Exhibit 10.31
EMPLOYMENT AGREEMENT
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This Employment Agreement made as of this 17th day of February, 1999,
between SAGE NETWORKS, INC., having a place of business at 000 Xxxxx Xxxxxx,
Xxxxxxxxx, XX 00000 (the "Employer"), and XXXXXXXX XXXXXX, residing at 00
Xxxxxxx Xxxx, Xxxxxxxxx, XX 00000 (the "Employee").
WHEREAS, an Agreement and Plan of Merger (the "Merger Agreement")
dated of even date herewith was entered into among the Employer, Employee and
certain other parties;
WHEREAS, in connection with the transactions contemplated by the
Merger Agreement, the parties desire the Employee to serve in certain capacities
with the Employer.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, the parties agree as follows:
1. Definitions.
Capitalized terms not otherwise defined herein shall have the meaning
ascribed to them in the Merger Agreement. As used herein, the following terms
have the following meanings:
"Agreement" shall mean this Agreement and any amendments hereto.
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"Agreement Term" shall have the meaning ascribed to it in Section
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2(a).
"Base Salary" shall mean the Employee's annual salary as determined
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pursuant to Section 5(a) hereof.
"Board" shall mean the Board of Directors of the Employer.
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"Cause" shall have the meaning ascribed to it in Section 9.
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"Employment Year" shall mean each consecutive 12-month period during
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the Agreement Term, the first of which shall commence on the date
hereof.
"Intellectual Property" shall have the meaning ascribed to it in
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Section 4(d).
"Restricted Period" shall have the meaning ascribed to it in Section
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4(a).
2. Agreement Term.
(a) The Employer will employ the Employee and the Employee will work
for the Employer for a term of three (3) years commencing on the date hereof,
unless sooner terminated as provided in Section 2(b) or in accordance with
Section 9, or in the event of death or disability of the Employee as provided in
Section 2(c) (the "Agreement Term").
(b) This Agreement may be terminated by the Employer for Cause or by
the Employee for Cause (in each case, as defined in Section 9) prior to the end
of the Agreement Term on such date as shall be specified in a notice given by
the Employer to the Employee or the Employee to the Employer, as appropriate.
(c) In the event of the death or disability of the Employee during the
Agreement Term, this Agreement shall terminate as of the date of such death or
as of the date of determination that such disability has occurred and the
Employee's estate or the Employee, as the case may be, shall be entitled to
receive (i) any and all accrued and unpaid portions of the Base Salary to the
date of death or disability, (ii) all of the benefits to which the Employee
would be entitled pursuant to Sections 7 and 8 hereof to the date of death or
disability, and (iii) in the case of the death of the Employee, such other
payments and benefits as shall be provided to the estates and beneficiaries of
deceased Employees under the then existing policies of the Employer. As used
herein, a "disability" shall have occurred if the Employee is entitled to
payments with respect to such disability under the Employer's long-term
disability insurance as then in effect, or if no such coverage is in effect, if
as a result of physical or mental incapacity, the Employee shall have been
incapable of performing the Employee's duties hereunder for a period in excess
of 26 consecutive calendar weeks or an aggregate of 30 weeks in any 12 month
period, in any such case, as determined by the Board (or a committee or officer
of the Employer designated by the Board) in its sole discretion. If the Employee
disagrees with such determination, the Board (or such designated committee or
officer) and the Employee shall select a mutually satisfactory physician to
resolve the disagreement and the resolution of such physician shall be binding
on both the Employer and the Employee.
3. Duties.
The Employee shall exercise such powers and perform such duties and
services for the Employer as the Employer may, from time to time, reasonably
require, devote her entire time, energy and attention to the business of the
Employer and shall not engage in any other business activity; provided, however,
that the Employee may pursue other business activities consisting primarily of
service on advisory boards of other developing companies so long as the time
spent on such activities does not exceed an average of 24 hours per month. The
Employee shall be based in Massachusetts but will be required to travel to the
extent required for the proper performance of the Employee's duties. The
Employee shall be the Senior Vice President Technology of the Employer and shall
report to the chief executive officer of the Employer.
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4. Non-Competition; Nonsolicitation; Confidentiality; Intellectual Property
Matters.
(a) Except as otherwise provided in Section 9(b), during the Agreement
Term and for a period of two (2) years following the later of (x) the third
anniversary of this Agreement or (y) the date of termination of this Agreement
("Restricted Period"), the Employee will not engage in any capacity in a
business substantially similar to or in competition with the business of the
Employer that is located or does business in any state in the United States
except as an officer, director, shareholder or employee of the Employer or any
affiliate thereof.
(b) During the Restricted Period, the Employee will not, unless acting
with the express written consent of Employer, directly or indirectly, solicit or
interfere with, or endeavor to entice away:
(i) any person who has rendered services as a subcontractor,
consultant or employee or otherwise for the Employer or any of
its affiliates with respect to the business of the Employer or
any of its affiliates during the 12 month period immediately
preceding the date of termination or expiration of this
Agreement; or
(ii) with respect to any business substantially similar to the
business in which the Employer or any of its affiliates is or has
been engaged after the date of this Agreement, any person or
entity who was a customer or client of the Employer or any of its
affiliates at any point during the 12 months preceding the
termination or expiration of this Agreement or any person or
entity who requested or received a proposal from the Employer or
any of its affiliates within the 12 months preceding the
termination or expiration of this Agreement.
(c) During the Agreement Term and at all times thereafter the Employee
agrees to hold in confidence all matters and things related to the business of
the Employer and each of its direct and indirect subsidiaries or affiliates of a
confidential or secret nature (including, without limitation, all private or
proprietary information) which the Employee may acquire, learn, develop or
create during the Agreement Term and will not, without the written consent of
Employer, except in the performance of the Employee's duties as an employee of
the Employer, use, publish or disclose any such matter or thing except to the
extent that (i) such information is otherwise publicly available, (ii)
disclosure is required by applicable law or court order or (iii) such
information is otherwise lawfully acquired by the Employee.
(d) The Employee hereby assigns, and agrees to assign, to the Employer
all of the Employee'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, whether or not patentable,
copyrightable or subject to other forms of protection, that are made, created,
developed, written or conceived by the Employee during the Agreement Term (and
any written or oral extension thereof), whether during or outside of regular
work hours, either solely or jointly with another, in whole or in part, either:
(i) in the course of the Employee's
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employment by the Employer or its affiliates, (ii) relating to the actual or
anticipated business or research or development of the Employer or (iii) with
the use of the Employer's time, material, private or proprietary information, or
facilities (herein each designated "Intellectual Property"). The Employee agrees
to execute (without charge to the Employer) a specific assignment of title to
Employer and, at the request and cost of the Employer, to do anything else
reasonably necessary to enable the Employer to secure a patent, copyright or
other form of protection for said Intellectual Property anywhere in the world.
The Employee acknowledges and agrees that the copyrights in Intellectual
Property created within the scope of the Employee's employment belong to the
Employer by operation of law.
(e) The Employee agrees to execute upon request by the Employer from
time to time during the Agreement Term, any nondisclosure, intellectual property
or confidentiality agreements which the Employer may require its employees
generally to execute, consistent with, but not more extensive than, the
foregoing.
(f) In consideration of the covenants and agreements of the Employee
contained in this Section 4, the Employer shall pay by wire transfer to the
Employee upon the execution and delivery of this Agreement by the parties hereto
the sum of $1,279,135 (the "Non-Compete Payment"). If the Employer has received
indemnity payments from the Employee in accordance with Section 5.01 of the
Merger Agreement (the "Indemnity Payments"), the aggregate amount of damages
payable to the Employer in connection with any breach by the Employee of this
Section 4 together with the Indemnity Payments shall not exceed the limitation
on the Employee's obligations under Section 5.01(f) of the Merger Agreement (the
"Limit").
5. Compensation.
(a) As compensation for the Employee's services to be rendered to the
Employer and in consideration for the covenants and agreements of the Employee
contained herein, the Employer shall pay to the Employee an annual Base Salary
of $150,000.
(b) The Base Salary shall be payable in substantially equal
installments and in substantially the same manner that salaries are paid by the
Employer to other employees in comparable positions with the Employer. The Board
(or a committee or officer of the Employer designated by the Board) shall make
an annual review of the Base Salary and may, but shall not be obligated to, in
its sole discretion, make increases thereto.
(c) The Employer shall pay to the Employee a signing bonus (the
"Signing Bonus"). The Signing Bonus shall be equal to $150,000 and shall be
payable in three installments. The first installment shall be equal to $52,000
and shall be payable upon execution and delivery of this Agreement by the
parties hereto. The second installment shall be equal to $75,000 and shall be
payable on the first anniversary of the date of this Agreement. The third
installment shall be equal to $52,000 and shall be payable on the third
anniversary of the date of this Agreement. An installment shall be forfeited if
this Agreement has been terminated on or before the date that such installment
is payable.
6. Vacation; Service Credit.
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The Employee shall be entitled to vacation periods annually during the
Employee's employment under this Agreement consistent with the Employer's
vacation policy for employees generally. The Employer shall give the Employee
service credit for all service with Net Daemons Associates, Inc. prior to the
date hereof, for vacation and all other employee benefits provided by the
Employer to the extent permitted by the Employer's employee benefit plans.
7. Reimbursement for Expenses.
The Employer shall reimburse the Employee for all reasonable and
necessary expenses and other disbursements actually incurred by the Employee for
and on behalf of the Employer in the performance of the Employee's duties upon
submission of adequate documentation of such expenses.
8. Benefits; Bonus; Incentive Compensation.
The Employee shall be entitled to participate in any health, medical
and dental, insurance or similar plan or program of the Employer established or
in effect for the benefit of its employees generally (collectively, "Insurance
Benefits"). The Employee shall be eligible to participate in the Employer's
bonus and incentive compensation programs, if any, at a level that is comparable
with the level of participation by other employees generally of the Employer in
comparable positions. All bonus and incentive compensation provided by the
Employer shall be at the Employer's sole discretion.
9. Termination By Employer for Cause.
(a) Termination of this Agreement for "Cause" by the Employer shall
mean termination due to the occurrence of any of the following events:
(i) if the Employee is convicted of any crime (whether or not
involving the Employer) which constitutes a felony or involves
moral turpitude, fraud or misrepresentation;
(ii) if the Employee exhibits dishonest conduct in connection
with the Employee's employment, which is fraud, theft or
misappropriation or embezzlement of Employer's funds, which
termination shall be effective on the tenth (10th) day after
written notice from Employer is delivered to the Employee;
(iii) if the Employee shall have breached any of the Employee's
material obligations under this Agreement or the Merger
Agreement, including, without limitation, the Employee's
agreement not to compete as provided in Section 4 of this
Agreement or in the Merger Agreement (other than an inadvertent
breach as to which the Employee shall have discontinued the
activity causing the breach within two (2) days following
delivery of notice thereof to the Employee); or
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(iv) if the Employee has habitually failed to follow the
reasonable directives of the Employer for the performance of the
Employee's duties or responsibilities hereunder, including,
without limitation, the Employee's duties and responsibilities
under Section 3 hereof, after due notice to the Employee, and a
reasonable opportunity to be heard by the Chairman or Co-
Chairman of the Employer within one month after the giving of
such notice and to correct such failure.
(b) Termination of this Agreement for "Cause" by the Employee shall
mean termination due to the breach by the Employer of the Employer's material
obligations under this Agreement or the Merger Agreement (other than an
inadvertent breach as to which the Employer shall have discontinued the activity
causing the breach within two (2) days following delivery of notice thereof to
the Employer).
10. Certain Remedies.
(a) If the Employer terminates this Agreement for Cause as defined in
Section 9(a) above, all of the Employee's rights under this Agreement shall
thereupon terminate and Employee shall be entitled only to all accrued and
unpaid portions of the Base Salary and Signing Bonus through the date of such
termination, and to all vested benefits under any employee benefit plans
maintained by the Employer, whether funded or unfunded, accrued through the date
of such termination. Notwithstanding the foregoing, such termination shall be
without prejudice to any right the Employee may have to continue to participate,
on a post-employment basis, in any retirement plan of the Employer now existing
or established hereafter for the benefit of its employees in general or any
health plan of the Employer, to the extent the Employee is eligible under the
general provisions thereof or as required by applicable law, including, without
limitation, COBRA.
(b) If the Employee terminates this Agreement for Cause as defined in
Section 9(b) above and the breach by the Employer resulting in such termination
relates to a failure by the Employer to make payments to the Employee under this
Agreement or the Merger Agreement, all of the Employee obligations under Section
4 of this Agreement shall terminate. Notwithstanding the foregoing, such
termination shall be without prejudice to any right the Employee may have to
continue to participate, on a post-employment basis, in any retirement plan of
the Employer now existing or established hereafter for the benefit of its
employees in general or any health plan of the Employer, to the extent the
Employee is eligible under the general provisions thereof or as required by
applicable law, including, without limitation, COBRA.
11. Notice.
Any notice required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given if delivered or mailed by
registered mail, postage prepaid: if to the Employee at the Employee's address
set forth on the first page hereof, or at such other address as the Employee
shall designate by notice to the Employer, and if to the Employer at 000 Xxxxx
Xxxxxx, Xxxxxxxxx, XX 00000, with a copy to Xxxxx X. Xxxxx, General
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Counsel, Sage Networks, Inc., 00 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxx Xxxxxx, XX
00000, or at such other address as it shall designate by notice to the Employee.
12. Successors and Assigns.
This Agreement is personal in its nature and neither of the parties
hereto shall, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder, except that the Employer may
assign this Agreement to any affiliate.
13. Governing Law; Jurisdiction.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts without regard to
its conflict of law rules. The Employer and the Employee submit and consent to
the jurisdiction of the state courts of the Commonwealth of Massachusetts or the
State of New York in the Counties of New York and/or Westchester and the federal
courts located therein with respect to any legal actions between them relating
to this Agreement.
14. Only Contract Relating to Employment; Amendments.
This Agreement supersedes any prior contracts relating to employment
between the Employee and the Employer and constitutes the full and complete
agreement between the Employee and the Employer in such respect and no
statement, representation, warranty or covenant has been made by either party
with respect thereto except as expressly set forth herein. This Agreement cannot
be changed, modified or amended and no provision or requirement hereof may be
waived without the consent in writing of the Employee and the Employer.
15. Headings.
The headings in this Agreement are for convenience of reference only
and shall not control or affect the meaning or construction of this Agreement.
16. Severability.
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect. If any provision
contained in this Agreement is found to be unenforceable by reason of the
extent, duration or scope thereof, or otherwise, then the court making such
determination shall have the right to reduce such extent, duration, scope or
other provision so that in its reduced form any such restriction shall
thereafter be enforceable to the maximum extent permitted by law. It is the
intent of the parties hereto that the covenants contained in this Agreement
shall be enforced to the fullest extent permissible under the laws and public
policies of each jurisdiction in which enforcement is sought (the Employee
hereby acknowledging that said restrictions are reasonably necessary for the
protection of the Employer).
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17. Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the Employer and the Employee have caused this
Agreement to be executed as of the date first above written.
SAGE NETWORKS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx, President
EMPLOYEE:
/s/ Xxxxxxxx Xxxxxx
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Xxxxxxxx Xxxxxx
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