Bonus Agreement - NaviSite Internet Services Corp. and Peter Kirwan Jr.
BONUS AGREEMENT
This BONUS AGREEMENT (this "Agreement") dated as of July 1, 1998 is entered
into by and between NaviSite Internet Services Corporation, a Delaware
corporation ("NaviSite"), and Peter Kirwan Jr. ("Employee").
WHEREAS, NaviSite, Servercast Communications, L.L.C., a Delaware limited
liability company ("Servercast"), Employee, and the members of the Servercast
have entered into a Purchase Agreement, dated as of the date hereof (the
"Purchase Agreement"), providing for the purchase by NaviSite from the members
of Servercast all of the issued and outstanding membership interests of
Servercast;
WHEREAS, NaviSite desires to reward the Employee if Servercast achieves
certain financial milestones.
NOW, THEREFORE, in consideration of the promises, and the mutual covenants
and agreements contained herein and for other good and valuable consideration,
the receipt, adequacy and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. Bonuses.
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(a) In the event (i) the total revenues attributable to the business of
Servercast for the one-year period ended July 1, 1999 (the "Target Period")
equal or exceed $1,984,690 ("Revenue Goal"); and (ii) the operating losses
(EBITDA) of Servercast for the Target Period are less than or equal to
$2,162,126 ("Income Goal"), NaviSite shall pay Employee, subject to Sections 3
and 5 hereof, an incentive bonus in the amount of $154,125 (the "1999 Bonus").
(b) In the event (i) the total revenues attributable to the business of
Servercast for the Target Period are less than the Revenue Goal but greater than
or equal to $992,345, and (ii) the operating losses (EBITDA) of Servercast for
the Target Period are greater than the Income Goal but less than or equal to
$3,243,189, then NaviSite shall pay Employee, subject to Sections 3 and 5
hereof, an amount equal to the 1999 Bonus reduced by higher of either (x) the
percentage that such gross revenues are less than the Revenue Goal or (y) the
percentage that such losses exceed the Income Goal.
(c) In the event (i) the total revenues attributable to the business of
Servercast for the Target Period are less than $992,345; or (ii) the operating
losses (EBITDA) of Servercast for the Target Period are greater than $3,243,189,
NaviSite shall not be obligated to pay and Employee shall not be entitled to
receive any bonus.
(d) In the event (i) the total revenues attributable to the business of
Servercast for the Target Period exceed the Revenue Goal by twenty percent (20%)
or more; and (ii) the operating losses (EBITDA) of Servercast for the Target
Period are less than or equal to $1,729,700, NaviSite shall pay Employee,
subject to Sections 4 and 6 hereof, the 1999 Bonus plus an additional $77,0625
(the "Premium Bonus").
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2. NaviSite Funding Obligation. NaviSite shall provide Servercast during the
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Target Period with a minimum of $2,100,000 in aggregate cash funding ("NaviSite
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Funding Obligation"), whether through the purchase or leasing of assets,
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contribution of cash or any other property by NaviSite to Servercast. In the
case of NaviSite's leasing of assets for Servercast, only the sum of lease
payments accrued and paid during the Target Period will be counted toward the
fulfillment of the NaviSite Funding Obligation.
3. Escrowed Amounts. Twenty (20%) of any amounts payable to Employee (the
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"Escrowed Amounts") pursuant to the 1999 Bonus and the Premium Bonus, if any,
shall be delivered into an escrow fund pursuant to the terms of the Escrow
Agreement dated of even date hereof by and among NaviSite, the Member
Representative (as the term is defined in the Escrow Agreement) and the escrow
agent named therein.
4. Stock Option Grant. NaviSite will grant Employee a non-statutory stock
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option (the "Employee Option") to purchase up to Fifty Thousand (50,000) shares
("Option Shares") of NaviSite Common Stock, par value $0.01 per share, at a
purchase price of $.93 per share. The Employee Option shall vest as to one-
fourth (1/4) of the Option Shares (12,500 shares) on July 1, 1999 (the "First
Vesting Date") while the remainder of the Option Shares shall vest monthly
thereafter at the end of each one-month period following the First Vesting Date
in thirty-six (36) equal portions of one-forty-eighth (1/48) of the Option
Shares (1,042 shares), provided the Employee continues to be employed as an
employee of NaviSite or to provide services as a consultant to NaviSite. The
Employee Option shall (i) be exercisable only as to the vested portion of the
Option Shares, and (ii) expire on the fifth anniversary of the date of grant of
the Employee Option.
5. Termination of Employment. Employee's employment hereunder may be
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terminated either by Employee or by NaviSite at any time upon ten (10) days
prior written notice.
(a) If prior to July 1, 1999 (i) Employee terminates his employment without
Just Cause, or (ii) NaviSite terminates Employee's employment for Cause (as
defined below), Employee shall forfeit any right to receive any bonus payments
pursuant to this Agreement.
(b) If after July 1, 1999 but prior to July 1, 2000 (i) Employee terminates
his employment without Just Cause, or (ii) NaviSite terminates Employee's
employment for Cause, Employee shall forfeit the Escrowed Amounts, if any,
delivered into escrow on behalf of the Employee pursuant to Section 4 hereof and
any amounts delivered into escrow pursuant to Section 1.3 of the Purchase
Agreement.
(c) If either (i) NaviSite terminates Employee's employment without Cause
or (ii) Employee terminates his employment with Just Cause, Employee shall
remain eligible to receive the bonuses in accordance with the terms and
conditions of Section 1 hereof and shall be entitled to receive any Escrowed
Amounts, if any within thirty (30) days of NaviSite's delivery of written Notice
of Termination (as defined below).
(d) For purposes of this Agreement, "Cause" shall mean (i) any act of
Employee involving fraud, embezzlement, theft, misrepresentation, dishonesty or
moral turpitude, (ii) Employee's indictment for a material crime on the basis of
alleged facts of such a serious nature that NaviSite has reasonable cause to
believe that Employee cannot effectively discharge his duties and
responsibilities, or Employee's indictment for the commission of a material
business-related crime, (iii) any gross or willful misconduct by Employee,
(iv) neglect or insubordination by Employee in
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the performance of his duties not cured within ten (10) days receipt of written
notice from NaviSite; or (v) any material breach by Employee of this Agreement
or any non-competition agreement between Employee and NaviSite.
(e) For purposes of this Agreement, "Just Cause" shall mean (i) a material
reduction from Employee's salary agreed to with NaviSite prior to the first
anniversary of this Agreement, or (ii) requiring Employee to relocate his or her
residence more than 50 miles from his current residence.
6. Notice of Termination. Any termination of employment by NaviSite or by
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Employee shall be communicated by written Notice of Termination (as defined
below) to the other party hereto in accordance with Section 9 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of employment under the provision so indicated.
7. Survival. The provisions of Sections 5, 7, 8 and 9 shall survive the
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termination of this Agreement in all events.
8. Notices. Any notice or other communication required or permitted hereunder
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shall be in writing and shall be deemed given when so delivered in person, by
overnight courier, by facsimile transmission (with receipt confirmed by
telephone or by automatic transmission report) or two business days after being
sent by registered or certified mail (postage prepaid, return receipt
requested), as follows:
(a) if to the NaviSite, to:
NaviSite Internet Services Corporation
300 Federal Street
Andover, MA 01810
Attention: Chief Financial Officer
Telephone: 978/552-3300
Facsimile: 978/552-3500
with a copy to:
Palmer & Dodge LLP
One Beacon Street
Boston, MA 02108-3190
Attention: William Williams II
Telephone: 617/573-0100
Facsimile: 617/227-4420
(b) if to Employee, to:
Peter Kirwan Jr.
615 Hudson Street #3
NY, NY 10014
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with a copy to:
Dornbush Mensch Mandelstam & Schaeffer, LLP
747 Third Avenue
New York, New York 10017
Attention: Landey Strongin, Esq.
Telephone: (212) 759-3300
Facsimile: (212) 753-7673
Any party may by notice given in accordance with this Section 8 to the other
parties designate another address or person for receipt of notices hereunder.
9. General.
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(a) Assignment. This Agreement may not be assigned by either party without
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the prior written consent of the other party.
(b) Entire Agreement. This Agreement, the Purchase Agreement and the
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Escrow Agreement contains the entire agreement between NaviSite and Employee
with respect to the subject matter hereof and there have been no oral or other
agreements of any kind whatsoever as a condition precedent or inducement to the
signing of this Agreement or otherwise concerning this Agreement or the subject
matter hereof.
(c) Withholding Taxes. Employee shall pay to NaviSite, or make provision
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satisfactory to NaviSite for payment of, any taxes required by law to be
withheld with respect to any payments to Employee hereunder no later than the
date of the event creating the tax liability. NaviSite may, to the extent
permitted by law, deduct any such tax obligations from any payment of any kind
otherwise due to the Employee.
(d) Continuation of Employment or Consulting Relationship. Employee shall
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have no right to continued employment or service as an employee or consultant of
NaviSite by virtue of this Agreement.
(e) Arbitration. In the event any dispute shall arise between NaviSite and
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Employee with respect to any of the terms and conditions of this Agreement, then
such dispute shall be submitted and finally settled in accordance with Section
9.5 of the Purchase Agreement. The parties agree not to institute any litigation
or proceedings against each other in connection with this Agreement except as
provided in this Section 9(e) hereof.
(f) Amendments. This Agreement may not be amended, nor shall any waiver,
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change, modification, consent or discharge be effected except by an instrument
in writing executed by or on behalf of the party against whom enforcement of any
waiver, change, modification, consent or discharge is sought.
(g) Severability. If any term or provision of this Note shall be held
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invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall in no way be affected thereby.
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(h) Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and in pleading or
proving any provision of this Agreement, it shall not be necessary to produce
more than one of such counterparts.
(i) Section Headings. The headings contained in this Agreement are for
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reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
(j) Governing Law. This Agreement shall be governed by and construed and
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enforced in accordance with the law (other than the law governing conflict of
law questions) of the Commonwealth of Massachusetts.
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IN WITNESS WHEREOF, the parties have been executed or caused to be executed
this Agreement as of the date first above written.
NAVISITE INTERNET SERVICES CORPORATION
By: /s/ Robert B. Eisenberg
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Name:
Title:
EMPLOYEE:
/s/ Peter C. Kirwan, Jr.
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Name: Peter C. Kirwan, Jr.
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