This EMPLOYMENT
AGREEMENT (the “Agreement”) is entered into as of
September 22, 2008 (the “Effective Date”), by and
between Limelight Networks, Inc. (the “Company”) and
Michael Gordon (“Employee”). Company and Employee may
be collectively referred to herein as the
“Parties.”
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A.
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Employee is currently serving as the
Company’s Chief Strategy Officer (“CSO”).
Employee has previously signed and delivered a Confidential
Information and Invention Assignment Agreement dated May 10,
2006 (the “Inventions Agreement”). The Inventions
Agreement acknowledges certain rights and imposes certain
obligations on the parties.
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B.
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Employee and the Company desire to
grant certain additional rights and impose certain additional
obligations upon the parties by entering into this
Agreement.
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1. Duties
and Scope of Employment.
(a)
Affirmation of Inventions Agreement, Position and Duties.
The parties each hereby reaffirm all of the terms and covenant
included in the Inventions Agreement. In the event of a conflict
between the terms of the Inventions Agreement and this Agreement,
the terms of this Agreement will control. As CSO, Employee reports
to the Company’s Chief Executive Officer (“CEO”).
Employee agrees to devote his full business efforts and time to
performing the duties of CSO, which include, but are not limited
to, acting as the Company’s technical and business
representative in pending and threatened intellectual property
related matters, working closely with the CEO to assess potential
technology acquisition matters to assure alignment with the
Company’s overall technology strategy, and ensuring that
marketing, development and research teams support product
initiatives that are aligned with the strategic objectives of the
Company, and will render such additional business and professional
services in the performance of Employee’s duties, consistent
with Employee’s position within the Company, as will
reasonably be assigned to Employee by the CEO.
(b)
Obligations. Employee, except as provided in this Agreement,
will devote Employee’s full business efforts and time to the
Company and will use good faith efforts to discharge
Employee’s obligations under this Agreement to the best of
Employee’s ability and in accordance with each of the
Company’s policies and procedures, including without
limitation, the Company’s code of conduct, conflict of
interests policies and such other policies and procedures as the
Company may adopt from time to time. Employee agrees not to
actively engage in any other employment,
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occupation, or
consulting activity for any direct or indirect remuneration without
the prior approval of the CEO (which approval will not be
unreasonably withheld); provided, however, that Employee may,
without the approval of the CEO, serve in any capacity with any
civic, educational, professional, industry or charitable
organization, provided such services do not interfere with
Employee’s obligations to Company.
2.
At-Will Employment . The Parties reaffirm that
Employee’s employment with the Company is for an unspecified
duration, and constitutes “at-will” employment. The
Parties acknowledge that this employment relationship may be
terminated at any time, upon written notice to the other party,
with or without good cause or for any or no cause, at the option
either of the Company or Employee. However, as described in this
Agreement, Employee may be entitled to severance benefits depending
upon the circumstances of Employee’s termination of
employment.
(a)
Base Salary . Commencing with the Effective Date, the
Company will pay Employee an annual salary of $220,000 as
compensation for Employee’s services (such annual salary, as
is then effective, to be referred to herein as “Base
Salary”). Employee’s Base Salary will be subject to
annual review (subject to the provisions of Section 10(d)(iii)
of this Agreement). The Base Salary will be paid periodically in
accordance with the Company’s normal payroll practices and
will be subject to the usual, required withholdings.
(b)
Annual Incentive . Employee will be eligible to receive
annual cash incentives payable for the achievement of company or
individual performance goals established or approved by the Board
of Directors of the Company (the “Board”) or by the
Compensation Committee of the Board (the “Committee”).
During calendar year 2008, Employee’s target annual incentive
(“Target Annual Incentive”) will be $110,000. The
actual earned annual cash incentive, if any, payable to Employee
for any performance period will depend upon the extent to which the
applicable performance goal(s) specified by the Committee are
achieved.
(i) Employee
may from time to time be issued stock options or other equity
awards under the Company’s 2007 Equity Incentive Plan (the
“Plan”), or successor plan(s). Such equity awards,
together with any equity awards issued to Employee by the Company
prior to the Effective date whether under the Plan or any
predecessor plan, are referred to in this Agreement as the Equity
Awards. Except as provided in this Agreement, the Equity Awards
will be subject to the Company’s standard terms and
conditions for Equity Awards granted under the Plan or such
predecessor or successor plan under which such Equity Award was or
may be issued.
(ii)
Acceleration upon Change of Control. In the event of a
Change of Control, 50% of Employee’s then outstanding
unvested Equity Awards will immediately vest. In the event that the
Employee’s employment is terminated without cause or
resignation for Good Reason in connection with a Change of Control
transaction, 100% of Employee’s then outstanding unvested
Equity Awards will immediately vest. See , Section 7(b)
herein.
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(a)
Generally . Employee will be eligible to participate in
accordance with the terms of all Company employee benefit plans,
policies and arrangements that are applicable to other Employees of
the Company, as such plans, policies and arrangements may exist
from time to time.
(b)
Vacation . Employee will be entitled to receive paid annual
vacation in accordance with Company policy for other Employees, but
with vacation accrual of not less than four (4) weeks per
year.
5.
Expenses . The Company will reimburse Employee for
reasonable travel, entertainment and other expenses, and for
professional association fees and continuing education expenses,
incurred by Employee in the furtherance of the performance of
Employee’s duties hereunder. All reimbursements to Employee
by the Company pursuant to this Section 5 shall be in
accordance with the Company’s expense reimbursement policy as
in effect from time to time.
6.
Termination of Employment . In the event Employee’s
employment with the Company terminates for any reason, Employee
will be entitled to any (a) unpaid Base Salary accrued up to
the effective date of termination; (b) unpaid, but earned and
accrued annual incentive for any completed fiscal year as of his
termination of employment; (c) pay for accrued but unused
vacation; (d) benefits or compensation as provided under the
terms of any employee benefit and compensation agreements or plans
applicable to Employee; (e) unreimbursed business expenses
required to be reimbursed to Employee; and (f) rights to
indemnification Employee may have under the Company’s
Certificate of Incorporation, Bylaws, this Agreement, and/or
separate indemnification agreement, as applicable. In the event
Employee’s employment with the Company terminates for any
reason (other than Cause), Employee will be entitled to exercise
any outstanding vested stock options for a period of three months
following the later of such termination of employment or the date
upon which Employee ceases to provide any other services to the
Company or any of its affiliates, whether as a director,
independent contractor or otherwise, but in no event later than the
applicable scheduled expiration date of such award (in the absence
of any termination of employment) as set forth in the award
agreement. For purposes of clarity, the term “expiration
date” shall be the scheduled expiration of the option
agreement and not the period that Employee shall be entitled to
exercise such option. In addition, if the termination is by the
Company without Cause or Employee resigns for Good Reason, Employee
will be entitled to the amounts and benefits specified in
Section 7.
(a)
Termination Without Cause other than in Connection with a Change
of Control . If Employee’s employment is terminated by
the Company without Cause and such termination is not in Connection
with a Change of Control, then, subject to Section 8, Employee
will receive: (i) continued payment of Employee’s Base Salary
(subject to applicable tax withholdings) for twelve
(12) months, such amounts to be paid in accordance with the
Company’s normal payroll policies; (ii) the actual earned
cash incentive, if any, payable to Employee for the current year,
pro-rated to the date of termination, with such pro-rated amount to
be calculated by multiplying the current year’s Target Annual
Incentive by a fraction with a numerator equal to the number of
days inclusive between the start of the current calendar year and
the date of termination and a denominator equal to
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365, such
amounts to be paid at the same time as similar bonus payments are
made to the Company’s other Employee officers, and
(iii) reimbursement for premiums paid for continued health
benefits for Employee (and any eligible dependents) under the
Company’s health plans until the earlier of (A) twelve
(12) months, payable when such premiums are due (provided
Employee validly elects to continue coverage under the Consolidated
Omnibus Budget Reconciliation Act (“COBRA”)), or
(B) the date upon which Employee and Employee’s eligible
dependents become covered under similar plans. For purposes of
clarity, the Committee shall determine, in good faith, the extent
to which any cash incentive has been earned by Employee.
(b)
Termination Without Cause or Resignation for Good Reason in
Connection with a Change of Control . If Employee’s
employment is terminated by the Company without Cause or by
Employee for Good Reason, and the termination is in Connection with
a Change of Control, then, subject to Section 8, Employee will
receive: (i) continued payment of Employee’s Base Salary
for the year in which the termination occurs (subject to applicable
tax withholdings), for twelve (12) months, such amounts to be
paid in accordance with the Company’s normal payroll
policies; (ii) payment of an amount equal to 100% of
Employee’s Target Annual Incentive for the year in which
termination occurs (subject to applicable tax withholding) such
amount to be paid in accordance with the Company’s normal
payroll procedures over the following twelve (12) months,
(iii) the vesting of 100% of Employee’s then outstanding
unvested equity awards, and (iv) reimbursement for premiums
paid for continued health benefits for Employee (and any eligible
dependents) under the Company’s health plans until the
earlier of (A) twelve (12) months, payable when such
premiums are due (provided Employee validly elects to continue
coverage under COBRA), or (B) the date upon which Employee and
Employee’s eligible dependents become covered under similar
plans.
(c)
Voluntary Termination Without Good Reason or Termination for
Cause . If Employee’s employment is terminated
voluntarily (excluding a termination for Good Reason in connection
with a change of control) or is terminated for Cause by the
Company, then, except as provided in Section 7, (i) all
further vesting of Employee’s outstanding equity awards will
terminate immediately and such options shall be exercisable in
accordance with the Company’s stock option plan;
(ii) all payments of compensation by the Company to Employee
hereunder will terminate immediately, and (iii) Employee will be
eligible for severance benefits only in accordance with the
Company’s then established plans, if any. In the event that
Employee’s employment is terminated due to death or
Disability, fifty percent (50%) of Employee’s then unvested
Equity Awards shall vest.
8.
Conditions to Receipt of Severance/Acceleration .
(a)
Separation Agreement and Release of Claims . The receipt of
any severance or other benefits pursuant to Sections 3 and 7
will be subject to Employee signing and not revoking a separation
agreement and release of claims in a form reasonably acceptable to
the Company and honoring all continuing covenants in this Agreement
and the Inventions Agreement. No severance or other benefits
pursuant to Section 7 will be paid or provided until the
separation agreement and release of claims becomes
effective.
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(b)
Confidentiality . Employee will fully perform and honor, and
hereby reaffirms, all covenants included in any other agreements
between Employee and the Company, including without limitation, all
covenant included in the Inventions Agreement.
(c)
Non-Competition. Employee agrees, for the duration of two
(2) years (the “Time Limit”) following the date of
the termination of employment with the Company (whether such
termination is voluntary or involuntary, with or without cause)
directly or indirectly or in any individual or representative
capacity, that he will not engage, own, manage, operate, control,
aid, or assist another in the operation, organization or promotion
of, be employed by, participate in, advise, or engage in any manner
with the ownership, management, operation, or control of any
business, which has a place of business or regularly conducts
business in the United States of America, and which promotes or
sells products or services competitive with those of the Company;
namely, content delivery network (“CDN”) services. In
the event of a violation of any of the covenants contained in this
Agreement, the Time Limit shall be extended by a period of time
equal to that period beginning when the activities constituting the
violation commenced, and ending when those activities terminated.
In the event that a court of competent jurisdiction determines that
the Time Limit restriction is too broad, the Parties agree to
reduce such restriction to Employee’s employment with the
Company and eighteen (18) months from the date of termination
of any such employment. In the event that a court of competent
jurisdiction determines that the 18 month Time Limit herein is
too
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