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EXHIBIT 10.25
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into this 30th day of
September 1998, by and between Xxxxx Xxxxxx (the "Executive") and APACHE
MEDICAL SYSTEMS, INC. (the "Company").
WHEREAS, the Company wishes to retain the services of the Executive, and
WHEREAS, Executive desires to be employed by the Company,
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. Subject to Section 7, the term of this Agreement shall
be from October 1, 1998 through October 1, 2000. Should the Parties wish to
extend this Agreement beyond October 1, 2000, the Parties shall enter into a
renewal agreement delineating the terms and conditions of Executive's employment
no later than July 1, 2000.
2. Employment Duties. Executive will serve as Vice President and Chief
Financial Officer of the Company subject to the direction of the Chief Executive
Officer and the Board of Directors. Executive shall be fully responsible for all
facets of the Company's financial functions, including investor relations and
the supervision and management of the department. Executive agrees to perform
and discharge the duties assigned to her to the Company's reasonable
satisfaction. In performing such duties, Executive agrees to comply fully with
all of the Company's policies and standards and to follow the lawful
instructions and directives of the Chief Executive Officer and Board of
Directors. Executive agrees to devote her full professional time, skills and
best efforts to the business of the Company and will not, during the term of
this Agreement, engage (whether or not during normal business hours) in any
other business or professional activity (excluding a limited number of
memberships in approved trade or professional associations and organizations),
whether or not such activity is pursued for gain, profit or other pecuniary
advantage, without the prior written authorization of the Chief Executive
Officer or the Board of Directors.
3. Compensation.
(a). Base Annual Salary. For all services rendered by Executive under
this Agreement, the Company will pay Executive a base salary of $128,000 per
annum, in equal semi-monthly installments, which shall be subject to review
annually by the Compensation Committee of the Board of Directors. The Company
shall withhold federal and state income and
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employment taxes from the salary amounts it disburses to Executive under this
Section.
(b). Performance Bonus. Executive may be eligible to receive an annual
performance bonus of up to 35% based on the Company's achievement of revenue and
operating profit targets.
4. Benefits.
(a). Executive will be entitled during the term of this Agreement to
three (3) weeks paid vacation and sick leave benefits as provided by the
Company's standard policies. Additionally, Executive shall be entitled during
the term of this Agreement to other benefits as may be provided from time to
time by the Company to its employees if and when she meets the eligibility
requirements for such benefits. The Company reserves the right to change or
discontinue any employee benefit plans or programs now being offered to its
employees and their dependents.
(b). The Company shall reimburse Executive for all reasonable expenses
incurred in connection with the performance of her duties under this Agreement
pursuant to the Company's standard business expense reimbursement policies.
5. Signing/Relocation Bonus. The Company shall provide Executive a
signing/relocation bonus in the amount of $20,000. This sum will be disbursed to
Executive as follows: (i) $5,000 will be paid thirty (30) days after Executive
commences employment with the Company; and, (ii) $5,000 will be paid monthly
thereafter for a period of three (3) months. In the event the Executive decides
to voluntarily terminate employment prior to completion of one (1) year
employment with the Company all signing bonuses and relocation funds are at the
Company's sole option, recoverable unless such termination was due to
catastrophic illness and/or disability.
6. Stock Options. Upon Executive's execution of this Agreement, Executive
will, as soon as practically possible, receive 50,000 incentive stock options in
the Company (the "Incentive Stock Options") in accordance with the provisions
and requirements of the Incentive Stock Option Agreement attached as Exhibit 1
to this Agreement.
7. Termination.
(a). For Cause. Notwithstanding any other provision of this Agreement,
the Company may terminate Executive's employment for cause at any time without
notice. For purposes of this Agreement, "cause" shall mean the Executive's (i)
commission of an action against or in derogation of the
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interests of the Company which constitutes an act of fraud, dishonesty, or moral
turpitude, or which, if proven in a court of law, would constitute a violation
of a criminal code or similar law; (ii) by reason of mental or physical
incapacity or disability, becoming unable to perform the essential functions of
her position for a period of ninety (90) days; (iii) material breach of any
lawful material duty or obligation imposed upon the Executive by the Company; or
(iv) divulging the Company's confidential information. If the Executive is
terminated pursuant to this Section 7(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 she shall be entitled to her base salary for
services rendered through the date of termination and accrued but unpaid
vacation benefits through the effective date of termination. Additionally,
Executive shall be entitled to any shares resulting from the exercise of vested
Incentive Stock Options, provided that such options have been exercised either
prior to or at the time the Company notifies her of her termination. Termination
of the Executive pursuant to this Section 7(a) shall not relieve her of her
obligations under Sections 10, 11 and 12.
(b). Without Cause. Notwithstanding any other provision of this
Agreement, the Company may terminate Executive's employment and this Agreement
without cause by providing Executive sixty (60) days written notice, provided
that in the event of such termination, Executive shall be entitled to all vested
Incentive Stock Options, which may be exercised as defined in this Agreement,
and continuation of her salary and Company-paid health benefits for six (6)
months after the effective date of her termination. The Company will also
continue Executive's life insurance and disability benefits during this six (6)
month period to the extent that the terms of its group insurance policies and/or
plans extend coverage to non-employees. Additionally, any Incentive Stock
Options that would have vested in the three months after the effective date of
Executive's termination will be accelerated to, and vest on, the effective
termination date. Executive's vested Incentive Stock Options may be exercised
three (3) months after the effective date of her termination.
(c). Material Change in Responsibilities. Notwithstanding any other
provision of this Agreement, should the Company materially change Executive's
responsibilities, Executive may provide the Company thirty (30) days written
notice of her objection to such change. The Company shall be afforded sixty (60)
days from receipt of such notice to respond to and cure Executive's
objection(s). Should the Company fail to restore Executive's responsibilities in
full during this sixty (60) day period, Executive shall be entitled to resign
and such resignation for purposes of salary and benefit continuation and
vesting, shall be treated as a termination without cause as defined in Section
7(b). For purposes of this Section, a "material change in responsibility" shall
mean a material change in her duties or authority.
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8. 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 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 her position or
transfer of Executive to a location outside of a 50-mile radius of the Company's
office at 0000 Xxxxxx Xxxxxxxxx in McLean, Virginia, Executive shall be entitled
to all Incentive Stock Options which have vested or are otherwise due to vest
pursuant to Section 10 of the Executive's Incentive Stock Option Agreement with
the Company, and continuation of her salary and Company-provided health,
disability and life insurance benefits for six (6) months as provided in Section
7(b).
(c). In the event of Executive's termination pursuant to Section 8(b),
Executive may, at her sole option, elect to receive payment of her six (6)
months salary in the form of a lump sum distribution, less applicable
withholdings, which shall be payable within twenty (20) days of the effective
date of her termination. Executive's election to such a lump sum distribution
shall not diminish Executive's obligations under Sections 10, 11 and 12.
(d). A "change in control" will not effect or diminish Executive's
rights and obligations under any provision of this Agreement, including, without
limitation, Sections 10, 11 and 12.
9. Selection of Chief Executive Officer. In the event that the Board of
Directors selects a new Chief Executive Officer, other than Executive or Xxxxx
Xxxxxxx, during the term of this Agreement, Executive shall notify the Board in
writing of any objections she may have to the newly elected Chief Executive
Officer within sixty (60) days of his or her selection. The Board shall
thereafter be afforded forty-five (45) days to resolve and redress Executive's
concerns.
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Should the Board fail to redress Executive's objections to her satisfaction,
Executive may resign her employment and receive the salary and continuation of
her benefits as provided in Section 7(b).
10. Confidentiality. In the course of performing her duties under this
Agreement, Executive will have access to "Confidential Information." Executive
agrees and acknowledges that this Confidential Information constitutes a
valuable and unique asset of the Company and that its protection is of critical
importance to the Company. To ensure that such Confidential Information is not
disclosed or divulged to third persons, Executive agrees as follows:
(a). that Confidential Information is owned by the Company and is to be
held by Executive in trust and solely for the benefit of the Company;
(b). that she shall not disclose or otherwise make available such
Information to any person or entity without the prior written authorization of
the Board of Directors of the Company, except as necessary for the performance
of Executive's services under this Agreement;
(c). that she 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, she shall promptly return
any and all such Confidential Information to the Company and shall continue to
abide by the confidentiality provisions of this Section.
For purposes of this Agreement, "Confidential Information" shall include,
but not be limited to, information that has been created, discovered, developed,
or otherwise become known to APACHE (including, without limitation, information
created, discovered, developed, or made known by Executive during the period of
this Agreement) and/or in which property rights have been assigned or otherwise
conveyed to APACHE, which information has commercial value in the business in
which APACHE is or may become engaged. By way of illustration, but not
limitation, Confidential Information includes trade secrets, processes,
structures, formulas, data and know-how, improvements, inventions, product
concepts, techniques, marketing plans, strategies, forecasts, customer lists and
information about APACHE's employees and/or consultants (including without
limitation, the compensation, job responsibility and job performance of such
employees and/or consultants). Additionally, Confidential Information shall
include certain information that has been made known to APACHE from third
parties, including, but not limited to, patient identifying information,
physician identifying information, information that would link a client's name
to individual data, and any information protected by a confidentiality agreement
or terms and conditions of an agreement regarding confidentiality.
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11. Non-Competition. Executive agrees and acknowledges that the Company has
a legitimate and necessary interest in protecting its goodwill, customer and
client relationships, and Confidential Information. Consistent with that
interest, Executive agrees that during the term of this Agreement and for a
period of twelve (12) months following her receipt of notice of termination
under Section 7, that she will not, directly or indirectly, own, manage,
control, participate in, consult with, render services to or otherwise engage in
any Competitive Business, or solicit or assist any other person to engage in any
Competitive Business.
(a). For purposes of this Agreement, "Competitive Business" is defined
as (1) all entities and/or individuals with whom the Company has a contract to
provide support and services; (2) entities and/or individuals that the Company
has identified on its key prospect list at the time Executive receives notice of
her termination; and/or (3) any other business engaged in developing, selling,
licensing or otherwise merchandising computer programs, databases and related
manuals, service and/or know-how for the purpose(s) of: (i) managing the quality
and utilization of patient care or related services using outcomes management
applications; or (ii) assessing and/or predicting mortality and other treatment
outcomes of hospital patients or outpatients; or (iii) otherwise recording
patient health factors in connection with severity adjusted outcomes for the
purpose of predicting their treatment, managing clinical productivity or
containing costs through the use of these outcomes management applications.
Ownership of not more than three percent (3%) or the outstanding securities of
any class of any corporation that are listed on a national securities exchange
or traded in the over-the-counter market shall not constitute ownership of a
Competitive Business within the meaning of this provision. If the Company
expands, diminishes and/or changes the scope of its business during the term of
this Agreement, the definition of Competitive Business hereunder will be
considered automatically revised to incorporate any such expansion, diminution
and/or change.
12. Non-Solicitation.
(a). Executive agrees that during the term of this Agreement and for a
twelve (12) month period following her receipt of notice of her termination
under Section 7, she will not, directly or indirectly, without the prior written
consent of the Company, solicit or attempt to solicit Competitive Business from
any individual or entity that was a customer of the Company at any time during
the six (6) month period immediately prior to Executive's termination of
employment with the Company.
(b). Executive agrees that during the term of this Agreement and for a
twelve (12) month period following her receipt of notice of her termination
under Section 7, she will not, directly or indirectly, without the prior written
consent of the Company, solicit or induce any employee of the Company to
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leave the employ of the Company or hire for any purpose any employee of the
Company.
13. Remedies. Executive agrees and acknowledges that the violation of any
of the covenants or agreements contained in Sections 10, 11 and 12 would cause
irreparable injury to the Company, that the remedy at law for such violation or
threatened violation would be inadequate, and that the Company will be entitled,
in addition to any other remedy, to temporary injunctive or other equitable
relief without the necessity of proving actual damages or posting a bond.
14. Notices. Any notice or communication under this Agreement will be in
writing and sent by registered or certified mail addressed to the respective
parties as follows:
If to the Company: Xx. Xxxxx Xxxxxxx
Chief Executive Officer
APACHE Medical Systems, Inc.
0000 Xxxxxx Xxxxxxxxx
XxXxxx, XX 00000-0000
Notice to Executive: Xxxxx Xxxxxx
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Executive shall notify the Company by certified mail of any change in her
address, and thereafter, the Company shall forward any notices under this
Agreement to Executive at such new address.
15. Entire Agreement. This Agreement embodies the entire agreement of the
Parties relating to Executive's employment and supersedes all prior agreements,
oral or written. No amendment or modification of this Agreement shall be valid
or enforceable unless made in writing and signed by the Parties.
16. Assignment. This Agreement is one for personal services and may not be
assigned by Executive to a third party.
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia.
18. Severability. Should one or more of the provisions of this Agreement be
held invalid or unenforceable by a 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 remain in 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
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available at law or in equity.
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Xxxxx Xxxxxx APACHE MEDICAL SYSTEMS, INC.
By:
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Date Date
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Exhibit 1
APACHE MEDICAL SYSTEMS, INC.
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement (this "Agreement"), dated as of
October 1, 1998 (the "Grant Date"), is by and between APACHE Medical Systems,
Inc., a Delaware corporation (the "Corporation"), and Xxxxx Xxxxxx (the
"Optionee"), a key employee of the Corporation.
1. Grant of Option. Subject to the provisions of the APACHE Medical
Systems, Inc. Employee Stock Option Plan (the "Plan") and this Agreement, the
Corporation hereby grants to the Optionee the right and option (the "Option") to
purchase from the Corporation an aggregate of 50,000 shares of the Corporation's
common stock, par value $0.01 per share (the "Shares"), at an exercise price of
$1.9380 per Share.
2. Vesting and Expiration. The option rights of the Optionee will be
exercisable until October 1, 2008, provided that they have vested and, except as
otherwise expressly provided in this Agreement, the Optionee is employed by the
Corporation. The Option shall vest as provided on Exhibit A hereto.
3. Exercise Following Termination of Employment. If the Optionee ceases to
be an employee of the Corporation, the outstanding portion of the Option shall
be exercisable only in accordance with the following provisions:
(a) If the Optionee's employment with the Corporation is terminated for
"cause" (as defined below), the outstanding portion of the Option, whether or
not vested, shall terminate at the time notice of termination is effective. As
used herein, "cause" means the Optionee's (i) commission of an action against or
in derogation of the interests of the Corporation which constitutes an act of
fraud, dishonesty or moral turpitude or which, if proven in a court of law,
would constitute a violation of a criminal code or similar law; (ii) material
breach of any lawful material duty or obligation imposed upon the Optionee by
the Corporation; or (iii) divulging the Corporation's confidential information.
(b) If the Optionee's employment with the Corporation is terminated for
any reason other than for cause (as defined above), death or disability (as
defined below), the outstanding portion of the Option (to the extent vested
prior to such termination) shall remain exercisable until the first to occur of
(i) the expiration date referred to in Section 2, and (ii) the expiration of
three months from the effective date of termination, provided that if the
Optionee ceases to be employed by the Corporation by reason of death or
disability, the period referred to in this clause (ii) shall be one year
following the date the Optionee ceases to be an employee of the Corporation. If
the Optionee dies during such three-month period referred to in clause (ii), his
or her estate may exercise the Option (to the extent such Option was vested and
exercisable prior to death), but not later than the earlier of one year after
the date of death or the expiration of the term of the Option. As used herein,
"disability" means the inability of the Optionee to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or has lasted or can be
expected to last for a continuous period of not less than 12 months.
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4. Acceleration Following Termination Other Than for Cause. In the event
Optionee's employment is terminated other than for cause, any Shares as to which
the Option has not vested on the effective date of termination that would have
vested during the three (3) months after the effective date of Optionee's
termination will be accelerated to, and vest on, the effective date of
Optionee's termination. Any Shares as to which the Option has not vested on the
effective date of termination will be cancelled.
5. Limitation on Exercisability. Notwithstanding any other provision
hereof, including, without limitation, Sections 4, 9 and 10, the Shares that may
be purchased for the first time during any calendar year pursuant to the Option,
together with any other options issued to the Optionee by the Corporation
intended to be incentive stock options (as defined in Section 422 of the
Internal Revenue Code of 1986, as amended from time to time, or subsequent
comparable statute (the "Code")), shall not have a Fair Market Value (as defined
in Section 9 hereof and determined as of the respective Grant Dates of such
options) in excess of $100,000.
6. Exercise. The Option may be exercised by delivering to the Corporation
at its principal offices a written notice, signed by a person entitled to
exercise the Option, of the election to exercise the Option and stating the
number of Shares to be purchased. Such notice shall be accompanied by the
payment of the full exercise price of the Shares to be purchased. Upon payment
in accordance with the Plan and within the time period specified by the
Corporation of the amount, if any, required to be withheld for Federal, state
and local tax purposes on account of the exercise of the Option, the Option
shall be deemed exercised as of the date the Corporation received such notice.
The Corporation may withhold, or allow the Optionee to remit to the Corporation,
any Federal, state or local taxes required by law to be withheld with respect to
any event giving rise to income tax liability with respect to the Option. In
order to satisfy all or any portion of such income tax liability, the Optionee
may elect to surrender Shares previously acquired by the Optionee or to have the
Corporation withhold Shares that would otherwise have been issued to the
Optionee pursuant to the exercise of the Option, the number of such withheld or
surrendered Shares to be sufficient to satisfy all or a portion of the income
tax liability that arises upon the event giving rise to income tax liability
with respect to the Option. Payment of the full exercise price shall be in the
form of cash, shares of capital stock of the Corporation having a Fair Market
Value (as defined in Section 9 hereof) on the date of exercise equal to the full
exercise price, or by any combination of cash and shares of such capital stock.
Upon the proper exercise of the Option, subject to the other provisions of this
Agreement, the Corporation shall issue in the name of the person exercising the
Option, and deliver to such person, a certificate or certificates for the Shares
purchased.
7. Nontransferability of Option. The Option shall not be transferable by
the Optionee except by will or the laws of descent and distribution. Without
limiting the generality of the foregoing, the Option shall not be sold,
transferred except as aforesaid, assigned, pledged or otherwise encumbered or
disposed of, shall not be assignable by operation of law, and shall not be
subject to execution, attachment or similar process. Any attempted sale,
transfer, pledge, assignment or other encumbrance or disposition of the Option
contrary to the provisions hereof, or the levy of any execution, attachment or
similar process upon the Option, shall be null and void and without effect.
During the lifetime of the Optionee, the Option may be exercised only
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by the Optionee or the Optionee's agent, attorney-in-fact or guardian. Following
the death of the Optionee, the Option may be exercised by the Optionee's
beneficiary or estate to the extent permitted by Section 3.
8. Notice of Transfer of Shares. The Optionee may not transfer or otherwise
dispose of any Shares purchased upon the exercise of the Option before the
expiration of (a) two years from the Grant Date or (b) one year after the
exercise of the Option with respect to such Shares, whichever occurs later,
without first giving written notice to the Secretary of the Corporation.
9. Adjustments Upon Reorganization or Changes in Capitalization. In the
event of a stock split, stock dividend, recapitalization, reclassification or
combination of shares, merger, sale of assets or similar event, the Compensation
Committee of the Board of Directors shall adjust equitably (a) the number and
class of Shares or other securities that are reserved for issuance under the
Option, (b) the number and class of Shares or other securities that are subject
to the Option, and (c) the appropriate Fair Market Value and other price
determinations applicable to the Option. The Compensation Committee of the Board
of Directors shall make all determinations under this Section 9, and all such
determinations shall be conclusive and binding. As used herein, "Fair Market
Value" means the amount determined by the Compensation Committee of the Board of
Directors from time to time, using such good faith valuation methods as it deems
appropriate, except that as long as the Shares are traded on NASDAQ or a
recognized stock exchange, it shall mean the average of the highest and lowest
quoted selling prices for the Shares on the relevant date, or, if there were no
sales on such date, the weighted average of the means between the highest and
the lowest quoted selling prices on the nearest day before and the nearest day
after the relevant date, as prescribed by Treasury Regulation Section
20.2031-2(b)(2), as reported in The Wall Street Journal or a similar publication
selected by the Compensation Committee of the Board of Directors.
10. Acceleration of Exercisability. Notwithstanding the provisions of
Section 2, the Option shall immediately vest, and until the expiration date
specified in Section 2 shall remain, exercisable as to all of the Shares
forthwith upon the occurrence of any Change in Control of the Corporation. As
used herein, "Change in Control" means the purchase or other acquisition by any
person, entity or group of persons, within the meaning of Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "Exchange Act") or any
comparable successor provisions, of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either the
outstanding Shares or the combined voting power of the Corporation's then
outstanding voting securities entitled to vote generally; the approval by the
stockholders of the Corporation of a reorganization, merger, or consolidation,
in each case, with respect to which persons who were stockholders of the
Corporation immediately prior to such reorganization, merger or consolidation do
not, immediately thereafter, own more than 30% of the combined voting power
entitled to vote generally in the election of directors of the reorganized,
merged or consolidated Corporation's then outstanding securities; a liquidation
or dissolution of the Corporation; or of the sale of all or substantially all of
the Corporation's assets.
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11. Miscellaneous.
(a) Notices. Any notice hereunder shall be in writing, and delivered or
sent by first-class U.S. mail, postage prepaid, addressed to:
(i) if to the Corporation, at:
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000, and
(ii) if to Optionee, at:
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subject to the right of either party, by written notice hereunder, to designate
at any time hereafter some other address.
(b) Compliance with Law and Regulations. The Option and the obligation
of the Corporation to sell and deliver Shares hereunder shall be subject to all
applicable Federal and state laws, rules and regulations and to such approvals
by any government or regulatory agency as may be required. Notwithstanding any
other provision of this Agreement, the Option may not be exercised if its
exercise, or the receipt of Shares pursuant thereto, would be contrary to
applicable law.
(c) No Rights as Stockholder. The Optionee shall have no rights as a
stockholder with respect to any Shares subject to the Option prior to the date
of issuance to the Optionee of a certificate or certificates for such Shares.
(d) No Employment Rights. Nothing in the Plan, this Agreement or the
grant of an Option shall confer upon the Optionee any rights to continued
employment with the Corporation or shall interfere with the right of the
Corporation to terminate the Optionee's employment with the Corporation.
(e) Section 83(b) Election. If the Optionee elects, in accordance with
Section 83(b) of the Code, to recognize ordinary income in the year in which the
Option is granted, the Optionee shall furnish to the Corporation a copy of a
completed and signed election form and shall pay (or make arrangements
satisfactory to the Corporation to pay) to the Corporation, within sixty (60)
days after the Grant Date, any Federal, state and local taxes required to be
withheld with respect to the Option.
(f) Withholding. The Corporation shall, to the extent permitted by law,
have the right to deduct from any payment of any kind otherwise due to the
Optionee any Federal, state and local taxes required by law to be withheld or
collected with respect to the Option.
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(g) Reservation of Shares; Certain Costs. The Corporation shall keep
available sufficient authorized but unissued Shares needed to satisfy the
requirements of this Agreement. The Corporation shall pay any original issue tax
that may be due upon the issuance of Shares pursuant to the Option and all other
costs incurred by the Corporation in issuing such Shares.
(h) Employment by Affiliates. For the purpose of this Agreement,
employment by a parent or subsidiary of, or a successor to, the Corporation
shall be considered employment by the Corporation. "Parent" and "subsidiary" as
used herein shall have the meaning of "parent" and "subsidiary corporation,"
respectively, as defined in Section 424 of the Code.
(i) Plan Governs. The Optionee hereby acknowledges receipt of a copy of
the Plan and agrees to be bound by its terms, all of which are incorporated
herein by reference. The Plan shall govern in the event of any conflict between
this Agreement and the Plan.
(j) Choice of Law. This Agreement shall be construed in accordance with
and be governed by the laws of the State of Delaware.
(k) Counterparts. This Agreement may be executed in two counterparts
each of which shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
APACHE MEDICAL SYSTEMS, INC.
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By: Xxxxx Xxxxxxx
Title: President and Chief Executive Officer
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Xxxxx Xxxxxx, Optionee
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EXHIBIT A
Vesting
The Option shall vest with the passage of time and subject to the
Corporation's performance as follows:
1. Six-Month and Annual Vesting. The Option shall vest during the period of
the Optionee's employment with the Corporation commencing six months after the
date Optionee begins employment with the Corporation (the "Start Date") as
follows:
Tranche Number of Shares Vesting Date
------- ---------------- ------------
Six-Month 10,000 Six Months After Start Date (Apr. 1, 1999)
(A) 10,000 1st Anniversary After Start Date (Oct. 1, 1999)
(B) 10,000 2nd Anniversary After Start Date (Oct. 1, 2000)
(C) 10,000 3rd Anniversary After Start Date (Oct. 1, 2001)
(D) 10,000 4th Anniversary After Start Date (Oct. 1, 2002)
2. Accelerated Vesting. At the discretion of the Board of Directors,
vesting of the Tranches referred to below may be accelerated if both Earnings
(defined as earnings before interest and taxes as reported by the Corporation
plus any agreed upon nonrecurring charges or writedowns as long as these relate
to pre-1997, 1998 assets or activities) and stock price performance targets are
satisfied, but not necessarily simultaneously, as follows:
Tranche Earnings Target AND Stock Price Target
------- --------------- ------------------
(A) Any two consecutive Closing price of $6 or
quarters in which the higher for 20 consecutive
Corporation reports trading days
positive Earnings
(B) Any four consecutive Closing price of $9 or
quarters in which the higher for 30 consecutive
Corporation reports trading days
positive Earnings
(C) Earnings greater than Closing price of $12 or
$1.0 million for any four higher for 60 consecutive
consecutive quarters of trading days
Earnings as reported in
the Corporation's Form 10-K
and Forms 10-Q filed with
the Securities and
Exchange Commission
(D) Earnings greater than Closing price of $15 or
$3.0 million for any four higher for 60 consecutive
consecutive quarters of trading days
Earnings as reported in
the Corporation's Form 10-K
and Forms 10-Q filed with
the Securities and
Exchange Commission
7
