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Exhibit 10.12
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") dated as of
January 1, 1999 is entered into by and between Sage Networks, Inc. (the
"Company"), and Intensity Ventures, Inc. (the "Consulting Company").
WHEREAS, the Company desires to engage the Consulting Company
to assist in the Company's business operations, and the Consulting Company
desires to provide its services to the Company in connection with its business
operations;
NOW, THEREFORE, in consideration of the mutual covenants set
forth herein, the Company and the Consulting Company hereby agree as follows:
1. Engagement.
The Company hereby engages the Consulting Company to serve as
an advisor and consultant to the Company as provided herein, and the Consulting
Company hereby accepts such engagement. The obligations of the Consulting
Company hereunder shall primarily be performed by Xxxxxxx X. Xxxx, the principal
of the Consulting Company (hereinafter, the "Principal"). During the time that
the Consulting Company is performing services for the Company pursuant to this
Agreement, and for all purposes hereunder, the Consulting Company's (and the
Principal's) status shall be that of an independent contractor of the Company.
2. Term.
The term of the Consulting Company's engagement under this
Agreement shall be for a period commencing on the date hereof through and
including December 31, 2000, unless sooner terminated as provided in Section 6
of this Agreement (the "Consulting Period"). The Agreement shall be
automatically extended from year to year thereafter unless either party gives
not less than three (3) months prior written notice to the other that such party
elects to have the Agreement terminated effective at the end of the initial or
then current renewal term. During the Consulting Period, the Consulting Company
and the Principal may engage in any business and perform any service for its or
his own account, provided that such business or service shall not prevent the
Consulting Company or the Principal from performing its or his duties to the
Company under Section 3 of this Agreement or violate the terms of the
restrictive covenants set forth in Section 8 hereof.
3. Consulting Services.
The Consulting Company shall advise and counsel the Company
and consult with its employees, representatives, agents and contractors as to
such matters and to perform such other services as the Company and the
Consulting Company may reasonably agree.
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During the term hereof, Principal shall serve as Co-Chairman of the Company and
shall perform such services as are customarily performed by persons holding such
office and shall be subject at all times to the direction of the Board of
Directors of the Company.
4. Consulting Fees.
(a) The Company shall pay to the Consulting Company, as
compensation for services rendered under this Agreement, an annual consulting
fee of ONE HUNDRED AND EIGHTY THOUSAND DOLLARS ($180,000), payable in
installments in accordance with the usual practice of the Company.
(b) The parties hereby acknowledge and agree that all amounts
paid to the Consulting Company during the Consulting Period shall represent fees
for its consulting services and shall therefore be paid without any deductions
or withholdings taken therefrom for taxes or any other purpose. The Consulting
Company further acknowledges that the Company makes no warranties as to any tax
consequences of such payments, and specifically agrees that the determination of
any tax liability or other consequences of the payment set forth above is the
sole and complete responsibility of the Consulting Company and the Principal.
5. Business Expenses.
During the Consulting Period, the Consulting Company may be
required to incur out-of-pocket business expenses in connection with the
performance of its duties under this Agreement. The Company shall reimburse in
full the Consulting Company for all such reasonable expenses upon presentation
by Consulting Company of the details of vouchers for such expenses in accordance
with customary practices of the Company.
6. Termination of Consulting Engagement.
(a) Anything to the contrary notwithstanding, this Agreement
shall terminate 30 days after the Principal's (i) death or (ii) disability for a
period of not less than twenty-six consecutive weeks; provided, however, that
the provisions of Section 7 hereof shall remain in full force and effect through
the end of the term hereof.
(b) Consulting Company's engagement hereunder may also be
terminated by the Company before the expiration of the term hereof only for
cause as herein defined. "Cause" shall mean only one or both of the following
occurrences.
(i) The Participant's or the Consulting Company's conviction
of a felony by a court of competent jurisdiction (which conviction,
through lapse of time or otherwise, is not subject to appeal); or
(ii) The Participant's or the Consulting Company's commission
of an act of fraud or embezzlement upon the Company.
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7. Severance.
In the event of termination of the services of the Consulting
Company by the Company before the expiration of the term hereof, except when
such termination is in accordance with the provisions of paragraph 6(a) or 6(b)
hereof, the Company will provide the Consulting Company with severance pay in an
amount equal to Consulting Company's base annual compensation through the end of
the term hereof, which shall be payable in a lump sum, discounted based on the
prime rate of Chase Bank then in effect, which lump sum shall be payable within
30 days of the date of termination. The Company shall also continue to provide
to Principal the retirement benefits, life insurance, medical insurance and
disability insurance pursuant to Section 4(b) through the end of the term
hereof.
In the event of termination of employment of the Consulting
Company before the expiration of the term hereof pursuant to the provisions of
paragraph 6(a) hereof, the Company will: (i ) provide the Consulting Company
with severance pay in an amount equal to one year's base annual compensation,
which shall be payable in a lump sum, discounted based on the prime rate of
Chase Bank then in effect, which lump sum shall be payable within 30 days of the
date of termination; (ii) continue to provide Principal the retirement benefits,
life insurance, medical insurance and disability insurance pursuant to Section
4(b) through the end of the term hereof; and (iii) continue to provide
Principal's spouse and minor children with medical benefits pursuant to Section
4(b) through the end of the term hereof.
8. Restrictive Covenants.
(a) Intellectual Property. The Consulting Company and the
Principal assign and agree to assign to the Company all of the Consulting
Company's and Principal's right, title and interest in and to all inventions,
discoveries, improvements, ideas, computer or other apparatus programs and
related documentation, and other works of authorship (hereinafter each
designated "Intellectual Property"), whether or not patentable, copyrightable or
subject to other forms of protection, made, created, developed, written or
conceived by the Consulting Company or the Principal during the Consulting
Period, whether during or outside of regular working hours, either solely or
jointly with another, in whole or in part, either:
(i) in the course of such consulting, or
(ii) relating to the actual or anticipated business or research or
development of the Company, or
(iii) with the use of the Company's time, material, private or
proprietary information, or facilities.
(b) Assignment. The Consulting Company and the Principal will,
without charge to the Company but at its expense, execute a specific assignment
of title to the Company and do anything else reasonably necessary to enable the
Company to
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secure a patent, copyright or other form of protection for said Intellectual
Property anywhere in the world.
(c) Confidential Information. During the Consulting Period and
at all times thereafter, the Consulting Company and the Principal will keep in
confidence and will not, except as required in the conduct of the Company's
business or as authorized in writing on behalf of the Company, publish, disclose
or use, any private or proprietary information that the Consulting Company or
the Principal may in any way acquire, learn, develop or create by reason of
consulting on behalf of the Company.
(d) Noncompetition: Nonsolicitation.
(i) During the Consulting Period and for a period of
twenty-four (24) months following the termination of the Consulting Period for
whatever reason, neither the Consulting Company nor the Principal will solicit
any customers who are presently or may hereafter become customers of the Company
unless such solicitation is entirely unrelated to Company's business.
(ii) Subsequent to the expiration of this Agreement,
neither the Consulting Company nor the Principal will interfere with or disrupt
or attempt to disrupt the Company's business relationship with its customers or
suppliers, or solicit the employees of the Company.
(iii) During the term of this Agreement and for a
period of twenty-four (24) months from the date of termination of the Consulting
Period for whatever reason, neither the Consulting Company nor the Principal
will disclose or use or enable anyone else to use any information or data which
may be obtained by it or him or available to it or him during the Consulting
Period.
(e) Enforcement. The Company shall be entitled to seek a
restraining order or injunction in any court of competent jurisdiction to
prevent any continuation of any violation of the provisions of this Section 8.
9. Notice.
All notices, requests and other communications pursuant to
this Agreement shall be in writing and shall be deemed to have been duly given,
if delivered in person or by courier, telegraphed, telexed or by facsimile
transmission or sent by express, registered or certified mail, postage prepaid,
addressed as follows:
If to the Consulting Company:
Intensity Ventures, Inc.
X/X Xxxxxxx X. Xxxx
X. X. Xxx X
Xxxxxxxx Xxxxxxx, XX 00000
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Fed Ex: 0000 00xx Xxxxxx, #000
Xxxxxxx, XX 00000
If to the Company:
Sage Networks, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Either party may, by written notice to the other, change the address to which
notices to such party are to be delivered or mailed.
10. Waiver of Breach.
Any waiver of any breach of this Agreement shall not be
construed to be a continuing waiver or consent to any subsequent breach on the
part either of the Consulting Company or of the Company.
11. Non-Assignment; Successors.
Neither party hereto may assign his or its rights or delegate
his or its duties under this Agreement without the prior written consent of the
other party; provided, however, that (i) this Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the Company upon
any sale of all or substantially all of the Company's assets, or upon any
merger, consolidation or reorganization of the Company with or into any other
corporation, all as though such successors and assigns of the Company and their
respective successors and assigns were the Company; and (ii) this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
the Consulting Company to the extent of any payments due to them hereunder. As
used in this Agreement, the term "Company" shall be deemed to refer to any such
successor or assign of the Company referred to in the preceding sentence.
12. Severability.
To the extent any provision of this Agreement or portion
thereof shall be invalid or unenforceable, it shall be considered deleted
therefrom (except as provided in the following sentence) and the remainder of
such provision and of this Agreement shall be unaffected and shall continue in
full force and effect. In the event that any provision of Section 8 hereof is
found by a court of competent jurisdiction to be invalid or unenforceable, such
provision shall be deemed modified and shall be enforced to the maximum extent
permitted by law.
13. Counterparts.
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This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. Governing Law.
This Agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of New York, without giving effect to the
choice of law principles thereof.
15. Entire Agreement.
This Agreement constitutes the entire agreement by the Company
and the Consulting Company with respect to the subject matter hereof and
supersedes any and all prior agreements or understandings between the Consulting
Company and the Company with respect to the subject matter hereof, whether
written or oral. This Agreement may be amended or modified only by a written
instrument executed by the Consulting Company and the Company.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
SAGE NETWORKS, INC.
By:/s/ Xxxxxxx X. Xxxxxxx
________________________________
Xxxxxxx X. Xxxxxxx
Co-Chairman
INTENSITY VENTURES, INC.
By /s/ Xxxxxxx X. Xxxx
________________________________
Xxxxxxx X. Xxxx
Its President
_______________________________
