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EXHIBIT 10.3
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is entered into as of
December ___, 1998, among Xxxxxxx Medical Products, a Utah corporation (the
"Company"), Xxxxxxxx-Xxxxx Corporation, a Delaware corporation
("Xxxxxxxx-Xxxxx"), and ________________ (the "Executive").
WHEREAS, the Executive has acquired extensive knowledge of and
experience in the businesses conducted by the Company; and
WHEREAS, a Severance Agreement dated ______________________, was
entered into between the Company and the Executive (the "Severance Agreement");
and
WHEREAS, concurrently herewith, the Company, Xxxxxxxx-Xxxxx, and Jazz
Acquisition Corp., a Utah corporation and a wholly-owned subsidiary of
Xxxxxxxx-Xxxxx ("Merger Sub"), are entering into an Agreement and Plan of Merger
dated as of the date hereof (as amended or supplemented from time to time, the
"Merger Agreement"), pursuant to which Merger Sub will be merged with and into
the Company and the Company will become a wholly-owned subsidiary of
Xxxxxxxx-Xxxxx, subject to the terms and conditions thereof; and
WHEREAS, the Executive will continue to be an employee of the Company,
as of the Effective Time of the Merger (as such term is defined in the Merger
Agreement), and accordingly, the Company and the Executive desire to rescind the
Severance Agreement, effective as of the Effective Time of the Merger.
WHEREAS, the parties to this Agreement acknowledge that Executive has
held a high-level or otherwise unique position at the Company, and has been and
will continue to be made privy to highly sensitive trade secrets and other
confidential information of the Company (and after the merger, of
Xxxxxxxx-Xxxxx), that the Executive in a unique and special manner has
contributed significantly to the good will of the Company, and that
nondisclosure of confidential information and a period of noncompetition are,
therefore, necessary to safeguard the Company's interests; and
WHEREAS, the Company, Xxxxxxxx-Xxxxx and the Executive desire to enter
into a noncompetition agreement upon the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
the Company, Xxxxxxxx-Xxxxx and the Executive hereby agree as follows:
1. Effective Date of the Agreement. Except as otherwise provided in
Section 4 hereof, this Agreement shall become effective at the Effective Time of
the Merger; provided, however, that this Agreement shall terminate automatically
and shall
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be of no further force or effect if the Merger Agreement shall be terminated and
the merger shall not become effective pursuant to the terms thereof.
2. Noncompetition. (a) (i) The Executive shall not, at any time during
his employment or during the period of _____ (___) years following termination
of his employment with the Company, directly or indirectly, own, manage,
operate, control or participate in the ownership, management, operation or
control of, or be associated as an officer, employee, consultant, agent, partner
or director with, or provide capital or other funding to enable a third party to
engage in, or solicit customers or distributors, with respect to any entity
whose products compete directly with the Designated Products or Services of the
Xxxxxxxx-Xxxxx Professional Health Care Sector (which Sector shall be deemed to
include the Company, Tecnol Medical Products, Inc. and any other direct or
indirect 40% owned subsidiary of such Sector) (collectively, the "Sector");
provided, however, that nothing herein shall be deemed to preclude the Executive
from owning up to 1% of the outstanding voting stock of any publicly traded
corporation whose shares are listed on a national stock exchange or listed on
NASDAQ.
For purposes hereof, the "Designated Products or Services" of the
Sector shall mean (i) any products sold by or in development by and any
professional service offered by the Sector as of the date hereof (but
specifically not including products sold by, products in development by or
services offered as of the date hereof by any business or entity acquired by the
Sector after the date hereof), (ii) any direct product line extension of any
product, product in development or professional service referred to in (i) above
which is acquired or developed by the Sector after the date hereof and (iii) any
other product, product in development or professional service acquired or
developed by the Sector after the date hereof if the Executive's
responsibilities include working directly (as part of his ordinary and usual
responsibilities) with, or exposure to sufficient and meaningful (as opposed to
incidental or intermittent) confidential information with respect to, such
product, product in development or professional service.
Notwithstanding the foregoing, the above restriction, except insofar as
it applies to products sold by or products in development by or professional
services offered by the Company on the date hereof, will be inapplicable to any
Executive if his employment is involuntarily terminated without cause within
_____ (__) months after the Effective Time.
(ii) The Executive shall not, at any time during the period of ______
(__) years following termination of the Executive's employment with the Company,
solicit, directly or indirectly, any employee of the Sector, to leave such
employment; provided, however that nothing herein shall be deemed to preclude
the Executive from hiring any such employees pursuant to an unsolicited response
to a general solicitation for employees.
(b) In the event any restriction contained in this Section 2 shall be
determined by any court of competent jurisdiction to be unenforceable by reason
of its extending for too great a period of time or over too great a geographical
area or by reason of its being too extensive in any other respect, it shall be
interpreted to extend only over the maximum period of time for which it may be
enforceable, over the maximum geographical area as to which it may be
enforceable and to the maximum
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extent in all other respects as to which it may be enforceable, all as
determined by such court in such action.
3. Compensation. As consideration for the mutual promises and
agreements contained herein:
(a) The Company shall pay to the Executive at the Effective Time of the
Merger an amount equal to ________ (____) months of such Executive's then
current monthly base salary.
(b) If at the date which is _______ (__) months after the date of the
Effective Time of the Merger, the Executive shall have remained in the
continuous employment of the Company, Xxxxxxxx-Xxxxx or their Affiliates, then
the Company shall (i) pay to the Executive an amount equal to __________ (___)
months of such Executive's then current monthly base salary, (ii) transfer to
Executive ownership of the Company vehicle then being used by the Executive, if
any, and (iii) pay to the Executive an amount equal to _______ (__) percent of
the then fair market value of any Company vehicle transferred. In the event of
the death of the Executive, or his termination due to having become totally and
permanently disabled, prior to the date of payment of either the amount payable
under Section 3(b) or the amount payable under Section 3(c) hereof, the Company
shall pay to the Executive's estate, or to the Executive, as applicable, the
amount under this Section 3(b) within fifteen (15) business days of notice of
death, or evidence of permanent disability, as applicable, and demand therefor.
(c) If at any time after the Effective Time of the Merger, but prior to
the date which is _________ (___) months after the date of the Effective Time of
the Merger, the Company involuntarily terminates the employment of the Executive
(without cause) then the Company shall (i) pay to the Executive an amount equal
to _________ (__) months of such Executive's then current monthly base salary,
(ii) transfer to Executive ownership of the Company vehicle then being used by
the Executive, if any, and (iii) pay to Executive an amount equal to ______ (__)
percent of the fair market value of any Company vehicle transferred. The
Executive shall not be entitled to receive payment under this Section 3(c)
unless such Executive executes a Severance Agreement and Release in a form
reasonably acceptable to the Company (which shall not include additional
noncompete or other post-termination restrictions on the Executive other than
any non-disparagement provisions) and such Executive does not revoke such
Severance Agreement and Release within the 7-day period following the date on
which it is executed.
(d) If the Executive's employment is involuntarily terminated (without
cause), or as a result of his having become totally and permanently disabled,
within ______ (__) months of the Effective Time of the Merger, and the Executive
elects COBRA medical coverage within the COBRA election period, the Company
shall reimburse the Executive's monthly COBRA premiums for his continuing
medical coverage for himself, his spouse and covered dependents, for the maximum
period of COBRA continuation coverage. Thereafter, if the Executive obtains
medical insurance for which premiums are due, the Company shall reimburse the
Executive for such monthly premiums for
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coverage for himself, and, if covered by the COBRA continuation coverage, his
spouse and any covered dependents, until the third anniversary of the
Executive's termination of employment; provided, however, that the amount of
such monthly reimbursement shall not exceed the last monthly payment for COBRA
continuation coverage.
(e) The above amounts are subject to applicable federal and state taxes
and withholding. The amounts payable pursuant to Section 3 shall not be paid to
the Executive if his employment with the Company is terminated for cause or he
voluntarily quits or retires, provided, however, the amounts under Sections 3(c)
and 3(d) shall be paid to the Executive if (i) the Executive voluntarily
terminates employment after a reduction by the Company in the Executive's annual
base salary or aggregate annual benefits in effect at the Effective Time of the
Merger (other than a reduction in such benefits which affects as a whole the
Company's employees who are eligible to participate in such benefit plan); or
(ii) the Executive voluntarily terminates employment after the Company requires
the Executive to be based anywhere other than within fifty miles of the
Company's current offices in Draper, Utah.
(f) For purposes of this Agreement, the term "cause" shall mean any of
the following occurring after the Effective Time:
(i) the commission by the Executive of a felony;
(ii) the Executive's dishonesty, habitual neglect or incompetence
in the management of the affairs of the Company; or
(iii) the refusal or failure by the Executive to act in accordance
with any lawful directive or order of the Company, or an act
or failure to act by the Executive which is in bad faith and
to the detriment of the Company.
4. Rescission of Severance Agreement. As of the date of this Agreement,
the Executive's rights (and the Company's obligations) under the Severance
Agreement shall be suspended (and the Executive shall have no rights to payments
thereunder) until the first to occur of the termination of the Merger Agreement
or the Effective Time of the Merger. If the Merger Agreement is terminated, as
of the date of such termination all right and obligations under the Severance
Agreement shall be reinstated, and the Severance Agreement shall continue on in
full force and effect, as of and from such date. If the Merger is consummated,
at the Effective Time of the Merger, the Severance Agreement shall be rescinded
and shall be of no further force or effect whatsoever.
5. Unauthorized Disclosure. (a) The Executive shall not, without the
prior written consent of the President-Professional Health Care Sector of
Xxxxxxxx-Xxxxx, use other than for Company purposes or disclose to any person
other than as required by law or court order or to a person to whom disclosure
is necessary or appropriate in connection with the performance by the Executive
of his duties, any confidential information obtained by him concerning the
Company, Xxxxxxxx-Xxxxx or any Affiliate (defined, with respect to any person,
as any subsidiary or any corporation or other entity in which a forty (40)
percent or more entity interest is owned, directly or indirectly, by such
person) thereof while in the employ of the Company, Xxxxxxxx-Xxxxx or any
Affiliate or any confidential information concerning any third party obtained by
him in his capacity
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as an employee or officer of the Company, Xxxxxxxx-Xxxxx or any Affiliate,
including such information with respect to any products, improvements, formulae,
designs or styles, processes, services, customers, suppliers, marketing
techniques, methods, future plans or operating practices ("Confidential
Information"); provided, however, that Confidential Information shall not
include any information known generally to the public or previously disclosed to
the public (other than as a result of unauthorized disclosure by the Executive)
or any information disclosed by the Company or Xxxxxxxx-Xxxxx to a third party
without restrictions on the disclosure of such information, or any information
disclosed to the Executive by a third party without violating a legal duty owed
to the Company or Xxxxxxxx-Xxxxx or their Affiliates.
(b) The Executive agrees that all documents, records, files, letters,
disks, memoranda, reports, data, sketches, drawings, laboratory notebooks,
program listings or other written, electronic, photographic or other tangible
material ("Tangible Property") containing Confidential Information, whether
created by the Executive or others, which have or shall come into his custody or
possession shall be and are the exclusive property of the Company and shall be
used by the Executive only in the performance of his duties. The Executive
agrees that upon the earlier of (i) a request by the Company or Xxxxxxxx-Xxxxx
or (ii) the termination or cessation of his employment for any reason, he shall
promptly deliver to the Company all Tangible Property in his possession or under
his control which contains Confidential Information. The Executive shall not
retain or deliver to any third person copies of such Tangible Property.
(c) The Executive agrees that his obligations not to disclose or use
Confidential Information or Tangible Property of the types set forth in Section
5(a) or 5(b) hereof also extend to such types of Confidential Information and
Tangible Property of customers or suppliers to the Company or its Affiliates or
other third parties who may have disclosed or entrusted the same to the Company
or its Affiliates or to the Executive in the course of the Company's business.
(d) The covenants set forth in this Section 5 shall lapse _____ (___)
years following termination of the Executive's employment.
6. Public Announcements. The Executive agrees that he shall not make or
cause to be made any public statement, public announcement or press release
which is intended, or would reasonably be expected, to disparage the Company,
the transactions contemplated by the Merger Agreement or the integration of the
Company's and its Affiliates' operations with those of Xxxxxxxx-Xxxxx and its
Affiliates.
7. Injunctive Relief. The Executive acknowledges that a breach of the
restrictions contained in Section 2, 5 or 6 hereof shall cause irreparable
damage to the Company and Xxxxxxxx-Xxxxx, the exact amount of which shall be
difficult to ascertain, and that the remedies at law for any such breach shall
be inadequate. Accordingly, the Executive agrees that if the Executive breaches
any of the restrictions contained in Section 2, 5 or 6 hereof, then the Company
and Xxxxxxxx-Xxxxx shall be entitled to injunctive relief, without posting bond
or other security, in addition to any other remedy or remedies available to the
Company or Xxxxxxxx-Xxxxx at law or in equity.
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8. Termination. The Executive acknowledges that his employment can be
terminated, with or without cause, by either the Company or him at any time.
This Agreement may be terminated by the Executive upon ten (10) days' prior
written notice to the Company and Xxxxxxxx-Xxxxx in the event that the Company
or Xxxxxxxx-Xxxxx shall breach any of their obligations under Section 3 hereof;
provided, however, that the Executive shall not be entitled to terminate this
Agreement pursuant to this Section 8 in the event that the Company or
Xxxxxxxx-Xxxxx shall cure any such breach within such ten (10) day period. In
the event of such termination by the Executive, the Company shall pay to the
Executive all remaining payments due under this Agreement within five (5)
business days of such termination.
9. Successors; Binding Agreement. This Agreement shall inure to the
benefit of and be enforceable by the Executive and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees, and by the Company and Xxxxxxxx-Xxxxx and their respective successors
and assigns.
10. Notices. All notices and other communications required or permitted
under this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered, when delivered by facsimile or electronic mail
or by courier or overnight express service or five days after having been sent
by certified or registered mail, postage prepaid, addressed: (a) if to the
Executive, to the Executive's address set forth in the records of the Company,
or if to the Company or Xxxxxxxx-Xxxxx, to Xxxxx X. Xxxxxx,
President-Professional Health Care Sector, Xxxxxxxx-Xxxxx Corporation, 0000
Xxxxxxx Xxxxxx Xxxx, Xxxxxxx, XX 00000, Fax: (000) 000-0000, with a copy to O.
Xxxxxx Xxxxxxxx, Senior Vice President-Law and Government Affairs,
Xxxxxxxx-Xxxxx Corporation, 000 Xxxxxx Xxxxx, Xxxxxx, XX 00000, Fax: (972)
000-0000, or (b) to such other address as any party may have furnished to the
other parties in writing in accordance herewith, except that notices of change
of address shall be effective only upon receipt.
11. Governing Law; Validity. The interpretation, construction and
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Utah without regard to
principles of conflicts of laws. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which other provisions shall remain in
full force and effect.
12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
13. Miscellaneous. No provision of this Agreement may be modified or
waived unless such modification or waiver is agreed to in writing and executed
by the Executive and by a duly authorized officer of the Company and of
Xxxxxxxx-Xxxxx. No waiver by any party hereto at any time of any breach by
another party hereto of, or failure to comply with, any condition or provision
of this Agreement to be performed or complied with by such other party shall be
deemed a waiver of any similar or dissimilar conditions or provisions at the
same or at any prior or subsequent time. Failure by the Executive, the Company
or Xxxxxxxx-Xxxxx to insist upon strict compliance with any
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provisions of this Agreement or to assert any right which the Executive, the
Company or Xxxxxxxx-Xxxxx may have hereunder shall not be deemed to be a waiver
of such provision or right or any other provision of or right under this
Agreement.
IN WITNESS WHEREOF, each of the Company and Xxxxxxxx-Xxxxx has caused
this Agreement to be executed by its duly authorized officer, and the Executive
has executed this Agreement as of the day and year first above written.
XXXXXXX MEDICAL PRODUCTS
By:
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Name:
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Title:
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XXXXXXXX-XXXXX CORPORATION
By:
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Name:
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Title:
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EXECUTIVE:
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Executive
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