Employment Agreement – Exodus Communications Inc. and William M. Austin
[EXODUS LOGO]
Exodus Communications, Inc.
2831 Mission College Boulevard
Santa Clara, CA 95054-1838
408-346-2200
July 12, 2001
Mr. William M. Austin
1 Brompton Court
Houston, TX 77024
Dear Bill:
I am pleased to extend to you an offer as Executive Vice President, Finance and
Chief Financial Officer of Exodus Communications, Inc. (the "Company"). The
terms of your employment that we discussed on the phone are set forth in this
letter and Attachment A to this letter. You will also be eligible to participate
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in our health and dental insurance, 401K, employee stock purchase plan and other
employee benefits established by the Company.
As an employee of the Company, you will have access to certain Company
confidential information and you may, during the course of your employment,
development certain information or inventions, which will become the property of
the Company. You will need to sign the attached "Employee Invention Assignment
and Confidentiality Agreement" and "Procedures and Guidelines Governing
Securities Trades by Company Personnel" as conditions of your employment. We
wish to impress upon you that we do not wish you to bring any confidential or
proprietary material of any former employer or to violate any other obligation
to your former employers. Also, you represent that you are not subject to any
restrictions that prevent you from working for the Company.
Your employment is conditioned upon you passing our background investigation
and providing verification of your eligibility for employment in the U.S., which
meets the requirements of the U.S. Department of Justice.
We look forward to your becoming a part of the Exodus team. Please confirm your
acceptance of this offer at the earliest possible date, but in any event no
later than Wednesday, July 18, 2001. Also, please fax a copy of your signed
offer letter (both
Exodus Confidential Information
William Austin
Offer Letter
July 12, 2001
Page 2
[EXODUS LOGO]
Exodus Communications, Inc.
2831 Mission College Boulevard
Santa Clara, CA 95054-1838
408-346-2200
pages) and the two attachments to my attention at (408) 884-6400 (confidential
fax number). You should keep the originals for your records. This offer expires
at 5:00 Pacific time on July 18, 2001.
Your signature will acknowledge that you have read, understood and agreed to the
terms and conditions set forth in this letter and Attachment A.
Sincerely,
/s/ Grace de Latour
Grade de Latour
Executive Vice President, Human Resources
I HAVE READ AND I UNDERSTAND THE TERMS OF THE OFFER SET FORTH ABOVE AND IN
ATTACHMENT A. AS INDICATED BY MY SIGNATURE BELOW, I ACCEPT THE OFFER AS STATED
HEREIN. NO FURTHER COMMITMENTS WERE MADE TO ME AS A CONDITION OF EMPLOYMENT.
/s/ William M. Austin
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William M. Austin
Date: 7/15/01
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Exodus Confidential Information
Attachment A
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Employee: William M. Austin
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Title: Executive Vice President, Finance and Chief Financial
Officer of Exodus Communications, Inc. (the "Company"),
reporting to the Company's CEO.
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Primary Employee's primary working office shall initially be
Office: an office established by him in the Houston, Texas
area. Following the date on which Employee relocates his
residence to California, which shall be no later than
January 15, 2002, his primary working office shall be
the Company's headquarters in Santa Clara, California.
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Annual Base Salary: Employee's initial base salary will be
Compensation: $33,333.33 per month, payable bi-weekly, which is
equivalent to $400,000 per year.
Initial Bonus: $400,000 guaranteed and paid quarterly
during the first year of employment. Thereafter,
Employee shall be eligible to receive an annual target
bonus equal to 100% of Employee's base salary, subject
to the Company meeting certain business objectives.
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Equity Options to purchase two million (2,000,000) shares of
Compensation: the Company's common stock (the "Stock Options"). The
Stock Options will be issued at an exercise price equal
to the fair market value of Exodus common stock on the
first day of Employee's employment with the Company. The
Stock Options will become vested with respect to two
percent (2%) of the number of shares granted per month
starting on Employee's first date of employment until
such time as the Stock Options become fully vested as to
all of the shares. The vested Stock Options will become
exercisable starting six (6) months after the Employee's
first day of employment. The Stock Options shall be
issued pursuant to the Company's 1998 Equity Incentive
Plan and form of stock option agreement that
incorporates the terms set forth above.
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Real Estate The Company will loan to Employee an amount up to
and Relocation $3.5 million to assist Employee with the purchase of a
Assistance: new residence in the San Francisco Bay Area (the "New
Residence"). The loan amount shall not exceed the
purchase price of the New Residence. The loan will be
issued pursuant to the terms of a full recourse
promissory note (the "Note") and will be secured by the
Employee's real property in California (including
principal residence) and Company securities held by
Employee. The Note will have a term of four (4) years
and a single balloon payment at the end of the term.
There will be no interest charged on the Note and the
Company will draft the Note documentation so as to
permit these arrangements to qualify as an "employee
relocation loan" under Treas. Reg. 1.7872-5(c)(i). In
the event the Note cannot qualify at the time it is
issued as an "employee relocation loan," then, for so
long as Employee is employed by the Company, the Company
will reimburse Employee for interest expense on the
Note. The Company will also reimburse Employee for
actual reasonable closing costs on the purchase of the
New Residence. The Company will not gross up the closing
costs or, if applicable, interest expense. The Note will
become due and payable within 45 days of the last day of
Employee's employment if Employee's employment with the
Company is terminated by Employee (other than an
"Involuntary Termination" as defined below) or
terminated by the Company for Cause (as defined below).
The Company will engage and pay for a third party
company to provide Employee with assistance with the
sale and purchase of his residences. This company will
also provide relocation assistance, including packing
and unpacking of personal possessions and moving of
possessions.
Employee may decide to delay the relocation of his
family to California until his high school aged child
can be enrolled in a school reasonably acceptable to
Employee. In the event of such delay, the Company will
cover for Employee the reasonable costs of an apartment
or condominium and a leased automobile for up to six (6)
months.
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Austin Terms of Offer of Employment (071301 v3)
Exodus Confidential Information
1 of 3
Attachment A
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Change in In the event Employee's employment with the Company is
Control; terminated by Employee due to an Involuntary
Termination of Termination or by the Company other than for Cause,
Employment; Employee shall be entitled to receive his base salary,
Continued 100% of annual target bonus, and benefits for a period
Benefits: of twenty-four (24) months from the date of
termination. In addition, in the event Employee's
employment with the Company is terminated by the Company
without Cause during the first six months of his
employment, he shall be entitled to exercise the number
of shares that are vested as of his last day of
employment.
In the event of a Change in Control (as defined below)
and Employee's employment with the Company is terminated
by Employee due to an Involuntary Termination or by the
Company other than for Cause within twelve (12) months
of the effective date of such Change in Control,
Employee shall be entitled to the following benefits:
1. Base salary, 100% of annual target bonus and benefits
for a period of twenty-four (24) months from the date of
termination;
2. Employee's Stock Options that have not vested as of
the date of employment termination shall become fully
vested as of such date; and
3. A cash bonus in the approximate amount of the Note
principal.
The Company's obligation to pay any of the continued
compensation or benefits described in this section shall
be subject to Employee signing a full settlement and
release and non-competition agreement with the Company.
In the event Employee's employment with the Company is
terminated by Employee other than under circumstances
that qualify as an Involuntary Termination, or is
terminated by Company for Cause, Employee shall not be
entitled the receive from the Company any compensation
or benefits following such termination.
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Definitions: The term "Change in Control" means the occurrence of
any of the following events: (i) a merger or
consolidation involving the Company in which the
shareholders of the company immediately prior to such
merger or consolidation own less than fifty percent of
the voting power of the surviving corporation; (ii) the
sale of all or substantially all, of the assets of the
Company; or (iii) any person or group (as defined in the
Securities Exchange Act of 1934, as amended) becoming
the beneficial owner (within the meaning of Rule 13d-3
of the Securities Exchange Act of 1934, as amended),
directly or indirectly, of securities representing more
than fifty percent of the voting power of the Company
then outstanding.
The term "Involuntary Termination" means termination of
Employee's employment with the Company by Employee
within sixty (60) days after the occurrence of one or
more of the following events: (i) a material reduction
in the Employee's job title, position within the Company
and/or responsibilities; (ii) any material reduction in
Employee's base salary or any material reduction in
benefits; or (iii) a written directive from the CEO of
the Company that the Employee relocate to an office
located more than a fifty (50) mile radius from the
Company's headquarters.
The term "Cause" means Employee: (i) takes willful
action made in bad faith that results in material damage
or harm to the Company; (ii) refuses or fails to act in
accordance with any specific, legal direction or order
of the CEO or the Board; (iii) is convicted of a crime
involving dishonesty, breach of trust, or physical or
emotional harm to any person; (iv) has repeated
unexplained or unjustified absences from the Company; or
(v) breaches any material term of any agreement between
Employee and the Company; provided that Employee shall
be notified of any circumstances that may give rise to a
termination for Cause and shall be given at least ten
(10) business days from receipt of such notice to cure
such circumstances, if the circumstances may be cured.
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Austin Terms of Offer of Employment (071301 v3)
Exodus Confidential Information
Attachment A
Austin Terms of Offer of Employment (071301 v3)
Exodus Confidential Information
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