Exhibit 10.27
January 28, 1998
Xx. Xxxxxx X. Bridge
CONNECT, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
1998 EMPLOYMENT LETTER
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Dear Xxxxxx:
This letter supersedes to the extent set forth below the letter agreement
between you and CONNECT, Inc. (the "Company") dated April 28, 1997 (the "1997
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Letter"), a copy of which is attached to this letter as Attachment A pursuant to
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which the Company's Board of Directors offered you, and you accepted, a position
with the Company as its Chairman, President and Chief Executive Officer, which
position you continue to hold. By your signature below, you acknowledge that
this letter agreement (the "1998 Letter") governs your employment relationship
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with the Company for the calendar year 1998. This 1998 Letter is effective as
of the date set forth above.
1. SALARY. Your salary for the calendar year 1998 will be $225,000 per
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annum, payable in accordance with the Company's standard payroll policy,
commencing effective as of January 1, 1998.
2. PERFORMANCE BONUS. During the calendar year 1998, you will be
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eligible to receive aggregate bonus payments of up to $200,000 payable in
accordance with the Company's standard Executive Bonus Plan for the 1998 Fiscal
Year, a copy of which is attached to this 1998 Letter as Attachment B.
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You acknowledge by your signature below that the Company is under no
obligation to pay to you any of the bonus payments set forth in the 1997 Letter
which have not been paid to you as of the date of this 1998 Letter.
3. STRATEGIC BONUS. During the 1998 calendar year, you will be eligible
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to receive a strategic bonus of up to $500,000 payable when, in the good faith
judgment of the Company's Board of Directors, you have met the strategic
objectives set by the Board.
4. GRANT OF STOCK OPTIONS. Effective as of the date of this 1998 Letter,
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the Board of Directors has approved a grant to you of nonstatutory stock options
(the "1998 Options") to purchase 400,000 shares of the Company's Common Stock
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with an exercise price equal to the
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Xx. Xxxxxx Bridge
January 28, 1998
Page 2
fair market value of such shares as of the grant date. The 1998 Options will
vest on a monthly basis over a period of 36 months, with such vesting beginning
as of January 1, 1998 and the 1998 Options becoming fully vested on December 31,
2000, assuming that you satisfy certain conditions related to your continued
employment with the Company,. In connection with the grant of the 1998 Options,
you will be required to execute the Company's standard form of stock option
agreement, which will set forth with greater specificity the terms of the 1998
Options.
5. CHANGE OF CONTROL BENEFITS. You entered into a Change of Control
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Agreement, dated June 11, 1997, with the Company (the "Agreement"), a copy of
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which is attached hereto as Attachment C, pursuant to which you became entitled
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to receive certain benefits in the event the Company should engage in certain
significant corporate events as set forth in the Agreement. Capitalized terms
used but not defined in this 1998 Letter shall have the same meaning set forth
in the Agreement.
In addition to any benefits to which you are entitled under the Agreement,
in the event the Company engages in a Change of Control transaction during the
calendar year 1998, the Company will, immediately prior to the consummation of
such Change of Control, forgive its loan to you in the principal amount of
$150,000, plus all accrued but unpaid interest as of such date.
6. WHOLE AGREEMENT. This 1998 Letter supersedes any previous letters and
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e-mails between you and the Company relating to the subject matter of this
letter, as well as any current employment and consulting agreements you may have
with the Company, except that the benefits provided pursuant to this 1998 Letter
are in addition to (i) any benefits provided by the third, fourth, fifth and
sixth paragraphs of the 1997 Letter (it being understood that the acceleration
provisions referenced in such sixth paragraph shall not apply to the 1998
Options), (ii) any benefits provided by the Agreement, and (iii) any benefits
provided under those stock option agreements entered into by you and the Company
prior to the date of this 1998 Letter.
[Signature Page Follows]
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Xx. Xxxxxx Bridge
January 28, 1998
Page 3
This 1998 Letter may be signed in one or more counterparts, all of which
together shall constitute one original.
Regards,
Xxxxxxx Xxxxxxx
For the Board of Directors
CONNECT, Inc.
I accept this offer. _____________________________ _____________
Xxxxxx Bridge Date
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ATTACHMENT B
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EXECUTIVE BONUS PLAN
1998 Fiscal Year
(Xxxxxx Bridge Form)
General guidelines:
- Bonus plans apply to:
Base Target Bonus Total Comp
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Bridge 225 200 425
- 50% of each executive's bonus eligible for quarterly payment (12.5%/quarter)
with the balance tied to achievement of annual target. All executive bonuses
tied 100% to revenue and operating margin components with each component
comprising 50% of total for both quarterly and annual objectives.
Payouts: Two components:
1. Revenues - 85% of quarterly/annual targets must be achieved to receive
any payout; 85% attainment pays 85% with 1% additional payout for each 1%
additional attainment up to 100%.
2. Operating margin - 100% must be achieved for payouts to occur. Payout
increase for 101-120% performance by 2% for each 1% achievement where quarterly
and annual targets are overachieved (i.e., 110% performance equals 120% payout,
up to 140% payout in event of 120% performance achieved).
- License revenue and operating margins as follows (in millions):
1Q 2Q 3Q 4Q Total
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Targets: Rev. 1.20 1.50 2.00 2.80 7.50
Op Mar. (2.73) (1.99) (1.38) (0.65) (6.75)
