Employment Agreement - Open Market Inc. and Ed Durkin
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), made this 17th day of
November, 2000, is entered into by Open Market, Inc., a Delaware corporation
with its principal place of business at 1 Wayside Road, Burlington, MA 01803
(the "Company"), and Ed Durkin, residing in Franklin, MA (the "Employee").
The Company desires to employ the Employee, and the Employee desires to
be employed by the Company. Therefore, in consideration of the mutual covenants
and promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto,
the parties agree as follows:
1. TERM OF EMPLOYMENT. The Company hereby agrees to employ the
Employee, and the Employee hereby accepts employment with the Company, upon the
terms set forth in this Agreement, for the period commencing on November 17,
2000 (the "Commencement Date") and ending upon termination of employment in
accordance with Section 4 (the "Employment Period").
2. TITLE; CAPACITY. The Employee shall serve as a Section 16(b) officer
of the Company (and will be required, as a condition of employment, to sign the
Executive Retention Agreement attached hereto as ATTACHMENT A) and as Vice
President and Chief Financial Officer or in such other similar position as the
Company may determine from time to time. The Employee shall be based at the
Company's headquarters in Burlington, Massachusetts, or such place within thirty
(30) miles of Burlington, Massachusetts as the Chief Executive Officer or any
interim Chief Executive Officer (the "CEO") shall determine. The Employee shall
be subject to the supervision of, and shall have such authority as is delegated
to him by the CEO, or his successor.
The Employee hereby accepts such employment and agrees to undertake the
duties and responsibilities inherent in such position and such other reasonably
consistent duties and responsibilities as the CEO shall from time to time
reasonably assign to him. The Employee agrees to devote his entire business
time, attention and energies to the business and interests of the Company during
the Employment Period; provided, however, that nothing herein shall be construed
as preventing the Employee from making personal investments, and provided,
further, that nothing herein shall be construed as preventing the Employee from
serving on civic or charitable boards, so long as the Employee has obtained
permission to do so in each instance and in advance from the CEO. The Employee
agrees to abide by the rules, regulations, instructions, personnel practices and
policies of the Company and any changes therein which may be adopted from time
to time by the Company.
3. COMPENSATION AND BENEFITS.
3.1 SALARY. The Company shall pay the Employee, in semi-monthly
installments, an annual base salary of $250,000 for the one-year period
commencing on the
1
<PAGE>
Commencement Date. Such salary shall be subject to adjustment thereafter as
determined by the Board of Directors of the Company or its designee, but in no
event shall the Employee's annual base salary decrease by more than 8% from year
to year.
3.2 FRINGE BENEFITS. The Employee shall be entitled to participate
in all bonus and benefit programs that the Company establishes and makes
available to its employees, if any, to the extent that Employee's position,
tenure, salary, age, health and other qualifications make him eligible to
participate, including, but not limited to, the Company's 2000 Executive Short
Term Incentive Plan attached hereto as ATTACHMENT B. The Employee shall be
entitled to three weeks paid vacation per year while employed pursuant to this
Agreement, to be taken at such times as may be approved by the CEO.
3.3 REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Employee for all reasonable travel, entertainment and other expenses incurred or
paid by the Employee in connection with, or related to, the performance of his
duties, responsibilities or services under this Agreement, upon presentation by
the Employee of documentation, expense statements, vouchers and/or such other
supporting information as the Company may reasonably request, PROVIDED, HOWEVER,
that the amount available for such travel, entertainment and other expenses may
be fixed in advance by the CEO.
3.4 OPTIONS. The Company agrees to grant to the Employee under its
1999 Stock Incentive Plan an option to purchase up to 300,000 shares of its
Common Stock, $.001 par value per share, at a price per share equal to the fair
market value of the shares of Common Stock of the Company at the time of grant,
which date shall be the same date as the Commencement Date . Such option shall
vest as to 25% of the total number of shares subject to option on the six month
anniversary of the Commencement Date. Thereafter, the remaining shares subject
to such option shall vest in twelve (12) equal quarterly installments. The
option shall be subject to the terms and conditions of the Company's standard
form of Option Agreement. To the extent permissible under applicable law and
under the 1999 Stock Incentive Plan, the option shall be an incentive stock
option.
3.5 BONUS. Employee shall be entitled to participate in the
Company's 2000 Executive Short Term Incentive Plan pursuant to which Employee
shall be paid (a) a minimum bonus of $25,000 for the year ending December 31,
2000 to be paid in the first pay period following December 31, 2000 and (b) a
minimum bonus of $15,750 for the quarter ending March 31, 2001 to be paid no
later than April 20, 2001 (the "Q1 Bonus"). The Employee's total target bonus
(including the Q1 Bonus) pursuant to the 2000 Executive Short Term Incentive
Plan for the year ending December 31, 2001 shall be $63,000. Such target bonus
shall be subject to adjustment thereafter as determined by the Board of
Directors of the Company or its designee, but in no event shall such target
bonus be less than $50,000 on an annualized basis.
4. EMPLOYMENT TERMINATION. The employment of the Employee by the
Company pursuant to this Agreement shall terminate upon the occurrence of any
one of the following:
2
<PAGE>
4.1 At the election of the Company, for cause, immediately upon
written notice by the Company to the Employee. For the purposes of this Section
4.1, cause for termination shall be deemed to exist upon (a) a good faith
finding by the CEO of the material failure of the Employee to perform his
assigned duties for the Company, which failure is not cured within sixty (60)
days after a written demand for performance is delivered to the Employee by the
CEO which specifically identifies the manner in which the CEO believes that the
Employee has not performed his duties; (b) the Employee's dishonesty, gross
negligence or willful misconduct, or (c) the conviction of the Employee of, or
the entry of a pleading of guilty or nolo contendere by the Employee to, any
crime involving moral turpitude or any felony;
4.2 Thirty days after the death or disability of the Employee. As
used in this Agreement, the term "disability" shall mean the inability of the
Employee, due to a physical or mental disability, for a period of 90 days,
whether or not consecutive, during any 360-day period to perform the services
contemplated under this Agreement. A determination of disability shall be made
by a physician satisfactory to both the Employee and the Company, PROVIDED THAT
if the Employee and the Company do not agree on a physician, the Employee and
the Company shall each select a physician and these two together shall select a
third physician, whose determination as to disability shall be binding on all
parties;
4.3 Except as provided in Section 4.6 below, at the election of the
Company, provided the Company gives the Employee at least 30 days advanced
written notice;
4.4 At the election of the Employee without Good Reason, provided
the Employee gives the Company at least 30 days advanced written notice;
4.5 At the election of the Employee at any time for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean the termination of
employment by the Employee as a result of (a) a material breach of the
Employment Agreement by the Company which breach is not cured within thirty (30)
days after written notice to the CEO of such breach; (b) a material reduction in
the Employee's responsibilities, salary, reporting structure, annual target
bonus or other benefits as provided in Section 3.2 of this Agreement; or (c) a
relocation of the Employee inconsistent with the first paragraph of Section 2;
and
4.6 By the Company at the recommendation of the next successor to
the CEO as of the date hereof (whether such successor shall be a new CEO, a new
interim CEO or an "Office of the CEO administered by the Board) within twelve
months of the commencement of such successor's employment with the Company as
CEO.
5. EFFECT OF TERMINATION.
5.1 TERMINATION FOR CAUSE OR AT THE ELECTION OF THE EMPLOYEE. In the
event the Employee's employment is terminated for cause pursuant to Section 4.1,
or at the election of the Employee pursuant to Section 4.4, the Company shall
pay to the Employee the compensation and benefits otherwise payable to him under
Section 3 through the last day of his actual employment by the Company.
3
<PAGE>
5.2 TERMINATION AT ELECTION OF THE COMPANY. In the event the
Employee's employment is terminated at the election of the Company pursuant to
Section 4.3, the Company shall pay to the Employee an amount equal to six months
of his base salary and a six month, pro-rated portion of his target bonus then
in effect as severance pay and shall continue the benefits set forth in Section
3.2 for a period of six months. In addition, in the event the Employee's
employment is terminated at the election of the Company pursuant to Section 4.3
prior to the sixth month anniversary of the Commencement Date, then an
additional 33% of the unvested portion of any options then held by the Employee
shall vest immediately prior to the termination of the Employee's employment. No
payment hereunder will be required unless and until the parties enter into a
release agreement pursuant to which the Employee releases the Company from any
and all claims related to his employment with or termination from the Company,
and any payment hereunder will be made in accordance with the Company's regular
payroll practices.
5.3 TERMINATION BY EMPLOYEE FOR GOOD REASON. In the event the
Employee's employment is terminated at the election of the Employee for Good
Reason prior to a Change of Control pursuant to Section 4.5, the Company shall
continue to pay to the Employee an amount equal to six months base salary and
his a six month, pro-rated portion of his target bonus then in effect as
severance pay and shall continue the benefits set forth in Section 3.2 for a
period of six months. In addition, in the event the Employee's employment is
terminated at the election of the Employee for Good Reason pursuant to Section
4.5 prior to the sixth month anniversary of the Commencement Date, then an
additional 33% of the unvested portion of any options then held by the Employee
shall vest immediately prior to the termination of the Employee's employment.
5.4 TERMINATION BY SUCCESSOR CEO WITHIN TWELVE MONTHS. In the event
the Employee's employment is terminated by the Company at the recommendation of
the successor to the CEO as of the date hereof (whether such successor shall be
a new CEO, a new interim CEO or an "Office of the CEO administered by the Board)
within twelve months of the commencement of such successor's employment with the
Company as CEO, the Company shall continue to pay to the Employee an amount
equal to one year base salary and his target bonus then in effect as severance
pay and shall continue the benefits set forth in Section 3.2 for a period of one
year. In addition, an additional 50% of the unvested portion of any options then
held by the Employee shall vest immediately prior to the termination of the
Employee's employment.
5.5 TERMINATION FOR DEATH OR DISABILITY. If the Employee's
employment is terminated by death or because of disability pursuant to Section
4.2, the Company shall pay to the estate of the Employee or to the Employee, as
the case may be, the compensation which would otherwise be payable to the
Employee up to the end of the month in which the termination of his employment
because of death or disability occurs.
5.6 SURVIVAL. The provisions of Sections 6 and 7 shall survive the
termination of this Agreement.
6. NON-COMPETE.
6.1 During the Employment Period and for a period of two years after
the termination or expiration thereof, the Employee will not directly or
indirectly: (i) as an individual
4
<PAGE>
proprietor, partner, stockholder, officer, employee, director, joint venturer,
investor, lender, or in any other capacity whatsoever (other than as the holder
of not more than one percent (1%) of the total outstanding stock of a publicly
held company), engage in the business of developing, producing, marketing or
selling software products or services in the Internet commerce industry or
content management or epublishing business that are or would be directly
competitive with products or services offered or under development by the
Company while the Employee was employed by the Company; or (ii) recruit, solicit
or induce, or attempt to induce, any employee or employees of the Company to
terminate their employment with, or otherwise cease their relationship with, the
Company; or (iii) solicit for the purpose of providing any product or service
competitive with the products or services offered by the Company, divert or take
away, or attempt to divert or to take away, the business or patronage of any of
the clients, customers or accounts, or prospective clients, customers or
accounts, of the Company which were contacted, solicited or served by the
Employee while employed by the Company.
6.2 If any restriction set forth in this Section 6 is found by any
court of competent jurisdiction to be unenforceable because it extends for too
long a period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.
6.3 The restrictions contained in this Section 6 are necessary for
the protection of the business and goodwill of the Company and are considered by
the Employee to be reasonable for such purpose. The Employee agrees that any
breach of this Section 6 will cause the Company substantial and irrevocable
damage and therefore, in the event of any such breach, in addition to such other
remedies which may be available, the Company shall have the right to seek
specific performance and injunctive relief.
7. PROPRIETARY INFORMATION AND DEVELOPMENTS.
7.1 PROPRIETARY INFORMATION.
(a) Employee agrees that all information and know-how, whether
or not in writing, of a private, secret or confidential nature concerning the
Company's technology business or financial affairs (collectively, "Proprietary
Information") is and shall be the exclusive property of the Company. By way of
illustration, but not limitation, Proprietary Information may include
inventions, products, processes, methods, techniques, formulas, compositions,
compounds, projects, developments, plans, research data, clinical data,
financial data, personnel data, computer programs, and customer and supplier
lists. Employee will not disclose any Proprietary Information to others outside
the Company or use the same for any unauthorized purposes without written
approval by an officer of the Company, either during or after his employment,
unless and until such Proprietary Information has become public knowledge
without fault by the Employee.
(b) Employee agrees that all files, letters, memoranda, reports,
records, data, sketches, drawings, laboratory notebooks, program listings, or
other written, photographic, or other tangible material containing Proprietary
Information, whether created by the Employee
5
<PAGE>
or others, which shall come into his custody or possession, shall be and are the
exclusive property of the Company to be used by the Employee only in the
performance of his duties for the Company.
(c) Employee agrees that his obligation not to disclose or use
information, know-how and records of the types set forth in paragraphs (a) and
(b) above, also extends to such types of information, know-how, records and
tangible property of customers of the Company or suppliers to the Company or
other third parties who may have disclosed or entrusted the same to the Company
or to the Employee in the course of the Company's business.
7.2 DEVELOPMENTS.
(a) Employee will make full and prompt disclosure to the Company
of all inventions, improvements, discoveries, methods, developments, software,
and works of authorship, whether patentable or not, which are created, made,
conceived or reduced to practice by the Employee or under his direction or
jointly with others during his employment by the Company, whether or not during
normal working hours or on the premises of the Company (all of which are
collectively referred to in this Agreement as "Developments").
(b) Employee agrees to assign and does hereby assign to the
Company (or any person or entity designated by the Company) all his right, title
and interest in and to all Developments and all related patents, patent
applications, copyrights and copyright applications. However, this Section 7(b)
shall not apply to Developments which do not relate to the present or planned
business or research and development of the Company and which are made and
conceived by the Employee not during normal working hours, not on the Company's
premises and not using the Company's tools, devices, equipment or Proprietary
Information.
(c) Employee agrees to cooperate fully with the Company, both
during and after his employment with the Company, with respect to the
procurement, maintenance and enforcement of copyrights and patents (both in the
United States and foreign countries) relating to Developments. Employee shall
sign all papers, including, without limitation, copyright applications, patent
applications, declarations, oaths, formal assignments, assignment of priority
rights, and powers of attorney, which the Company may deem necessary or
desirable in order to protect its rights and interests in any Development.
7.3 OTHER AGREEMENTS. Employee hereby represents that he is not
bound by the terms of any agreement with any previous employer or other party to
refrain from using or disclosing any trade secret or confidential or proprietary
information in the course of his employment with the Company or to refrain from
competing, directly or indirectly, with the business of such previous employer
or any other party. Employee further represents that his performance of all the
terms of this Agreement and as an employee of the Company does not and will not
breach any agreement to keep in confidence proprietary information, knowledge or
data acquired by him in confidence or in trust prior to his employment with the
Company. Employee acknowledges that he shall execute the Company's standard form
of Invention and Non-Disclosure Agreement attached hereto as ATTACHMENT C and
that the duties and obligations of the
6
<PAGE>
Employee and the rights of the Company under such agreement shall be in
additional to, and not in lieu of those set forth in Sections 6 and 7 of this
Agreement.
8. NOTICES. All notices required or permitted under this Agreement
shall be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party at the address shown above, or at
such other address or addresses as either party shall designate to the other in
accordance with this Section 8.
9. 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.
10. ENTIRE AGREEMENT. This Agreement, together with its attachments,
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.
11. AMENDMENT. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Employee.
12. GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the Commonwealth of Massachusetts.
13. 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 Employee are personal and shall not be assigned by him.
14. MISCELLANEOUS.
14.1 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.
14.2 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.
14.3 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.
7
<PAGE>
15. REQUIRED APPROVALS. The Company and the Employee hereby acknowledge
and agree that this Agreement shall not take effect until the above terms and
conditions have been approved by the Company's Board of Directors, which
approval shall be evidenced by the interim CEO's execution of this Agreement on
behalf of the Company.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year set forth above.
OPEN MARKET, INC.
By: /s/ Harland LaVigne
--------------------------
Name: Harland LaVigne
--------------------------
Title: Chief Executive Officer
--------------------------
EMPLOYEE
By: /s/ Ed Durkin
--------------------------
Ed Durkin