Item 1.01 Entry into a Material Definitive Agreement
Agreements
with Employees
Jeffrey Stibel,
Vikas Rijsinghani and William Borzage have entered into employment agreements
with Website Pros, Inc. (“Website Pros”)
that became effective on September 30, 2007, upon the closing of the
Merger described in detail under Item 2.01 below. The employment agreements
have an indefinite term, and either Website Pros or the executives may terminate
the employment agreements at any time for any reason. A summary of the material
terms of the new employment agreements follows:
Title
and Salary.
Mr. Stibel’s title is President, and his an annual base salary is
$325,000. Mr. Rijsinghani’s title is Chief Technical Officer, and his
annual base salary is $180,000.
Mr. Borzage’s title is Senior Vice President, Marketing, and his
annual base salary is $150,000.
Annual
Bonus.
Each of Messrs. Stibel, Rijsinghani and Borzage is eligible to earn an
annual incentive bonus. The annual target bonus amount will be set at 60%, 40%
and 30%, respectively, of their annual base salary.
Benefits.
Each of Messrs. Stibel,
Rijsinghani and Borzage is eligible to participate in the standard benefit
programs that Website Pros may have in effect from time to time, including
participation, at the discretion of Website Pros’ board of directors, in the
Website Pros, Inc. 2005 Equity Incentive Plan.
Relocation.
Each of
Messrs. Stibel, Rijsinghani and Borzage has agreed to relocate their
primary work location to the Website Pros’ corporate headquarters in
Jacksonville, Florida, following the closing of the merger and their families’
primary residences to the Jacksonville metropolitan area by March 31, 2008.
Each has further agreed that such relocation will not give rise to a right to
resign for good reason under their respective employment agreements with
Website Pros. Each executive will be entitled to relocation payments and
benefits for expenses reasonably incurred in the relocation process (which, in
the case of Mr. Stibel, are capped at $100,000).
In addition, each
of Messrs. Stibel, Rijsinghani and Borzage is eligible to earn an
additional relocation bonus. Mr. Stibel is eligible to earn a relocation
bonus in an amount to be determined by Website Pros, payable as to 50% of the
amount payable upon the executive’s relocation of his family’s residence and
50% payable upon the executive’s sale of his existing family residence.
Mr. Rijsinghani is eligible to earn a relocation bonus of $90,000, payable
in full within 15 days following the date he purchases a family residence in or
near Jacksonville. Mr. Borzage is
eligible to earn a relocation bonus of $75,000, payable in full within 15 days
following the date he purchases a family residence in or near Jacksonville.
In each case,
payments of the relocation bonus are subject to forfeiture on a pro rata basis
if the executive terminates his employment with Website Pros without good
reason, of if Website Pros terminates the executive’s employment for cause,
within 12 months following the date on which such amount was paid, in the case
of Mr. Stibel, and within 12 months following the effective date of his
relocation, in the case of Messrs. Rijsinghani and Borzage. In the event of any
other termination of the executive’s employment prior to 12 months following
the date on which such amount was paid, in the case of Mr. Stibel, and within
12 months following the effective date of his relocation, in the case of
Messrs. Rijsinghani and Borzage, and subject to the executive’s execution
of a release of claims and observation of his continuing obligations to Website
Pros, the executive will not be required to forfeit any amount of the
relocation bonus. However, these amounts will be offset against, and reduce on
a dollar-for-dollar basis, the amount of the severance benefits (as described
below), if any, owed by Website Pros to executive.
Agreement
to Hold Shares.
Mr. Stibel has agreed to not sell or otherwise transfer 80% of the shares
of Web.com (including shares of Website Pros common stock issued upon
conversion thereof in the merger) and Website Pros common stock that he may
acquire from time to time upon the exercise of his stock options until the
earliest of (i) July 30, 2008, (ii) the effective date of a change of
control of Website Pros and (iii) in the event of a termination of his
employment, the date on which his release of claims against Website Pros
becomes effective.
Mr. Rijsinghani
has agreed to not sell or otherwise transfer 65,000 of the shares of Web.com
(including shares of Website Pros common stock issued upon conversion thereof
in the merger) and Website Pros common stock that he may acquire from time to
time upon the exercise of his stock options from the date of the merger agreement
until the earliest of (i) September 30, 2008, (ii) the effective date
of a change of control of Website Pros and (iii) in the event of a
termination of his employment, the date on which his release of claims against
Website Pros becomes effective.
Mr. Borzage
has agreed to not sell or otherwise transfer 80% of the shares of Web.com
(including shares of Website Pros common stock issued upon conversion thereof
in the merger) and Website Pros common stock that he may acquire from time to
time upon the exercise of his stock options until the earliest of
(i) September 30, 2008, (ii) the effective date of a change of
control of Website Pros and (iii) in the event of a termination of his
employment, the date on which his release of claims against Website Pros
becomes effective.
Severance
Benefits.
Subject to the executive’s execution of an effective release of claims in favor
of Website Pros, and the executive’s observation of his continuing obligations
to Website Pros following termination, Messrs. Stibel, Rijsinghani and
Borzage will be eligible to receive severance benefits, as follows:
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Termination Prior to September 30,
2008 (the First Anniversary of the Closing)
•
If Mr. Stibel’s
employment is terminated by Website Pros without cause or by Mr. Stibel for
good reason (certain material adverse changes in the terms and conditions of
his employment), and such termination occurs prior to September 30, 2008, Mr.
Stibel will receive a lump sum cash severance payment equal to eighteen (18)
months of his then-current base salary plus $212,640, each of his
then-outstanding, unvested equity awards will become fully vested, and Website
Pros will reimburse him for continued health insurance premiums for up to 12
months.
•
If Mr. Rijsinghani’s
employment is terminated by Website Pros without cause or by Mr. Rijsinghani
for good reason, and such termination occurs prior to September 30, 2008, Mr.
Rijsinghani will receive a lump sum cash severance payment equal to twelve
(12) months of his then-current base salary, each of his then-outstanding,
unvested equity awards will become fully vested, and Website Pros will
reimburse him for continued health insurance premiums for up to 6 months. If Mr. Borzage’s employment is terminated by
Website Pros without cause or by Mr. Borzage for good reason, and such
termination occurs prior to September 30, 2008, Mr. Borzage will receive a lump
sum cash severance payment equal to six (6) months of his then-current base salary
and each of his then-outstanding, unvested equity awards will become fully
vested.
Termination
On or After September 30, 2008
•
If Mr. Stibel’s
employment is terminated by Website Pros without cause or by Mr. Stibel
for good reason, and such termination occurs on or after September 30, 2008,
Mr. Stibel will receive a lump sum cash severance payment equal to
eighteen (18) months of his then-current base salary plus 150% of the prior
year’s bonus actually earned, each of his then-outstanding, unvested equity
awards will become vested as to the number of shares that would have vested in
the 18 months following termination, and Website Pros will reimburse him for
continued health insurance premiums for up to 18 months.
•
If either
Mr. Rijsinghani or Mr. Borzage is terminated on or after September 30,
2008, they will be eligible to receive severance only under the terms of the
Website Pros Executive Severance Benefit Plan (which is on file with the
Securities and Exchange Commission and is an exhibit to Website Pros’ Annual
Report on Form 10-K for the year ended December 31, 2006).
Mr. Stibel is not eligible to participate in the Executive Severance Plan.
Any lump sum
severance benefits owed to the executives under the employment agreements will be
paid within ten (10) business days following the date on which the
executive’s release of claims against Website Pros becomes effective, but in no
event later than March 15 of the year following the year in which
termination occurs. All severance benefits offered to the executives under
their employment agreements will be offset against any amounts owed to the
executive under applicable laws governing payments upon a reduction in force
(such as the Worker Adjustment and Retraining Notification Act) and under any
other company plan or policy providing for compensation and benefits following
a termination of employment.
Change
of Control Benefits.
If Website Pros undergoes a change of control, then
all of Mr. Stibel’s then-outstanding, unvested equity awards will become
fully vested.
Reduction
of Benefits under Code Section 280G.
If any payment or benefit (including but
not limited to payments and benefits pursuant to the new employment agreements)
that the executives may receive in connection with a change in control would
(i) constitute a “parachute payment” within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended, and
(ii) be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code, then the executive will only receive the largest portion
of the payments that would result in no portion of the Payments being subject
to the excise tax.
Conditions
to Employment.
As a condition to employment, each of Messrs. Stibel, Rijsinghani and
Borzage must enter into Website Pros’ standard form of proprietary information
and inventions assignment agreement as well as a noncompetition agreement.
Under the terms of the noncompetition agreements, Messrs. Stibel,
Rijsinghani and Borzage agreed, among other things and subject to certain
exceptions, not to, directly or indirectly, engage in competition with respect
to Web.com’s products and services, each as further described in the
agreements, at any time within three years following the effective time of
the merger, within the United States its possessions and territories.
Messrs. Stibel, Rijsinghani and Borzage further agreed, subject to certain
exceptions, to not directly or indirectly, solicit, attempt to solicit, induce
or attempt to induce any person or entity to terminate their employment or
other relationship with Website Pros or any of its affiliates.
Agreements
with Former Directors of Website Pros and Web.com
Effective September 30, 2007, G. Harry Durity resigned
his position on Website Pros’ board of directors in connection with the
Merger. In connection with Mr. Durity’s
resignation and in recognition of his service to Website Pros, the board of
directors has modified the equity grants held by Mr. Durity so that any
restricted stock and any options to purchase Website Pros common stock held by
him immediately prior to the closing to the Merger became fully vested and
extended the time period in which Mr. Durity would have to exercise any stock
option to the end of the term of each such option.
Effective
September 30, 2007, John B. Balousek, John Patrick Crecine, Efrem Gerszberg,
Seymour Holtzman, Robert T. Slezak, and Robert Lee (who are former directors of
Web.com) ceased to be directors of Web.com.
Under the terms of the Web.com options held by these directors prior to
the Merger (which converted into options to purchase common stock of Website
Pros) these
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