1
EXHIBIT 10.18
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into this June 15,
1999, by and between Xxxxx Xxxxx (the "Executive") and APACHE MEDICAL SYSTEMS,
INC., a Delaware corporation (the "Company").
WHEREAS, the Company considers Executive to be a valued employee with
significant expertise; and
WHEREAS, the Company wishes to retain the continued employment and
maintain existing non-competition, and non-solicitation and severance pay
provisions applicable to Executive in consideration for Executive's agreement to
the terms and conditions set forth herein; and
WHEREAS, Executive desires to continue to be an employee of the Company on
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the promises and mutual agreements
made herein, and intending to be legally bound hereby, the Company and Executive
agree as follows:
1. Employment Term. The Company will continue to employ Executive for a
term commencing on June 15, 1999 and ending on January 31, 2000 ("Employment
Term"). The Employment Term shall be automatically extended for additional
one-year terms, unless Executive or the Company provides ninety (90) days'
advance written notice to the other of its intention not to renew.
2. Employment Duties. Executive will continue to serve as an Executive
Vice President of the Company reporting directly to the Chief Executive Officer
and responsible for compliance with policies and practices of the Company and
keeping within same for the day to day management of National Health Advisors
and shall perform such other duties as may be assigned from time to time by the
Company. Executive shall, on a full-time basis, serve the Company faithfully,
diligently and competently and to the best of his ability and in accordance with
this Agreement and applicable law.
3. (a) Compensation. In exchange for Executive's services under this
Agreement, the Company shall pay Executive as salary $180,250 per annum. Salary
shall be payable in twenty-four (24) equal bi-monthly installments and otherwise
in accordance with the Company's ordinary pay practices. Any payments made to
Executive pursuant to this Section 3 shall be treated as wages for withholding
and employment tax purposes.
1
2
(b) Performance Bonus. Executive shall be eligible to receive during
the Employment Term an annual performance bonus based on the attainment by
APACHE of annual performance goals referenced in Attachment 1.
The amount of actual payment, if any, shall be based on a
sliding scale and proportional to the level of the performance goals as
determined by the Chief Executive Officer and the Compensation Committee. The
actual bonus will be below, at, or above the target bonus based upon actual
performance achieved by year end as measured against original target
performance.
The target bonus shall be up to $125,000.
4. Benefits.
(a) Executive shall be entitled during the Employment Term to
participate in such employee benefit plans and programs as are offered from time
to employees of the Company to the extent that his position, tenure,
compensation, age, health and other qualifications make him eligible to
participate. The Company does not promise the adoption or continuance of any
particular plan or program during the Employment Term, and Executive's (and his
dependents') participation in any such plan or program shall be subject to the
provisions, rules, regulations and laws applicable thereto.
(b) Executive shall be entitled to 4 weeks paid vacation in
accordance with the general terms of the Company's vacation policy generally
applicable to Executive Staff.
5. Stock Options. Executive will be eligible for regular annual review and
award of stock options on the same basis as other executive management level
staff and according to the terms of the Company's Employee Stock Option Plan and
the Company's Incentive Stock Option Agreement.
6. Other.
(a) Reimbursement of Expenses. Executive shall be entitled to
reimbursement for ordinary, necessary and reasonable out-of-pocket business
expenses which he incurs in connection with performing his duties hereunder. The
reimbursement of all such expenses shall be made upon presentation of
satisfactory evidence of the amounts and nature of such expenses and shall be
subject to the Company's current policies regarding business expenses and to the
approval of the Company's Chief Executive Officer.
(b) Except as specifically provided herein, Executive shall be
entitled during the Employment Term to participate on the same basis as all
other employees of APACHE in standard employee benefit programs (e.g.,
disability benefits, life insurance or medical insurance) maintained by the
Company from time to time, subject to the
2
3
eligibility and participation rules in effect from time to time for such
programs, provided that the Company will not materially reduce the value in the
aggregate of such benefits to Executive.
(c) Executive agrees and acknowledges that APACHE shall have no
obligation to maintain or continue any of the employee benefit programs (the
"Prior Programs") that were maintained at NHA prior to the effective date of the
Merger Agreement, including any qualified or nonqualified retirement programs,
and that any changes to or terminations of the Prior Programs shall be made in
the sole discretion of APACHE.
7. Non-Competition, Non-Solicitation. Executive agrees that throughout the
duration of his employment with the Company and for two years thereafter,
regardless of the reason for his termination, he shall not, either directly or
indirectly: (a) solicit or attempt to secure the Company's existing clients or
customers at the time of Executive's termination, and (b) the Executive shall
not directly or indirectly hire or cause to be hired or contract with or solicit
or recommend for employment any employee of the Company. (c) Executive continues
to be bound by the "Proprietary Information, Inventions, Non--Competition and
Non-Solicitation Agreement" (Attachment 2).
8. Termination.
(a) For Cause. Notwithstanding any other provision of this
Agreement, Executive's employment with the Company and this Agreement may be
terminated by the Company at any time and without notice for cause. For purposes
of this Agreement, "cause" shall include but not be limited to: (i) a material
breach of Executive's duties hereunder; (ii) intentional or grossly negligent
misconduct by Executive in connection with a failure by Executive in the
performance of his duties hereunder; (iii) conviction of Executive of a felony
or violation of any law involving moral turpitude, dishonesty, disloyalty or
fraud; (iv) willful disregard by Executive of instructions of the CEO or the
Board; or (v) performance of any similar action that the CEO and the
Compensation Committee of the Board of Directors, in their sole discretion, may
deem to be sufficiently injurious to the interests of the Corporation so as to
constitute substantial cause for termination. In the event of termination under
this Section 8(a), the Company's obligations under this Agreement shall cease
and, except as required by applicable law, Executive shall forfeit all rights to
receive any other compensation or benefits under this Agreement, except that he
shall be entitled to his Salary for services performed through the date of such
termination and any stock options vested as of his termination date. Termination
of Executive pursuant to this Section 8(a) shall not relieve him of his
obligations under Sections 7 and 8(e).
(b) Without Cause. Notwithstanding any other provision of this
Agreement, Executive's employment with the Company and this Agreement may be
terminated by the Company for any reason or for no reason, provided that in the
event of such termination, Executive shall be entitled to all stock options
vested as of his termination date which options may be exercised according to
the terms of the
3
4
Company's Employee Stock Option Plan and the Company's Incentive Stock Option
Plan and continuation of his salary and Company-provided health insurance
benefits for twelve (12) months. If the Company notifies Executive of its
intention not to renew this Agreement as provided in Section 1, Executive shall
be deemed to be terminated by the Company as of the last day of the Employment
Term and Executive shall be entitled to salary, benefits and exercise of vested
stock options as per the terms of the Employee Stock Option Agreement.
Termination of Executive pursuant to this Section 8(b) shall not relieve him of
his obligations under Section 7 and 8(e).
(c) Material Change in Responsibility. During the term of this
Agreement, Executive may terminate his employment with the Company and this
Agreement upon ninety (90) days' advance written notice in the event of any
"material change in responsibility." For purposes of this Agreement, a "material
change in responsibility" shall mean a material change in his duties or
authority. Should Executive provide written notice to the Company pursuant to
this Section, the Company may cure the "material change in responsibility"
during the 90-day notice period which cure may not be unreasonably rejected by
Executive. Notice of termination under this Section 8(c) shall be valid only if
received by the Company within 120 days after the "material change in
responsibility" occurred. In the event of termination under this Section 8(c),
Executive shall be entitled to all vested stock options, which may be exercised
according to the terms of the Company's Employee Stock Option Plan and the
Company's Incentive Stock Option Plan, and continuation of his salary and
Company-provided health insurance benefits for twelve (12) months.
(d) Termination By Executive. Executive may terminate his employment
and this Agreement at any time prior to the expiration of the Employment Term
for any reason upon 90-days' advance written notice to the Company. In such
event, Executive shall continue to receive regular payments of the Base Annual
Salary only through the effective date of Executive's termination. The Company
reserves the right to substitute pay in lieu of any part or all of such 90-day
notice period.
(e) Incorporation By Reference. Executive agrees and acknowledges
that he continues to be bound by the terms of the Proprietary Information,
Inventions, Non-Competition and Non-Solicitation Agreement previously signed by
Executive and attached and incorporated by reference in the Merger Agreement as
Attachment 2 ("the Proprietary Information Agreement"). Termination of Executive
pursuant to this Section 8(c) shall not relieve Executive of his obligations
under Sections 7 and 8(e).
9. Termination Due to Change in Control.
(a) Defined. For purposes of this Agreement, a "change in control"
is: (1) the purchase or other acquisition by any person, entity or group of
persons, within the meaning of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934 or any comparable successor provisions, of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under such Act) of thirty percent
(30%) or more of either the outstanding shares of common stock or the combined
voting power of the Company's
4
5
then outstanding voting securities entitled to vote generally; (2) the approval
by the stockholders of the Company of a reorganization, merger or consolidation,
in each case, with respect to which persons who were stockholders of the Company
immediately prior to such reorganization, merger or consolidation do not,
immediately thereafter, own more than thirty percent (30%) of the combined
voting power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated Company's then outstanding securities; (3) a
liquidation or dissolution of the Company; or (4) the sale of all or
substantially all of the Company's assets.
(b) In the event that a change in control results in either an
involuntary termination of Executive through elimination of his position or a
voluntary termination as a result of a material change in responsibility
pursuant to Section 8(c) or transfer of Executive to a location outside of a
50-mile radius of his permanent residence, Executive shall be entitled to all
vested stock options, which may be exercised during the Severance Period as
defined in this Agreement, and continuation of his salary and Company-provided
health insurance benefits for twelve (12) months.
(c) A "change in control" will not effect or diminish Executive's
rights and obligations under any provision of this Agreement, including, without
limitation, Sections 8, 9, 10, 11, and 12. Termination pursuant to this Section
9 shall not relieve Executive of his obligations under Sections 7 and 8(e).
10. Disability. If, prior to expiration or termination of the Employment
Term, Executive becomes unable to perform his duties by reason of death or
permanent disability, the Company shall have the right to immediately terminate
this Agreement by giving written notice to Executive to that effect. For
purposes of this Agreement, the term "Permanent Disability" shall mean the
inability of Executive to perform his essential job duties for a period in
excess of four (4) months during any twelve (12) month period.
11. Notices.
(a) All notices hereunder shall be in writing and shall be deemed
given when delivered in person or when telecopied with hard copy to follow, or
three business days after being deposited in the United States mail, postage
prepaid, registered or certified mail, or two business days after delivery to a
nationally recognized express courier, expenses prepaid, addressed as follows:
If to Executive:
----------------
----------------
----------------
5
6
If to the Company:
------------------
Chief Executive Officer
APACHE Medical Systems, Inc.
0000 Xxxxxx Xxxxxxxxx #000
XxXxxx, XX 00000-0000
Telecopy: (000) 000-0000
and/or at such other addresses as may be designated by notice given in
accordance with the provisions hereof.
12. Confidentiality. In the course of performing duties under this
Agreement, Executive may have access to "Confidential Information," including
but not limited to contracts, contract proposals, proprietary information, trade
secrets, inventions, procedures, processes, financial information, business
records, business plans, and other information of a confidential and proprietary
nature owned by the Company. Executive acknowledges that protection of this
Confidential Information is of critical importance to the Company. To ensure
that such Confidential Information is not disclosed or divulged to other
persons, Executive agrees as follows:
(a) that said Confidential Information is the property of the
Company and is to be held by Executive in trust and solely for the benefit of
the Company;
(b) that Executive shall not disclose or otherwise make available
such Confidential Information to any person or entity without the prior written
consent of the Company, except as necessary for the performance of Executive's
services under this Agreement;
(c) that Executive shall not in any way utilize such Confidential
Information for the gain or advantage of Executive or others or to the detriment
of the Company; and
(d) that upon termination of this Agreement, Executive shall
promptly return any and all such Confidential Information to the Company and
shall continue to abide by the confidentiality provisions of this Section Twelve
(12).
13. Assignment of Agreement. This Agreement shall be binding upon and
inure to the benefit of both parties and their respective heirs, successors and
permitted assigns. No party shall assign this Agreement or its rights hereunder
without the prior written consent of the other party; provided, however, that
the Company shall assign this Agreement to any person or entity acquiring all or
substantially all of the business of the Company (whether by sale of stock, sale
of assets, merger, consolidation or otherwise).
14. Entire Agreement/Modification of Agreement. This Agreement contains
all of the agreements between the parties with respect to the subject matter
hereof, and
6
7
this Agreement supersedes all other agreements, oral or written, between the
parties with respect to the subject matter hereof. No change or modification of
this Agreement shall be valid unless the same shall be in writing and signed by
both parties. No waiver of any provisions of this Agreement shall be valid
unless in writing and signed by the waiving party. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver, unless so provided in the waiver.
15. Severability. If any provisions of this Agreement or portions thereof
shall, for any reason, be considered invalid or unenforceable by any court of
competent jurisdiction, such provisions or portions thereof shall be ineffective
only to the extent of such invalidity or unenforceability, and the remaining
provisions of this Agreement or portions thereof shall nevertheless be valid,
enforceable and of full force and effect. The Company's rights under this
Agreement shall not be exclusive and shall be in addition to all other rights
and remedies available at law or in equity.
16. Headings. The section headings or titles herein are for convenience of
reference only, shall not be deemed a part of this Agreement, and shall not in
any way affect the meaning or interpretation of this Agreement.
17. Resolution of Disputes. In the event of a dispute between Executive
and the Company that is not resolved after a good faith effort by the parties,
such dispute will be submitted to arbitration. The arbitration will be conducted
in accordance with the rules of the American Arbitration Association in effect
at the time of the demand for arbitration and will be held in Washington, D.C.
The arbitrator will be selected from an appropriate list of qualified
arbitrators, permit reasonable discovery, and make written findings of fact and
conclusions of law reflecting the appropriate substantive law. Either party must
deliver a request for arbitration in writing to the other party within ninety
(90) days of the date the aggrieved party first has knowledge of the event
giving rise to the claim or ninety (90) days following the 120-day period in the
case of a "Material Change in Responsibility" as defined in Section 7, otherwise
the claim will be considered void and waived. The decision of the arbitrator
will be exclusive, final and binding on Executive and the Company, and Executive
is hereby waiving any right he may have to have any dispute decided in court and
by a jury. The losing party will bear the cost of the arbitrator.
18. Applicable Law. This Agreement shall be governed and construed
according to the laws of the Commonwealth of Virginia and, where appropriate,
the United States of America. Executive expressly submits and consents in
advance to the jurisdiction of the federal and state courts of the Commonwealth
of Virginia for all purposes in connection with any action or proceeding arising
out of or relating to this Agreement for all disputes not resolved pursuant to
Section 17.
7
8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
/s/ Xxxxx X. Xxxxx
-------------------------------
Xxxxx X. Xxxxx
APACHE MEDICAL SYSTEMS, INC.
By: /s/ Xxxxx Xxxxxxx
----------------------------
Name: Xxxxx Xxxxxxx
Title: President & Chief Executive Officer
8
9
ATTACHMENT 1
The following is predicated upon your continued fulltime employment
through the end of the initial employment term (Jan. 31, 2000).
1) Cash Bonus
- During the 1st quarter of 1999 you have already received 60% of your 1998
referenced potential cash Bonus (this is the total earned "1998 bonus").
- During the 2nd quarter of 1999 you will receive consideration for a cash
advance of up to 1/4 of the total 1999 projected cash bonus earned.
- During the 3rd quarter of 1999 you will receive a final payment of 40% of
the 1998 cash bonus amount and accept same as full settlement of all prior
bonus issues.
- The 4th quarter bonus advance amount is zero.
Any 1999 cash bonus earned will be calculated based on an equal
weighting of NHA and APACHE Performance. The APACHE portion will be based on
APACHE's meeting its 1999 revenue and operating profit targets as described in
the "1999 employee bonus plan."
The entire 1999 bonus will be calculated utilizing the following
sliding scale.
BONUS SLIDING SCALE
COMBINED ACTUAL PERFORMANCE AS A % OF 1999 0-65% >65% >70% >80% >90% >100%
TARGET.
% POTENTIAL BONUS EARNED ZERO 25% 40% 70% 85% 100%
The sliding scale will be interpolated at the discretion of the CEO.
/s/ Xxxxx Xxxxxxx /s/ Xxxxx Xxxxx
--------------------------------- ----------------------------------
Xxxxx Xxxxxxx Xxxxx Xxxxx
President & CEO
APACHE Medical Systems
10
ATTACHMENT 2
PROPRIETARY INFORMATION, INVENTIONS,
NON-COMPETITION AND NON-SOLICITATION AGREEMENT
This Proprietary Information, Inventions, Non-Competition and
Non-Solicitation Agreement (the "Agreement") is executed as of this 2nd day of
June, 1997, by and between APACHE Medical Systems, Inc., a Delaware corporation
("APACHE"), and its subsidiaries and affiliates, including but, not limited to,
the National Health Advisors Ltd., a Virginia corporation ("NHA") (individually
and collectively, the "Company"), and Xxxxx X. Xxxxx (the "Executive").
WHEREAS, Executive is a primary shareholder and is employed as
President and Managing Partner of NHA; and
WHEREAS, NHA is being merged into and with APACHE and will become a
wholly-owned subsidiary of APACHE pursuant to an Agreement and Plan of Merger
dated on a date even herewith (the "Merger Agreement"), pursuant to which
Executive will realize a significant and substantial personal gain; and
WHEREAS, NHA has been, is, and will be engaged in the highly
competitive business of providing healthcare consulting services to hospitals
and hospital systems in the area of strategic and operational consulting and
other future business initiatives, on a national basis, APACHE has been, is, and
will be engaged in the highly competitive business of developing, selling,
licensing or otherwise merchandising computer programs, databases and related
manuals, service and knowhow for the purpose(s) of: (i) managing the quality and
utilization of patient care or related services using outcomes management
applications; and (ii) assessing and/or predicting mortality and other treatment
outcomes of hospital patients or outpatients; and (iii) recording patient health
factors in connection with predicting their treatment, managing clinical
productivity or containing costs through the use of outcomes management
applications, and other future business initiatives, on a national basis
(collectively the "Business"); and
WHEREAS, the Company wishes to employ Executive pursuant to the terms
and conditions of the Employment Agreement between Executive and APACHE dated on
a date even herewith; and
WHEREAS, a material inducement to APACHE to enter into the Merger
Agreement and to employ Executive is the agreement of Executive to make certain
commitments to engage in and refrain from certain activities as described in
this Agreement, which commitment is necessary to ensure the protection of the
Company's legitimate business interests in the Business, including, but not
limited to, the protection of the goodwill, client and customer relationships
and Confidential Information (as defined in Article 1 of this Agreement) of the
Company.
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth in the Merger Agreement, the Employment Agreement and hereinafter, the
parties agree as follows:
11
ARTICLE 1
CONFIDENTIALITY
1.1 Definition. "Confidential Information" for purposes of this
Agreement shall be defined as all information, knowledge or data relating to the
Business, including, but not limited to, trade secrets; financial information;
technological and engineering data; formulas; production plans and methods;
business applications and techniques; research and development activities;
preferences and identities of clients, customers, vendors, suppliers and
prospective clients, customers, vendors and suppliers; current, prospective and
ongoing business strategies, plans and techniques; computer and other programs,
software, devices, methods, techniques, processes and inventions; compilations
and other materials developed by or on behalf of the Business (whether in
written, graphic, audiovisual, electronic or other media, including computer
software), which has been or may be subject to reasonable efforts to maintain
its confidentiality, is not generally known to the public or by competitors of
the Company, and which derives its value from remaining undisclosed.
Confidential Information also includes information in the above categories of
any client, customer, supplier, vendor or other third party doing business with
the Company, which has been or will be disclosed to the Company in the course of
conduct of the Business. Confidential Information does not include any
information that is in the public domain or otherwise is or becomes publicly
available (other than as a result of a wrongful act of Executive or any owner,
agent or employee of the Company).
1.2 Acknowledgments. Executive acknowledges that by virtue of his
past relationship with NHA and his integral participation in the conduct of
NHA's business, he has been intimately involved with and privy to Confidential
Information of NHA, which is a valuable asset of the Company, and which, if
disclosed or used without authorization, could cause irreparable harm to the
Company. Executive further acknowledges that by virtue of his future employment
relationship with the Company and his integral participation in the conduct of
the Business, he will be intimately involved with and privy to Confidential
Information, which is a valuable asset of the Company and which, if disclosed or
used without authorization, could cause irreparable harm to the Company.
1.3 Agreement Not to Use or Divulge Confidential Information.
Executive acknowledges that all Confidential Information is the exclusive
property of the Company. Executive agrees to hold all Confidential Information
in trust for the benefit of the Company or any third party as described in
Section 1.1 above. Executive further agrees not to use in any manner, during his
employment and at all times thereafter so long as it remains confidential, for
his benefit or for the benefit of any other individual or entity, or divulge or
convey to any other individual or entity, any Confidential Information without
the prior written permission of the Chief Executive Officer of APACHE or his/her
designee (the "CEO"), unless required to do so by legal process; provided that,
before making such disclosure, Executive shall advise the CEO and will cooperate
fully in any legal action the Company may elect to take in order to attempt to
prevent such disclosure.
1.4 Return of Materials. Executive acknowledges that he does not have
and will not acquire any right, title or interest in or to any Confidential
Information or any part thereof as a result of Executive's prior relationship
with NHA, future employment by the Company or otherwise. Executive agrees to
deliver promptly to the Company, upon termination of his employment
-2-
12
for any reason, all letters, lists, notes, reports, memoranda, documents, data,
computer programs and all other property and materials, and copies thereof,
which were obtained or made by Executive during his employment by the Company or
prior relationship with NHA, which contain or relate in any way to Confidential
Information, and to destroy any electronically stored versions of the foregoing
in Executive's possession or control which are not otherwise in the possession
or control of the Company.
1.5 Disclosure and Assignment of Inventions and Creative Works.
Executive agrees to promptly disclose in writing to the Company all inventions,
ideas, discoveries, formulas, developments, improvements and innovations,
regardless of whether they are patentable (collectively "Inventions"), and all
copyrightable works, including without limitation computer software designs and
programs ("Creative Works"), conceived, made or developed by Executive, whether
solely or together with others, during the period he is employed by the Company
and during the six-month period following the termination of Executive's
employment for any reason. Executive agrees that all Inventions and Creative
Works conceived, made or developed by him, whether during working hours or
otherwise, that: (a) relate directly to the Business of the Company or to its
actual or demonstrably anticipated research or development, or (b) result from
Executive's work for the Company, or (c) involve the use of any equipment,
supplies, facilities, Confidential Information or time of the Company, are the
exclusive property of the Company. Executive hereby assigns and agrees to
assign, all right, title and interest in and to all such Inventions and Creative
Works to the Company. Executive further agrees to perform all reasonable actions
necessary to assist the Company in establishing, confirming and defending its
rights with respect to such Inventions and/or Creative Works. Executive
understands that his obligations under this Agreement do not require him to
assign rights to Inventions or Creative Works which he develops on his own time
without using the Company's equipment, supplies, facilities or Confidential
Information, unless they relate directly to the Business or the Company's actual
or demonstrably anticipated research or development at the time of conception,
or result from any work performed for the Company by Executive.
ARTICLE 2
NON-COMPETITION
2.1 Acknowledgments. Executive acknowledges that the Company's
products and services are highly specialized, that the identity and particular
needs of individual clients, customers, vendors and suppliers are not generally
known to the public or by individuals or entities engaged in the Business, and
the Company has a proprietary and valuable interest in the Confidential
Information. Furthermore, in connection with the limited protection provided by
the covenants contained in this Article 2, Executive acknowledges that his
ability to compete directly or indirectly has been limited only to the extent
necessary to protect the Company's legitimate business interest, and that he is
not thereby precluded from earning a living.
2.2 Non-Competition. As a material inducement to APACHE to enter
into the Merger Agreement, in consideration of the fact that Executive is a
principal owner of the assets and property of NHA and will receive a direct and
substantial benefit as of the closing date of the merger, and in recognition of
Confidential Information to which Executive has been and will be privy by virtue
of his past and future relationship with NHA and the Company, Executive agrees
that, during his employment by the Company and for a period of two (2) years
following the
-3-
13
termination of his employment for any reason, he will not, directly or
indirectly, by any means or device whatsoever, for himself, or on behalf of or
in conjunction with any person, partnership, corporation, limited liability
company or other entity whatsoever, do any one or more of the following:
2.2.1 solicit, induce, entice, hire or employ, or attempt to
solicit, induce, entice, hire or employ any employee of the Company, so as to
cause or attempt to cause such employee to leave the employ of the Company
and/or to accept employment elsewhere, regardless of whether such other
employment would be competitive with the Business;
2.2.2 own, operate, manage, consult for, be affiliated with,
be employed by, or render services to, any person, partnership, corporation or
other entity whatsoever, which is competitive with the Business, or otherwise
compete with the Business, in a capacity which is the same as or substantially
similar to the capacity in which he serves the Company, in any geographic areas
in the United States where the Company engages in the Business as of the date of
Executive's termination; or
2.2.3 call on, contact, solicit or otherwise seek to deal or
deal with any actual or known potential client, customer, vendor or supplier of
the Company which was an actual or known potential client, customer, vendor or
supplier of the Company during Executive's employment or as of the date of
Executive's termination, whichever may be applicable, for the purpose of
interfering with, disrupting or competing with the Company in the Business.
ARTICLE 3
XXXXXXX XXXXXXX
3.1 Nondisclosure of Material Information. If, during the term of
Executive's employment, he becomes aware of any material information regarding a
third party by whom the Company is or has been engaged, which has not been made
available to the public for at least one full business day, Executive agrees
that he will not trade, directly or indirectly, in the securities of such third
party, nor directly or indirectly disclose any material information to any other
person or entity who is likely to trade in such third party's securities.
3.2 Material Information. For purposes of this Article 3, information
is considered material if there is a substantial likelihood that an investor
would consider the information to be important in deciding whether to buy, sell
or hold securities of a third party. Accordingly, information will be considered
material regardless of whether it:
3.2.1 is positive or negative;
3.2.2 was received from a source inside the third party or from
a source which is not connected with the third party;
3.2.3 affects the third party, or its business conditions
(financial or otherwise), operations, assets, net worth or prospects (so-called
"inside information") or market price of its securities (so called "market
information"); or
3.2.4 would, in and of itself, determine an investor's
decision.
-4-
14
3.3 Made Available to the Public. Information will be considered made
available to the public only if it has been:
3.3.1 disclosed in an annual report or quarterly report
distributed or made available by the third party to its security holders;
3.3.2 included in a widely disseminated press release intended
for and made available to the general public; or
3.3.3 widely reported in the media.
ARTICLE 4
MISCELLANEOUS
4.1 Governing Law. Notwithstanding the principles of conflicts of law
of any jurisdiction to the contrary, all terms and provisions of this Agreement
are to be construed and governed by the laws of the State of Virginia, without
regard to the laws of any other jurisdiction, wherein Executive may reside,
where the Company is located or the Business is conducted, or where any
violation of this Agreement occurs. Any suit, action or other legal proceeding
arising out of or relating to this Agreement shall be brought exclusively in the
federal or state courts serving Fairfax County, Virginia, and Executive and the
Company hereby irrevocably consent to personal jurisdiction in the State of
Virginia and to venue in such courts and waive any and all objections to such
jurisdiction and venue.
4.2 Successors and Assigns. This Agreement shall inure to the benefit
of and be enforceable by the Company and, its successors and assigns.
4.3 Waivers. The waiver by the Company of a breach by Executive of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by Executive.
4.4 Complete Agreement. This Agreement, the Employment Agreement and
the Merger Agreement contain the complete agreement and understanding between
the Company and Executive with respect to the subject matter thereof and hereof,
and supersede and preempt any prior understandings, agreements and
representations between the parties, written or oral, relating to such subject
matter.
4.5 Additional Rights and Causes of Action. This Agreement is in
addition to and does not in any way waive or detract from the rights or causes
of action available to the Company under any statutory or common law.
4.6 Revision. If, at the time of enforcement of this Agreement, a
court holds that the restrictions stated herein are unreasonable because they
are overly broad as to time, geographic area and/or scope of conduct limited
under circumstances then existing, and therefore are unenforceable, the parties
agree that such court shall revise this Agreement by substituting the maximum
time period, geographic area and/or scope deemed reasonable and enforceable
under such circumstances.
-5-
15
4.7 Enforcement. Executive acknowledges that his breach of any
provision of this Agreement would cause irreparable harm to the Company, and
that money damages would be an inadequate remedy for any such breach. Therefore,
in the event Executive breaches or threatens to breach any provision of this
Agreement, the Company or its successors or assigns, in addition to other rights
and remedies existing in its or their favor, may apply to any court of competent
jurisdiction for specific performance, injunctive and/or other equitable relief
in order to enforce or prevent any violation of this Agreement.
4.8 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, and such invalidity, illegality or unenforceability is not subject
to revision pursuant to Section 4.6 hereof, such invalidity, illegality or
unenforceability will not affect any other provision, but this Agreement will be
reformed, construed and/or enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
4.9 Survival. This Agreement shall survive the termination of
Executive's employment for any reason.
IN WITNESS, WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
APACHE Medical Systems, Inc.
/s/ Xxxxx X. Xxxxx /s/ Xxxxx Xxxxxxx
By:
----------------------- -----------------------------
Xxxxx X. Xxxxx Xxxxx Xxxxxxx
Its: Chairman and Chief Executive Officer
-6-
