EXHIBIT 4
FORM OF NON-COMPETITION AND NON-SOLICITATION AGREEMENT
[FOR EACH OF XXXXX X. XXXXX AND XXXXXXX X. XXXXXX, PH.D.]
This NON-COMPETITION AND NON-SOLICITATION AGREEMENT (the "Agreement") made
this 9th day of February, 1997, among Vencor, Inc. a Delaware corporation
("Purchaser"), TheraTx, Incorporated, a Delaware corporation (the "Company"),
and , a resident of ("Shareholder").
WHEREAS, concurrently herewith the Company, Purchaser and Peach Acquisition
Corp. ("Merger Sub") are entering into an Agreement and Plan of Merger dated
as of the date hereof (the "Merger Agreement"), pursuant to which Merger Sub,
at the Effective Time (as defined in the Merger Agreement) will be merged with
and into the Company, and the Company will become a wholly-owned subsidiary of
Purchaser; and
WHEREAS, Shareholder is the holder of shares of Common Stock (including
shares subject to options), par value $0.001, of the Company ("Shares"); and
WHEREAS, as part of the transactions contemplated by the Merger Agreement,
Shareholder has the right to tender of all of her Shares to Purchaser at a
price of $17.10 per Share and intends to so tender; and
WHEREAS, the Company and Purchaser would not be willing to enter into the
Merger Agreement or to consummate the transactions contemplated thereby unless
Shareholder had agreed to execute and deliver this Agreement pursuant to the
terms hereof.
NOW THEREFORE, in consideration of the mutual covenants and undertakings
contained herein, the payments to be made to Shareholder pursuant to the Offer
(as defined in the Merger Agreement), and in order to induce Purchaser to
enter into the Merger Agreement and to consummate the transactions
contemplated thereby, the parties hereto agree, upon the terms and subject to
the conditions herein set forth, as follows:
1. Definitions. For purposes of this Agreement, the following terms shall
have the meanings described below:
a. "Business" means, at any time, any business or line of business which is
the same as or similar to the business of providing rehabilitation and
respiratory therapy program management services to skilled nursing facilities
or occupational health facilities that are not owned, operated or leased by
the person or Entity (as defined herein) or any affiliate thereof providing
such services.
b. "Excluded Business" shall mean any Entity that derives less than 10% of
its revenue from a Business, provided that Shareholder is not engaged in the
portion of such Entity which is engaged in a Business.
c. "Noncompetition/Nonsolicitation Period" means the period commencing on
the Effective Time (as defined in the Merger Agreement) and ending on the
later of (i) the date 12 months following Shareholder's termination of
employment with the Company and its affiliates or (ii) the date 12 months
following the Effective Time or at such later time as such period may be
extended pursuant to Section 17 hereof.
2. Agreement Not to Compete. During the Noncompetition/Nonsolicitation
Period, Shareholder shall not:
a. directly or indirectly own, operate, manage, control, be employed by or
participate in any corporation, partnership, sole proprietorship, limited
liability company or any other type of entity (collectively, "Entities") that
competes within the United States of America with a Business other than an
Excluded Business; or
b. participate as an officer, director, agent, consultant, employee,
adviser, sole proprietor, independent contractor, representative, stockholder
or partner of, or otherwise have any direct or indirect legal, financial or
other beneficial interest as a creditor or otherwise in, any Entity that
engages within the United States of America in a Business, except for
ownership of less than 1% of any class of securities or interests registered
pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as
amended or an Excluded Business; or
c. solicit, divert or attempt to solicit or divert from the Company or any
of its subsidiaries, any business constituting any part of the Business then
conducted by the Company or any of its subsidiaries.
1
3. Agreement Not to Solicit or Hire.
a. Shareholder shall not, so long as Shareholder is employed by the Company
or any of its affiliates and, during the Noncompetition/Nonsolicitation
Period, directly or indirectly, individually or on behalf of other persons or
Entities, solicit or induce or attempt to solicit or induce or hire any person
engaged or employed (whether part-time or full-time) by the Company or any of
its subsidiaries, including as an independent contractor, adviser or
consultant (other than a person whose duties were limited to a secretarial,
clerical or similar capacity) to leave the employ of, or cease providing
services to, the Company or any of its subsidiaries, as the case may be, or in
any other manner seek to engage or employ any such person (whether or not for
compensation) as an officer, employee, consultant, adviser, independent
contractor or otherwise, such that such person would thereafter be unable to
devote the same business time, attention, energies, abilities and efforts to
the business then conducted by the Company or any of its subsidiaries, as the
case may be, as was theretofore devoted.
b. Shareholder shall not, so long as Shareholder is employed by the Company
or any of its affiliates and, during the Noncompetition/Nonsolicitation
Period, directly or indirectly, individually or on behalf of other persons or
Entities, (i) solicit or induce or attempt to solicit or induce any client of
the Company or any of its subsidiaries to retain or use any other person or
Entity for the purpose of providing services which are the same as or similar
to services provided by the Company and its subsidiaries, provided, that, such
client is a client of the Company or any of its subsidiaries, as of the date
hereof, as of the Effective Time (as defined in the Merger Agreement) or
within six months to the time Shareholder's employment with the Company shall
terminate or (ii) provide services in competition with the Business.
4. Confidential Information. All information furnished by the Company or any
of its affiliates to Shareholder and all information obtained by Shareholder
in the performance of Shareholder's employment or functions with the Company
or any of its affiliates including, without limitation, all information with
respect to clients of the Company or any of its affiliates, shall be treated
by Shareholder as confidential and shall not be communicated or disclosed by
Shareholder without the prior written consent of Purchaser or any of its
affiliates, except (i) as is necessary for the performance of Shareholder's
employment with the Company or any of its affiliates, (ii) as otherwise
required by applicable law or (iii) if such information becomes generally
known to or available for use by the public otherwise than by communication or
disclosure by Shareholder or any of his representatives. Information of the
Company or any of its affiliates includes, without limitation, technical,
marketing, business or financial information, material proprietary processes,
analytical models or formulas, customer lists, information relating to
personnel or former personnel of the Company or any of its affiliates, or any
other material confidential or non-public information or material concerning
the business, affairs, patents, trademarks, trade secrets, service marks,
products, services, suppliers, or customers of or provided by (or proposed to
be provided by) the Company or any of its affiliates thereof. Shareholder
shall assign to the Company all rights to inventions, trade secrets and other
products developed by him alone or in conjunction with others at any time
while employed by the Company or any of its affiliates and will cooperate in
filing applications for letters patent and in executing assignments upon the
Company's request. At the request of the Company or any of its affiliates, or
if earlier upon termination of Shareholder's employment with the Company or
any of its affiliates, Shareholder shall promptly deliver to the Company,
without retaining any copies thereof, all such confidential information in any
medium or form, and all material based or derived from such confidential
information, including files, software, records, computer access codes,
business equipment (including fax machines, telephones, and personal
computers) and instruction manuals of the Company and its affiliates which are
in the possession of Shareholder.
5. Injunctive Relief. In the event that Shareholder breaches or threatens to
breach any of the covenants contained herein, the Company or Purchaser shall
be entitled to seek a temporary or permanent injunction against Shareholder
prohibiting any further violation of any such covenants, it being acknowledged
and agreed that any such breach of the covenants will cause irreparable harm
to the Company and Purchaser, and that the remedy at law for any breach or
threatened breach of such covenants would be inadequate to protect the
interests of
2
Purchaser or the Company. The injunctive or equitable relief provided herein
shall be in addition to any award of damages, compensatory, exemplary or
otherwise, to which the Company or Purchaser may be entitled and shall not be
construed to limit the right of the Company or Purchaser to collect such
damages.
6. Acknowledgment. The parties acknowledge that this Agreement has been
negotiated at arms length by the parties, none of whom being under any
compulsion to enter into this Agreement and that the restrictive covenants
contained herein do not inhibit Shareholder's ability to earn a livelihood in
his chosen profession without violating the restrictive covenants. The Company
has attempted to limit Shareholder's rights to compete only to the extent
necessary to protect Purchaser and the Company from unfair competition, it
being acknowledged that Purchaser's and the Company's operations are not
geographically limited and are conducted throughout the United States of
America.
7. Severability; Blue-Penciling.
(a) If any court determines that any of the restrictive covenants contained
herein is invalid, illegal or unenforceable, the remainder of the restrictive
covenants shall, to the extent enforceable under applicable law, not thereby
by affected and shall be given full effect, without regard to the portions
which have been declared invalid, illegal or unenforceable; provided, however,
that if the economic or legal substance of the principles and transactions
contemplated by this Agreement and the Merger Agreement is affected in a
manner materially adverse to any party as a result of the determination that a
provision hereof is invalid, illegal or unenforceable, the parties hereto
agree to negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible and to ensure that the
principles and transactions contemplated hereby and by the Merger Agreement
are fulfilled to the closest extent possible.
(b) If any court determines that any of the restrictive covenants contained
herein is unenforceable because of the duration or geographic scope of such
provision, it is the intention of the parties that such court shall have the
power to modify any such provision to the extent necessary to render the
provision enforceable, and such provision as so modified shall be enforced.
8. Governing Law. All questions concerning the construction, validity and
interpretation of this Agreement shall be governed by the law of the State of
Delaware.
9. Notices. All notices, requests or other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered by hand,
facsimile transmission or by United States mail (certified, return receipt
requested), properly addressed and postage prepaid:
If to Shareholder to:
---------------------------------------
---------------------------------------
---------------------------------------
If to Purchaser or the Company to:
Vencor, Inc.
0000 Xxxxxxxxx Xxxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
10. Entire Agreement. This Agreement contains the entire understanding of
the parties hereto with respect to the subject matter contained herein, and
supersedes and cancels all prior agreements, negotiations, correspondences,
undertakings and communications of the parties, oral or written, regarding
such subject matter.
11. Amendments. This Agreement may be amended only by a written instrument
executed by the parties or their respective successors or assigns.
3
12. Cumulative Remedies. Each of the several rights and remedies provided in
this Agreement, or by law or in equity, shall be cumulative, and no one of
them shall be exclusive of any other right or remedy, and the exercise of any
one of such rights or remedies shall not be deemed a waiver of, or an election
to exercise, any other such right or remedy.
13. Termination in accordance with the Merger Agreement. Notwithstanding
anything to contrary in this Agreement, in the event that the Merger Agreement
shall terminate in accordance with its terms prior to Purchaser's purchase of
Shares in the Offer, this Agreement shall terminate.
14. Assignability. This Agreement and the various rights and obligations
arising hereunder shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, successors and permitted assigns.
This Agreement may not be assigned by any party without the prior written
consent of the other party and any attempt to assign this Agreement without
such consent shall be void and of no effect.
15. Headings; References. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. All references herein to "Sections" shall be
deemed to be references to Sections hereof unless otherwise indicated.
16. Waiver of Jury Trial. Shareholder and the Company hereby irrevocably and
unconditionally waive trial by jury in any legal action or proceeding relating
to this Agreement and for any counterclaim in respect thereof.
17. Option to Extend. Shareholder agrees that Purchaser shall have the
option (but not the obligation) to extend the period in Section 1(b)(ii) from
12 months to 24 months if, prior to the expiration of such 12-month period,
the Company pays Shareholder $225,000, in cash, payable in equal monthly
installments during such additional 12-month period, less any amounts that
Shareholder shall receive as an employee of any Entity (including the Company
or any of its affiliates (but excluding any severance or similar payments)) in
respect of such period.
18. Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which shall constitute
one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and year
set forth at the beginning hereof.
VENCOR, INC.
By: ___________________________________
Title:
THERATX, INCORPORATED
By: ___________________________________
Title:
---------------------------------------
[Shareholder]
4
