• FindLaw
• Contract
• Compensation Business Contracts
• Employment Agreements
• Employment Agreement - Network Solutions Inc. and James Rutt(May 17, 1999)

Employment Agreement - Network Solutions Inc. and James Rutt(May 17, 1999)

May 18, 1999                                                  CONFIDENTIALMr. James Rutt18727 Silcott Springs RoadPurcellville, VA  20132Dear Jim:1. It is a pleasure to offer you the position of Chief Executive Officer ofNetwork Solutions, Inc., reporting directly to the NSI Board of Directors. It ismy hope that in this capacity you will extend the professional capabilities ofour organization, and that you will personally find the association to be bothchallenging and rewarding.2. We would like to begin your employment on or before May 25, 1999. Yourstarting salary will be approximately $6,730.77 per week, based on ananticipated workweek of 40 hours, which is equivalent to an annual salary of$350,000. Your salary will be subject to review annually for increases based onNSI's compensation policies and your performance and contributions to ourbusiness. In addition to your base salary you will have the following benefits:-     NSI Bonus Plan: You will be eligible to receive a performance bonus with a      target of 100% of base salary. Your bonus will be based on objectives to      be established and mutually agreed upon by you and the NSI Board of      Directors. Your target bonus for 1999 shall be set at 100% of your      annualized base salary (i.e., $350,000).-     NSI Options: You will receive 750,000 NSI non-qualified stock options. The      stock options will be subject to the terms specified in the attached      Nonstatutory Stock Option Agreement. Fifty percent of the options (375,000      options) will be granted and priced on your start date at Fair Market      Value (as defined in NSI's 1996 Stock Incentive Plan, as amended) on such      date and the remaining fifty percent (375,000 options) will be granted and      priced on the tenth business day following your start date at Fair Market      Value (as defined in NSI's 1996 Stock Incentive Plan, as amended) on such      date. In addition, you will receive yearly stock option grants at least      equal to those provided to other NSI senior executives based on any yearly      stock option grant program then maintained by NSI. -     NSI Stock Units: You will be granted 7,000 Stock Units on your start date,      representing the right to receive 7,000 shares of NSI Common Stock, under      NSI's 1996 Stock Incentive Plan, as amended. These Stock Units will vest      on the same schedule as the non-qualified stock options set forth above,      and upon your death, total disability or the attainment by you of age 65,      except that accelerated vesting will occur with respect to 5,000 of these      Stock Units in the event the NSI Board acts to      remove you for any reason other than Cause or Non-performance or you      terminate your employment for Good Reason. Notwithstanding the foregoing,      acceleration of vesting will not be forfeited for Non-performance unless      you have been given an opportunity to be heard by the Board of Directors      after at least 10 days' written notice by the Board. For purposes of this      offer letter,      1. 'Cause' means (i) your conviction of a felony involving a personal act      of willful and intentional misconduct or the entry by you of a plea of      nolo contendere in connection with such an alleged felony.      2. 'Non-performance' means (i) the repeated and continual failure by you      to fulfill the basic duties of your position(s) with NSI; (ii) your gross      negligence, dishonesty, willful malfeasance or gross misconduct in      connection with your employment with NSI which has had (or is expected to      have) a demonstrative and adverse effect on the business or reputation of      NSI or its subsidiaries; or (iii) failure by you to follow any lawful      directives established for you by the Board of Directors. For purposes of      the definition of 'Non-performance,' any isolated, insubstantial and      inadvertent action not taken in bad faith which is remedied by you      promptly after receipt of written notice thereof from NSI shall not be      deemed to be 'Non-performance.'      3. 'Good Reason' means the occurrence of any of the following without your      written consent: (i) assignment to you of any duties materially      inconsistent with your position as Chief Executive Officer or any material      diminution in your position, authority, duties or responsibilities; (ii)      reduction in base salary or target bonus opportunity or failure to provide      you with stock option grants on a basis which is at least as favorable as      that provided to other executive officers generally (excluding grants to      new hires or other extraordinary grants to a particular individual); (iii)      relocation of your principal work place to a location that is more than 25      miles from Reston, Virginia; or (iv) failure to be elected or reelected to      the NSI Board of Directors or removal from the NSI Board of Directors. For      purposes of the definition of 'Good Reason,' any isolated, insubstantial      and inadvertent action not taken in bad faith which is remedied by NSI      promptly after receipt of written notice thereof from you shall not be      deemed to be 'Good Reason.'Separation Agreement: On or before your start date, you and NSI will execute theattached separation agreement(the 'Separation Agreement') .      -     SAIC/NSI Fringe Benefits: The benefits plan currently includes health      care, dental, life insurance, income protection, paid absences, and a      401(k) plan to name a few. -     Attorneys' Fees: NSI will reimburse you for all reasonable attorneys' fees      up to $10,000 incurred in connection with advising you with respect to      this offer, upon submission of copies of bills. -     Board Membership: You will be recommended to be added to the NSI Board of      Directors.3.       By and in consideration of the benefits to be provided to you under         this offer letter, you agree that:          (a) Noncompetition. During the period commencing on the date youremployment terminates and ending on the first anniversary thereof (the'Restriction Period'), you shall not provide services to or otherwise becomeassociated with any corporation, partnership, limited liability company or otherentity or organization (a 'Competitor'), whether as a principal, partner, employee, agent, consultant,shareholder (other than as a holder, or a member of a group which is a holder,of not in excess of 1% of the outstanding voting shares of any such entity) orin any other relationship or capacity, which is engaged in a business orcommercial activity in any geographic area where NSI or such subsidiary isengaged in such business or commercial activity on such date which directlycompetes with any business or activity in which NSI or any of its subsidiariesis engaged (with the exception of any business or activities which provide lessthan 10% of NSI's net revenue) (a 'Business') on the date your employmentterminates; provided that, if you are employed by or serve as a consultant to asubsidiary, division or other affiliate of a Competitor (the 'Affiliate') andthe Affiliate is not itself engaged in a Business, such employment orconsultation shall not be in violation of this provision so long as your dutiesand responsibilities with respect to such employment or consultation are limitedto the business of the Affiliate.                        (b) Confidentiality. Without the prior written consentof NSI, except to the extent required by an order of a court having competentjurisdiction or under subpoena from an appropriate government agency, you shallnot disclose any trade secrets, customer lists, designs, information regardingproduct development, marketing plans, sales plans, projected acquisitions ordispositions of properties or management agreements, management organizationinformation (including data and other information relating to members of theBoard and management), operating policies or manuals, business plans, purchasingagreements, financial records, or other financial, commercial, business ortechnical information relating to NSI or any of its subsidiaries or informationdesignated as confidential or proprietary that NSI or any of its subsidiariesmay receive belonging to suppliers, customers or others who do business with NSIor any of its subsidiaries (collectively, 'Confidential Information') to anythird person unless such Confidential Information has been previously disclosedto the public by NSI or is in the public domain (other than by reason of yourbreach of this offer letter).                        (c) Non-Solicitation of Employees and Agents. During theRestriction Period, you shall not directly or indirectly solicit, encourage orinduce any employee or agent of NSI or any of its subsidiaries to terminateemployment or its services with such entity, and shall not directly orindirectly, either individually or as owner, agent, employee, consultant orotherwise, employ or offer employment to any person who is or was employed byNSI or a subsidiary thereof unless such person shall have ceased to be employedby such entity for a period of at least six months.                        (d) Injunctive Relief and Other Remedies with Respect to Covenants.  You acknowledge and agree that your covenants and obligationswith respect to noncompetition, nonsolicitation, and confidentiality relate tospecial, unique and extraordinary matters and that a violation of any of theterms of such covenants and obligations will cause NSI irreparable injury forwhich adequate remedies are not available at law. Therefore, you agree that (i)NSI shall be entitled to an injunction, restraining order or such otherequitable relief (without the requirement to post bond) restraining you fromcommitting any violation of the covenants and obligations contained in thissection of the offer letter, and (ii) following any material violation by you ofthe covenants and obligations contained in this section of the offer letter, NSIshall be entitled to recover from you any compensation and benefits payable toyou pursuant to the Separation Agreement. These remedies are cumulative and arein addition to any other rights and remedies the Company may have at law or inequity. In connection with the foregoing provisions of this section of the offerletter, you represent that your economic means and circumstances are such thatsuch provisions will not prevent you from providing for yourself and your familyon a basis satisfactory to you.4. As the Chief Executive Officer we would expect you to adhere to the EmployeeOwnership Guidelines established by the Board of Directors. The guideline is acommitment by the senior management team to maintain a certain level of stockownership in the company expressed as a multiple of his/her base salary. Thelevel of stock ownership to be maintained is determined by the position held andlength of time in that covered position. The employee ownership goal ramps upover a four-year period, after which the Year 4 ownership goal should bemaintained. The phased process for the CEO is as follows and represents amultiple of total cash compensation:                             Years in Position              CEO                                    1                       1x                                    2                       2x                                    3                       3x                                    4                       4xStock ownership levels will be reviewed annually and, due to the historicalvolatility of public stock, for purposes of determining whether the guidelineshave been met, the value of stock or share equivalents will be calculated usingthe highest of the past four quarters' average price. Ownership that will becounted is:*     Stock Units - Share equivalents underlying vested Stock Units held will be      counted.*     Stock Options - Share equivalents underlying vested stock options will be      counted.*     Stock - Purchased through the ESPP or other means.Unvested stock options, unvested stock units or other plan holdings do not counttowards the achievement of these ownership guidelines.5. NSI has a strong policy against employee use of illegal drugs and substanceabuse. Your start date will be determined after you have successfully completeda drug test. This is to foster a drug free work environment within the company.All offers of employment, including yours, are contingent upon successfullypassing a medical laboratory screen for illegal drugs. You may also be subjectto such a screen as an employee in accordance with the company's compliance withfederal laws, regulations, and executive orders or by the terms of contractsentered into by NSI. The use of illegal drugs or substances can be cause fortermination should you become employed by NSI.6. This employment offer is effective for seven (7) days from receipt of thisletter. If you have any questions, feel free to call Bill Roper or me. The termsof this offer letter are strictly confidential and are not to be disclosedwithout the express permission of NSI. This offer is contingent upon receivingfavorable references. In addition, it is understood that you or NSI may terminate this employment relationship at anytime with or without cause or notice, subject to the financial arrangementsdiscussed above.7. Upon acceptance of our offer, we will forward to you a package including thestandard Science Applications International Corporation Inventions Agreement,the Education Summary and Pre-employment Statement, and the SAIC/NSI EmployeeDispute Resolution Guide. We will ask you to review all of the materialscarefully. The Employee Dispute Resolution Guide contains an acknowledgmentpage, which needs to be signed by you. As a condition of employment, allemployees of NSI are required to execute these documents. You may do so on yourfirst day of employment. As a further condition of employment, all new employeesare required to present documentation that confirms their identity andeligibility for employment in the United States. Additionally, you must havecompleted NSI/SAIC form G/C 489 that inquires about any personal or substantialparticipation in the conduct of U.S. Government Agency procurement within thelast two years.8. We are sincerely eager for you to join our executive staff and look forwardto your early acceptance of our offer and a mutually rewarding association. Youracceptance can be acknowledged by signing the enclosed copies of this letter andreturning the original to me and a copy to the Human Resources Department.Please keep a copy for your records.Sincerely,Network Solutions, Inc./s/ MIKE DANIELSMike DanielsChairman of the BoardI accept your offer of employment.Signature /s/ J P RUTT           Date  May 21, 1999           --------------------        --------------                                        4:50 P.M.