Digex Incorporated Senior Vice President of Business Operations Employment Offer Letter to Todd Carlson

Summary

Digex Incorporated offers Todd Carlson the position of Senior Vice President of Business Operations, requiring part-time work in Washington, DC, with a base salary of $125,000 and eligibility for a 50% bonus. The offer includes stock options, employee benefits, and temporary housing and commuting expenses. Employment is contingent on signing an intellectual property agreement, proof of work authorization, and completion of an application. The letter clarifies that it is not a contract for a specific employment term and requires acceptance by July 14, 2000.

EX-10.5 6 0006.txt EXHIBIT 10.5 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 ###-###-####. 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 ###-###-#### or fax at ###-###-####. 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 - ---------------------------- ---------- ------------- Accepted: Todd Carlson Date: Start Date: