Employment Agreement - Egenera Inc. and Thomas Sheehan
EMPLOYMENT AGREEMENT
To: Mr. Thomas Sheehan
92 Maynard Farm Road
Sudbury, Massachusetts 01776
February 22, 2001
The undersigned, Egenera, Inc., a Delaware corporation, as well as its
successors and assigns (hereinafter collectively referred to as the "Company"),
hereby agree with you as follows:
1. Position and Responsibilities.
1.1 You shall serve as Chief Financial Officer of the Company
which was officially approved at the Board of Directors meeting in November
2000. You will, to the best of your ability, devote your full time and best
efforts to the performance of your duties hereunder and the business and affairs
of the Company and perform such duties as may be assigned to you by or on
authority of the Company's President or Board of Directors from time to time and
the duties customarily associated with such capacity from time to time and at
such place or places as the Company shall designate are appropriate and
necessary in connection with such employment.
1.2 You will duly, punctually and faithfully perform and observe
any and all rules and regulations which the Company may now or shall hereafter
establish governing the conduct of its business.
1.3 You will report directly to the President and will be based
initially out of the Company's Marlborough, Massachusetts office.
2. Term of Employment.
2.1 The initial term of this Agreement shall be for the period set
forth on Exhibit A annexed hereto commencing with the date hereof. Thereafter,
this Agreement shall be automatically renewed for successive periods of one (1)
year, unless you or the Company shall give the other party not less than thirty
(30) days written notice of non-renewal. This Agreement and your employment with
the Company may be terminated prior to expiration of the term as provided in
Section 2.2.
2.2 This Agreement may be terminated prior to the expiration of
the term described in
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Section 2.1 hereof as follows:
(a) The Company shall have the right, upon written notice to
you, to terminate your employment (i) immediately at any time for "Cause" (as
defined herein and subject to your right of cure and right to dispute as
provided herein); or (ii) at any time without Cause; and
(b) You shall have the right to terminate this Agreement
upon not less than thirty (30) days prior written notice to the Company.
2.3 For purposes of Section 2.2, the term "Cause" shall mean (a)
gross negligence or willful misconduct in the performance of assigned duties;
(b) material and repetitive refusal to perform or discharge the duties or
responsibilities assigned by the President or Board of Directors of the Company
provided the same are not illegal, unethical or inconsistent with the position
of Chief Financial Officer of a corporation and the failure to correct such
refusal and perform such duties or responsibilities within a reasonable period
of time (but in any event no less than seven (7) calendar days after written
notice of such failure); (c) conviction of a felony or misdemeanor involving
moral turpitude; (d) willful or prolonged absence from work not excused by a
bona fide medical disability as reasonably determined by a qualified physician
mutually acceptable to both you and the Company or other good cause as
reasonably determined by the Board of Directors; and (e) falseness of any
warranty or representation by you herein or the breach of your obligations under
this Agreement to the material detriment of the Company.
2.4 In the event of the Involuntary Termination (as hereinafter
defined) of your employment with the Company at any time, the Company hereby
agrees to provide you with Severance Benefits as defined in Section 5 of
Exhibit A hereto. In this regard, the phrase "Involuntary Termination" shall
mean (a) any termination of your employment by the Company without Cause,
pursuant to Section 2.2(a)(ii); or (b) your demotion or termination of your
employment for Good Reason (as defined in Section 6 of Exhibit A).
3. Compensation. You shall receive the compensation and benefits set
forth on Exhibit A ("Compensation") for all services to be rendered by you
hereunder and for your transfer of property rights pursuant to an agreement
relating to inventions, confidentiality and noncompetition of even date herewith
attached hereto as Exhibit C between you and the Company (the "Invention,
Confidentiality and Noncompete Agreement").
4. Other Activities During Employment.
4.1 Except for any outside employments and directorships currently
held by you as listed on Exhibit B, and except with the prior written consent of
the Company's Board of Directors, you will not during the term of this Agreement
undertake or engage in any other employment, occupation or business enterprise
other than one in which you are an inactive investor.
4.2 You hereby agree that, except as disclosed on Exhibit B
hereto, during your
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employment hereunder, you will not, directly or indirectly, engage (a)
individually, (b) as an officer, (c) as a director, (d) as an employee, (e) as a
consultant, (f) as an advisor, (g) as an agent (whether a salesperson or
otherwise), (h) as a broker, or (i) as a partner, coventurer, stockholder or
other proprietor owning directly or indirectly more than two percent (2%)
interest, in any firm, corporation, partnership, trust, association, or other
organization which is engaged in the research, development, production,
manufacture or marketing of equipment or processes in direct competition with
the Company or any other line of business engaged in or under demonstrable
development by the Company (such firm, corporation, partnership, trust,
association, or other organization being hereinafter referred to as a
"Prohibited Enterprise"). Except as may be shown on Exhibit B, you hereby
represent that you are not engaged in any of the foregoing capacities (a)
through (i) in any Prohibited Enterprise.
5. Former Employers.
5.1 You represent and warrant that your employment by the Company
will not conflict with and will not be constrained by any prior or current
employment, consulting agreement or relationship whether oral or written. You
represent and warrant that you do not possess confidential information arising
out of any such employment, consulting agreement or relationship which, in your
best judgment, would be utilized in connection with your employment by the
Company in the absence of Section 5.2.
5.2 If, in spite of the second sentence of Section 5.1, you should
find that confidential information belonging to any other person or entity might
be usable in connection with the Company's business, you will not intentionally
disclose to the Company or use on behalf of the Company any confidential
information belonging to any of your former employers; but during your
employment by the Company you will use in the performance of your duties all
information which is generally known and used by persons with training and
experience comparable to your own all information which is common knowledge in
the industry or otherwise legally in the public domain.
6. Invention, Confidentiality and Noncompete Agreement. You agree to
execute, deliver and be bound by the provisions of the Invention,
Confidentiality and Noncompete Agreement.
7. Remedies. Your obligations under the Invention, Confidentiality and
Noncompete Agreement and the provisions of Sections 4, 6, and 7 of this
Agreement (as modified by Section 10, if applicable) shall survive the
expiration or termination of your employment (whether through your resignation
or otherwise) with the Company. You acknowledge that a remedy at law for any
breach or threatened breach by you of the provisions of the Invention,
Confidentiality and Noncompete Agreement would be inadequate and you therefore
agree that the Company shall be entitled to such injunctive or other equitable
relief in case of any such breach or threatened breach.
8. Assignment. This Agreement and the rights and obligations of the
parties hereto shall bind and inure to the benefit of any successor or
successors of the Company by reorganization, merger or consolidation and any
assignee of all or substantially all of its business and properties, but, except
as to
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any such successor or assignee of the Company, neither this Agreement nor any
rights or benefits hereunder may be assigned by the Company or by you, except by
operation of law. The Company's obligations and those of any successors or
assignees of the Company under this Agreement, including but not limited to the
severance provisions and other compensation and benefits due to you pursuant to
Exhibit A hereto, will be a condition of and are to remain those of any
successor or assignee.
9. Interpretation. IT IS THE INTENT OF THE PARTIES THAT in case any one
or more of the provisions contained in this Agreement shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect the other provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. MOREOVER, IT IS THE
INTENT OF THE PARTIES THAT in case any one or more of the provisions contained
in this Agreement shall for any reason be held to be excessively broad as to
duration, geographical scope, activity or subject, such provision shall be
construed by limiting and reducing it as determined by a court of competent
jurisdiction, so as to be enforceable to the extent compatible with applicable
law.
10. Notices. Any notice which the Company is required to or may desire
to give you shall be given by personal delivery or registered or certified mail,
return receipt requested, addressed to you at your address of record with the
Company, or at such other place as you may from time to time designate in
writing. Any notice which you are required or may desire to give to the Company
hereunder shall be given by personal delivery or by registered or certified
mail, return receipt requested, addressed to the Company at its principal
office, or at such other office as the Company may from time to time designate
in writing. The date of delivery of any notice under this Section 10 shall be
deemed to be the date of delivery thereof.
11. Waivers. If either party should waive any breach of any provision of
this Agreement, such party shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
12. Complete Agreement; Amendments. The foregoing including Exhibits A,
B, C and D hereto, is the entire agreement of the parties with respect to the
subject matter hereof, superseding any previous oral or written communications,
representations, understandings, or agreements with the Company or any officer
or representative thereof. Any amendment to this Agreement or waiver by the
Company of any right hereunder shall be effective only if evidenced by a written
instrument executed by the parties hereto, upon authorization of the Company's
Board of Directors.
13. Headings. The headings of the Sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning of this Agreement.
14. Counterparts. This Agreement may be signed in two counterparts, each
of which shall be deemed an original and both of which shall together constitute
one agreement.
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15. Choice of Law; Enforceability; Waiver of Jury Trial. You acknowledge
that a substantial portion of the Company's business is based out of and
directed from the Commonwealth of Massachusetts, where the Company is
headquartered and administers all employee compensation and benefits. You also
acknowledge that during the course of your employment with the Company you have
had and will continue to have substantial contacts with Massachusetts.
This Agreement shall be deemed to have been made in the Commonwealth of
Massachusetts, shall take effect as an instrument under seal within
Massachusetts, and the validity, interpretation and performance of this
Agreement shall be governed by, and construed in accordance with, the internal
law of Massachusetts, without giving effect to conflict of law principles. Both
parties further acknowledge that the last act necessary to render this Agreement
enforceable is its execution by the Company in Massachusetts, and that the
Agreement thereafter shall be maintained in Massachusetts. Both parties agree
that any action, demand, claim or counterclaim relating to the terms and
provision of this Agreement, or to its breach, shall be commenced in
Massachusetts in a court of competent jurisdiction. Both parties further
acknowledge that venue shall exclusively lie in Massachusetts and that material
witnesses and documents would be located in Massachusetts. Both parties further
agree that any action, demand, claim or counterclaim shall be resolved by a
judge alone, and both parties hereby waive and forever renounce the right to a
trial before a civil jury.
16. Advice of Separate Counsel. You acknowledge that you have been
advised to review this Agreement with your own legal counsel and other advisors
of your choosing and that prior to entering into this Agreement, you have had
the opportunity to review this Agreement with your attorney and other advisors
and have not asked (or relied upon) the Company or its counsel to represent you
in this matter.
If you are in agreement with the foregoing, please sign your name below
and also at the bottom of the Invention, Confidentiality and Noncompete
Agreement and Incentive Stock Option Agreement, whereupon this Agreement shall
become binding in accordance with its terms. Please then return this Agreement
to the Company. (You may retain for your records the accompanying counterpart of
this Agreement enclosed herewith).
Very truly yours,
ACCEPTED AND AGREED: EGENERA, INC.
/s/ Thomas F. Sheehan By: /s/ Kenneth Zolot
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Kenneth Zolot
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EXHIBIT A
EMPLOYMENT TERM, COMPENSATION AND BENEFITS
OF THOMAS SHEEHAN
1. Term. The term of the Agreement to which this Exhibit A is attached
and made a part shall be for a period of one (1) year from the date of this
Agreement.
2. Compensation; Base Salary. Your annual base salary ("Base Salary")
shall be One Hundred Eighty Five Thousand Dollars ($185,000) payable in
accordance with the Company's payroll policies.
3. Vacation, Insurance and Benefits; Expenses. You shall be entitled to
all legal holidays recognized by the Company, and Fifteen (15) days paid
vacation per annum, which shall accrue at a rate of 1.25 days per month. Any
unused vacation may be accrued or used in accordance with Company policy. You
shall be eligible for participation in any health, dental, and other insurance
plans which may be established and maintained by the Company as determined by
the Company's Board of Directors in its sole discretion. You shall also be
entitled to participate in any employee benefit programs which the Company's
Board of Directors may establish for Company employees generally, including, but
not limited to, health insurance, stock purchase or option plans. The Company
shall reimburse you for all usual and ordinary business expenses incurred by you
in the scope of your employment hereunder in accordance with the Company's
expense reimbursement policy.
4. Initial Stock Options. As approved by the Board of Directors, you
shall be entitled to receive incentive stock options to purchase up to an
aggregate of 1,200,000 shares of common stock, $.001 par value per share, of the
Company. Such options shall be priced at $.25 and shall vest in accordance with
the Company's 2000 Stock Option/Stock Issuance Plan. A copy of the form of
Incentive Stock Option Agreement you will be required to sign upon grant of the
option is attached hereto as Exhibit D.
5. Severance Benefits. When provided for in this Agreement, you shall
be entitled to "Severance Benefits." When used in this Agreement, the term
"Severance Benefits" shall mean a total amount equal to your then current annual
Base Salary and the continuation for you and your family, during the Severance
Period, as defined below, of all of the other benefits which are provided or
available to you on the last day of your actual service with the Company
provided that the Company's benefit plans allow for inclusion of non-employee
beneficiaries. To the extent that the Company's benefit policies do not allow
for inclusion of non-employee beneficiaries, the Company shall pay to you in
cash the amount of money that the Company would have otherwise spent on
providing you with such benefits. For purposes of this Agreement, the term
"Severance Period" means the period of twelve (12) months beginning on
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the Date of Termination. Notwithstanding the foregoing, such Severance Benefits
shall be reduced by any compensation you receive as an employee or consultant
from any third party during the Severance Period. The Severance Benefits shall
be paid via check to you in the manner and at the rate which is consistent with
the then current payroll policies of the Company. In the event that you become
eligible for Severance Benefits as provided hereunder, such payments will
terminate on the earliest of the following events: (i) you are employed full
time; (ii) you breach your obligations under the Invention, Confidentiality and
Noncompete Agreement; or (iii) the first anniversary of the date of your
Involuntary Termination.
6. Change in Control.
(a) For purposes of this Agreement, "Change in Control" means and
shall be deemed to occur if any of the following occurs: (i) the acquisition by
an individual, entity or group, as defined in Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), of
beneficial ownership, as defined in Rule 13d-3 promulgated under the Exchange
Act, of 50% or more of the combined voting power of the voting securities of the
Company entitled to vote generally in the election "of directors (the "Voting
Securities"); or (ii) individuals who, on the date of this Agreement,
constituted the Board of Directors of the Company (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board of Directors of
the Company; provided, however, that any individual becoming a director
subsequent to the date of this Agreement, whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the directors then serving and comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents;
or (iii) approval by the Board of Directors or the shareholders of the Company
of a (A) tender offer to acquire any of the Common Stock or voting securities,
(B) reorganization, (C) merger or (D) consolidation, other than a
reorganization, merger or consolidation with respect to which all or
substantially all of the individuals and entities who were the beneficial
owners, immediately prior to such reorganization, merger or consolidation, of
the Common Stock and voting securities beneficially own, directly or indirectly,
immediately after such reorganization, merger or consolidation, more than 80% of
the then outstanding Common Stock and Voting Securities (entitled to vote
generally in the election of directors) of the Company resulting from such
reorganization, merger or consolidation in substantially the same proportions as
their respective ownership, immediately prior to such reorganization, merger or
consolidation, of the Common Stock and the voting securities; or (iv) approval
by the Board of Directors or the shareholders of the Company of (A) a complete
or substantial liquidation or dissolution of the Company, or (B) the sale or
other disposition of all or substantially all of the assets of the Company,
excluding a reorganization of the Corporation under the corporate laws of
Delaware.
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(b) In the event of your actual termination of employment
contemporaneous with or following a Change in Control, except (x) because of
your death, (y) by the Company for Cause or Disability (as hereinafter defined)
or (z) by you other than for Good Reason (as hereinafter defined): (i) you shall
be entitled to receive Severance Benefits under Section 5 above, to be paid in
accordance with the terms of this Agreement; and (ii) the following additional
provisions shall apply (which provisions shall supersede any other provisions of
the Agreement, including but not limited to Section 2 of the Agreement, to the
extent such provisions are inconsistent with the following provisions):
(1) Disability. For purposes of this Section 6(b),
termination by the Company of your employment based on "Disability" shall mean
termination because of your absence from your duties with the Company on a full
time basis for one hundred eighty (180) consecutive days as a result of your
incapacity due to physical or mental illness, unless within thirty (30) days
after Notice of Termination (as hereinafter defined) is given to you following
such absence, you shall have returned to the full time performance of your
duties.
(2) Good Reason. Termination by you of your employment for
"Good Reason" shall mean termination based on (i) a reduction by the Company in
your Base Salary (other than a reduction in salaries generally for managers of
the Company); (ii) a material decline in your responsibilities or authority as
in effect on the date hereof; (iii) a material breach by the Company of the
terms of this Agreement; or (iv) a requirement by the Company that you relocate
to an office of the Company located outside of a twenty-five (25) mile radius
of Marlborough, Massachusetts.
(3) Notice of Termination. Any purported termination by the
Company or by you following a Change in Control shall be communicated by written
notice to the other party hereto which indicates the specific termination
provision in this Agreement relied upon (the "Notice of Termination").
(4) Date of Termination. "Date of Termination" following a
Change in Control shall mean (A) if your employment is to be terminated for
Disability, thirty (30) days after Notice of Termination is given (provided that
you shall not have returned to the performance of your duties on a full-time
basis during such thirty (30) day period), (B) if your employment is to be
terminated by the Company for any reason other than death or Disability or by
you pursuant to Sections 6(b)(2) hereof or for any other Good Reason, the date
specified in the Notice of Termination, or (C) if your employment is terminated
on account of your death, the day after your death.
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