Exhibit 10.1
EMPLOYMENT
AGREEMENT
Employment Agreement (this "Agreement") dated as
of May 27, 2004 (the "Effective Date") by and between lnternap
Network Services Corporation (the "Company") and David Buckel
("Executive") (collectively the "Parties").
1. Position and Duties
. Effective as of May 27, 2004,
Executive shall serve as the Vice President and Chief Financial
Officer for the Company, with such duties, authorities and
responsibilities as are commensurate with such position. Executive
shall report to the Company's Chief Executive Officer ("CEO") and
work from the Company's offices in Atlanta, Georgia.
2. Base Salary . Effective as of May 11, 2004, Executive shall
receive an annual base salary of $190,000.00 ("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 or decreased
from time to time by the CEO 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
discretion.
3. Performance-Based Bonus
. While the Company has not decided
to implement a bonus plan ("Bonus") for Executive and other senior
executive officers at this time, should it do so in the future its
present intention is that Executive's Bonus would be from 35% to up
to 50% of Executive's Base Salary, prorated if less than a full
year. Performance metrics for the Bonus, if any, for 2004 shall be
established by the CEO in consultation with the Board and in their
sole and reasonable discretion as soon as practicable after a
determination has been made to implement a Bonus plan for Executive
and other senior executive officers. Performance metrics for and
target amount of the Bonus for 2005 and each subsequent calendar
year shall be established on or before February 28 of the year to
which the Bonus relates. The CEO, in consultation with the Board
and in their sole and reasonable discretion, shall determine, on or
before February 28 of the year in which the Bonus would be payable,
whether a Bonus is payable and, if so, the amount of such Bonus.
Unless otherwise determined by the Board, all Bonus payments shall
be made on the Company's first regular payroll date following such
determination and shall be subject to standard payroll tax
withholdings and deductions. To be eligible for a Bonus, Executive
must be continuously employed by the Company through the date on
which the Bonus is paid. Executive recognizes and agrees that: (a)
the Company may in its sole discretion and with reasonable notice
to Executive determine that any Bonus, if payable, may be paid in
whole or in part in the Company's common stock or other equity
securities, including restricted stock and stock options; and (b)
the Company may in its sole discretion suspend or discontinue any
bonus program at any time without any liability on the part of the
Company.
4. Equity Compensation
. The Company has heretofore granted
Executive one or more options to purchase 1,150,000 shares of the
Company's common stock, subject to the terms and conditions of the
relevant option plan(s) and related stock option agreement(s) (the
"Options"). The Board, upon the recommendation of the CEO and in
their sole discretion, may award additional options or equity or
other equity-based
compensation to
Executive on terms, in amounts and subject to performance goals as
determined by the CEO and the Board (any such options also being
referred to hereinafter as "Options" and any such equity or
equity-based compensation being referred to herein as "Additional
Equity Compensation").
5. 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 compensation and benefits from time to time, as it
deems necessary.
6. 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.
7. 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.
8. Severance Payments
. If Executive has been terminated
involuntarily without Cause (as defined below) by the Company prior
to November 30,2004, Executive shall receive, in recognition of his
undertaking to effect significant operational improvements in the
company's finance organization beginning May 14, 2004, a cash
severance payment equal to 1.11 times his Base Salary. If Executive
has been terminated involuntarily without Cause after that date,
Executive shall receive a cash severance payment equal to one (1)
times his Base Salary. Payment of such severance amounts shall be
subject to standard payroll tax withholdings and deductions. In
addition to the severance benefits provided above, upon Executive's
involuntary termination of employment without Cause, all of
Executive's unvested Options and Additional Equity Compensation
shall lapse and expire, and all of Executive's vested Options shall
remain exercisable no later than three months after the date of
termination. No payment or acceleration of Options or Additional
Equity Compensation shall be made pursuant to this Section 8 unless
prior to or concurrent with such payment a valid release has been
executed and delivered by Executive and becomes effective in
accordance with Section 11 hereof. Notwithstanding the immediately
preceding sentence, Executive shall not be entitled to any benefits
or rights under this Section 8 if Executive
also is eligible for payments and/or benefits under Section
9 hereof.
9. Change in Control Payments and
Acceleration . Upon
Executive's involuntary termination of employment without Cause (as
defined below) or voluntary termination of employment for Good
Reason, in either case within 12 months after a Change in Control,
(i) the Company shall pay Executive a cash severance payment equal
to two time the sum of Executive's then-current Base Salary and
maximum target Bonus and (ii) all of Executive's unvested Options
and Additional Equity Compensation shall become vested, free of
restrictions and immediately exercisable for the remaining term of
the relevant grant or award.
Payment of such severance payments shall be
subject to standard payroll tax withholdings and
deductions.
No payment or acceleration of Options or
Additional Equity Compensation shall be made unless prior to or
concurrent with such payment a valid release has been executed and
delivered by Executive and becomes effective in accordance with
Section 11 hereof.
Executive will continue to receive the
healthcare and life insurance coverages in effect on his date of
termination for twenty-four (24) months after the date of
termination pursuant to this Section 9 just as if he had remained
an active employee of the Company, subject to Executive paying the
customary employee portion of such coverages, provided that if the
Company cannot continue to cover Executive under its plans, the
Company will separately provide Executive with comparable coverages
or pay Executive in a lump sum the costs of such
coverages.
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"),
excluding the current members of the Board ("Series A Directors")
who have been elected pursuant to the terms of the Company's Series
A Convertible Preferred Stock ("Series A Stock"), 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 lncumbent Board (or deemed to be such pursuant to this
proviso), excluding the Series A Directors, shall be considered as
though such individual were a member of the lncumbent 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 lncumbent 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
