EXHIBIT 10.55
NON-COMPETITION AND SEVERANCE AGREEMENT
(Amended and Restated as of September 26, 2002)
This NON-COMPETITION AND SEVERANCE AGREEMENT, originally entered into
as of the 16th day of May 2002, by and between Colorado MEDtech, Inc., a
Colorado corporation ( the "Company"), and __________________ ("Employee"), is
amended and restated as of September 26, 2002.
WHEREAS, Employee is a valued member of the management group of the
Company, familiar with certain valuable trade secrets, business plans, technical
information and other confidential information of the Company; and
WHEREAS, to protect the value of certain valuable trade secrets,
business plans, technical information and other confidential information of the
Company, the Company desires to restrict the ability of Employee to compete with
the business of the Company after the termination of Employee's employment with
the Company; and
WHEREAS, the Company desires to have Employee and other officers of the
Company adhere to the Colorado MEDtech stock ownership guidelines attached
hereto; and
WHEREAS, as an inducement to Employee to enter into such restriction,
the Company has agreed to enter into this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Non-Compete. Employee acknowledges that in the course of Employee's
employment with the Company, Employee has, prior to the date of this Agreement,
and will, during the period of his employment with the Company, become familiar
with the Company's trade secrets, business plans and business strategies and
with other confidential business information concerning the Company, including
but not limited to, information concerning suppliers of hardware, products and
software and other aspects of information processing technology, prices, terms,
inventions, discoveries, concepts, ideas, processes, methods, formulas,
techniques, data, data bases and improvements thereof, and information relating
to research, development, inventions, purchasing, merchandising and marketing of
the Company ("Confidential Information"). Employee's services have been and
shall be of special and unique value to the Company. Employee also acknowledges
that in the course of his employment Employee will have access to relationships
and goodwill with the Company's customers, distributors, alliance partners,
suppliers and employees. Employee acknowledges that his services cannot be
replaced and that the loss of Employee's services, or the use of Employee's
services by a competitor, may cause the inevitable disclosure of trade secret
information and other irreparable harm to the Company.
In light of Employee's value to and knowledge of the Company's
business and the Company's agreement to provide the consideration set forth
herein, Employee agrees that, during the period of Employee's employment with
the Company and for a period equal to the
"Severance Period" (defined below) (the "Non-Compete Period"), Employee will
not, in association with or as an officer, principal, member, advisor, agent,
partner, director, material stockholder, employee or consultant of any
corporation (or sub-unit, in the case of a diversified business) or other
enterprise, entity or association, work on the acquisition or development of, or
engage in any line of business, property or project which is, directly or
indirectly, competitive with any business that the Company engages in or, to the
knowledge of Employee, is planning to engage in during the period of Employee's
employment with the Company, including but not limited to the Business (as
hereinafter defined). Such restriction shall cover Employee's activities
anywhere in the world. As used herein, the term "Business" means the business of
outsource development or outsource manufacturing of medical devices or imaging
components, and the business of developing, manufacturing and distributing
medical accessories and supplies for imaging equipment.
1.1 Reasonable Restrictions. Employee understands that the provisions
of Section 1 of this Agreement may limit Employee's ability to earn a
livelihood in a business similar to the business in which he is
involved, but as a member of the management group of the Company he
nevertheless agrees and hereby acknowledges that (a) such provisions do
not impose a greater restraint than is necessary to protect the
goodwill or other business interests of the Company and any of the
Company's affiliates; (b) such provisions contain reasonable
limitations as to time, scope of activity, and geographical area to be
restrained; and (c) the consideration set forth in this Agreement is
sufficient to compensate Employee for the restrictions contained in
Section 1 hereof. In consideration of the foregoing and in light of
Employee's education, skills and abilities, Employee agrees that
Employee will not assert that, and it should not be considered that,
any provisions of Section 1 otherwise are void, voidable or
unenforceable or should be voided or held unenforceable.
1.2 Enforcement of Restrictions. If, at the time of enforcement of the
foregoing Sections of this Agreement, a court shall hold that the
duration, scope, or area restrictions stated herein are unreasonable
under circumstances then existing, the parties hereto agree that the
maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area
and that the court shall be allowed and directed to revise the
restrictions contained herein to cover the maximum period, scope and
area permitted by law. Employee acknowledges that, as a key employee of
the Company, Employee has access to the Company's confidential business
information and Employee's services are unique to the Company and its
affiliates. Employee therefore agrees that the remedy at law for any
breach by Employee of any of the covenants and agreements set forth
Section 1 of this Agreement will be inadequate and that in the event of
any such breach, the Company may, in addition to the other remedies
which may be available to it at law, apply to any court of competent
jurisdiction to obtain specific performance and/or injunctive relief
prohibiting Employee (together with all those persons associated with
Employee) from the breach of such covenants and agreements and to
enforce, or prevent any violations of, the provisions of this
Agreement. In addition, in the event of an alleged breach or violation
by Employee of this Agreement, the applicable Non-Compete Period set
forth in Section 1 hereof shall be tolled until such breach or
violation has been cured.
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2. Severance. If, prior to June 30, 2004, CMED completes:
(a) a merger, stock swap, change in control, or sale of
substantially all of its assets (an "entity trigger event"), then:
(i) If, at the time of, or within forty-five
days prior to closing of an entity trigger event, or within twelve (12) months
after closing of an entity trigger event Employee's employment is terminated by
the Company without cause, or if Employee voluntarily terminates employment for
good reason, then severance is payable. Severance payments shall commence two
weeks after closing of an entity trigger event.
(ii) If Employee's employment is not terminated,
or within 10 days after the entity trigger event Employee is offered substitute
employment with the successor entity at a level which would not give Employee
good reason not to accept, then no severance is payable. If Employee is not
terminated or if Employee accepts such offered employment, a 12-month tail
period will begin. If within the tail period Employee's employment is terminated
by the Company or the successor employer without cause, or if Employee
voluntarily terminates employment for good reason, then severance is payable,
and severance payments shall commence two weeks after termination.
or:
(b) a sale of a significant portion of the assets of any
operating division of CMED (treating CIVCO as an operating division, and
including a merger, stock swap or change in control of CIVCO) or closure and
discontinuance of operation of any such operating division (a "division trigger
event"), then the same rules apply as in subparagraph (a), above, but if
Employee remains employed by the Company after a division trigger event then the
tail period shall restart after each division trigger event.
For purposes of this Agreement, "severance", which shall be considered
liquidated damages in lieu of any other payments or obligations of the Company
in connection with Employee's employment or termination, means continuation of
Employee's base salary payments: for twelve (12) months following the date of
termination. The Company shall make adequate provision for payment of all
severance payment obligations.
If after a qualifying termination Employee elects to continue Employee's group
health insurance coverage through COBRA, the Company will also pay the monthly
medical insurance premium payment required to maintain Employee's then current
medical insurance coverage (less any amount Employee is paying for such
insurance at the time of termination, of which payment from Employee will be
required by the beginning of each month) after termination for twelve (12)
months or until Employee obtains new employment, whichever occurs first.
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For purposes of this letter, Employee's employment with the Company shall be
deemed terminated for "Cause" only if it is terminated by the Company for:
(i) misappropriation of corporate confidential
information (or unauthorized disclosure thereof) or funds by Employee or with
Employee's direct involvement;
(ii) fraud, embezzlement, theft or dishonesty by
Employee reasonably suspected by the Company; or
(iii) negligent or willful misconduct or
dereliction of duty by Employee, including without limitation, failure to follow
material direction of the CEO of the Company; provided, however, that no
discharge shall be deemed for Cause under this clause (iii) unless Employee
shall have first received written notice from the Company advising Employee of
the specific acts or omissions alleged to constitute such negligent or willful
misconduct, and such misconduct continues uncured by Employee for a period of
twenty (20) days.
"Good Reason" shall exist if Employee: (1) is demoted
from the position Employee held prior to an entity trigger
event or division trigger event; (2) is assigned duties
inconsistent with Employee's roles and responsibilities prior
to an entity trigger event or division trigger event; (3) is
relocated to an office or site greater than 50 miles from
Employee's location prior to an entity trigger event or
division trigger event; or (4) Employee's compensation or
benefits are materially reduced (including paid time off and
vacation).
A "change of control of the Company" will be deemed to occur under
either of the following circumstances: (A) any "person" (as that term is used in
Section 13(d) and 14(d) of the Securities Exchange of 1934 (the "Exchange Act"),
other than the Company or any "person" who on the date hereof is a director or
officer of the Company, is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing fifty percent (50%) or more of the combined voting power of
the Company's then outstanding securities, or (B) if, at any time during any
period of two consecutive years, individuals who at the beginning of such period
constitute the Board cease for any reason to constitute at least a majority
thereof, unless the election of each director who was not a director at the
beginning of such period was approved in advance by two-thirds of the group
comprised of directors who were both (i) in office at the time of election of
the new director; and (ii) who were also directors at the beginning of the two
year measurement period.
2.1 Request for Post-Employment Allowance: In order to obtain any
payment pursuant to Section 2, Employee shall submit a Request for
Post-Employment Allowance (attached hereto as Exhibit A). The Company
shall have no obligation to make any payments to Employee unless and
until Employee shall have submitted an executed copy of such request.
3. Options. In consideration for the restrictions on Employee contained
herein, the Company agrees to grant to Employee options to purchase _______
shares of Company stock. The options shall be granted under a Company stock
option plan and may be incentive or
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non-statutory stock options. The exercise price of such options shall be the
fair market value of the Company's Common Stock at the close of the market on
the date of this Agreement. Such options shall vest as follows: one-quarter of
such amount after the one-year anniversary of this Agreement, with an additional
one-quarter on each of the three subsequent anniversary dates of this Agreement.
The options shall expire ten (10) years after the grant date.
4. Ownership Guidelines. Employee agrees to abide by the guidelines for
ownership of Colorado MEDtech stock attached as Exhibit B hereto.
5. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.
6. Successors and Assigns. This Agreement, all terms and conditions
hereunder, and all remedies arising herefrom, shall inure to the benefit of and
be binding upon the Company, any successor in interest to all or substantially
all of the business and/or assets of the Company, and the heirs, administrators,
successors and assigns of Employee. Except as provided in the preceding
sentence, the rights and obligations of the parties hereto may not be assigned
or transferred by either party without the prior written consent of the other
party.
7. Notices. For purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to Employee: at his last known address as reflected in the
Company's personnel files
If to the Company: Colorado MEDtech, Inc.
0000 X. 00xx Xx.
Xxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
8. Severability. If any provision of this Agreement is prohibited by or
is unlawful or unenforceable under any applicable law of any jurisdiction as to
such jurisdiction, such provision shall be ineffective to the extent of such
prohibition without invalidating the remaining provisions hereof.
9. Survival of Obligations. Termination of this Agreement for any reason
shall not relieve the Company or Employee of any obligation accruing or arising
prior to such termination.
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10. Amendments. No waiver or modification of this Agreement or any
covenant, condition, or limitation herein contained shall be valid unless in
writing and duly executed by the party to be charged therewith, and no evidence
of any waiver or modification shall be offered or received in evidence of any
proceeding, arbitration or litigation between the parties hereto arising out of
or affecting this Agreement, or the rights or obligations of the parties
hereunder, unless such waiver or modification is in writing, duly executed as
aforesaid.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original but all of which, when
taken together, shall constitute only one legal instrument. This Agreement shall
become effective when copies hereof, when taken together, shall bear the
signatures of both parties hereto. It shall not be necessary in making proof of
this Agreement to produce or account for more than one such counterpart.
12. No Agreement to Employ. This Agreement shall not by itself constitute
an agreement for a specific term of employment. EITHER EMPLOYEE OR THE COMPANY
MAY TERMINATE EMPLOYEE'S EMPLOYMENT AT ANY TIME AND FOR ANY REASON.
13. Arbitration. Any and all disputes arising under or related to this
Agreement which cannot be resolved through negotiations between the parties
shall be submitted to binding arbitration. If the parties fail to reach a
settlement of their dispute within fifteen (15) days after the earliest date
upon which one of the parties notified the other(s) of its desire to attempt to
resolve the dispute, then the dispute shall be promptly submitted to arbitration
by a single arbiter through the Judicial Arbiter Group ("JAG"), any successor of
the Judicial Arbiter Group, or any similar arbitration provider who can provide
a former judge to conduct such arbitration if JAG is no longer in existence, or
an arbiter appointed by the court. The arbiter shall be selected by JAG or the
court on the basis, if possible, of his or her expertise in the subject
matter(s) of the dispute. The decision of the arbiter shall be final,
non-appealable and binding upon the parties, and it may be entered in any court
of competent jurisdiction. The arbitration shall take place in Denver, Colorado.
The arbitrator shall be bound by the laws of the State of Colorado applicable to
the issues involved in the arbitration and all Iowa rules relating to the
admissibility of evidence, including, without limitation, all relevant
privileges and the attorney work product doctrine. All such discovery shall be
completed in accordance with the time limitations prescribed in the Colorado
Rules of Civil Procedure, unless otherwise agreed by the parties or ordered by
the arbitrator on the basis of strict necessity adequately demonstrated by the
party requesting an extension or reduction of time. The arbitrator shall have
the power to grant equitable relief where applicable under Colorado law. The
arbitrator shall issue a written opinion setting forth her or his decision and
the reasons therefor within thirty (30) days after the arbitration proceeding is
concluded. The obligation of the parties to submit any dispute arising under or
related to this Agreement to arbitration as provided in this Section shall
survive the expiration or earlier termination of this Agreement. Notwithstanding
the foregoing, pending the conclusion of an arbitration proceeding, the Company
may seek and obtain an injunction or other appropriate relief from a court of
competent jurisdiction to prohibit the violation of the non-competition
provisions set forth in this Agreement, but no such application to a court shall
in any way be permitted to stay or otherwise impede the progress of the
arbitration proceeding.
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14. Fees. If any action at law or in equity is necessary to enforce or
interpret the terms of this agreement, the prevailing party shall be entitled to
reasonable attorneys fees, costs and necessary disbursements in addition to any
other relief to which that party may be entitled.
IN WITNESS WHEREOF, the Company and Employee have entered into this
Non-Competition and Severance Agreement as of the date first above written.
COLORADO MEDTECH, INC.
By:
------------------------------
Name:
Title:
EMPLOYEE:
---------------------------------
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SCHEDULE OF NON-COMPETITION AND SEVERANCE AGREEMENTS
The following schedule of details of the three Non-Competition and
Severance Agreements is provided in accordance with Instruction 2 to Item 601 of
Regulation S-K. One (1) Non-Competition and Severance Agreement has been made
for each person listed in the table below, and each document is substantially
identical in all material respects to the form preceding this schedule except
with respect to the details provided in the table below.
NAME NUMBER OF OPTIONS IN SECTION 3
Xxxxxxx X. Xxxxxxx, Xx. 15,000
Xxxxxxx X. Xxxxxx 12,000
Xxxxxxx X. Xxxxxx 15,000
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