Employment Agreement - CMGI Inc. and George A. McMillan
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
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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.
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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
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George A. McMillan DATE