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Exhibit 10.7
EXECUTION COPY
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into on the
26th day of January, 1998 by and between MEDSCAPE, INC., a New York corporation
(the "Company"), and XXXX X. XXXXXX ("Executive").
1. Employment and Term. The Company will employ Executive as
President and Chief Executive Officer of the Company, and Executive shall accept
such employment, for a three year period commencing February 16, 1998 (the
"Employment Date"), subject to earlier termination pursuant to the terms hereof.
Executive shall at all times report to, and shall be subject to the policies
established by, the Company's Board of Directors (the "Board"). Executive shall
during the term of this Agreement serve as a full voting member of the Board.
Executive shall be responsible for all segments of the Company's business and
all other officers of the Company shall report to Executive.
2. Performance. Executive shall (i) loyally and conscientiously
perform all his duties and obligations under this Agreement to the best of his
abilities; (ii) devote substantially all of his business time, attention, energy
and efforts to the business of the Company; and (iii) not directly or indirectly
render any services of a commercial or professional nature to any other person
or organization without the prior written consent of the Board.
3. Compensation and Benefits.
(a) Base Salary. During the first year of this Agreement, the
Company shall pay Executive a base salary of $195,000 per year, payable in
accordance with the Company's standard payroll policy. Executive's base salary
during the second and third years of this Agreement shall be determined by the
Compensation Committee of the Board, but in no event shall the base salary in
such years be less than the base salary payable in the first year.
(b) Signing Bonus. On or before the Employment Date, the
Company shall pay Executive a one-time signing bonus of $35,000.
(c) Performance Bonuses. In addition to the base salary, the
Company shall pay Executive a performance bonus in respect of the calendar year
1998 in accordance with the Performance Bonus & Goals set forth in Exhibit A.
Executive's performance bonus and goals during, calendar years 1999 and 2000
shall be developed by the Compensation Committee of the Board after consultation
with Executive, but in no event shall the performance bonus at target (budget)
in each such year be less than $35,000 in the aggregate. Executive shall be
entitled to any bonus earned with respect to any calendar year so long as
Executive remains employed by the Company at the end of such year, but shall not
be entitled to any portion of the bonus for any calendar year in which he is not
employed by the Company at year end. Any performance bonus shall be payable as
soon as practicable after each calendar year during the term of this Agreement.
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(d) Stock Option. On the Employment Date, Executive shall be
granted an incentive stock option to purchase 300,000 shares of Class B Common
Stock, par value $.01 per share pursuant to the Company's 1996 Stock Option Plan
(the "Option Plan"). The stock option agreement, including the terms of such
grant, is attached to this Agreement as Exhibit B.
(e) Benefits. During the term hereof, Executive shall be
entitled to all such family health and medical benefits (including, dental) and
all life and disability insurance as are provided to the senior executives of
the Company.
(f) Vacation. Executive shall be entitled to paid vacation
each year in accordance with the Company's vacation policy for its senior
executives.
4. Restrictive Covenants.
(a) Noncompetition During Employment. During his employment
with the Company, Executive shall not, directly or indirectly, either as an
employee, consultant, agent, principal, partner, stockholder, corporate officer,
director, or in any other individual or representative capacity, engage or
participate in any business or organization that is competitive with the
business of the Company.
(b) Noncompetition After Employment. Executive agrees that for
the one year period following termination of his employment with the Company, he
will not (i) directly or indirectly, either as employee, consultant, agent,
principal, partner, stockholder, corporate officer, director, or in any other
individual or representative capacity, engage or participate in any business or
organization that is competitive with the business of the Company at the time of
such termination; (ii) solicit, divert or take away, or attempt to solicit,
divert or to take away, the business or patronage of any of the clients,
customers or accounts of the Company (except on behalf of a business unrelated
to the business of the Company); or (iii) encourage or solicit any employee of
the Company to leave the employ of the Company for any reason; provided,
however, that in the event Executive is terminated by the Company without "Good
Cause" (as defined in Section 5(b)), the provisions of this Section 4(b) shall
apply only for a period of six (6) months following termination of employment
and the provisions of Section 4(b)(i) shall only prohibit Executive from
engaging or participating, in the manner described in clause (i) above, in the
businesses or other organizations that own the following Websites (subject to
the exception in Section 4(c)(i)): Physicians Online, Medec Interactive,
Harrisons On Line and the American Medical Association.
(c) Exceptions. Notwithstanding the provisions of this Section
4, nothing herein shall prohibit Executive from (i) holding less than two
percent (2%) of the outstanding capital stock of a publicly held corporation
engaged in a business that competes with the business of the Company; (ii)
serving on one or more Boards of Directors of non-profit corporations so long
as, in the aggregate, such commitments do not interfere with the performance of
Executive's duties for the Company; or (iii) after his employment with the
Company terminates for any reason, being
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employed by a multi-division corporation that competes with the Company so long
as Executive's responsibilities do not extend to the specific division of such
corporation that competes with the Company and so long as Executive does not
work in such division or advise or otherwise assist such division.
(d) Remedies and Interpretation. The restrictions contained in
this Section 4 and in Section 6 of this Agreement are necessary for the
protection of the business and goodwill of the Company and are considered by
Executive to be reasonable for such purpose. Executive agrees that any breach of
this Section 4 or Section 6 by Executive is likely to cause the Company
substantial and irrevocable damage and therefore, in the event of any such
breach, Executive agrees that the Company, in addition to any other remedies
that may be available, shall be entitled to specific performance and other
injunctive relief, without proving actual damages. If any restriction set forth
in this Section 4 or in 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 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.
5. Termination of Employment.
(a) Death or Disability. In the event of the Executive's death
or "Disability" (as defined below), the Company may by written notice to
Executive terminate Executive's employment effective not less than 30 days after
the date of such notice. "Disability" means a mental or physical condition that
renders Executive incapable of performing his duties and obligations under this
Agreement for a period of six consecutive months, or more than 210 days in any
eight month period, in the written opinion of a competent physician specializing
in such condition selected by the Board who has personally examined and
evaluated Executive's condition. Executive agrees to submit to appropriate
medical examination by such physician at the Company's expense and that such
physician's determination shall be final. If this Agreement is terminated by
Company under this Section 5(a), the Company shall pay Executive or his estate
within 10 days after the effective date of such termination any unpaid
compensation (including any accrued but unpaid vacation pay and bonuses accrued
in accordance with Section 3(c) hereof) accrued through such effective date,
provided that no severance amount shall be payable.
(b) Termination for Good Cause. The Company may terminate
Executive's employment at any time for "Good Cause," as defined below. "Good
Cause" means gross misconduct, gross neglect of duties (including by reason of
alcohol or drug, dependency), acts involving moral turpitude, conviction of a
felony, material breach by Executive of this Agreement that is not substantially
cured within 30 business days after receipt of written notice from the Company
of such breach, or any act or omission involving fraud, embezzlement or
misappropriation of any property of the Company by Executive.
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(c) Termination without Good Cause. If the Company terminates
Executive's employment without Good Cause, the Company shall (i) give Executive
written notice of such termination at least 60 days prior to the effective date
of such termination; (ii) pay Executive within 10 business days after the
effective date of such termination all unpaid compensation (including any
accrued but unpaid vacation pay and bonuses accrued in accordance with Section
3(c) hereof) accrued through the effective date of such termination; (iii) pay
Executive monthly severance payments equal to Executive's base monthly salary in
effect at the time of such termination for a period of six months after the
effective date of such termination (provided the Company may, in its discretion,
upon receipt of a written request from Executive, pay such unpaid compensation
and severance payments in a lump sum); and (iv) provide Executive full family
health and medical benefits (including dental) and all life and disability
insurance as are provided to the senior executives of the Company for a period
of six months after the effective date of such termination.
(d) Termination by Executive. Executive may terminate this
Agreement by giving the Company written notice at least 60 days prior to the
effective date of such termination. If Executive terminates this Agreement under
this Section 5(d), the Company shall pay Executive only any unpaid compensation
(including any accrued but unpaid vacation pay) accrued through the effective
date of such termination, but Executive shall not be entitled to any severance
payments.
(e) Resignation as Director. Upon termination of Executive's
employment pursuant to this Agreement, he shall resign as a director and an
officer of the Company.
6. Development Rights and Confidential Information.
(a) Developments. Executive agrees that any developments by
way of invention, design, copyright, trademark, software, magazine or journal
concept or other matters which may be developed or perfected by him during the
term of this Agreement or which are in process or under investigation during the
term of this Agreement, and which relate to the business of the Company or its
subsidiaries, shall be the property of the Company. The Employee will, at the
request and expense of the Company, assist the Company in applying for and
prosecuting letters patent thereon in the United States or in foreign countries
if the Company reasonably requests, and will assign and will transfer the same
to the Company together with any letters patent, copyrights, trademarks and
applications therefor.
(b) Confidentiality. Executive agrees not to disclose or use
Confidential Information of the Company except in connection with his employment
with the Company. For purposes of this Section 6(b), the term "Confidential
Information" shall mean all information in any manner relating to the Company's
business including, but not limited to, information regarding business plans and
strategies, trade secrets, "know-how", inventions, software, finances, markets,
properties, methods of doing business, processes, customers, staff resumes,
executive compensation, or suppliers, whether or not such information is labeled
or otherwise identified as confidential. Irrespective of the foregoing, no
information will be deemed "Confidential Information" if such
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information (i) is a part of the public knowledge or literature or becomes part
of the public knowledge or literature, in either case from a source other than
Executive or a source acting at Executive's direction, (ii) is received by
Executive in writing, without binder of secrecy, from a third party who is
entitled to convey such information to the public, or (iii) is required by law
or court order to be disclosed. Upon termination of this Agreement, Executive
will deliver to the Company all equipment, records, copies of records and any
other written information of or pertaining to the Company or any subsidiary of
the Company which are then in his possession.
7. Company Covenants. The Company covenants and agrees with
Executive, as a condition to his acceptance of employment with the Company, to
take all actions within its power and to use its best efforts to obtain the
approvals of third parties (including without limitation, the shareholders of
the Company and/or parties to relevant agreements) necessary or appropriate, to
accomplish the following as soon as reasonably practicable:
(a) Amendment of Restated Certificate of Incorporation.
Amendment of the Company's Restated Certificate of Incorporation to provide
that, upon the consummation of a firm commitment underwritten public offering of
any class of common stock of the Company pursuant to a registration statement
under the Securities Act of 1933, as amended, or immediately prior to the
consummation of a Corporate Change (as defined in the Option Plan), all shares
of Class A Common Stock, $.01 par value per share of the Company, and all shares
of Class B Common Stock, $.01 par value per share of the Company, shall
automatically convert into a single class of Common Stock, S.01 par value of the
Company, on a one-for-one basis.
(b) Increase in Option Plan Shares. Approval by the Company's
shareholders of an increase in the aggregate number of shares reserved for
issuance under the Option Plan from 1,400,000 shares to 1,700,000 shares, as
previously approved by the Board.
(c) Amendment to Stockholders' Agreement. Amendment of Section
2(b) of the Stockholders' Agreement, dated as of the 31st day of October, 1997,
by and among the Company and the other parties thereto, to provide that
Executive shall be entitled to serve as a director of the Company for so long as
he is the President of the Company. Executive shall become a party to such
amendment for purposes of Section 2 thereof.
8. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of New York applicable to contracts
made and performed in New York.
(b) Arbitration. Any dispute between Executive and the Company
with respect to the terms of this Agreement, or any claim arising out of or
relating to this Agreement, will
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be submitted to and be settled by final and binding arbitration in New York, New
York, in accordance with the rules of the American Arbitration Association.
(c) Entire Agreement. This Agreement, including all exhibits
and schedules attached hereto, constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
agreements relating to the subject matter hereof. No amendment or modification
of this Agreement shall be effective unless in writing and signed by both
parties hereto.
(d) Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
construed, if possible, so as to be enforceable under applicable law; if such
construction is not possible, then such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
(e) Successors and Assigns. The rights and obligations of the
Company under this Agreement shall inure to the benefit of and shall be binding
upon the successors and assigns of the Company. Executive shall not be entitled
to assign any of his rights or obligations under this Agreement.
(f) Notices. All notices required or permitted under this
Agreement shall be in writing, and shall be deemed effective upon delivery as
evidenced by delivery receipt via overnight delivery service or registered or
certified mail to the addresses set forth on the signature page, or such other
address as either party shall designate to the other in accordance with this
provision.
(g) Waiver. A waiver by either party of any breach hereof by
the other party shall not be construed as a waiver of any subsequent breach.
(h) Counterparts. This agreement may be executed in
counterparts with the same force and effect as if each signatory had executed
the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
MEDSCAPE, INC.
By /s/ /s/ Xxxx X. Xxxxxx
--------------------------- -----------------------------
Title: President XXXX X. XXXXXX
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000 Xxxx 00xx Xxxxxx 00 Xxxxx Xxxxxxx
Xxx Xxxx, XX 00000 Xxxxxxx, XX 00000
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EXHIBIT A
PERFORMANCE BONUS GOALS & PAYMENTS
The "Target Bonus" (the annual amount payable if the "target" level
for each goal is achieved) is $35,000 in the aggregate for each of calendar
years 1998, 1999 and 2000. If the Threshold Level for all goals is achieved,
Executive will receive a bonus payment equal to 25% of the Target Bonus; if the
"Superior Level" for all goals is achieved, Executive will receive a bonus
payment equal to 150% of the Target Bonus. Actual bonus payments will be
calculated on a linear basis between the Threshold Level and the Target Level
and between the Target Level and Superior Level, as the case may be; provided,
however, that the bonus calculation shall be measured for each separate goal
based on the weighting ascribed to that goal.
The following example illustrates this plan: Assume that in 1998,
the Company achieves (1) 100% of budgeted revenue, (2) 110% of budgeted EBITDA,
and (3) 95% of U.S. MD Registrants. The bonus earned would be $35,000,
consisting of (1) $10.5M ($35M x 30%) with respect to revenues, (2) $14M ($35M x
30% + (2/3 x 50% of Target Bonus for such goal)), and $10.5M ($35M x 40% x (2/3
x 75% of Target Bonus for such goal + 25% of Target Bonus for such goal)).
The goals, their weighting and the performance levels are as
follows:
GOAL WEIGHTING THRESHOLD* TARGET* SUPERIOR
Medscape Revenue 30% 85% of Budget Budget 115% of Budget
Medscape EBITDA 30% 85% of Budget Budget 115% of Budget
U.S. MD Registrants 40% 85% of Budget Budget 115% of Budget
* Based on 1998 Budget (draft) dated December 10, 1997.
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EXHIBIT B
MEDSCAPE, INC.
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of the ____ day of February, 1998, by and
between Medscape, Inc., a New York corporation (the "Company"), and Xxxx X.
Xxxxxx (the "Employee").
WITNESSETH THAT:
WHEREAS, the Company pursuant to its 1996 Stock Option Plan, as
amended (the "Plan") wishes to grant this stock option to the Employee.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto hereby agree as follows:
1. Grant of Option.
The Company hereby grants to the Employee, on the date set forth
above, the right and option (hereinafter called "the option") to purchase all or
any part of an aggregate of 300,000 shares of Class B Common Stock, par value
$0.01 per share, of the Company at the price of $.43 per share and subject to
the terms and conditions set forth herein. This option is intended to be an
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code 1986, as amended (the "Code").
2. Duration and Exercisabilitv.
(a) Except as provided in Section 2(c) below, this option shall
become exercisable with respect to one third of the total number of shares
subject to the option grant upon the Employee's completion of the first twelve
(12) months of employment and with respect to the balance of the shares, in
successive equal monthly installments, over the next two years, such that this
option shall be fully exercisable after three (3) full years of employment. This
option shall in all events terminate ten (10) years after the date of grant (or,
in the case of a shareholder of the Company owning more than 10% of the voting
power of stock of the Company and its affiliates, five (5) years from the date
of grant).
(b) During the lifetime of Employee, the option shall be exercisable
only by Employee and shall not be assignable or transferable by Employee, other
than by will or the laws of descent and distribution.
(c) Notwithstanding the installment exercise provision set forth in
Section 2(a) above and subject to the other terms and conditions set forth
herein, this option may be exercised as to 100% of the shares of Class B Common
Stock of the Company for which this option was granted
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on the date of a "Corporate Change" (as such term is defined under Section 13 of
the Plan). Immediately following any Corporate Change, the option shall
terminate and cease to be outstanding, except to the extent assumed by any
successor corporation (or parent thereof).
3. Effect of Termination of Employment.
(a) In the event that Employee shall cease to be employed by the
Company or its subsidiaries, if any, for any reason other than Employee's
Serious Misconduct (as such term is defined in Section 3(d) hereof), or
Employee's death or Disability (as such term is defined in Section 3(e) hereof),
Employee shall have the right to exercise the option at any time within 90 days
after such termination of employment to the extent of the full number of shares
the Employee was entitled to purchase under the option on the date of
termination, subject to the condition that no option shall be exercisable after
the expiration of the term of the option.
(b) In the event that Employee shall cease to be employed by the
Company or its subsidiaries, if any, by reason of Employee's Serious Misconduct
(as defined in Section 3(d)) during the course of employment, the option shall
terminate as of the date of the Serious Misconduct.
(c) If Employee shall die while in the employ of the Company or a
subsidiary, if any, or within 90 days after termination of employment for any
reason other than Serious Misconduct (as defined in Section 3(d)), or if
employment is terminated because Employee has incurred a Disability (as defined
in Section 3(e)) while in the employ of the Company or a subsidiary, if any, and
the Employee shall not have fully exercised the option, such option may be
exercised at any time within twelve (12) months after Employee's death or date
of termination of employment for Disability by Employee, his personal
representatives, administrators or guardians, as applicable, or by any person or
persons to whom the option is transferred by will or the applicable laws of
descent and distribution, to the extent of the full number of shares Employee
was entitled to purchase under the option on the date of death or, in the case
of death within 90 days after termination of employment, on the date of
termination of employment, if earlier, or date of termination for such
Disability and subject to the condition that no option shall be exercisable
after the expiration of the term of the option.
(d) "Serious Misconduct" shall mean conduct inimical to the
interests of the Company which causes material economic damage to the Company
(for example, misappropriation of Company funds) or conduct which significantly
interferes with the individual's ability to perform their duties (for example,
alcohol or illicit drug dependency) and shall be determined by the Committee or
Board of Directors, whose determination shall be final.
(e) "Disability" shall mean a mental or physical conditions that
renders Employee incapable of performing his duties and obligations under this
Agreement for a period of six consecutive months, or more than 210 days in any
eight month period, in the written opinion of a competent physician specializing
in such condition selected by the Committee or Board of Directors
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who has personally examined and evaluated Employee's condition. Employee agrees
to submit to appropriate medical examination by such physician at the Company's
expense and that such physician's determination shall be final.
4. Manner of Exercise.
(a) The option can be exercised only by Employee or other proper
party by delivering within the option period written notice to the Company at
its principal office. The notice shall state the number of shares as to which
the option is being exercised and be accompanied by payment in full of the
option price for all shares designated in the notice.
(b) Employee may pay the option price in cash, by check (bank check,
certified check or personal check), by money order or, with the approval of the
Company, (i) by delivering to the Company for cancellation certificates
representing Class B Common Stock of the Company with a fair market value as of
the date of exercise equal to the option price or the portion thereof being paid
by tendering such shares, (ii) by delivering to the Company a combination of
cash and certificates representing Class B Common Stock of the Company with an
aggregate fair market value equal to the option price, or (iii) provided the
following is permitted under the Securities Act of 1933, as amended, through a
special sale and remittance procedure ("cashless exercise") pursuant to which
the Employee shall concurrently provide irrevocable written instructions (A) to
a Company-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Company, out of the sale proceeds available on
the settlement date, sufficient funds to cover the aggregate exercise price
payable for the purchased shares plus all applicable Federal, state and local
income and employment taxes required to be withheld by the Company, by reason of
such exercise and (B) to the Company to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete the sale.
For purposes of clauses (i) and (ii), the fair market value of the Company's
Class B Common Stock as of any date shall be reasonably determined in good faith
by the Committee or the Board from time to time.
5. Restrictions on Issuance of Shares.
Notwithstanding the provisions of Section 2, the Company shall have
no obligation to deliver any certificate or certificates representing shares of
Class B Common Stock upon exercise of an option until the following conditions
shall be satisfied:
(a) (i) The shares with respect to which the option has been
exercised are at the time of the issue of such shares effectively registered
under applicable Federal and State securities laws as now in force or hereafter
amended; or (ii) counsel for the Company shall have given an opinion that the
issuance of such shares upon exercise of the option is exempt from registration
under Federal and State securities laws as now in force or hereafter amended or
the Company is otherwise satisfied in its discretion that such exercise complies
with such securities laws; and
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(b) In either event the Company has complied with all applicable
laws and regulations, including without limitation all regulations required by
any stock exchange upon which the Company's outstanding Class B Common Stock is
then listed.
(c) The Employee shall represent, warrant, covenant and agree in
writing that the Option Shares (as defined in Section 6) are being acquired for
his own account for investment purposes only and not with a view to distribution
or any other disposition thereof.
The Company shall use reasonable efforts to the extent it deems
practicable to bring about the compliance with the above conditions within a
reasonable time except that the Company shall be under no obligation to cause a
registration statement or a post-effective amendment to any registration
statement to be prepared solely for the purpose of covering the issue of shares
in respect of which any option may be exercised or to permit any Employee to
effect a registration of his or her shares in connection with a registration of
shares by the Company.
6. Right of First Refusal.
Until the consummation of a firm commitment underwritten public
offering of the Company's common stock pursuant to a registration statement
under the Securities Act of 1933, as amended, the Company and the Investor
Stockholders (as such term is defined in the Stockholders Agreement, dated as of
October 31, 1997 (the "Stockholders' Agreement"), by and among the Company and
the Existing Stockholders, the Investor Stockholders and any Additional
Stockholders, as such terms are defined therein shall be entitled to the
following right of first refusal.
(a) Transfer of Shares. The Employee shall not transfer any shares
of Class B Common Stock obtained upon exercise of the option ("Option Shares")
or any right or interest therein then owned by him except by a transfer that
meets the requirements of this Section 6. In the event that the Employee
proposes to transfer any portion of the Option Shares, whether voluntarily or
involuntarily, other than a Permitted Transfer or in connection with a Corporate
Change, then at least thirty (30) days prior to such transfer, the Employee
shall give notice (the "Notice") to the Company and the Investor Stockholders of
his intention to effect such transfer. The Notice shall set forth (i) the class,
series and number of Option Shares to be sold by the Employee ("Transferred
Shares"), (ii) the date or proposed date of the transfer and the name and
address of the proposed transferee, and (iii) the principal terms of the
transfer, including the cash or other property or consideration to be received
upon such transfer.
(b) Company's Option. The Company shall have the option, but not the
obligation, to purchase any or all of the Transferred Shares on the same terms
as specified in the Notice. Within thirty (30) days after the receipt of the
Notice, the Company shall give written notice to the Employee and the Investor
Stockholders (the "Company Notice") stating whether or not it elects to exercise
its option to purchase, the number of Transferred Shares, if any, it elects to
purchase, and a date and time for consummation of the purchase not more than
thirty (30) days after
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the receipt of the Company Notice by the Employee. Failure by the Company to
give such notice within such time period shall be deemed an election by it not
to exercise its option.
(c) Investor Stockholders' Option. If the Company fails to exercise
its right to purchase under subparagraph (b) hereof, or exercises its right to
purchase for less than all of the Transferred Shares, then the Investor
Stockholders shall have the option, but not the obligation, to purchase, pro
rata to their ownership interest in the shares of Common Stock issued or
issuable to such stockholder upon the conversion of shares of Series C Preferred
Stock of the Company, any or all of the remaining Transferred Shares on the same
terms as specified in the Notice. Not later than thirty (30) days after the
Investor Stockholders receive the Company Notice, each Investor Stockholder
shall give written notice to the Employee and the Company (the "Investor
Notice") stating whether or not it elects to exercise its option to purchase,
the number of the remaining Transferred Shares, if any, that it elects to
purchase, and a date and time for consummation of the purchase not more than
thirty (30) days after the receipt of the Investor Notice by the Employee.
Failure by an Investor Stockholder to give such notice within such time period
shall be deemed an election by it not to exercise its option. If the Company and
the Investor Stockholders exercise their respective rights to purchase for less
than all the Transferred Shares, then the Employee shall thereafter be free to
transfer the remaining Transferred Shares on the terms provided in the Notice,
free and clear of any restrictions under this Section 6.
(d) Definitions. For purposes of this Section 6, the term "Permitted
Transfer" shall mean a transfer to a spouse (other than pursuant to any divorce
or separation proceedings or settlement), parents, children (natural or
adopted), stepchildren or grandchildren or a trust for any of their benefit
(each recipient being a "Permitted Transferee"); provided, however, that prior
to such transfer, such Permitted Transferee shall agree in writing to be bound
by the obligations imposed upon the Employee under this Section 6 as if such
transferee were originally a signatory to this Agreement.
(e) Application of Provisions. In each case, any Transferred Shares
not purchased by the proposed transferee in accordance with Section 6(c) hereof
may not be sold or otherwise disposed of until they are again offered to the
Company and the Investor Stockholders under the procedures specified in Sections
6(a), (b) and (c) hereof.
(f) Transfers Void. Any attempted transfer by the Employee in
violation of the terms of this Section 6 shall be ineffective to vest in any
transferee any interest held by the Employee in the Transferred Shares. Without
limiting, the foregoing, any purported transfer in violation hereof shall be
ineffective as against the Investor Stockholders and the Company, and the
Company and the Investor Stockholders shall have a continuing right and option
(but not an obligation), until the restrictions contained in this Section 6
terminate, to purchase the shares purported to be transferred by the Employee
for a price and on terms the same as those at which the purported transfer was
effected.
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7. Miscellaneous.
(a) This option is issued pursuant to the Plan and is subject to its
terms. All capitalized terms used in this agreement that are not otherwise
defined herein shall have the meanings set forth in the Plan. A copy of the Plan
has been delivered to Optionee with this Option.
(b) This Agreement shall not confer on Employee any right with
respect to continuance of employment by the Company or any of its subsidiaries,
nor will it interfere in any way with the right of the Company to terminate such
employment at any time. Employee shall have none of the rights of a shareholder
with respect to shares subject to this option until such shares shall have been
issued to Optionee upon exercise of this option.
(c) The exercise of all or any part of this option shall only be
effective at such time that the sale of Class B Common Stock pursuant to such
exercise will not violate any state or Federal or State securities or other
laws.
(d) If there shall be any change in the Class B Common Stock of the
Company through merger, consolidation, reorganization, recapitalization,
conversion, dividend in the form of stock (of whatever amount), stock split or
other similar change in the corporate structure of the Company, and all or any
portion of the option shall then be unexercised and not yet expired, then
appropriate adjustments in the outstanding option shall be made by the Company,
in order to prevent dilution or enlargement of option rights. Such adjustments
shall include, where appropriate, changes in the number of shares of Class B
Common Stock and price per share subject to the outstanding option.
(e) The Company shall at all times during the term of the option
reserve and keep available such number of shares as will be sufficient to
satisfy the requirements of this Agreement.
(f) If Employee shall dispose of any of the Class B Common Stock of
the Company acquired by Employee pursuant to the exercise of the option within
two (2) years from the date this option was granted or within one (1) year after
the transfer of any such shares to Employee upon exercise of this option, then,
in order to provide the Company with the opportunity to claim the benefit of any
income tax deduction which may be available to it under the circumstances and to
report any taxable income of Employee which may result, Employee shall promptly
notify the Company of the date of acquisition and disposition of such shares,
the number of shares so disposed of, and the consideration, if any, received for
such shares. In order to comply with all applicable federal or state income tax
laws or regulations, the Company may take such action as it deems appropriate to
insure (i) notice to the Company within the time periods described above and
(ii) that, if necessary, all applicable federal or state payroll, withholding,
income or other taxes are withheld or collected from Employee.
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(g) The Plan permits the Board or Committee to provide for terms in
the grant of an option thereunder that differ from the terms of the Plan and,
accordingly, the terms of this Agreement shall govern with respect to any
conflict between this Agreement and the Plan.
8. Notices.
Notices to be given hereunder shall be in writing and shall be
delivered personally or sent by registered or certified mail, postage prepaid,
return receipt requested, and addressed, if to the Employee at 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx such other address as the Employee specifies in
writing to the Company, and if to the Company to its then principal office.
9. Entire Agreement.
This instrument contains the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements
relating to the subject matter hereof and may be changed only by an agreement in
writing and signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
10. Governing Law.
This Agreement shall be construed and enforced in accordance with
the laws of the State of New York.
11. Severability.
In case any one or more of the provisions hereof shall be determined
to be invalid or unenforceable, either in whole or in part, this Agreement shall
be deemed amended to delete or modify, as necessary, the offending provision or
provisions and to alter the balance of this Agreement in order to render the
same valid and enforceable.
