Exhibit
10.28
EMPLOYMENT
AGREEMENT
Employment
Agreement (this "Agreement") dated as of May 2, 2005 (the
"Effective Date"), by and between Internap Network Services
Corporation (the "Company") and Robert P. Smith II ("Executive")
(collectively the "Parties").
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1. Position and Duties
. Effective May 17, 2005, Executive
shall serve as the Chief Marketing Officer and Vice President of
Marketing 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 shall work from the Company's offices in
Atlanta, Georgia.
2. Base Salary. Executive shall receive an annual base salary
of $ 200,000 ("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 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 .
(i) Executive shall be eligible to receive a
performance bonus (“Performance Bonus”) for achieving
key marketing objectives during the third and fourth quarters of
2005. The Executive’s Performance Bonus target for each
quarter shall be $20,000 and objectives established on or before
the start of each quarter. The CEO, in his sole and reasonable
discretion, shall determine, whether a Performance Bonus is payable
and, if so, the amount of such Bonus.
(ii) Executive shall participate in the
Company’s Annual Incentive Plan (“Bonus”) for
Executive and other senior executive officers. The
Executive’s Bonus target for 2005 shall be 50% of Executive's
Base Salary, prorated if less than a full year, depending on
individual and Company performance metrics. Performance metrics for
and target amount of the Bonus for 2006 and each subsequent
calendar year shall be established on or before March 31 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 March 31 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 and Executive
acknowledge that the Company will issue to Executive an option to
purchase 500,000 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") no later than
May 31, 2005. 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. Upon
Executive's involuntary termination by the Company of employment
without Cause (as defined below), Executive shall receive a cash
severance payment equal to the product of (x) the number of days
that Executive is an employee of the Company, divided by 365
(provided that the foregoing ratio shall never exceed one (1) and
(y) Executive’s then-current 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 Incumbent 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 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 as
