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EXHIBIT 10(k)
INCENTIVE STOCK OPTION,
TRADE SECRET, INVENTION, AND
NON-COMPETITION AGREEMENT
THIS AGREEMENT, made this 20th day of November, 1995, by and between
TECNOL MEDICAL PRODUCTS, INC., a Delaware corporation (hereinafter called
"TMPI"), and Jeffrey A. Nick (hereinafter called the "Optionee"), but effective
as of the date set forth in paragraph 2 below.
W I T N E S E T H:
WHEREAS, Optionee is a key employee of the Company who, during the
course of Optionee's employment with the Company has been, and in the future is
expected to be, engaged in one or more of the manufacturing, marketing,
selling, administrative, management, financial communications, legal,
engineering, product development, product quality, or other important
activities of the Company and is expected to obtain valuable and proprietary
confidential information of the Company in the course of carrying out
Optionee's duties of employment; and
WHEREAS, the Company wants to encourage Optionee's continued interest in
and loyalty and commitment to the Company and toward that end, the Company
desires to increase Optionee's proprietary interest in the success of the
Company by making it possible for Optionee to acquire an initial or increased
stock ownership interest in the Company on a basis anticipated to be
economically beneficial and favorable to Optionee; and
WHEREAS, as a condition to the Company's willingness to facilitate
Optionee's stock ownership interest in the Company and ancillary to its
undertaking to do so and to impart confidential information to Optionee, the
Company desires to obtain Optionee's commitment to the Company to not disclose
confidential information of the Company and not compete with the Company should
Optionee's employment terminate; and
WHEREAS, Optionee and the Company both recognize and agree that such
commitment by Optionee is necessary to protect the value of the Company for all
of its security holders, including Optionee:
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements herein contained, TMPI and the Optionee hereby agree with each other
as follows:
1. The granting of this Option shall not impose upon the Company any
obligation to employ or continue to employ the Optionee; and the right of the
Company to terminate the employment of the Optionee shall not be diminished or
affected by reason of the fact that an option has been granted to him.
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2. Subject to the terms and conditions set forth herein, TMPI hereby
grants to the Optionee under the Option Plan the right to purchase up to, but
not exceeding in the aggregate, 11,667 shares of the common stock, $.001 par
value, of TMPI (the "Common Stock") during the period commencing March 1, 1996
and ending March 1, 2003, at a price per share of $17.00 (the "Option Exercise
Price"). The "Effective Date" of this agreement is November 20, 1995.
The right and option granted hereunder may be exercised from time to
time as follows: beginning March 1, 1996, as to not more than 1,667 shares
covered hereby; beginning March 1, 1997, as to any number of shares which, when
added to the number of shares previously purchased under the option, shall not
exceed 3,334 shares covered hereby; beginning March 1, 1998, as to any number
of shares which, when added to the number of shares previously purchased under
the option, shall not exceed 5,001 covered hereby; beginning March 1, 1999, as
to any number of shares which, when added to the number of shares previously
purchased under the option, shall not exceed 6667 shares covered hereby;
beginning March 1, 2000, as to any number of shares which, when added to the
number of shares previously purchased under the option shall not exceed 8334 of
the total shares covered hereby; beginning March 1, 2001, as to any number of
shares which, when added to the number of shares previously purchased under the
option, shall not exceed 10,001 shares covered hereby; beginning March 1, 2002,
as to any number of shares which, when added to the number of shares previously
purchased under the option, shall not exceed the total number of shares covered
hereby.
Shares cannot be sold, transferred, or encumbered for a period of two
(2) years after the date on which the Option is exercised, excluding transfers
to the Company, members of the Optionee's immediate family, or trusts for the
benefit of the Optionee or members of the Optionee's immediate family, provided
that any Shares so transferred (other than to the Company) will remain subject
to the remainder of the two-year prohibition on transfer. In the event of the
death of the Optionee, any Shares held by the Optionee's estate may be
transferred free of the remainder of the two-year prohibition on transfer. Any
Shares as to which the two-year prohibition on transfer has been lifted shall
be subject to the requirement that the Optionee notify the Company of any
disposition as provided in paragraph 5 hereof. Each certificate representing
shares shall bear a legend reflecting the appropriate restriction.
The option granted hereunder is intended to qualify as an incentive
stock option under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"). However, to the extent that the aggregate fair market value of
the Common Stock (determined at the date of grant of the option) with respect
to which incentive stock options are exercisable for the first time by the
Optionee during any calendar year (under all incentive stock option plans of
TMPI and any parent or subsidiary corporation of TMPI) exceeds $100,000, such
options will not be incentive stock options. For this purpose, options shall
be taken into account in the order in which they were granted.
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The option granted hereunder is granted pursuant to and is governed by
the terms of the 1991 Tecnol Stock Option Plan (the "Option Plan").
3. The right and option granted hereunder shall be exercised by
delivering to Tecnol Medical Products, Inc. a written notification specifying
the number of shares which the Optionee desires to purchase, together with
cash, certified check, bank cashier's check or postal or express money order to
the order of Tecnol Medical Products, Inc. for an amount equal to the option
price of such shares, and specifying the address to which the certificates for
such shares are to be mailed. In lieu of payment in cash or cash equivalents,
Optionee may make payment by tendering to Tecnol Medical Products, Inc. shares
of Common Stock, or by tendering shares of Common Stock plus cash or cash
equivalents, in amounts such that the fair market value of the Common Stock
tendered, plus the amount of cash or cash equivalents paid, if any, equals the
option price for the shares to be purchased.
4. As promptly as practical after receipt of such written
notification and payment and receipt of such evidence of intent to acquire for
investment as may be required by the Company, the Company will deliver to the
Optionee certificates for the number of shares with respect to which such
option has been so exercised, issued in the Optionee's name; provided that such
delivery shall be deemed effected for all purposes when a stock transfer agent
of the Company shall have deposited such certificates in the United States
mail, postage prepaid, addressed to the Optionee, at the address specified
pursuant to paragraph 3 hereof.
5. If the Optionee shall dispose of any of the shares purchased
hereunder within the later of one year after the transfer of such shares to him
or two years from the effective date of the granting of this option, then in
order to provide the Company with the opportunity to claim the benefit of any
income tax deduction which may be available to it under the circumstances, the
Optionee shall promptly notify the Company of the dates of acquisition and
disposition of such shares, the number of shares so disposed of, and the
consideration, if any, received for such shares. In addition, in order to help
assure that the Company receives notice of any such transfer, any stock
certificate evidencing any shares of Common Stock issued under this Agreement
shall bear a legend substantially as follows for the first year after issuance
of such Common Stock to the Optionee or, if sooner, until such time as the
Optionee certifies in writing to the Company that such Common Stock has been
sold in a bona fide transaction and advises the Company of the amount of the
consideration received for such shares:
"The Company has asked its stock transfer agent to notify the Secretary
of the Company if the securities represented by this certificate are
held of record at any time prior to [applicable date] in any name other
than [applicable name]."
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Further, upon request of the Company, from time to time, the Optionee shall
certify in writing the dates of acquisition and any dispositions of such Common
Stock on or before the first anniversary of the issuance of such Common Stock
to the Optionee, the number of shares so disposed of, and the consideration, if
any, received for such shares.
6. Except as is otherwise expressly provided in this Agreement, the
option herein granted shall terminate immediately upon the severance of the
employment relationship between the Company and the Optionee by the Company for
good cause, and two weeks after the severance of the employment relationship
between the Company and the Optionee for any reason, other than for good cause
or on account of death or retirement in good standing from the employ of the
Company for reasons of age or total and permanent disability under the then
established rules of the Company. For purposes of this Agreement, "Company"
shall mean Tecnol Medical Products, Inc. and any corporation in which Tecnol
Medical Products Inc. owns, directly or indirectly, stock possessing eighty
percent or more of the total combined voting power of all classes of stock;
and, any corporation in which Tecnol Medical Products, Inc. owns, directly or
indirectly, stock possessing fifty percent or more of the total combined voting
power of all classes of stock, if the Board of Tecnol Medical Products, Inc.
resolves that such other corporation shall be so defined. Whether authorized
leave of absence or absence on military or government service shall constitute
severance of the employment relationship between the Company and the Optionee
shall be determined by the Committee appointed by the Board of Directors of
TMPI to administer the Option Plan (the "Committee). In the event of the death
of the Optionee while in the employ of the Company and before the date of
expiration of this option, this option shall terminate one year following the
date of death of the Optionee. After the death of the Optionee, Optionee's
executors, administrators, or any person or persons to whom this option may be
transferred by will or by the laws of descent and distribution, shall have the
right, at any time prior to such termination, to exercise the option granted
hereunder, in whole or in part. If, before the date of expiration of this
option, the Optionee shall be retired in good standing from the employ of the
Company for reasons of age or total and permanent disability under the then
established rules of the Company, this option shall terminate three months
(twelve months in the case of retirement for disability) after the date of such
retirement. However, in the event of such retirement, the Optionee shall have
the right prior to the termination of such option to exercise the option to the
extent to which Optionee was entitled to exercise the option immediately prior
to such retirement. Provided, however, nothing in this Section shall operate
to extend this option beyond 10 years after the Effective Date hereof.
7. Whenever the word "Optionee" is used in any provision of this
Agreement under circumstances where the provisions should logically be
construed to apply to the executors, administrators or the person or persons to
whom the option may be transferred by will or by the laws of descent and
distribution, the word "Optionee" shall be deemed to include such person or
persons.
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8. This option is not transferable by the Optionee otherwise than by
will or under the laws of descent and distribution, and is exercisable, during
Optionee's lifetime, only by Optionee. No assignment or transfer of this
option, or of the rights represented thereby, whether voluntary or involuntary,
by operation of law or otherwise (except by will or by the laws of descent and
distribution) shall vest in the assignee or transferee any interest or right
herein whatsoever, but immediately upon any such assignment or transfer this
option shall terminate and become of no further effect.
9. The Optionee shall not be deemed for any purpose to be a
stockholder of TMPI in respect of any shares as to which this option shall not
have been exercised, as herein provided, and until such shares shall have been
issued to the Optionee by TMPI hereunder.
10. The existence of this option shall not affect in any way the
right or power of the Company or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Common Stock or the rights thereof, or the
dissolution or liquidation of the Company, or any sale or transfer of all or
any part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
11. The shares with respect to which this option is granted are
shares of the Common Stock of TMPI as presently constituted, but if, and
whenever, prior to the delivery by TMPI of all the shares of the Common Stock
with respect to which this option is granted, TMPI shall effect a subdivision
or consolidation of shares or other capital readjustment, the payment of a
stock dividend, or other increase or reduction of the number of shares of the
Common Stock outstanding, without receiving compensation therefor in money,
services or property, then (a) in the event of an increase in the number of
such shares outstanding, the number of shares of Common Stock then remaining
subject to option hereunder shall be proportionately increased, and the option
price per share shall be proportionately reduced; and (b) in the event of a
reduction in the number of such shares outstanding, the number of shares of
Common Stock then remaining subject to option hereunder shall be
proportionately reduced, and the option price per share shall be
proportionately increased.
12. After a merger of one or more corporations into TMPI, or after a
consolidation of TMPI and one or more corporations in which TMPI shall be the
surviving corporation, the Optionee shall, at no additional cost, be entitled
upon any exercise of this option, to receive (subject to any required action by
stockholders) in lieu of the number of shares as to which this option shall
then be so exercisable, the number and class of shares of stock or other
securities or cash or other property to which the Optionee would have been
entitled pursuant to the terms of the agreement of merger or consolidation, as
if immediately prior to such merger or consolidation the Optionee had been the
holder of record of a number of shares of Common
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Stock of TMPI equal to the number of shares as to which such option shall be so
exercised; provided that, anything herein contained to the contrary
notwithstanding, upon the dissolution or liquidation of TMPI, or upon any
merger or consolidation if TMPI is not the surviving corporation, the Board of
Directors of TMPI shall determine the disposition of this option in accordance
with the alternatives set forth in paragraph 14 of the Option Plan.
13. Except as hereinbefore expressly provided, the issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, for cash or property or for labor or services, either
upon direct sale, upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to this option.
14. Notwithstanding any of the provisions hereof, the Optionee hereby
agrees that he will not exercise the option granted hereby, and that the
Company will not be obligated to issue any shares to the Optionee hereunder, if
the exercise hereof or the issuance of such shares shall constitute a violation
by the Optionee or the Company of any provisions of any law or regulations of
any governmental authority. If, at any time specified herein for the issuance
of shares to the Optionee, any law or regulation shall require either the
Company or the Optionee to take any action in connection with the shares then
to be issued, the issuance of such shares shall be deferred until such action
shall have been taken. Any determination in this connection by the Committee
shall be final, binding and conclusive. The Company shall in no event be
obligated to register any securities pursuant to the Securities Act of 1933 (as
now in effect or as hereafter amended) or to take any other affirmative action
in order to cause the exercise of the option or the issuance of shares pursuant
thereto to comply with any law or regulation of any governmental authority.
15. Every notice or other communication relating to this Agreement
shall be in writing, and shall be mailed to or delivered to the party for whom
it is intended at such address as may from time to time be designated by it in
a notice mailed or delivered to the other party as herein provided; provided
that, unless and until some other address be so designated, all notices or
communications by the Optionee to the Company shall be addressed to the
President of TMPI and mailed or delivered to TMPI at its office at 7201
Industrial Park Blvd., Fort Worth, Texas 76180, and all notices or
communications by the Company to the Optionee may be given to the Optionee
personally or may be mailed to him at Optionee's address as shown in the
records of the Company.
16. (a) The Optionee recognized and acknowledges that:
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(1) "Company-Type Products" means the types of products
that the Company is and will be engaged in developing,
manufacturing, marketing and selling, such as, but not
limited to, the following: reusable orthopedic soft goods;
face masks and respirators; all disposable restraints,
holders, binders, supports, pads, protectors, straps, ice
packs, telemetry unit pouches, wash mitts, caps, shoe
covers, wound dressings, and other health care and
industrial disposable items developed, manufactured,
marketed or sold by the Company during Optionee's
employment with the Company; and, if Optionee engages in
Technical Activities of the Company (as defined below) at
any time during Optionee's employment with the Company,
any components or raw materials for use in any of the
above which were the subject of research and/or
development during Optionee's employment with the Company.
(2) If Optionee, at any time during the course of
Optionee's employment with the Company, is engaged in the
manufacturing, engineering and/or product development
activities of the Company ("Technical Activities") such as
manufacturing existing Company-Type Products, improving
and enhancing Company-Type Products, and developing new
Company-Type Products, then, during the course of
Optionee's employment, Optionee will likely (a) engage in
research and experimentation to create and improve the
design of such products; (b) design and manufacture
special machinery that is used to manufacture,
automatically inspect and/or package such products; (c)
develop and design sonic bonding equipment used in such
machines; (d) design and develop specifications and
manufacturing processes for materials used in Company-Type
Products including, without limitation, films, and
non-woven fabrics; and/or (e) design and manufacture
machines used to manufacture such materials in the
performance if Optionee's duties. The Company's success
and innovation in developing new, and in enhancing
existing, Company-Type Products and in developing and
improving the materials and machinery used in, and to
manufacture, its Company-Type Products confers on the
Company a significant competitive advantage against its
competitors. The continued confidentiality of these
aspects of the Company's business are vital to its
business.
(3) If Optionee, at any time during the course of
Optionee's employment with the Company, is engaged in the
financial, legal, administrative, management, marketing,
sales, or communication activities of the Company ("Sales
and Administrative Activities") then the Optionee will
become familiar with or have access to extensive
confidential information
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pertaining to the business of the Company, which may
include, without limiting the forgoing, and depending upon
Optionee's specific employment duties, names of customers
of the Company and the prices it obtains or has obtained
from customers or for which it sells or has sold its
products, sources for materials used in the Company's
products, contract relationships between the Company and
its customers and suppliers, confidential business and
financial data of the Company, information pertaining to
the Company's employees (including, without limitation
information concerning compensation and benefit programs),
information regarding the Company's costs, information
about the Company's products and anticipated new products,
forecasts, plans, objectives, investment opportunities,
and long term business strategies and plans of the
Company. This confidential information is of strategic
importance to the Company in its ability to successfully
compete. The continued confidentiality of this
information is vital to the Company's business.
(4) The Company has established a valuable and extensive
trade in its Company-Type Products as well as business
connections and customers which are of significant value
to it.
(5) By virtue of Optionee's employment, Optionee
acknowledges that Optionee holds a position of trust with
respect to the confidential information of the company
made accessible to the Optionee, and that the Company will
suffer irreparable injury if during Optionee's employment
or at any time subsequent to the termination of such
employment, Optionee should, directly or indirectly, enter
into competition with the Company or divulge such secret
and confidential information to competitors or potential
competitors of the Company.
(6) It is expected that Optionee, during Optionee's
employment by the Company, may conceive or generate (alone
or together with others) inventions, discoveries or ideas,
and it is recognized that the ownership thereof should be
and will be in the Company.
(7) The covenants and conditions contained herein are
reasonable and necessary for the protection of the
Company's business. In this regard, Optionee recognizes
that the descriptive scope of the confidential information
described in Section 16 and the territory covered by the
non-competition covenants in Section 16 hereof are
reasonable in light of the fact that the work that
Optionee will perform for the Company as its employee will
contribute to the manufacture or sale of products
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that will be sold to end users (directly or in many cases
through intermediary distributors) located throughout the
Geographic Region described in Section 16(f).
(b) Optionee covenants and agrees that Optionee will not
at any time during Optionee's employment or thereafter, in any
fashion, form or manner, either directly or indirectly, except to
the extent necessary to carry out Optionee's employee
responsibilities for the benefit of the Company, divulge,
disclose or communicate to any person, firm, partnership,
corporation, or enterprise in any manner whatsoever any
information of any kind, nature or description concerning any
matters affecting or relating to the business of the Company,
including without limitation, (i) research conducted by the
Company in connection with product development, manufacturing
processes, machinery construction, product materials or
otherwise, (ii) the manufacturing methods or processes used or
under development by the Company for its products, machines and
materials, (iii) the nature or properties of the materials used
by the Company in its products or under development, and supply
sources of such materials, (iv) the names of any of the Company's
customers and the prices it obtains or has obtained or for which
it sells or has sold its products, (v) contract relationships
between the Company and its customers and suppliers, (vi)
confidential business and financial data of the Company, (vii)
information pertaining to the Company's employees (including,
without limitation, information concerning compensation and
benefit programs), (viii) information regarding the Company's
cost, (ix) information about the Company's products and
anticipated new products, (x) forecasts, plans, objectives,
investment opportunities, and long term business strategies and
plans of the Company, and (xi) any other information of, about
or concerning the business of the Company, its manner of
operations, its plans, processes or other data of any kind,
nature or description. The Optionee and Company agree that the
foregoing information is important, material and confidential and
substantially effects the successful conduct of the business of
the Company, and its good will, regardless of whether any or all
of the foregoing matters would be deemed to be "trade secrets" as
defined by law. Optionee may have occasion to learn other
information as a consequence of or through Optionee's employment
with the Company, such as information from or about suppliers,
customers, competitors and others. This information generally is
obtained by the Company by studying competitive products, by
requesting information from such other companies, by doing
various studies and the like. Such information is some cases may
not be proprietary to the Company but nevertheless the Company
learns such information in the course of its business, keeps such
information secret (because it is costly and useful information),
and
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legitimately uses such information in connection with its
business. Optionee agrees Optionee will not use or disclose, or
permit such information to be disclosed or used except in
furtherance of Optionee's duties for the Company and agrees not
to use or disclose such information in violation of any
obligations or duties which Optionee or the Company has to any
third party. The parties agree that any breach of the terms of
this Section 16(b) is a material breach of this Agreement. The
Company considers, and the Optionee agrees, that all such
information is the Company's sole and exclusive property, and
Optionee agrees to promptly deliver all such information in
tangible form as well as all other correspondence, memoranda,
notes, records, reports, plans, customer lists and all other
papers (and copies thereof) and all electronically stored or
computerized data to the Company either upon the Company's
request or upon any termination of this Agreement. The Company
agrees to provide Optionee with access to and the right to use in
the performance of Optionee's duties to the Company the
confidential, proprietary and other business information and
trade secrets described above in this Section 16 in consideration
of the covenants of Optionee of non-disclosure and
non-competition set forth in this Section 16.
(c) All "Inventions" made or conceived by the Optionee, solely
or with others, while employed by the Company, either during or
after working hours, or within a period of one (1) year after
termination of Optionee's employment, which are useful in or
related to the business of the Company or which have been made or
conceived wholly or partially, with the use of the Company's
time, material, or facilities, shall belong exclusively to the
Company. The Optionee agrees that Optionee shall have no claim
for additional compensation for such Inventions. The Optionee
agrees promptly to disclose in accordance with Company procedures
any such Invention promptly and fully by a written report,
setting forth in detail the structures, procedures and
methodology employed and the results achieved. In addition, full
reports and records shall be kept in accordance with Company
practices during and on completion of any study or research
project undertaken on the Company's behalf, whether or not in
Optionee's opinion a given study or project has resulted in an
Invention. For purposes hereof the term "Invention" means any
discovery, concept, idea, whether patentable or not, relating to
any present or prospective activities of the Company, including,
but not limited to, devices, processes, methods, formulae,
techniques, and any improvements to any of the foregoing. The
Optionee hereby assigns and agrees to assign to the Company all
of Optionee's rights to such Inventions and to all proprietary
rights therein, based thereon or related thereto, including, but
not limited to, applications for United States and foreign
letters patent and resulting letters patent. At the request of
the Company, either before or
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after termination of Optionee's employment, Optionee shall assist
the Company in acquiring and maintaining patent protection upon
and confirming its title to such Inventions. Optionee's
assistance shall include the signing of applications for patent
assignments and other papers, and taking any other steps
considered desirable by the Company.
(d) Ancillary to, an in order to further assure that the
Optionee will not violate Optionee's covenants of non-disclosure
of confidential, proprietary and other business information of
the Company set forth in Section 16(b) hereof or Optionee's
obligations respecting Inventions under Section 16(c), and
ancillary to the rest of this Agreement and in consideration of
each of the foregoing, Optionee covenants and agrees that for the
Applicable Period (as defined below) after termination of
Optionee's employment for any reason, Optionee will not, for any
reason, anywhere in the Geographic Region (as defined below),
directly or indirectly, as an employee, employer, consultant,
agent, principal, partner, stockholder, officer, director, or in
any other individual or representative capacity:
(1) engage or participate in any business that:
(A) is engaged, directly or indirectly, in
the sale or marketing of any product that is the
same as or similar to or competitive with any
Company-Type Product which was sold or marketed by
the Company during Optionee's employment with the
Company; or
(B) is engaged, directly or indirectly in
research for or the development or manufacture of
any product that is the same as or similar to or
competitive with any Company-Type Product which was
the subject of research or development or which was
manufactured, by the Company during Optionee's
employment with the Company; or
(C) is engaged, directly or indirectly, in
the research, development, manufacture, sale or
marketing of any item made from film or non-woven
fabric bonded through a sonic bonding manufacturing
process; or
(D) is engaged, directly or indirectly, in
the research development, manufacture, use, sale or
marketing of any manufacturing equipment that (i)
uses computers in automated
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manufacturing; or (ii) is used to produce products
made of film or non-woven fabric; or (iii) uses an
automated or computerized product inspection
system, because equipment similar in function or
design to any of the foregoing equipment would be
similar to equipment developed or manufactured by
the Company during the course of Employee's
employment; or
(E) is engaged, directly or indirectly, in
the business described in clause (D) above, if such
machines or designed to be used to manufacture
Company-Type Products; or
(2) recruit, or hire, or attempt to recruit or
hire, directly or or by assisting others, any other
employee or consultant of the Company or give advice or
counsel with respect to the hiring of any person who
shall have been an employee of the Company at any time
within the two- year period immediately preceding such
hiring, advice or counsel.
(e) Ancillary to, and in order to further assure that
Optionee will not violate Optionee's covenants of non-disclosure
of confidential, proprietary and other business information of
the Company set forth in Section 16(b) herein, or Optionee's
obligations respecting Inventions under Section 16(c), and
ancillary to the rest of this Agreement and in consideration of
each of the foregoing, Optionee covenants and agrees that for the
Applicable Period after termination of Optionee's employment for
any reason Optionee will not, for any reason, anywhere outside
the Geographic Region (as defined below), directly or indirectly
as an employee, employer, consultant, agent, principal, partner,
stockholder, officer director, or in any other individual or
representative capacity engage or participate in any business
described in paragraph (d)(1) of this Section 16 if in fact such
business is shipping the products or equipment described therein
to any country included in the Geographic Region. Optionee
recognizes that the foregoing covenant is necessary to prevent
Optionee from indirectly competing with the Company in a
prohibited manner inside the Geographic Region.
(f) Geographic Region means United States, Canada, Japan,
Puerto Rico, Mexico, Australia and the countries included in the
European Economic Community; and, if Optionee was directly
engaged in selling Company-Type Products in any other country
while employed by the Company, then in such other country.
(g) If Optionee engages in Technical Activities at any
time during Optionee's employment with the Company, then, for
purposes of sections 16(d)(1)
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and (2) and 16(e), Applicable Period means:
Period For Conduct Described in Clause
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6 months (d)(1)(A)
2 years (d)(1)(B)
2 years (d)(1)(C)
2 years (d)(1)(D)
3 years (d)(1)(E)
2 years (d)(2)
and, if Optionee engages in Sales and Administrative Activities
at any time during Optionee's employment with the Company, then,
for purposes of sections 16(d)(1) and (2) and 16(e), "Applicable
Period" means:
Period For Conduct Described in Clause
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2 years (d)(1)(A)
2 years (d)(1)(B)
6 months (d)(1)(C)
6 months (d)(1)(D)
1 year (d)(1)(E)
2 years (d)(2)
If Optionee engages in Technical Activities and in Sales
and Administrative Activities during Optionee's employment with
Company then the Applicable Period shall be the longer period
designated for specific conduct.
(h) Optionee agrees to provide to any future employer a
copy of the covenants contained in this Section 16 and agrees
that the Company may do so as well.
(i) During the term of Optionee's employment, Optionee
shall not do any act that is prohibited immediately following
termination of Optionee's employment under Section 16.
(j) The ownership of less than 2% of a publicly traded
company will not, in and of itself, violate Section 16.
(k) Both the Company's rights and the Optionee's duties
under this Section 16 shall survive any termination of this
Agreement. If Optionee violates any covenant contained in
Section 16 of this Agreement, the Company shall not, as a result
of the time involved in obtaining relief, be deprived of the
benefit of the
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full period of any such covenant. Accordingly, the covenants of
Optionee contained in Section 16 shall be deemed to have the
durations specified therein, which periods shall commence upon
the later of (i) the termination of Optionee's employment with
the Company and (ii) the later to occur of: (A) the date of entry
of a final judgment enforcing the covenants of Optionee under
Section 16, as the case may be or (B) the date on which Optionee
permanently ceases such violation.
(l) The Optionee recognizes that the remedy of damages
for breach or threatened breach of the provisions of this Section
16 would be inadequate and that the harm occasioned by such
breach would be irreparable, and accordingly, Optionee expressly
agrees that in the event of a breach or threatened breach by
Optionee of any of the provisions of this Section 16, the Company
will be entitled to an injunction, without the requirement of
posting bond, restraining Optionee from violating the terms
hereof, or from rendering services to any person, firm,
corporation, association, or other entity to whom any
confidential information concerning or relating to the business
of the Company has been disclosed or may be threatened to be
disclosed, or for whom Optionee is working or rendering services,
or threatens to work or render services in violation of the terms
hereof. Nothing herein shall be construed as prohibiting the
Company from pursuing any other remedies available to it for
breach or threatened breach of this Section 16, including
recovery of damages from Optionee. Optionee's allegation of or
the existence of any claim against the Company, under this
Agreement or otherwise, will not constitute a defense to the
Company's enforcement of this Section.
(m)
(1) The parties recognize and agree that it may be
difficult if not impossible for the Company to prove the
existence of a breach of the Optionee's covenants of
confidentiality and non- disclosure under Section 16(b)
of this Agreement. The parties further recognize and
agree that the non-competition covenants contained in
Section 16(d) are necessary to support the legitimate
business interests of the Company in preserving the
confidentiality and secrecy of and control over such
confidential information and its business goodwill and are
ancillary to, supportive of, and a part of this Agreement,
are ancillary to the Company's undertaking to facilitate
Optionee's stock ownership in the Company, and are
necessary as a means of ensuring compliance by Optionee
with such confidentiality covenants.
(2) The existence of any claim or cause of action
of Optionee against the Company or any officer, director,
or shareholder of the
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Company, that is predicated on this Agreement or
otherwise, shall not constitute a defense to the
enforcement by the Company of the covenants of the
Optionee contained in this Section 16. In addition, the
provisions of this Section 16 shall continue to be binding
upon Optionee in accordance with their terms,
notwithstanding the termination of Optionee's employment
with the Company for any reason.
(3) The parties acknowledge and agree that the
time, scope, territory and other provisions of this
Section 16 are reasonable under the circumstances. The
parties further agree that if at any time despite the
express agreement of the parties hereto, it is held
through enforcement proceedings that any portion of
Section 16 is unenforceable by reason of its being too
extensive in any respect, then it shall be interpreted and
reformed to extend only over the maximum period of time
for which it may be enforceable and over the maximum
geographical area as to which it may be enforceable and to
the maximum extent in all other respects as to which it
may be enforceable.
17. This Agreement constitutes the entire agreement between the parties
and may not be amended except by an instrument in writing executed by both
parties.
18. This Agreement has been executed and will be performed in the State
of Texas and will be governed by and construed in accordance with the laws of
the State of Texas subject to the extent limited in Section 20 hereof.
19. If any one or more provisions of this Agreement shall be held to be
invalid, illegal or unenforceable in any respect in any jurisdiction, the
validity, legality or enforceability of the remaining provisions of this
Agreement in such jurisdiction shall not in any way be affected or impaired
thereby. Further, in lieu of such invalid, illegal, or unenforceable
provision, there shall be deemed inserted a provision as close in scope and
content to such provision as possible while remaining valid, legal and
enforceable in such jurisdiction.
20.
(a) Any dispute arising out of or relating to the
interpretation, validity, or enforcement of Section 16 of this Agreement
shall be settled by binding arbitration in accordance with the then
current commercial Arbitration Rules of the American Arbitration
Association. Either party may initiate an arbitration proceeding in
accordance with such Rules. The arbitration shall be conducted by a
panel of three independent arbitrators appointed in accordance with such
Rules. The arbitration shall be governed solely by the United States
Arbitration Act notwithstanding any other provision of this
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Agreement to the contrary. If the arbitrators determine that a breach
of any of the provisions of Section 16 has occurred or is threatened
then, at the request of the Company, the arbitrators shall award
temporary or permanent injunctive relief in favor of the Company, as it
may request, restraining and enjoining any further such breach. Such
award shall be in addition to and not in lieu of any other relief to
which the Company may be entitled, including, without limitation,
damages arising out of any such breach. The arbitrators shall enter any
award in form sufficient to permit judgment upon the award to be entered
by, and to permit an order for contempt enforcing compliance ith such
judgment to be entered by, a court of competent jurisdiction.
(b) Prior to the hearing on the merits in an arbitration
proceeding to enforce theprovisions of Section 16 hereof, in order to
maintain the status quo pending such hearing,the Company shall have the
right to seek and obtain temporary or preliminary injunctive relief from
a court of competent jurisdiction restraining Optionee from violating
theprovisions of Section 16.
21. This amended and restated Agreement is amended on July 26, 1996,
with the effective date of the amendment being November 20, 1995, in order to
give effect to the intention of the parties and correct the mutual mistake of
the parties regarding certain provisions governing the transferability of the
shares subject hereto as required by the Option Plan, and supercedes the
previously executed Agreement dated November 20, 1995.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
TECNOL MEDICAL PRODUCTS, INC.
By: /s/ VAN HUBBARD
-----------------------------------------
President
/s/ JEFFREY A. NICK
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Optionee
704 Giltin Court
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Street address
Arlington TX 76006
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City State/County Zip Code
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