Executive Severance Agreement - CMGI Inc. and George A. McMillan
EXECUTIVE SEVERANCE AGREEMENT
-----------------------------
THIS EXECUTIVE SEVERANCE AGREEMENT ("Agreement") by and between CMGI, Inc.,
a Delaware corporation (the "Company") and George A. McMillan (the "Executive"),
is made as of June 11, 2001.
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. 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 24 months of employment
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 or prior to his first day of employment with the Company ("Initial
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 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;
<PAGE>
- Executive shall be entitled to exercise his vested Initial
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 15/th/ day of the month);
- In no event shall Executive be entitled to exercise his vested
Initial 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 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 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 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 , the Executive shall have the right to exercise any vested
Initial 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
-2-
<PAGE>
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.
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 for his
personal use of the assets or business opportunities of the Company, or its
affiliates, (iv) embezzlement or other financial or 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; or (iii) material dimunition of
Executive's duties, authority or position as Chief Financial Officer of the
Company, without the Executive's consent.
(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.
-3-
<PAGE>
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.
(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.
-4-
<PAGE>
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/ David S. Wetherell
Title: Chief Executive Officer
/s/ George A. McMillan
------------------
George A. McMillan
-5-