Exhibit
10.27
EMPLOYMENT
AGREEMENT
Employment
Agreement (this "Agreement") dated as of February 1, 2004 (the
"Effective Date"), by and between Internap Network Services
Corporation (the "Company") and Eric Suddith ("Executive")
(collectively the "Parties").
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1. Position and Duties
. Executive shall serve as the Vice
President, Operations 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 $ 160,000.00 ("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 and Executive
acknowledge that the Company will issue to Executive one or more
options to purchase 250,000 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 March 15, 2004. 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 am 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 assets of the Company (each, a
"Corporate Transaction") or, if consummation of such Corporate
Transaction is subject, at the time of such approval by
