NAVISITE, INC. Separation Agreement
Exhibit 10.57
NAVISITE, INC.
This Separation Agreement (the “Agreement”) is made and entered into by and between
NaviSite, Inc., a Delaware corporation (the “Company”), and Xxxxx Xxxxxx (the
“Employee‘”) as of April 6, 2006.
WHEREAS, in order to induce you to remain in its employ, the Company agrees that you shall
receive the benefits set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the
parties agree as follows:
| 1. | Certain Definitions. |
As used herein, the following terms shall have the meanings set forth below:
| (a) | “Cause” shall mean (i) an intentional act of fraud, embezzlement or theft in connection with your duties to the Company or in the course of your employment with the Company, (ii) your willful engaging in gross misconduct which is demonstrably and materially injurious to the Company, (iii) your willful and continued failure to perform substantially your duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), which such failure is not cured within five (5) days after a written demand for substantial performance is delivered to you by the Company which specifically identifies the manner in which the Company believes that you have not substantially performed your duties. For purposes of this Subsection, no act or failure to act on your part shall be deemed “willful” unless done or omitted to be done by you not in good faith and without reasonable belief that your action or omission was in the best interest of the Company. | ||
| (b) | “Date of Termination” shall have the meaning set forth in Section 2(c). | ||
| (c) | “Disability” shall be deemed to have occurred if, as a result of incapacity due to physical or mental illness, you shall have been absent from the full time performance of your duties with the Company for six (6) consecutive months and, within thirty (30) days after written Notice of Termination by reason of disability is given to you, you shall not have returned to the full time performance of your duties. | ||
| (d) | “Good Reason” shall mean, without your express written consent, the occurrence of any of the following circumstances unless, in the cases of paragraphs (i), (ii), (iii), (iv), (v) or (vi), such circumstances are fully corrected prior to the Date of Termination specified in the Notice of Termination given in respect thereof: |
| (i) | any significant diminution in your position, duties responsibilities, power, or office (not solely a change in title); | ||
| (ii) | any reduction, without your consent, in your annual base salary as in effect on the date hereof or as the same may be increased from time to time; |
| (iii) | the failure by the Company to (i) continue in effect any material compensation or benefit plan in which you participate, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or (ii) continue your participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of your participation relative to other participants; | ||
| (iv) | the failure by the Company to continue to provide you with benefits substantially similar to those enjoyed by you under any of the Company’s life insurance, medical, health and accident, or disability plans, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits, or the failure by the Company to provide you with the number of paid vacation days to which you are entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy; | ||
| (v) | any requirement by the Company or of any person in control of the Company that the location at which you perform your principal duties for the Company be changed to a new location that is outside a radius of fifty (50) miles from your principal place of employment; or | ||
| (vi) | the failure of the Company to obtain a reasonably satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 5. |
| (e) | “Notice of Termination” shall have the meaning set forth in Section 2(b). | ||
| (f) | “Severance Payments” shall have the meaning set forth in Section 3(b)(ii). |
| 2. | Employment Status. |
| (a) | You acknowledge that this Agreement does not constitute a contract of employment or impose on the Company any obligation to retain you as an employee. You may terminate your employment at any time, with or without Good Reason. | ||
| (b) | Any termination of your employment by the Company or by you during the term of this Agreement shall be communicated by written notice that indicates the specific provision in this Agreement relied upon and sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated (“Notice of Termination”). A Notice of Termination shall be delivered to the other party hereto in accordance with Section 6. | ||
| (c) | The “Date of Termination” shall mean (i) if your employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that you shall not have returned to the full-time performance of your duties during such thirty (30) day period), and (ii) if your employment is terminated by the Company for Cause or other than for Cause, by you for Good Reason or for any other reason (other than Disability), the date specified in the Notice of Termination. | ||
| (d) | Your right to terminate your employment for Good Reason shall not be affected by your incapacity due to physical or mental illness. Your continued employment shall not |
| constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason under this Agreement. |
| 3. | Compensation Upon Termination. |
Subject to the terms and conditions of this Agreement, you shall be entitled to the
following benefits during a period of disability, or upon termination of your employment,
as the case may be, provided that such period of termination occurs during the term of this
Agreement.
| (a) | Cause and Voluntary Termination other than for Good Reason. If your employment shall be terminated by the Company for Cause or by you other than for Good Reason, the Company shall pay you your full base salary and all other compensation through the Date of Termination at the rate in effect at the time the Notice of Termination is given, plus all other amounts to which you are entitled under any compensation plan of the Company at the time such payments are due, and the Company shall have no further obligations to you under this Agreement. | ||
| (b) | Termination Without Cause; Voluntary Termination for Good Reason. If your employment with the Company is terminated by the Company (other than for Cause, Disability or your death) or by you for Good Reason, then you shall be entitled to the benefits below upon effectiveness (taking into account any applicable statutory revocation periods) of a general waiver and release from you in favor of the Company, its directors, officers, employees, representatives, agents and affiliates in a form satisfactory to the Company. Notwithstanding the foregoing, the Company shall not provide any benefit otherwise receivable by you pursuant to subsection (ii - v) of this paragraph (b) if an equivalent benefit is actually received by you from another employer during the six (6) month period following your termination, and any such benefit actually received by you shall be reported to the Company. |
| (i) | The Company shall pay to you your full base salary through the Date of Termination at the rate in effect at the time of Notice of Termination is given; | ||
| (ii) | The Company will pay as severance pay to you, severance payments at your annual base salary in effect on the Date of Termination, less applicable withholding (together with the payments provided in paragraphs (iii - v) below, the “Severance Payments”) until six (6) months following the Date of Termination. Severance Payments will be made in accordance with the Company’s normal payroll procedures; | ||
| (iii) | The Company will provide a Bonus Payment equal to your target bonus for the current fiscal year pro rated to your Date of Termination. This Bonus Payment will be made in a lump sum following the Date of Termination. In addition, the Company will pay you any unpaid bonus from the prior fiscal year; | ||
| (iv) | The Company shall pay to you all legal fees and expenses incurred by you in seeking to obtain or enforce any right or benefit provided by this Agreement; and | ||
| (v) | for up to a six (6) month period after such termination, the Company shall provide reimbursement to you for COBRA payments for health and welfare benefits continuation provided you elect COBRA coverage. |
| (c) | In the event that you become entitled to the Severance Payments, if any of the Severance Payments will be subject to the tax imposed by Section 4999 of the code (or any similar tax that may hereafter be imposed) (the “Excise Tax”) the Company shall pay to you an additional amount (the “Gross-Up Payment”) such that the net amount retained by you, after deduction of any Excise Tax on the Total Payments (as hereinafter defined) and any federal, state and local income tax and Excise Tax upon the payment provided for by this Subsection, shall be equal to the Total Payments. For purposes of determining whether any of the Severance Payments will be subject to the Excise Tax and the amount of such Excise Tax, (a) any other payments or benefits received by you in connection with your termination of employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, or any person affiliated with the Company or such person) (which together with the Severance Payments, constitute the “Total Payments”) shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code, and all “excess parachute payments” within the meaning of Section 280G(b)(1) shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected by the Company’s independent auditors such other payments or benefits (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered within the meaning if Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax, (b) the amount of the Total Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (1) the total amount of the Total Payments or (2) the amount of excess parachute within the meaning of Section 280G(b)(1) (after applying paragraph (a), above), and (c) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company’s independent auditors in accordance with the principles of Sections 280G(b)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, you shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of your residence on the Date of Termination, net of the maximum reduction in federal income taxes, which could be obtained from deduction of such state and local taxes. In the event that the Excise Tax is subsequently determined to be less than the amount taken unto account hereunder at the time of termination of your employment, you shall repay to the Company at the time the amount of such reduction in excise tax is finally determined the portion of the Gross-Up Payment attributable to such reduction (plus the portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by you if such repayment results in a reduction in Excise Tax and/or a federal, state and local income tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of your employment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional gross-up payment in respect of such excess (plus any interest payable with respect to such excess) at the time that amount of such excess is finally determined. |
| 4. | Acceleration of Compensation upon Termination. All options and shares of restricted stock granted or issued to you under the Company’s Amended and Restated 2003 Stock Incentive Plan or any other stock incentive plan of the Company shall become exercisable and vested in full on the Date of Termination. |
| 5. | Successors; Binding Agreement. |
| (a) | The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain an assumption of this Agreement at or prior to the effectiveness of any succession shall be a breach of this Agreement and shall constitute Good Reason if you elect to terminate your employment, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, Company shall mean the Company as defined above and any successor to its business or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. | ||
| (b) | This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributes, devisees and legatees. If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or if there is no such designee, to your estate. |
| 6. | Notice. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be duly given when delivered or when mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed to the Company, at 000 Xxxxxxxxx Xxxx, Xxxxxxx, XX 00000, Attention: General Counsel and Chief Financial Officer, and to you at the address set forth below or to such other address as either the Company or you may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. | |
| 7. | Miscellaneous. |
| (a) | The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. | ||
| (b) | The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the Commonwealth of Massachusetts. | ||
| (c) | No waiver by you at any time of any breach of, or compliance with, any provision of this Agreement to be performed by the Company shall be deemed a waiver of that or any other provision at any subsequent time. | ||
| (d) | This Agreement may be executed in counterparts, each of which shall be deemed to be an original but both of which together will constitute one and the same instrument. | ||
| (e) | Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state of local law. |
| (f) | This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto; and any prior agreement of the parties hereto in respect of the subject matter contained herein is hereby terminated and cancelled. |
If this letter sets forth our agreement on the subject matter hereof, kindly sign and return to the
Company the enclosed copy of this letter, which will then constitute our agreement on this subject.
| NAVISITE, INC. |
||||
| By: | /s/ Xxxx X. Xxxxx, Xx. | |||
| Name: | Xxxx X. Xxxxx. Jr. | |||
| Title: | Chief Financial Officer | |||
Acknowledged and Agreed this 6 day of April, 2006:
EMPLOYEE
| /s/ Xxxxx X. Xxxxxx | ||||
| Signature | ||||
| Xxxxx X. Xxxxxx | ||||
| Print Name | ||||
| EVP, Corporate Development & CTO | ||||
| Title | ||||
Address: 00 Xxxxxxxx Xxx
Xxxxxxxxxxxx, XX
00000
Xxxxxxxxxxxx, XX
00000
