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EXHIBIT 10.51
Employment Agreement dated February 1, 1998 between WebMD, Inc. and K. Xxxxxx
Xxxxxxxx
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the 1st day
of February, 1998, by and between ENDEAVOR TECHNOLOGIES INC., a Georgia
corporation ("ETI"), and K. XXXXXX XXXXXXXX, an individual (the "Executive"),
and is effective as of the date hereof.
WHEREAS, Executive is expected to make a significant contribution to
the success and development of ETI in his role as a Director and the Chief
Financial Officer of ETI; and
WHEREAS, Executive is willing to render services to ETI on the terms
and subject to the conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by Executive and ETI including,
without limitation, the promises and covenants described herein, the parties
hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
EMPLOYMENT
Section 1.1 Term of Employment. The term of Executive's
employment hereunder shall commence on or before February 2, 1998 and continue
for a period of two (2) years, unless earlier terminated as provided in this
Agreement. At the end of the second year of the initial two-year term, this
Agreement shall automatically be extended for an additional one-year term unless
either party hereto shall give written notice of its or his intent to terminate
one hundred eighty (180) days prior to the end of the second year of the initial
two-year term.
Section 1.2 Duties and Responsibilities of Executive. Executive
is hereby employed full time as the Chief Financial Officer of ETI, shall do and
perform all services and acts necessary or advisable to fulfill the duties of
such offices, and shall conduct and perform such additional services and
activities as may be determined from time to time by the Board of Directors or
the CEO of ETI, as applicable. During the term of this Agreement, Executive
shall devote his full time, energy and skill to the business of ETI and to the
promotion of ETI's interests, and Executive acknowledges that he has a duty of
loyalty to ETI and shall not engage in, directly and indirectly, any other
business or activity that could materially and adversely affect ETI's business
or the Executive's ability to perform his duties under this Agreement.
In his capacity as an officer of ETI, Executive shall report to the CEO
of ETI. Executive's authority and responsibility in ETI shall at all times be
subject to the review and discretion of the Board of Directors, who shall have
the final authority to make decisions regarding the business of ETI.
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Section 1.3 Compensation. For all services to be rendered by
Executive under this Agreement, ETI shall pay Executive as follows:
(a) Base Salary. Executive shall be paid an annual gross salary
of One Hundred Seventy-Five Thousand Dollars ($175,000) payable bi-weekly. At
the sole discretion of the Board of Directors of ETI, Executive's annual gross
salary may be increased, from time to time, throughout the term of this
Agreement, the amount of any such increase to be determined by the Board of
Directors (or by a compensation committee thereof).
(b) Annual Bonus. Executive may be paid an annual bonus in an
amount recommended by the CEO of ETI and approved by the Board of Directors of
ETI (or a compensation committee thereof).
Section 1.4 Benefits.
(a) Vacation. Executive shall be entitled to three weeks paid
vacation annually during the first three calendar years of his employment by ETI
and four weeks paid vacation during each calendar year thereafter. Any vacation
not used during any calendar year shall be forfeited except that one week's
unused vacation may be carried forward to the year following the year in which
such vacation entitlement accrued.
(b) Life, Disability and Retirement Programs. Executive shall be
entitled to participate in any life, disability and retirement programs that are
generally offered to or provided for the senior management personnel of ETI,
said programs to be approved by the Board of Directors.
(c) Group Insurance. Executive shall be entitled to participate
in such group health and dental insurance programs (including family coverage)
as may from time to time be offered generally to all of the other members of the
senior management personnel of ETI and its subsidiaries. Executive's
participation shall be on the same basis (including cost provisions) as such
other members of senior management.
Section 1.5 Stock Options. ETI shall grant Executive options to
purchase 265,000 shares of Common Stock, Series D of ETI (the "Options"), such
Options to be subject to the terms and conditions set forth below. The Options
shall be adjusted for any change in the total issued common shares of ETI (of
any class) due to stock splits and stock dividends so that after the change, the
number of shares subject to the then outstanding Options bears the same
proportion to the total number of issued common shares of ETI (of all classes)
as borne prior to the change.
(a) Grant, Vesting and Exercise. Options to purchase 265,000
shares of Common Stock, Series D shall be granted as of the effective date of
this Agreement and at the exercise price of Two Dollars ($2.00) per each share
of Common Stock, Series D acquired upon exercise (subject to customary
adjustments). It is agreed that Two Dollars ($2.00) is the fair market value of
a share as of the effective date hereof. Said Options shall vest and become
exercisable in accordance with the following schedule and shall remain
exercisable through the fourth anniversary of the effective
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date of this Agreement, at which time such Options shall expire unless earlier
terminated in accordance with the provisions hereof. Such Options shall include
a provision requiring Executive to execute and deliver a copy of the Restated
Shareholders Agreement (as it may be amended from time to time) among ETI and
all of its current shareholders (the "Restated Shareholders Agreement").
Option for
Number of Date Vested
Shares and Exercisable
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88,333 February 2, 1998
44,167 February 2, 1999
44,167 February 2, 2000
88,333 February 2, 2001
At the effective time and date of a registration statement filed under
the 1993 Act for a public offering of any series of ETI's shares, one-half (1/2)
of the Options held by Executive which then have not vested and become
exercisable under the above vesting schedule will immediately vest and become
exercisable. All Options shall vest and become exercisable upon a Change of
Control of ETI which occurs subsequent to the effective time and date of a
registration statement filed under the Securities Act of 1933 ("1933 Act") for a
public offering of any series of ETI's shares. For purposes of this Section
1.5(a), a "Change of Control" shall mean a change of the possession, direct or
indirect, of the power to direct or cause the direction of management and
policies of ETI, whether through ownership of voting securities, by contract
(other than a commercial contract for goods or non-management services), or
otherwise. Without limitation, a Change of Control shall be deemed to have
occurred if any person or entity that is not on the date hereof the beneficial
owner of any securities of ETI becomes the beneficial owner, directly or
indirectly, of 20% or more of the combined voting power of ETI's outstanding
voting securities ordinarily having the right to vote for the election of
directors of ETI.
(b) Return of Options and Repurchase of Shares. (i) In the event
that Executive voluntarily resigns his employment with ETI prior to February 2,
2000, all then outstanding Options that have been issued to Executive shall be
canceled as of the date of Executive's notice of voluntary resignation. In the
event that Executive voluntarily resigns his employment with ETI after February
1, 2000, all then outstanding and exercisable options shall remain exercisable
in full for a period of 120 days after the date of such notice of voluntary
resignation. ETI shall have the option at its sole discretion to purchase any
unexercised Options from the Executive at a price per share equal to the
difference between the exercise price of such Options and the per share
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Fair Market Value of the shares of Common Stock underlying such Options
determined as of or before the thirtieth (30th) day following the date such
notice of voluntary resignation was given, with the Fair Market Value of such
shares of Common Stock to be determined in the manner set forth in clause (iv)
of this Subsection 1.5(b) set forth below. Furthermore, in the event Executive
voluntarily resigns his employment with ETI and no registration statement filed
under the 1933 Act for a public offering of any series of ETI's shares has
become effective, then ETI in its sole discretion may purchase any shares of
Common Stock previously obtained by Executive upon his exercise of any Options
for an amount equal to the Fair Market Value of such shares of Common Stock. Any
such repurchase of shares by ETI shall be accomplished within 180 days after
ETI's receipt of such notice of resignation.
(ii) In the event that Executive's employment with ETI
shall be terminated by ETI for Cause after February 1, 1999 or at any time
without Cause, all then outstanding and unexercised Options shall become
exercisable in full as of the date such notice of termination was given by ETI
and shall remain exercisable in full for a period of 120 days after the date
such notice of termination was given. ETI shall have the option at its sole
discretion to purchase any unexercised Options from the Executive at a price per
share equal to the difference between the exercise price of such Options and the
per share Fair Market Value of the shares of Common Stock underlying such
Options determined as of or before the thirtieth (30th) day following the date
such notice of termination was given by ETI, with the Fair Market Value of such
shares of Common Stock to be determined in the manner set forth in clause (iv)
of Subsection 1.5(b) appearing below. Furthermore, if no registration statement
filed under the 1933 Act for a public offering of any series of ETI's Common
Stock has become effective, then ETI in its sole discretion may repurchase any
shares of Common Stock previously obtained by Executive upon the exercise of any
Options for an amount equal to the Fair Market Value of such shares of the
shares of Common Stock. Any such repurchase of the shares of Common Stock shall
be accomplished within 180 days after the date such notice of termination was
given by ETI.
(iii) In the event Executive's employment with ETI shall be
terminated by ETI for Cause on or before February 1, 1999, all then outstanding
Options will be canceled, and, if no registration statement filed under the 1933
Act for a public offering of any series of ETI's Common Stock has become
effective, then ETI in its sole discretion may repurchase any shares of Common
Stock previously obtained by Executive upon his exercise of any Options for an
amount equal to the aggregate amount paid by Executive to ETI in connection with
the exercise price of such Options plus interest at eight percent per annum for
the period Executive owned the Common Stock. Any such repurchase of the shares
of Common Stock shall be accomplished within 180 days after such notice of
termination.
(iv) The Fair Market Value of a share of Common Stock,
Series D on the date specified by ETI shall mean (i) the closing sales price of
the Common Stock of ETI on such date on the national securities exchange
(treating the NASDAQ National Market System as a national securities exchange)
having the greatest volume of trading in the Common Stock during the thirty (30)
day period preceding the day the value is to
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be determined or, if such exchange was not open for trading on such date, the
next preceding date on which it was open; (ii) if the Common Stock is not traded
on any national securities exchange, the average of the closing high bid and low
asked prices of the Common Stock on the over-the-counter market, in arms-length
transactions not involving an affiliate of ETI, on the day such value is to be
determined, or in the absence of closing bids on such day, the closing bids on
the next preceding day on which there were bids; (iii) if the Common Stock also
is not traded on the over-the-counter market, the average net proceeds per share
received or the price paid by ETI with respect to shares of Common Stock of any
series sold or purchased by ETI in arms length transactions during the ninety
(90) days preceding the day the value is to be determined; or (iv) if no such
purchase or sale transactions by ETI have occurred within such ninety (90) day
period, the fair market value as determined in good faith by the Board of
Directors of ETI based on (a) such relevant facts as may be available to such
Board, which may include opinions of independent experts, the price at which
recent purchases or sales have been made by third parties, the book value of the
per share, and the ETI's current and future earnings or (b) an independent
appraisal, conducted at ETI's expense, by a qualified financial appraiser who is
reasonably satisfactory to both ETI and Executive, provided that the selection
of method (a) or (b) shall be by mutual agreement of the Board and Executive.
(c) Initial Public Offering. In the event that ETI shall undertake
an initial public offering ("IPO") of any series of its stock, pursuant to which
it files a registration statement in accordance with the 1933 Act, notice of the
filing of such registration statement shall be provided to Executive, and upon
the effective date of such registration statement (i) pursuant to and in
accordance with the Restated Shareholders Agreement, each one (1) outstanding
share of Common Stock, Series D will become one (1) share of Common Stock with
all rights of a share of Common Stock, Series A, (ii) pursuant to and in
accordance with Section 1.5(a) above, one-half (1/2) of the Executive's then
unvested Option shall immediately vest and become exercisable, and (iii) ETI
shall have no right to repurchase any shares of Common Stock obtained by his
exercise of any Options.
Section 1.6 Member of Board. Executive will be elected to the
Board of Directors of ETI at the first regularly scheduled Board meeting
following the effective date hereof.
Section 1.7 Business Expenses. Executive shall be entitled to
reimbursement of all ordinary and necessary business expenses reasonably
incurred for business travel, communications (including cell phone and pager),
entertainment and meals in connection with the performance of Executive's duties
under this Agreement in accordance with ETI's established policies for
reimbursement of business expenses including an automobile allowance of Five
Hundred Dollars ($500) per month. ETI will also pay the initiation fees,
membership dues and assessments for Executive's family membership in a club in
the Atlanta area acceptable to ETI and Executive which would permit Executive to
engage in business entertainment for the benefit of ETI. ETI expects Executive
to attend and participate in continuing education seminars and courses with
respect to the health industry and business management related to his
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duties, and ETI will reimburse all ordinary and necessary expenses of such
attendance and participation. Such continuing education courses and seminars
will be scheduled in consultation with the CEO of ETI to ensure coordination of
schedules.
ARTICLE II
COVENANTS OF EXECUTIVE
Section 2.1 Confidentiality. Executive recognizes the interest
of ETI in maintaining the confidential nature of its proprietary and other
business and commercial information. In connection therewith, Executive
covenants that during the term of his employment with Company under this
Agreement, and for a period of one (1) year thereafter, Executive shall not,
directly or indirectly, except as authorized by the Board of Directors, publish,
disclose or use for his own benefit or for the benefit of a business or entity
other than ETI or otherwise, any secret or confidential matter, or proprietary
or other information not in the public domain that was acquired by Executive
during his employment, relating to ETI, or any of its subsidiaries' businesses,
operations, customers, suppliers, products, employees, financial affairs or
industrial practices, technology, know-how or intellectual property or other
similar information (the "Proprietary Information").
Executive will abide by ETI's policies and regulations, as established
from time to time, for the protection of its Proprietary Information. Executive
acknowledges that all records, files, data, documents and the like relating to
suppliers, customers, costs, prices, systems, methods, personnel, technology and
other materials relating to ETI or its affiliated entities shall be and remain
the sole property of ETI and/or such affiliated entity and shall, upon the
request of ETI, turn over all copies of such Proprietary Information to ETI
(together with a written statement certifying as to his compliance with the
foregoing).
Section 2.2 Non-Solicitation of Customers and Non-Competition.
During the term of his employment with ETI, and for a period of one (1) year
thereafter, Executive shall not directly or indirectly, through one or more
intermediaries or otherwise, solicit, direct or appropriate, or attempt to
solicit, direct or appropriate any individual or entity which was, at the time
of termination of Executive's employment, a customer or client of ETI for the
purpose of providing a service or product to such customer or client which is
the same type of service or product offered or provided by ETI at the time of
termination of Executive's employment, with ETI.
During the Executive's employment with ETI, and for the one (1) year
period following the termination of Executive's employment with ETI for any
reason, Executive shall not, without the prior written consent of the Board of
Directors, which consent may be withheld at the sole discretion of the Board of
Directors, engage or participate in, as a business executive or equity owner,
the management or conduct of any business or enterprise that directly competes
in any geographical area with any line of business in which ETI was engaged in
at the time of termination of Executive's employment with ETI; provided,
however, that nothing in this Section 2.2 shall prohibit Executive from
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acquiring or holding, for investment purposes only, less than five percent (5%)
of the outstanding publicly traded securities of any corporation which may
compete directly or indirectly with ETI.
Section 2.3 Non-Solicitation of Employees. During the term of
Executive's employment with ETI, and for a period of one (1) year thereafter
(the "Non-solicitation Period"), Executive shall not, directly or indirectly,
through one or more intermediaries or otherwise, employ, induce, solicit for
employment, or assist others in employing, inducing or soliciting for employment
any individual who is at any time during the Non-solicitation Period an employee
of ETI for the purpose of providing services that are the same or similar to the
types of services offered or engaged in by ETI at the time of termination of
Executive's employment with ETI.
Section 2.4 Trade Secrets. The Executive shall not, at any time,
either during the term of his employment or after any termination of employment,
use or disclose any Trade Secrets (as defined under applicable law) of ETI or
its subsidiaries, except in fulfillment of his duties as the Executive during
his employment, for so long as the pertinent information or data remain Trade
Secrets, whether or not the Trade Secrets are in written or tangible form.
ARTICLE III
TERMINATION OF EMPLOYMENT
Section 3.1 Termination by Company. Executive's employment may be
terminated by ETI by giving notice during the term of this Agreement upon the
occurrence of one or more of the following events:
(a) Executive's death or disability which renders Executive
incapable of performing his duties for more than one hundred twenty (120)
calendar days in one calendar year or within consecutive calendar years
(termination under this Section 3.1(a) shall be deemed termination without
Cause);
(b) for any reason following a determination by the Board of
Directors of ETI to terminate Executive's employment (termination under this
Section 3.1(b) shall be deemed termination without Cause); or
(c) "for Cause," which for purposes of this Agreement shall mean
that the Executive shall have committed or engaged in:
(i) an intentional act of fraud, embezzlement or theft in
connection with his duties or in the course of his employment with ETI;
(ii) any intentional wrongful damage to any material
assets of ETI;
(iii) any intentional wrongful disclosure of Proprietary
Information or Trade Secrets of ETI or its affiliates;
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(iv) a felony or any similar crime involving dishonesty or
moral turpitude;
(v) the habitual and debilitating use of alcohol or
drugs; or
(vi) the failure of the Executive to meet performance
expectations, as determined and articulated by a majority of the members of
ETI's Board of Directors other than Executive; provided, however, that in the
event of this clause (vi) being the sole reason for a termination for Cause,
Executive shall have the cure provisions and rights provided for in Section
3.1(d) hereof and clause (ii) of Section 3.2(c) hereof.
(d) In the event of a determination by ETI's Board of Directors to
terminate Executive's employment under clause (vi) of Section 3.1(c) based
solely on the failure of Executive to meet performance expectations, then ETI
shall furnish to Executive in writing a notice of proposed termination setting
forth a specific statement of the deficiencies in his performance. Executive
shall then have a period of ninety (90) days after the giving of such written
notice of proposed termination by ETI in which to attempt to effect a cure of
the specified deficiencies. If at the end of such ninety (90) day period no such
cure has been effected to the reasonable satisfaction of the Board of Directors
of ETI, then Executive's employment shall be terminated as of the end of such
ninety (90) day period. ETI shall be obligated to provide to Executive only one
such notice of proposed termination, and if subsequent to effecting a cure of
specified deficiencies the Executive is determined by the Board of Directors to
have again failed to meet performance expectations, then his employment may be
terminated immediately upon ETI's giving of notice of termination to Executive
which specifies his deficiencies in performance.
Section 3.2 Severance. For purposes of this Agreement,
Executive's entitlement to any severance payments upon termination of his
employment shall be as set forth below:
(a) Termination Without Cause. Executive shall be entitled to 12
months salary continuation, payable in bi-weekly installments, and continued
participation in ETI's group health and dental insurance program upon the timely
periodic payment of the amount required by ETI for employees to maintain family
coverage for such programs, as severance pay in the event that the Executive's
employment is terminated without Cause, commencing as of the date of Executive's
death or disability for purposes of Section 3.1(a), or the date specified in a
notice given under Section 3.1(b).
(b) Voluntary Termination. Executive shall not receive any
severance pay in the event that he voluntarily resigns his employment with ETI
unless such severance pay is approved by the Board of Directors of ETI in its
sole discretion. Executive shall provide a minimum of thirty (30) days prior
notice to the CEO of his resignation. In the event Executive shall provide
thirty (30) days prior written notice of his intent to resign, ETI may accept
such resignation effective as of any date during such thirty (30) day period as
ETI deems appropriate, provided that Executive shall receive from ETI his salary
and be entitled to participate at ETI's expense in any Company sponsored
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benefit programs in which he was a participant as of the effective date of his
resignation for the duration of such thirty (30) day period.
(c) For Cause. Executive shall not be entitled to any severance
pay whatsoever in the event that his employment is terminated "for Cause"
pursuant to Section 3.1 (c) of this Agreement, unless (i) severance pay is
approved by the Board of Directors of ETI in its sole discretion, or (ii)
Executive's employment is terminated based solely on nonperformance pursuant to
clause (vi) of Section 3.1(c), in which event Executive shall be entitled to
three (3) months salary continuation and continued participation in ETI's group
health and dental insurance program upon timely periodic payment of the amount
required by ETI for employees to maintain family coverage for such programs.
ARTICLE IV
GENERAL PROVISIONS
Section 4.1 Withholding of Taxes. ETI may withhold from any
amounts payable under this Agreement all federal, state, city or other taxes and
withholdings as shall be required pursuant to any applicable law, rule or
regulation.
Section 4.2 Notice. For purposes of this Agreement, all
communications including, without limitation, notices, consents, requests or
approvals, provided for herein shall be in writing and shall be deemed to have
been duly given (i) when personally delivered, (ii) on the day of transmission
when given by facsimile transmission with confirmation of receipt, (iii) on the
following day if submitted to a nationally recognized courier service, or (iv)
five (5) business days after having been mailed by United States registered mail
or certified mail, return receipt requested, postage prepaid, addressed to ETI
(to the attention of the Secretary of ETI) at its principal executive office or
to Executive at his principal residence, or to such other address as any party
may have furnished to the other in writing and in accordance herewith, except
the notices of change of address shall be effective only upon receipt.
Section 4.3 Governing Law. The validity, interpretation,
construction, performance and enforcement of this Agreement shall be governed by
the laws of the State of Georgia, without giving effect to the principles of
conflict of laws of such State.
Section 4.4 Validity. If any provision of this Agreement or the
application of any provision hereof to any person or circumstances is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement and
the application of such provision to any other person or circumstances shall not
be affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it valid, enforceable and legal; provided, however, if the provision so
held to be invalid, unenforceable or otherwise illegal constituted a material
inducement to a party's execution and delivery of this Agreement, such provision
shall not be reformed unless prior to any reformation that party agrees to be
bound by the reformation.
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Section 4.5 Entire Agreement. This Agreement supersedes any other
agreements, oral or written, between the parties with respect to the subject
matter hereof, and contains all of the agreements and understandings between the
parties with respect to the employment of Executive by ETI. Any waiver or
modification of any term of this Agreement shall be effective only if it is set
forth in a writing signed by all parties hereto.
Section 4.6 Successors and Binding Agreement.
(a) This Agreement shall be binding upon and inure to the benefit
of ETI and any Successor of or to ETI, but shall not be otherwise be assignable
or delegable by ETI. "Successor" shall mean any successor in interest,
including, without limitation, any entity, individual or group of persons
acquiring directly or indirectly all or substantially all of the business or
assets of ETI, whether by sale, merger, consolidation, reorganization or
otherwise.
(b) ETI shall require any Successor to agree at the time of
becoming a Successor to perform this Agreement to the same extent as the
original parties would be required if no succession had occurred.
(c) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives, executors,
administrators, heirs, distributees and legatees.
(d) This Agreement is personal in nature and neither of the
parties shall, without the consent of the other, assign, transfer or delegate
this Agreement or any rights or obligations hereunder except as expressly
provided in this Section 4.6.
Section 4.7 Captions. The captions in this Agreement are solely
for convenience of reference and shall not be given any effect in the
construction or interpretation of this Agreement.
Section 4.8 Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in a writing signed by Executive and ETI. No waiver by a party hereto
at any time of any breach by another party hereto or compliance with any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provision or conditions at the
same or at any prior or subsequent time.
Section 4.9 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
ENDEAVOR TECHNOLOGIES INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Chief Executive Officer
EXECUTIVE
/s/ K. Xxxxxx Xxxxxxxx
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K. Xxxxxx Xxxxxxxx
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