Exhibit 10.15
OFFICER AGREEMENT
THIS AGREEMENT (the "Agreement") is executed this 15th day of December,
1998, by and between USinternetworking, Inc., a Delaware corporation USi') and
Xxxxxxx X. XxXxxxxx ("Officer"). The effective commencement of the Agreement
shall be as of July 2, 1998 (the "Effective Date").
WITNESSETH:
WHEREAS, USi is engaged in the developmetrt of computing and
communications services for commercial customers, and
WHEREAS, USi desires to employ Officer and Officer desires to be
employed by USi in such capacity and under such terms and conditions as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and provisions
made by the parties and intending to be legally bound, the parties agree as
follows:
1. TERM.
USi agrees to employ Officer, and Officer hereby accepts such employment, on
the terms and conditions set forth herein for a period of three (3) years as of
the Effective Date subject to the termination provisions herewithin.
2. EMPLOYMENT AND DUTIES.
(a) Officer shall have the title of Executive Vice President of Operations
and Client Services and shall have such duties that are commensurate and
consistent with those with similar positions in the Internetworking industry,
subject to the authority and direction of the Chief Executive Officer and the
Board of Directors of USi.
(b) Officer shall, from the date of execution of this Agreement, devote all
skills solely and exclusively to the business interests and affairs of USi.
Officer shall not be a partner, officer, director, stockholder, advisor,
investor, creditor, or employee of any business competitive with USi's business
without the written consent of USi, which consent may be withheld in USi's sole
discretion, provided, however, that nothing contained herein shall be deemed to
prevent Executive from investing his personal funds in the capital stock or
other securities of any corporation whose stock or securities are publicly owned
or are regularly traded on any public exchange, provided he does not own more
than two percent (2%) thereof.
(c) Officer acknowledges and agrees that Officer owes a fiduciary duty of
loyalty, fidelity, and allegiance to act at all times in the best interests of
USi and to do no act which would knowingly injure the business, interests, or
reputation of USi or, to the best of his knowledge, any of its subsidiaries,
affiliates or owners. In keeping with these duties, Officer shall make full
disclosure to USi of all business opportunities pertaining to USi's business and
shall not appropriate for Officer's own benefit any such business opportunities.
(d) Officer shall at all times comply with (i) all material applicable laws,
rules and regulations related to Executives responsibilities assumed hereunder
and known to Officer, and (ii) all material written corporate and business
policies and procedures of USi whether generally applicable to
all of USi's officers or made specifically applicable to Officer as advised in
advance by USi to Officer in writing but only to the extent such policies and
procedures are not inconsistent with the other provisions of this Agreement.
(e) Officer shall not, from the date of execution of this Agreement, without
the prior written approval of USi, which approval USi may withhold in its sole
discretion, receive compensation or obtain any direct or indirect financial
benefit for services rendered to any Person other than USi after the Effective
Date. As used herein, the term "Person" shall include all natural persons,
corporations, business trusts, associations, companies, partnerships, joint
ventures and other entities and governments and agencies and political
subdivisions.
3. COMPENSATION.
(a) As compensation for Officer's services, USi hereby agrees to pay
Officer, and Officer agrees to accept a base salary equal to $175,000 per year
plus consideration for a bonus of $75,000 or greater based upon the
accomplishments of USi for the period ending December 31, 1998. The bonus
payment, if any, shall be paid in April of 1999 after the review of USi's
accomplishments by the Compensation Committee of the Board of Directors and will
be reviewed annually by USi's Compensation Committee for adjustment.
(b) As further compensation and in consideration of Section 2, USi hereby
grants to Officer a fully exercisable option to purchase all or any part of
3,000,000 shares of fully paid and non-assessable common stock of USi at a price
per share of $0.33 without commission or other charge ("Option Grant"), subject
to the terms and conditions of the USINTERNETWORKING, INC.'S 1998 Stock Option
Plan ("Plan"), which is incorporated herein by this reference. Officer
acknowledges that the Company contemplates the sales of additional equity
securities in the future that may dilute any potential ownership interest the
Officer may obtain upon his exercise of all or any part of the Option Grant.
(c) Future compensation enhancements, changes, or modifications may be made
by the Compensation Committee formed as a result of the first equity financing
that occurred in the second quarter of 1998.
4. BENEFITS.
(a) Officer shall be entitled to medical, dental and life insurance, and
offer such benefits provided by USi, pursuant to its general employment
policies. Said benefits may be changed from time-to-time in USi's sole business
discretion, but only to the extent that USi changes its general employment
policies with respect to such benefits .
(b) Officer shall be entitled to fifteen (15) paid vacation days per year.
Unless USi consents in writing, Officer's vacation time shall not be carried
over from one contract year to another and Officer shall not be compensated for
any unused vacation time.
(c) USi shall provide, at no cost to Officer, an additional life insurance
policy on Officer's life with the beneficiary specified by Officer and the face
amount of which shall be equal to twice the Officer's annual base salary as
provided by this Agreement, less any group insurance provided pursuant to
Section 4(a) above.
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5. TERMINATION.
(a) USi shall have the right to terminate this Agreement for cause in the
event Officer (i) is in violation of any provision of this Agreement; (ii)
engages in any illegal or immoral practices or activates which can be reasonably
be expected to be materially detrimental to the reputation of USi; (iii)
manifests dishonesty, disloyalty, fraud, willful misconduct or material
dereliction in the discharge of his duties hereunder, or (iv) uses, possesses,
sells, trades in, or delivers any illegal drug or controlled substance, during
working hours or otherwise. In the event of a violation of any provision of this
Agreement, the Board of Directors will advise Officer in writing and allow a
60-day cure period for executive to remedy the violation prior to termination.
(b) Termination without cause shall cause a payment to Officer of the then
base and pro-rated bonus times the remaining number of months in this Agreement.
If Officer is terminated without cause, USi's Repurchase Right under the Plan,
if any, shall lapse with respect to the Option Grant 24 hours prior to
termination.
(c) This Agreement shall terminate effective immediately upon the date of
Officer's death.
(d) In the event Officer fails to perform the responsibilities stated
hereunder due to disability, USi shall have the right to terminate Officer's
employment upon written notice to Officer. Nonperformance is defined as failure
to perform the duties hereunder for a cumulative total of sixty (60%) or more of
the normal working days during any two (2) consecutive months, or failure to
perform duties for ninety (90)or more consecutive days. Nothing herein shall be
construed to violate any Federal or State law including the Family and Medical
Leave Act of 1993, 29 U.S.C.S. sections 2601 et seq., and the American with
Disabilities Act of 1990, 42 U.S.C.S. sections 12101 et seq.
(e) Upon any termination under Paragraph 5 (c) or (d) above during the term
of this Agreement, Officer (or his estate) shall have, pursuant to the Plan, one
(1) year to exercise all or any part of the Option Grant. To the extent that USi
desires to obtain a policy of Insurance to cover the risk of Officer's death or
disability, Officer will cooperate in obtaining such policy.
(f) In the event the Officer is terminated by the Board of Directors for
cause, Officer may not exercise any part of the Option Grant from the date of
termination. Only if said termination is deemed to be invalid by the appointed
arbitrator pursuant to Section 11, may Officer once again exercise any part of
the Option Grant.
(g) In the event Officer elects to terminate this Agreement, all base salary
and benefits will cease as of the termination date. Pursuant to the Plan, if
this Agreement is terminated for any reason before July 2, 1999, USi shall have
the right to repurchase at the price of $0.33 all shares of Common Stock covered
by the Option Grant. If this Agreement is terminated for any reason as of July
2, 1999, USi's repurchase right shall lapse with respect to one-third (1/3) of
the number of shares of Common Stock covered by the Option Grant. If this
Agreement shall terminate for any reason as of 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, July
2, 1998, USi's repurchase right shall lapse with respect to an additional
one-twelfth (1/12) of the shares of Common Stock covered by the Option Grant. No
termination of Officer's employment hereunder shall effect his obligations under
Sections 7, 8, 9, and 12 of this Agreement.
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6. CHANGE OF CONTROL
If a Change of Control occurs at any time during the term of this
Agreement, and the Officer's employment is terminated without cause, USi's
repurchase right to buy back any portion of the Option Grant shall automatically
expire 24 hours prior to such termination. A "Change of Control" means a change
in ownership or control of USi effected through either of the following
transactions: (a) any person or related group of persons (other than USi or any
person that prior to such transaction, directly or indirectly controls, is
controlled by, or is under common control with USi) directly or indirectly
acquires beneficial ownership (within the meaning of ?Rule 13d-3 of the
Securities and Exchange Act) of the securities possessing more than fifty
percent (50%) of the total combined voting power of the USi's outstanding
securities pursuant to a tender or exchange offer made directly to USi's
stockholders which the Board of Directors does not recommend such stockholders
to accept; or (b) there is a change in the composition of the Board of Directors
over a period of thirty-six (36) consecutive months (or less) such that a
majority of the Board members (rounded up to the nearest whole number) ceases,
by reason of one or more proxy contests for the election of Board members, to be
comprised of individuals who either (i) have been Board members continuously
since the beginning of such period or (ii) have been elected or nominated for
election as Board members during such period by at least a majority of the board
members described in clause (i) who were still in office at the time such
election or nomination was approved by the Board.
7. PUBLIC STATEMENTS.
Officer agrees not to directly or indirectly publish, circulate, utter
or disseminate any statements, commitments, or material whatsoever, which
reflects unfavorably on USi or harm, damages or impairs the business or
operations of USi unless required by law or by a valid order of a Court of
competent jurisdiction. This provision shall survive the termination of this
Agreement.
8. CONFIDENTIAL DOCUMENTS AND RECORDS.
(a) During the course of his employment, Officer will have access to
confidential information, including, but not limited to confidential financial
information, proprietary information of USi or its clients or customers,
technical information and other confidential information about USi's business
that is not known by actual or potential competitors of USi regardless of
whether such information qualifies as a "trade secret" under applicable law
("Confidential Information"). Officer shall not at any time use or divulge to
others any Confidential Information obtained as a result of his employment with
USi.
(b) Officer agrees either upon his termination or upon an earlier request of
USi, to return or deliver to USi all forms of such Confidential Information in
his possession or control including but not to drawings, specifications,
documents, records, devices, models or any other material and copies or
reproductions thereof. Officer acknowledges that monetary damages would not be
adequate to compensate USi if Officer violates this confidentiality agreement.
Accordingly, Officer agrees that USi should be entitled to injunctive relief to
prevent the continued violation of this provision.
(c) All memoranda, notices, files, records and other documents made or
compiled by Officer during the period of his employment in the ordinary course
of business, or made available to him concerning the business of USi, shall be
USi's property and shall be delivered to USi at its request therefor or
automatically on the termination of this Agreement.
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(d) Officer agrees promptly to disclose to USi, and assign to USi or its
designee, his entire right, title, and interest in and to all designs,
trademarks, discoveries, formulae, processes, manufacturing techniques, trade
secrets, inventions, improvements, ideas or copyrightable works, including all
rights to obtain, register, perfect and enforce these proprietary interests.
("Inventions") which he may solely or jointly develop or reduce to practice
during the period of his employment with USi (a) which pertain to any line of
business activity of USi, which are aided by the use of time, material or
facilities of USi, whether or not during working hours, or (c) which relate to
any of his work during the period of his employment with USi, whether or not
during normal working hours.
(e) Officer agrees to perform, during and after his employment, all acts
deemed necessary or desirable by USi to permit and assist it, in obtaining and
enforcing the full benefits, enjoyment, rights and title throughout the world in
the Inventions hereby assigned to USi as set forth above. Such acts may include,
but are not limited to execution of documents and assistance or cooperation in
legal proceedings. This provision shall survive the termination of the
Agreement.
9. COVENANT NOT TO COMPETE.
(a) Although this Agreement gives both parties flexibility over the term of
Officer's employment, USi's willingness to hire Officer is based in material
part on the understanding between the parties that Officer will not utilize the
skills or knowledge or that he develops as part of his job to the competitive
disadvantage of USI. Accordingly, Officer agrees to the following promises not
to compete, as set forth in subsections (a) through (e) below, with USi during
or after the termination of this Agreement. Although these restrictions may
prohibit or limit Officer's right or ability to work in the Internet industry,
Officer agrees that these restrictions are reasonable and acceptable to him.
(b) Officer promises that for a period of one (1) year after the termination
of this Agreement for any reason set forth in Section 5 of this Agreement,
Officer will not compete or perform services involving or related to USi's
primary product line.
(c) Officer further promises that for a period of one (1) year after the
termination of this Agreement for any reason set forth in Section 5 of this
Agreement, Officer will not (i) solicit the services of any employee or
independent contractor of USi; (ii) induce or encourage of USi's employees to
leave its employ, and (iii) have any commercial contact with, nor solicit
clients of USi.
(d) Officer acknowledges that if he violates this covenant not to compete,
USi is entitled to obtain a temporary restraining order or a preliminary and
permanent injunction (in addition to all other available remedies) from a court
enjoining Officer from violating this Agreement in order to prevent immediate
and irreparable harm to USi.
(e) Officer agrees that if any part of this covenant not to compete is held
to be unenforceable for any reason, this covenant shall be interpreted in a
manner that will render it enforceable.
10. FREEDOM TO CONTRACT.
The Officer represents and warrants that he has the right to negotiate
and enter into this Agreement and that this Agreement does not breach, interfere
with or conflict with any other contractual agreement, covenant not to compete,
option, right of first refusal, or other existing business relationship. Officer
acknowledges that this representation is a material inducement to USi entering
into this Agreement and in the event Officer breaches this warranty, Officer
agrees to indemnify and hold
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harmless USi from any and all claims, actions, losses, damages (including but
not limited to, reasonable attorney's fees and costs), and USi shall have the
right to terminate Officer for cause.
11. ARBITRATION.
Except for breaches or threatened breaches of the provisions of this
Agreement relating to equitable relief, any controversy or claim arising out of
or in any way between the Officer and USi, shall be submitted to arbitration.
Said arbitration shall be conducted pursuant to the provisions of the Federal
Arbitration Act, 9 U.S.C. Section et. seq. in an expeditious manner. The parties
agree that a final arbitration hearing shall be conducted on the first available
date of the arbitrator after the parties have completed discovery. In the event
of any litigation or arbitration proceeding, the same shall occur solely in
Annapolis, Maryland. In the event of litigation or arbitration arising out of
this Agreement or the employment relationship or any other claim between USi and
Officer, the prevailing party shall be entitled to recover any and all
reasonable attorney's fees and costs incurred both on the trial and appellate
level as well as the arbitration level and/or any appeal of the arbitration.
12. CONFIDENTIALITY.
Officer hereby agrees to keep confidential and not publish or publicly
disclose in any manner the terms or provisions of this Agreement including,
without limitation, those relating to compensation, during the employment term
hereunder or at any time thereafter, except that Officer may disclose this
Agreement to his legal counsel, financial advisors, agents, family or as
required by a court or governmental agency of competent jurisdiction.
13. GOVERNING LAW, VENUE AND WAIVER OF JURY TRIAL.
This Agreement including any disputes hereunder, and the interpretation,
validity and/or enforcement of any provision thereof, shall be governed by the
laws of the State of Maryland. any action brought involving the arbitration
and/or enforcement of any of the covenants of this Agreement shall be brought
only in a court of competent jurisdiction in Maryland and the parties agree to
waive any claim relating to forum non conveniens. The parties further agree and
hereby waive and release any right to a trial by jury in any action arising out
of the interpretation, enforcement or breach of this Agreement or any
arbitration provision.
14. ENTIRE AGREEMENT.
This Agreement contains the entire understanding between the parties and
supersedes and replaces any and all previous agreements and/or oral
negotiations. The parties stipulate and agree that neither of them has made any
representations concerning the execution and delivery of this Agreement except
such representations as specifically set forth herein and that all the terms and
conditions of this Agreement are set forth in this writing, and there are no
representations or agreement that are not so contained herein and that neither
party is relying upon any representation made by the other that is not contained
herein in connection with the negotiations and the terms of this Agreement. The
parties agree that this Agreement may only be changed or modified by an
agreement in writing signed by both parties.
15. WAIVER.
A waiver by either party of any term or condition of this Agreement in
any instance shall not be construed as a waiver of any other term or condition.
All remedies, rights and obligations
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contained in this Agreement shall be cumulative, and none of them shall be in on
of any offer remedy, right or obligations of either party.
IN WITNESS WHEREOF, the parties hereto have set their hands and seats on
the day and year first above
USinternetworking, Inc.
/s/ Xxxxxxxxxxx X. XxXxxxxx
---------------------------------
By: Xxxxxxxxxxx X. XxXxxxxx
Chairman and Chief Executive Officer
/s/ Xxxxxxx X. XxXxxxxx
--------------------------------
Officer.
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