Exhibit 10.15
AMENDMENT TO EMPLOYMENT LETTERS
WHEREAS Lycos, Inc., a Delaware corporation ("Lycos"), and Xxxxxx
X. Xxxxxx (the "Executive") executed an employment letter dated December 8,
1995, as clarified by a letter dated December 11, 1995 (collectively, the
"Employment Letters");
WHEREAS Lycos and the Executive wish to amend the Employment Letters
in certain respects as provided herein;
NOW, THEREFORE, Lycos and the Executive agree as follows:
1. Change in Control. In the event of a Change in Control (as
defined herein), outstanding stock options granted by Lycos to the Executive
shall become vested and immediately exercisable on the date of the Change in
Control (to the extent not then already vested and exercisable), but only to the
extent such acceleration does not result in an "excess parachute payment" within
the meaning of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), as determined by Lycos's independent auditors (the "Accounting
Firm") after taking into account other payments or benefits the Executive may be
entitled to receive (the "Section 280G Limitation"). In the event that certain
of the Executive's outstanding stock options will not become vested and
immediately exercisable pursuant to the Section 280G Limitation, the Accounting
Xxxx will determine which options will be accelerated upon the occurrence of the
Change in Control by determining which of the Executive's options, if
accelerated, will provide him the maximum economic value in connection with the
Section 280G Limitation.
2. Termination Following a Change in Control. (a) If, within two
years following a Change in Control, the Executive's employment with Lycos (or
its successor) is terminated by Lycos (or its successor) for reasons other than
Cause (as defined herein) or the Executive terminates his employment with Lycos
(or its successor) for Good Reason (as defined herein), (i) all outstanding
stock options granted by Lycos shall become vested and exercisable for a period
of 90 days following the date the Executive ceases to be employed by Lycos (or
its successor), or until the date on which the option expires by its terms,
whichever occurs first and (ii) in the event it shall be determined that any
payment or distribution to or for the benefit of the Executive (whether paid or
payable or distributed or
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distributable pursuant to the terms of this Amendment to the Employment
Agreement) or otherwise, but determined without regard to any additional
payments required under this Section 2(a)(ii) (a "Payment") would be subject to
the excise tax imposed by Section 4999 of the Code or any interest or penalties
are incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes and Excise Tax) imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payment. The Executive's employment shall be deemed
to have been terminated following a Change in Control by the Company without
Cause if the Executive's employment is terminated prior to a Change in Control
without Cause at the direction of a party who has entered into an agreement with
the Company the consummation of which will constitute a Change in Control.
(b) Subject to the provisions of Section 2(c), all determinations
required to be made under this Section 2, including whether and when a Gross-Up
Payment is required and the amount of such Gross-UP Payment and the assumptions
to be utilized in arriving at such determination, shall be made by the
Accounting Firm (or such other certified public accounting firm reasonably
acceptable to Lycos as may be designated by the Executive) which shall provide
detailed supporting calculations both to Lycos and the Executive within 15
business days of the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by Lycos. All fees and expenses of
the Accounting Firm shall be borne solely by Lycos. Any Gross-Up Payment, as
determined pursuant to this Section 2, shall be paid by Lycos to the Executive
within five days of the later of (i) the due date for the payment of any Excise
Tax, and (ii) the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon Lycos and the
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by Lycos should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that Lycos exhausts its
remedies pursuant to Section 2(c) and the Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the
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Underpayment that has occurred and any such Underpayment shall be paid promptly
by Lycos to or for the benefit of the Executive.
(c) The Executive shall notify Lycos in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by Lycos
of the Gross-Up Payment. Such notification shall be given as soon as practicable
but no later than ten business days after the Executive is informed in writing
of such claim and shall apprise Lycos of the nature of such claim and the date
on which such claim is requested to be paid. The Executive shall not pay such
claim prior to the expiration of the 30-day period following the date on which
it gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If Lycos notifies
the Executive in writing prior to the expiration of such period that it desires
to contest such claim, the Executive shall:
(i) give Lycos any information reasonably requested by Lycos
relating to such claim;
(ii) take such action in connection with contesting such claim as
Lycos shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such
claim by an attorney selected by Xxxxx;
(iii) cooperate with Lycos in good faith in order to effectively
contest such claim, and
(iv) permit Lycos to participate in any proceedings relating to such
claim;
provided, however, that Lycos shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, for an Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of costs
and expenses. Without limitation on the foregoing provisions of this Section
2(c), Lycos shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate
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courts, as Lycos shall determine; provided, however, that if Lycos directs the
Executive to pay such claim and sue for refund, Lycos shall advance the amount
of such payment to the Executive, on an interest-free basis and shall indemnify
and hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, Lycos' control of the contest
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 2(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to Lycos'
complying with the requirements of Section 2(c)) promptly pay to Lycos the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 2(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
Lycos does not notify the Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
3. Definitions. The following terms shall have the meanings
indicated when used in this Amendment:
(a) "Cause" shall mean
(i) the wilful and continued failure of the Executive to
perform substantially the Executive's duties with Lycos or one of its
affiliates (other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board of Directors of
Lycos ("Board") or the Chairman of Lycos which specifically identifies the
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manner in which the Board believes that the Executive has not
substantially performed the Executive's duties, or
(ii) the wilful engaging by the Executive in illegal conduct
or gross misconduct which is materially and demonstrably injurious to
Lycos, or
(iii) conviction of a felony or guilty or nolo contendere plea
by the Executive with respect thereto.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "wilful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of Lycos. Any act, or
failure to act, based upon authority given pursuant to a resolution duly adopted
by the Board or upon the instructions of the Chairman or a senior officer of
the Lycos shall be conclusively presumed to be done, or omitted to be done, by
the Executive in good faith an in the best interest of Lycos. The cessation of
employment of the Executive shall not be deemed to be for Cause unless and until
there shall have been delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than two-thirds of the entire
membership of the Board (excluding the Executive if he is a member of the Board)
at a meeting of the Board called and held for such purpose (after reasonable
notice is provided to the Executive and the Executive is given an opportunity,
together with counsel, to be heard before the Board), finding that, in the good
faith opinion of the Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars thereof in
detail.
(b) "Change in Control" shall be deemed to occur if the conditions
set forth in any one of the following paragraphs shall have been satisfied:
(i) any person (as defined in Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Act") is or becomes the beneficial
owner as defined in Rule 13d-3 under the Act, directly or indirectly, (A)
of securities of Lycos (not including in the securities beneficially owned
by such person any securities acquired directly from Lycos or its
affiliates) representing 20% or more of the combined voting power of
Lycos' then outstanding securities or (B) of securities of Lycos
(including in the securities owned by such person any securities acquired
directly
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from Lycos or its affiliates) representing more than 50% of the combined
voting power of Lycos' then outstanding securities; or
(ii) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board and any new
director (other than a director designated by a person who has entered
into an agreement with Lycos to effect a transaction described in clause
(i), (iii) or (iv) of this Section 3(b) whose election by the Board or
nomination for the election by the Lycos' stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof; or
(iii) the consummation of (A) a merger or consolidation of
Lycos with any other corporation, other than (1) a merger or consolidation
which would result in the voting securities of Lycos outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of Lycos, at
least 50% of the combined voting power of the voting securities of Lycos,
or such surviving entity outstanding immediately after such merger or
consolidation, or (2) a merger or consolidation effected to implement a
recapitalization of Lycos (or similar transaction) in which no person
acquires more than 50% of the combined voting power of Lycos' then
outstanding securities or (B) any other transaction as a result of which
the shareholders of Lycos immediately prior to such transaction cease to
have the ability to designate a majority of the members of the Board; or
(iv) the shareholders of Lycos approve a plan of complete
liquidation of Lycos or an agreement for the sale or disposition by Lycos
of all or substantially all of Lycos' assets.
(c) "Good Reason" shall mean, in the absence of a written consent of
the Executive:
(i) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including status, offices,
titles and
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reporting requirements), authority, duties or responsibilities, or any
other action by Lycos which, in the Executive's reasonable judgment,
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial
and inadvertent action not taken in bad faith and which is remedied by
Lycos promptly after receipt of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of the Employment Agreement (as amended by this Amendment),
other than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by Lycos promptly after
receipt of notice thereof given by the Executive;
(iii) Lycos requiring the Executive to be based at any
location other than the Boston, Massachusetts metropolitan area;
(iv) any purported termination by Lycos of the Executive's
employment otherwise than for Cause;
(v) any failure by Lycos to require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and for assets of the Company to
assume expressly and agree to perform all obligations under the
Executive's Employment Agreement, as amended pursuant hereto to the same
extent Lycos would be required to perform if no succession had taken
place.
4. Validity/Pooling. The invalidity or unenforceability of any
provision of this Amendment to the Employment Letters shall not affect the
validity or enforceability of any other provision of this Amendment, which shall
remain in full force and effect. If (a) the Board approves a merger or
consolidation of Lycos which is intended by the Board to satisfy the accounting
rules related to the pooling of interest method of accounting (the "Pooling
Rules") and (b) any provision of this Amendment would violate the Pooling Rules,
then such provision shall be null and void ab initio. In such event, Lycos and
the Executive shall negotiate, in good faith, a replacement provision of
equivalent value which does not cause such a violation, provided, and to the
extent, that Lycos' outside auditors determine that any such replacement
provision is permissible without violating the Pooling Rules.
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5. Effective Date. This Amendment to the Employment Letters shall be
effective as of the date it is executed by both parties.
IN WITNESS WHEREOF, the parties have caused this Amendment to the
Employment Letters to be executed as of the 27th day of August 1999.
LYCOS, INC.,
By: /s/ Xxxxxx X. Xxxxxxxxx
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Xxxxxx X. Xxxxxxxxx
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
