EXHIBIT 10.8
August 28, 1998
Xx. Xxx X. Xxxx
4-1-8 M304 Hiroo, Shibuya-ku
Tokyo 000 Xxxxx
This letter confirms our offer to you of employment by PSINet K.K. or a related
Japanese company (the "Company"), and sets forth the terms and conditions which
shall govern such employment as outlined below. This offer shall remain open
until noon on September 1, 1998.
1. EMPLOYMENT:
A) The Company agrees to employ you as President of PSINet Asia/Pacific
Division reporting to the C.O.O. of PSINet Inc. You will also be appointed a
Senior Vice President of PSINet Inc. This is a corporate officer position and as
an officer of the Company you must stand for election by the PSINet Inc. Board
of Directors each year. You accept the employment and agree to begin work on or
before October 6, 1998, 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 C.O.O.
B) In connection with your employment by the Company, your principal place of
employment shall be the Tokyo, Japan area and you shall not be required
permanently to relocate to a principal place of business outside such area
during the term of your employment hereunder.
C) 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. TERM OF EMPLOYMENT. The term of the employment shall commence on the date
hereof and shall continue for a period of three (3) years.
3. COMPENSATION:
A) BASE SALARY. The Company shall pay you a base salary at the rate of
(Yen)40,000,000 per annum. Beginning on January 2, 2000, and on January 2/nd/
of each year during the term of this Agreement, your base salary shall be
increased at a minimum by an amount equal to five percent (5%) of your then
current base salary. 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.
B) SIGNING BONUS. The Company will pay you a signing bonus of (Yen)3,000,000
at the completion of your first full month of employment with the Company. This
bonus shall be subject to all normal withholding taxes.
C) PERFORMANCE BONUS. The Company will pay you a bonus upon the successful
completion of the objectives established for your performance for the applicable
year. The performance criteria will be issued separately by the C.O.O. of
PSINet Inc., at the beginning of each year, and may be changed, with mutual
fairness, from time to time as situations develop. Your performance bonus will
be an amount equal to up to (Yen)16,500,000 and shall be payable in two tiers,
each of which shall consist of one-half of your total performance bonus amount
for the applicable year. Separate criteria will be established for your
entitlement to each tier's bonus money. For the period ending March 1999, your
performance bonus shall not be less than (Yen)8,250,000, provided all
obligations under this agreement are met by you for this period.
D) INCENTIVE STOCK OPTIONS. Effective upon your start date, PSINet Inc. shall
grant you options to purchase One Hundred Thousand (100,000) shares of PSINet
Inc.'s common stock (the "Options") pursuant to its Executive Stock Incentive
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 dare, (b) the Options
shall not be exercisable after the expiration of ten (10) years from the date
such Options are granted, and (c) the stock shall vest ratably, monthly, over
forty-eight (48) months, provided that for each month's vesting purposes you
continue to be employed full time by the Company, PSINet Inc. 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. The
Compensation Committee of the Company's Board of Directors, in its sole
discretion, may determine to grant you additional options in the future.
In the event of a Change of Control, as defined in Section 9 below, or upon
the occasion of your death during the term of this Agreement while you are in
compliance with the requirements hereof, the Company shall vest all of the above
noted unvested stock options immediately.
4. EMPLOYEE BENEFITS. You shall be provided employee benefits commensurate
with your position as Vice President, including (without limitation) 401(k)
retirement plan, four weeks' paid vacation, reasonable expenses associated with
an annual physical examination paid for by the Company, reimbursement of up
seventy-five percent (75%) of your annually incurred dental expenses, 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.
5. TERMINATION:
A) Your employment with the Company may be terminated by the Company at any
time for "Cause" as defined in Section 6(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 7(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 two years of your
employment, you will be paid severance pay for a total of twelve (12) months.
If you are terminated without cause within the third year of your employment,
you will be paid severance pay for a total of twenty-six (26) weeks. In
addition, your employment may be
-2-
terminated by you at any time for any 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 7 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 twenty-four (24)
months after termination of employment, to the following (collectively, the
"Termination Payments"): (i) your then current rate of base salary as provided
in Section 3; (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 24-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 6
hereof, your committing an act materially adversely affecting the Company which
constitutes wanton or willful misconduct, your conviction of a felony or an
equivalent under Japanese law, or any material breach by you of this Agreement.
6. 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 twenty-
four (24) 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
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 7(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 7(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
-3-
any of the provisions in Section 7(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 twelve percent (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.
7. 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 instruments of conveyance,
as may be appropriate to give full and proper effect to such assignment.
8. 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 9, 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.
C) As used in this Agreement, "Change in Control" shall mean: (i) the
shareholders of the Company approve an agreement for the sale of all or
substantially all of the assets of the Company; or (ii) the shareholders of the
Company approve a merger or consolidation of the Company with any other
corporation (and the Company implements it), other than (A) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent more than eighty
percent (80%) of the combined voting power of the voting securities of the
Company, or such surviving entity, outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no "person"
(as defined below) acquires more than thirty percent (30%) of the combined
voting power of the Company's then-outstanding securities' or (iii) any
"person," as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended, (the "Exchange Act") (other than (A) of the
Company, (B) any corporation owned, directly or indirectly, by the Company or
the shareholders of the Company in substantially
-4-
the same proportions as their ownership of stock of the Company is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company's then outstanding securities.
9. 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 7 shall be restricted, a proportional
reduction shall be made in the payments under Section 6b.
10. 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.
11. 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.
12. GOVERNING LAW. THIS LETTER AGREEMENT SHALL BE SUBJECT TO, GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF JAPAN. THIS AGREEMENT SHALL BE
RENDERED IN JAPANESE, IF REQUIRED BY LAW, BUT THE ENGLISH LANGUAGE VERSION
HEREOF SHALL BE DEEMED TO BE THE OFFICIAL VERSION BETWEEN THE PARTIES.
13. 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.
-5-
XXXX EMPLOYMENT AGREEMENT SIGNATURE PAGE
Please confirm your agreement with the foregoing 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 K.K.
By: /s/Xxxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxx, Chairman
Accepted and Agreed to as of September 1, 1998:
-----------
By: /s/Xxx X. Xxxx
--------------------------------
Xxx X. Xxxx
-6-
