Exhibit 10.35
CONFIDENTIAL
USINTERNETWORKING, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "AGREEMENT") dated as
of July 6, 1999, (the "Effective Date") is made by and between
USINTERNETWORKING, Inc., a Delaware corporation (together with any successor
thereto, the "COMPANY") and Xxxxxxxx Xxxxxxxx (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) substantial failure to perform his
duties hereunder, other than any such failure resulting from the
Executive's Disability, after thirty (30) days written notice and
opportunity for cure, all as determined by the Chief Executive Officer
of the Company,
(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.
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(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.
(n) "TERMINATION" shall have the meaning set forth
in SECTION 5.
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 July 6, 2002, unless earlier terminated as provided in
SECTION 5.
3. POSITION AND DUTIES.
(a) The Executive shall serve as the President of the
Company's Microsoft Exchange Business Unit to be located in Northern Virginia,
with such customary responsibilities, duties and authority as may from time to
time be assigned to the Executive by the Chief Executive Officer of the Company,
to whom the Executive shall initially report. The
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Executive shall devote substantially all his working time and efforts to the
business and affairs of the Company.
(b) If elected or appointed thereto, and only for the
duration of such elected term or appointment, the Executive shall serve as an
officer 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 officers 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 $200,000 per annum, subject to increase
as determined by the Compensation Committee ("ANNUAL BASE SALARY").
(b) BONUS. The Executive shall be eligible to receive
a discretionary bonus of up to one hundred percent (100%), of the Executive's
year end gross annual salary to be paid in accordance with criteria set each
calendar quarter of the Term by the Chief Executive Officer of the Company, or
other direct supervisor of the Company.
(c) SIGNING BONUS. The Executive shall receive a
signing bonus of one hundred thousand dollars ($100,000), net of taxes, fifty
thousand dollars ($50,000) of which will be paid to the Executive on the
Effective Date, and the balance of fifty thousand dollars ($50,000) to be paid
to the Executive on January 6, 2000. Should the Executive be terminated for
cause or terminate his employment without good reason, as set forth in Section 5
(a) (iii) or (vi) below, on or before January 6, 2000, Executive must reimburse
to the Company the full amount of the signing bonus received within ten (10)
business days of his termination.
(d) BENEFITS-STOCK GRANT. The Executive shall be
entitled to receive, within one month of the Effective Date, twenty-five
thousand (25,000) shares of the Company's common stock, par value $0.001 per
share. ("Stock Grant"), subject to the approval of the Compensation Committee.
Executive acknowledges that the Company contemplates the sales of additional
equity securities in the future that may dilute the ownership interest
represented as of the Effective Date by the Stock Grant. Executive and the
Company acknowledge that the fair market value of the Stock Grant as of June 18,
1999, is eight hundred fifty thousand dollars ($850,000). The Stock Grant shall
vest according to the following schedule:
(i) On the first anniversary of the
Effective Date, one-third (1/3) of the Stock Grant shall vest;
(ii) On the last day of each calendar
quarter (I.E., March 31, June 30, September 30 and December 31) that
begins coincident with or following the first anniversary of the
Effective Date, an additional one-twelfth (1/12) of the Stock Grant
shall vest;
STOCK OPTION GRANT. The Executive
shall be granted a non-qualified stock option to purchase seventy-five
thousand (75,000) shares of the Company's common
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stock, par value $0.001 per share ("Stock Option Grant") at an exercise
price per share of twenty nine dollars ($29.00), subject to the approval of
the Compensation Committee. Executive acknowledges that the Company
contemplates the sales of additional equity securities in the future that
may dilute the ownership interest represented as of the Effective Date by
the Stock Option Grant. The Stock Option Grant shall vest according to the
following schedule:
(i) On the first anniversary of the
Effective Date, one-third (1/3) of the Stock Option Grant shall vest;
(ii) On the last day of each calendar
quarter (I.E., March 31, June 30, September 30 and December 31) that
begins coincident with or following the first anniversary of the
Effective Date, an additional one-twelfth (1/12) of the Stock Option
Grant shall vest;
At any time during the Term, the
vesting of the Stock Option Grant shall accelerate upon:
(i) a "CHANGE IN CONTROL" (a "CHANGE
IN CONTROL" means an assignment or
transfer, in a single transaction
or a series of related
transactions, of substantially all
of the assets of the Company or
capital stock representing a
majority of the voting control of
the Company to an entity or
entities not in control of the
capital stock of the Company as of
July 6, 1999); and
(ii) Executive's Termination Without
Cause (as defined in Section 5 (a)
(iv)) or Executive's "CONSTRUCTIVE
TERMINATION WITHOUT CAUSE"
(defined for purposes of this
Section as meaning: a) when the
Executive is required by the
Company to move more than
one-hundred (100) miles from his
residence as of the Effective
Date; b) when the office of the
Company's Microsoft Business Unit
is moved more than fifty (50)
miles from where it was located
immediately before a Change in
Control; c) the Company
significantly reduces the
Executive's duties under the
Agreement; or d) the Executive's
compensation or benefits are
reduced in violation of the
Agreement) within twelve months of
a Change in Control.
Such acceleration of vesting of the Stock
Option Grant is subject to the approval of the Board.
OTHER BENEFITS. The Executive shall be
entitled to flexible benefit plans which include medical PPO coverage (Blue
Cross/Blue Shield), a dental PPO plan (Phoenix Insurance), and a vision plan
(Vision Advantage). The Company also provides long-term disability and two times
base pay in life insurance. The Company's 401(k) plan offers a choice of
Fidelity Advisor Investment Funds. Additionally, the Executive will be eligible
for
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fifteen (15) days per Contract Year of vacation, accrued at the rate of 1.25
days per full calendar month of the Contract Year.
(e) 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.
(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.
(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").
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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 Chief Executive Officer; 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 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.
(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.
(c) MITIGATION OF DAMAGES. In the event of any
termination of the Executive's employment by the Company, the Executive shall
be required to seek other similar employment to mitigate damages, and any income
earned by the Executive from other similar employment or self-employment shall
be offset against any obligation of the Company to the Executive under this
Agreement.
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;
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(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;
(iii) in any way solicit, or attempt to
divert, take away or call on, any customers or potential customers of
the Company; or
(iv) in any way disparage the Company, its
operations, business, Board, directors, officers, management or
employees.
(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 24 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
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
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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.
11. GOVERNING LAW. This Agreement shall be governed,
construed, interpreted and enforced in accordance with the substantive laws of
the State of Maryland.
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;
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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.
16. AMENDMENTS; WAIVERS. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, signed by the
Executive and the Chief Executive Officer of the Company. 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 panel of three arbitrators 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.
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IN WITNESS WHEREOF, the parties have executed this Agreement
on the date and year first above written.
THE COMPANY:
USINTERNETWORKING, Inc.
By: _______________________________
Xxxxxxxxxxx X. XxXxxxxx, CEO
THE EXECUTIVE:
By: _______________________________
Xxxxxxxx Xxxxxxxx
Address: ______________________
______________________
WITNESS:
By: _______________________________
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