This EMPLOYMENT
AGREEMENT (the “Agreement”) is entered into as of
October 14, 2008 (the “Signing Date”), by and
between Limelight Networks, Inc. (the “Company”) and
Douglas Lindroth (“Executive”). Company and Executive
may be collectively referred to herein as the
“Parties.”
Executive is
currently serving as a member of the Company’s Board of
Directors. On or before October 20, 2008 Executive will resign
his position as a member of the Company’s Board of Directors
and will commence performance of his duties as Senior Vice
President and Chief Financial Officer as described in this
Agreement (the “Effective Date”). Executive will retain
the equity awards previously granted to him as a member of the
Company’s Board of Directors provided he continues as a
Service Provider throughout the vesting period of such
options.
1. Duties
and Scope of Employment.
(a)
Position and Duties. As of the Effective Date Executive will
assume the title, position and responsibilities of Senior Vice
President and Chief Financial Office (“CFO”). Executive
reports to the Company’s Chief Executive Officer
(“CEO”). Executive agrees to devote his full business
efforts and time to performing the duties of CFO, which include,
but are not limited to, acting as the Company’s supervising
and managing the finance and accounting functions, assuring
compliance with financial reporting requirements, advising the
Board, CEO and executive management team on finance, financial
planning and reporting matters, and will render such additional
business and professional services in the performance of
Executive’s duties, as are customarily performed by
executives with Executive’s position, and as will reasonably
be assigned to Executive by the CEO. Except as otherwise provided
in this Agreement, Executive will perform his duties from the
Company’s headquarters facilities in Tempe, AZ and, for an
average of one day per week, from the company’s satellite
facility or Executive’s home office in the San Diego, CA
area.
(b)
Obligations. Executive, except as provided in this
Agreement, will devote Executive’s full business efforts and
time to the Company and will use good faith efforts to discharge
Executive’s obligations under this Agreement to the best of
Executive’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. Executive agrees not to
actively engage in any other employment, occupation, or consulting
activity for any direct or indirect remuneration without the prior
approval of the board or directors (which approval will not be
unreasonably withheld); provided, however, that Executive may,
without the approval of the board of directors, serve in any
capacity with any civic,
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educational,
professional, industry or charitable organization, provided such
services do not interfere with Executive’s obligations to
Company. Executive has disclosed to the board of directors certain
directorships and other business activities in which Executive is
involved as of the Effective Date, and Executive may continue such
board memberships and existing and successor business activities
provided such activities can be carried out consistent with Company
policy and without impairing performance of Executive’s
duties under this Agreement.
(c)
No Conflicts . Executive represents, warrants and covenants
to the Company that as of the Effective Date, Executive will not be
a party to any contracts, understanding, agreement or policy,
written or otherwise, that will be breached by Executive entering
into, or performing services under, this Agreement. Executive
further represents that he has disclosed to the Company in writing
all threatened, pending, or actual claims that are unresolved and
still outstanding as of the Signing Date, in each case, against
Executive which he is aware, if any, as a result of his employment
with any previous employer or his membership on any boards of
directors.
(d)
Other Entities . Executive agrees to serve if appointed,
without additional compensation, as an officer and director for
each of the Company’s subsidiaries, partnerships, joint
ventures, limited liability companies and other affiliates,
including entities in which the Company has a significant
investment as determined by the Company. As used in this Agreement
the term “affiliates” will mean any entity controlled
by, controlling or under common control with the
Company.
2.
At-Will Employment and Inventions Agreement . Concurrently
with the signing of this Agreement Executive will also execute and
deliver to the Company an At-will Employment, Inventions and
Confidential Information Agreement (the “Inventions
Agreement”), a copy of which has been provided to Executive.
In the event of a conflict between any provisions of the Inventions
Agreement and this Agreement, this Agreement will control. The
Parties affirm that Executive’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 Executive.
However, as described in this Agreement, Executive may be entitled
to severance benefits depending upon the circumstances of
Executive’s termination of employment.
(a)
Base Salary . Commencing with the Effective Date, the
Company will pay Executive an annual salary of $300,000 as
compensation for Executive’s services (such annual salary, as
is then effective, to be referred to herein as “Base
Salary”). Executive’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 . Executive 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
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Board (the
“Committee”). During calendar year 2008 and 2009,
Executive’s target annual incentive (“Target Annual
Incentive”) will be $100,000. The actual earned annual cash
incentive, if any, payable to Executive for any performance period
will depend upon the extent to which the applicable performance
goal(s) specified by the Committee are achieved; and for 2008
prorated for the period between the Effective date and
December 31, 2008.
(i) On
the Effective Date the Company will issue to Executive:
(A) 350,000 Restricted Stock Units (the “RSUs”)
pursuant to the Company’s 2007 Equity Award Incentive Plan
(the “Plan”), and (B) an option to purchase 100,000
shares of the Company’s Common Stock (the
“Options”) at a per share exercise price equal to the
greater of five dollars ($5.00) per share or the Fair Market Value
on the Effective Date or if the Effective Date occurs during a
blackout period under the Company’s Insider Trading Policy
then on the third business day following the opening of the
Company’s trading window following the Effective Date, as
such terms are defined or used in the Plan. The RSUs and the
Options will be granted under and subject to the terms of the Plan.
One-fourth (1/4 th )
of the total number of shares subject to the Options will vest and
become exercisable on the one year anniversary of the Effective
Date, and an additional 1/48 th of
the total number of shares subject to the Options will vest and
become exercisable on the same day as the Effective Date of each
calendar month thereafter, provided Executive continues to be a
Service Provider (as such term is defined in the Plan) through each
such date. Except as provided in this Agreement, the Options will
be subject to the Company’s standard terms and conditions for
options granted under the Plan. One forty-eighth (1/48
th ) of the total number of RSUs will vest on the
one month anniversary of the Effective Date and an additional
1/48 th
on the same day as the Effective
Date of each calendar month thereafter, provided Executive
continues to be a Service Provider through each such
date.
(ii) Executive
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 Executive by the Company
pursuant to section 3(c)(i) above, 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.
(iii)
Acceleration upon Change of Control. In the event of a
Change of Control, 50% of Executive’s then outstanding
unvested Equity Awards will immediately vest. In the event that a)
the Company enters into an agreement after 90 days following
the Effective Date which agreement leads to a Change of Control,
and b) the Executive’s employment is terminated without cause
or Executive resigns for Good Reason in connection with that Change
of Control transaction, 100% of Executive’s then remaining
outstanding unvested Equity Awards will immediately vest. For the
purpose of clarity, if an agreement leading to a Change of Control
is entered into within 90 days of the Effective Date, no
accelerated vesting will occur beyond the 50% specified in 3 (c)
(iii) above, even if Executive is terminated in connection with
that Change of Control. See , Section 7(b)
herein.
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(d)
Signing Bonus . Executive will receive a one-time bonus of
$50,000 to be paid in the first regular payroll following the
Effective Date.
(a)
Generally . Executive will be eligible to participate in
accordance with the terms of all Company Executive benefit plans,
policies and arrangements that are applicable to other Executives
of the Company, as such plans, policies and arrangements may exist
from time to time.
(b)
Vacation . Executive will be entitled to receive paid annual
vacation in accordance with Company policy for other Executives,
but with vacation accrual of not less than four (4) weeks per
year.
5.
Expenses . The Company will reimburse Executive for
reasonable travel, entertainment and other expenses, and for
professional association fees and continuing education expenses,
incurred by Executive in the furtherance of the performance of
Executive’s duties hereunder. The Company will also reimburse
Executive for up to $2,500 for his expenses in engaging legal
counsel to review this Agreement on his behalf. The Company will
also reimburse Executive for expenses actually incurred in renting
an apartment in the Phoenix/Tempe/Scottsdale area, , which expenses
will not exceed $2,000 per month plus utilities. The Company will
also reimburse Executive for expenses actually incurred in air
travel between the Phoenix, Arizona area and San Diego, California.
All reimbursements to Executive 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 Executive’s
employment with the Company terminates for any reason, Executive
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 Executive benefit and compensation agreements or plans
applicable to Executive; (e) unreimbursed business expenses
required to be reimbursed to Executive; and (f) rights to
indemnification Executive may have under the Company’s
Certificate of Incorporation, Bylaws, this Agreement, and/or
separate indemnification agreement, as applicable. In the event
Executive’s employment with the Company terminates for any
reason (other than Cause), Executive will be entitled to exercise
any outstanding vested stock options for a period of six months
following the later of such termination of employment or the date
upon which Executive 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 Executive shall be entitled to
exercise such option. In addition, if the termination is by the
Company without Cause or Executive resigns for Good Reason,
Executive will be entitled to the amounts and benefits specified in
Section 7.
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(a)
Termination Without Cause other than in Connection with a Change
of Control . If Executive’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,
Executive will receive: (i) continued payment of Executive’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 Executive 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 365, such
amounts to be paid at the same time as similar bonus payments are
made to the Company’s other Executive officers, and
(iii) reimbursement for premiums paid for continued health
benefits for Executive (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
Executive validly elects to continue coverage under the
Consolidated Omnibus Budget Reconciliation Act
(“COBRA”)), or (B) the date upon which Executive
and Executive’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 Executive.
(b)
Termination Without Cause or Resignation for Good Reason in
Connection with a Change of Control . If Executive’s
employment is terminated by the Company without Cause or by
Executive for Good Reason, and the termination is in Connection
with a Change of Control, then, subject to Section 8,
Executive will receive: (i) continued payment of
Executive’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 Executive’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 Executive’s then
outstanding unvested equity awards in accordance with Section
3(c)(iii) above, and (iv) reimbursement for premiums paid for
continued health benefits for Executive (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 Executive validly elects to continue coverage
under COBRA), or (B) the date upon which Executive and
Executive’s eligible dependents become covered under similar
plans.
(c)
Voluntary Termination Without Good Reason or Termination for
Cause . If Executive’s employment is term
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