x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE |
04-2921333 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification
No.) | |
100 Brickstone Square |
01810 | |
Andover, Massachusetts |
(Zip Code) | |
(Address of principal executive offices) |
Common Stock, par value $.01 per share |
392,449,546 | |
Class |
Number of shares outstanding |
Page Number | ||||
Part I. FINANCIAL INFORMATION |
||||
Item 1. |
Condensed Consolidated Financial Statements |
|||
3 | ||||
4 | ||||
5 | ||||
6 | ||||
Item 2. |
21 | |||
Item 3. |
53 | |||
Part II. OTHER INFORMATION |
||||
Item 1. |
54 | |||
Item 6. |
55 | |||
56 | ||||
57 |
April 30, 2002 |
July 31, 2001
|
|||||||
(Unaudited) |
||||||||
(in thousands, except share and per share amounts) |
||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
328,903 |
|
$ |
710,704 |
| ||
Available-for-sale securities |
|
26,170 |
|
|
110,134 |
| ||
Trading security |
|
114,974 |
|
|
|
| ||
Accounts receivable, trade, net of allowance for doubtful accounts |
|
62,988 |
|
|
111,593 |
| ||
Inventories |
|
41,319 |
|
|
40,141 |
| ||
Prepaid expenses and other current assets |
|
67,401 |
|
|
53,132 |
| ||
|
|
|
|
|
| |||
Total current assets |
|
641,755 |
|
|
1,025,704 |
| ||
|
|
|
|
|
| |||
Property and equipment, net |
|
135,049 |
|
|
209,554 |
| ||
Investments in affiliates |
|
69,411 |
|
|
239,127 |
| ||
Goodwill and other intangible assets, net of accumulated amortization |
|
271,718 |
|
|
464,867 |
| ||
Other assets |
|
40,182 |
|
|
149,679 |
| ||
|
|
|
|
|
| |||
$ |
1,158,115 |
|
$ |
2,088,931 |
| |||
|
|
|
|
|
| |||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Notes payable |
$ |
114,974 |
|
$ |
33,594 |
| ||
Current installments of long-term debt |
|
736 |
|
|
6,213 |
| ||
Accounts payable |
|
45,243 |
|
|
69,841 |
| ||
Accrued expenses |
|
238,905 |
|
|
280,023 |
| ||
Other current liabilities |
|
16,213 |
|
|
54,717 |
| ||
|
|
|
|
|
| |||
Total current liabilities |
|
416,071 |
|
|
444,388 |
| ||
|
|
|
|
|
| |||
Long-term debt, less current installments |
|
6,878 |
|
|
1,814 |
| ||
Deferred income taxes |
|
|
|
|
20,795 |
| ||
Other long-term liabilities |
|
7,121 |
|
|
19,097 |
| ||
Due to Hewlett-Packard Company and Hewlett-Packard Financial Services Corporation, net of $33,061
discount |
|
21,939 |
|
|
220,000 |
| ||
Minority interest |
|
100,774 |
|
|
186,440 |
| ||
Commitments and contingencies |
||||||||
Preferred stock, $0.01 par value per share. Authorized 5,000,000 shares; issued 375,000 Series C convertible,
redeemable preferred stock at July 31, 2001, dividend at 2% per annum; zero outstanding as of April 30, 2002 and 375,000 outstanding as of July 31, 2001; carried at liquidation value |
|
|
|
|
390,640 |
| ||
Stockholders equity: |
||||||||
Common stock, $0.01 par value per share. Authorized 1,400,000,000 shares; issued and outstanding 392,174,370 shares
at April 30, 2002 and 346,725,404 shares at July 31, 2001 |
|
3,921 |
|
|
3,467 |
| ||
Additional paid-in capital |
|
7,289,976 |
|
|
7,138,132 |
| ||
Deferred compensation |
|
|
|
|
(291 |
) | ||
Accumulated deficit |
|
(6,690,347 |
) |
|
(6,353,233 |
) | ||
|
|
|
|
|
| |||
|
603,550 |
|
|
788,075 |
| |||
Accumulated other comprehensive income |
|
1,782 |
|
|
17,682 |
| ||
|
|
|
|
|
| |||
Total stockholders equity |
|
605,332 |
|
|
805,757 |
| ||
|
|
|
|
|
| |||
$ |
1,158,115 |
|
$ |
2,088,931 |
| |||
|
|
|
|
|
|
Three Months Ended April 30, |
Nine Months Ended April 30, |
|||||||||||||||
2002 |
2001 |
2002 |
2001 |
|||||||||||||
(in thousands, except per share amounts) |
||||||||||||||||
Net revenue |
$ |
187,385 |
|
$ |
290,313 |
|
$ |
599,842 |
|
$ |
987,245 |
| ||||
Operating expenses (benefit): |
||||||||||||||||
Cost of revenue |
|
169,444 |
|
|
261,224 |
|
|
530,299 |
|
|
900,749 |
| ||||
Research and development |
|
13,460 |
|
|
35,621 |
|
|
46,483 |
|
|
133,383 |
| ||||
In-process research and development |
|
|
|
|
|
|
|
|
|
|
1,462 |
| ||||
Selling |
|
34,987 |
|
|
82,691 |
|
|
113,978 |
|
|
333,334 |
| ||||
General and administrative |
|
38,429 |
|
|
64,999 |
|
|
122,395 |
|
|
224,491 |
| ||||
Amortization of intangible assets and stock-based compensation |
|
63,543 |
|
|
247,439 |
|
|
193,209 |
|
|
1,379,456 |
| ||||
Impairment |
|
(548 |
) |
|
609,491 |
|
|
47,353 |
|
|
2,678,063 |
| ||||
Restructuring |
|
1,721 |
|
|
18,526 |
|
|
13,951 |
|
|
127,398 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total operating expenses |
|
321,036 |
|
|
1,319,991 |
|
|
1,067,668 |
|
|
5,778,336 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating loss |
|
(133,651 |
) |
|
(1,029,678 |
) |
|
(467,826 |
) |
|
(4,791,091 |
) | ||||
Other income (expense): |
||||||||||||||||
Interest income |
|
2,492 |
|
|
12,517 |
|
|
12,361 |
|
|
44,432 |
| ||||
Interest expense, net |
|
(5,292 |
) |
|
(6,637 |
) |
|
(2,917 |
) |
|
(39,634 |
) | ||||
Other gains (losses), net |
|
(7,441 |
) |
|
(48,155 |
) |
|
(34,125 |
) |
|
72,271 |
| ||||
Gains (losses) on issuance of stock by subsidiaries |
|
|
|
|
(432 |
) |
|
|
|
|
122,438 |
| ||||
Equity in losses of affiliates |
|
(2,003 |
) |
|
(9,948 |
) |
|
(15,396 |
) |
|
(39,376 |
) | ||||
Minority interest |
|
5,683 |
|
|
53,564 |
|
|
37,594 |
|
|
393,323 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
(6,561 |
) |
|
909 |
|
|
(2,483 |
) |
|
553,454 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Loss before income taxes and extraordinary item |
|
(140,212 |
) |
|
(1,028,769 |
) |
|
(470,309 |
) |
|
(4,237,637 |
) | ||||
Income tax benefit |
|
(15,000 |
) |
|
(42,130 |
) |
|
(2,421 |
) |
|
(76,760 |
) | ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Loss before extraordinary item |
|
(125,212 |
) |
|
(986,639 |
) |
|
(467,888 |
) |
|
(4,160,877 |
) | ||||
Extraordinary item: |
||||||||||||||||
Gain on extinguishment of notes payable to Hewlett-Packard Company |
|
|
|
|
|
|
|
133,075 |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net loss |
$ |
(125,212 |
) |
$ |
(986,639 |
) |
$ |
(334,813 |
) |
$ |
(4,160,877 |
) | ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Reconciliation of net loss to net loss available to common stockholders: |
||||||||||||||||
Net loss |
$ |
(125,212 |
) |
$ |
(986,639 |
) |
$ |
(334,813 |
) |
$ |
(4,160,877 |
) | ||||
Preferred stock accretion |
|
|
|
|
(1,829 |
) |
|
(2,301 |
) |
|
(5,609 |
) | ||||
Gain on repurchase of Series C Convertible Preferred stock |
|
|
|
|
|
|
|
63,505 |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net loss available to common stockholders |
$ |
(125,212 |
) |
$ |
(988,468 |
) |
$ |
(273,609 |
) |
$ |
(4,166,486 |
) | ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Basic and diluted loss per share available to common stockholders: |
||||||||||||||||
Loss available to common stockholders |
$ |
(0.32 |
) |
$ |
(2.87 |
) |
$ |
(1.08 |
) |
$ |
(12.82 |
) | ||||
Gain on extinguishment of notes payable to Hewlett-Packard Company |
|
|
|
|
|
|
|
0.35 |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net loss per share available to common stockholders |
$ |
(0.32 |
) |
$ |
(2.87 |
) |
$ |
(0.73 |
) |
$ |
(12.82 |
) | ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Shares used in computing basic and diluted loss per share |
|
392,025 |
|
|
344,186 |
|
|
375,603 |
|
|
324,999 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended April 30, |
||||||||
2002 |
2001 |
|||||||
(in thousands) |
||||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ |
(334,813 |
) |
$ |
(4,160,877 |
) | ||
Adjustments to reconcile net loss to net cash used for operating activities: |
||||||||
Depreciation, amortization and impairment charges |
|
317,450 |
|
|
4,158,361 |
| ||
Deferred income taxes |
|
(2,421 |
) |
|
(77,537 |
) | ||
Non-operating gains, net |
|
(124,991 |
) |
|
(194,709 |
) | ||
Equity in losses of affiliates |
|
15,396 |
|
|
39,376 |
| ||
Minority interest |
|
(37,594 |
) |
|
(393,323 |
) | ||
In-process research and development |
|
|
|
|
1,462 |
| ||
Changes in operating assets and liabilities, excluding effects from acquired and divested companies: |
||||||||
Trade accounts receivable |
|
46,457 |
|
|
98,580 |
| ||
Prepaid expenses and other current assets |
|
(13,314 |
) |
|
(30,777 |
) | ||
Accounts payable and accrued expenses |
|
(106,159 |
) |
|
(37,459 |
) | ||
Deferred revenues |
|
(6,272 |
) |
|
(10,138 |
) | ||
Refundable and accrued income taxes, net |
|
28,145 |
|
|
(6,094 |
) | ||
Other assets and liabilities |
|
(740 |
) |
|
6,532 |
| ||
|
|
|
|
|
| |||
Net cash used for operating activities |
|
(218,856 |
) |
|
(606,603 |
) | ||
|
|
|
|
|
| |||
Cash flows from investing activities: |
||||||||
Additions to property and equipment |
|
(37,925 |
) |
|
(91,347 |
) | ||
Net proceeds from maturities of (purchases of) available-for-sale securities |
|
22,366 |
|
|
20,971 |
| ||
Proceeds from liquidation of stock investments |
|
20,851 |
|
|
954,453 |
| ||
Proceeds from sale of property and equipment |
|
|
|
|
35,779 |
| ||
Investments in affiliates |
|
1,662 |
|
|
(64,941 |
) | ||
Cash impact of acquisitions and divestitures of subsidiaries |
|
61 |
|
|
(14,432 |
) | ||
Other |
|
3,384 |
|
|
(240 |
) | ||
|
|
|
|
|
| |||
Net cash provided by investing activities |
|
10,399 |
|
|
840,243 |
| ||
|
|
|
|
|
| |||
Cash flows from financing activities: |
||||||||
Net repayments of obligations under capital leases |
|
(22,429 |
) |
|
(40,476 |
) | ||
Net proceeds from (repayments of) notes payable |
|
(75,000 |
) |
|
(2,082 |
) | ||
Net proceeds from (repayments of) long-term debt |
|
23,281 |
|
|
(3,482 |
) | ||
Payment for retirement of Series C Convertible Preferred Stock |
|
(100,301 |
) |
|
|
| ||
Net proceeds from issuance of common stock |
|
1,012 |
|
|
16,955 |
| ||
Net proceeds from issuance of stock by subsidiaries |
|
93 |
|
|
6,535 |
| ||
Other |
|
|
|
|
(4,926 |
) | ||
|
|
|
|
|
| |||
Net cash used for financing activities |
|
(173,344 |
) |
|
(27,476 |
) | ||
|
|
|
|
|
| |||
Net increase (decrease) in cash and cash equivalents |
|
(381,801 |
) |
|
206,164 |
| ||
|
|
|
|
|
| |||
Cash and cash equivalents at beginning of period |
|
710,704 |
|
|
639,666 |
| ||
|
|
|
|
|
| |||
Cash and cash equivalents at end of period |
$ |
328,903 |
|
$ |
845,830 |
| ||
|
|
|
|
|
|
Three Months Ended April 30, |
Nine Months Ended April 30, |
|||||||||||||||
2002 |
2001 |
2002 |
2001 |
|||||||||||||
(in thousands) |
||||||||||||||||
(unaudited) |
||||||||||||||||
Gain (loss) on sales of marketable securities |
$ |
(798 |
) |
$ |
(116 |
) |
$ |
(31,801 |
) |
$ |
263,475 |
| ||||
Gain (loss) on derivative and sale of hedged Yahoo!, Inc. common stock |
|
|
|
|
(1,493 |
) |
|
53,897 |
|
|
85,164 |
| ||||
Gain on sale of investment in eGroups, Inc. |
|
|
|
|
|
|
|
|
|
|
8,114 |
| ||||
Loss on impairment of marketable securities |
|
(474 |
) |
|
(322 |
) |
|
(2,182 |
) |
|
(149,108 |
) | ||||
Loss on impairment of investments in affiliates |
|
(6,374 |
) |
|
(26,078 |
) |
|
(33,390 |
) |
|
(29,640 |
) | ||||
Loss on sale of Activate.Net Corporation, Inc. |
|
|
|
|
|
|
|
(20,743 |
) |
|
|
| ||||
Loss on sale of Raging Bull, Inc. |
|
|
|
|
|
|
|
|
|
|
(95,896 |
) | ||||
Loss on sale of Signatures SNI, Inc. |
|
|
|
|
(18,499 |
) |
|
|
|
|
(18,499 |
) | ||||
Gain on sale of NaviSite, Inc. streaming division |
|
522 |
|
|
|
|
|
522 |
|
|
|
| ||||
Gain on sale of real estate holding |
|
|
|
|
|
|
|
|
|
|
19,801 |
| ||||
Gain (loss) on mark-to-market adjustment for trading security |
|
(2,865 |
) |
|
|
|
|
20 |
|
|
|
| ||||
Other, net |
|
2,548 |
|
|
(1,647 |
) |
|
(448 |
) |
|
(11,140 |
) | ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
$ |
(7,441 |
) |
$ |
(48,155 |
) |
$ |
(34,125 |
) |
$ |
72,271 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
Employee Related Expenses |
Contractual Obligations |
Asset Impairments |
Total |
|||||||||||||
(in thousands) |
||||||||||||||||
(unaudited) |
||||||||||||||||
Accrued restructuring balance at July 31, 2001 |
$ |
4,168 |
|
$ |
91,384 |
|
$ |
|
|
$ |
95,552 |
| ||||
Q1 Restructuring |
|
5,916 |
|
|
13,621 |
|
|
18,589 |
|
|
38,126 |
| ||||
Q2 Restructuring |
|
1,140 |
|
|
235 |
|
|
662 |
|
|
2,037 |
| ||||
Q3 Restructuring |
|
918 |
|
|
3,456 |
|
|
400 |
|
|
4,774 |
| ||||
Restructuring adjustments |
|
|
|
|
(30,986 |
) |
|
|
|
|
(30,986 |
) | ||||
Cash charges |
|
(10,176 |
) |
|
(36,769 |
) |
|
|
|
|
(46,945 |
) | ||||
Non-cash charges |
|
|
|
|
(10,767 |
) |
|
(19,651 |
) |
|
(30,418 |
) | ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Accrued restructuring balance at April 30, 2002 |
$ |
1,966 |
|
$ |
30,174 |
|
$ |
|
|
$ |
32,140 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended April 30, |
Nine Months Ended April 30, | |||||||||||||
2002 |
2001 |
2002 |
2001 | |||||||||||
(in thousands) | ||||||||||||||
(unaudited) | ||||||||||||||
Cost of revenue |
$ |
(2,440 |
) |
$ |
439 |
$ |
(17,562 |
) |
$ |
40,607 | ||||
Research and development |
|
(19 |
) |
|
779 |
|
3,404 |
|
|
13,737 | ||||
Selling |
|
261 |
|
|
5,407 |
|
8,907 |
|
|
26,327 | ||||
General and administrative |
|
3,919 |
|
|
11,901 |
|
19,202 |
|
|
46,727 | ||||
|
|
|
|
|
|
|
|
|
| |||||
$ |
1,721 |
|
$ |
18,526 |
$ |
13,951 |
|
$ |
127,398 | |||||
|
|
|
|
|
|
|
|
|
|
Three Months Ended April
30, |
Nine Months Ended April
30, |
|||||||||||||||
2002 |
2001 |
2002 |
2001 |
|||||||||||||
(in thousands) |
||||||||||||||||
(unaudited) |
||||||||||||||||
Net revenue: |
||||||||||||||||
Enterprise Software and Services |
$ |
36,522 |
|
$ |
88,612 |
|
$ |
122,674 |
|
$ |
350,236 |
| ||||
eBusiness and Fulfillment |
|
140,582 |
|
|
166,197 |
|
|
427,473 |
|
|
528,524 |
| ||||
Managed Application Services |
|
10,070 |
|
|
30,932 |
|
|
43,159 |
|
|
92,736 |
| ||||
Portals (formerly Search and Portals) |
|
211 |
|
|
4,572 |
|
|
6,536 |
|
|
15,749 |
| ||||
Other |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
$ |
187,385 |
|
$ |
290,313 |
|
$ |
599,842 |
|
$ |
987,245 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating loss: |
||||||||||||||||
Enterprise Software and Services |
$ |
(68,279 |
) |
$ |
(833,802 |
) |
$ |
(223,201 |
) |
$ |
(4,097,664 |
) | ||||
eBusiness and Fulfillment |
|
(53,536 |
) |
|
(55,032 |
) |
|
(135,315 |
) |
|
(134,629 |
) | ||||
Managed Application Services |
|
(1,373 |
) |
|
(89,588 |
) |
|
(63,562 |
) |
|
(308,840 |
) | ||||
Portals (formerly Search and Portals) |
|
(95 |
) |
|
(26,911 |
) |
|
(6,391 |
) |
|
(179,750 |
) | ||||
Other |
|
(10,368 |
) |
|
(24,345 |
) |
|
(39,357 |
) |
|
(70,208 |
) | ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
$ |
(133,651 |
) |
$ |
(1,029,678 |
) |
$ |
(467,826 |
) |
$ |
(4,791,091 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Pro forma operating income (loss): |
||||||||||||||||
Enterprise Software and Services |
$ |
(22,598 |
) |
$ |
(55,720 |
) |
$ |
(63,463 |
) |
$ |
(230,936 |
) | ||||
eBusiness and Fulfillment |
|
(20,690 |
) |
|
(3,610 |
) |
|
(37,424 |
) |
|
(10,008 |
) | ||||
Managed Application Services |
|
(3,032 |
) |
|
(47,648 |
) |
|
(34,899 |
) |
|
(188,170 |
) | ||||
Portals (formerly Search and Portals) |
|
353 |
|
|
(2,155 |
) |
|
60 |
|
|
(39,996 |
) | ||||
Other |
|
(8,497 |
) |
|
(22,557 |
) |
|
(29,246 |
) |
|
(65,473 |
) | ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
$ |
(54,464 |
) |
$ |
(131,690 |
) |
$ |
(164,972 |
) |
$ |
(534,583 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended April 30, |
Nine Months Ended April 30, |
|||||||||||||||
2002 |
2001 |
2002 |
2001 |
|||||||||||||
(in thousands) |
||||||||||||||||
(unaudited) |
||||||||||||||||
Net loss |
$ |
(125,212 |
) |
$ |
(986,639 |
) |
$ |
(334,813 |
) |
$ |
(4,160,877 |
) | ||||
Net unrealized holding gain (loss) arising during period |
|
(4,169 |
) |
|
(38,528 |
) |
|
(32,156 |
) |
|
(557,443 |
) | ||||
Reclassification adjustment for realized loss in net loss |
|
3,212 |
|
|
501 |
|
|
16,256 |
|
|
(17,090 |
) | ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Comprehensive loss |
$ |
(126,169 |
) |
$ |
(1,024,666 |
) |
$ |
(350,713 |
) |
$ |
(4,735,410 |
) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
J. CONDENSED |
CONSOLIDATED STATEMENTS OF CASH FLOWS SUPPLEMENTAL INFORMATION |
Nine Months Ended April 30, | ||||||
2002 |
2001 | |||||
(in thousands) | ||||||
(unaudited) | ||||||
Cash paid during the period for: |
||||||
Interest |
$ |
942 |
$ |
5,296 | ||
|
|
|
| |||
Income taxes |
$ |
1,341 |
$ |
16,794 | ||
|
|
|
| |||
Cash received during the period for: |
||||||
Federal income tax refund |
$ |
13,975 |
$ |
| ||
|
|
|
|
L. AGREEMENTS |
WITH HEWLETT-PACKARD COMPANY AND HEWLETT-PACKARD FINANCIAL SERVICES CORPORATION |
Three Months Ended April 30, 2002 |
As a % of Total Net Revenue |
Three Months Ended April 30, 2001 |
As a % of Total Net Revenue |
$ Change |
% Change |
||||||||||||||
($ in thousands) |
|||||||||||||||||||
Enterprise Software and Services |
$ |
36,522 |
20 |
% |
$ |
88,612 |
30 |
% |
$ |
(52,090 |
) |
(59 |
)% | ||||||
eBusiness and Fulfillment |
|
140,582 |
75 |
% |
|
166,197 |
57 |
% |
|
(25,615 |
) |
(15 |
)% | ||||||
Managed Application Services |
|
10,070 |
5 |
% |
|
30,932 |
11 |
% |
|
(20,862 |
) |
(67 |
)% | ||||||
Portals |
|
211 |
0 |
% |
|
4,572 |
2 |
% |
|
(4,361 |
) |
(95 |
)% | ||||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|||||||||||||
Total |
$ |
187,385 |
100 |
% |
$ |
290,313 |
100 |
% |
$ |
(102,928 |
) |
(35 |
)% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended April 30, 2002 |
As a % of Segment Net Revenue |
Three Months Ended April 30, 2001 |
As a % of Segment Net Revenue |
$ Change |
% Change |
|||||||||||||||
($ in thousands) |
||||||||||||||||||||
Enterprise Software and Services |
$ |
19,062 |
|
52 |
% |
$ |
55,119 |
62 |
% |
$ |
(36,057 |
) |
(65 |
)% | ||||||
eBusiness and Fulfillment |
|
138,755 |
|
99 |
% |
|
147,676 |
89 |
% |
|
(8,921 |
) |
(6 |
)% | ||||||
Managed Application Services |
|
11,668 |
|
116 |
% |
|
54,304 |
176 |
% |
|
(42,636 |
) |
(79 |
)% | ||||||
Portals |
|
(41 |
) |
(19 |
)% |
|
4,125 |
90 |
% |
|
(4,166 |
) |
(101 |
)% | ||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total |
$ |
169,444 |
|
90 |
% |
$ |
261,224 |
90 |
% |
$ |
(91,780 |
) |
(35 |
)% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended April 30, 2002 |
As a % of Segment Net Revenue |
Three Months Ended April 30, 2001 |
As a % of Segment Net Revenue |
$ Change |
% Change |
||||||||||||||
($ in thousands) |
|||||||||||||||||||
Enterprise Software and Services |
$ |
12,457 |
34 |
% |
$ |
28,846 |
33 |
% |
$ |
(16,389 |
) |
(57 |
)% | ||||||
Managed Application Services |
|
1,003 |
10 |
% |
|
5,377 |
17 |
% |
|
(4,374 |
) |
(81 |
)% | ||||||
Portals |
|
|
|
|
|
1,398 |
31 |
% |
|
(1,398 |
) |
(100 |
)% | ||||||
|
|
|
|
|
|
|
|||||||||||||
Total |
$ |
13,460 |
7 |
% |
$ |
35,621 |
12 |
% |
$ |
(22,161 |
) |
(62 |
)% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended April 30, 2002 |
As a % of Segment Net Revenue |
Three Months Ended April 30, 2001 |
As a % of Segment Net Revenue |
$ Change |
% Change |
|||||||||||||||
($ in thousands) |
||||||||||||||||||||
Enterprise Software and Services |
$ |
18,165 |
|
50 |
% |
$ |
51,009 |
58 |
% |
$ |
(32,844 |
) |
(64 |
)% | ||||||
eBusiness and Fulfillment |
|
14,032 |
|
10 |
% |
|
14,317 |
9 |
% |
|
(285 |
) |
(2 |
)% | ||||||
Managed Application Services |
|
2,730 |
|
27 |
% |
|
11,393 |
37 |
% |
|
(8,663 |
) |
(76 |
)% | ||||||
Portals |
|
(97 |
) |
(46 |
)% |
|
922 |
20 |
% |
|
(1,019 |
) |
(111 |
)% | ||||||
Other |
|
157 |
|
|
|
|
5,050 |
|
|
|
(4,893 |
) |
(97 |
)% | ||||||
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ |
34,987 |
|
19 |
% |
$ |
82,691 |
28 |
% |
$ |
(47,704 |
) |
(58 |
)% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended April 30, 2002 |
As a % of Segment Net Revenue |
Three Months Ended April 30, 2001 |
As a % of Segment Net Revenue |
$ Change |
% Change |
||||||||||||||
($ in thousands) |
|||||||||||||||||||
Enterprise Software and Services |
$ |
15,356 |
42 |
% |
$ |
21,691 |
24 |
% |
$ |
(6,335 |
) |
(29 |
)% | ||||||
eBusiness and Fulfillment |
|
10,928 |
8 |
% |
|
9,398 |
6 |
% |
|
1,530 |
|
16 |
% | ||||||
Managed Application Services |
|
2,656 |
26 |
% |
|
13,900 |
45 |
% |
|
(11,244 |
) |
(81 |
)% | ||||||
Portals |
|
|
|
|
|
770 |
17 |
% |
|
(770 |
) |
(100 |
)% | ||||||
Other |
|
9,489 |
|
|
|
19,240 |
|
|
|
(9,751 |
) |
(51 |
)% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total |
$ |
38,429 |
21 |
% |
$ |
64,999 |
22 |
% |
$ |
(26,570 |
) |
(41 |
)% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended April 30, 2002 |
As a % of Segment Net Revenue |
Three Months Ended April 30, 2001 |
As a % of Segment Net Revenue |
$ Change |
% Change |
||||||||||||||
($ in thousands) |
|||||||||||||||||||
Enterprise Software and Services |
$ |
33,018 |
90 |
% |
$ |
168,263 |
190 |
% |
$ |
(135,245 |
) |
(80 |
)% | ||||||
eBusiness and Fulfillment |
|
30,403 |
22 |
% |
|
49,838 |
30 |
% |
|
(19,435 |
) |
(39 |
)% | ||||||
Managed Application Services |
|
67 |
1 |
% |
|
5,168 |
17 |
% |
|
(5,101 |
) |
(99 |
)% | ||||||
Portals |
|
|
|
|
|
24,115 |
527 |
% |
|
(24,115 |
) |
(100 |
)% | ||||||
Other |
|
55 |
|
|
|
55 |
|
|
|
|
|
0 |
% | ||||||
|
|
|
|
|
|
|
|||||||||||||
Total |
$ |
63,543 |
34 |
% |
$ |
247,439 |
85 |
% |
$ |
(183,896 |
) |
(74 |
)% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended April 30, 2002 |
As a % of Segment Net Revenue |
Three Months Ended April 30, 2001 |
As a % of Segment Net Revenue |
$ Change |
% Change |
|||||||||||||||
($ in thousands) |
||||||||||||||||||||
Enterprise Software and Services |
$ |
3,619 |
|
10 |
% |
$ |
579,113 |
654 |
% |
$ |
(575,494 |
) |
(99 |
)% | ||||||
Managed Application Services |
|
(3,986 |
) |
(40 |
)% |
|
30,378 |
98 |
% |
|
(34,364 |
) |
(113 |
)% | ||||||
Other |
|
(181 |
) |
|
|
|
|
|
|
|
(181 |
) |
100 |
% | ||||||
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ |
(548 |
) |
0 |
% |
$ |
609,491 |
210 |
% |
$ |
(610,039 |
) |
(100 |
)% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended April 30, 2002 |
As a % of Segment Net Revenue |
Three Months Ended April 30, 2001 |
As a % of Segment Net Revenue |
$ Change |
% Change |
|||||||||||||||
($ in thousands) |
||||||||||||||||||||
Enterprise Software and Services |
$ |
3,124 |
|
9 |
% |
$ |
18,373 |
21 |
% |
$ |
(15,249 |
) |
(83 |
)% | ||||||
Managed Application Services |
|
(2,695 |
) |
(27 |
)% |
|
|
|
|
|
(2,695 |
) |
(100 |
)% | ||||||
Portals |
|
444 |
|
210 |
% |
|
153 |
3 |
% |
|
291 |
|
190 |
% | ||||||
Other |
|
848 |
|
|
|
|
|
|
|
|
848 |
|
100 |
% | ||||||
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ |
1,721 |
|
1 |
% |
$ |
18,526 |
6 |
% |
$ |
(16,805 |
) |
(91 |
)% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended April 30, 2002 |
As a % of Total Net Revenue |
Nine Months Ended April 30, 2001 |
As a % of Total Net Revenue |
$ Change |
% Change |
||||||||||||||
($ in thousands) |
|||||||||||||||||||
Enterprise Software and Services |
$ |
122,674 |
21 |
% |
$ |
350,236 |
35 |
% |
$ |
(227,562 |
) |
(65 |
)% | ||||||
eBusiness and Fulfillment |
|
427,473 |
71 |
% |
|
528,524 |
54 |
% |
|
(101,051 |
) |
(19 |
)% | ||||||
Managed Application Services |
|
43,159 |
7 |
% |
|
92,736 |
9 |
% |
|
(49,577 |
) |
(53 |
)% | ||||||
Portals |
|
6,536 |
1 |
% |
|
15,749 |
2 |
% |
|
(9,213 |
) |
(58 |
)% | ||||||
|
|
|
|
|
|
|
|||||||||||||
Total |
$ |
599,842 |
100 |
% |
$ |
987,245 |
100 |
% |
$ |
(387,403 |
) |
(39 |
)% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended April 30, 2002 |
As a % of Segment Net Revenue |
Nine Months Ended April 30, 2001 |
As a % of Segment Net Revenue |
$ Change |
% Change |
||||||||||||||
($ in thousands) |
|||||||||||||||||||
Enterprise Software and Services |
$ |
64,721 |
53 |
% |
$ |
214,121 |
61 |
% |
$ |
(149,400 |
) |
(70 |
)% | ||||||
eBusiness and Fulfillment |
|
400,397 |
94 |
% |
|
468,642 |
89 |
% |
|
(68,245 |
) |
(15 |
)% | ||||||
Managed Application Services |
|
61,237 |
142 |
% |
|
189,563 |
204 |
% |
|
(128,326 |
) |
(68 |
)% | ||||||
Portals |
|
3,944 |
60 |
% |
|
28,423 |
180 |
% |
|
(24,479 |
) |
(86 |
)% | ||||||
|
|
|
|
|
|
|
|||||||||||||
Total |
$ |
530,299 |
88 |
% |
$ |
900,749 |
91 |
% |
$ |
(370,450 |
) |
(41 |
)% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended April 30, 2002 |
As a % of Segment Net Revenue |
Nine Months Ended April 30, 2001 |
As a % of Segment Net Revenue |
$ Change |
% Change |
||||||||||||||
($ in thousands) |
|||||||||||||||||||
Enterprise Software and Services |
$ |
39,357 |
32 |
% |
$ |
103,820 |
30 |
% |
$ |
(64,463 |
) |
(62 |
)% | ||||||
eBusiness and Fulfillment |
|
|
|
|
|
703 |
|
|
|
(703 |
) |
(100 |
)% | ||||||
Managed Application Services |
|
5,432 |
13 |
% |
|
20,088 |
22 |
% |
|
(14,656 |
) |
(73 |
)% | ||||||
Portals |
|
1,694 |
26 |
% |
|
8,772 |
56 |
% |
|
(7,078 |
) |
(81 |
)% | ||||||
Other |
|
|
|
|
|
|
|
|
|
|
|
N/A |
| ||||||
|
|
|
|
|
|
|
|||||||||||||
Total |
$ |
46,483 |
8 |
% |
$ |
133,383 |
14 |
% |
$ |
(86,900 |
) |
(65 |
)% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended April 30, 2002 |
As a % of Segment Net Revenue |
Nine Months Ended April 30, 2001 |
As a % of Segment Net Revenue |
$ Change |
% Change |
||||||||||||||
($ in thousands) |
|||||||||||||||||||
Enterprise Software and Services |
$ |
61,453 |
50 |
% |
$ |
220,210 |
63 |
% |
$ |
(158,757 |
) |
(72 |
)% | ||||||
eBusiness and Fulfillment |
|
41,434 |
10 |
% |
|
43,591 |
8 |
% |
|
(2,157 |
) |
(5 |
)% | ||||||
Managed Application Services |
|
8,996 |
21 |
% |
|
47,170 |
51 |
% |
|
(38,174 |
) |
(81 |
)% | ||||||
Portals |
|
740 |
11 |
% |
|
11,274 |
72 |
% |
|
(10,534 |
) |
(93 |
)% | ||||||
Other |
|
1,355 |
|
|
|
11,089 |
|
|
|
(9,734 |
) |
(88 |
)% | ||||||
|
|
|
|
|
|
|
|||||||||||||
Total |
$ |
113,978 |
19 |
% |
$ |
333,334 |
34 |
% |
$ |
(219,356 |
) |
(66 |
)% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended April 30, 2002 |
As a % of Segment Net Revenue |
Nine Months Ended April 30, 2001 |
As a % of Segment Net Revenue |
$ Change |
% Change |
||||||||||||||
($ in thousands) |
|||||||||||||||||||
Enterprise Software and Services |
$ |
39,264 |
32 |
% |
$ |
82,810 |
24 |
% |
$ |
(43,546 |
) |
(53 |
)% | ||||||
eBusiness and Fulfillment |
|
29,154 |
7 |
% |
|
30,050 |
6 |
% |
|
(896 |
) |
(3 |
)% | ||||||
Managed Application Services |
|
20,345 |
47 |
% |
|
43,914 |
47 |
% |
|
(23,569 |
) |
(54 |
)% | ||||||
Portals |
|
1,188 |
18 |
% |
|
9,524 |
60 |
% |
|
(8,336 |
) |
(88 |
)% | ||||||
Other |
|
32,444 |
|
|
|
58,193 |
|
|
|
(25,749 |
) |
(44 |
)% | ||||||
|
|
|
|
|
|
|
|||||||||||||
Total |
$ |
122,395 |
20 |
% |
$ |
224,491 |
23 |
% |
$ |
(102,096 |
) |
(46 |
)% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended April 30, 2002 |
As a % of Segment Net Revenue |
Nine Months Ended April 30, 2001 |
As a % of Segment Net Revenue |
$ Change |
% Change |
||||||||||||||
($ in thousands) |
|||||||||||||||||||
Enterprise Software and Services |
$ |
100,971 |
82 |
% |
$ |
1,141,382 |
326 |
% |
$ |
(1,040,411 |
) |
(91 |
)% | ||||||
eBusiness and Fulfillment |
|
91,803 |
21 |
% |
|
116,667 |
22 |
% |
|
(24,864 |
) |
(21 |
)% | ||||||
Managed Application Services |
|
271 |
1 |
% |
|
25,885 |
28 |
% |
|
(25,614 |
) |
(99 |
)% | ||||||
Portals |
|
|
|
|
|
95,358 |
606 |
% |
|
(95,358 |
) |
(100 |
)% | ||||||
Other |
|
164 |
|
|
|
164 |
|
|
|
|
|
N/A |
| ||||||
|
|
|
|
|
|
|
|||||||||||||
Total |
$ |
193,209 |
32 |
% |
$ |
1,379,456 |
140 |
% |
$ |
(1,186,247 |
) |
(86 |
)% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended April 30, 2002 |
As a % of Segment Net Revenue |
Nine Months Ended April 30, 2001 |
As a % of Segment Net Revenue |
$ Change |
% Change |
||||||||||||||
($ in thousands) |
|||||||||||||||||||
Enterprise Software and Services |
$ |
14,606 |
12 |
% |
$ |
2,602,314 |
743 |
% |
$ |
(2,587,708 |
) |
(99 |
)% | ||||||
eBusiness and Fulfillment |
|
|
|
|
|
3,500 |
1 |
% |
|
(3,500 |
) |
(100 |
)% | ||||||
Managed Application Services |
|
30,600 |
71 |
% |
|
59,813 |
64 |
% |
|
(29,213 |
) |
(49 |
)% | ||||||
Portals |
|
|
|
|
|
12,436 |
79 |
% |
|
(12,436 |
) |
(100 |
)% | ||||||
Other |
|
2,147 |
|
|
|
|
|
|
|
2,147 |
|
N/A |
% | ||||||
|
|
|
|
|
|
|
|||||||||||||
Total |
$ |
47,353 |
8 |
% |
$ |
2,678,063 |
271 |
% |
$ |
(2,630,710 |
) |
(98 |
)% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended April 30, 2002 |
As a % of Segment Net Revenue |
Nine Months Ended April 30, 2001 |
As a % of Segment Net Revenue |
$ Change |
% Change |
|||||||||||||||
($ in thousands) |
||||||||||||||||||||
Enterprise Software and Services |
$ |
25,503 |
|
21 |
% |
$ |
82,543 |
24 |
% |
$ |
(57,040 |
) |
(69 |
)% | ||||||
eBusiness and Fulfillment |
|
|
|
|
|
|
|
|
|
|
|
|
N/A |
| ||||||
Managed Application Services |
|
(20,160 |
) |
(47 |
)% |
|
15,143 |
16 |
% |
|
(35,303 |
) |
(233 |
)% | ||||||
Portals |
|
5,361 |
|
82 |
|
|
29,712 |
189 |
% |
|
(24,351 |
) |
(82 |
)% | ||||||
Other |
|
3,247 |
|
|
|
|
|
|
|
|
3,247 |
|
N/A |
| ||||||
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ |
13,951 |
|
2 |
% |
$ |
127,398 |
13 |
% |
$ |
(113,447 |
) |
(89 |
)% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Leases |
CMGI Field |
Other Contractual Obligations |
Total | |||||||||
(in thousands) | ||||||||||||
For the three-month period May 1, 2002 through July 31, 2002 |
$ |
23,432 |
$ |
3,800 |
$ |
953 |
$ |
28,185 | ||||
For the fiscal years ended July 31: |
||||||||||||
2003 |
|
58,714 |
|
7,600 |
|
1,925 |
|
68,239 | ||||
2004 |
|
31,769 |
|
7,600 |
|
1,100 |
|
40,469 | ||||
2005 |
|
28,082 |
|
7,600 |
|
250 |
|
35,932 | ||||
2006 |
|
24,920 |
|
7,600 |
|
|
|
32,520 | ||||
Thereafter |
|
65,679 |
|
76,000 |
|
|
|
141,679 | ||||
|
|
|
|
|
|
|
| |||||
$ |
232,596 |
$ |
110,200 |
$ |
4,228 |
$ |
347,024 | |||||
|
|
|
|
|
|
|
|
|
Revenue recognition |
|
Accounting for impairment of long-lived assets |
|
Restructuring expenses |
|
Accounting for the allowance for doubtful accounts and sales returns |
|
Loss Contingencies |
|
Excess and obsolete inventory |
|
difficulty integrating acquired technologies, operations and personnel with the existing businesses; |
|
diversion of management attention in connection with both negotiating the acquisitions and integrating the assets; |
|
strain on managerial and operational resources as management tries to oversee larger operations; |
|
the funding requirements for acquired companies may be significant; |
|
exposure to unforeseen liabilities of acquired companies; |
|
increased risk of costly and time-consuming litigation, including stockholder lawsuits; |
|
potential issuance of securities in connection with an acquisition with rights that are superior to the rights of holders of CMGIs common stock, or which
may have a dilutive effect on the common stockholders; |
|
the need to incur additional debt or use cash; and |
|
the requirement to record potentially significant additional future operating costs for the amortization of intangible assets. |
|
demand for its products and services; |
|
payment of costs associated with its acquisitions, sales of assets and investments; |
|
timing of sales of assets and marketable securities; |
|
market acceptance of new products and services; |
|
seasonality, especially in the eBusiness and Fulfillment segment; |
|
charges for impairment of long-lived assets in future periods; |
|
potential restructuring charges in connection with CMGIs continuing restructuring efforts; |
|
specific economic conditions in the industries in which CMGI competes; and |
|
general economic conditions. |
|
rapidly changing technology; |
|
evolving industry standards; |
|
frequent new product and service introductions; |
|
shifting distribution channels; and |
|
changing customer demands. |
|
subjecting them to significant liability for damages; |
|
resulting in invalidation of their proprietary rights; |
|
resulting in costly license fees in order to settle such claims; |
|
being time-consuming and expensive to defend even if such claims are not meritorious; and |
|
resulting in the diversion of management time and attention. |
CMGI, INC. | ||
By: |
/s/ THOMAS
OBERDORF | |
Thomas Oberdorf Chief
Financial Officer and Treasurer (Principal Financial and Accounting Officer) |
Item |
Description | |
10.1 |
2002 Non-Officer Employee Stock Incentive Plan, as amended. | |
10.2 |
CEO Offer Letter from the Registrant to George A. McMillan, dated February 18, 2002. | |
10.3 |
Amended and Restated Executive Severance Agreement, dated as of March 1, 2002, by and between the Registrant and
George A. McMillan. | |
10.4 |
Offer Letter from the Registrant to Thomas Oberdorf, dated March 1, 2002. | |
10.5 |
Executive Severance Agreement, dated as of March 4, 2002, by and between the Registrant and Thomas
Oberdorf. | |
10.6 |
Indemnification Agreement, dated as of February 1, 2002, by and between the Registrant and James
Barnett. | |
10.7 |
Indemnification Agreement, dated as of February 1, 2002, by and between AltaVista Company and James
Barnett. | |
10.8 |
Offer Letter from uBid, Inc. to Christian Feuer, dated April 12, 2002. | |
10.9 |
Executive Severance Agreement, dated as of April 15, 2002, by and between uBid, Inc. and Christian
Feuer. | |
10.10 |
Form of Executive Retention Agreement by and between NaviSite, Inc. and Patricia Gilligan, is incorporated herein by
reference to Exhibit 10.5 to NaviSites Quarterly Report on Form 10-Q for the period ended April 30, 2001 (File No. 000-27597). | |
10.11 |
Form of Indemnification Agreement by and between NaviSite, Inc. and Patricia Gilligan, is incorporated herein by
reference to Exhibit 10.6 to NaviSites Quarterly Report on Form 10-Q for the period ended April 30, 2001 (File No. 000-27597). |
EXHIBIT 10.1 CMGI, INC. 2002 NON-OFFICER EMPLOYEE STOCK INCENTIVE PLAN 1. Purpose The purpose of this 2002 Non-Officer Employee Stock Incentive Plan (the "Plan") of CMGI, Inc., a Delaware corporation (the "Company"), is to advance the interests of the Company's stockholders by enhancing the Company's ability to attract, retain and motivate persons who make (or are expected to make) important contributions to the Company by providing such persons with equity ownership opportunities and performance-based incentives and thereby better aligning the interests of such persons with those of the Company's stockholders. Except where the context otherwise requires, the term "Company" shall include any of the Company's present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the "Code"), and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a significant interest, as determined by the Board of Directors of the Company (the "Board"). 2. Eligibility All of the Company's employees (and any individuals who have accepted an offer for employment), other than those who are also officers (within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder) or directors of the Company, are eligible to be granted options or restricted stock awards (each, an "Award") under the Plan. Each person who has been granted an Award under the Plan shall be deemed a "Participant." 3. Administration and Delegation (a) Administration by Board of Directors. The Plan will be administered by the Board. The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. All decisions by the Board shall be made in the Board's sole discretion and shall be final and binding on all persons having or claiming any interest in the Plan or in any Award. No director or person acting pursuant to the authority delegated by the Board shall be liable for any action or determination relating to or under the Plan made in good faith. (b) Appointment of Committees. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or -1-
subcommittees of the Board (a "Committee"). All references in the Plan to the "Board" shall mean the Board or a Committee of the Board or the executive officers referred to in Section 3(c) to the extent that the Board's powers or authority under the Plan have been delegated to such Committee or executive officers. (c) Delegation to Executive Officers. To the extent permitted by applicable law, the Board may delegate to one or more executive officers of the Company the power to grant Awards to employees or officers of the Company or any of its present or future subsidiary corporations and to exercise such other powers under the Plan as the Board may determine, provided that the Board shall fix the terms of the Awards to be granted by such executive officers (including the exercise price of such Awards, which may include a formula by which the exercise price will be determined) and the maximum number of shares subject to Awards that the executive officers may grant; provided further, however, that no executive officer shall be authorized to grant Awards to any "executive officer" of the Company (as defined by Rule 3b-7 under the Exchange Act) or to any "officer" of the Company (as defined by Rule 16a-1 under the Exchange Act). 4. Stock Available for Awards Subject to adjustment under Section 7, Awards may be made under the Plan for up to 4,150,000 shares of common stock, $.01 par value per share, of the Company (the "Common Stock"). If (i) any Award expires or is terminated, surrendered or canceled without having been fully exercised, (ii) any Award is forfeited in whole or in part, (iii) any Award results in any shares of Common Stock not being issued or (iv) the shares of Common Stock issued pursuant to any Award are repurchased by the Company (including without limitation shares of Common Stock issued upon exercise of an Option (as hereinafter defined) that are subsequently repurchased by the Company pursuant to a contractual repurchase right or otherwise), the unused shares of Common Stock covered by such Award or the shares of Common Stock so repurchased, as the case may be, shall again be available for the grant of Awards under the Plan. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares. 5. Non-Statutory Stock Options (a) General. The Board may grant non-statutory stock options to purchase Common Stock (each, an "Option") and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable. No Option granted under the Plan shall be intended to be an "incentive stock option" as defined in Section 422 of the Code. (b) Exercise Price. The Board shall establish the exercise price at the time each Option is granted and specify it in the applicable instrument evidencing the grant of the Option. -2-
(c) Duration of Options. Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable instrument evidencing the grant of the Option. (d) Exercise of Option. Options may be exercised by delivery to the Company of a written notice of exercise signed by the proper person or by any other form of notice (including electronic notice) approved by the Board together with payment in full as specified in Section 5(e) for the number of shares for which the Option is exercised and payment in full as specified in Section 8(e) of any tax withholding. (e) Payment Upon Exercise. Common Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows: (1) in cash or by check, payable to the order of the Company; (2) except as the Board may, in its sole discretion, otherwise provide in an instrument evidencing the grant of the Option, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding; (3) except as the Board may, in its sole discretion, otherwise provide in an instrument evidencing the grant of the Option, when the Common Stock is registered under the Exchange Act, by delivery of shares of Common Stock owned by the Participant valued at their fair market value as determined by (or in a manner approved by) the Board in good faith ("Fair Market Value"), provided (i) such method of payment is then permitted under applicable law and (ii) such Common Stock, if acquired directly from the Company, was owned by the Participant at least six months prior to such delivery; (4) to the extent permitted by the Board, in its sole discretion, by (i) delivery of a full recourse promissory note of the Participant to the Company on terms determined by the Board, or (ii) payment of such other lawful consideration as the Board may determine; or (5) by any combination of the above-permitted forms of payment. (f) Substitute Options. In connection with a merger or consolidation of an entity with and into the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Options in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof. Substitute Options may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Options contained in the other sections of this Section 5 or in Section 2 hereof. -3-
6. Restricted Stock. (a) Grants. The Board may grant Awards entitling Participants to acquire shares of Common Stock, subject to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) from the Participant in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Board for such Award (each, a "Restricted Stock Award"). (b) Terms and Conditions. The Board shall determine the terms and conditions of any such Restricted Stock Award, including the conditions for repurchase (or forfeiture) and the issue price, if any. (c) Stock Certificates. Any stock certificates issued in respect of a Restricted Stock Award shall be registered in the name of the Participant and, unless otherwise determined by the Board, deposited by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or if the Participant has died, to the beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant's death (the "Designated Beneficiary"). In the absence of an effective designation by a Participant, Designated Beneficiary shall mean the Participant's estate. 7. Adjustments for Changes in Common Stock and Certain Other Events (a) Changes in Capitalization. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of Common Stock other than a normal cash dividend, (i) the number and class of securities available under this Plan, (ii) the number and class of securities and exercise price per share subject to each outstanding Option, and (iii) the repurchase price per share subject to each outstanding Restricted Stock Award shall be appropriately adjusted by the Company (or substituted Awards may be made, if applicable) to the extent the Board shall determine, in good faith, that such an adjustment (or substitution) is necessary and appropriate. If this Section 7(a) applies and Section 7(c) also applies to any event, Section 7(c) shall be applicable to such event, and this Section 7(a) shall not be applicable. (b) Liquidation or Dissolution. In the event of a proposed liquidation or dissolution of the Company, the Board shall upon written notice to the Participants provide that all then unexercised Options will (i) become exercisable in full as of a specified time at least ten business days prior to the effective date of such liquidation or dissolution and (ii) terminate effective upon such liquidation or dissolution, except to the extent exercised before such effective date. The Board may specify the effect of a liquidation or dissolution on any Restricted Stock Award granted under the Plan at the time of the grant of such Award. -4-
(c) Reorganization Events (1) Definition. A "Reorganization Event" shall mean: (a) any merger or consolidation of the Company with or into another entity as a result of which all of the Common Stock is converted into or exchanged for the right to receive cash, securities or other property or (b) any exchange of all of the Common Stock for cash, securities or other property pursuant to a share exchange transaction; provided, however, that, unless the Board determines otherwise, a "Reorganization Event" shall not include any transaction that involves the Company, on the one hand, and any Company Subsidiary (as defined below), on the other hand. "Company Subsidiary" shall mean any corporation or other entity that is controlled, directly or indirectly, by the Company. (2) Consequences of a Reorganization Event on Options. Upon the occurrence of a Reorganization Event, or the execution by the Company of any agreement with respect to a Reorganization Event, the Board shall provide that all outstanding Options shall be assumed, or equivalent options shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof). For purposes hereof, an Option shall be considered to be assumed if, following consummation of the Reorganization Event, the Option confers the right to purchase, for each share of Common Stock subject to the Option immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Common Stock for each share of Common Stock held immediately prior to the consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise of Options to consist solely of common stock of the acquiring or succeeding corporation (or an affiliate thereof) equivalent in fair market value to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Reorganization Event. Notwithstanding the foregoing, if the acquiring or succeeding corporation (or an affiliate thereof) does not agree to assume, or substitute for, such Options, then the Board shall, upon written notice to the Participants, provide that all then unexercised Options will become exercisable in full as of a specified time prior to the Reorganization Event and will terminate immediately prior to the consummation of such Reorganization Event, except to the extent exercised by the Participants before the consummation of such Reorganization Event; provided, however, that in the event of a Reorganization Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share of Common Stock surrendered pursuant to such Reorganization Event (the "Acquisition Price"), then the Board may instead provide that all outstanding Options shall terminate upon consummation of such Reorganization Event and that each Participant shall receive, in exchange therefor, a cash payment equal to the amount (if any) by which (A) the Acquisition Price multiplied by the number of shares of Common Stock subject to such outstanding Options (whether or not then exercisable), exceeds (B) the aggregate exercise price of such Options. To the extent all or any portion of an Option becomes exercisable solely as a result of the first -5-
sentence of this paragraph, upon exercise of such Option the Participant shall receive shares subject to a right of repurchase by the Company or its successor at the Option exercise price. Such repurchase right (1) shall lapse at the same rate as the Option would have become exercisable under its terms and (2) shall not apply to any shares subject to the Option that were exercisable under its terms without regard to the first sentence of this paragraph. If any Option provides that it may be exercised for shares of Common Stock which remain subject to a repurchase right in favor of the Company, upon the occurrence of a Reorganization Event, any shares of restricted stock received upon exercise of such Option prior to such Reorganization Event shall be treated in accordance with Section 7(c)(3) as if they were a Restricted Stock Award. (3) Consequences of a Reorganization Event on Restricted Stock Awards. Upon the occurrence of a Reorganization Event, the repurchase and other rights of the Company under each outstanding Restricted Stock Award shall inure to the benefit of the Company's successor and shall apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to the Common Stock subject to such Restricted Stock Award. 8. General Provisions Applicable to Awards (a) Transferability of Awards. Except as the Board may otherwise determine or provide in an Award, Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the life of the Participant, shall be exercisable only by the Participant. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees. (b) Documentation. Each Award shall be evidenced by an instrument in such form (written, electronic or otherwise) as the Board shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan. (c) Board Discretion. Except as otherwise provided by the Plan, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award need not be identical, and the Board need not treat Participants uniformly. (d) Termination of Status. The Board shall determine the effect on an Award of the disability, death, retirement, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, the Participant's legal representative, conservator, guardian or Designated Beneficiary may exercise rights under the Award. (e) Withholding. Each Participant shall pay to the Company, or make provision satisfactory to the Board for payment of, any taxes required by law to be withheld in connection with Awards to such Participant no later than the date of the event creating the tax liability. Except as the Board may otherwise provide in an Award, when the Common Stock is registered under the Exchange Act, Participants may, to the extent then permitted under applicable law, -6-
satisfy such tax obligations in whole or in part by delivery of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value; provided, however, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company's minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income). The Company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to a Participant. (f) Amendment of Award. The Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type and changing the date of exercise or realization, provided that the Participant's consent to such action shall be required unless the Board determines that the action, taking into account any related action, would not materially and adversely affect the Participant. (g) Conditions on Delivery of Stock. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company's counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations. (h) Acceleration. The Board may at any time provide that any Award shall become immediately exercisable in full or in part, free of some or all restrictions or conditions, or otherwise realizable in full or in part, as the case may be. 9. Miscellaneous (a) No Right To Employment or Other Status. No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award. (b) No Rights As Stockholder. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder of such shares. Notwithstanding the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to such Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then a Participant who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on -7-
the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend. (c) Effective Date and Term of Plan. The Plan is effective as of March 13, 2002 (the "Effective Date"). No Awards shall be granted under the Plan after the completion of ten years from the Effective Date, but Awards previously granted may extend beyond that date. (d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time. (e) Governing Law. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, without regard to any applicable conflicts of law. * * * * * -8-
CMGI, INC. AMENDMENT NO. 1 TO 2002 NON-OFFICER EMPLOYEE STOCK INCENTIVE PLAN The 2002 Non-Officer Employee Stock Incentive Plan (the "Plan") of CMGI, Inc., a Delaware corporation (the "Corporation"), is hereby amended as follows: Section 4 of the Plan is hereby amended and restated in its entirety to read as follows: "4. Stock Available for Awards Subject to adjustment under Section 7, Awards may be made under the Plan for up to 19,150,000 shares of common stock, $.01 par value per share, of the Company (the "Common Stock"). If (i) any Award expires or is terminated, surrendered or canceled without having been fully exercised, (ii) any Award is forfeited in whole or in part, (iii) any Award results in any shares of Common Stock not being issued or (iv) the shares of Common Stock issued pursuant to any Award are repurchased by the Company (including without limitation shares of Common Stock issued upon exercise of an Option (as hereinafter defined) that are subsequently repurchased by the Company pursuant to a contractual repurchase right or otherwise), the unused shares of Common Stock covered by such Award or the shares of Common Stock so repurchased, as the case may be, shall again be available for the grant of Awards under the Plan. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares." * * * * * Adopted by the Board of Directors on May 20, 2002. -9-
EXHIBIT 10.2 February 18, 2002 George A. McMillan 25 Thornbury Lane Sudbury, MA 01776 Dear George: It is a distinct pleasure to offer you the position of Chief Executive Officer of CMGI, Inc. ("CMGI"), effective March 1, 2002 and subject to approval by the Board of Directors of CMGI. In connection with your promotion to Chief Executive Officer, you will also be elected to the CMGI Board of Directors. The terms of this offer letter shall supersede the terms of your offer letter dated June 11, 2001 (other than with respect to the option grant and its terms and conditions as outlined and described in such letter dated June 11, 2001). Your starting annualized salary will be $500,000, which represents $19,230.77 every two weeks. You will also be eligible to receive a target annualized bonus for fiscal year 2002 of $450,000 based on successful satisfaction of fiscal year 2002 business objectives that will be set and agreed to by CMGI and you. Your fiscal year 2002 bonus will be guaranteed at a minimum of $300,000. In addition, you shall be eligible to receive potential additional bonus amounts up to $450,000 based on business achievements above and beyond the targets set by CMGI and you. Any bonus payments will be paid to you after the end of fiscal year 2002 in accordance with the written business objectives plan. Your bonus plan for fiscal year 2003 will be set by the Compensation Committee of the Board of Directors of CMGI. In addition, on today's date, you will be granted an option to purchase 2,750,000 shares of CMGI common stock under the CMGI 2000 Stock Incentive Plan (the "Plan"). This option will have an exercise price equal to $1.42, the closing price on the Nasdaq National Market (during normal trading hours) on Friday, February 15, 2002 (the last trading day prior to the date hereof), and it will be divided into three tranches. The first tranche of the option shall cover 1,250,000 shares and shall vest as follows: 25% on the earlier to occur of (i) the first anniversary of the date hereof and (ii) the First Confirmation Date (as defined below), and monthly thereafter commencing on the 13th monthly anniversary of the date hereof for the next three (3) years (whereby 1/48th of the original number of the shares underlying the first tranche of the option shall vest on each monthly anniversary date of the date hereof starting on the 13th monthly anniversary date of the date of grant, until fully vested on the fourth anniversary of the date hereof). The option shall have a seven (7) year term. The second tranche of the option shall cover 1,000,000 shares and shall vest as follows: 25% on the first anniversary of the First Confirmation Date and monthly thereafter for the next three (3) years (whereby 1/48th of the original number of the shares underlying the second tranche of the
option shall vest on each monthly anniversary date of the First Confirmation Date starting on the 13th monthly anniversary date of the First Confirmation Date, until fully vested on the fourth anniversary of the First Confirmation Date). Notwithstanding the foregoing, in the event that the First Confirmation Date does not occur prior to February 18, 2007, the second tranche of the option shall nonetheless become fully vested on such date. For purposes of this offer letter, "First Confirmation Date" shall be defined as the first date following the date hereof that CMGI publicly announces Net Operating Income (as defined below) on a consolidated basis for a fiscal quarter commencing after the date hereof greater than zero dollars. The third tranche of the option shall cover 500,000 shares and shall vest as follows: 25% on the first anniversary of the Second Confirmation Date (as defined below) and monthly thereafter for the next three (3) years (whereby 1/48th of the original number of the shares underlying the option shall vest on each monthly anniversary date of the Second Confirmation Date starting on the 13/th/ monthly anniversary date of the Second Confirmation Date, until fully vested on the fourth anniversary of the Second Confirmation Date). Notwithstanding the foregoing, in the event that the Second Confirmation Date does not occur prior to February 18, 2007, the third tranche of the option shall nonetheless become fully vested on such date. For purposes of this offer letter, "Second Confirmation Date" shall be defined as the first date following the First Confirmation Date that CMGI publicly announces Net Operating Income on a consolidated basis for a fiscal quarter greater than that reached on the First Confirmation Date. For purposes of this offer letter, "Net Operating Income" shall be defined as operating income excluding expenses related to in-process research and development, depreciation, restructuring, long-lived asset impairment and amortization of intangible assets and stock-based compensation. All options shall be subject to all terms, limitations, restrictions and termination provisions set forth in the Plan and in the separate option agreements (which shall be based upon CMGI's standard form option agreement) that shall be executed to evidence the grant of any options. Enclosed you will find a copy of a Non-Competition Agreement, the execution of which is required as a condition of CMGI granting you an option to purchase CMGI common stock. In lieu of a car allowance, you will be permitted primary use of the Chief Executive Officer security-protected BMW that is presently leased by CMGI until such time as CMGI disposes of such automobile. Until such time as CMGI disposes of such automobile, CMGI will continue to make the monthly payments including, without limitation, customary insurance and annual tax payments that relate to such automobile lease. As an employee of CMGI, you may participate in any and all bonus and benefit programs that CMGI establishes and makes generally available to its employees from time to time, provided you are eligible under (and subject to all provisions of) the plan documents governing those programs.
Additionally, you will continue to accrue vacation time at a rate of 10.00 hours per month (3 weeks per year) beginning on your first month of employment, but in no event shall you accrue vacation time beyond 80 hours. The Amended and Restated Executive Severance Agreement attached hereto as Exhibit A contains additional terms that shall be applicable to your employment, and Exhibit A shall be incorporated herein by reference. For purposes of the Amended and Restated Executive Severance Agreement, your target bonus for fiscal year 2002 shall be deemed to be $450,000. In connection with your election to the Board of Directors of CMGI, you and CMGI shall enter into the Indemnification Agreement attached hereto as Exhibit B. In addition, CMGI hereby confirms that in connection with your employment by CMGI, CMGI shall provide you with indemnification to the fullest extent authorized by CMGI's Certificate of Incorporation and By-Laws. CMGI agrees that it shall pay the reasonable costs and expenses of one counsel to you in connection with the preparation of this offer letter and the other documents contemplated hereby, up to a maximum payment by CMGI of $2,000. Please confirm your acceptance of this position by signing one copy of this letter and returning it to me. Additionally, please sign and return the enclosed Non-Competition Agreement. Your employment with CMGI will be "at-will". This means that your employment with CMGI may be terminated by either you or CMGI at any time and for any reason, with or without notice. This offer expires as of the close of business on Tuesday, February 19, 2002. This offer and the Amended and Restated Executive Severance Agreement constitute the entire agreement between the parties and supersede all prior offers, both oral and written (other than those portions of the June 11, 2001 offer letter as described above). This letter does not constitute a guarantee of employment or a contract. We are very pleased by the prospect of your new role with CMGI, and we are confident that you will make a significant contribution to our future success! Sincerely, /s/ David S. Wetherell David S. Wetherell Chairman of the Board, CMGI, Inc. /s/ George A. McMillan February 18, 2002 - ---------------------- ----------------- George A. McMillan DATE
EXHIBIT 10.3 AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT -------------------------------------------------- THIS AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT ("Agreement") by and between CMGI, Inc., a Delaware corporation (the "Company"), and George A. McMillan (the "Executive"), is made as of March 1, 2002. WHEREAS, effective as the date hereof, the Executive has been promoted to the position of Chief Executive Officer of the Company; WHEREAS, the Company has determined that appropriate steps should be taken to reinforce and encourage the continued employment and dedication of the Executive; WHEREAS, the Company and the Executive are parties to an Executive Severance Agreement dated as of June 11, 2001; and WHEREAS, the parties desire to amend and restate the Executive Severance Agreement; NOW, THEREFORE, as an inducement for and in consideration of the Executive remaining in its employ, the Company agrees that the Executive shall receive the severance benefits set forth in this Agreement in the event the Executive's employment with the Company is terminated under the circumstances described below; and for good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree that the Executive Severance Agreement be and hereby is amended and restated in its entirety as follows: 1. Term of Agreement. The term of this Agreement shall be June 11, 2001 through the last day of Executive's employment with the Company. 2. Not an Employment Contract. The Executive acknowledges that this Agreement does not constitute a contract of employment or impose on the Company any obligation to retain the Executive as an employee and that this Agreement does not prevent the Executive from terminating his employment. Executive understands and acknowledges that he is an employee at will and that either he or the Company may terminate the employment relationship between them at any time and for any reason. 3. Severance Payment. (a) In the event the employment of the Executive is terminated by the Company for a reason other than for Cause (as defined below), or by the Executive for Good Reason (as defined below), the Company shall pay to the Executive a severance payment equal to 12 months of his then-current monthly base salary plus target bonus, as in effect on the Executive's last day of employment, and will reimburse the Executive for cost of COBRA for medical, dental and vision for 12 months following the Executive's last day of employment. The severance payment shall be payable in full within 10 business days after the termination of Executive's employment, unless the parties agree otherwise. Additionally, in the event that prior to July 9, 2003 there occurs a termination giving rise to a severance payment by the Company to Executive pursuant to this Section 3(a), 50% of the then-unvested options to purchase shares of common stock of the Company pursuant to options granted to Executive on July 9, 2001 ("Initial Options") shall immediately become exercisable in full and shall be deemed fully vested.
Additionally, and not in limitation of the previous sentence, (A) in the event that prior to February 18, 2004 there occurs a termination giving rise to a severance payment by the Company to Executive pursuant to this Section 3(a), 25% of the then-unvested options to purchase shares of common stock of the Company pursuant to options granted to Executive on February 18, 2002 ("CEO Options") shall immediately become exercisable in full and shall be deemed fully vested, and (B) in the event that on or after February 18, 2004 there occurs a termination giving rise to a severance payment by the Company to Executive pursuant to this Section 3(a), 50% of the then-unvested CEO Options shall immediately become exercisable in full and shall be deemed fully vested. In the event of any termination of employment giving rise to a severance payment pursuant to this Section 3(a), the Executive shall have the right to exercise any vested Initial Options and CEO Options following such termination of employment, unless the options terminate sooner by the terms of the underlying option agreement, as follows: - Executive shall have at least 90 days following the termination date of his employment to exercise his vested Initial Options and CEO Options; - Executive shall be entitled to exercise his vested Initial Options and CEO Options following the termination date of his employment for a number of months following such termination date equal to the number of months he worked for the Company (rounded up to the next month in the event the Executive's termination date is on or after the 15th day of the month); - In no event shall Executive be entitled to exercise his vested Initial Options and CEO Options following his termination date for a period greater than 365 days. In the event the severance payment and other such benefits, including but not limited to Initial Options and CEO Options being accelerated pursuant to this Section 3(a), are paid to the Executive by the Company pursuant to this Section 3(a), then Section 3(b) shall not apply and shall have no further force or effect. (b) In the event the employment of the Executive is terminated by the Company for a reason other than for Cause within twelve (12) months following a Change of Control (as defined below) of the Company or by the Executive for Good Reason within twelve (12) months following a Change of Control of the Company, the Company shall pay to the Executive a severance payment equal to 24 months of his then-current monthly base salary plus target bonus, as in effect on the Executive's last day of employment, and will reimburse the Executive for cost of COBRA for medical, dental and vision for 18 months following the Executive's last day of employment. The severance payment shall be payable in full within 10 business days after the termination of Executive's employment, unless the parties agree otherwise. Additionally, in the event of a termination giving rise to a severance payment by the Company to Executive pursuant to this Section 3(b), each outstanding option to purchase shares of common stock of the Company then held by the Executive shall immediately become exercisable in full and shall be deemed fully vested. In the event of any termination of employment giving rise to a severance payment pursuant to this Section 3(b), with respect to Initial Options and CEO Options, the -2-
Executive shall have the right to exercise any vested Initial Options and CEO Options within a 12-month time period following such termination of employment, unless the options terminate sooner by the terms of the underlying option agreement. All other options shall be exercisable in accordance with their terms. In the event the severance payment and other such benefits (including but not limited to options being accelerated pursuant to this Section 3(b)) are paid to the Executive by the Company pursuant to this Section 3(b), then Section 3(a) shall not apply and shall have no further force or effect. (c) The Executive agrees that prior to payment of the severance payment pursuant to this Section 3 and prior to the provision of benefits and acceleration of stock options called for by Section 3, Executive shall execute a release, based on the Company's standard form (including mutual confidentiality and non-disparagement provisions), of any and all claims he may have against the Company and its officers, directors, employees and affiliates, except for his right to enforce any post-employment obligations to him, including obligations of the Company under this Agreement and stock option agreements, and indemnification in his capacity as an officer, director or otherwise of the Company and its affiliates. Executive understands and agrees that the payment of the severance payment, provision of benefits and the acceleration of options called for by Section 3 are contingent on his execution of the previously described release of claims. The payment to the Executive of the amounts payable under this Section 3 (and acceleration of options, if applicable) shall constitute the sole remedy of the Executive in the event of a termination of the Executive's employment. (d) In the event that any amounts payable to the Executive pursuant to this Section 3 are characterized as "excess parachute payments" pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), then the Executive may elect to reduce the amounts payable to the Executive hereunder or to have a portion of the stock options not vest in order to avoid any "excess parachute payment" under Section 280G(b)(1) of the Code; provided that any such election shall not adversely affect the Company. Unless the parties hereto otherwise agree in writing, any determination required under this Section 3(d) shall be made in writing by independent public accountants reasonably agreed to by the parties hereto (the "Accountants"), whose determination shall be conclusive and binding upon the parties for all purposes. For purposes of making the calculations required by this Section 3(d), the Accountants may rely on reasonable, good faith interpretations concerning the application of Section 280G and Section 4999 of the Code. The parties agree to furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make the required determinations. The Executive shall bear all fees and expenses the Accountants may reasonably charge in connection with the services contemplated by this Section 3(d). 4. Definitions. For purposes of this Agreement, the following terms shall have the following meanings: (a) "Cause" shall mean a good faith finding by the Board of Directors of the Company, after giving Executive an opportunity to be heard, of: (i) dishonest, gross negligent or willful misconduct by Executive in connection with his employment duties, (ii) continued failure by Executive to perform his duties or responsibilities required pursuant to his employment, after written notice and an opportunity to cure, (iii) mis-appropriation by Executive of the assets or business opportunities of the Company, or its affiliates, (iv) embezzlement or other financial or -3-
other fraud committed by Executive, (v) the Executive knowingly allowing any third party to commit any of the acts described in any of the preceding clauses (iii) or (iv), or (vi) the Executive's indictment for, conviction of, or entry of a plea of no contest with respect to, any felony or any crime involving moral turpitude. (b) "Good Reason" shall mean: (i) the unilateral relocation by the Company of the Executive's principal work place for the Company to a site more than 60 miles from Andover, Massachusetts, (ii) a reduction in the Executive's (A) then-current base salary without the Executive's consent, or (B) target bonus or a material reduction in benefits without the Executive's consent, or unless other executive officers are similarly treated, (iii) material diminution of Executive's duties, authority or position as Chief Executive Officer of the Company, without the Executive's consent, (iv) any amendment following the date hereof to the officer indemnification provisions contained in Article Ninth of the Company's certificate of incorporation that materially reduces the indemnification benefits to the Executive, or (v) death or permanent and total disability (as defined in Section 22(e)(3) of the Code) of the Executive. (c) "Change of Control" shall mean the first to occur of any of the following: (a) any "person" or "group" (as defined in the Securities Exchange Act of 1934) becomes the beneficial owner of a majority of the combined voting power of the then outstanding voting securities with respect to the election of the Board of Directors of the Company; (b) any merger, consolidation or similar transaction involving the Company, other than a transaction in which the stockholders of the Company immediately prior to the transaction hold immediately thereafter in the same proportion as immediately prior to the transaction not less than 50% of the combined voting power of the then voting securities with respect to the election of the Board of Directors of the resulting entity; or (c) any sale of all or substantially all of the assets of the Company. 5. Termination of Employment. Upon termination of Executive's employment with the Company for any reason, in addition to any severance payments or other benefits which may be payable under Section 3 of this Agreement, Executive shall be entitled to receive all salary and benefits through the last day of his employment. In addition, in the event the Executive is terminated for other than Cause or the Executive terminates his employment for Good Reason, Executive shall be entitled to a pro rata share of his earned target bonus, such earned target bonus to be determined in accordance with the terms and provisions of the Executive's target bonus plan. 6. Miscellaneous. (a) Notices. Any notices delivered under this Agreement shall be deemed duly delivered four business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, or one business day after it is sent for next-business day delivery via a reputable nationwide overnight courier service, in each case to the address of the recipient set forth in the introductory paragraph hereto. Either party may change the address to which notices are to be delivered by giving notice of such change to the other party. All notices to the Company shall also be addressed to the Company's General Counsel. -4-
(b) Pronouns. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns and pronouns shall include the plural, and vice versa. (c) Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement. (d) Amendment. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Executive. (e) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts. Any action, suit or other legal arising under or relating to any provision of this Agreement shall be commenced only in a court of the Commonwealth of Massachusetts (or, if appropriate, a federal court located within Massachusetts), and the Company and the Executive each consents to the jurisdiction of such a court. The Company and the Executive each hereby irrevocably waive any right to a trial by jury in any action, suit or other legal proceeding arising under or relating to any provision of this Agreement. (f) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to its assets or business, provided, however, that the obligations of the Executive are personal and shall not be assigned by him or her. (g) Waivers. No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion. (h) Captions. The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement. (i) Severability. In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby. * * * * * -5-
THE EXECUTIVE ACKNOWLEDGES THAT HE HAS CAREFULLY READ THIS AGREEMENT AND UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above. CMGI, Inc. By: /s/ Jeffrey Yanagi Title: EVP Human Resources /s/ George A. McMillan ---------------------- George A. McMillan -6-
EXHIBIT 10.4 March 1, 2002 Thomas Oberdorf 49 Miller Circle Armonk, NY 10504 Dear Tom: It is a distinct pleasure to offer you the position of Chief Financial Officer and Treasurer of CMGI, Inc. ("CMGI" or the "Company"). In this capacity you will report to George McMillan, Chief Executive Officer, CMGI. Your starting salary will be $12,500 bi-weekly, which is equivalent to an annualized base salary of $325,000. You will also be eligible to receive a pro-rated bonus for fiscal year 2002 based on a target annualized bonus of $162,500. This bonus will be based on successful satisfaction of fiscal year 2002 business objectives pursuant to the terms and conditions of CMGI's FY 2002 Bonus Plan for CMGI Corporate. Your target annualized bonus for fiscal year 2002 will be 50% of your base salary. You are eligible for relocation benefits up to a maximum of $150,000. These benefits are outlined in CMGI's Relocation Policy, which is attached for your reference. All relocation will be coordinated through MSI, the relocation vendor for the Company. Please contact Joyce Fantasia to initiate the relocation process. Should you take advantage of these benefits, and terminate either voluntarily or for cause (as defined below), during the first year following your effective date of hire, 100% of all funds provided to you for relocation will be immediately repayable to the Company. If you terminate either voluntarily or for cause during the second year following your effective date of hire, 50% of the total funds provided to you will be immediately repayable to the Company. For purposes of this offer letter, "cause" shall mean a good faith finding by the Company of: (i) gross negligence or willful misconduct by you in connection with your employment duties, (ii) failure by you to perform your duties or responsibilities required pursuant to your employment, after written notice and an opportunity to cure, (iii) misappropriation by you of the assets or business opportunities of the Company or its affiliates, (iv) embezzlement or other financial fraud committed by you, (v) you knowingly allowing any third party to commit any of the acts described in any of the preceding clauses (iii) or (iv), or (vi) your indictment for, conviction of, or entry of a plea of no contest with respect to, any felony. In addition, on your start date, you will be granted an option to purchase 750,000 shares of CMGI common stock under the CMGI 2000 Stock Incentive Plan (the "Plan"). This option will be priced at the closing price on the date of grant and it will be divided into three tranches. The first tranche of the option shall cover 350,000 shares and shall vest as follows: 25% on the earlier to occur of (i) the first anniversary of the date of grant and (ii) the First Confirmation Date (as defined below), and monthly thereafter commencing on the 13th monthly anniversary of the date of grant for the next three (3) years (whereby 1/48th of the original number of the shares underlying the first tranche of the option shall vest
on each monthly anniversary date of the date of grant starting on the 13th monthly anniversary date of the date of grant, until fully vested on the fourth anniversary of the date of grant). The option shall have a seven (7) year term. The second tranche of the option shall cover 250,000 shares and shall vest as follows: 25% on the first anniversary of the First Confirmation Date and monthly thereafter for the next three (3) years (whereby 1/48th of the original number of the shares underlying the second tranche of the option shall vest on each monthly anniversary date of the First Confirmation Date starting on the 13th monthly anniversary date of the First Confirmation Date, until fully vested on the fourth anniversary of the First Confirmation Date). Notwithstanding the foregoing, in the event that the First Confirmation Date does not occur prior to the fifth anniversary of the date of grant, the second tranche of the option shall nonetheless become fully vested on such date. For purposes of this offer letter, "First Confirmation Date" shall be defined as the first date following the date of grant that CMGI publicly announces Net Operating Income (as defined below) on a consolidated basis for a fiscal quarter commencing after the date of grant greater than zero dollars. The third tranche of the option shall cover 150,000 shares and shall vest as follows: 25% on the first anniversary of the Second Confirmation Date (as defined below) and monthly thereafter for the next three (3) years (whereby 1/48th of the original number of the shares underlying the option shall vest on each monthly anniversary date of the Second Confirmation Date starting on the 13th monthly anniversary date of the Second Confirmation Date, until fully vested on the fourth anniversary of the Second Confirmation Date). Notwithstanding the foregoing, in the event that the Second Confirmation Date does not occur prior to the fifth anniversary of the date of grant, the third tranche of the option shall nonetheless become fully vested on such date. For purposes of this offer letter, "Second Confirmation Date" shall be defined as the first date following the First Confirmation Date that CMGI publicly announces Net Operating Income on a consolidated basis for a fiscal quarter greater than that reached on the First Confirmation Date. . For purposes of this offer letter, "Net Operating Income" shall be defined as operating income excluding expenses related to in-process research and development, depreciation, restructuring, long-lived asset impairment and amortization of intangible assets and stock-based compensation. All options described above shall be subject to all terms, limitations, restrictions and termination provisions set forth in the Plan and in the separate option agreements (which shall be based upon the Company's standard form option agreement) that shall be executed to evidence the grant of such options. Enclosed you will find a copy of a Non-Competition Agreement, the execution of which is required as a condition of the Company granting you an option to purchase CMGI common stock and your employment with the Company. Additionally, as a condition of employment with CMGI, you are required to execute the enclosed Non-Disclosure and Developments Agreement. As an employee of CMGI, you may participate in any and all bonus and benefit programs that the Company establishes and makes generally available to its employees from time to time, provided you are eligible under (and subject to all provisions of) the plan documents governing those programs. Details of the benefits offered will be reviewed with you in orientation on your first day of employment.
In accordance with current federal law, you will be asked to provide documentation proving your eligibility to work in the United States. Please review the enclosed Employment Eligibility Verification Form (Form I9) and the list of acceptable documents that are required. You must bring this on your first day of employment. If you fail to bring proper documentation with you on your first day of work, you will be asked to go home to collect your paperwork. Unfortunately, there can be no exceptions. If you do not bring proper documentation, you will be considered ineligible for employment and CMGI will not add you to its payroll until the required I9 documentation is received. Please confirm your acceptance of this position and your start date by signing one copy of this letter and returning it to me. Additionally, please complete, sign and return the enclosed Employee Information sheet along with the Sexual Harassment policy, Massachusetts Tax Form, W4, Direct Deposit Form and both agreements that are enclosed. All documents along with one copy of your signed offer letter must be returned by the end of business on Thursday, if you wish to start the following Monday. If you choose to fax the documents, please fax a copy of your signed offer letter and all the enclosed documents to 978/684-3816 and bring the originals with you on your first day. If you wish to overnight the original documents, please mail one copy of your signed offer letter and the entire enclosed package to CMGI Attention: Joyce Fantasia 100 Brickstone Square Andover, MA 01810. Your employment with CMGI will be "at-will". This means that your employment with CMGI may be terminated by either you or CMGI at any time and for any reason, with or without notice. This offer expires as of the close of business on Friday, March 8, 2002. This offer supersedes all prior offers, both verbal and written. This letter does not constitute a guarantee of employment or a contract. Thomas, we are very pleased by the prospect of your addition to the CMGI team, and we are confident that you will make a significant contribution to our future success! Sincerely, /s/ Jeffrey Yanagi Jeff Yanagi Executive Vice President Human Resources /s/ Thomas Oberdorf - ------------------- THOMAS OBERDORF March 4, 2002 - ------------- START DATE
EXHIBIT 10.5 EXECUTIVE SEVERANCE AGREEMENT THIS EXECUTIVE SEVERANCE AGREEMENT ("Agreement") by and between CMGI, Inc., a Delaware corporation (the "Company") headquartered at 100 Brickstone Square, Andover, Massachusetts and Thomas Oberdorf (the "Executive"), is made as of March 4, 2002. WHEREAS, the Board of Directors of the Company (the "Board") has determined that Executive will play a critical role in the operations of the Company; and WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued employment and dedication of the Executive. NOW, THEREFORE, as an inducement for and in consideration of the Executive remaining in its employ, the Company agrees that the Executive shall receive the severance benefits set forth in this Agreement in the event the Executive's employment with the Company is terminated under the circumstances described below. 1. Not an Employment Contract. The Executive acknowledges that this Agreement does not constitute a contract of employment or impose on the Company any obligation to retain the Executive as an employee and that this Agreement does not prevent the Executive from terminating his employment. Executive understands and acknowledges that he is an employee at will and that either he or the Company may terminate the employment relationship between them at any time and for any reason. 2. Severance Pay. (a) Severance Pay Following a Change in Control. In the event a Change in Control (as defined below) occurs and, within one (1) year thereafter, the employment of the Executive is terminated by the Company for a reason other than for Cause (as defined below) or by the Executive for Good Reason (as defined below), then the Company shall pay to the Executive (as severance pay) a lump sum payment equal to (i) his then current base salary multiplied by two (2), plus (ii) his then current target bonus multiplied by two (2), within 30 days after the Termination Date (as defined below). The Executive agrees that after the Termination Date, but prior to payment of the severance pay and bonus called for by this paragraph, he shall execute a release, based on the Company's standard form severance agreement, of any and all claims he may have against the Company and its officers, employees, directors, parents and affiliates. Executive understands and agrees that the payment of the severance pay and bonus called for by this paragraph are contingent on his execution of the previously described release of claims. (b) Severance Pay Absent a Change in Control. In the event the employment of the Executive is terminated by the Company for a reason other than for Cause (as defined below), then the Company shall continue to pay to the Executive (as severance pay), (i) his regular base salary as in effect on the Executive's last day of employment (exclusive of bonus or any other compensation), for one (1) year following the Termination Date (as defined below), plus (ii) at the end of such year, the amount of Executive's target bonus as in effect on the Executive's last day of employment. Unless the parties agree otherwise, the severance pay provided for in clause
(i) above shall be paid in installments, in accordance with the Company's regular payroll practices, and the severance pay set forth in (ii) above shall be paid within 30 days of the end of the fiscal year to which such amount relates. The Executive agrees that after the Termination Date, but prior to payment of the severance pay and bonus called for by this paragraph, he shall execute a release, based on the Company's standard form severance agreement, of any and all claims he may have against the Company and its officers, employees, directors, parents and affiliates. Executive understands and agrees that the payment of the severance pay and bonus called for by this paragraph are contingent on his execution of the previously described release of claims. (c) Sole Remedy. The payment to the Executive of the amounts payable under this Section 2 shall constitute the sole remedy of the Executive in the event of a termination of the Executive's employment by the Company or a resignation by the Executive that results in payment of benefits under this Section 2. 3. Definitions. For purposes of this Agreement, the following terms shall have the following meanings: (a) "Cause" shall mean a good faith finding by the Company of: (i) gross negligence or willful misconduct by Executive in connection with his employment duties, (ii) failure by Executive to perform his duties or responsibilities required pursuant to his employment, after written notice and an opportunity to cure, (iii) mis-appropriation by Executive of the assets or business opportunities of the Company, or its affiliates, (iv) embezzlement or other financial fraud committed by Executive, (v) the Executive knowingly allowing any third party to commit any of the acts described in any of the preceding clauses (iii) or (iv), or (vi) the Executive's indictment for, conviction of, or entry of a plea of no contest with respect to, any felony. (b) "Good Reason" shall mean: (i) the unilateral relocation by the Company of the Executive's principal work place for the Company to a site more than 60 miles from Andover, Massachusetts; (ii) a reduction in the Executive's then current base salary, without the Executive's consent; or (iii) the Executive's assignment to a position where the duties of the position are outside his area of professional competence. (c) "Change in Control" shall mean the consummation of any of the following events: (i) a sale, lease or disposition of all or substantially all of the assets of the Company, or (ii) a sale, merger, consolidation, reorganization, recapitalization, sale of assets, stock purchase, contribution or other similar transaction (in a single transaction or a series of related transactions) of the Company with or into any other corporation or corporations or other entity, or any other corporate reorganization, where the stockholders of the Company immediately prior to such event do not retain (in substantially the same percentages) beneficial ownership, directly or indirectly, of more than fifty percent (50%) of the voting power of and interest in the successor entity or the entity that controls the successor entity, provided, however, that no Change in Control shall be deemed to have occurred due to the conversion or payment of any equity or debt instrument of the Company which is outstanding on the date hereof. (d) "Termination Date" shall mean the Executive's last day on the payroll of the Company. -2-
4. Miscellaneous. (a) Notices. Any notices delivered under this Agreement shall be deemed duly delivered four business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, or one business day after it is sent for next-business day delivery via a reputable nationwide overnight courier service, in each case to the address of the recipient set forth in the introductory paragraph hereto. Either party may change the address to which notices are to be delivered by giving notice of such change to the other party. All notices to the Company shall also be addressed to the Company's General Counsel. (b) Pronouns. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns and pronouns shall include the plural, and vice versa. (c) Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement. (d) Amendment. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Executive. (e) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts. Any action, suit or other legal arising under or relating to any provision of this Agreement shall be commenced only in a court of the Commonwealth of Massachusetts (or, if appropriate, a federal court located within Massachusetts), and the Company and the Executive each consents to the jurisdiction of such a court. The Company and the Executive each hereby irrevocably waive any right to a trial by jury in any action, suit or other legal proceeding arising under or relating to any provision of this Agreement. (f) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to its assets or business, provided, however, that the obligations of the Executive are personal and shall not be assigned by him. (g) Waivers. No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion. (h) Captions. The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement. -3-
(i) Severability. In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby. THE EXECUTIVE ACKNOWLEDGES THAT HE HAS CAREFULLY READ THIS AGREEMENT AND UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above. CMGI, Inc. By: /s/ Jeffrey Yanagi ------------------- Title: EVP Human Resources /s/ Thomas Oberdorf ------------------- Thomas Oberdorf -4-
EXHIBIT 10.6 INDEMNIFICATION AGREEMENT This Agreement is made as of the 1st day of February 2002, by and between CMGI, Inc., a Delaware corporation (collectively with its direct and indirect majority owned subsidiaries, the "Corporation"), and James Barnett ("Indemnitee"), a director or officer of the Corporation. WHEREAS, it is essential to the Corporation to retain and attract as directors and officers the most capable persons available, and WHEREAS, the substantial increase in corporate litigation subjects directors and officers to expensive litigation risks, and WHEREAS, the Corporation has adopted an Article in its Restated Certificate of Incorporation (the "Charter") and a By-Law providing for the indemnification of Officers and Directors of the Corporation as authorized by Section 45 of the Delaware General Corporation Law, and WHEREAS, Indemnitee has indicated that he does not regard the protection available under the Corporation's Charter and insurance as adequate in the present circumstances, and may not be willing to serve or continue to serve as a director or officer without adequate protection, and WHEREAS, the Corporation desires Indemnitee to serve, or continue to serve, as a director or officer of the Corporation. NOW THEREFORE, the Corporation and Indemnitee do hereby agree as follows: 1. Agreement to Serve. Indemnitee agrees to serve or continue to serve as a director or officer of the Corporation for so long as Indemnitee is duly elected or appointed or until such time as Indemnitee tenders Indemnitee's resignation or Indemnitee's status as a director or officer is terminated. 2. Definitions. As used in this Agreement: (a) The term "Proceeding" shall include any threatened, pending or completed action, suit, arbitration, alternative dispute resolution proceeding, administrative hearing or other proceeding, whether brought by or in the right of the Corporation or otherwise and whether of a civil, criminal, administrative or investigative nature, and any appeal therefrom. (b) The term "Corporate Status" shall mean the status of a person who is or was a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer, partner, trustee, member, employee or agent of a subsidiary of the Corporation or another corporation, partnership, joint venture, trust, limited liability company or other enterprise.
(c) The term "Expenses" shall include, without limitation, reasonable attorneys' fees, retainers, court costs, transcript costs, fees and expenses of experts, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and other disbursements or expenses of the types customarily incurred in connection with investigations, judicial or administrative proceedings or appeals, but shall not include the amount of judgments, fines or penalties against Indemnitee or amounts paid in settlement in connection with such matters. (d) References to "other enterprise" shall include employee benefit plans; references to "fines" shall include any excise tax assessed with respect to any employee benefit plan; references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Agreement. (e) The term "Change of Control" shall mean the consummation of any of the following events: (i) a sale, lease or disposition of all or substantially all of the assets of the Corporation or a subsidiary of which Indemnitee is an officer, or (ii) a merger or consolidation (in a single transaction or a series of related transactions) of the Corporation or a subsidiary of which Indemnitee is an officer with or into any other corporation or corporations or other entity, or any corporate reorganization, where the stockholders of the Corporation or a subsidiary of which Indemnitee is an officer immediately prior to such event do not retain (in substantially the same percentages) beneficial ownership, directly or indirectly, of more than fifty percent (50%) of the voting power of and interest in the successor entity or the entity that controls the successor entity. 3. Indemnification in Third-Party Proceedings. The Corporation shall indemnify Indemnitee in accordance with the provisions of this Paragraph 3 if Indemnitee was or is a party to or threatened to be made a party to or otherwise involved in any Proceeding (other than a Proceeding by or in the right of the Corporation to procure a judgment in its favor) by reason of the Indemnitee's Corporate Status or by reason of any action alleged to have been taken or omitted in connection therewith, against all Expenses, judgments, fines, penalties, liabilities or losses and, to the extent permitted by law, amounts paid or to be paid in settlement actually and reasonably incurred by Indemnitee or on his behalf in connection with such Proceeding, if Indemnitee acted in good faith and in a manner which Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation and, with respect to of any criminal Proceeding, had no reasonable cause to believe that his conduct was unlawful. The termination of any Proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which the Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal Proceeding, had reasonable cause to believe that his conduct was unlawful.
4. Indemnification in Proceedings by or in the Right of the Corporation. The Corporation shall indemnify Indemnitee in accordance with the provisions of this Paragraph 4 if Indemnitee was or is a party to or threatened to be made a party to or otherwise involved in any Proceeding by or in the right of the Corporation to procure a judgment in its favor by reason of the Indemnitee's Corporate Status or by reason of any action alleged to have been taken or omitted in connection therewith, against all Expenses, judgments, fines, penalties, liabilities or losses and, to the extent permitted by law, amounts paid or to be paid in settlement actually and reasonably incurred by Indemnitee or on his behalf in connection with such Proceeding, if Indemnitee acted in good faith and in a manner which Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, except that no indemnification shall be made under this Paragraph 4 in respect of any claim, issue, or matter as to which Indemnitee shall have been adjudged to be liable to the Corporation, unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such Expenses as the Court of Chancery or such other court shall deem proper. The termination of any Proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which the Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal Proceeding, had reasonable cause to believe that his conduct was unlawful. 5. Exceptions to Right of Indemnification. Notwithstanding anything to the contrary in this Agreement, except as set forth in Paragraph 10, the Corporation shall not indemnify the Indemnitee in connection with a Proceeding (or part thereof) initiated by the Indemnitee unless the initiation thereof was approved by the Board of Directors of the Corporation. Notwithstanding anything to the contrary in this Agreement, the Corporation shall not indemnify the Indemnitee to the extent the Indemnitee is reimbursed from the proceeds of insurance, and in the event the Corporation makes any indemnification payments to the Indemnitee and the Indemnitee is subsequently reimbursed from the proceeds of insurance, the Indemnitee shall promptly refund such indemnification payments to the Corporation to the extent of such insurance reimbursement. 6. Indemnification of Expenses of Successful Party. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful, on the merits or otherwise, in defense of any Proceeding or in defense of any claim, issue or matter therein, Indemnitee shall be indemnified against all Expenses incurred by him or on his behalf in connection therewith. Without limiting the foregoing, if any Proceeding or any claim, issue or matter therein is disposed of, on the merits or otherwise (including a disposition without prejudice), without (i) the disposition being adverse to the Indemnitee, (ii) an adjudication that the Indemnitee was liable to the Corporation, (iii) a plea of guilty or nolo contendere by the Indemnitee, (iv) an adjudication that the Indemnitee did not act in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and (v) with respect to any criminal proceeding, an adjudication that the Indemnitee had reasonable cause to believe his conduct was unlawful, the Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto.
7. Notification and Defense of Claim. As a condition precedent to his right to be indemnified, the Indemnitee must notify the Corporation in writing as soon as practicable of any Proceeding for which indemnity will or could be sought by him and provide the Corporation with a copy of any summons, citation, subpoena, complaint, indictment, information or other document relating to such Proceeding with which he is served. With respect to any Proceeding of which the Corporation is so notified, the Corporation will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel reasonably acceptable to the Indemnitee. After notice from the Corporation to the Indemnitee of its election so to assume such defense, the Corporation shall not be liable to the Indemnitee for any legal or other expenses subsequently incurred by the Indemnitee in connection with such claim, other than as provided below in this Paragraph 7. The Indemnitee shall have the right to employ his own counsel in connection with such claim, but the fees and expenses of such counsel incurred after notice from the Corporation of its assumption of the defense thereof shall be at the expense of the Indemnitee unless (i) the employment of counsel by the Indemnitee has been authorized by the Corporation, (ii) counsel to the Indemnitee shall have reasonably concluded that there may be a conflict of interest or position on any significant issue between the Corporation and the Indemnitee in the conduct of the defense of such action or (iii) the Corporation shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel for the Indemnitee shall be at the expense of the Corporation, except as otherwise expressly provided by this Agreement. The Corporation shall not be entitled, without the consent of the Indemnitee, to assume the defense of any claim brought by or in the right of the Corporation or as to which counsel for the Indemnitee shall have reasonably made the conclusion provided for in clause (ii) above. The Corporation shall not be required to indemnify the Indemnitee under this Agreement for any amounts paid in settlement of any Proceeding effected without its written consent. The Corporation shall not settle any Proceeding in any manner which would impose any penalty or limitation on Indemnitee without Indemnitee's written consent. Neither the Corporation nor the Indemnitee will unreasonably withhold their consent to any proposed settlement. 8. Advancement of Expenses. Subject to the provisions of Paragraph 9 below, in the event that the Corporation does not assume the defense pursuant to Paragraph 7 of this Agreement of any Proceeding to which the Indemnitee was or is a party or is threatened to be made a party by reason of his Corporate Status or by reason of any action alleged to have been taken or omitted in connection therewith and of which the Corporation receives notice under this Agreement, any Expenses incurred by the Indemnitee or on his behalf in defending such Proceeding shall be paid by the Corporation in advance of the final disposition of such Proceeding; provided, however, that the payment of such Expenses incurred by the Indemnitee or on his behalf in advance of the final disposition of such Proceeding shall be made only upon receipt of an undertaking by or on behalf of the Indemnitee to repay all amounts so advanced in the event that it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the Corporation as authorized in this Agreement. Such undertaking shall be accepted without reference to the financial ability of the Indemnitee to make repayment. 9. Procedure for Indemnification. In order to obtain indemnification or advancement of Expenses pursuant to Paragraphs 3, 4, 6 or 8 of this Agreement, Indemnitee shall submit to the Corporation a written request, including in such request such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to indemnification or advancement of Expenses. Any such indemnification or advancement of Expenses shall be made promptly, and in any event within 30 days after receipt by the Corporation of the written request of the Indemnitee, unless with respect to requests under Paragraphs 3, 4 or 8 the Corporation determines within such 30-day period that such Indemnitee did not meet the applicable standard of conduct for indemnification set forth in Paragraph 3 or 4, as the case may be. The Board of Directors of the Corporation shall either (a) approve the indemnification and advancement of Expenses (i) by a majority vote of the Directors of the Corporation consisting of persons who are not at that time parties to the Proceeding ("Disinterested Directors"), whether or not a quorum; or (ii) by a committee of Disinterested Directors designated by a majority vote of Disinterested Directors, whether or not a quorum; or (b) designate independent legal counsel (appointed by the Corporation and approved by Indemnitee) who shall, within said 30-day period, provide a written opinion to the Board as to whether Indemnitee has met the relevant standards of conduct for indemnification and advancement of Expenses. The obligations of the Corporation hereunder with respect to the payment of any Expenses, judgment, fine or penalty shall be subject to the condition that the independent legal counsel shall not have determined (in a written opinion) that Indemnitee is not permitted to be indemnified under the applicable standards of conduct for indemnification. The obligation of the Corporation regarding the advancement of Expenses pursuant to this Agreement shall be subject to the condition that, if, when and to the extent that the independent legal counsel determines that Indemnitee is not permitted to be so indemnified, the Corporation shall be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the Corporation) for all such amounts theretofore paid. If Indemnitee has commenced legal proceedings (either before or after the determination by independent legal counsel) in a court of competent jurisdiction to secure a determination that Indemnitee may be indemnified under this Agreement or otherwise, any determination made by the independent legal counsel that Indemnitee is not permitted to be indemnified shall not be binding, and Indemnitee shall not be required to reimburse the Corporation for any advancement of Expenses and shall continue to be entitled to the advancement of Expenses until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). If there has been no determination by the independent legal counsel or if the independent legal counsel determines that Indemnitee is not permitted to be indemnified in whole or in part, Indemnitee shall have the right to commence litigation in any court in the states of California or Delaware having subject matter jurisdiction thereof and in which venue is proper seeking an initial determination by the court or challenging any such determination by the independent legal counsel or any aspect thereof, and the Corporation hereby consents to service of process and to appear in any such proceeding. 10. Remedies. The right to indemnification or advancement of Expenses as provided by this Agreement shall be enforceable by the Indemnitee in any court of competent jurisdiction if the Corporation denies such request, in whole or in part, or if no disposition thereof is made within the 30-day period referred to above in Paragraph 9. Unless otherwise required by law, the burden of proving that indemnification is not appropriate shall be on the Corporation. Neither the failure of the Corporation to have made a determination prior to the commencement of such action that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Corporation pursuant to
Paragraph 9 that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct. Indemnitee's expenses (of the type described in the definition of "Expenses" in Paragraph 2(c)) reasonably incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such Proceeding shall also be indemnified by the Corporation. 11. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Corporation for some or a portion of the Expenses, judgments, fines, penalties or amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with any Proceeding but not, however, for the total amount thereof, the Corporation shall nevertheless indemnify Indemnitee for the portion of such Expenses, judgments, fines, penalties or amounts paid in settlement to which Indemnitee is entitled. 12. Subrogation. In the event of any payment under this Agreement, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are reasonably necessary to enable the Corporation to bring suit to enforce such rights. 13. Term of Agreement. The Corporation's agreements and obligations under this Agreement shall continue during the period Indemnitee is a director or officer of the Corporation, and shall continue thereafter so long as Indemnitee shall be subject to any possible claim or proceeding by reason of Indemnitee's service in such capacity. The Indemnitee's rights under this Agreement shall inure to the benefit of Indemnitee's heirs, executors and administrators. 14. Officer and Director Liability Insurance. In the event the Corporation's Directors and Officers Insurance terminates or the scope or amount of coverage of the Corporation's Directors and Officers Insurance be reduced from the scope and coverage in effect during the first year of the Agreement, the Corporation agrees to give Indemnitee prompt notice thereof and to hold harmless and indemnify the Indemnitee to the fullest extent permitted pursuant to this Agreement and/or by applicable law to the full extent of the coverage that is in effect during the first year of this Agreement. Notwithstanding the foregoing, the Corporation is not obligated to maintain any Directors and Officers Insurance. 15. Section 16(b) Liability. The Corporation shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Corporation within the meaning of Section 16(b) of the Securities and Exchange Act of 1934 and amendments thereto or similar provisions of any state statutory law or common law. 16. Indemnification Hereunder Not Exclusive. The indemnification and advancement of Expenses provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may be entitled under the Charter, the By-Laws, any agreement, any vote of stockholders or disinterested directors, the General Corporation Law of Delaware, any other law
(common or statutory), or otherwise, both as to action in his official capacity and as to action in another capacity while holding office for the Corporation. Nothing contained in this Agreement shall be deemed to prohibit the Corporation from purchasing and maintaining insurance, at its expense, to protect itself or the Indemnitee against any expense, liability or loss incurred by it or him in any such capacity, or arising out of his status as such, whether or not the Indemnitee would be indemnified against such expense, liability or loss under this Agreement; provided that the Corporation shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy (whether arising from an insurance policy provided to the Corporation, a subsidiary, a parent, or any other insurance policy), contract, agreement or otherwise. 17. Attorneys' Fees. In the event that Indemnitee institutes any legal action to enforce Indemnitee's legal rights hereunder, or to recover damages for breach of this Agreement, Indemnitee, if Indemnitee prevails in whole or in part, shall be entitled to recover from the Corporation reasonable attorneys' fees and disbursements incurred by Indemnitee with respect to the claims or matters on which Indemnitee has prevailed. 18. Merger, Consolidation, or Change of Control. In the event that the Corporation or a subsidiary of which Indemnitee is an officer shall be a constituent corporation in a consolidation or merger, whether the Corporation or a subsidiary of which Indemnitee is an officer is the resulting or surviving corporation or is absorbed, or if there is a Change of Control, Indemnitee shall stand in the same position under this Agreement as Indemnitee would have with respect to the Corporation or a subsidiary of which Indemnitee is an officer if its separate existence had continued or if there had been no Change of Control. 19. No Special Rights. Nothing herein shall confer upon Indemnitee any right to continue to serve as an officer or director of the Corporation for any period of time or at any particular rate of compensation. 20. Savings Clause. If this Agreement or any portion thereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify Indemnitee as to Expenses, judgments, fines, penalties and amounts paid in settlement with respect to any Proceeding to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated and to the fullest extent permitted by applicable law. 21. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute the original. 22. Successors and Assigns. This Agreement shall be binding upon the Corporation and its successors and assigns and shall inure to the benefit of the estate, heirs, executors, administrators and personal representatives of Indemnitee. 23. Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
24. Modification and Waiver. This Agreement may be amended from time to time to reflect changes in Delaware law or for other reasons. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof nor shall any such waiver constitute a continuing waiver. 25. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been given (i) when delivered by hand or (ii) if mailed by certified or registered mail with postage prepaid, on the third day after the date on which it is so mailed: (a) if to the Indemnitee, to: James Barnett 232 Polhemus Avenue Atherton, CA 94027 if to the Corporation, to: CMGI, Inc. 100 Brickstone Square Andover, MA 01810 Attention: General Counsel or Chief Executive Officer or to such other address as may have been furnished to Indemnitee by the Corporation or to the Corporation by Indemnitee, as the case may be. 26. Applicable Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware. 27. Enforcement. The Corporation expressly confirms and agrees that it has entered into this Agreement in order to induce Indemnitee to continue to serve as a director of the Corporation, and acknowledges that Indemnitee is relying upon this Agreement in continuing in such capacity. 28. Entire Agreement. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supercedes all prior agreements, whether oral or written, by any officer, employee or representative of any party hereto in respect of the subject matter contained herein; and any prior agreement of the parties hereto in respect of the subject matter contained herein is hereby terminated and cancelled. For avoidance of doubt, the parties confirm that the foregoing does not apply to or limit the Indemnitee's rights under Delaware law or the Corporation's Charter or bylaws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. CMGI, INC. INDEMNITEE: By: /s/ David Andonian By: /s/ James Barnett Name: David Andonian Name: James Barnett Title: President and Chief Executive Title: Chief Executive Officer of Officer AltaVista Company
EXHIBIT 10.7 INDEMNIFICATION AGREEMENT This Agreement is made as of the 1st day of February 2002, by and between AltaVista Company, a Delaware corporation (collectively with its direct and indirect majority owned subsidiaries, the "Corporation"), and James Barnett ("Indemnitee"), a director or officer of the Corporation. WHEREAS, it is essential to the Corporation to retain and attract as directors and officers the most capable persons available, and WHEREAS, the substantial increase in corporate litigation subjects directors and officers to expensive litigation risks, and WHEREAS, the Corporation's Amended and Restated Certificate of Incorporation, as amended (the "Charter") provides that indemnification of agents of the Corporation by the Corporation is authorized through agreements with such agents in certain circumstances and with certain limitations, and WHEREAS, Indemnitee has indicated that he does not regard the protection available under the Corporation's Charter and insurance as adequate in the present circumstances, and may not be willing to serve or continue to serve as a director or officer without adequate protection, and WHEREAS, the Corporation desires Indemnitee to serve, or continue to serve, as a director or officer of the Corporation. NOW THEREFORE, the Corporation and Indemnitee do hereby agree as follows: 1. Agreement to Serve. Indemnitee agrees to serve or continue to serve as a director or officer of the Corporation for so long as Indemnitee is duly elected or appointed or until such time as Indemnitee tenders Indemnitee's resignation or Indemnitee's status as a director or officer is terminated. 2. Definitions. As used in this Agreement: (a) The term "Proceeding" shall include any threatened, pending or completed action, suit, arbitration, alternative dispute resolution proceeding, administrative hearing or other proceeding, whether brought by or in the right of the Corporation or otherwise and whether of a civil, criminal, administrative or investigative nature, and any appeal therefrom. (b) The term "Corporate Status" shall mean the status of a person who is or was a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer, partner, trustee, member, employee or agent of
another corporation, partnership, joint venture, trust, limited liability company or other enterprise. (c) The term "Expenses" shall include, without limitation, reasonable attorneys' fees, retainers, court costs, transcript costs, fees and expenses of experts, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and other disbursements or expenses of the types customarily incurred in connection with investigations, judicial or administrative proceedings or appeals, but shall not include the amount of judgments, fines or penalties against Indemnitee or amounts paid in settlement in connection with such matters. (d) References to "other enterprise" shall include employee benefit plans; references to "fines" shall include any excise tax assessed with respect to any employee benefit plan; references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Agreement. (e) The term "Change of Control" shall mean the consummation of any of the following events: (i) a sale, lease or disposition of all or substantially all of the assets of the Corporation, or (ii) a merger or consolidation (in a single transaction or a series of related transactions) of the Corporation with or into any other corporation or corporations or other entity, or any corporate reorganization, where the stockholders of the Corporation immediately prior to such event do not retain (in substantially the same percentages) beneficial ownership, directly or indirectly, of more than fifty percent (50%) of the voting power of and interest in the successor entity or the entity that controls the successor entity. 3. Indemnification in Third-Party Proceedings. The Corporation shall indemnify Indemnitee in accordance with the provisions of this Paragraph 3 if Indemnitee was or is a party to or threatened to be made a party to or otherwise involved in any Proceeding (other than a Proceeding by or in the right of the Corporation to procure a judgment in its favor) by reason of the Indemnitee's Corporate Status or by reason of any action alleged to have been taken or omitted in connection therewith, against all Expenses, judgments, fines, penalties, liabilities or losses and, to the extent permitted by law, amounts paid or to be paid in settlement actually and reasonably incurred by Indemnitee or on his behalf in connection with such Proceeding, if Indemnitee acted in good faith and in a manner which Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation and, with respect to of any criminal Proceeding, had no reasonable cause to believe that his conduct was unlawful. The termination of any Proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which the Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal Proceeding, had reasonable cause to believe that his conduct was unlawful.
4. Indemnification in Proceedings by or in the Right of the Corporation. The Corporation shall indemnify Indemnitee in accordance with the provisions of this Paragraph 4 if Indemnitee was or is a party to or threatened to be made a party to or otherwise involved in any Proceeding by or in the right of the Corporation to procure a judgment in its favor by reason of the Indemnitee's Corporate Status or by reason of any action alleged to have been taken or omitted in connection therewith, against all Expenses, judgments, fines, penalties, liabilities or losses and, to the extent permitted by law, amounts paid or to be paid in settlement actually and reasonably incurred by Indemnitee or on his behalf in connection with such Proceeding, if Indemnitee acted in good faith and in a manner which Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, except that no indemnification shall be made under this Paragraph 4 in respect of any claim, issue, or matter as to which Indemnitee shall have been adjudged to be liable to the Corporation, unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such Expenses as the Court of Chancery or such other court shall deem proper. The termination of any Proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which the Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal Proceeding, had reasonable cause to believe that his conduct was unlawful. 5. Exceptions to Right of Indemnification. Notwithstanding anything to the contrary in this Agreement, except as set forth in Paragraph 10, the Corporation shall not indemnify the Indemnitee in connection with a Proceeding (or part thereof) initiated by the Indemnitee unless the initiation thereof was approved by the Board of Directors of the Corporation. Notwithstanding anything to the contrary in this Agreement, the Corporation shall not indemnify the Indemnitee to the extent the Indemnitee is reimbursed from the proceeds of insurance, and in the event the Corporation makes any indemnification payments to the Indemnitee and the Indemnitee is subsequently reimbursed from the proceeds of insurance, the Indemnitee shall promptly refund such indemnification payments to the Corporation to the extent of such insurance reimbursement. 6. Indemnification of Expenses of Successful Party. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful, on the merits or otherwise, in defense of any Proceeding or in defense of any claim, issue or matter therein, Indemnitee shall be indemnified against all Expenses incurred by him or on his behalf in connection therewith. Without limiting the foregoing, if any Proceeding or any claim, issue or matter therein is disposed of, on the merits or otherwise (including a disposition without prejudice), without (i) the disposition being adverse to the Indemnitee, (ii) an adjudication that the Indemnitee was liable to the Corporation, (iii) a plea of guilty or nolo contendere by the Indemnitee, (iv) an adjudication that the Indemnitee did not act in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and (v) with respect to any criminal proceeding, an adjudication that the Indemnitee had reasonable cause to believe his conduct was unlawful, the Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto.
7. Notification and Defense of Claim. As a condition precedent to his right to be indemnified, the Indemnitee must notify the Corporation in writing as soon as practicable of any Proceeding for which indemnity will or could be sought by him and provide the Corporation with a copy of any summons, citation, subpoena, complaint, indictment, information or other document relating to such Proceeding with which he is served. With respect to any Proceeding of which the Corporation is so notified, the Corporation will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel reasonably acceptable to the Indemnitee. After notice from the Corporation to the Indemnitee of its election so to assume such defense, the Corporation shall not be liable to the Indemnitee for any legal or other expenses subsequently incurred by the Indemnitee in connection with such claim, other than as provided below in this Paragraph 7. The Indemnitee shall have the right to employ his own counsel in connection with such claim, but the fees and expenses of such counsel incurred after notice from the Corporation of its assumption of the defense thereof shall be at the expense of the Indemnitee unless (i) the employment of counsel by the Indemnitee has been authorized by the Corporation, (ii) counsel to the Indemnitee shall have reasonably concluded that there may be a conflict of interest or position on any significant issue between the Corporation and the Indemnitee in the conduct of the defense of such action or (iii) the Corporation shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel for the Indemnitee shall be at the expense of the Corporation, except as otherwise expressly provided by this Agreement. The Corporation shall not be entitled, without the consent of the Indemnitee, to assume the defense of any claim brought by or in the right of the Corporation or as to which counsel for the Indemnitee shall have reasonably made the conclusion provided for in clause (ii) above. The Corporation shall not be required to indemnify the Indemnitee under this Agreement for any amounts paid in settlement of any Proceeding effected without its written consent. The Corporation shall not settle any Proceeding in any manner which would impose any penalty or limitation on Indemnitee without Indemnitee's written consent. Neither the Corporation nor the Indemnitee will unreasonably withhold their consent to any proposed settlement. 8. Advancement of Expenses. Subject to the provisions of Paragraph 9 below, in the event that the Corporation does not assume the defense pursuant to Paragraph 7 of this Agreement of any Proceeding to which the Indemnitee was or is a party or is threatened to be made a party by reason of his Corporate Status or by reason of any action alleged to have been taken or omitted in connection therewith and of which the Corporation receives notice under this Agreement, any Expenses incurred by the Indemnitee or on his behalf in defending such Proceeding shall be paid by the Corporation in advance of the final disposition of such Proceeding; provided, however, that the payment of such Expenses incurred by the Indemnitee or on his behalf in advance of the final disposition of such Proceeding shall be made only upon receipt of an undertaking by or on behalf of the Indemnitee to repay all amounts so advanced in the event that it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the Corporation as authorized in this Agreement. Such undertaking shall be accepted without reference to the financial ability of the Indemnitee to make repayment. 9. Procedure for Indemnification. In order to obtain indemnification or advancement of Expenses pursuant to Paragraphs 3, 4, 6 or 8 of this Agreement, Indemnitee shall submit to the Corporation a written request, including in such request such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to indemnification or advancement of Expenses. Any such indemnification or advancement of Expenses shall be made promptly, and in any event within 30 days after receipt by the Corporation of the written request of the Indemnitee, unless with respect to requests under Paragraphs 3, 4 or 8 the Corporation determines within such 30-day period that such Indemnitee did not meet the applicable standard of conduct for indemnification set forth in Paragraph 3 or 4, as the case may be. The Board of Directors of the Corporation shall either (a) approve the indemnification and advancement of Expenses (i) by a majority vote of the Directors of the Corporation consisting of persons who are not at that time parties to the Proceeding ("Disinterested Directors"), whether or not a quorum; or (ii) by a committee of Disinterested Directors designated by a majority vote of Disinterested Directors, whether or not a quorum; or (b) designate independent legal counsel (appointed by the Corporation and approved by Indemnitee) who shall, within said 30-day period, provide a written opinion to the Board as to whether Indemnitee has met the relevant standards of conduct for indemnification and advancement of Expenses. The obligations of the Corporation hereunder with respect to the payment of any Expenses, judgment, fine or penalty shall be subject to the condition that the independent legal counsel shall not have determined (in a written opinion) that Indemnitee is not permitted to be indemnified under the applicable standards of conduct for indemnification. The obligation of the Corporation regarding the advancement of Expenses pursuant to this Agreement shall be subject to the condition that, if, when and to the extent that the independent legal counsel determines that Indemnitee is not permitted to be so indemnified, the Corporation shall be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the Corporation) for all such amounts theretofore paid. If Indemnitee has commenced legal proceedings (either before or after the determination by independent legal counsel) in a court of competent jurisdiction to secure a determination that Indemnitee may be indemnified under this Agreement or otherwise, any determination made by the independent legal counsel that Indemnitee is not permitted to be indemnified shall not be binding, and Indemnitee shall not be required to reimburse the Corporation for any advancement of Expenses and shall continue to be entitled to the advancement of Expenses until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). If there has been no determination by the independent legal counsel or if the independent legal counsel determines that Indemnitee is not permitted to be indemnified in whole or in part, Indemnitee shall have the right to commence litigation in any court in the states of California or Delaware having subject matter jurisdiction thereof and in which venue is proper seeking an initial determination by the court or challenging any such determination by the independent legal counsel or any aspect thereof, and the Corporation hereby consents to service of process and to appear in any such proceeding. 10. Remedies. The right to indemnification or advancement of Expenses as provided by this Agreement shall be enforceable by the Indemnitee in any court of competent jurisdiction if the Corporation denies such request, in whole or in part, or if no disposition thereof is made within the 30-day period referred to above in Paragraph 9. Unless otherwise required by law, the burden of proving that indemnification is not appropriate shall be on the Corporation. Neither the failure of the Corporation to have made a determination prior to the commencement of such action that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Corporation pursuant to
Paragraph 9 that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct. Indemnitee's expenses (of the type described in the definition of "Expenses" in Paragraph 2(c)) reasonably incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such Proceeding shall also be indemnified by the Corporation. 11. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Corporation for some or a portion of the Expenses, judgments, fines, penalties or amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with any Proceeding but not, however, for the total amount thereof, the Corporation shall nevertheless indemnify Indemnitee for the portion of such Expenses, judgments, fines, penalties or amounts paid in settlement to which Indemnitee is entitled. 12. Subrogation. In the event of any payment under this Agreement, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are reasonably necessary to enable the Corporation to bring suit to enforce such rights. 13. Term of Agreement. The Corporation's agreements and obligations under this Agreement shall continue during the period Indemnitee is a director or officer of the Corporation, and shall continue thereafter so long as Indemnitee shall be subject to any possible claim or proceeding by reason of Indemnitee's service in such capacity. The Indemnitee's rights under this Agreement shall inure to the benefit of Indemnitee's heirs, executors and administrators. 14. Officer and Director Liability Insurance. In the event the Corporation's Directors and Officers Insurance (whether obtained directly by the Corporation or through the parent of the Corporation) terminates or the scope or amount of coverage of the Corporation's Directors and Officers Insurance be reduced from the scope and coverage in effect during the first year of the Agreement, the Corporation agrees to give Indemnitee prompt notice thereof and to hold harmless and indemnify the Indemnitee to the fullest extent permitted pursuant to this Agreement and/or by applicable law to the full extent of the coverage that is in effect during the first year of this Agreement. Notwithstanding the foregoing, the Corporation is not obligated to maintain any Directors and Officers Insurance. 15. Indemnification Hereunder Not Exclusive. The indemnification and advancement of Expenses provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may be entitled under the Charter, the By-Laws, any agreement, any vote of stockholders or disinterested directors, the General Corporation Law of Delaware, any other law (common or statutory), or otherwise, both as to action in his official capacity and as to action in another capacity while holding office for the Corporation. Nothing contained in this Agreement shall be deemed to prohibit the Corporation from purchasing and maintaining insurance, at its expense, to protect itself or the Indemnitee against any expense, liability or loss incurred by it or him in any such capacity, or arising out of his status as such, whether or not the Indemnitee
would be indemnified against such expense, liability or loss under this Agreement; provided that the Corporation shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy (whether arising from an insurance policy provided to the Corporation, a subsidiary, a parent, or any other insurance policy), contract, agreement or otherwise. 16. Attorneys' Fees. In the event that Indemnitee institutes any legal action to enforce Indemnitee's legal rights hereunder, or to recover damages for breach of this Agreement, Indemnitee, if Indemnitee prevails in whole or in part, shall be entitled to recover from the Corporation reasonable attorneys' fees and disbursements incurred by Indemnitee with respect to the claims or matters on which Indemnitee has prevailed. 17. Merger, Consolidation, or Change of Control. In the event that the Corporation shall be a constituent corporation in a consolidation or merger, whether the Corporation is the resulting or surviving corporation or is absorbed, or if there is a Change of Control, Indemnitee shall stand in the same position under this Agreement as Indemnitee would have with respect to the Corporation if its separate existence had continued or if there had been no Change of Control. 18. No Special Rights. Nothing herein shall confer upon Indemnitee any right to continue to serve as an officer or director of the Corporation for any period of time or at any particular rate of compensation. 19. Savings Clause. If this Agreement or any portion thereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify Indemnitee as to Expenses, judgments, fines, penalties and amounts paid in settlement with respect to any Proceeding to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated and to the fullest extent permitted by applicable law. 20. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute the original. 21. Successors and Assigns. This Agreement shall be binding upon the Corporation and its successors and assigns and shall inure to the benefit of the estate, heirs, executors, administrators and personal representatives of Indemnitee. 22. Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof. 23. Modification and Waiver. This Agreement may be amended from time to time to reflect changes in Delaware law or for other reasons. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof nor shall any such waiver constitute a continuing waiver.
24. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been given (i) when delivered by hand or (ii) if mailed by certified or registered mail with postage prepaid, on the third day after the date on which it is so mailed: (a) if to the Indemnitee, to: 232 Polhemus Avenue Atherton, CA 94027 (b) if to the Corporation, to: Chief Executive Officer and General Counsel AltaVista Company 1070 Arastradero Road Palo Alto, CA 94304 or to such other address as may have been furnished to Indemnitee by the Corporation or to the Corporation by Indemnitee, as the case may be. 25. Applicable Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware. 26. Enforcement. The Corporation expressly confirms and agrees that it has entered into this Agreement in order to induce Indemnitee to continue to serve as a director of the Corporation, and acknowledges that Indemnitee is relying upon this Agreement in continuing in such capacity. 27. Entire Agreement. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supercedes all prior agreements, whether oral or written, by any officer, employee or representative of any party hereto in respect of the subject matter contained herein; and any prior agreement of the parties hereto in respect of the subject matter contained herein is hereby terminated and cancelled. For avoidance of doubt, the parties confirm that the foregoing does not apply to or limit the Indemnitee's rights under Delaware law or the Corporation's Charter or bylaws. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. ALTAVISTA COMPANY INDEMNITEE: James Barnett By: /s/ Susan Marsch By: /s/ James Barnett Name: Susan Marsch Name: James Barnett Title: General Counsel, Vice President Title: Chief Executive Officer Business & Legal Affairs and Secretary
EXHIBIT 10.8 April 12, 2002 Christian Feuer 627 N. Lincoln Street Hinsdale, IL 60521 Dear Christian: It is a distinct pleasure to offer you the position of President and Chief Executive Officer of uBid, Inc. ("uBid"). In this capacity you will report to the Board of Directors of uBid. Your starting salary will be $13,461.53 bi-weekly, which is equivalent to an annualized base salary of $350,000.00. You will also be eligible to receive a pro-rated bonus for fiscal year 2002, ending 7/31/02, based on a target annualized bonus of $200,000.00, of which $50,000.00 is guaranteed. Your FY03 bonus potential will be $200,000.00, of which uBid will guarantee $100,000.00, provided that you are employed by uBid on the date that bonuses are paid under the FY03 Bonus Plan, to be approved by the uBid Board of Directors. This bonus will be based on successful satisfaction of fiscal year 2003 business and personal objectives pursuant to the terms and conditions of the FY2003 Bonus Plan. In addition, on your date of hire, you will be granted an option (the "Option") to purchase 300,000 shares of CMGI common stock under the CMGI 2000 Stock Incentive Plan (the "Plan"). The Option will vest as follows: 25% on the one year anniversary of the date of grant, and then 1/48/th/ of the total award will vest monthly until fully vested on the fourth anniversary of the date of grant. The exercise price of the Option shall equal the closing price of the CMGI common stock on the Nasdaq National Market (during normal trading hours) on the date of grant. The Option shall be subject to all terms, limitations, restrictions and termination provisions set forth in the Plan and in the separate option agreement (which shall be based upon CMGI's standard form of option agreement) that shall be executed to evidence the grant of the Option. Additionally, as a condition of employment with uBid, you are required to execute each of the enclosed Non-Competition Agreement and Non-Disclosure and Developments Agreement. Please be advised that as President and Chief Executive Officer of uBid, you shall be deemed to be an "executive officer" of CMGI within the meaning of Rule 3b-7 under the Securities Exchange Act of 1934, as amended, and an "officer" of CMGI within the meaning of Rule 16a-1(f) under such Act. More details regarding the reporting requirements and other obligations imposed on you by federal securities laws will be forthcoming from a member of CMGI's Legal Department. As an employee of uBid, you may participate in any and all bonus and benefit programs that uBid establishes and makes available to its employees from time to time, provided you are eligible under (and subject to all provisions of) the plan documents governing those programs. Details of the benefits offered will be reviewed with you in orientation on your first day of employment.
Page Two of Two Offer of Employment, Christian Feuer In accordance with current federal law, you will be asked to provide documentation proving your eligibility to work in the United States. Please review the enclosed Employment Eligibility Verification Form (Form I9) and the list of acceptable documents that are required. You must bring this on your first day of employment. If you fail to bring proper documentation with you on your first day of work, you will be asked to go home to collect your paperwork. Unfortunately, there can be no exceptions. If you do not bring proper documentation, you will be considered ineligible for employment and uBid will not add you to its payroll until the required I9 documentation is received. Please confirm your acceptance of this offer and your start date by signing one copy of this letter and returning it to me. Additionally, please complete, sign and return the enclosed Employee Information sheet along with the Sexual Harassment policy, Illinois Tax Form, W4, Direct Deposit Form and both agreements that are enclosed. All documents along with one copy of your signed offer letter must be returned by the end of business on Thursday, if you wish to start the following Monday. If you choose to fax the documents, please fax a copy of your signed offer letter and all the enclosed documents to 978/684-3624 and bring the originals with you on your first day. If you wish to overnight the original documents, please mail one copy of your signed offer letter and the entire enclosed package to CMGI Attention: Joyce Fantasia 100 Brickstone Square Andover, MA 01810. Your employment with uBid will be "at-will". This means that your employment with uBid may be terminated by either you or uBid at any time and for any reason, with or without notice. This offer expires as of the close of business on Friday, April 19, 2002. This offer supersedes all prior offers, both verbal and written. This letter does not constitute a guarantee of employment or a contract. Christian, we are very pleased by the prospect of your addition to the uBid team, and we are confident that you will make a significant contribution to our future success! Sincerely, /s/ George McMillan George McMillan Treasurer uBid, Inc. /s/ Christian Feuer 4/15/02 - ------------------- ------- CHRISTIAN FEUER DATE TBD - --- START DATE
EXHIBIT 10.9 EXECUTIVE SEVERANCE AGREEMENT THIS EXECUTIVE SEVERANCE AGREEMENT ("Agreement") by and between uBid, Inc., a Delaware corporation (the "Company"), headquartered at 8550 W. Bryn Mawr Road, Suite 200, Chicago, Illinois and Christian Feuer (the "Executive"), is made as of April 15, 2002. WHEREAS, the Board of Directors of the Company (the "Board") has determined that Executive will play a critical role in the operations of the Company; and WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued employment and dedication of the Executive. NOW, THEREFORE, as an inducement for and in consideration of the Executive remaining in its employ, the Company agrees that the Executive shall receive the severance benefits set forth in this Agreement in the event the Executive's employment with the Company is terminated under the circumstances described below. 1. Not an Employment Contract. The Executive acknowledges that this Agreement does not constitute a contract of employment or impose on the Company any obligation to retain the Executive as an employee and that this Agreement does not prevent the Executive from terminating his employment. Executive understands and acknowledges that he is an employee at will and that either he or the Company may terminate the employment relationship between them at any time and for any reason. 2. Severance Pay. (a) Severance Pay Following a Change in Control. In the event a Change in Control (as defined below) occurs and, within one (1) year thereafter, the employment of the Executive is terminated by the Company for a reason other than for Cause (as defined below) or by the Executive for Good Reason (as defined below), then the Company shall pay to the Executive (as severance pay) a lump sum payment equal to six (6) months base salary. The Executive agrees that after the Termination Date (as defined below), but prior to payment of the severance pay pursuant to this paragraph, he shall execute a copy of the Company's form of general release of any and all claims he may have against the Company and its officers, employees, directors, parents and affiliates. Executive understands and agrees that the payment of the severance pay pursuant to this paragraph is contingent on his execution of the previously described release of claims. (b) Severance Pay Absent a Change in Control. In the event the employment of the Executive is terminated by the Company for a reason other than for Cause (as defined below), then the Company shall continue to pay to the Executive (as severance pay) his regular base salary as in effect on the Executive's last day of employment (exclusive of bonus or any other compensation), for six (6) months following the Termination Date. Unless the parties agree otherwise, the severance pay provided for in this Section 2(b) shall be paid in installments, in accordance with the Company's regular payroll practices. The Executive agrees that after the Termination Date, but prior to payment of the severance pay pursuant to this paragraph, he shall
execute a copy of the Company's form of general release of any and all claims he may have against the Company and its officers, employees, directors, parents and affiliates. Executive understands and agrees that the payment of the severance pay pursuant to this paragraph is contingent on his execution of the previously described release of claims. (c) Sole Remedy. The payment to the Executive of the amounts payable under this Section 2 shall constitute the sole remedy of the Executive in the event of a termination of the Executive's employment by the Company or a resignation by the Executive that results in payment of benefits under this Section 2. 3. Definitions. For purposes of this Agreement, the following terms shall have the following meanings: (a) "Cause" shall mean a good faith finding by the Company of: (i) gross negligence or willful misconduct by Executive in connection with his employment duties, (ii) failure by Executive to perform his duties or responsibilities required pursuant to his employment, after written notice and an opportunity to cure, (iii) misappropriation by Executive of the assets or business opportunities of the Company, or its affiliates, (iv) embezzlement or other financial fraud committed by Executive, (v) the Executive knowingly allowing any third party to commit any of the acts described in any of the preceding clauses (iii) or (iv), or (vi) the Executive's indictment for, conviction of, or entry of a plea of no contest with respect to, any felony. (b) "Good Reason" shall mean: (i) the unilateral relocation by the Company of the Executive's principal work place for the Company to a site more than 60 miles from the location of Executive's principal work place at the time of the Change in Control; (ii) a reduction in the Executive's then current base salary, without the Executive's consent; or (iii) the Executive's assignment to a position where the duties of the position are outside his area of professional competence. (c) "Change in Control" shall mean the consummation of any of the following events: (i) a sale, lease or disposition of all or substantially all of the assets of the Company, or (ii) a sale, merger, consolidation, reorganization, recapitalization, sale of assets, stock purchase, contribution or other similar transaction (in a single transaction or a series of related transactions) of the Company with or into any other corporation or corporations or other entity, or any other corporate reorganization, where the stockholders of the Company immediately prior to such event do not retain (in substantially the same percentages) beneficial ownership, directly or indirectly, of more than fifty percent (50%) of the voting power of and interest in the successor entity or the entity that controls the successor entity, provided, however, that a Change in Control shall not include a sale, lease, transfer or other disposition of all or substantially all of the capital stock, assets, properties or business of the Company (by way of merger, consolidation, reorganization, recapitalization, sale of assets, stock purchase, contribution or other similar transaction) that involves the Company, on the one hand, and CMGI, Inc. or any CMGI Subsidiary (as defined below), on the other hand. (d) "Termination Date" shall mean the Executive's last day on the payroll of the Company. -2-
(e) "CMGI Subsidiary" shall mean any corporation or other entity that is controlled, directly or indirectly, by CMGI, Inc. 4. Miscellaneous. (a) Notices. Any notices delivered under this Agreement shall be deemed duly delivered four business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, or one business day after it is sent for next-business day delivery via a reputable nationwide overnight courier service, in each case to the address of the recipient set forth in the introductory paragraph hereto. Either party may change the address to which notices are to be delivered by giving notice of such change to the other party. All notices to the Company shall also be addressed to the Company's General Counsel. (b) Pronouns. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns and pronouns shall include the plural, and vice versa. (c) Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement. (d) Amendment. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Executive. (e) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois. Any action, suit or other legal arising under or relating to any provision of this Agreement shall be commenced only in a court of the State of Illinois (or, if appropriate, a federal court located within Illinois), and the Company and the Executive each consents to the jurisdiction of such a court. The Company and the Executive each hereby irrevocably waive any right to a trial by jury in any action, suit or other legal proceeding arising under or relating to any provision of this Agreement. (f) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to its assets or business, provided, however, that the obligations of the Executive are personal and shall not be assigned by him. (g) Waivers. No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion. (h) Captions. The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement. -3-
(i) Severability. In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby. THE EXECUTIVE ACKNOWLEDGES THAT HE HAS CAREFULLY READ THIS AGREEMENT AND UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above. uBid, Inc. By: /s/ George A. McMillan ----------------------- Title: Treasurer /s/ Christian Feuer ------------------- Christian Feuer -4-