Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is made as of the 28th day of November,
2016 by and between Rapid7 LLC, a Delaware Limited Liability Company (the
“Company”), and Jeffrey Kalowski (the “Executive”).

1.      Employment Term; Position. The Company and the Executive desire to enter
into an employment relationship, which is expected to commence on or about
January 9, 2017 and continuing in effect until terminated by either party in
accordance with Section 9 of this Agreement (the “Term”). The Executive’s
employment with the Company will be “at will,” meaning that the Executive’s
employment may be terminated by the Company or the Executive at any time and for
any reason. During the Term, the Executive will serve as the Chief Financial
Officer of the Company, and will have such powers and duties as may from time to
time be prescribed by the Chief Executive Officer of the Company (the “CEO”) or
other authorized executive. The Executive shall devote his full working time and
efforts to the business and affairs of the Company. Notwithstanding the
foregoing, the Executive may serve on other boards of directors, with the
approval of the Board of Directors of the Company (the “Board”) or engage in
religious, charitable or other community activities as long as such services and
activities are disclosed to the Board and do not interfere with or create a
conflict with the Executive’s performance of his or her duties to the Company.

2.      Compensation and Related Matters.

(a)    Base Salary. During the Term, the Executive’s initial annual base salary
will be $350,000, subject to review and modification from time to time at the
sole discretion of the Compensation Committee of the Board (the “Compensation
Committee”). The base salary in effect at any given time is referred to herein
as “Base Salary.” The Base Salary will be payable in a manner that is consistent
with the Company’s usual payroll practices.

(b)    Incentive Compensation. During the Term, the Executive will be eligible
to be considered for annual cash incentive compensation as determined by the
Compensation Committee from time to time at their sole discretion, in accordance
with the terms of the Company’s bonus plan then in effect, the initial annual
target of which will be equal to $200,000. Executive’s incentive compensation
awards shall be earned on a pro-rata basis during the year, and shall be paid in
full no later than March 15 of the following calendar year. Except as otherwise
set out in Sections 4 and 5 below, Executive must be an employee on the date of
payment to receive incentive compensation under this Section 2(b).

(c)    Other Benefits. During the Term, the Executive will be entitled to
continue to participate in the Company’s employee benefit plans, subject to the
terms and the conditions of such plans and to the Company’s right to amend,
modify or terminate such plans at the Company’s sole discretion.

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3.      Certain Definitions.

(a)    Change in Control. A “Change in Control” shall be deemed to have occurred
upon the occurrence of any one of the following events: (i) the sale of all or
substantially all of the assets of the Company on a consolidated basis to an
unrelated person or entity, (ii) a merger, reorganization or consolidation
pursuant to which the holders of the Company’s outstanding voting power and
outstanding stock immediately prior to such transaction do not own a majority of
the outstanding voting power and outstanding stock or other equity interests of
the resulting or successor entity (or its ultimate parent, if applicable)
immediately upon completion of such transaction, (iii) the sale of all of the
stock of the Company to an unrelated person, entity or group thereof acting in
concert, or (iv) any other transaction in which the owners of the Company’s
outstanding voting power immediately prior to such transaction do not own at
least a majority of the outstanding voting power of the Company or any successor
entity immediately upon completion of the transaction other than as a result of
the acquisition of securities directly from the Company.

(b)    Terminating Event. A “Terminating Event” shall mean any of the events
provided in this Section 3(b):

(i)    Termination by the Company. Termination by the Company of the employment
of the Executive with the Company for any reason other than for Cause, death or
Disability. For purposes of this Agreement, “Cause” shall mean: (I) a good faith
and reasonable finding by the Board that (A) Employee has materially failed to
perform his duties for the Company and, if such failure is capable of being
cured, has failed to remedy such failure within 20 calendar days following
written notice from the Board to Employee in reasonable detail notifying him of
such failure, or (B) Employee has engaged in gross negligence, embezzlement,
theft, fraud or any other material act of dishonesty, misconduct or breach of
fiduciary duty (as reasonably determined by the Board) that is reasonably
expected to result in harm to the Company, or Employee has engaged in the
misappropriation of any funds of the Company in amount greater than $500, (II)
the commission or conviction of Employee of, or the entry of a pleading of
guilty or nolo contendere by Employee to a felony (other than a felony solely as
a result of a traffic violation), or (III) a material breach by Employee of any
agreement with the Company, including this Agreement and the Employee
(Confidentiality, Assignment, Non-competition and Non-Solicitation) Agreement
dated as of the date hereof between the Employee and the Company (the
“Additional Agreement”). A Terminating Event shall not be deemed to have
occurred pursuant to this Section 3(b)(i) solely as a result of the Executive
being an employee of any direct or indirect successor to the business or assets
of the Company, rather than continuing as an employee of the Company following a
Change in Control. For purposes hereof, the Executive will be considered
“Disabled” if, as a result of the Executive’s incapacity due to physical or
mental illness, the Executive shall have been absent from his duties to the
Company on a full-time basis for 180 calendar days in the aggregate in any
12-month period.

(ii)    Termination by the Executive for Good Reason. For purposes of this
Agreement, “Good Reason” shall mean that the Executive has complied with the
“Good Reason Process” (hereinafter defined) following, the occurrence of any of
the following events:

 

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(A)    a material adverse change or diminution in the Executive’s position,
responsibilities, authority or duties (for purposes of clarity, if, following
the Change in Control, the Executive ceases to be the Chief Financial Officer of
a publicly-traded company then a material adverse change or diminution to the
Executive’s position, responsibilities, authority or duties will be deemed to
have occurred hereunder);

(B)    a material diminution in the Executive’s base salary except for
across-the-board salary reductions based on the Company’s financial performance
similarly affecting all or substantially all senior management employees of the
Company; or

(C)    a change in the geographic location at which the Executive is required to
provide services to the Company of 20 or more miles from the location at which
Executive provided services prior to such change (not including business travel
and short-term assignments).

“Good Reason Process” shall mean that (i) the Executive reasonably determines in
good faith that a “Good Reason” condition has occurred; (ii) the Executive
notifies the Company in writing of the first occurrence of the Good Reason
condition within 60 days of the first occurrence of such condition; (iii) the
Executive cooperates in good faith with the Company’s efforts, for a period not
less than 30 days following such notice (the “Cure Period”), to remedy the
condition; (iv) notwithstanding such efforts, the Good Reason condition
continues to exist; and (v) the Executive terminates his employment within 60
days after the end of the Cure Period. If the Company cures the Good Reason
condition during the Cure Period, Good Reason shall be deemed not to have
occurred. For the purposes of delivery of notice under subsection (A), an
adverse change or material diminution that occurs incrementally over a period of
time (not to exceed twelve (12) months) shall be deemed to have occurred when
such adverse change or diminution, in the aggregate, becomes material.

4.      Termination in Connection with Change in Control. In the event a
Terminating Event occurs on, in anticipation of and within 90 days prior to, or
within the 12 months immediately following a Change in Control (the “Change in
Control Period”), subject to the Executive signing a separation agreement
containing, among other provisions, a general release of claims in favor of the
Company and related persons and entities, confidentiality, return of property
and non-disparagement, in a form and manner satisfactory to the Company (the
“Separation Agreement and Release”) and the Separation Agreement and Release
becoming irrevocable, all within 60 days after the Date of Termination, the
following shall occur:

(a)    all stock options and other stock-based awards with time-based vesting
held by the Executive shall immediately accelerate and become fully exercisable
or nonforfeitable as of the Date of Termination or, if later, the date of such
Change in Control;

 

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(b)    the Company shall pay to the Executive an amount equal to 1.5 times the
sum of (i) the Executive’s annual base salary in effect immediately prior to the
Terminating Event (or the Executive’s annual base salary in effect immediately
prior to the Change in Control, if higher) and (ii) the Executive’s target bonus
for the fiscal year in which the Change in Control occurred;

(c)    any earned but unpaid pro-rata bonus accrued as of the Date of
Termination;

(d)    if the Executive was participating in the Company’s group health plan
immediately prior to the Date of Termination and elects COBRA health
continuation, then the Company shall pay to the Executive a monthly cash payment
for 18 months or the Executive’s COBRA health continuation period, whichever
ends earlier, in an amount equal to the monthly employer contribution that the
Company would have made to provide health insurance to the Executive if the
Executive had remained employed by the Company; and

(e)    the amounts payable under this Section 4 shall be paid out in a lump sum
no later than sixty days after the Date of Termination; provided, however, that
if the 60-day period begins in one calendar year and ends in a second calendar
year, the Severance Amount shall begin to be paid in the second calendar year by
the last day of such 60-day period. Each payment pursuant to this Agreement is
intended to constitute a separate payment for purposes of Treasury Regulation
Section 1.409A-2(b)(2).

5.      Termination Other than In Connection with a Change in Control. In the
event a Terminating Event occurs at any time other than in connection with a
Change in Control, subject to the Executive signing the Separation Agreement and
Release and the Separation Agreement and Release becoming irrevocable, all
within 60 days after the Date of Termination, the following shall occur:

(a)    the Company shall pay to the Executive an amount equal to (i) one times
the Executive’s annual base salary in effect immediately prior to the
Terminating Event, (ii) any earned but unpaid pro-rata bonus accrued as of the
Date of Termination, and (iii) the Executive’s target bonus for the fiscal year
in which the Terminating Event occurred;

(b)    if the Executive was participating in the Company’s group health plan
immediately prior to the Date of Termination and elects COBRA health
continuation, then the Company shall pay to the Executive a monthly cash payment
for 12 months or the Executive’s COBRA health continuation period, whichever
ends earlier, in an amount equal to the monthly employer contribution that the
Company would have made to provide health insurance to the Executive if the
Executive had remained employed by the Company;

(c)    6 months of stock options and other stock-based awards with time-based
vesting held by the Executive shall immediately accelerate and become fully
exercisable or nonforfeitable as of the Executive’s Date of Termination; and

(d)    the amounts payable under this Section 5 shall be paid out in a lump sum
no later than sixty days after the Date of Termination; provided, however, that
if the 60-day period begins in one calendar year and ends in a second calendar
year, the Severance Amount shall begin to be paid in the second calendar year by
the last day of such 60-day period. Each payment pursuant to this Agreement is
intended to constitute a separate payment for purposes of Treasury Regulation
Section 1.409A-2(b)(2).

 

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6.      Additional Limitation.

(a)    Anything in this Agreement to the contrary notwithstanding, in the event
that the amount of any compensation, payment or distribution by the Company to
or for the benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, calculated
in a manner consistent with Section 280G of the Internal Revenue Code of 1986,
as amended (the “Code”) and the applicable regulations thereunder (the
“Severance Payments”), would be subject to the excise tax imposed by
Section 4999 of the Code, the following provisions shall apply:

(i)    If the Severance Payments, reduced by the sum of (A) the Excise Tax and
(B) the total of the federal, state, and local income and employment taxes
payable by the Executive on the amount of the Severance Payments which are in
excess of the Threshold Amount, are greater than or equal to the Threshold
Amount, the Executive shall be entitled to the full amount of Severance
Payments.

(ii)    If the Threshold Amount is less than (x) the Severance Payments, but
greater than (y) the Severance Payments reduced by the sum of (A) the Excise Tax
and (B) the total of the federal, state, and local income and employment taxes
on the amount of the Severance Payments which are in excess of the Threshold
Amount, then the Severance Payments shall be reduced (but not below zero) to the
extent necessary so that the sum of all Severance Payments shall not exceed the
Threshold Amount. In such event, the Severance Payments shall be reduced in the
following order: (1) cash payments not subject to Section 409A of the Code;
(2) cash payments subject to Section 409A of the Code; (3) equity-based payments
and acceleration; and (4) non-cash forms of benefits. To the extent any payment
is to be made over time (e.g., in installments, etc.), then the payments shall
be reduced in reverse chronological order.

(b)    For the purposes of this Section 6, “Threshold Amount” shall mean three
times the Executive’s “base amount” within the meaning of Section 280G(b)(3) of
the Code and the regulations promulgated thereunder less one dollar ($1.00); and
“Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, and
any interest or penalties incurred by the Executive with respect to such excise
tax.

(c)    The determination as to which of the alternative provisions of
Section 6(a) above shall apply to the Executive shall be made by a nationally
recognized accounting firm selected by the Company (the “Accounting Firm”),
which shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the Date of Termination, if applicable, or
at such earlier time as is reasonably requested by the Company or the Executive.
For purposes of determining which of the alternative provisions of Section 6(a)
above shall apply, the Executive shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation applicable to individuals
for the calendar year in which the determination is to be made, and state and
local income taxes at the highest marginal rates of

 

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individual taxation in the state and locality of the Executive’s residence on
the Date of Termination, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes. Any
determination by the Accounting Firm shall be binding upon the Company and the
Executive.

7.      Section 409A.

(a)    Anything in this Agreement to the contrary notwithstanding, if at the
time of the Executive’s “separation from service” within the meaning of Section
409A of the Code, the Company determines that the Executive is a “specified
employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then to
the extent any payment or benefit that the Executive becomes entitled to under
this Agreement on account of the Executive’s separation from service would be
considered deferred compensation subject to the 20 percent additional tax
imposed pursuant to Section 409A(a) of the Code as a result of the application
of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and
such benefit shall not be provided until the date that is the earlier of (A) six
months and one day after the Executive’s separation from service, or (B) the
Executive’s death.

(b)    The parties intend that this Agreement will be administered in accordance
with Section 409A of the Code. To the extent that any provision of this
Agreement is ambiguous as to its compliance with Section 409A of the Code, the
provision shall be read in such a manner so that all payments hereunder comply
with Section 409A of the Code. The parties agree that this Agreement may be
amended, as reasonably requested by either party, and as may be necessary to
fully comply with Section 409A of the Code and all related rules and regulations
in order to preserve the payments and benefits provided hereunder without
additional cost to either party.

(c)    All in-kind benefits provided and expenses eligible for reimbursement
under this Agreement shall be provided by the Company or incurred by the
Executive during the time periods set forth in this Agreement. All
reimbursements shall be paid as soon as administratively practicable, but in no
event shall any reimbursement be paid after the last day of the taxable year
following the taxable year in which the expense was incurred. The amount of
in-kind benefits provided or reimbursable expenses incurred in one taxable year
shall not affect the in-kind benefits to be provided or the expenses eligible
for reimbursement in any other taxable year. Such right to reimbursement or
in-kind benefits is not subject to liquidation or exchange for another benefit.

(d)    To the extent that any payment or benefit described in this Agreement
constitutes “non-qualified deferred compensation” under Section 409A of the
Code, and to the extent that such payment or benefit is payable upon the
Executive’s termination of employment, then such payments or benefits shall be
payable only upon the Executive’s “separation from service.” The determination
of whether and when a separation from service has occurred shall be made in
accordance with the presumptions set forth in Treasury Regulation Section
1.409A-1(h).

(e)    The Company makes no representation or warranty and shall have no
liability to the Executive or any other person if any provisions of this
Agreement are determined to constitute deferred compensation subject to Section
409A of the Code but do not satisfy an exemption from, or the conditions of,
such Section.

 

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8.      Withholding. All payments made by the Company to the Executive under
this Agreement shall be net of any tax or other amounts required to be withheld
by the Company under applicable law.

9.      Notice and Date of Termination.

(a)    Notice of Termination. The Executive’s employment with the Company may be
terminated by the Company or the Executive at any time and for any reason.
During the term of this Agreement, any purported termination of the Executive’s
employment (other than by reason of death) shall be communicated by written
Notice of Termination from one party hereto to the other party hereto in
accordance with this Section 9. 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.

(b)    Date of Termination. “Date of Termination” shall mean: (i) if the
Executive’s employment is terminated by his death, the date of his death;
(ii) if the Executive’s employment is terminated on account of Executive’s
Disability or by the Company for Cause, the date on which Notice of Termination
is given; (iii) if the Executive’s employment is terminated by the Company
without Cause, the date on which a Notice of Termination is given; (iv) if the
Executive’s employment is terminated by the Executive without Good Reason, 30
days after the date on which a Notice of Termination is given, and (v) if the
Executive’s employment is terminated by the Executive with Good Reason, the date
on which a Notice of Termination is given after the end of the Cure Period.
Notwithstanding the foregoing, in the event that the Executive gives a Notice of
Termination to the Company, the Company may unilaterally accelerate the Date of
Termination and such acceleration shall not result in a termination by the
Company for purposes of this Agreement.

10.      No Mitigation. The Company agrees that, if the Executive’s employment
by the Company is terminated during the term of this Agreement, the Executive is
not required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by the Company pursuant to Section 4 or
Section 5 hereof. Further, the amount of any payment provided for in this
Agreement shall not be reduced by any compensation earned by the Executive as
the result of employment by another employer.

11.      Consent to Jurisdiction. The parties hereby consent to the exclusive
jurisdiction of the Superior Court of the Commonwealth of Massachusetts and the
United States District Court for the District of Massachusetts for the
resolution of any dispute arising under this Agreement or otherwise concerning
Executive’s employment. Accordingly, with respect to any such court action, the
Executive (a) submits to the personal jurisdiction of such courts; (b) consents
to service of process; and (c) waives any other requirement (whether imposed by
statute, rule of court, or otherwise) with respect to personal jurisdiction or
service of process.

12.      Attorneys’ Fees. If any action is necessary to enforce the terms of
this Agreement, the substantially prevailing party will be entitled to
reasonable attorneys’ fees, costs

 

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and expenses in addition to any other relief to which such prevailing party may
be entitled. Notwithstanding anything to the contrary contained herein, the
preceding sentence shall not apply to any dispute that arises with respect
Executive’s rights on termination for Good Reason in connection with a Change in
Control, and the Company shall pay, as they become due, all reasonable
attorneys’ fees, costs and expenses incurred by Executive in seeking to obtain,
interpret or enforce such rights under this Agreement.

13.      Integration. This Agreement constitutes the entire agreement between
the parties with respect to severance pay, benefits and accelerated vesting in
connection with any termination of employment and supersedes in all respects all
prior agreements between the parties concerning such subject matter, including
without limitation any offer letter or employment agreement relating to the
Executive’s employment relationship with the Company. In the interest of
clarity, any agreement relating to confidentiality, noncompetition,
nonsolicitation or assignment of inventions shall not be superseded by this
Agreement and the Executive acknowledges and agrees that any such agreement
shall remain in full force and effect.

14.      Successor to the Executive. This Agreement shall inure to the benefit
of and be enforceable by the Executive’s personal representatives, executors,
administrators, heirs, distributees, devisees and legatees. In the event of the
Executive’s death after a Terminating Event but prior to the completion by the
Company of all payments due him under this Agreement, the Company shall continue
such payments to the Executive’s beneficiary designated in writing to the
Company prior to his death (or to his estate, if the Executive fails to make
such designation).

15.      Enforceability. If any portion or provision of this Agreement
(including, without limitation, any portion or provision of any Section of this
Agreement) shall to any extent be declared illegal or unenforceable by a court
of competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not be affected thereby,
and each portion and provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.

16.      Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.

17.      Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by a nationally recognized overnight currier service of by
registered or certified mail, postage prepaid, return receipt requested, to the
Executive at the last address the Executive has filed in writing with the
Company, or to the Company at its main office, attention of the Board.

18.      Amendment. This Agreement may be amended or modified only by a written
instrument signed by the Executive and by a duly authorized representative of
the Company.

 

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19.      Effect on Other Plans and Agreements. An election by the Executive to
resign for Good Reason under the provisions of this Agreement shall not be
deemed a voluntary termination of employment by the Executive for the purpose of
interpreting the provisions of any of the Company’s benefit plans, programs or
policies. Nothing in this Agreement shall be construed to limit the rights of
the Executive under the Company’s benefit plans, programs or policies except as
otherwise provided in Section 6 hereof, and except that the Executive shall have
no rights to any severance benefits under any Company severance pay plan, offer
letter or otherwise. In the event that the Executive is party to an agreement
with the Company providing for payments or benefits under such agreement and
this Agreement, the terms of this Agreement shall govern and Executive may
receive payment under this Agreement only and not both. Further, Section 4 and
Section 5 of this Agreement are mutually exclusive and in no event shall
Executive be entitled to payments or benefits pursuant to Section 4 and
Section 5 of this Agreement.

20.      Governing Law. This is a Massachusetts contract and shall be construed
under and be governed in all respects by the laws of the Commonwealth of
Massachusetts, without giving effect to the conflict of laws principles of such
Commonwealth. With respect to any disputes concerning federal law, such disputes
shall be determined in accordance with the law as it would be interpreted and
applied by the United States Court of Appeals for the First Circuit.

21.      Successor to Company. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company expressly to assume
and agree to perform this Agreement to the same extent that the Company would be
required to perform it if no succession had taken place. Failure of the Company
to obtain an assumption of this Agreement at or prior to the effectiveness of
any succession shall be a material breach of this Agreement.

22.      Gender Neutral. Wherever used herein, a pronoun in the masculine gender
shall be considered as including the feminine gender unless the context clearly
indicates otherwise.

23.      Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be taken to be
an original; but such counterparts shall together constitute one and the same
document.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement effective on the
date and year first above written.

 

RAPID7 LLC By:  

/s/ Christina Luconi

  Name: Christina Luconi   Title: Chief People Officer

 

/s/ Jeffrey Kalowski

Jeffrey Kalowski

 

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