Exhibit 10.34
EMPLOYMENT AGREEMENT
This Employment Agreement dated as of October 2, 1998, is made
by and between USinternetworking, Inc., a Delaware corporation (together with
any successor thereto, the "COMPANY") and Xxxxxxx X. Xxxxxx (the "EXECUTIVE").
RECITALS
A. It is the desire of the Company to assure itself of the
services of the Executive by engaging the Executive to perform such services
under the terms hereof.
B. The Executive desires to commit himself to serve the
Company on the terms herein provided.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements set forth below the parties hereto agree as
follows:
1. CERTAIN DEFINITIONS.
(a) "ANNUAL BASE SALARY" shall have the meaning set
forth in SECTION 4.
(b) "BOARD" shall mean the Board of Directors of the
Company.
(c) The Company shall have "CAUSE" to terminate the
Executive's employment hereunder upon the Executive's:
(i) failure substantially to perform his
duties hereunder, other than any such failure resulting from the
Executive's Disability, after notice and reasonable opportunity for
cure, all as determined by the Board,
(ii) conviction of a felony or a crime
involving moral turpitude; or
(iii) fraud or personal dishonesty involving
Company's assets.
(d) "COMPANY" shall have the meaning set forth in the
preamble hereto.
(e) "COMPENSATION COMMITTEE" means the compensation
committee of the Board of Directors of the Company.
(f) "CONTRACT YEAR" shall mean each twelve month
period beginning on the effective date hereof or an annual anniversary thereof.
(g) "DATE OF TERMINATION" shall mean (i) if the
Executive's employment is terminated by his death, the date of his death,
(ii) if the Executive's employment is terminated pursuant to SECTION 5(a)(ii) -
(vi) the date specified in the Notice of Termination.
(h) "DISABILITY" shall mean the absence of the
Executive from the Executive's duties to the Company on a full-time basis for
a total of six months during any twelve month period as a result of incapacity
due to mental or physical illness which is determined to be reasonably likely to
extend beyond the completion of the Term by a physician selected by the Company
and acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably).
(i) "EXECUTIVE" shall have the meaning set forth in
the preamble hereto.
(j) The Executive shall have "GOOD REASON" to
terminate his employment in the event that the Company fails to make any payment
or provide any benefit hereunder or commits a material breach of this Agreement
and does not cure such failure or breach after notice and a reasonable
opportunity to cure.
(k) "NOTICE OF TERMINATION" shall have the meaning
set forth in SECTION 5(b).
(l) "PAYMENT PERIOD" shall have the meaning set forth
in SECTION 7(a)(i).
(m) "TERM" shall have the meaning set forth in
SECTION 2(b).
2. EMPLOYMENT. The Company shall employ the Executive and the
Executive shall enter the employ of the Company, for the period set forth in
this SECTION 2, in the position set forth in SECTION 3 and upon the other terms
and conditions herein provided. The term of employment under this Agreement (the
"TERM") shall be for the period beginning on the effective date of this
Agreement and ending on October 2, 2001, unless earlier terminated as provided
in SECTION 5.
3. POSITION AND DUTIES.
(a) The Executive shall serve as a Vice President of
the Company and President of Advanced Communication Resources, Inc. ("ACR") with
such customary responsibilities, duties and authority as may from time to time
be assigned to the Executive by the Board, provided that such responsibilities
are substantially equivalent to those held by Executive with ACR. The Executive
shall devote substantially all his working time and efforts to the business and
affairs of the Company.
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(b) If elected or appointed thereto, and only for the
duration of such elected term or appointment, the Executive shall serve as a
director of the Company and any of its subsidiaries and/or in one or more
executive offices of any of such subsidiaries, provided that the Executive is
indemnified for serving in any and all such capacities on a basis consistent
with that provided by the Company to other directors of the Company or similarly
situated executive officers of any such subsidiaries.
4. COMPENSATION AND RELATED MATTERS.
(a) ANNUAL BASE SALARY. During the Term the Executive
shall receive a base salary at a rate of $175,000 per annum, subject to increase
as determined by the Compensation Committee ("ANNUAL BASE SALARY").
(b) BONUS. For each Contract Year, the Executive
shall receive a bonus equal to 25% of the Annual Base Salary applicable to such
Contract Year, payable within thirty days after the end of the applicable
Contract Year.
(c) BENEFITS. The Executive shall be entitled to
participate in the other employee benefit plans, programs and arrangements of
the Company (including vacation) now (or, to the extent determined by the Board,
hereafter) in effect which are applicable to the senior officers of the Company,
subject to and on a basis consistent with the terms, conditions and overall
administration thereof.
(d) EXPENSES. The Company shall reimburse the
Executive for all reasonable travel and other business expenses incurred by him
in the performance of his duties to the Company, in accordance with the
Company's documentation and other policies with respect thereto.
5. TERMINATION. The Executive's employment hereunder may be
terminated by the Company or the Executive, as applicable, without any breach of
this Agreement only under the following circumstances:
(a) CIRCUMSTANCES.
(i) DEATH. The Executive's employment
hereunder shall terminate upon his death.
(ii) DISABILITY. If the Company determines
in good faith that the Executive has incurred a Disability, the Company
may give the Executive written notice of its intention to terminate the
Executive's employment. In such event, the Executive's employment with
the Company shall terminate effective on the 30th day after receipt of
such notice by the Executive, provided that within the 30 days after
such receipt, the Executive shall not have returned to full-time
performance of his duties. The Executive shall continue to receive his
Annual Base Salary until the Date of Termination.
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(iii) TERMINATION FOR CAUSE. The Company may
terminate the Executive's employment hereunder for Cause.
(iv) TERMINATION WITHOUT CAUSE. The Company
may terminate the Executive's employment hereunder without Cause.
(v) RESIGNATION WITH GOOD REASON. The
Executive may terminate his employment for Good Reason.
(vi) TERMINATION WITHOUT GOOD REASON. The
Executive may resign his employment without Good Reason upon 90 days
written notice to the Company.
(vii) TERMINATION FOR NOTE DEFAULT. The
Executive may terminate his employment hereunder and his obligations
under Section 7 and 8 of this Agreement if an Event of Default (as
defined in the Note dated the date hereof executed by the Company in
favor of the Employee) has occurred and is continuing.
(b) NOTICE OF TERMINATION. Any termination of the
Executive's employment by the Company or by the Executive under this
SECTION 5 (other than termination pursuant to paragraph (a)(i)) shall be
communicated by a written notice to the other party hereto indicating the
specific termination provision in this Agreement relied upon, setting 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
specifying a Date of Termination which, except in the case of termination for
Cause, shall be at least fourteen days (or 90 days in the case of Termination
without Good Reason by the Executive) following the date of such notice (a
"NOTICE OF TERMINATION").
6. SEVERANCE PAYMENTS.
(a) TERMINATION WITHOUT CAUSE OR RESIGNATION FOR
GOOD REASON: If the Executive's employment shall terminate without Cause
(pursuant to SECTION 5(a)(iv) or for Good Reason (pursuant to SECTION 5(a)(v)),
the Company shall:
(i) pay to the Executive, in accordance with
its regular payroll practice, following the date of the termination, an
amount equal to the Base Salary provided herein that the Executive
would have been entitled to receive had he continued his employment
hereunder for the remainder of the Term; and
(ii) pay to the Executive a prorated amount
of bonus based on the Company's year-to-date performance in relation to
the performance targets set by the Board; and
(iii) continue for the remainder of the Term
the Executive's coverage under all Company benefit plans and programs
in which the Executive was entitled to participate immediately prior to
the Date of Termination, to the extent
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permitted thereunder. In the event that the Executive's participation
in any such plan or program is not permitted, the Company shall arrange
to provide the Executive with benefits substantially similar to those
which the Executive would otherwise have been entitled to receive under
such plans and programs at the Company's expense.
(b) SURVIVAL. The expiration or termination of the
Term shall not impair the rights or obligations of any party hereto which shall
have accrued hereunder prior to such expiration.
7. COMPETITION.
(a) The Executive hereby agrees, in consideration of
his employment hereunder and in view of the confidential position to be held by
the Executive hereunder, that during the Term and during the 24 month period
beginning on the Date of Termination, the Executive will not directly or
indirectly, by or for himself, or as the agent of another, or through others as
an agent,
(i) in any way solicit or induce or attempt
to solicit or induce any employee, officer, representative, consultant,
or other agent of the Company (whether such person is presently
employed by the Company or may hereinafter be so employed), to leave
the Company's employ or otherwise interfere with the employment
relationship between any such person and the Company; or
(ii) take any action to purchase or obtain
goods or services, from any of the Company's proprietary suppliers or
other supplier with whom the Company has developed a unique or
exclusive relationship; or
(iii) in any way solicit, or attempt to
divert, take away or call on, any customers of the Company.
(b) The Executive shall not, at any time during the
Term, or (if his employment was terminated by the Executive without Good
Reason or by the Company for Cause) during the 12 month period following the
Date of Termination, without the prior written consent of the Board, directly or
indirectly engage in, or have any interest in, or manage or operate any person,
firm, corporation, partnership or business (whether as director, officer,
employee, agent, representative, partner, security holder, consultant or
otherwise) that engages in any business which competes with any business of the
Company or any subsidiary anywhere in the world at the date of termination;
PROVIDED, HOWEVER, that the Executive shall be permitted to acquire a stock
interest in such a corporation provided such stock is publicly traded and the
stock so acquired is not more than one percent (1%) of the outstanding shares of
such corporation.
(c) In the event the terms of this SECTION 7 shall be
determined by any court of competent jurisdiction to be unenforceable by reason
of its extending for too great a period of time or over too great a geographical
area or by reason of its being too extensive in any other respect, it will be
interpreted to extend only over the maximum period of time for which it may be
enforceable, and/or over the maximum geographical area as to which it may be
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enforceable and/or to the maximum extent in all other respects as to which it
may be enforceable, all as determined by such court in such action.
8. NONDISCLOSURE OF PROPRIETARY INFORMATION.
(a) Except as required in the faithful performance of
the Executive's duties hereunder or pursuant to subsection (c), the Executive
shall, in perpetuity, maintain in confidence and shall not directly, indirectly
or otherwise, use, disseminate, disclose or publish, or use for his benefit or
the benefit of any person, firm, corporation or other entity any confidential or
proprietary information or trade secrets of or relating to the Company,
including, without limitation, information with respect to the Company's
operations, processes, products, inventions, business practices, finances,
principals, vendors, suppliers, customers, potential customers, marketing
methods, costs, prices, contractual relationships, regulatory status,
compensation paid to employees or other terms of employment, or deliver to any
person, firm, corporation or other entity any document, record, notebook,
computer program or similar repository of or containing any such confidential or
proprietary information or trade secrets. The parties hereby stipulate and agree
that as between them the foregoing matters are important, material and
confidential proprietary information and trade secrets and affect the successful
conduct of the businesses of the Company (and any successor or assignee of the
Company).
(b) Upon termination of the Executive's employment
with Company for any reason and upon the Company's request, the Executive will
promptly deliver to the Company all correspondence, drawings, manuals, letters,
notes, notebooks, reports, programs, plans, proposals, financial documents, or
any other documents concerning the Company's customers, business plans,
marketing strategies, products or processes and/or which contain proprietary
information or trade secrets.
(c) The Executive may respond to a lawful and valid
subpoena or other legal process but shall give the Company the earliest possible
notice thereof, shall, as much in advance of the return date as possible, make
available to the Company and its counsel the documents and other information
sought and shall assist such counsel in resisting or otherwise responding to
such process.
9. INJUNCTIVE RELIEF. It is recognized and acknowledged by the
Executive that a breach of the covenants contained in SECTIONS 7 and 8 will
cause irreparable damage to Company and its goodwill, the exact amount of which
will be difficult or impossible to ascertain, and that the remedies at law for
any such breach will be inadequate. Accordingly, the Executive agrees that in
the event of a breach of any of the covenants contained in SECTIONS 7 and 8, in
addition to any other remedy which may be available at law or in equity, the
Company will be entitled to specific performance and injunctive relief.
10. BINDING ON SUCCESSORS. This Agreement shall be binding
upon and inure to the benefit of the Company, the Executive and their respective
successors, assigns, personnel and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable.
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11. GOVERNING LAW. This Agreement shall be governed,
construed, interpreted and enforced in accordance with the substantive laws of
the State of New York.
12. VALIDITY. The invalidity or unenforceability of any
provision or provisions 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.
13. NOTICES. Any notice, request, claim, demand, document and
other communication hereunder to any party shall be effective upon receipt (or
refusal of receipt) and shall be in writing and delivered personally or sent by
telex, telecopy, or certified or registered mail, postage prepaid, as follows:
(a) If to the Company:
USinternetworking, Inc.
One USi Plaza
000 Xxxxxxx Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Chief Executive Officer
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
(b) If to the Executive, to him at the address
set forth below under his signature;
with a copy to:
Morse, Zelnick, Rose & Lander LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
Telecopy: (000) 000-0000
or at any other address as any party shall have specified by notice in writing
to the other parties.
14. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
15. ENTIRE AGREEMENT. The terms of this Agreement are intended
by the parties to be the final expression of their agreement with respect to the
employment of the Executive by the Company and may not be contradicted by
evidence of any prior or contemporaneous agreement. The parties further intend
that this Agreement shall constitute the complete and exclusive statement of its
terms and that no extrinsic evidence whatsoever may be introduced in any
judicial, administrative, or other legal proceeding to vary the terms of this
Agreement.
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16. AMENDMENTS; WAIVERS. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, signed by the
Executive and the Chairman of the Board. By an instrument in writing similarly
executed, the Executive or the Company may waive compliance by the other party
or parties with any provision of this Agreement that such other party was or is
obligated to comply with or perform, provided, however, that such waiver shall
not operate as a waiver of, or estoppel with respect to, any other or subsequent
failure. No failure to exercise and no delay in exercising any right, remedy, or
power hereunder preclude any other or further exercise of any other right,
remedy, or power provided herein or by law or in equity.
17. NO INCONSISTENT ACTIONS. The parties hereto shall not
voluntarily undertake or fail to undertake any action or course of action
inconsistent with the provisions or essential intent of this Agreement.
Furthermore, it is the intent of the parties hereto to act in a fair and
reasonable manner with respect to the interpretation and application of the
provisions of this Agreement.
18. ARBITRATION. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration,
conducted before a single arbitrator in Washington, D.C. in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that the Company shall be entitled to seek a restraining order or
injunction in any court of competent jurisdiction to prevent any continuation of
any violation of the provisions of SECTIONS 7 or 8 of the Employment Agreement
and the Executive hereby consents that such restraining order or injunction may
be granted without the necessity of the Company's posting any bond, and provided
further that the Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement. The
fees and expense of the arbitrator shall be borne by the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date and year first above written.
THE COMPANY:
USINTERNETWORKING, INC.
By: ____________________________
Name: ______________________
THE EXECUTIVE:
By: ____________________________
Xxxxxxx X. Xxxxxx
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Address: 000 Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxxx, XX 00000
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CONFIDENTIAL
Rider#1, effective as of April 15, 1999, to the Employment Agreement between
USINTERNETWORKING, INC., a Delaware Corporation ("USi") and Xxxxxxx X. Xxxxxx
(the "Executive"), dated October 2, 1998.
Section 4 (a) and (b) shall be amended to read in their entirety as follows:
(A) ANNUAL BASE SALARY. During the Term beginning April 15, 1999,
the Executive shall receive a base salary at a rate of $225,000
per annum, subject to increase as determined by the Compensation
Committee ("ANNUAL BASE SALARY").
(B) PERFORMANCE BONUS. For each Contract Year, the Executive shall
receive a bonus of $75,000, contingent upon the Executive
meeting certain objectives during each Contract Year. The
objectives for the first Contract Year are to be mutually agreed
upon in writing between the Executive and the Company by May 15,
1999. The objectives for the second and third Contract Years
will be mutually agreed upon in writing between the Executive
and the Company by November 2, 1999, and November 2, 2000,
respectively.
RETENTION BONUS. The Company will pay the Executive a bonus of
$200,000 on October 9, 1999, contingent upon the Executive
substantially performing his duties as Vice President and
General Manager of the Company through October 9, 1999, and a
bonus of $195,0000 on December 31, 2000, contingent upon the
Executive substantially performing his duties as Vice President
and General Manager of the Company through December 31, 2000,
(the $200,000 and $195,000 bonus payments collectively referred
to herein as the "Retention Bonus"). Should the Executive resign
his employment without Good Reason pursuant to Section 5(a)(vi)
("Termination without Good Reason"), or be terminated for Cause
pursuant to Section 5(a)(iii) ("Termination for Cause") before
December 31, 2000, Executive shall pay back to the Company the
entire amount of the Retention Bonus previously paid to
Executive, within thirty (30) days of his Termination without
Good Reason or Termination for Cause. In the event that the
Executive's employment is terminated before October 9, 1999, due
to death, Disability or Termination without Cause (pursuant to
Sections 5(a)(i), (ii) or (iv), respectively), Executive, or his
estate, shall be paid the $200,000 bonus. In the event that the
Executive's employment is terminated on or after October 9,
1999, and before December 31, 2000, due to death, Disability or
Termination without Cause (pursuant to Sections 5(a)(i), (ii) or
(iv), respectively), Executive, or his estate, shall be paid the
$195,000 bonus.
IN WITNESS WHEREOF, the parties have set their hands and seals on this 15th day
of April, 1999.
USINTERNETWORKING, INC. Executive:
_________________________ ____________________
By: Xxxxxxx X. XxXxxxx Xxxxxxx X. Xxxxxx
Witness:
_________________________
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