus the maximum target Bonus under the
Incentive Plan and (y) 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 11 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 (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 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)
material 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)
Executive’s willful and continued failure to perform his duties hereunder (other
than such failure resulting from the Executive’s incapacity due to physical or
mental illness or after the issuance of a notice of termination by the Executive
for Good Reason) within ten (10) business days after the Company delivers to
him
a written demand for performance that specifically identifies the actions to
be
performed provided that such written demand is not unlawful or in violation
of
Executive’s fiduciary duties to the Company.
For
purposes of this Section 11, no act or failure to act by the Executive shall
be
considered a “gross omission”, “gross dereliction” or “willful” if such act is
done by the Executive in the good faith belief that such act is or was to be
beneficial to the Company or such failure to act is due to the Executive’s good
faith belief that such action would be materially harmful to the
Company.
Executive
shall not be deemed to have been terminated for “Cause” unless there shall have
been delivered to him written notice, not less than ten (10) business days
prior
to the proposed termination date, specifying the basis for such termination;
provided, however, that if clause (iv) above is the basis for such termination,
then such termination shall be effective on the date such written notice is
delivered to Executive.
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;
(ii) any significant reduction in Executive’s then current total
compensation from that compensation paid by the Company in the prior fiscal
year; (iii) a change of more than fifty (50) miles Executive's permanent
workplace without Executive's consent, or (iv) any material breach of this
Agreement by the Company. Executive shall not be deemed to have terminated
this
Agreement for “Good Reason” unless he shall have delivered to the Company
written notice, not less than ten (10) business days prior to the proposed
termination date, specifying the basis for such termination.
12. 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.
13. 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 substantially similar
in all material respects to the form of Release attached hereto as Exhibit
B
(but subject to such changes as the Company may deem reasonably necessary in
order to take into account changes in applicable law) 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.
14. 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 Section 14 of this Agreement: (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.
15. 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.
16. 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.
The
Company shall reimburse Executive for the legal fees and expenses incurred
by
Executive in connection with the review and negotiation of this Agreement up
to
$5,000.
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
XXXXXXXX
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By:
/s/
Xxxxx X.
XxXxxxxx
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/s/
Xxxxxxx Xxxxxxxx
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Name:
Xxxxx X. XxXxxxxx
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Xxxxxxx
Xxxxxxxx
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Title:
President & CEO
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