EXHIBIT 10.40
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COMPENSATION AGREEMENT
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This
Compensation Agreement (this "AGREEMENT"), dated as of the 1st day
of
January, 2004 (the "Effective Date"), is
entered into by and between DSL.net,
Inc., a Delaware corporation (the
"COMPANY"), and Robert DeSantis (the "KEY
OFFICER").
WHEREAS, the
Company desires to afford the Key Officer the benefits set
forth in this Agreement, in recognition of
the Key Officer's contributions to
the Company;
NOW, THEREFORE,
in consideration of the transactions contemplated hereby
and the respective covenants and agreements
of the parties herein contained, the
parties hereto, intending to be legally
bound hereby, agree as follows:
1. CERTAIN COMPENSATION AND
BENEFITS.
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(a) Salary and Benefits. Without reducing any other benefits to
which
the Key Officer is otherwise entitled, the
Company hereby agrees to provide to
the Key Officer his base salary and
benefits, at levels at least equal to those
to which the Key Officer is currently
entitled, from the Effective Date through
at least March 31, 2004 (the "RETENTION
PERIOD"), in accordance with standard
Company payroll practices, unless the Key
Officer quits without Good Reason (as
defined below) or is terminated by the
Company for Cause (as defined below)
prior to expiration of the Retention
Period.
(b) Acceleration of Options. In addition to the foregoing,
without
reducing any other benefits to which the
Key Officer is otherwise entitled,
subject to Section 2(c) below, if the
employment of the Key Officer is
terminated by the Company without Cause or
the Key Officer quits for Good Reason
during the Retention Period or within nine
(9) months following the expiration
of the Retention Period (i.e., on or prior
to December 31, 2004) (the "EXTENSION
PERIOD"), all issued and outstanding
unexercised stock options granted to such
Key Officer on or prior to the date of this
Agreement shall immediately vest and
become exercisable for one (1) year
following the termination date, with all
other terms governed by the Key Officer's
respective stock option agreements
with the Company.
(c) Certain Defined Terms. For purposes hereof, the term "CAUSE"
shall
mean (i) habitual intoxication, (ii)
illegal drug use or addiction, (iii)
conviction of a felony (or plea of guilty
or NOLO CONTENDERE with respect
thereto) which in any material respect
impairs the reputation of, or in any
material respect harms, the Company, (iv)
material failure or inability to
perform his agreements, duties or
obligations as an employee of the Company,
other than from illness or injury, which
failure is not cured by the Key Officer
within thirty (30) days (or such longer
period as may be reasonably
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necessary to cure such failure) following
notice to the Key Officer from the
Company setting forth in reasonable detail
the nature of such failure, or (v)
commission of any act, or failure to act,
in bad faith which in any material
respect impairs the reputation of, or in
any material respect harms, the
Company. For purposes hereof, "GOOD REASON"
shall mean (i) the reduction of the
Key Officer's compensation or a reduction
in the Key Officer's benefits not the
result of Company-wide changes made to the
Company's benefits plans affecting
all or similarly situated employees of the
Company, (ii) the relocation of the
Company's office where the Key Officer most
recently worked to a location more
than thirty (30) miles from its then
current location (without a corresponding
permission from the Company allowing the
Key Officer to telecommute), provided
the Key Officer quits within fourteen (14)
days after execution and delivery by
the Company of a duly authorized lease or
other binding agreement committing the
Company to such relocation (provided, if
the Company notifies the Key Officer of
the Company's decision to cancel its
planned relocation, the Company shall be
deemed to have cured the event of "Good
Reason" and the Key Officer's notice of
resignation shall be deemed revoked, and
the status quo shall be maintained,
unless the Key Officer has already accepted
employment with another employer),
(iii) a material reduction in the Key
Officer's duties or position at the
Company, (iv) a failure on the part of the
Company to pay the Key Officer when
due any salary, bonus or other material
benefit due to him, provided, however,
that, in any such event, the Key Officer
shall notify the Company of such event
and give it fifteen (15) days to remedy the
situation before terminating his
employment, or (v) there exists a breach by
the Company of any material term or
provision of any employment agreement
between it and the Key Officer, provided,
however, that, in any such event, the Key
Officer shall notify the Company of
such event and give it fifteen (15) days to
remedy the situation before
terminating his employment.
2. CONSEQUENCES OF
TERMINATION.
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(a) Termination for Cause. Upon termination by the Company of the
Key
Officer's employment for Cause during the
Retention Period or the Extension
Period, all rights of the Key Officer under
this Agreement shall immediately
terminate and the Company shall have no
further obligations hereunder, other
than to pay to the Key Officer all base
salary and accrued benefits owing as of
the date of termination in accordance with
the Company's normal practices then
in effect.
(b) Termination for Death or Disability. If the Key Officer's
employment with the Company shall be
terminated during the Retention Period or
the Extension Period due to death or
Disability (as defined below), the Company
shall have no further obligations to the
Key Officer or the Key Officer's heirs,
beneficiaries, administrators, executors or
other personal representatives under
this Agreement, other than to pay to the
Key Officer all base salary and accrued
benefits owing as of the date of
termination in accordance with the Company's
normal practices then in effect. For
purposes hereof, the term "DISABILITY"
shall be used herein as defined in the
Company's disability insurance policy in
effect with respect to the Key Officer or,
absent same, shall
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mean the Key Officer's inability, by reason
of physical or mental incapacity
(determined by a licensed physician
reasonably acceptable to the Key Officer and
the Company), to perform the essential
functions of his job, with or without a
reasonable accommodation by the Company,
for an aggregate of seventy-five (75)
days during any twelve (12) month period,
as the case may be. Once the Key
Officer has become Disabled, payment of any
further base salary and benefits, if
any, shall be subject to the Company's
disability insurance coverage in effect
with respect to the Key Officer.
(c) Termination Without Cause. If the Key Officer's employment
with
the Company is terminated by the Company at
any time during the Retention Period
or the Extension Period without Cause,
then, without reducing any other benefits
to which the Key Officer is otherwise
entitled, the Company will continue to
provide to the Key Officer, for six (6)
months from and after April 1, 2004, in
the event the Key Officer was terminated
without Cause on or prior to March 31,
2004, or the date of termination, in the
event the Key Officer was terminated
without Cause on or after April 1, 2004
(the "COVERED PERIOD"), his benefits and
base salary in accordance with Company
practices, less all withholdings required
under then current Company policy and
applicable law or regulation, provided,
however, the foregoing payment of base
salary shall be paid to the Key Officer
in lump sum within thirty (30) days of the
termination date, less all required
withholdings; provided, further, however,
that the Key Officer agrees that his
eligibility to receive any and all
compensation and benefits described in this
Section 2(c) and in Section 1(b) shall be
subject to and contingent upon the Key
Officer's execution of a full and complete
release in favor of the Company,
substantially in the form of that attached
hereto as Exhibit A (including any
changes thereto necessitated by applicable
law at the time of execution, the
"RELEASE"). The Key Officer shall return to
the Company, in cash, the value of
any compensation and benefits paid to him
upon a violation of the provisions of
said Release (except to the extent
application of the foregoing clause would
invalidate any waiver given thereunder) or
the provisions of any of Sections 3
through 4 of this Agreement. No payments of
compensation or benefits under
Section 2(c) or Section 1(b) shall be made
nor rights of enforceability with
respect thereto vested until the revocation
period, if any, referred to in the
Release shall have expired.
(d) Termination by the Key Officer. A termination of the Key
Officer's
employment with the Company during the
Retention Period or the Extension Period
by the Key Officer upon his voluntary
termination or resignation (other than a
termination of employment with the Company
by the Key Officer for Good Reason)
shall be treated (solely for purposes of
determining the Key Officer's
eligibility to receive the compensation and
benefits referred to herein) as a
termination for Cause under Section 2(a).
The Key Officer agrees to provide the
Company with at least fourteen (14) days'
prior written notice of his voluntary
cessation of employment hereunder, subject
to the Company's right to waive, upon
notice to the Key Officer, such requirement
and accelerate the effectiveness of
the Key Officer's voluntary cessation of
employment to an earlier time and date
(but not earlier than the date of the Key
Officer's giving of notice of his
voluntary cessation of employment to the
Company), it being mutually understood
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and agreed that the Company shall to
continue to pay the Key Officer his
compensation and benefits during the time
of continued employment, if any,
following the Key Officer's notice of his
voluntary cessation of employment up
through the effective date of termination.
A termination of the Key Officer's
employment with the Company during the
Retention Period or the Extension Period
by the Key Officer for Good Reason shall be
treated as a termination without
Cause under Section 2(c).
(e) Status upon Termination. The termination of the Key
Officer's
employment hereunder, for any reason
whatsoever, shall constitute the
termination of this Agreement (subject to
Section 6(i) hereof) and the Key
Officer's effective termination from any
and all positions of employment with
the Company and all of its affiliates,
unless otherwise mutually agreed to by
the parties hereto.
3. NON-SOLICITATION AND
CONFIDENTIALITY.
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(a) Non-solicitation. Without limiting any other
non-solicitation
restrictions previously agreed to by the
Key Officer as part of his employment
arrangement with the Company, while an
employee of the Company and during any
Covered Period, the Key Officer agrees not
to (i) solicit any employee of the
Company or any of the Company's affiliates
to leave the employ of the Company or
such affiliate nor to hire any of the
foregoing persons; provided, however, by
way of clarification, the Key Officer shall
not be deemed in breach of this
clause (i) (A) in the event he or his new
employer launches a general job search
(through advertisement, job posting, or
recruiter) that does not exclusively
target the Company's employees or (B) in
the event he or his new employer hires
an employee of the Company or any of its
affiliates who initiated employment
discussions with the Key Officer or his new
employer or who responded to a
general job search campaign or recruiter
inquiry that did not exclusively target
the Company's employees; or (ii) solicit or
cause to be solicited the business
of any current customer or client of the
Company or any of the Company's
affiliates with respect to any line of
business engaged in (or planned to be
engaged in) by the Company, whether now
existing or hereafter established,
provided, however, the Key Officer shall
not be deemed in breach of this clause
(ii) as a result of mass marketing
campaigns aimed at prospects on customer
lists obtained by the Key Officer or his
new employer from sources other than
the Company, and not in violation of this
Agreement, and which do not expressly
target the Company's customers or clients
in particular.
(b) Confidentiality. Without limiting any other non-disclosure
obligations previously agreed to by the Key
Officer as part of his employment
arrangement with the Company, during and
after the term of this Agreement, the
Key Officer shall not, except as may
otherwise be required by law, directly or
indirectly disclose to any person or
entity, or use or cause to be used in any
manner adverse to the interests of the
Company or any affiliate thereof, any
Confidential Information (as defined
below). The Key Officer agrees that, upon
the termination of the Key Officer's
employment with the Company, all tangible
Confidential Information and Company
property and duplicates thereof in the
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possession or control of the Key Officer,
in any form or format, shall forthwith
be returned to the Company and shall not be
retained by the Key Officer or
furnished or communicated to any third
party in any form whatsoever. Prior to
any disclosure of Confidential Information
required by law, the Key Officer
shall provide prompt notice thereof to the
Company so as to allow the Company to
seek appropriate injunctive relief and
shall reasonably assist the Company in
its efforts to limit such disclosure. The
Key Officer further acknowledges and
agrees to abide by his continuing
obligation to not make use of any material
non-public information with respect to the
Company in a manner violative of
applicable securities laws.
As used in this
Section 3(b), the term "CONFIDENTIAL INFORMATION" shall
mean the following: (i) information
disclosed to the Key Officer or known by the
Key Officer as a consequence of the Key
Officer's relationship with the Company
and any affiliate thereof, not generally
known in the industry of the Company's
(or an affiliate's) business, about the
Company's or an affiliate's business,
employees, customers, directors, officers,
partners, or shareholders; sales or
marketing methods; business plans, methods
and forecasts; service locations;
customer, prospect and vendor lists;
finances; or trade marks,
