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EXHIBIT 10.5
July 5, 2000
Mr. Todd Carlson
1000 Blue Ridge Place
Richardson, TX 75080
Dear Todd:
On the behalf of Digex Incorporated, I am pleased to offer you the position of
Senior Vice President of Business Operations, reporting to Mark Shull, Chief
Executive Officer. This is a regular part time position that will require you to
work in the Washington, DC area a minimum of 10 days per month.
Compensation
Your annual base salary will be $125,000 (based on 52 weeks of service).
Salaries are reviewed annually, and increases are granted based on individual
performance during the year and in accordance with Company policy.
You will be eligible to participate in Digex's Executive Management Incentive
Compensation Plan. In this position, you will be eligible for a bonus of 50% of
your base salary. At 100% of objective achievement your total potential cash
compensation is $187,500.
The incentive will be prorated on the base pay received during the current
fiscal calendar year. This incentive opportunity is contingent upon the
achievement of corporate and individual objectives as determined by your
departmental management.
Stocks
This offer includes a stock option grant covering an aggregate of 125,000 shares
of Digex common stock contingent upon approval by the Compensation Committee of
the Board of Directors. You will be granted 100,000 shares at an exercised price
equal to the market price of Digex Inc. common stock on the date that the grant
is approved and the remaining 25,000 shares at an exercised price equal to
$20.00 less than the market price referenced above.
Vesting of the award will begin with the approval of the grant and will continue
over a four-year period. 25% of the shares covered by the option will vest one
year following the date of grant. The balance of the shares will vest in equal
quarterly installments over the next three years so long as you continue to be
employed by Digex. Additionally, upon a "change in control" as defined in the
stock option plan (attached), this grant will fully vest one year following such
change.
Details will be provided in your Grant Agreement upon approval by the Board of
Directors. The option will be issued pursuant to the Company's long-term
Incentive Plan and will be subject to all the terms and conditions of that plan.
Benefits
As an employee of Digex you will be entitled to all employee benefits: Medical
insurance, medical and prescription drug card, dental insurance, short and
long-term disability, life insurance, 401(k) plan, educational reimbursement,
holidays, sick leave, vacation time, military leave, bereavement leave, voting
time off and jury duty leave. Your medical benefits will be effective the first
day of the month following your start of employment. An outline of these
benefits is attached. Should you have any benefit questions, please contact Ms.
Marilyn Garner, Senior Human Resources Generalist, 240-264-2391.
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Todd Carlson
page 2
July 5, 2000
Temporary Housing/Commuting Expenses
This offer does not include relocation, however Digex will provide suitable
temporary housing and commuting expenses on an ongoing basis while employed at
Digex. It is understood that you will be located in Dallas, Texas. However you
are expected to work a minimum of ten (10) days per month in the Washington, DC
area.
This offer is contingent on the following:
. Your acknowledgement and execution of our "Employee Agreement Regarding
Intellectual Property and Proprietary Information", which will be reviewed
and authorized by you and a company representative.
. Proof that you are legally authorized to work in the United States per
Immigration Reform Act of 1986 (see attachment A).
. Completion of the enclosed employment application.
As you know, in the ordinary course of business, pay and benefits plans evolve
as laws, employee, and / or business need change. If, in the future, it becomes
necessary to change any of the benefit or compensation plans currently in
effect, these changes will apply to you as they do to other eligible employees.
Furthermore, while this letter is our commitment to employ you in the previously
mentioned position, it does not constitute a contract for a specific length of
employment.
Kindly acknowledge your acceptance of this offer by signing and dating the
enclosed copy of this letter and returning it to me by July 14, 2000. If we do
not receive your acceptance of this offer by the close of business on the above
date, this offer will be withdrawn without further liability of either party to
the other.
If you have any questions or need additional information, please feel free to
call me at (240) 264-4712 or fax at (240) 264-2666. I am looking forward to your
joining the Digex Executive Management Team and feel it will be a mutually
beneficial relationship. I wish you success in the continuation of your career
with Digex.
Sincerely yours,
/s/ DAVID GAY
David Gay
Director of Employment
cc: M. Shull
D. Ruberg
Encl.
/s/ TODD CARLSON 7/8/00 7/1/00
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Accepted: Todd Carlson Date: Start Date:
