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following such Business Combination, each of the following two conditions is satisfied: (x) all orsubstantially all of the individuals and entities who were the beneficial owners of theOutstanding Company Common Stock and Outstanding Company Voting Securities immediately prior tosuch Business Combination beneficially own, directly or indirectly, more than 50% of thethen-outstanding shares of common stock and the combined voting power of the then-outstandingsecurities entitled to vote generally in the election of directors, respectively, of the resultingor acquiring corporation in such Business Combination (which shall include, without limitation, acorporation which as a result of such transaction owns the Company or substantially all of theCompany’s assets either directly or through one or more subsidiaries) (such resulting or acquiringcorporation is referred to herein as the “Acquiring Corporation”) in substantially the sameproportions as their ownership of the Outstanding Company Common Stock and Outstanding CompanyVoting Securities, respectively, immediately prior to such Business Combination and (y) no Person(excluding any employee benefit plan (or related trust) maintained or sponsored by the Company or bythe Acquiring Corporation) beneficially owns, directly or indirectly, 40% or more of thethen-outstanding shares of common stock of the Acquiring Corporation, or of the combined votingpower of the then-outstanding securities of such corporation entitled to vote generally in theelection of directors (except to the extent that such ownership existed prior to the BusinessCombination); or               (iv) the liquidation or dissolution of the Company.Notwithstanding anything to the contrary, the following acquisitions shall not constitute a Changeof Control event: (A) any acquisition directly from the Company (excluding an acquisition pursuantto the exercise, conversion or exchange of any security exercisable for, convertible into orexchangeable for common stock or voting securities of the Company, unless the Person exercising,converting or exchanging such security acquired such security directly from the Company or anunderwriter or agent of the Company), (B) any acquisition by any employee benefit plan (or relatedtrust) sponsored or maintained by the Company or any corporation controlled by the Company, (C) anyacquisition by any corporation pursuant to a Business Combination (as defined below) which complieswith clauses (x) and (y) of subsection (iii) of this definition or (D) any acquisition by AtlanticInvestors, LLC or its affiliates (each such party is referred to herein as “ClearBlue”) of anyshares of common stock.          (b) “Cause” shall mean (i) an intentional act of fraud, embezzlement or theft inconnection with your duties to the Company or in the course of your employment with the Company,(ii) your willful engaging in gross misconduct which is demonstrably and materially injurious tothe Company, (iii) your willful and continued failure to perform substantially your duties with theCompany or one of its affiliates (other than any such failure resulting from incapacity due tophysical or mental illness), which such failure is not cured within five (5) days after a writtendemand for substantial performance is delivered to you by the Company which specifically identifiesthe manner in which the Company believes that you have not substantially performed your duties. Forpurposes of this Subsection, no act or failure to act on your part shall be deemed “willful” unlessdone or omitted to be done by you not in good faith and without reasonable belief that your actionor omission was in the best interest of the Company.          (c) “Date of Termination” shall have the meaning set forth in Section 2(c).          (d) “Disability” shall be deemed to have occurred if, as a result of incapacity due tophysical or mental illness, you shall have been absent from the full time performance of yourduties with the Company for six (6) consecutive months and, within thirty (30) days after writtenNotice of Termination by reason of disability is given to you, you shall not have returned to thefull time performance of your duties.
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          (e)“Good Reason” shall mean, without your express written consent, the occurrence after a Change of Control of the Company of any of the following circumstancesunless, in the cases of paragraphs (i), (ii), (iii), (iv), (v) or (vi), such circumstances arefully corrected prior to the Date of Termination specified in the Notice of Termination given inrespect thereof:               (i) any significant diminution in yourposition, duties, responsibilities, power, or office (not solely a change in title) as in effect immediately prior toa Change of Control (unless such changes are required and solely related to the reportingstructures of an Acquiring Corporation);               (ii) any reduction, without your consent, in your annual base salary as in effect onthe date hereof or as the same may be increased from time to time;               (iii) the failure by the Company to (i) continue in effect any material compensation orbenefit plan in which you participate immediately prior to the Change of Control, unless anequitable arrangement (embodied in an ongoing substitute or alternative plan) has been made withrespect to such plan, or (ii) continue your participation therein (or in such substitute oralternative plan) on a basis not materially less favorable, both in terms of the amount ofbenefits provided and the level of your participation relative to other participants, as existed atthe time the Change of Control;               (iv) the failure by the Company to continue to provide you with benefits substantiallysimilar to those enjoyed by you under any of the Company’s life insurance, medical, health andaccident, or disability plans in which you were participating at the time of the Change of Control,the taking of any action by the Company which would directly or indirectly materially reduce any ofsuch benefits, or the failure by the Company to provide you with the number of paid vacation daysto which you are entitled on the basis of years of service with the Company in accordance with theCompany’s normal vacation policy in effect at the time of the Change of Control;               (v) any requirement by the Company or of any person in control of the Company that thelocation at which you perform your principal duties for the Company be changed to a new locationthat is outside a radius of fifty (50) miles from your principal place of employment at the time of the Change of Control; or               (vi) the failure of the Company to obtain a reasonably satisfactory agreement from anysuccessor to assume and agree to perform this Agreement, as contemplated in Section 5.               (vii) In order to establish “Good Reason” for a termination, the Employee must providenotice to the Company of the existence of the condition giving rise to the “Good Reason” within 90days following the initial existence of the condition, and the Company has 30 days followingreceipt of such notice to remedy such condition.          (f) “Notice of Termination” shall have the meaning set forth in Section2(b).          (g) “Severance Payments” shall have the meaning set forth in Section3(b)(ii).
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     2. Employment Status.          (a) You acknowledge that this Agreement does not constitute a contract of employment or imposeon the Company any obligation to retain you as an employee. You may terminate your employment atany time, with or without Good Reason.          (b) Any termination of your employment by the Company or by you during the term of thisAgreement shall be communicated by written notice that indicates the specific provision in thisAgreement relied upon and sets forth in reasonable detail the facts and circumstances claimed toprovide a basis for termination of your employment under the provision so indicated (“Notice ofTermination”). A Notice of Termination shall be delivered to the other party hereto inaccordance with Section 6.          (c) The “Date of Termination” shall mean (i) if your employment is terminated forDisability, thirty (30) days after Notice of Termination is given (provided that you shall not havereturned to the full-time performance of your duties during such thirty (30) day period), and (ii)if your employment is terminated by the Company for Cause or other than for Cause, by you for GoodReason or for any other reason (other than Disability), the date specified in the Notice ofTermination.          (d) Your right to terminate your employment for Good Reason shall not be affected by yourincapacity due to physical or mental illness. Your continued employment shall not constituteconsent to, or a waiver of rights with respect to, any circumstance constituting Good Reason underthis Agreement.     3. Compensation Upon Termination. Subject to the terms and conditions ofthisAgreement, you shall be entitled to the following benefits during a period of disability, or upontermination of your employment, as the case may be, provided that such period of termination occursduring the term of this Agreement.          (a) Cause and Voluntary Termination other than for Good Reason. If your employmentshall be terminated by the Company for Cause or by you other than for Good Reason, the Companyshall pay you your full base salary and all other compensation through the Date of Termination atthe rate in effect at the time the Notice of Termination is given, plus all other amounts to whichyou are entitled under any compensation plan of the Company at the time such payments are due, andthe Company shall have no further obligations to you under this Agreement.          (b) Termination Without Cause; Voluntary Termination for Good Reason. If youremployment with the Company is terminated by the Company (other than for Cause, Disability or yourdeath) or by you for Good Reason, then you shall be entitled to the benefits below uponeffectiveness (taking into account any applicable statutory revocation periods) of a general waiverand release from you in favor of the Company, its directors, officers, employees, representatives,agents and affiliates in a form satisfactory to the Company. Notwithstanding the foregoing, theCompany shall not provide any benefit otherwise receivable by you pursuant to subsections (ii) —(v) of this paragraph (b) if an equivalent benefit is actually received by you from another employerduring the six (6) month period following your termination, and any such benefit actually receivedby you shall be reported to the Company.               (i) The Company shall pay to you your full base salary through theDate of Termination at the rate in effect at the time of Notice of Termination is given;               (ii) The Company will pay as severance pay to you, severance payments at yourannual base salary in effect on the Date of Termination, less applicable
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withholding (together with the payments provided in paragraph (iii-v) below, the “SeverancePayments”) until the earlierof (A) twelve (12) months following the Date ofTermination, or (B) acceptance by you of a position with another entity that is reasonablycomparable to the position you held with the Company. Severance Payments will be made in accordancewith the Company’s normal payroll procedures;               (iii) The Company will provide a Bonus Payment equal to your target bonus for thecurrent fiscal year pro rated to your Date of Termination. This Bonus Payment will be made in alump sum following the Date of Termination. In addition, the Company will pay you any unpaid bonusfrom the prior fiscal year.               (iv*) *The Company shall pay to you all legal fees and expenses incurred by you in seekingto obtain or enforce any right or benefit provided by this Agreement; and               (v) for up to a six (6) month period after such termination, theCompany shall provide reimbursement to you for COBRA payments for health and welfare benefitscontinuation provided you elect COBRA coverage.          (c) In the event that you become entitled to the Severance Payments, if any of theSeverance Payments will be subject to the tax imposed by Section 4999 of the Internal Revenue Codeof 1986, as amended (the “Code”) (or any similar tax that may hereafter be imposed)(the“Excise Tax”) the Company shall pay to you an additional amount (the “Gross-UpPayment”) such that the net amount retained by you, after deduction of any Excise Taxon the Total Payments (as hereinafter defined) and any federal, state and local income tax andExcise Tax upon the payment provided for by this Subsection, shall be equal to the Total Payments.For purposes of determining whether any of the Severance Payments will be subject to the Excise Taxand the amount of such Excise Tax, (a) any other payments or benefits received by you in connectionwith a Change of Control of the Company or your termination of employment (whether pursuant to theterms of this Agreement or any other plan, arrangement or agreement with the Company, anypersonwhose actions result in a Change of Control of the Company or any person affiliatedwith the Company or such person) (which together with the Severance Payments, constitute the “Total Payments”) shall be treated as “parachute payments” within the meaning of Section280G(b)(2) of the Code, and all “excess parachute payments” within the meaning of Section 280G(b)(l) shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selectedby the Company’s independent auditors such other payments or benefits (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or inpart) represent reasonable compensation for services actually rendered within the meaning ifSection 280G(b)(4) of the Code in excess of the base amount within the meaning of Section280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax, (b) the amount of the TotalPayments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (1)the total amount of the Total Payments or (2) the amount of excess parachute within the meaning ofSection 280G(b)(1) (after applying paragraph (a), above), and (c) the value of any non-cashbenefits or any deferred payment or benefit shall be determined by the Company’s independentauditors in accordance with the principles of Sections 280G(b)(3) and (4) of the Code. For purposesof determining the amount of the Gross-Up Payment, you shall be deemed to pay federal income taxesat the highest marginal rate of federal income taxation in the calendar year in which the Gross-UpPayment is to be made and state and local income taxes at the highest marginal rate of taxation inthe state and locality of your residence on the Date of Termination, net of the maximum reductionin federal income taxes, which could be obtained from deduction of such state and local taxes. Inthe event that the Excise Tax is subsequently determined to be less than the amount take intoaccount hereunder at the time of termination of your employment,
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you shall repay to the Company at thetime the amount of such reduction in excise tax is finallydetermined the portion of the Gross-Up Payment attributable to such reduction (plus the portion ofthe Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposedon the Gross-Up Payment being repaid by you if such repayment results in a reduction in Excise Taxand/or a federal, state and local income tax deduction) plus interest on the amount of suchrepayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the ExciseTax is determined to exceed the amount taken into account hereunder at the time of the terminationof your employment (including by reason of any payment the existence or amount of which cannot bedetermined at the time of the Gross-Up Payment), the Company shall make an additional gross-uppayment in respect of such excess (plus any interest payable with respect to such excess) at thetime that amount of such excess is finally determined.          (d) Payments to the Employee under Section 3 shall be bifurcated into twoportions, consisting of the portion, if any, that includes the maximum amount of the payments thatdoes not constitute “nonqualified deferred compensation” within the meaning of Section 409A of theCode and the portion, if any, that includes the excess of the total payments that doesconstitute nonqualified deferred compensation. Payments hereunder shall first be made from theportion that does not consist of nonqualified deferred compensation until such portion is exhaustedand then shall be made from the portion that does constitute nonqualified deferred compensation.Notwithstanding the foregoing, if the Employee is a “specified employee” as defined in Section409A(a)(3)(B)(i) of the Code, the commencement of the delivery of the portion that constitutesnonqualified deferred compensation will be delayed to the date that is 6 months and one day afterthe Employee’s termination of employment (the “Earliest Payment Date”). Any payments thatare delayed pursuant to the preceding sentence shall be paid pro rata during the period beginningon the Earliest Payment Date and ending on the date that is 6 months following the Earliest PaymentDate. The determination of whether, and the extent to which, any of the payments to be made to theEmployee hereunder are nonqualified deferred compensation shall be made after the application ofall applicable exclusions under Treasury Reg. § 1.409A-1(b)(9). Any payments that are intended toqualify for the exclusion for separation pay due to involuntary separation from service set forthin Treasury Regulation Section 1.409A-1(b)(9)(iii) must be paid no later than the last day of thesecond taxable year of the Employee following the taxable year of the Employee in which theEmployee’s termination of employment occurs.     4. Compensation upon Change of Control. Following a Change of Control oftheCompany, (a) if such Change of Control occurs on or before the six-month anniversary of the datehereof, 50% of all options and shares of restricted stock granted or issued to you under theCompany’s Amended and Restated 2003 Stock Incentive Plan or any other stock incentive plan of theCompany that are unvested as of such date shall become exercisable and vested in full on the dateof the Change of Control; and (b) if such Change of Control occurs after the six-month anniversaryof the date hereof, all of all options and shares of restricted stock granted or issued to you underthe Company’s Amended and Restated 2003 Stock Incentive Plan or any other stock incentive plan ofthe Company that are unvested as of such date shall become exercisable and vested in full on thedate of the Change of Control.     5. Successors; Binding Agreement.          (a) The Company will require any successor (whether direct or indirect, bypurchase, merger, consolidation or otherwise) to all or substantially all of the business or assetsof the Company expressly to assume and agree to perform this Agreement to the same extent that theCompany would be required to perform it if no such succession had taken place. Failure of theCompany to obtain an assumption of this Agreement at or prior to the effectiveness of any
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succession shall be a breach of this Agreement and shall constitute Good Reason if you elect toterminate your employment, except that for purposes of implementing the foregoing, the date onwhich any such succession becomes effective shall be deemed the Date of Termination. As used inthis Agreement, Company shall mean the Company as defined above and any successor to its businessor assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, orotherwise.          (b) This Agreement shall inure to the benefit of and be enforceable by yourpersonal or legal representatives, executors, administrators, successors, heirs, distributes,devisees and legatees. If you should die while any amount would still be payable to you hereunderif you had continued to live, all such amounts, unless otherwise provided herein, shall be paid inaccordance with the terms of this Agreement to your devisee, legatee or other designee or if thereis no such designee, to your estate.     6. Notice. For the purposes of this Agreement, notices and all other communicationsprovided for in this Agreement shall be in writing and shall be duly given when delivered or whenmailed by United States registered or certified mail, return receipt requested, postage prepaid,addressed to the Company, at 400 Minuteman Road, Andover, MA 01810, Attention: Chief FinancialOfficer, and to you at the address set forth below or to such other address as either the Companyor you may have furnished to the other in writing in accordance herewith, except that notice ofchange of address shall be effective only upon receipt.     7. Miscellaneous.          (a) The invalidity or unenforceability of any provision of this Agreement shall not affectthe validity or enforceability of any other provision of this Agreement, which shall remain infull force and effect.          (b) The validity, interpretation, construction and performance of this Agreement shall begoverned by the laws of the Commonwealth of Massachusetts.          (c) No waiver by you at any time of any breach of, or compliance with, any provision of thisAgreement to be performed by the Company shall be deemed a waiver of that or any other provision atany subsequent time.          (d) This Agreement may be executed in counterparts, each of which shall be deemed to be anoriginal but both of which together will constitute one and the same instrument.          (e) Any payments provided for hereunder shall be paid net of any applicable withholdingrequired under federal, state or local law.          (f) This Agreement sets forth the entire agreement of the parties hereto in respect of thesubject matter contained herein and supersedes all prior agreements, promises, covenants,arrangements, communications, representations or warranties, whether oral or written, by anyofficer, employee or representative of any party hereto; and any prior agreement of the partieshereto in respect of the subject matter contained herein is hereby terminated and cancelled.          (g) This Agreement is intended to comply with the provisions of Section 409A and the Agreementshall, to the extent practicable, be construed in accordance therewith. Terms defined on theAgreement shall have the meanings given such terms under Section 409A if and to the extent requiredin order to comply with Section 409A. No payments to be made under this Agreement may beaccelerated or deferred except as specifically permitted
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under Section 409A. In the event that the Agreementshall be deemed not to comply with Section409A, then neither the Company, the Board nor its or their designees or agents shall be liable tothe Employee or other person for actions, decisions or determinations made in good faith.*****If this letter sets forth our agreement on the subject matter hereof, kindly sign and return to theCompany the enclosed cop*y*of this letter, which will then constitute our agreement on this subject.      NAVISITE, INC.