Exhibit 10.5
July 1, 1997
Xx. Xxxxxxx X. Xxxxxxxxx
000 Xxxxxx Xxxx
Xxxxx Xxxxx, Xxxxxxxx 00000-0000
Dear Xxxxxxx:
This letter confirms our offer to you of employment by PSINet Inc. (the
"Company"), and sets forth the terms and conditions which shall govern such
employment as outlined below. This offer is subject to satisfactory
completion of reference checks and ratification by the Company's Board of
Directors, but otherwise shall remain open until midnight on Tuesday, July
1,1997.
1. EMPLOYMENT:
a) The Company agrees to employ you as Vice President and Controller,
reporting to the Chief Financial Officer ("CFO") of the Company. This is a
corporate officer position and as an officer of the Company you must stand
for election by the Board of Directors each year. You accept the employment
and agree to begin work on or before July 15, 1997, and remain in the employ
of the Company, and, except during vacation periods and sickness, to provide
during standard business hours a minimum of forty hours per week of
management services to the Company, as determined by and under the direction
of the CFO.
b) During your employment you will, except during vacations, periods of
illness, and other absences beyond your reasonable control, devote your best
efforts, skill and attention to the performance of your duties on behalf of
the Company.
2. COMPENSATION:
a) BASE SALARY. The Company shall pay you a base salary at the rate of
$130,000per annum. Your base salary shall be subject to additional increases
at the discretion of the Company's Board of Directors. Your base salary shall
be payable in such installments as the Company regularly pays its other
salaried employees, subject to such deductions and withholdings as may be
required by law or by further agreement with you.
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b) BONUS COMPENSATION. The Company will pay you a bonus upon the successful
completion of the objectives established for your performance, which will be
measured on or about January 30, 1998. The performance criteria will be
issued separately by the CFO, and may be changed, with mutual fairness, from
time to time as situations develop. The target bonus for the period ending
December 31, 1997 for the period (start date through December 31, 1997) will
be a total of up to $38,000. Separate criteria will be established for your
entitlement for the year starting January 1, 1998.
c) INCENTIVE STOCK OPTIONS. Effective upon your start date, PSINet Inc.
shall grant you options, subject to Board approval, to purchase thirty
thousand (30,000) shares of PSINet Inc.'s common stock (the "Options")
pursuant to its Executive Stock Incentive Plan (the "Plan"). Such Options
shall be evidenced by an option agreement in such form as required by the
Plan. Among other terms and provisions prescribed by the Plan, the option
agreement shall provide that (a) the exercise price of the Options shall be
the price per share of the Company's common stock as reported by the NASDAQ
Stock Market at the close of business on your start date, (b) the Options
shall not be exercisable after the expiration of ten years from the date such
Options are granted, and (c) the stock shall vest ratably, monthly, over
forty-eight months, provided that for each month's vesting purposes you
continue to be employed full time by the Company or one of its subsidiaries
during such month, and provided that the Company's Board of Directors
ratifies, no less often than annually, that you have met the performance
standards and criteria set for you for the preceding period.
3. EMPLOYEE BENEFITS. You shall be provided employee benefits, including
(without limitation) 401(k), four weeks' paid vacation, and life, health,
accident and disability insurance under the Company's plans, policies and
programs available to employees in accordance with the provisions of such
plans, policies, and programs.
4. TERMINATION:
a) Your employment with the Company may be terminated by the Company at any
time for "Cause" as defined in Section 4(c) hereof. Upon such termination,
the Company will provide written notice whether it has elected to use the
non-competition restrictions set forth in Section 5(a) hereof. Your
employment may also be terminated by the Company at any time without Cause
provided the Company shall have given you thirty (30) days' prior written
notice of such termination. That written notice must state whether the
Company has elected to use the non-Competition restriction (which decision
may not be rescinded). If you are terminated by the Company without cause
within the initial one-year term of your employment, you will be paid ninety
(90) days' severance pay. In addition, your employment may be terminated by
you at any time for any
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reason, provided you shall have given the Company at least thirty (30) days'
prior written notice of such termination. By the 30th day the Company must
notify you in writing whether it has elected to use the non-Competition
restriction. Such decision may not be rescinded. Failure of the Company to
so notify you shall result in the non-Competition restriction not being in
place.
b) Subject to your compliance with your obligations under Section 5 hereof,
in the event that your employment terminates or is terminated by you or the
Company for any reason other than for Cause, and the Company has elected to
use the non-Competition restriction, you shall be entitled, for a period of
twelve (12) months after termination of employment, to the following
(collectively, the "Termination Payments"): (i) your then current rate of
base salary as provided in Section 2; (ii) all life insurance and health
benefits, disability insurance and benefits and reimbursement theretofore
being provided to you; and (iii) Company contributions, to the extent
permitted by applicable law, to a SEP-XXX, Xxxxx or other retirement
mechanism selected by you sufficient to provide the same level of retirement
benefits you would have received if you had remained employed by the Company
during such 12-month period. The Company shall make up the difference in
cash payments directly to you to the extent that applicable law would not
permit it to make such contributions.
c) The Company shall have "Cause" for your termination of your employment by
reason of any breach of your agreement not to compete pursuant to Section 5
hereof, your committing an act materially adversely affecting the Company
which constitutes wanton or willful misconduct, your conviction of a felony,
or any material breach by you of this Agreement.
5. AGREEMENT NOT TO COMPETE.
a) In consideration of your employment pursuant to this Agreement and for
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, you covenant to and agree with the Company that, so long
as you are employed by the Company under this Agreement and for a period of
twelve (12) months following the termination of such employment (but only if
the Company has elected to enforce the restriction), you shall not, without
the prior written consent of the Company, either for yourself or for any
other person, firm or corporation, manage, operate, control, participate in
the management, operation or control of or be employed by any other person or
entity which is engaged in providing Internet-related network or
communications services competitive with the Internet-related network or
communication services offered to customers by the Company as of the date of
termination or within six (6) months thereafter. The foregoing shall in no
event restrict you from: (i) writing or teaching, whether on behalf of
for-profit, or not-for-profit institution(s); (ii) investing (without
participating in management or
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operation) in the securities of any private or publicly traded corporation or
entity; or (iii) after termination of employment, becoming employed by a
hardware, software or other vendor to the Company, provided that such vendor
does not offer network or communication services that are competitive with
the Internet-related network or communications services offered by the
Company as of the date of termination of employment or within six (6) months
thereafter.
b) You may request permission from the Company's Board of Director's to
engage in activities which would otherwise be prohibited by Section 5(a).
The Company shall respond to such request within thirty (30) days after
receipt. The Company will notify you in writing if it becomes aware of any
breach or threatened breach of any of the provisions in Section 5(a), and you
shall have thirty (30) days after receipt of such notice in which to cure or
prevent the breach, to the extent that you are able to do so. You and the
Company acknowledge that any breach or threatened breach by you of any of the
provisions in Section 5(a) above cannot be remedied by the recovery of
damages, and agree that in the event of any such breach or threatened breach
which is not cured with such 30-day period, the Company may pursue injunctive
relief for any such breach or threatened breach. If a court of competent
jurisdiction determines that you breached any of such provisions, you shall
not be entitled to any Termination Payments from and after date of the
breach. In such event, you shall promptly repay any Termination Payments
previously made plus interest thereon from the date of such payment(s) at 12%
per annum. If, however, the Company has suspended making such Termination
Payments and a court of competent jurisdiction finally determines that you
did not breach such provision or determines such provision to be
unenforceable as applied to your conduct, you shall be entitled to receive
any suspended Termination Payment, plus interest thereon from the date when
due at 12% per annum. The Company may elect (once) to continue paying the
Termination Payments before a final decision has been made by the court.
6. INTELLECTUAL PROPERTY Ownership of Work Product. All copyrights,
patents, trade secrets, or other intellectual property rights associated with
any ideas, concepts, techniques, inventions, processes, or works of authorship
developed or created by you during the course of performing the Company's work
(collectively the "Work Product") shall belong exclusively to the Company and
shall, to the extent possible, be considered a work made for hire for the
Company within the meaning of Title 17 of the United States Code. You
automatically assign, and shall assign at the time of creation of the Work
Product, without any requirement of further consideration, any right, title, or
interest you may have in such Work Product, including any copyrights or other
intellectual property rights pertaining thereto. Upon request of the Company,
you shall take such further actions, including execution and delivery of
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instruments of conveyance, as may be appropriate to give full and proper effect
to such assignment.
7. TRANSFERABILITY.
a) As used in this Agreement, the term "Company" shall include any successor
to all or part of the business or assets of the Company who shall assume and
agree to perform this Agreement.
This Agreement shall inure to the benefit of and be enforceable by you and
your personal or legal representatives, executors, administrators, heirs,
distributees, devisees and legatees.
b) Except as provided under paragraph (a) of this Section 7, neither this
Agreement nor any of the rights or obligations hereunder shall be assigned or
delegated by any party hereto without the prior written consent of the other
party.
8. SEVERABILITY. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted. If a court of competent jurisdiction
determines that any particular provision of this Agreement is invalid or
unenforceable, the court shall restrict the provision so as to be
enforceable. However, if the provisions of Section 5 shall be restricted, a
proportional reduction shall be made in the payments under Section 4.
9. ENTIRE AGREEMENT; WAIVERS. This letter Agreement contains the entire
agreement of the parties concerning the subject matter hereof and supersedes
and cancels all prior agreements, negotiations, correspondence, undertakings
and communications of the parties, oral or written. No waiver or
modification of any provision of this Agreement shall be effective unless in
writing and signed by both parties.
10. NOTICES. Any notices, requests, instruction or other document to be
given hereunder shall be in writing and shall be sent certified mail, return
receipt requested, addressed to the party intended to be notified at the
address of such party as set for at the head of this agreement or such other
address as such party may designate in writing to the other.
11. GOVERNING LAW. THIS LETTER AGREEMENT SHALL BE SUBJECT TO, GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS PRINCIPLES OF CONFLICTS OF LAW.
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12. COUNTERPARTS. This letter Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
shall be one and the same instrument.
Please confirm your agreement with the forgoing by signing and returning
one copy of this letter Agreement to the undersigned, whereupon this letter
agreement shall become a binding agreement between you and the Company.
Sincerely,
PSINet Inc.
By: /s/ Xxxxxx X. Postal
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Xxxxxx X. Postal, Chief Financial Officer
Accepted and Agreed to as of July 1, 1997:
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By: /s/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx
