Exhibit 10
AMENDMENT NO. 1
TO
EMPLOYMENT AGREEMENT
This Amendment No. 1 dated as of April 15, 1998 (the "Amendment") to the
Employment Agreement dated as of November 7, 1995 (the "Agreement") by and
between Xxxx X. Xxxxxxxx and Open Market, Inc. (the "Company"), is entered into
by and between Xxxx X. Xxxxxxxx and the Company.
For valuable consideration, receipt of which is hereby acknowledged, the
parties hereby agree as follows:
1. The Executive and the Company hereby confirm that the Executive's annual
Base Salary and Annual Bonus for the Employment Year December 7, 1997
through December 7, 1998 shall be as specified in the minutes of the
Compensation Committee of the Board of Directors for the meeting held on
February 3, 1998 (which minutes shall not be subject to amendment for
purposes of this provision).
2. Subparagraphs 2(b) and (c) of the Agreement are hereby deleted in their
entirety and the following shall be inserted in lieu thereof:
(b) Notwithstanding the foregoing, on each anniversary of the
Commencement Date commencing with the second anniversary of such date,
Executive's employment hereunder shall be automatically extended for one
(1) year unless either Executive or the Company shall have given written
notice to the other of a desire that such automatic extension not occur,
which notice was given no later than ninety (90) days prior to the relevant
anniversary of the Commencement Date. If the Company gives Executive such
written notice, Executive shall be entitled to an aggregate payment,
payable as follows: (i) if a Change of Control (as defined below) has not
occurred prior to the termination upon expiration of the Employment Term,
in twelve substantially equal monthly installments after the expiration of
the Employment Term or (ii) if a Change of Control has occurred prior to or
upon termination upon the expiration of the Employment Term, in a lump-sum
within thirty (30) days after the expiration of the Employment Term, equal
in all cases to the sum of (x) the annual Base Salary in effect immediately
prior to such expiration, plus (y)(A) if a Change of Control has not
occurred prior to termination upon the expiration of the Employment Term,
the Annual Bonus payable pursuant to Paragraph 4 for the Employment Year
(as defined below) or full fiscal year, as the case may be, immediately
preceding such expiration date, or (B) if a
Change of Control has occurred prior to or upon the termination upon
expiration of the Employment Term, the greater of (1) the Annual Bonus
payable pursuant to Paragraph 4 for the Employment Year, or full fiscal
year, as the case may be, immediately preceding such expiration date or (2)
one half of the Highest Annual Bonus (as defined in Paragraph 11),
provided, however, in all cases that the Company shall not be obligated
-------- -------
to make, and the Executive shall not be entitled to receive, such post-
employment payments if (x) the Company does not elect to extend the
Executive's employment for "Cause" (as defined in Paragraph 9) provided the
Company provides a Notice of Termination no later than the date of
expiration of the Employment Term or (y) such failure to extend by the
Company occurs after December 7, 2000.
(c) In addition, if the Company gives Executive such written notice
and as a result Executive is entitled to receive the post-employment
payment described in subparagraph (b) of this Paragraph 2, then effective
upon the date of expiration of the Employment Term, any options held by
Executive entitling him to purchase securities of the Company (or shares of
capital stock for which securities of the Company have been exchanged in a
Business Combination (as defined below)), which are then subject to
vesting, then (i) if a Change of Control has not occurred prior to the
termination upon the expiration of the Employment Term, then and to the
extent such options are subject to vesting, such options shall be
automatically modified to accelerate such vesting by one year, and (ii) if
a Change of Control has occurred prior to the termination upon the
expiration of the Employment Term, then such options shall be automatically
accelerated and become immediately exercisable in full.
Notwithstanding the above provisions of this subparagraph 2(c)(ii), if
during the nine month period subsequent to the date of the Amendment No. 1
to this Agreement, if (a) a Change of Control (as defined below) occurs as
a result of a Business Combination and (b) the acquiring entity and the
Company desire to account for such Business Combination as a "pooling-of-
interests" business combination, as defined by Accounting Principles Board
Opinion No. 16 (or its successor) and (c) the right to acceleration of the
exercisability of all outstanding unvested options to purchase common stock
of the Company (or shares of capital stock for which such shares of common
stock of the Company have been exchanged in a Business Combination)
precludes the Business Combination to be accounted for as a pooling-of-
interests business combination, as determined by the Company's Chief
Financial Officer, then the provisions of this subparagraph 2(c) are
revoked and shall have no force or effect, but any options held by
Executive entitling him to purchase securities of the Company (or shares of
capital stock for
-2-
which such shares of common stock of the Company have been exchanged in a
Business Combination), which options are subject to vesting, shall be
automatically modified to accelerate such vesting by one year.
3. Paragraph 4 of the Agreement is hereby amended by adding the following as
subparagraph (c):
(c) In the event of the occurrence of a Change of Control (as defined
below), in addition to Executive's rights under other provisions of this
Agreement, following the occurrence of the Change of Control (the
"Effective Date"), Executive shall be entitled to receive such annual bonus
for the one year period commencing on the Effective Date as may be
determined by the Board of Directors, but in each event no less than the
annual bonus paid or payable in respect of the last full fiscal year
preceding the Effective Date the amount of which bonus was determined by
the Compensation Committee prior to such Change of Control.
4. Paragraph 5 of the Agreement is amended by adding the following as
subparagraph (d):
(d) Benefits Following a Change of Control. In the event of the
occurrence of a Change of Control, in addition to Executive's rights under
other provisions of this Agreement, for the one year period commencing on
the Effective Date, (i) Executive shall be entitled to participate in all
incentive plans, practices, policies and programs, all benefits under
welfare benefit, savings and retirement plans, practices, policies and
programs (including, without limitation, medical, prescription, dental,
disability, employee life, group life, split-dollar life, accidental death
and travel accident insurance plans and programs) and paid vacation in
accordance with the plans, practices, policies and programs provided by the
Company and its affiliated companies applicable generally to senior
executives of the Company and its affiliated companies, but in no event
shall such plans, practices, policies and programs provide the Executive
with benefits less favorable, in the aggregate, than the most favorable of
such plans, practices, policies and programs in effect for Executive at any
time during the 120-day period immediately preceding the Effective Date or,
if more favorable to the Executive, those provided generally at any time
after the Effective Date to other senior executives of the Company and its
affiliated companies, and (ii) Executive shall be entitled to receive
reimbursement for all reasonable expenses incurred by him in accordance
with the policies, practices and procedures of the Company in effect
immediately prior to the Effective Date.
-3-
5. Subparagraph 7(b) of the Agreement is hereby amended by deleting the first
two sentences thereof and inserting in their place the following:
Executive shall be considered to be totally and permanently disabled
hereunder if he is absent from his duties with the Company on a full-time
basis for six (6) months as a result of incapacity due to mental or
physical illness or injury which is determined to be total and permanent by
a physician selected by the Company or its insurers and acceptable to the
Executive or his legal representative.
6. Paragraph 8 of the Agreement is hereby amended by adding at the end of the
second paragraph thereof the following:
, except as otherwise provided in this Agreement.
7. The definition of "Good Reason" in Paragraph 8 of the Agreement is hereby
amended by deleting the word "or" at the end of clause (v), deleting the
period at the end of clause (vi) and inserting in lieu thereof the
following:
; or
(vii) after a Change of Control, the Company's requiring the Executive to
travel on Company business to a substantially greater extent than required
immediately prior to the Change of Control.
8. The definition of a "Change of Control" in Paragraph 8 of the Agreement is
hereby amended to include the following after the word "Director" in the
seventh line of Section (i) on page 8 of the Agreement:
, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of
a "person" (as such term is used in Section 13(d) of the Exchange Act or
any successor provision) other than the Board of Directors.
9. Paragraph 9 of the Agreement is hereby amended by adding at the end of the
first paragraph thereof the following:
Any Notice of Termination for Cause given after the occurrence of a Change
of Control must be given within ninety (90) days of the Board learning of
the event(s) or circumstance(s) which the Board believes constitute(s)
Cause.
-4-
10. Paragraph 9 of the Agreement is hereby further amended by deleting clause
(2) thereof and inserting in lieu thereof the following:
(2) a period of thirty (30) days has elapsed since delivery of
such notice during which Executive was afforded an opportunity to cure the
reasons for the Company's intention to terminate for Cause.
11. Paragraph 10 of the Agreement is hereby amended by adding at the end
thereof the following:
The failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing his or
the Company's rights hereunder.
12. Clause (ii) of Subparagraph 11(a) of the Agreement is hereby deleted
through the words "Termination Date" and the following shall be inserted in
lieu thereof:
(ii)(A) if a Change of Control has not occurred prior to the
effective date of such termination, the Annual Bonus payable pursuant to
Paragraph 4 for the Employment Year or full fiscal year, as the case may
be, which ended immediately preceding such Termination Date or (B) if a
Change of Control has occurred prior to or on the Termination Date, then
the greater of (1) the Annual Bonus payable pursuant to Paragraph 4 for the
Employment Year, or full fiscal year, as the case may be, which ended
immediately preceding such Termination Date or (2) one half of the Highest
Annual Bonus:
13. Subparagraph 11(a) is further amended by adding at the end of such
subparagraph the following:
The "Highest Annual Bonus" shall mean the higher of (1) the highest annual
cash bonus paid to Executive in the last two fiscal years prior to the date
of the Change of Control and (2) the annual bonus paid or payable
(including any bonus or portion thereof which has been earned but deferred
(and annualized for any fiscal year consisting of less than twelve full
months or during which the Executive was employed for less than twelve full
months), for the most recently completed fiscal year during the one year
period after the date of a Change of Control, if any.
-5-
14. Paragraph 14 of the Agreement is hereby amended by deleting the last
sentence thereof and the following shall be inserted in lieu thereof:
The amount due to Executive (or his estate) under this Paragraph 14 in
payment of any bonus, other than the Annual Bonus, shall be a
proportionate amount of the bonus that would otherwise have been due
to Executive as if such termination had not occurred, and which
proportion shall be based on the number of elapsed days in the
applicable bonus period prior to the Termination Date. The amount due
to Executive (or his estate) under this Paragraph 14 in payment of the
Annual Bonus shall be (i) if a Change of Control has not occurred
prior to the effective date of such termination, then a proportionate
amount of the bonus that would otherwise have been due to Executive as
if such termination had not occurred, or (ii) if a Change of Control
has occurred prior to or on the effective date of such termination,
then a proportionate amount of the greater of (x) the Annual Bonus
payable pursuant to Paragraph 4 for the Employment Year ended
immediately preceding such Termination Date or (y) the Highest Annual
Bonus, and which proportion in all cases shall be based on the number
of elapsed days in the applicable bonus period prior to the
Termination Date.
15. Paragraph 12 of the Agreement is hereby deleted in its entirety and the
following shall be inserted in lieu thereof:
"Effect of Termination upon Equity Compensation. In the event (a)
----------------------------------------------
Executive's employment hereunder is terminated by him for a Good Reason or
by the Company other than for either Cause or total and permanent
disability, and (b) the Executive is entitled to the payments provided in
Paragraph 11, then effective upon the Termination Date, any options held by
Executive entitling him to purchase securities of the Company (or shares of
capital stock for which securities of the Company have been exchanged in a
Business Combination), which options are subject to vesting, shall become
immediately exercisable in full."
Notwithstanding the above, if during the nine-month period subsequent
to the date of the Amendment No. 1 to this Agreement, (a) a Change of
Control occurs as a result of a Business Combination and (b) the acquiring
entity and the Company desire to account for such Business Combination as a
"pooling-of-interests" business combination, as defined by Accounting
Principles Board Opinion No. 16 (or its successor) and (c) the right to the
acceleration of the exercisability of all outstanding unvested options to
purchase Common Stock of the Company (or shares of capital stock for which
securities of the Company have been exchanged in a Business Combination)
precludes the Business Combination to be accounted for as a pooling-of-
interests business combination, as determined by the Company's Chief
Financial Officer, then the provisions of this Section 2 are revoked and
shall have no force or effect, but any options held by Executive entitling
him to purchase securities of the Company (or shares of capital stock for
which
-6-
securities of the Company have been exchanged in a Business Combination),
which options are subject to vesting, shall be automatically modified to
accelerate such vesting by one year.
16. Paragraph 18 is hereby amended by changing the title thereof to
"Mitigation; Full Settlement" and the following shall be inserted at the
end of such paragraph:
The Company's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against the Executive (under
this Agreement or otherwise) or others.
17. Paragraph 19(1) is hereby amended by adding at the end of such paragraph
the following:
The Company shall pay such fees and expenses as incurred. Notwithstanding
the first sentence of this paragraph, Executive shall have no obligation to
reimburse the Company with respect to any fees or expenses incurred after a
Change of Control. In addition, after a Change of Control, the Company
shall pay interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986,
as amended.
18. The Agreement is further amended by adding the following as Section 20:
20. Termination Prior to Change of Control. Anything in this
--------------------------------------
Agreement to the contrary notwithstanding, if a Change of Control occurs
and if the Executive's employment with the Company is terminated prior to
the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment (i) was
at the request of a third party who has taken steps reasonably calculated
to effect a Change of Control or (ii) otherwise arose in connection with or
anticipation of a Change of Control, then for all purposes of this
Agreement such termination shall be treated as occurring after a Change of
Control.
-7-
19. Except as amended hereby, the Agreement shall remain in full force and
effect.
20. This Amendment may be executed in one or more counterparts, each of which
shall be deemed to be an original, but all of which shall be one and the
same document.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first written above.
OPEN MARKET, INC.
/s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
and Chief Financial Officer
/s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Xxxx X. Xxxxxxxx
-8-
