President Employment Agreement

EMPLOYMENT AGREEMENT



This Employment Agreement made as of this 10th day of March, 1999, between SAGE NETWORKS, INC., having an address at 215 First Street, Cambridge, MA 02142 ("Employer"), and JAMES M. LIDESTRI, residing at 225 Crestwood Court, Fishkill, New York 12524 ("Employee").



WHEREAS, an Asset Purchase Agreement (the "Purchase Agreement") dated as of March 8, 1999 was entered into among the Employer, Interliant, Inc., a Texas corporation (the "Company") and certain other parties;



WHEREAS, in connection with the transactions contemplated by the Purchase 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 Purchase Agreement. As used herein, the following terms have the following meanings:



"Agreement" shall mean this Agreement and any amendments hereto.



"Agreement Term" shall have the meaning ascribed to it in Section

2(a).



"Base Salary" shall mean the Employee's annual salary as determined

pursuant to Section 5(a) hereof.



"Board" shall mean the Board of Directors of the Employer.



"Cause" shall have the meaning ascribed to it in Section 9.



"Employment Year" shall mean each consecutive 12-month period during

the Agreement Term, the first of which shall commence on the date



"Good Reason" shall have the meaning ascribed to it in Section 2(d).



"Intellectual Property" shall have the meaning ascribed to it in

Section 4(d).



"Objectives-Based Bonus" shall have the meaning ascribed to it in

Section 5(d).



"Restricted Period" shall mean (i) where the Employee is terminated by the Employer for Cause or where the Employee terminates thi s Agreement or ceases employment with Employer other than for Good Reason, a period commencing on the date of such termination and ending on the later of (a) two years following the date of this Agreement or (b) one year following the date of such termina t ion; (ii) where the Employee is either terminated by the Employer without Cause or the Employee terminates his employment for Good Reason, a period of one year following the date of such termination; or (iii) upon any expiration of the Agreement Term, a p eriod of one year following the date of such expiration.





"Signing Bonus" shall have the meaning ascribed to it in Section 5(c).



2. Agreement Term.



(a) The Employer will employ the Employee and the Employee will work for the Employer, on the terms and conditions set forth herein, for a term commencing on the date hereof and terminating on March 1, 2001 (the "Contract Termination Date"), unless sooner terminated as provided in Section 2(b) or in accordance with Section 9, or i n the event of death or disability of the Employee as provided in Section 2(c) (the "Agreement Term"); provided, however, that the Agreement Term shall automatically continue and the Contract Termination Date shall be automatically extended thereafter on a month to month basis, unless either the Board or an officer of Employer at the direction of the Board shall notify the Employee or the Employee shall notify the Employer, that the Employer or the Employee (for any or no reason) desires to terminate this Agreement, in which event this Agreement shall terminate, without any other action by the parties, on the date which is ninety (90) days after the date such notice is delivered.



(b) This Agreement may be terminated by the Employer for Cause (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.



(c) In the event of the death or disability of the Employee during the Agreement Term, this Agr eement 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 portion s 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, as a result of physical or mental incapacity, the Em p loyee shall have been incapable of performing 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, as determined by the Board (or a committee or officer of the Employer des i gnated 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 resolut ion of such physician shall be binding on both the Employer and the Employee.



(d) The Employee shall be entitled to terminate his employment hereunder for Good Reason. Termination by the Employee of the Employee's employment for "Good Reason" shall m ean (i) any breach of this Agreement by the Employer, including, without limitation, any attempted reduction during the Agreement Term in the amount of the Employee's compensation or benefits in effect from time to time; or (ii) without the Employee's wri t ten consent, the assignment to the Employee of any duties which are materially inconsistent with the Employee's positions, duties, responsibilities and status, a significant reduction in the Employee's title, duties or responsibilities; and such event sha ll continue for a period of thirty (30) days or more after written notice thereof is sent to the Employer by the Employee.







3. Duties.



The Employee shall exercise such powers and perform such duties and services commensurate with his position for the Employer as the Chief Executive Officer of Employer may, from time to time, reasonably require, and shall devote his entire bus i ness time, energy and attention to the business of the Employer, or its subsidiaries. The Employee shall be the Executive Vice President of the Employer and President of Interliant of Texas, Inc., a Delaware corporation and a wholly owned subsidiary of Em ployer. The Employee shall report to the Chief Executive Officer of the Employer.



4. Non-Competition; Nonsolicitation; Confidentiality; Intellectual

Property Matters.



(a) During the Agreement Term and for the 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 or its subsidiaries during the Agreement Term or as of the date of termination, as the case may be, that is located or d oes business in any state in the United States or anywhere throughout the world except as an officer, director, shareholder or employee of the Employer or any affiliate thereof. However, nothing in this Section 4 shall prohibit the Employee from acquiring or holding any issue of stock or securities of any person that has any securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, listed on a national securities exchange or quoted on the automated quotation system of the N a tional Association of Securities Dealers, Inc. so long as (i) the Employee is not deemed to be an "affiliate" of such person as such term is used in paragraphs (c) and (d) of Rule 145 under the Securities Act of 1933, as amended, and (ii) the Employee and /or members of his immediate family or persons under his control do not own or hold more than 5% of any voting securities of any such person.



(b) During the Agreement Term and for 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:


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