EXHIBIT 10.12
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, dated as of November 6, 2000
(hereinafter "Agreement"), by and between PSINet Inc. (hereinafter "the
Company"), a New York corporation with its principal place of business located
at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(hereinafter "the Executive").
WHEREAS, the Company has determined that it is in the best
interests of the Company to delegate certain management responsibilities of the
Company to the Executive;
WHEREAS, the Executive is willing to provide her services as
an employee of the Company for the inducements and on the terms and conditions
set forth below in this Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. EMPLOYMENT POSITION.
(a) POSITION AND DUTIES. The Company hereby employs the
Executive to serve as Senior Vice President and General
Counsel of the Company, and the Executive hereby accepts such
employment in the capacity and subject to the terms and
conditions hereinafter set forth. This position is a corporate
officer position and, as an officer of the Company, the
Executive must stand for election by the Company's Board of
Directors (the "Board") each year of the Term (as defined in
Section 2 hereof). The Executive shall have such powers,
duties, authority, and responsibilities as are (i) consistent
with such position, (ii) assigned to such offices in the
Company's By-laws, and (iii) reasonably assigned to the
Executive by the Chairman and Chief Executive Officer of the
Company. The Executive accepts such employment and agrees to
remain in the employ of the Company and provide management
services to the Company, as determined by and under the
direction of the Chairman and Chief Executive Officer.
(b) LOCATION OF EMPLOYMENT. The principal place of
employment of the Executive shall be in the greater
Washington, D.C. area. The Executive shall be available to
travel to the extent reasonably required to carry out the
duties and responsibilities as Senior Vice President and
General Counsel or as otherwise may be reasonably required by
the business of the Company.
(c) MANAGEMENT RESPONSIBILITIES. The Executive shall at
all times perform his responsibilities and duties with
appropriate care and consistent with his position as may be
assigned by the Chairman and Chief Executive Officer of the
Company and shall at all times exercise reasonable judgment
and discretion in the performance of such responsibilities and
duties.
2. TERM OF EMPLOYMENT. The initial term of the Executive's
employment under this Agreement shall commence as of the date of this Agreement
and shall terminate on the third anniversary hereof (the "Initial Term") subject
to earlier termination as provided in Section 6.
After the Initial Term, this Agreement shall be automatically extended each year
for an additional one (1) year period (each, a "Renewal Term"). The Initial Term
together with any Renewal Term are referred to herein collectively as the
"Term."
3. COMPENSATION.
(a) BASE SALARY. The Company shall pay the Executive a
base salary at a rate of $265,000.00 per year beginning on the
date hereof. Beginning on January 1, 2001 and January 1 of
each subsequent year thereafter, the Executive's base salary
shall be increased at a minimum by an amount equal to five
percent (5%) of the Executive's then current base salary. The
Executive's base salary shall be subject to additional
increases at the discretion of the Chairman and Chief
Executive Officer of the Company subject to the approval of
the Compensation Committee of the Board (the "Compensation
Committee"). The Executive's base salary shall be payable in
such installments as the Company regularly pays its other
salaried employees. All payments shall be subject to the
deduction of payroll withholdings taxes and similar
assessments as required by law or by further agreement with
the Executive.
(b) PERFORMANCE BONUS. The Company will pay the Executive
a bonus subject to the successful completion of the objectives
established for the Executive's performance for each calendar
year during the Term. The performance criteria will be issued
separately by the Chairman and Chief Executive Officer of the
Company with respect to each calendar year during the Term,
and may be changed, with mutual fairness, from time to time as
situations develop. The target bonus for the one-year period
ending December 31, 2000 will be a total of up to $125,000.00.
Separate criteria will be established for the Executive's
entitlement for the year starting January 1, 2001. Bonuses in
subsequent years during the Term will be at least equal to the
amount of the bonus during the previous calendar year.
(c) STOCK OPTIONS. On the first anniversary of the date
of this Agreement and each subsequent anniversary date during
the Term, the Company shall grant the Executive options to
purchase 25,000 shares of the Company's common stock (the
"Options") pursuant to the Company's Executive Stock Incentive
Plan (the "Plan") or another option plan of the Company, such
grant being subject to the terms of this Agreement and the
Executive's continued employment at the time of the grant and
evidenced by an option agreement in such form and under the
terms and conditions set forth in the applicable plan.
(d) VESTING OF STOCK OPTIONS. In the event of (i) a
Change in Control (as defined in Section 3(e) hereof); (ii)
the termination of the Executive's employment by the Company
for any reason other than for Cause (as defined in Section
6(c) hereof); or (iii) the termination of the Executive by the
Company because of the Executive's death or disability, the
Company shall immediately vest all of the unvested stock
options the Executive has received prior to the date of the
Change in Control or Date of Termination (as defined in
Section 6(j) hereof), as applicable.
(e) CHANGE IN CONTROL. As used in this Agreement, "Change
in Control" shall mean: (i) the shareholders of the Company
approve an agreement for the
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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 (1) the Company or (2) any corporation
owned, directly or indirectly, by the Company or the
shareholders of the Company in substantially the same
proportions as their ownership of stock in 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 thirty percent (30%) or more of the
combined voting power of the Company's then outstanding
securities.
4. FRINGE BENEFITS; AUTOMOBILE ALLOWANCE.
(a) During the Term, the Executive shall be entitled to
the maximum benefits that are generally provided to all senior
executives of the Company under any life insurance, group
insurance, medical, retirement, pension or other employee
benefit or incentive plans or pursuant to other arrangements
or understandings (excluding any equity, equity option or
equity bonus plans), so long as any such plan, benefit,
arrangement or understanding remains generally available to
all other senior executive officers of the Company.
(b) During the Term, the Executive shall also receive an
automobile allowance of $800 per month or whatever greater
amount the Company pays to its Executives as a matter of
standard practice from time to time.
(c) During the Term, the Executive shall be entitled to
financial and tax advice at the Company's expense through the
▇▇▇▇▇ Companies up to a maximum amount of $7,000.00 per year.
(d) During the Term, the Executive shall be entitled to
four (4) weeks paid vacation each year which can accumulate to
a maximum of six (6) weeks.
5. EXPENSE REIMBURSEMENT. In addition to the compensation and
benefits provided in Sections 3 and 4, the Company shall, upon receipt of
appropriate documentation, reimburse the Executive for his reasonable travel,
lodging, entertainment, and other ordinary and necessary business expenses
incurred in the course of his duties on behalf of the Company during the Term.
6. TERMINATION. The Term is subject to early termination as
provided below:
(a) TERMINATION BY THE COMPANY BECAUSE OF THE EXECUTIVE'S
DISABILITY. If at any time during the Term, the Company
determines in good faith that the Executive has been unable,
as a result of physical or mental illness or incapacity,
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to perform his duties hereunder for a period of either (i) one
hundred eighty (180) consecutive days during any twelve-month
period or (ii) ninety (90) consecutive days during any
twelve-month period if the Executive's physical or mental
illness or incapacity would reasonably be expected to continue
for another consecutive ninety (90) day period after such
initial ninety (90) day period, the Term may be terminated by
the Company upon thirty (30) days' written notice to the
Executive. Should the Executive be terminated pursuant to this
Section 6(a), he shall be entitled to Termination Payments as
provided for in Section 6(g).
(b) TERMINATION BY THE COMPANY BECAUSE OF THE EXECUTIVE'S
DEATH. In the event that the Executive's death occurs prior to
the expiration of the Term, the Term shall terminate as of the
date of the Executive's death. Should the Executive be
terminated pursuant to this Section 6(b), he shall be entitled
to Termination Payments as provided for in Section 6(g).
(c) TERMINATION BY THE COMPANY FOR CAUSE. The Executive's
employment may be terminated by the Company at any time for
"Cause." In the event of a termination for Cause, all salary
and benefits otherwise payable to the Executive shall cease
immediately upon such termination. For purposes of this
Agreement, the Company shall have Cause for termination of the
Executive's employment under this Agreement by reason of (i)
any breach by the Executive of his agreement not to compete or
solicit pursuant to Section 7 hereof; (ii) any violation of
Company policy which materially and adversely affects the
business or reputation of the Company; (iii) any act or
omission by the Executive constituting willful misconduct or
gross negligence, (iv) the Executive's conviction of a felony
(or a plea of guilty or NOLO CONTENDRE thereto); (v) the
Executive's conviction of any other criminal action (or a plea
of guilty or NOLO CONTENDRE thereto) that has or might
reasonably be expected to have an adverse effect on the
business or reputation of the Company or its subsidiaries;
(vi) the Executive's commission of an act of fraud; (vii) a
material breach by the Executive of any provision of this
Agreement which breach and the effects thereof remain uncured
for a period of thirty (30) days after written notice,
specifically identifying the breach, is given to the Executive
by the Company (however, it being expressly understood that
the Company need not provide any notice and may terminate the
Executive immediately where the Company in good faith believes
that the Executive's material breach is not curable within
thirty (30) days); or (viii) the Executive's voluntary
resignation without Good Reason and without having given the
Company at least thirty (30) days prior written notice.
(d) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company
may terminate the employment of the Executive under this
Agreement at any time without cause with thirty (30) days'
prior written notice. Should the Executive be terminated
pursuant to this Section 6(d), he shall be entitled to
Termination Payments as provided for in Section 6(g).
(e) TERMINATION BY THE EXECUTIVE WITHOUT GOOD REASON. The
Executive may terminate his employment at any time without
Good Reason (as that term is defined in Section 6(f)),
provided that the Executive shall have given the Company at
least thirty (30) days prior written notice of such
termination. In the event of termination by the Executive
without Good Reason, the Executive's
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salary and benefits shall continue during the notice period
specified by the Executive and shall cease thereafter.
(f) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The
Executive may terminate his employment at any time for Good
Reason. For purposes of this Agreement, "Good Reason" shall
mean any of the following occurrences but only if occurring
within twelve (12) months after a Change in Control:
(i) the diminution or change, without the
Executive's written consent, of his position, title,
authority, duties or responsibilities as indicated
in Section 1(a) hereof;
(ii) the Company requiring the Executive, without
his written consent, to be based at any office or
location or to relocate to any location other than
the Company's headquarters which shall be located
in the Washington, D.C. area;
(iii) any material breach by the Company of this
Agreement which is not cured within thirty (30) days
after notice is given to the Company in accordance
with this Agreement.
(g) TERMINATION PAYMENTS. A. If the Executive's
employment is terminated by the Company (1) without Cause
pursuant to Section 6(d) or (2) because of the Executive's
death or disability pursuant to Section 6(a) or (b) (each of
the circumstances in Section 6(g)(A)(1) and (2) being known as
a "Termination Event"), the Company shall provide the
Executive (or, in the case of his death, his estate, heirs or
legal representatives) the following (collectively, the
"Termination Payments"), to be paid or given within thirty
(30) days of the Date of Termination (except with respect to
item (iii) below which will be granted and given in accordance
with Section 3(d) herein):
(i) a lump sum representing (1) the Executive's
monthly base salary as derived from the Executive's
annual salary and giving effect to all annual
increases thereto as provided in Section 3(a) herein,
times the greater of (Y) the number of months
remaining in the current Term and (Z) twenty-four
(24) months; and (2) all other accrued and unpaid
amounts due to the Executive as of the Date of
Termination (including, without limitation, accrued
vacation pay and reimbursement of business expenses);
(ii) a lump sum representing all annual bonus
amounts, as provided for in Section 3(b) hereof,
calculated on the assumption that all performance
criteria objectives would have been exceeded, such
that the Executive would receive the maximum bonus
established by the Chairman and Chief Executive
Officer of the Company to which the Executive would
have been entitled had he remained employed by the
Company for the longer of (Y) the remainder of the
current Term or (Z) twenty-four (24) months after the
Date of Termination; and
(iii) the vested options provided in Section 3(d).
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Moreover, should the Company terminate the Executive
without Cause pursuant to Section 6(d) herein, the Executive
shall be entitled to the immediate vesting of such number of
options as are equal to the number which would have vested,
ratably, monthly, had the Executive remained employed for the
longer of the remainder of the current Term or twenty-four
(24) months after the Date of Termination.
B. If the Executive terminates his employment
for Good Reason as defined in Section 6(f) or a Termination
Event occurs within twelve months after a Change in Control,
the Executive is entitled to the Termination Payments as
stated in Section 6(g)(A)(i) (ii) and (iii) above as well as
the following:
(iv) continuation of all life insurance and
health benefits, disability insurance and benefits
and reimbursement theretofore being provided to the
Executive and/or his family, or such other more
favorable benefits applicable to any senior executive
officer of the Company, to which the Executive would
have been entitled had he remained employed by the
Company for the longer of (Y) the remainder of the
current Term or (Z) twenty-four (24) months after the
Date of Termination, with the exception of the car
allowance as provided in Section 4(b) herein;
(v) Company contributions, to the extent
permitted by applicable law, to a SEP-▇▇▇, ▇▇▇▇▇ or
other retirement mechanism reasonably selected by the
Executive sufficient to provide the same level of
retirement benefits the Executive would have received
if he had remained employed by the Company for the
longer of (Y) the remainder of the current Term or
(Z) twenty-four (24) months after the Date of
Termination provided, however, that the Company shall
make up the difference in cash payments directly to
the Executive to the extent that applicable law would
not permit it to make such contributions;
C. In consideration of the Termination Payments
provided in this Section 6(g)(A) and (B), the Executive agrees
to execute a termination of employment agreement under which
the Executive agrees to fully release all claims against the
Company.
(h) TAX PROVISIONS. In the event that any payments under
this Agreement or any other compensation, benefit or other
amount from the Company for the benefit of the Executive are
subject to the tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code") (including any
applicable interest and penalties, the "Excise Tax"), no such
payment ("Parachute Payment") shall be reduced (except for
required tax withholdings) and the Company shall pay to the
Executive by the earlier of the date such Excise Tax is
withheld from payments made to the Executive or the date such
Excise Tax becomes due and payable by the Executive, an
additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive (after deduction of any
Excise Tax on the Parachute Payments, taxes based upon the Tax
Rate (as defined below) upon the payment provided for by this
Section 6(h) and Excise Tax upon the payment provided for by
this Section 6(h)), shall be equal to the amount the Executive
would have received if no Excise Tax had been imposed.
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A Tax counsel chosen by the Company's independent auditors,
provided such person is reasonably acceptable to the Executive
("Tax Counsel"), shall determine in good faith whether any of
the Parachute Payments are subject to the Excise Tax and the
amount of any Excise Tax, and Tax Counsel shall promptly
notify the Executive of its determination. The Company and the
Executive shall file all tax returns and reports regarding
such Parachute Payments in a manner consistent with the
Company's reasonable good faith determination. For purposes of
determining the amount of the Gross-Up Payment, the Executive
shall be deemed to pay taxes at the Tax Rate applicable at the
time of the Gross-Up Payment. In the event that the Excise Tax
is subsequently determined to be less than the amount taken
into account hereunder at the time a Parachute Payment is
made, the Executive shall repay to the Company promptly
following the date that the amount of such reduction in Excise
Tax is finally determined the portion of the Gross-Up Payment
attributable to such reduction (without interest). In the
event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time a Parachute Payment
is made (including by reason of any payment the existence or
amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall pay the Executive an
additional amount with respect to the Gross-Up Payment in
respect of such excess (plus any interest or penalties payable
in respect of such excess) at the time that the amount of such
excess is finally determined. The Company shall reimburse the
Executive for all reasonable fees, expenses, and costs related
to determining the reasonableness of any Company position in
connection with this paragraph and preparation of any tax
return or other filing that is affected by any matter
addressed in this paragraph, and any audit, litigation or
other proceeding that is affected by any matter addressed in
this Section 6(h) and an amount equal to the tax on such
amounts at the Executive's Tax Rate. For the purposes of the
foregoing, "Tax Rate" means the Executive's effective tax rate
based upon the combined federal and state and local income,
earnings, Medicare and any other tax rates applicable to the
Executive, all at the highest marginal rate of taxation in the
country and state of the Executive's residence on the date of
determination, net of the reduction in federal income taxes
which could be obtained by deduction of such state and local
taxes.
(i) NOTICE OF TERMINATION. Any termination of the
Executive's employment during the Term by the Company or by
the Executive shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 16
of this Agreement. For purposes of this Agreement, a "Notice
of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision
so indicated, and (iii) if applicable, specifies a termination
date. The failure by the Executive or the Company to set forth
in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company hereunder or
preclude the Executive or the Company, as applicable, from
asserting such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.
(j) DATE OF TERMINATION. For purposes of this Agreement,
"Date of Termination" means (i) if the Executive's employment
is terminated by reason of
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death, the date of death; or (ii) if the Executive's
employment is terminated under any other circumstances, the
date of receipt of the Notice of Termination by the party
being so notified or any later date specified therein. For
purposes of this Agreement, the Executive will be deemed to be
employed through the end of the calendar day on the Date of
Termination.
7. COVENANTS OF EXECUTIVE
(a) COVENANT NOT TO COMPETE. In consideration of the
Executive's employment pursuant to this Agreement and for
other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Executive agrees
that, so long as the Executive is 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), the Executive
shall not, without the prior written consent of the Company,
either for the Executive or for any other person, firm or
corporation, own, manage, operate, control, be employed by,
participate in or be associated in any manner with the
ownership, management, operation or control of any business
providing Internet-related, E-commerce, web-hosting, network
or communication services competitive with the Company as of
the Date of Termination or within six (6) months thereafter.
The foregoing shall in no event restrict the Executive from:
(i) the general practice of law, either individually or in a
private firm practice; (ii) writing or teaching, whether on
behalf of for-profit, or not-for-profit institution(s); (iii)
investing (without participating in management or operation)
in the securities of any private or publicly traded
corporation or entity; or (iv) after termination of
employment, becoming employed by a hardware, software or other
vendor to the Company, provided that such vendor does not
offer Internet-related, E-commerce, web-hosting, network or
communication services that are competitive with the services
offered by the Company as of the Date of Termination or within
six (6) months thereafter.
(b) NONSOLICITATION. In consideration of the Executive's
employment pursuant to this Agreement and for other good and
valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the Executive agrees that, so long as the
Executive is employed by the Company under this Agreement and
for a period of eighteen (18) months following the termination
of such employment, the Executive agrees not to hire, solicit,
nor attempt to solicit for himself or any third party, the
services of any employee or subcontractor of the Company or
any of the Company's subsidiaries or affiliates without the
Company's prior written consent; provided, however, that the
Executive is not prevented from employing such person who
contacts the Executive on his or her own initiative and
without any direct or indirect solicitation by the Executive.
(c) BREACH/THREATENED BREACH. The Executive may request
permission from the Company's Board of Director's to engage in
activities which would otherwise be prohibited by Section 7(a)
or (b). The Company shall respond to such request within
thirty (30) days after receipt. The Company shall notify the
Executive in writing if it becomes aware of any breach or
threatened breach of any of the provisions in Section 7(a) or
(b), and the Executive shall have thirty (30) days after
receipt of such notice in which to cure or prevent the breach,
to the extent that the Executive is able to do so. The
Executive and the Company
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acknowledge that any breach or threatened breach by the
Executive of any of the provisions in Section 7(a) or (b)
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
the Executive breached any of such provisions, the Executive
shall not be entitled to any Termination Payments from and
after date of the breach. In such event, the Executive 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 the Executive did not breach such
provision or determines such provision to be unenforceable as
applied to the Executive's conduct, the Executive 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.
(d) 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 the
Executive 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. The Executive automatically
assigns, and shall assign at the time of creation of the Work
Product, without any requirement of further consideration, any
right, title, or interest the Executive may have in such Work
Product, including any copyrights or other intellectual
property rights pertaining thereto. Upon request of the
Company, the Executive 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.
(e) EQUITABLE RELIEF. The Executive acknowledges and
agrees that the covenants and obligations of Executive
contained in Section 7 hereof relate to special, unique and
extraordinary matters and are reasonable and necessary to
protect the legitimate interests of the Company and that a
breach of any of the terms of such covenants and obligations
will cause the Company irreparable harm and injury for which
adequate remedies at law are not available. The Executive
therefore agrees that the Company need not prove actual
damages in order to obtain injunctive relief, a restraining
order, an order of specific performance or any other equitable
relief (together, "Equitable Relief") with respect to any of
Executive's obligations under Section 7. The Executive hereby
waives any claim or defense therein that the Company has an
adequate remedy at law or that money damages would provide an
adequate remedy. It shall, however, be the option of the
Company whether or not to seek Equitable Relief.
8. REPRESENTATION AND WARRANTIES.
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(a) THE COMPANY. The Company hereby represents and
warrants to the Executive as follows:
(i) the Company is duly organized, validly
existing and in good standing under the laws
of the State of New York;
(ii) this Agreement has been duly authorized,
executed and delivered by the Company and
will constitute the legal, valid and binding
obligation of the Company, enforceable
against the Company in accordance with its
terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws
affecting the rights of creditors generally
and to general principles of equity whether
considered in a suit at law or in equity;
and
(iii) the execution and delivery of this Agreement
by the Company, the performance by the
Company of its obligations hereunder and the
consummation by the Company of the
transactions contemplated hereby will not
violate any agreement to which the Company
is a party.
(b) EXECUTIVE. The Executive hereby represents and
warrants to the Company as follows:
(i) this Agreement has been duly executed and
delivered by the Executive and will
constitute the legal, valid and binding
obligation of the Executive, enforceable
against the Executive in accordance with its
terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws
affecting the rights of creditors generally
and to general principles of equity whether
considered in a suit at law or in equity;
(ii) the execution and delivery of this Agreement
by Executive, the performance by the
Executive of his obligations hereunder and
the consummation by the Executive of the
transactions contemplated hereby will not
violate any agreement to which he is a
party; and
(iii) the Executive has made such investigations
of the business and properties of the
Company as he deems necessary or appropriate
before entering into this Agreement.
9. TRANSFERABILITY.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws
of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company, its successors and assigns.
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(c) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, share
exchange or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume in
writing and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in
this Agreement, "Company" shall mean the Company as defined
herein and any successor to its businesses and/or assets as
aforesaid that assumes and agrees to perform this Agreement by
operation of law, or otherwise. A failure of the Company to
cause a successor to assume this Agreement in any such
transaction shall be a breach of this Agreement by the
Company.
10. NONEXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, plan, program, policy or practice provided by the Company and for which
the Executive may qualify (except with respect to any benefit to which the
Executive has waived his rights in writing), nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any other contract
or agreement entered into after the date of this Agreement with the Company.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any benefit, plan, policy, practice or program of, or any
contract or agreement entered into with, the Company shall be payable in
accordance with such benefit, plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
11. FULL SETTLEMENT; MITIGATION, COSTS AFTER A CHANGE IN CONTROL.
In no event shall the Executive be obligated to seek other employment or take
any other action by way of mitigation of the amounts (including amounts for
damages for breach) payable to the Executive under any of the provisions of this
Agreement, and such amounts shall not be reduced whether or not the Executive
obtains other employment. In addition, following a Change in Control only, the
Company's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Executive or others. Notwithstanding any other
provisions in this Agreement to the contrary, in the event that, following a
Change in Control, any successor in interest to the Company unsuccessfully
contests and/or challenges any of the Executive's rights under this Agreement,
then the successor in interest to the Company shall pay the Executive's
reasonable attorney's fees and costs incurred in such contest or challenge.
12. NO WAIVER. The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement or the failure to
assert any right the Executive or the Company may have hereunder shall not be
deemed to be a waiver of such provision or right or any other provision or right
of this Agreement.
13. ARBITRATION. With the exception of disputes arising under
Section 7 hereof, any dispute arising under this Agreement shall be settled by
arbitration in accordance with the rules of the American Arbitration Association
and judgment upon the award rendered by the arbitrator may be rendered in any
court having jurisdiction thereof. Arbitration hereunder shall be by a single
arbitrator appointed by agreement of the parties. The parties shall agree that
any arbitration award shall be final and binding on the parties. Except as
stated otherwise in Paragraph 11 of this Agreement, each party shall bear its
own costs and attorneys' fees associated with the arbitration.
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14. SEVERABILITY. The provisions of this Agreement will be deemed
severable, and if any part of any provision is held to be illegal, void,
voidable, invalid, nonbinding, or unenforceable in its entirety or partially or
as to any party, for any reason, such provision may be changed, consistent with
the intent of the parties hereto, to the extent reasonably necessary to make the
provision, as so changed, legal, valid, binding, and enforceable. If any
provision of this Agreement is held to be illegal, void, voidable, invalid,
nonbinding, or unenforceable in its entirety or partially or as to any party,
for any reason, and if such provision cannot be changed consistent with the
intent of the parties hereto to make it fully legal, valid, binding, and
enforceable, then such provision will be stricken from this Agreement, and the
remaining provisions of this Agreement will not in any way be affected or
impaired, but will remain in full force and effect.
15. ENTIRE AGREEMENT/AMENDMENTS. This Agreement contains and its
terms constitute the entire agreement of the parties and supersedes all prior
agreements regarding the subject matter herein. This Agreement supersedes and
replaces any prior or contemporaneous agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written regarding the
subject matter herein. No amendment or modification of any provision of this
Agreement shall be effective unless in writing and signed by the party against
whom enforcement of such amendment or modification is sought.
16. NOTICES. All notices required to be given or which may be
given under this Agreement shall be in writing, delivered in accordance with one
or more of the following and deemed received upon the earlier of (i) when it is
personally delivered to the party, (ii) three (3) days after having been mailed
by certified mail, postage prepaid, return receipt requested, (iii) two (2) days
after having been sent via overnight delivery by a recognized overnight delivery
service or (iv) one (1) day after having been sent via facsimile transmission,
in each case addressed to the party intended to be notified at the address of
such party as set forth in the records of the Company or such other address as
such party may designate in writing to the other.
17. GOVERNING LAW. This Agreement shall be governed by the laws
of the Commonwealth of Virginia without giving effect to the conflicts of law
principles thereof.
18. SURVIVAL. All provisions which may reasonably be interpreted
or construed to survive the expiration or termination of this Agreement shall
survive the expiration or termination of this Agreement.
19. COUNTERPARTS. This 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.
20. EXECUTION. This Agreement shall be deemed effective upon the
execution by the Company and the Executive.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as the date first written above.
Executive:
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
PSINet Inc. ("Company"):
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Title: Chairman and Chief Executive Officer
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