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EXHIBIT 10.38
NON-COMPETITION AND NON-CIRCUMVENTION AGREEMENT
This Non-Competition and Non-Circumvention Agreement (the "Agreement")
is entered into effective as of March 1, 1997 by and among QuadraMed
Corporation, a Delaware corporation ("QuadraMed"), Healthcare Recovery
Acquisition Corporation, a Delaware corporation ("Acquisition Co."), and Xxxxxx
X. Xxxxxx (the "Shareholder").
WHEREAS, QuadraMed and Acquisition Co. have entered into that certain
Acquisition Agreement and Plan of Merger dated as of March 1, 1997 (as amended)
with Healthcare Recovery Incorporated, a New Jersey corporation (the
"Company"), and the shareholders of the Company (the "Acquisition Agreement"),
pursuant to which the Company will be merged within and into Acquisition Co.
WHEREAS, the Company has heretofore operated a healthcare accounts
receivable management, collection and financing and business office outsourcing
and reimbursement consulting business.
WHEREAS, the Shareholder owns a majority of the issued and outstanding
shares of the capital stock of the Company.
WHEREAS, QuadraMed and Acquisition Co. desire to assure themselves
that the Shareholder will not compete with QuadraMed and Acquisition Co. for a
period of five (5) years from the termination of his employment with QuadraMed
or any affiliate thereof in a business which is the same as, substantially
similar to or in competition with the healthcare accounts receivable
management, collection and financing and business office outsourcing and
reimbursement consulting operations of QuadraMed and/or Acquisition Co.
(including the business and goodwill of the Company) as now being conducted and
as they may evolve in the ordinary course in all of the states and territories
of the United States.
WHEREAS, this Agreement is a material inducement to QuadraMed and
Acquisition Co. to enter into the Acquisition Agreement, and the Shareholder is
agreeable to entering into this Agreement with QuadraMed and Acquisition Co. on
the terms herein set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements contained herein, the parties hereby covenant and agree as
follows:
1. Subject to the terms and conditions hereof, the Shareholder
covenants and agrees that, for the period commencing on the Closing and ending
on the fifth (5th) anniversary of the termination of his employment with
QuadraMed or any affiliate thereof (the "Restricted Period"), the Shareholder
will not, either directly or indirectly through an affiliated or controlled
entity or person, on his own behalf or as a partner, consultant, proprietor,
principal, agent, stockholder, creditor, security holder, trustee or otherwise
(except by ownership of five percent (5%) or less of the outstanding stock of
any publicly held corporation), or in any other capacity, invest, participate
or engage in, or devote any material endeavor or effort to an entity or
business which is the same as, substantially similar to or in
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competition with the healthcare accounts receivable management, collection and
financing and business office outsourcing and reimbursement consulting
operations of QuadraMed and/or Acquisition Co. (including the business and
goodwill of the Company) as now being conducted and as they may evolve in the
ordinary course (the "Restricted Business") in all of the states and
territories of the United States (the "Restricted Territory").
2. The Shareholder acknowledges that he has knowledge of
information of substantial value regarding the Restricted Business, which is
not generally known and which gives QuadraMed and Acquisition Co. an advantage
over competitors who do not know it, including, without limitation, computer
programs, names and expertise of employees and consultants, know-how, trade
secrets, formulae, processes, ideas, inventions and other sales, business,
financial, customer and product-developments, plans, lists, forecasts,
strategies and information of the Company (collectively, the "Confidential
Information"). The term "Confidential Information" shall not include
information which is (i) generally or readily obtainable by the public or the
trade, (ii) publicly known or becomes known, through no fault or activity of
the Company or the Shareholder or (iii) required to be disclosed by the
Company, the Shareholder or any relative or affiliate thereof pursuant to
deposition, interrogatory, request for documents, order, subpoena, civil
investigative demand or similar legal compulsion; provided, however, that
prompt written notice of such requirement shall be provided to QuadraMed so
that it may seek a protective order or other appropriate remedy and/or may
waive compliance with this Section 2; and provided, further, that if such
protective order or other remedy is not obtained, and whether or not such
waiver is given, only such portion of the Confidential Information which the
person subject to such legal compulsion is advised in writing by its counsel is
legally required to be disclosed shall be disclosed and reasonable effort shall
be made to obtain assurances that confidential treatment will be accorded such
Confidential Information. The Shareholder hereby expressly acknowledges and
agrees that the Confidential Information constitutes confidential and valuable
trade secret business information of the Company. The Shareholder agrees, at
all times during the Restricted Period, to regard and preserve as confidential
such Confidential Information, and, subject to the provisions hereof, to
refrain from publishing or disclosing any part of it or from using, copying or
duplicating it in any way or by any means or for any purposes. Subject to the
provisions hereof, the Shareholder further agrees, at all times during the
Restricted Period, that such Confidential Information will not be disclosed by
the Shareholder to any person or entity except counsel or other professionals
retained by Shareholder to provide professional advice without the prior
written consent of QuadraMed, which may be withheld in its sole discretion.
The Shareholder acknowledges that the disclosure or use or any Confidential
Information in violation of this Agreement could gravely affect the effective
and successful conduct of the Restricted Business and the value of the goodwill
of the Company acquired pursuant to the Acquisition Agreement, and that breach
of the terms of this Section 2 is a material breach of the terms of this
Agreement.
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3. During the Restricted Period, the Shareholder shall not,
whether for his own account or for the account of any other individual,
partnership, firm, corporation or other business organization, divert or
attempt to divert, directly or indirectly, or otherwise interfere in a material
fashion with any portion of the Restricted Business, or any customers or
contractors of the Restricted Business, or induce or attempt to induce,
directly or indirectly, any person to terminate his or her employment or other
business association with the Restricted Business.
4. The Shareholder shall refrain from making disparaging or
derogatory comments or references regarding the business, practices, competence
and/or services of the Restricted Business; provided, however, that such
comments or references may be made in good faith to prosecute or defend any
claim, action or proceeding by or against QuadraMed or Acquisition Co. or under
or pursuant to any deposition, interrogatory, request for documents, order,
subpoena, civil investigative demand or similar legal compulsion.
5. The covenants contained herein shall be construed as if each
covenant is divided into separate and distinct covenants in respect of the
Restricted Business, each capacity in which the Shareholder is prohibited from
competing and each part of the Restricted Territory in which the QuadraMed or
Acquisition Co. is carrying on the Restricted Business. Each such covenant
shall constitute separate and several covenants distinct from all other such
covenants.
6. Each of the parties hereto recognizes that the territorial
restrictions contained in this Agreement are properly required for the adequate
protection of the Restricted Business and that in the event any covenant or
other provision contained herein shall be deemed to be illegal, unenforceable
or unreasonable by a court or other tribunal of competent jurisdiction with
respect to any part of the Restricted Territory, such covenant or provision
shall not be affected with respect to any other part of the Restricted
Territory, and each of the parties hereto agrees and submits to the reduction
of said territorial restriction to such an area as said court shall deem
reasonable.
7. Each of the parties acknowledge that (i) the covenants and the
restrictions contained in this Agreement are necessary, fundamental and
required for the protection of the Restricted Business, (ii) such covenants
relate to matters which are of a special, unique and extraordinary character
that gives each of such covenants a special, unique and extraordinary value and
(iii) a breach of any of such covenants or any other provision of this
Agreement will result in irreparable harm and damage to the Restricted Business
which cannot be adequately compensated by a monetary award. Accordingly, it is
expressly agreed that in addition to all other remedies available at law or in
equity, QuadraMed and/or Acquisition Co. shall be entitled to seek the remedy
of a temporary restraining order, preliminary injunction or such other form of
injunctive or equitable relief as may be used by any court of competent
jurisdiction to restrain or enjoin any of the parties hereto from breaching any
such covenant or provision or to specifically enforce the provisions hereof.
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8. All defined terms utilized in this Agreement shall have the
meanings ascribed to them in the Acquisition Agreement unless otherwise
indicated.
9. All notices, requests, demands and other communications which
are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given if delivered in the fashion and at the
addresses or facsimile numbers as specified in Section 8.7 of the Acquisition
Agreement, or to such other addresses or facsimile numbers as any party hereto
may specify by notice in writing to the other.
10. THIS AGREEMENT AND ANY DISPUTE ARISING UNDER OR RELATED TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY WITHOUT REGARD
TO THE CONFLICTS OF LAWS RULES THEREOF.
11. This Agreement is the valid and legally binding obligation of
the parties hereto, enforceable against each party in accordance with its terms
and shall inure to the benefit of such parties and their respective successors
and assigns.
12. This Agreement may be executed in counterparts, all of which
shall constitute the same instrument.
13. Each party hereto acknowledges that it has been represented by
independent legal counsel.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
QUADRAMED QUADRAMED CORPORATION,
a Delaware corporation
By: /s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx, Chief Executive Officer
ACQUISITION CO. HEALTHCARE RECOVERY ACQUISITION
CORPORATION, a Delaware corporation
By: /s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx, Chief Executive Officer
SHAREHOLDER
/s/ XXXXXX X. XXXXXX
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Xxxxxx X. Xxxxxx
[SIGNATURE PAGE TO NON-COMPETITION AND NON-CIRCUMVENTION AGREEMENT]
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