Exhibit 99.1
TRANSITION AND SEVERANCE
AGREEMENT
The parties to this Transition and
Severance Agreement (“Agreement”) are Philip Koen
(“Koen”) and Equinix, Inc. and its parent
corporation(s) domestic and foreign, subsidiary corporations
domestic and foreign, d/b/a/ companies domestic and foreign,
affiliated companies domestic and foreign, successors, assigns, and
operating units domestic and foreign (hereinafter collectively
referred to as “Equinix” or the “Company”).
This Agreement is for the benefit of Koen and Equinix (collectively
the “parties”).
RECITALS
WHEREAS , Koen is presently employed as President and
Chief Operating Officer (“COO”) of the
Company;
WHEREAS , the Company and Koen mutually agree to:
(i) terminate their employment relationship;
(ii) transition Koen’s responsibilities as President and
COO with present responsibility for the Company’s Asia
Pacific Operations to other officers within the Company; and
(iii) release each other from any and all claims as set forth
herein; and
WHEREAS , the parties have mutually agreed to end their
relationship on mutually beneficial terms;
NOW, THEREFORE
, in consideration of the mutual
promises contained herein, the parties agree as follows:
1. Definition of
Terms. The following terms referred to in this Agreement
shall have the following meanings:
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(a)
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Base
Salary . “Base
Salary” means $322,000 per annum.
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(b)
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Bonus . “Bonus” means $193,200.
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(c)
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Cause . “Cause” shall mean any one or more
of the following: (i) any act of material personal dishonesty
taken by Koen in connection with his responsibilities as an
employee; (ii) Koen’s conviction of a felony; or
(iii) Koen’s violation of his obligations to the Company
that are materially injurious to the Company and that are (if
curable) not cured within 15 days after the Company delivers to
Koen a written demand for performance describing the basis for the
Company’s belief that Koen has violated his obligations to
the Company.
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(d)
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Compensation
Continuation Period .
“Compensation Continuation Period” shall mean the
eighteen (18) month period immediately following the
Separation Date.
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(e)
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Separation
Date . The
“Separation Date” shall mean March 2,
2006.
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(f)
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Effective
Date . The
“Effective Date” shall mean the eighth (8th) day
after Koen executes this Agreement, assuming he does not revoke it
after he signs it.
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(g)
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Transition
Period . The
“Transition Period” shall mean the period of time
between the Effective Date and the Separation Date.
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2. Transition Period and
Termination of Employment . Koen and the Company
acknowledge and agree as follows:
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(a)
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Transition
Period . The parties
intend that Koen shall continue his full-time employment during the
Transition Period, unless the Company terminates
Koen’s
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employment for
Cause. While Koen is employed by Company during the Transition
Period, Koen’s Base Salary and employee benefits, including
accrual of vacation and vesting of stock options (as described
below), benefits under the Expatriate Agreement executed by Koen
and the Company dated January 5, 2003 (as described in section
2(c)(iv) below, the “Ex-Pat Agreement”) and
participation in the Company’s 401(k), will continue
unchanged from what they were immediately before the Effective
Date. Koen will also receive a Bonus for the year 2005 payable when
all other employees eligible to receive a similar bonus for 2005
are paid their bonus and/or by the close of business on
March 15, 2006, whichever is earlier. The parties acknowledge
and agree that Koen’s employment during the Transition Period
shall be at-will, as defined under California law.
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(b)
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Duties . During the Transition Period, Koen
shall:
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(i)
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continue to
serve as the President and COO and report to the Company’s
Chief Executive Officer;
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(ii)
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transition and
hand over his responsibilities to such other person(s) that the
Company designates;
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(iii)
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finalize all
documentation and reporting related to his responsibilities as
reasonably necessary;
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(iv)
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transfer
knowledge generally regarding Company’s operations as
reasonably requested and necessary;
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(v)
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introduce any
designated individual to all concerned functions and primary
contacts;
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(vi)
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perform such
other tasks and duties that the Company may reasonably assign to
Koen; and
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(vii)
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take the
following vacation period and holidays: a) vacation:
November 21, 22, 23, 27; December 23, 27-30; and b)
holidays: Deepavali - 11/1; Hari Raya Puasa – 11/3, 4;
Thanksgiving – 11/24, 25; Christmas – 12/25,
26.
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If any of the above tasks are not
completed by the Separation Date, the parties may, at their mutual
discretion and upon mutually agreeable terms, enter into a
consulting agreement that would permit Koen to complete them. While
Koen shall be a full-time employee of Company during the Transition
Period, he may also reasonably investigate alternative employment
opportunities during the Transition Period provided he notifies the
Company’s Chief Executive Officer of any necessary absences
to do so. The Company understands that, in the final months of the
Transition Period (commencing in January, 2006), Koen may require
extended absences from the Singapore office to attend to matters in
the U.S. pertinent to his transition duties and transition back to
the United States after his Singapore assignment. Such absences
will not be grounds for the Company to terminate Koen’s
employment for “Cause.”
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(c)
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Termination
of Employment . Unless
Koen resigns or is terminated earlier for Cause pursuant to
Section 3 below, Koen’s employment with the Company
shall terminate as of the close of business on the Separation Date.
As of the Separation Date, it is mutually agreed by the parties
that Koen will no longer be an employee of the Company and will no
longer hold any positions or offices with the Company.
Upon
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the termination
of Koen’s employment for any reason, Koen shall not be
entitled to any payments, benefits, damages, awards or compensation
other than as provided by this Agreement. Without regard to the
reason for, or the timing of, Koen’s termination of
employment and subject to the provisions of Section 3
below:
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(i)
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the Company
shall pay Koen any earned but unpaid Base Salary due for periods up
through the Separation Date;
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(ii)
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the Company
shall pay Koen all of Koen’s accrued and unused vacation
through the Separation Date;
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(iii)
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following
submission within 30 days after the Separation Date of a proper
expense report by Koen, the Company shall reimburse Koen for all
business expenses reasonably and necessarily incurred by Koen in
connection with the business of the Company prior to the Separation
Date; and
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(iv)
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the Company and
Koen will honor the following obligations in the Ex-Pat Agreement
according to their terms until such time as all obligations have
been completely met given Koen’s Separation Date of
March 2, 2006: paragraphs 1 (a, d, g, h, i and j)
(Compensation and Benefits), 2 (Repatriation), 3 (Tax Equalization)
and 4 (Miscellaneous Provisions). To the extent it does not
contract directly with vendors to honor these obligations, and Koen
advances payments with regard thereto, the Company will reimburse
Koen for all expenses reasonably and necessarily incurred as
respects the Company’s obligations under the Ex-Pat agreement
as is its custom and practice within no more than 30 days after
Koen submits invoices documenting the expenses incurred.
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(d)
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Stock
Options . Koen and the
Company both hereby acknowledge and agree that, as of
November 1, 2005, the company has granted him the following
options to purchase shares of its Common Stock:
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Grant Date
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Shares Granted
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Price per Share
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Shares Vested as
of 11/1/05
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1 7/30/99
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20,625
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$
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2.1334
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20,625
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2. 6/13/00
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2,500
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$
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224.000
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2,500
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3. 1/9/01
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8,125
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$
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119.0016
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8,125
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4. 4/9/01
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15,059
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$
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29.4400
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15,059
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5. 4/9/01
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16,192
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$
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29.4400
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16,192
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6. 9/26/01
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15,625
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$
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12.1600
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15,625
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7. 4/22/02
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7,813
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$
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22.400
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6,836
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8. 3/6/03
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200,000
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$
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3.25
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188,888
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9. 2/9/04
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98,000
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$
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30.0200
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44,916
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Koen further acknowledges and agrees
that all outstanding stock options held by Koen shall remain
subject to the terms and conditions of the applicable Company stock
option plan and agreement evidencing the option.
3. Consequences of Termination
of Employment .
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(a)
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Benefits
Payable if Employment not Terminated for Cause Prior to Separation
Date . In exchange for
Koen signing and not revoking this Agreement, and his promise to
sign and not revoke the Release of Claims in the form attached
Exhibit 1 (the “Release”) on the Separation Date, the
Company agrees to provide the following severance payments and
benefits to Koen if his employment is not terminated for Cause or
he resigns prior to the Separation Date:
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(i)
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Subject to
section 3(B)(iii) the Company shall accelerate the vesting on all
outstanding and unvested stock options held by Koen as of the
Separation Date as if his employment with the Company continued
through and until September 2, 2007. Koen shall have until
December 31, 2006 to exercise his vested options.
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(ii)
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On
November 15, 2005 the Company will grant Koen a fully vested
option to purchase 42,500 shares of the Company’s common
stock with an exercise price equal to the fair market value (i.e.
the closing price) of Company common stock on November 15,
2005 (the “New Option”.) Koen shall have thirty
(30) months from the Separation Date to exercise the stock
that is subject to the New Option. The New Option shall be subject
to the terms and conditions of the Company’s 2000 Equity
Incentive Plan and Agreement.
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(iii)
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Koen will be
paid a lump bonus of $322,000.00 on the Company’s first
payroll date after September 2, 2006;
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(iv)
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Koen’s
attorney, Bruce M. Towner, will be reimbursed on the first payroll
date to occur after September 2, 2006 for Koen’s actual
and reasonable attorneys’ fees incurred in connection with
the negotiation of this Agreement in an amount not to exceed
$40,000 as documented to the Company by detailed invoices provided
to Koen by his attorney and forwarded to the Company’s
attorney;
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(v)
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Koen shall be
entitled to receive $161,000, which is an amount equal to 1/2 of
his Base Salary on the Company’s first payroll date to occur
after
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September 2, 2006. Koen shall further be
entitled to the continuation of his Base Salary during the
remaining time in the Compensation Continuation Period. Such
continuation payments shall be paid bi-monthly in accordance with
the Company’s normal payroll practices. During the
Compensation Continuation Period, Koen will serve as a
“Strategic Advisor” to the Company and agrees that he
will be available to provide Strategic Advisor services at mutually
convenient times to Koen and to the Company upon the request of the
Company (up to a maximum of five hours of service per calendar
month). Koen and the Company will represent to third parties that
he is a “Strategic Advisor” to the Company during this
time period. Nothing about his services as a Company Strategic
Advisor will preclude Koen from engaging in other consultant or
employment work during the Compensation Continuation
Period.
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(vi)
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During the
Compensation Continuation Period, provided Koen timely elects to
continue his health care coverage after the Separation Date
(through COBRA or otherwise), the Company shall continue to pay
premiums to continue medical insurance benefits for Koen and his
eligible dependants under his then existing medical, dental and
vision plans. Koen shall make such election at his sole discretion
but subject to applicable law and the terms and conditions of any
applicable healthcare plan. Upon the Separation Date, the Company
will permit Koen to convert the Company sponsored life insurance
coverage to his personal use to the extent the applicable policies
permit such conversion.
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(vii)
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The Company and
Koen have issued a press release regarding Koen’s departure
in the form attached as Exhibit 2;
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(viii)
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The Company
shall transfer to Koen the right, title, and interest in the Sony
mini-laptop computer, Sony office laptop, Blackberry and Nokia
mobile phone that were issued to him by the Company. These items
are transferred as-is. However, Koen shall make the items available
to the Company so that it can remove any and all Company documents
and other property.
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(ix)
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On
February 8, 2005 the Company granted Koen 42,500 shares of
restricted stock pursuant to the terms of the Company’s 2000
Equity Incentive Plan and Restricted Stock Agreement (collectively
the “Plan”). As of the Effective Date Koen is fully
vested in 5,312 of the shares. Also, as of January 2, 2006,
Koen will have reached the Time Based Vesting criteria (as defined
in the Plan) with respect to a total of 5,312 additional shares of
restricted stock (the “Partially Vested Shares”), but
will not have reached the Stock Price Appreciation Target
applicable thereto (as defined in the Plan). If the Company reaches
the Stock Price Appreciation Target under the Plan for the
Partially Vested Shares before the end of the Compensation
Continuation Period, then Koen will become fully vested therein. If
the Partially Vested Shares do not reach the Stock Price
Appreciation Target then they will be forfeited at the end of the
Compensation Continuation Period. All of the
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restricted
stock that did not reach the Time Based Vesting Date as of the
Separation Date shall be forfeited pursuant to the Terms of the
Plan. Except as modified by this paragraph, the restricted stock
held by Koen shall remain subject to the terms and conditions of
the Plan.
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(x)
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Koen shall be
permitted to use the Company’s email system through and until
August 1, 2006, provided he complies with any and all company
policies related thereto. The Company reserves the right to
terminate Koen’s email use if such use violates Company
policy in its sole discretion.
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(b)
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Payments for
Other Terminations Prior to Separation Date .
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(i)
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If the Company
terminates Koen’s employment without Cause or he dies prior
to the Separation Date, then Koen and/or his estate shall continue
to receive the payments and benefits of Section 2(a) and
(c) above and shall also receive the Section 3(a)
payments and benefits upon Koen signing and not revoking (or his
executor signing and not revoking, in the event Koen dies) the
Release as required in Section 3(a).
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(ii)
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If, prior to
the Separation Date, either (a) the Company terminates
Koen’s employment for Cause, or (b) Koen resigns his
employment prior to January 2, 2006, then Koen will be
eligible only to receive the payments and benefits set forth in
Section 2(a) and (c) earned up to the date his employment
is terminated for Cause or he resigns prior to January 2,
2006;
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(iii)
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If on or after
January 2, 2006 but before the end of the Transition Period,
Koen resigns his Equinix employment, the Company will not be
obligated to
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provide Koen
with ongoing employment compensation, vesting and benefits (other
than health insurance or COBRA if applicable) during the remainder
of the Transition Period, but will remain obligated to provide Koen
with the other employment and severance benefits specified in
Sections 2 (a) and (c) and 3 (i-x) above. Example: Koen
resigns on January 15, 2006. He is not paid base salary and
does not receive additional stock vesting or restricted stock
accrual during the period January 15, 2006 until March 2,
2006. All other severance compensation, vesting and benefits
contemplated by this Agreement will be provided to him.
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4. Preservation of indemnity
and directors and officers insurance rights . Nothing in
this Agreement is intended to, or does, waive Koen’s rights
to indemnity and defense from Equinix arising out of his duties as
an employee and officer of the Company to the extent that he is
entitled to indemnity and defense pursuant to California law, the
Company’s Certificate of Incorporation, Bylaws and the
Indemnification Agreement dated August 27, 1999 between Koen
and the Company. This Agreement shall not divest Koen of any
liability insurance rights, if any, he may have by virtue of his
employment with Equinix.
5. Releases
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(a) Koen’s Release of
Equinix . Koen releases and discharges Equinix, Equinix’s
present and former officers, directors, employees, representatives,
attorneys, agents, insurers, parent companies, subsidiaries,
predecessors, affiliates, and successors from any and all claims,
liabilities or obligations of every kind and nature, whether now
known or unknown, suspected or unsuspected,
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which Koen ever had or now has, including but
not limited to all claims arising out of or in connection with
(i) his employment by Equinix or termination of employment
with Equinix, including but not limited to any contention that Koen
was discriminated or retaliated against, harassed, wrongfully
terminated, constructively terminated or injured by Equinix in any
way or that Equinix breached any agreement with Koen or other
obligation to Koen, (ii) any illness, injury, impairment, or
other physical, mental, psychological or other medical condition,
any claim for benefits, including without limitation long term
disability benefits, short term disability benefits, other
disability benefits, and (iii) any other employment-related
benefits, including but not limited to all claims for stock options
or the value of any stock options. This release includes all
federal, state, and non-U.S. statutory claims, federal, state, and
non-U.S. common law claims (including those for contract and tort),
and claims under any federal, state, or non-U.S. statute or
ordinance, including, without limitation, the Employee Retirement
Security Income Act of 1974, the Americans with Disabilities Act,
Title VII of the Civil Rights Act of 1964 (as amended), the Age
Discrimination in Employment Act, 42 U.S.C. §1981, 42 U.S.C.
§ 1983, the Family Medical Leave Act, the United States
Constitution, the Sarbanes-Oxley Act, 18 U.S.C. § 1514,
the Fair Credit Reporting Act, the California Constitution, the
California Fair Employment and Housing Act, the California Unfair
Competition Act (California Business and Professions Code section
17200 et seq.), the California Family Rights Act, and the
California Labor Code.
(b) Equinix Release of Koen .
Equinix releases and discharges Koen from any and all claims,
liabilities or obligations of every kind and nature, whether now
known or unknown, suspected or unsuspected, which Equinix ever had
or now has, including but not limited to all claims arising out of
or in connection with his employment by Equinix. This release
includes all federal,
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state, and non-U.S. statutory claims, federal,
state and non-U.S. common law claims (including those for contract
and tort), and claims under any federal, state, or non-U.S. statute
or ordinance. Notwithstanding the above, nothing in this Agreement
shall act as a release or waiver of any claim by Equinix against
Koen for the theft, misuse, or improper disclosure of the
Company’s confidential, proprietary or trade secret
information.
(c) 1542 Waiver . Koen and
Equinix acknowledge the language of Section 1542 of the
California Civil Code, which provides:
A GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN
HIS/HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN
BY HIM/HER MUST HAVE MATERIALLY AFFECTED HIS/HER SETTLEMENT WITH
THE DEBTOR.
Koen and Equinix expressly waive the
protection of Section 1542. Koen and Equinix understand and
agree that claims or facts in addition to or different from those
which are now known or believed by Koen and Equinix to exist may
hereafter be discovered. It is Koen’s intention to settle
fully and release all of the claims Koen now has against Equinix
and any of Equinix’s officers, directors, employees,
representatives, attorneys, agents, insurers, parent companies,
predecessors, affiliates, subsidiaries and successors, whether
known or unknown, suspected or unsuspected. It is Equinix’s
intention to settle fully and release all of the claims Equinix now
has against Koen, whether known or unknown, suspected or
unsuspected. The releases contained herein do not apply to: a) any
rights or obligations created by this Agreement; and b)
Koen’s vested right, if any, to his Company sponsored 401(k)
plan, under the terms of the applicable plan documents.
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(d) No Assignment of Claims .
Except as authorized by this Agreement (such as in the event of
Koen’s death), Koen promises that he has not assigned,
transferred or conveyed to any person or entity any claim, demand,
liability, obligation or cause of action released by this
Agreement. Koen agrees to indemnify, defend and hold harmless
Equinix and/or any present or former officers, directors,
employees, representatives, attorneys, agents, insurers, parent
companies, predecessors, affiliates, subsidiaries or successors of
Equinix from any claims which may be asserted against them based
on, or arising out of, any such assignment, transfer, or
conveyance.
6. Mitigation . The
earnings, payments, equity and benefits contemplated by this
Agreement, shall not be reduced by any earnings, payments, equity
and benefits that Koen may receive from any other
source.
7. Non-Disparagement .
The officers and directors of the Company agree not to make any
defamatory remarks about Koen to third parties. Koen agrees not to
make any defamatory remarks about the Company (including its
employees, officers, directors, products, services, or business
practices).
8. Employment
Information . Should Koen desire to have the Company
provide any person or entity with any information concerning
Koen’s employment, Koen shall direct such person or entity to
contact Keri Crask, Vice President of Human Resources. The Company
shall respond to any such inquiry by confirming: (i) the dates
of Koen’s employment with the Company, (ii) the titles
of Koen’s job positions with the Company,
(iii) Koen’s Base Salary of $322,000 and (iv) that
it is the Company’s policy to provide only this
information.
9. Successors and
Assigns . Any successor or assign (whether direct or
indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all
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of the Company’s business and/or assets or
to the rights and/or obligations of this Agreement, shall be
obligated to perform this Agreement in the same manner and to the
same extent as the Company would be required to perform it in the
absence of a succession or reassignment. Without the written
consent of the Company, Koen shall not assign or transfer this
Agreement or any right or obligation under this Agreement to any
other person or entity. Notwithstanding the foregoing, the terms of
this Agreement and all rights of Koen hereunder shall inure to the
benefit of, and be enforceable by, Koen’s personal or legal
representatives, executors, administrators, spouse, successors,
heirs, distributees, devisees and legatees.
10. Notices . Notices
and all other communications contemplated by this Agreement shall
be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified
mail, return receipt requested and postage prepaid. In the case of
Koen, mailed notices shall be addressed to him at the home address
that he most recently communicated to the Company in writing and to
his attorney Bruce M. Towner, Towner Law Offices, 1700 Montgomery,
Suite 110, San Francisco CA 94111. In the case of the
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