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Exhibit 10.11
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of
the 16th day of February, 1998 by and between MEDSCAPE, INC., a New York
corporation (the "Company"), and XXXXX X. XXXXXXXX ("Executive").
1. Employment and Term. The Company will employ Executive as
Chairman of the Executive Committee of the Company, and Executive shall accept
such employment, for a three year period commencing February 16, 1998 (the
"Employment Period"), subject to earlier termination pursuant to the terms
hereof. Executive shall at all times report to the Chief Executive Officer of
the Company. Executive's principal focus shall be the development of new
products and services for the Company.
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 one-half 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 (other than SCP Communications, Inc. ("SCP")) without the prior
written consent of the Board. The Company acknowledges and agrees that Executive
will devote one-half of his time performing his obligations under his Employment
Agreement with SCP.
3. Compensation and Benefits.
(a) Base Salary. During, the Employment Period, the Company
shall pay Executive a base salary of $80,000 per year, payable in accordance
with the Company's standard payroll policy.
(b) Performance Bonuses. In addition to the base salary, the
Company shall pay Executive a performance bonus in respect of each of 1998, 1999
and 2000 ("Bonus Years"), in accordance with the Performance Bonus & Goals set
forth in Exhibit A. Executive shall be entitled to any bonus earned with respect
to any Bonus Year so long as Executive remains employed by the Company on
December 31 of such Bonus Year, but shall not be entitled to any portion of the
bonus for any Bonus Year in which he is not employed by the Company on December
31 of such Bonus Year. Any performance bonus shall be payable within 30 days
after approval by the Board of Directors of the Company of the Company's
financial statements for such Bonus Year.
(c) Performance Bonus Payment. The performance bonus for each
year shall be paid, at Executive's election, in, either:
(i) cash; or
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(ii) that number of shares (the "Bonus Share Amount") of
Class B Common Stock, par value $.01 per share, of the Company ("Class B Common
Stock") equal to the bonus amount divided by the "Price Per Bonus Share," as
defined below. "Price Per Bonus Share" means the fair market value of each share
of Class B Common Stock as of December 31 of such Bonus Year as determined by
the Company's Board of Directors taking into account the restrictions on sale
and nonvoting nature of such shares; or
(iii) fully vested and exercisable incentive stock
options to purchase that number of shares of Class B Common Stock equal to 150%
of the Bonus Share Amount, pursuant to the Company's 1996 Stock Option Plan, as
the same may be amended from time to time (the "Option Plan").
(d) 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; provided, however, that Executive shall not be entitled to any such
benefits or insurance if Executive is receiving substantially similar benefits
and insurance in connection with his employment by SCP.
(e) 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.
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(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 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.
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(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.
(c) 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.
(d) 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 information (i) is
a part of the public knowledge or
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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. 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 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 cf 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
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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/ Xxxx X. Xxxxxx /s/ Xxxxx X. Xxxxxxxx
------------------------ -------------------------
Xxxx X. Xxxxxx Xxxxx X. Xxxxxxxx
President & CEO
000 Xxxx 00xx Xxxxxx 000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000 Xxx Xxxx, 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 $50,000 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 goals, their weighting and the performance levels are as
follows:
Goal Weighting Threshold* Target* Superior*
Medscape Revenue 30% ($15,000) 85% of Budget Budget 115% of Budget
Medscape EBITDA 30% ($15,000) 85% of Budget Budget 115% of Budget
U.S. MD Registrants 40% ($20,000) 85% of Budget Budget 115% of Budget
* Based on 1998 Budget (draft) dated December 10, 1997.
