Document:

Date:

 

 

 

 

 

July 28, 2005

 

 

Mr. Anthony Dolanski

4 Roselawn Lane

Malvern, PA 19355

Dear Tony:

The Board of Directors and I recognize you as a valuable contributor to Internet Capital Group ("ICG"). We place a high priority upon retaining your services to ICG and in rewarding you for your commitment, dedication and hard work. I am, therefore, very pleased to reaffirm the severance package that will be made available to you should you be terminated other than for cause prior to December 31, 2008. A summary of these severance benefits is listed below.

	SEVERANCE PAY - ICG will pay you at the date of termination of employment a lump sum payment equal to 12 months of base salary plus target bonus at the rate existing at termination of employment.

	ANNUAL BONUS - ICG will pay you at the same time, under the same terms and conditions as other employees, a pro-rated bonus for service through your termination date, based on your individual performance and ICG's performance for that period as determined by the Board of Directors.

	EMPLOYEE BENEFITS - ICG will continue to provide you and your family medical and dental insurance at the same percent of premium payment existing at the time of termination until the earlier of (A) 12 months after termination of employment; or (B) your eligibility for any of these benefits under another employer's or spouse's employer's plan.

	OUTPLACEMENT - ICG will provide you career counseling until the earlier of (A) 12 months after termination of employment; or (B) your employment with a subsequent employer.

	EQUITY - ICG Management will recommend to the Compensation Committee of the Board of Directors that your equity grants be subject to the better of the following: (A) credit for an additional 12 months service (compared to your actual service with ICG); or (B) application of the terms of the relevant equity grant instrument. Such equity grants shall be exercisable after your termination of employment to the earlier of 1) twenty-four months or 2) 12 months after the ICG share price is maintained at minimum closing price of $16 per share for 20 trading days, subject to adjustment for splits and the like.

	CHANGE IN CONTROL - In the event of an involuntary termination caused by a change in control as defined in the summary plan description, you will receive 100% acceleration of all equity grants. The term to exercise any equity grant shall be extended to the remaining grant term.

	RELEASE - Availability of these severance benefits will be conditioned upon your executing, and not rescinding or breaching, upon termination of employment a release of liability in a form acceptable to ICG. If you elect not to sign a release of liability, you will be eligible for the standard severance package applicable at that time. That package currently consists of one month's pay plus two week's pay per year of completed service and paid medical and dental insurance for you and your family for the standard severance period.

In addition, in connection with the equity grant that was approved by the Board on July 22, 2005, the Board has also adopted stock ownership guidelines for the senior management of ICG.  Under these guidelines, you are expected to own the lesser of (1) 40% of any restricted stock granted to you that vests after July 22, 2005, and (2) stock worth at least 150% of your base salary.  Also in consideration of the July 22, 2005 equity grant, the Company requires that you execute a restrictive covenant agreement in the form attached hereto as Exhibit A.  

Lastly, notwithstanding anything in this letter to the contrary, to the extent that any severance or other amounts payable under this letter ("Severance Payments") are deemed to be deferred compensation subject to the requirements of section 409A of the Internal Revenue Code of 1986 ("Code"), and the requirements of section 409A of the Code are not met with respect to the Severance Payments, ICG may amend this letter, without your consent, so that the Severance Payments will comply with the requirements of section 409A of the Code.  Amendment of this letter to comply with section 409A of the Code will not result in you being entitled to receive any enhanced benefit under this letter.

This letter supercedes the letter agreement between you and ICG dated February 4, 2003.  

We trust that our commitment to protect the financial security of you and your family will strengthen your loyalty to ICG.  Our sincere belief is that the current ICG team, including you, is outstanding and will drive our success against the new business plan.  This success will provide meaningful financial rewards to our shareholders and employees.

This letter is not intended to modify your status as an at-will employee of ICG and all other employment terms and conditions remain the same.

Sincerely,

 

 

Walter Buckley

Chairman and Chief Executive Officer

Accepted and agreed:

 

 

___________________________________________________

Anthony P. DolanskiDate

 

cc:  Employee fileDate:

 

July 28, 2005

 

 

Mr. Walter W. Buckley, III

221 Atlee Road

Wayne, PA 19087

Dear Buck:

Pursuant to Section 3 of your Employment Agreement dated March 9, 2004 (the "Employment Agreement"), the Board of Directors of Internet Capital Group, Inc. ("ICG") on July 22, 2005 approved an equity grant for you in the form of 130,000 shares of restricted stock and 616,000 stock appreciation rights with a base price of $7.34, as more fully described in their respective grant instruments.

In addition to your equity grant, ICG's Board also approved stock ownership guidelines for ICG's senior management.  Under these guidelines, you are expected to own the lesser of (1) 40% of any restricted stock granted to you that vests after July 22, 2005, and (2) stock worth at least 300% of your base salary.  

You agree that the scope of the noncompetition covenant in the Employment Agreement should cover internet software and services companies and companies that become ICG partner companies after the date hereof.  Accordingly, this letter agreement hereby deletes Section 15(a)(1) of the Employment Agreement and replaces it in its entirety with the following language:

During the Term and until the last day of the six month period following the Executive's termination of employment for any reason, the Executive hereby agrees that he will not, except with the prior written consent of the Board and  the ICG Board, directly or indirectly, own, manage, operate, join, control, finance or participate in the ownership, management, operation, control or financing of, or be connected as an officer, director, employee, partner, principal, agent, representative, consultant or otherwise with, or use or permit the Executive's name to be used in connection with, any business or enterprise or any division of any business or enterprise whose primary business involves or is related to business to business commerce using the internet or internet software or services.

This letter agreement also hereby deletes Section 15(a)(2) of the Employment Agreement and replaces it in its entirety with the following language:  

For the 12-month period following the period described in (1) above, the Executive will not, except with the prior written consent of the Board and the ICG Board, directly or indirectly, own, manage, operate, join, control, finance or participate in the ownership, management, operation, control or financing of, or be connected as an officer, director, employee, partner, principal, agent, representative, consultant or otherwise with, or use or permit the Executive's name to be used in connection with, any entity, or division or business unit of an entity, that is a direct competitor of one or more of any company that becomes an ICG partner company after July 28, 2005 or of the following entities or their successors:  LinkShare, ICG Commerce, Marketron, StarCite, Blackboard, CommerceQuest and Investor Force.

Lastly, we agree that your Employment Agreement will be amended, without your consent, so that your Employment Agreement and any benefits provided there under will comply with the requirements of section 409A of the Internal Revenue Code of 1986 (the "Code").  Amendment of your Employment Agreement to comply with section 409A of the Code will not result in you being entitled to receive any enhanced benefit under your Employment Agreement.

Please sign the enclosed copy of this letter agreement acknowledging your agreement with the terms set forth herein and return it to our human resources department as soon as possible.

Sincerely,

 

 

Anthony Dolanski

Chief Financial Officer

 

Accepted and agreed:

 

 

___________________________________________________

Walter W. Buckley, IIIDate

 

Enclosure

cc:  Employee fileSTOCK OPTION CERTIFICATE

STOCK APPRECIATION RIGHT CERTIFICATE

Internet Capital Group, Inc., a Delaware corporation ("ICG"), hereby grants, on the grant date shown below (the "Date of Grant") to the grantee named below (the "Grantee") a stock appreciation right (this "SAR") that relates to the stock appreciation, if any, over the base amount for the total number of shares shown below (the "Shares") of the common stock of ICG, subject to the terms and conditions on both sides of this Stock Appreciation Right Certificate (the "Certificate") and the ICG 2005 Omnibus Equity Compensation Plan (the "Plan").  The stock appreciation of the SAR is the amount by which the Fair Market Value (as defined in the Plan) of the underlying Shares on the date of exercise of this SAR exceeds the base amount of the SAR.  The base amount per Share of this SAR is shown below (the "Base Amount").  The terms of the Plan are incorporated herein by reference.  

_______________________________________________

Grantee:  ____________

Shares Subject to SAR:____________

Base Amount Per Share:  $_____

Date of Grant:                    _______ ____, ____

Term of SAR:  _______ years

I hereby accept the SAR grant described in this Stock Appreciation Right Certificate.  I have read the terms of the Plan and this Stock Appreciation Right Certificate, and agree to be bound by the terms of the Plan and this Stock Appreciation Right Certificate and the interpretations of the Committee (as defined in the Plan) with respect thereto.

Accepted by:   ____________________________

                              Grantee

In witness whereof, this Stock Appreciation Right Certificate has been executed by ICG by a duly authorized officer as of the date specified hereon.

Internet Capital Group, Inc.

 

___________________________________

Walter W. Buckley, III

President and Chief Executive Officer

 

___________________________________

Luann M. Taiariol, Witness

 

	Vesting.  Subject to the provisions of Paragraph 2(f), you will vest in the SAR as follows:

	25% of the Shares covered by the SAR will vest upon the first year anniversary of the Date of Grant if you are an Employee (as defined in the Plan), Non-Management Director (as defined in the Plan), or Consultant (as defined in the Plan) of the Company (as defined in the Plan) at that time.

	Following the first year anniversary of the Date of Grant, 2.083% of the Shares covered by the SAR will vest on the ____ day of each month that you are an Employee, Non-Management Director, or Consultant of the Company (i.e., equal monthly vesting over the next 36 months).

	Term; Termination of the SAR.  This SAR will terminate on the occurrence of the earliest to occur of the following dates:

	Term of SAR.  The SAR terminates ten (10) years from the Date of Grant, or upon the liquidation of the Company, if earlier.  If you have not fully exercised the SAR prior to that date, you will not be permitted to exercise, and will forfeit any remaining portion of, the SAR.  The SAR will also expire and be forfeited at such times and in such circumstances as otherwise provided in this Certificate or under the Plan.

	Termination on Death.  If you cease to be employed by, or provide service to, the Company ("Termination of Service") on account of your death, or if you die within ninety (90) days after you have a Termination of Service on account of a termination identified in Paragraph 2(f) or 2(g), the vested portion of the SAR shall terminate unless exercised within the earlier of (i) the one (1) year period after you incur a Termination of Service, or (ii) the term of the SAR.  Any unvested portion of the SAR will terminate and be forfeited on the date you incur the Termination of Service.  

	Termination on Disability.  If you have a Termination of Service on account of you incurring a Disability (as defined below), the vested portion of the SAR shall terminate unless exercised within the earlier of (i) the one (1) year period after you incur such Termination of Service, or (ii) the term of the SAR.  Any unvested portion of the SAR will terminate and be forfeited on the date in which you incur the Termination of Service.  For purposes of this Paragraph 2(c), "Disability" shall mean you becoming disabled within the meaning of section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code").  

	Termination on Retirement.  If you incur a Termination of Service on account of your Retirement (as defined below), the vested portion of the SAR shall terminate unless exercised within the earlier of (i) the one (1) year period after you incur such Termination of Service, or (ii) the term of the SAR.  Any unvested portion of the SAR will terminate and be forfeited on the date in which you incur the Termination of Service.  For purposes of this Paragraph 2(d), "Retirement" shall mean your Termination of Service with the consent of ICG after the attainment of age 55.

	Termination for Cause.  If you incur a Termination of Service on account of a termination for Cause (as defined below), the SAR will immediately terminate on the date of such Termination of Service and you will forfeit all shares of ICG common stock that you would have been entitled to receive upon exercise of the SAR (as described in Paragraph 3(b) below) for which ICG has not delivered share certificates.  For purposes of this Paragraph 2(e) and for Paragraph 2(f) below, "Cause" shall mean a finding by the Committee that (i) you have breached your employment, service, noncompetition, nonsolicitation, restrictive covenant or other similar contract with the Company; (ii) you have been engaged in disloyalty to the Company, including, without limitation, fraud, embezzlement, theft, commission of a felony or dishonesty in the course of your employment or service; (iii) you have disclosed trade secrets or confidential information of the Company to persons not entitled to receive such information; or (iv) you have entered into competition with the Company.  Notwithstanding the foregoing, if you have an employment agreement with the Company defining "Cause," then such definition shall supersede the foregoing definition.

	Termination for Any Other Reason.  If you incur a Termination of Service for any reason other than as identified in this Paragraph 2, any vested portion of the SAR shall terminate unless exercised within the earlier of (i) ninety (90) days after you incur such Termination of Service, or (ii) the term of the SAR.  Any unvested portion of the SAR will terminate and be forfeited on the date you incur the Termination of Service. 

	Exercising the SAR; Payment Upon Exercise.  

	Notice.  When you want to exercise any portion of the SAR, you must give written notice to ICG, or its designee, of your intent to exercise the SAR and specify the number of Shares as to which the SAR is to be exercised. 

	Payment with Respect to the SAR.  Upon exercise, ICG shall deliver to you a number of shares of ICG common stock (the "Common Stock") that will be determined by dividing the Value of the Stock Appreciation (as defined below), by the Fair Market Value of a share of Common Stock on the date of exercise.  Only whole shares of Common Stock will be delivered to you pursuant to the exercise of the SAR, and, to the extent that a fractional share of Common Stock would result, the cash value of such fractional share will be paid to you in lieu of a fractional share.  All shares of Common Stock will be issued under the Plan.  For purposes of this Paragraph 3(b), the "Value of the Stock Appreciation" shall mean the amount that results from multiplying (i) the number of Shares as to which the SAR is to be exercised, by (ii) the difference between the Fair Market Value of a Share on the date of exercise and the Base Amount.

	Cancellation of Shares.  Upon exercise of the SAR, the Shares covered by such exercise shall be cancelled and you shall cease to have any further right to exercise the SAR with respect to such Shares under this Certificate.  

	Limitation on Exercise.  This SAR may not be exercised when the Base Amount is equal to, or greater than, the Fair Market Value of a Share.

	The obligation of ICG to deliver shares of Common Stock upon exercise of the SAR shall be subject to all applicable laws, rules and regulations and such approvals by governmental agencies as may be deemed appropriate by the Committee, including such actions as ICG's counsel shall deem necessary or appropriate to comply with relevant securities laws and regulations.  You understand that you are responsible for the income tax consequences of your exercise of the SAR and the sale of any shares of Common Stock received by you upon exercise of the SAR.  ICG may require that you (or the person exercising the SAR pursuant to a transfer in accordance with Paragraph 5 below) represent that any shares of Common Stock that you receive will be held by you for your own account and not with a view to or for sale in connection with any distribution of the shares, or such other representation as the Committee deems appropriate.  All obligations of ICG under this Certificate shall be subject to the rights of ICG as set forth in the Plan to withhold amounts required to be withheld for any taxes, if applicable.  Subject to Committee approval, you may elect to satisfy any tax withholding obligation of the Company with respect to the SAR by having shares of Common Stock that you receive upon exercise of the SAR withheld up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA), state and local tax liabilities.

	Change of Control.  The provisions of the Plan applicable to a Change of Control (as defined in the Plan) shall apply to the SAR, and, in the event of a Change of Control, the Committee may take such actions as it deems appropriate pursuant to the Plan.  

	Transferability of the SAR.  Only you may exercise the SAR during your lifetime.  After your death, the SAR shall be exercisable (subject to the limitations specified in the Plan) solely by your legal representatives, or by the person who acquires the right to exercise the SAR by will or by the laws of descent and distribution, to the extent that the SAR is exercisable pursuant to this Certificate.   

	Incorporation by Reference; Entire Agreement; Definitions.  This SAR shall be subject to the terms, conditions and limitations of the Plan and to interpretations, regulations and determinations concerning the Plan established from time to time by the Committee in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (i) rights and obligations with respect to withholding taxes, (ii) the registration, qualification or listing of the shares of Common Stock that you receive upon exercise of the SAR, (iii) changes in capitalization of ICG, and (iv) other requirements of applicable law. This Certificate, together with the Plan, contains the entire agreement between you and ICG with respect to the SAR and supersedes all prior and contemporaneous agreements, written or oral, with respect thereto.  In the event of any contradiction, distinction or differences between this Certificate and the terms of the Plan, the terms of the Plan will control.  Except as otherwise defined in this Certificate, the terms used in this Certificate shall have the meanings set forth in the Plan.

	No Stockholder Rights.  Neither you, nor any person or entity you transfer the SAR pursuant to Paragraph 5, shall have any of the rights and privileges of a stockholder with respect to the Shares subject to the SAR.  If you exercise the SAR you will only have rights as a stockholder with respect to those shares of Common Stock you are entitled to receive when the certificates for such shares have been issued to you after the exercise of the SAR.

	Assignment and Transfers.  Your rights and interests under this Certificate may not be sold, assigned, encumbered or otherwise transferred except as provided in Paragraph 5.  In the event of any attempt by you to alienate, assign, pledge, hypothecate, or otherwise dispose of this SAR or any right hereunder, except as provided for in this Certificate, or in the event of the levy of any attachment, execution or similar process upon the rights or interests hereby conferred, ICG may terminate the SAR by notice to you, and the SAR and all rights hereunder shall thereupon become null and void.  The rights and protections of ICG hereunder shall extend to any successors or assigns of ICG and to ICG's parent, subsidiaries, and affiliates.  This Certificate may be assigned by ICG without your consent.

	Governing Law.  This Certificate shall be deemed to be made under and shall be construed in accordance with the laws of the State of Delaware, without giving effect to conflict of laws provisions thereof. 

	Miscellaneous. 

	The captions of this Certificate are not part of the provisions hereof and shall have no force or effect.  Except as provided in Paragraph 10(f) below, this Certificate may not be amended or modified except by a written agreement executed by you, or your legal representative, as applicable, and by ICG, or by its successors or legal representative, as applicable.  The invalidity or unenforceability of any provision of this Certificate shall not affect the validity or enforceability of any other provision of this Certificate.

	The Committee may make such rules and regulations and establish such procedures for the administration of this Certificate as it deems appropriate.  Without limiting the generality of the foregoing, the Committee may interpret this Certificate and the Plan, with such interpretations to be conclusive and binding on all persons and otherwise accorded the maximum deference permitted by law.  In the event of any dispute or disagreement as to the interpretation of this Certificate, the Plan or of any rule, regulation or procedure, or as to any question, right or obligation arising from or related to this Certificate or the Plan, the decision of the Committee shall be final and binding on all persons, and your accepting this SAR is your agreement to this.

	All notices hereunder shall be in writing, and if to ICG or the Committee, shall be delivered to the Board of Directors of ICG or mailed to its principal office, addressed to the attention of the Board of Directors; and if to you, shall be delivered personally, sent by facsimile transmission or mailed to you at the address appearing in the records of the Company.  Such addresses may be changed at any time by written notice to the other party given in accordance with this Paragraph 10(c).

	The failure of you or ICG to insist upon strict compliance with any provision of this Certificate or the Plan, or to assert any right that you or ICG, respectively, may have under this Certificate or the Plan, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Certificate or the Plan. 

	Nothing in this Certificate shall confer on you the right to continue in the employment or service of the Company, its parent or subsidiaries, or interfere in any way with the right of the Company, its parent or subsidiaries, and its stockholders to terminate your employment or service at any time.

	Notwithstanding anything in this Agreement to the contrary, to the extent that this SAR is deemed to be deferred compensation subject to the requirements of section 409A of the Code, and the requirements of section 409A of the Code are not met with respect to this SAR, ICG may amend this Certificate, without your consent, so that this SAR will comply with the requirements of section 409A of the Code.  Amendment of this Certificate to comply with section 409A of the Code will not result in you being entitled to receive any enhanced benefit under this Certificate.

 

 

Grantee's Initials:________

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