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EXHIBIT 10.24
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into this 24th day
of August 1998, by and between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (the "Executive") and APACHE
MEDICAL SYSTEMS, INC. (the "Company").
WHEREAS, the Company wishes to retain the services of the Executive,
and
WHEREAS, Executive desires to be employed by the Company,
NOW, THEREFORE, in consideration of the promises and mutual agreements
made herein, and intending to be legally bound hereby, the Company and
Executive agree as follows:
1. Employment Term. Subject to Section 7, the term of this
Agreement shall be from September 14, 1998 through September 14, 2000. Should
the Parties wish to extend this Agreement beyond September 14, 2000, the
Parties shall enter into a renewal agreement delineating the terms and
conditions of Executive's employment no later than July 14, 2000.
2. Employment Duties. Executive will serve as Vice President and
General Counsel of the Company subject to the direction of the Chief Executive
Officer and the Board of Directors. Executive shall be fully responsible for
all facets of the Company's legal function, including the supervision and
management of outside counsel. Executive agrees to perform and discharge the
duties assigned to her to the Company's reasonable satisfaction. In performing
such duties, Executive agrees to comply fully with all of the Company's
policies and standards and to follow the lawful instructions and directives of
the Chief Executive Officer and Board of Directors. Executive agrees to devote
her full professional time, skills and best efforts to the business of the
Company and will not, during the term of this Agreement, engage (whether or not
during normal business hours) in any other business or professional activity,
whether or not such activity is pursued for gain, profit or other pecuniary
advantage, without the prior written authorization of the Chief Executive
Officer or the Board of Directors.
3. Compensation.
(a). Base Annual Salary. For all services rendered by
Executive under this Agreement, the Company will pay Executive a base salary of
$150,000 per annum, in equal bi-weekly installments, which shall be subject to
review annually by the Compensation Committee of the Board of Directors. The
Company shall withhold federal and state income and employment taxes from the
salary amounts it disburses to Executive under this Section.
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(b). Performance Bonus. Executive may be eligible to
receive an annual performance bonus based on the Company's achievement of
revenue and operating profit targets.
4. Benefits.
(a). Executive will be entitled during the term of this
Agreement to three (3) weeks paid vacation and sick leave benefits as provided
by the Company's standard policies. Additionally, Executive shall be entitled
during the term of this Agreement to other benefits as may be provided from
time to time by the Company to its employees if and when she meets the
eligibility requirements for such benefits. The Company reserves the right to
change or discontinue any employee benefit plans or programs now being offered
to its employees and their dependents.
(b). The Company shall reimburse Executive for all
reasonable expenses incurred in connection with the performance of her duties
under this Agreement pursuant to the Company's standard business expense
reimbursement policies.
(c). The Company shall reimburse Executive up to $1,000
annually for the cost of Executive's California state bar dues and Executive's
attendance at a continuing legal education program(s) for up to three business
days each year. Additionally, the Company will reimburse Executive for the
reasonable travel expenses that she incurs as a result of her participation in
such programs.
5. Signing/Relocation Bonus. The Company shall provide Executive
a signing/relocation bonus in the amount of $20,000. This sum will be
disbursed to Executive as follows: (i) $5,000 will be paid thirty (30) days
after the date this Agreement is fully executed by the Parties; (ii) $5,000
will be paid sixty (60) days after Executive commences employment with the
Company; (iii) $5,000 will be paid ninety (90) days after Executive commences
employment with the Company; and (iv) $5,000 will be paid upon Executive's
execution of a written commitment to purchase, or rent for a minimum of twelve
(12) months, a residence in the Washington Metropolitan area.
6. Stock Options. Upon Executive's execution of this Agreement,
Executive will be eligible to receive 50,000 incentive stock options in the
Company (the "Incentive Stock Options") in accordance with the provisions and
requirements of the Incentive Stock Option Agreement attached as Exhibit 1 to
this Agreement.
7. Termination.
(a). For Cause. Notwithstanding any other provision of
this Agreement, the Company may terminate Executive's employment for cause at
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any time without notice. For purposes of this Agreement, "cause" shall mean
the Executive's (i) commission of an action against or in derogation of the
interests of the Company which constitutes an act of fraud, dishonesty, or
moral turpitude, or which, if proven in a court of law, would constitute a
violation of a criminal code or similar law; (ii) by reason of mental or
physical incapacity or disability, becoming unable to perform the essential
functions of her position for a period of ninety (90) days; (iii) material
breach of any material duty or obligation imposed upon the Executive by the
Company; or (iv) divulging the Company's confidential information. If the
Executive is terminated pursuant to this Section 7(a), the Company's
obligations under this Agreement shall cease, and, except as required by
applicable law, Executive shall forfeit all rights to receive any other
compensation or benefits under this Agreement, except that she shall be
entitled to her base salary for services rendered through the date of
termination and accrued but unpaid vacation benefits through the effective date
of termination. Additionally, Executive shall be entitled to any shares
resulting from the exercise of vested Incentive Stock Options, provided that
such options have been exercised either prior to or at the time the Company
notifies her of her termination. Termination of the Executive pursuant to this
Section 7(a) shall not relieve her of her obligations under Sections 10, 11 and
12.
(b). Without Cause. Notwithstanding any other provision
of this Agreement, the Company may terminate Executive's employment and this
Agreement without cause by providing Executive thirty (30) days written notice,
provided that in the event of such termination, Executive shall be entitled to
all vested Incentive Stock Options, which may be exercised as defined in this
Agreement, and continuation of her salary and Company-paid health benefits for
six (6) months after the effective date of her termination. The Company will
also continue Executive's life insurance and disability benefits during this
six (6) month period to the extent that the terms of its group insurance
policies and/or plans extend coverage to non-employees. Additionally, any
Incentive Stock Options that would have vested in the three months after the
effective date of Executive's termination will be accelerated to, and vest on,
the effective termination date. Executive's vested Incentive Stock Options may
be exercised three (3) months after the effective date of her termination.
(c). Material Change in Responsibilities. Notwithstanding
any other provision of this Agreement, should the Company materially change
Executive's responsibilities, Executive may provide the Company thirty (30)
days written notice of her objection to such change. The Company shall be
afforded sixty (60) days from receipt of such notice to respond to and cure
Executive's objection(s). Should the Company fail to restore Executive's
responsibilities in full during this sixty (60) day period, Executive shall be
entitled to resign and such resignation for purposes of salary and benefit
continuation and vesting, shall be treated as a termination without cause as
defined in Section 7(b). For purposes of this Section, a "material change in
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responsibility" shall mean a material change in her duties or authority.
8. Termination Due to Change in Control.
(a). Defined. For purposes of this Agreement, a "change
in control" is: (1) the purchase or other acquisition by any person, entity or
group of persons, within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934 or any comparable successor provisions, of
beneficial ownership (within the meaning of Rule 13D-3 promulgated under such
Act) of thirty percent (30%) or more of either the outstanding shares of common
stock or the combined voting power of the Company's then outstanding voting
securities entitled to vote generally; (2) the approval by the stockholders of
the Company of a reorganization, merger or consolidation, in each case, with
respect to which persons who were stockholders of the Company immediately prior
to such reorganization, merger or consolidation do not, immediately thereafter,
own more than thirty percent (30%) of the combined voting power entitled to
vote generally in the election of directors of the reorganized, merged or
consolidated Company's then outstanding securities; (3) a liquidation or
dissolution of the Company; or (4) the sale of all or substantially all of the
Company's assets.
(b). In the event that a change in control results in
either an involuntary termination of Executive through elimination of her
position or transfer of Executive to a location outside of a 50-mile radius of
the Company's office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ in McLean, Virginia, Executive
shall be entitled to all Incentive Stock Options which have vested or are
otherwise due to vest pursuant to Section 10 of the Executive's Incentive Stock
Option Agreement with the Company, and continuation of her salary and
Company-provided health, disability and life insurance benefits for six (6)
months as provided in Section 7(b).
(c). In the event of Executive's termination pursuant to
Section 8(b), Executive may, at her sole option, elect to receive payment of
her six (6) months salary in the form of a lump sum distribution, less
applicable withholdings, which shall be payable within twenty (20) days of the
effective date of her termination. Executive's election to such a lump sum
distribution shall not diminish Executive's obligations under Sections 10, 11
and 12.
(d). A "change in control" will not effect or diminish
Executive's rights and obligations under any provision of this Agreement,
including, without limitation, Sections 10, 11 and 12.
9. Selection of Chief Executive Officer. In the event that the
Board of Directors selects a new Chief Executive Officer, other than Executive
or ▇▇▇▇▇ ▇▇▇▇▇▇▇, during the term of this Agreement, Executive shall notify the
Board in writing of any objections she may have to the newly elected Chief
Executive Officer within sixty (60) days of his or her selection. The Board
shall thereafter
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be afforded forty-five (45) days to resolve and redress Executive's concerns.
Should the Board fail to redress Executive's objections to her satisfaction,
Executive may resign her employment and receive the salary and continuation of
her benefits as provided in Section 7(b).
10. Confidentiality. In the course of performing her duties under
this Agreement, Executive will have access to "Confidential Information."
Executive agrees and acknowledges that this Confidential Information
constitutes a valuable and unique asset of the Company and that its protection
is of critical importance to the Company. To ensure that such Confidential
Information is not disclosed or divulged to third persons, Executive agrees as
follows:
(a). that Confidential Information is owned by the Company
and is to be held by Executive in trust and solely for the benefit of the
Company;
(b). that she shall not disclose or otherwise make
available such Information to any person or entity without the prior written
authorization of the Board of Directors of the Company, except as necessary for
the performance of Executive's services under this Agreement;
(c). that she shall not in any way utilize such
Confidential Information for the gain or advantage of Executive or others or to
the detriment of the Company; and
(d). that upon termination of this Agreement, she shall
promptly return any and all such Confidential Information to the Company and
shall continue to abide by the confidentiality provisions of this Section.
For purposes of this Agreement, "Confidential Information" shall
include, but not be limited to, information that has been created, discovered,
developed, or otherwise become known to APACHE (including, without limitation,
information created, discovered, developed, or made known by Executive during
the period of this Agreement) and/or in which property rights have been
assigned or otherwise conveyed to APACHE, which information has commercial
value in the business in which APACHE is or may become engaged. By way of
illustration, but not limitation, Confidential Information includes trade
secrets, processes, structures, formulas, data and know-how, improvements,
inventions, product concepts, techniques, marketing plans, strategies,
forecasts, customer lists and information about APACHE's employees and/or
consultants (including without limitation, the compensation, job responsibility
and job performance of such employees and/or consultants). Additionally,
Confidential Information shall include certain information that has been made
known to APACHE from third parties, including, but not limited to, patient
identifying information, physician identifying information, information that
would link a client's name to individual data, and any information protected by
a confidentiality agreement or terms and conditions of an agreement regarding
confidentiality.
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11. Non-Competition. Executive agrees and acknowledges that the
Company has a legitimate and necessary interest in protecting its goodwill,
customer and client relationships, and Confidential Information. Consistent
with that interest, Executive agrees that during the term of this Agreement and
for a period of twelve (12) months following her receipt of notice of
termination under Section 7, that she will not, directly or indirectly, own,
manage, control, participate in, consult with, render services to or otherwise
engage in any Competitive Business, or solicit or assist any other person to
engage in any Competitive Business.
(a). For purposes of this Agreement, "Competitive
Business" is defined as (1) all entities and/or individuals with whom the
Company has a contract to provide support and services; (2) entities and/or
individuals that the Company has identified on its key prospect list at the
time Executive receives notice of her termination; and/or (3) any other
business engaged in developing, selling, licensing or otherwise merchandising
computer programs, databases and related manuals, service and/or know-how for
the purpose(s) of: (i) managing the quality and utilization of patient care or
related services using outcomes management applications; or (ii) assessing
and/or predicting mortality and other treatment outcomes of hospital patients
or outpatients; or (iii) otherwise recording patient health factors in
connection with predicting their treatment, managing clinical productivity or
containing costs through the use of outcomes management applications.
Ownership of not more than three percent (3%) or the outstanding securities of
any class of any corporation that are listed on a national securities exchange
or traded in the over-the-counter market shall not constitute ownership of a
Competitive Business within the meaning of this provision. If the Company
expands, diminishes and/or changes the scope of its business during the term of
this Agreement, the definition of Competitive Business hereunder will be
considered automatically revised to incorporate any such expansion, diminution
and/or change.
12. Non-Solicitation.
(a). Executive agrees that during the term of this
Agreement and for a twelve (12) month period following her receipt of notice of
her termination under Section 7, she will not, directly or indirectly, without
the prior written consent of the Company, solicit or attempt to solicit
Competitive Business from any individual or entity that was a customer of the
Company at any time during the six (6) month period immediately prior to
Executive's termination of employment with the Company.
(b). Executive agrees that during the term of this
Agreement and for a twelve (12) month period following her receipt of notice of
her termination under Section 7, she will not, directly or indirectly, without
the prior written
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consent of the Company, solicit or induce any employee of the Company to leave
the employ of the Company or hire for any purpose any employee of the Company.
13. Remedies. Executive agrees and acknowledges that the
violation of any of the covenants or agreements contained in Sections 10, 11
and 12 would cause irreparable injury to the Company, that the remedy at law
for such violation or threatened violation would be inadequate, and that the
Company will be entitled, in addition to any other remedy, to temporary
injunctive or other equitable relief without the necessity of proving actual
damages or posting a bond.
14. Notices. Any notice or communication under this Agreement
will be in writing and sent by registered or certified mail addressed to the
respective parties as follows:
If to the Company: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Chief Executive Officer
APACHE Medical Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Notice to Executive: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Executive shall notify the Company by certified mail of any change in
her address, and thereafter, the Company shall forward any notices under this
Agreement to Executive at such new address.
15. Entire Agreement. This Agreement embodies the entire
agreement of the Parties relating to Executive's employment and supersedes all
prior agreements, oral or written. No amendment or modification of this
Agreement shall be valid or enforceable unless made in writing and signed by
the Parties.
16. Assignment. This Agreement is one for personal services and
may not be assigned by Executive to a third party.
17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia.
18. Severability. Should one or more of the provisions of this
Agreement be held invalid or unenforceable by a court of competent
jurisdiction, such provisions or portions thereof shall be ineffective only to
the extent of such invalidity or unenforceability, and the remaining provisions
of this Agreement or portions thereof shall nevertheless be valid, enforceable
and remain in full force and effect. The Company's rights under this Agreement
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shall not be exclusive and shall be in addition to all other rights and
remedies available at law or in equity.
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ APACHE MEDICAL SYSTEMS, INC.
By:
--------------------------------
----------------------------------- ------------------------------------
Date Date
1528987
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Exhibit 1
APACHE MEDICAL SYSTEMS, INC.
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement (this "Agreement"), dated as of
September 14, 1998, (the "Grant Date"), is by and between APACHE Medical
Systems, Inc., a Delaware corporation (the "Corporation"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
(the "Optionee"), a key employee of the Corporation.
1. Grant of Option. Subject to the provisions of the APACHE
Medical Systems, Inc. Employee Stock Option Plan (the "Plan") and this
Agreement, the Corporation hereby grants to the Optionee the right and option
(the "Option") to purchase from the Corporation an aggregate of 50,000 shares
of the Corporation's common stock, par value $0.01 per share (the "Shares"), at
an exercise price of $1.2190 per Share.
2. Vesting and Expiration. The option rights of the Optionee
will be exercisable until September 14, 2008, provided that they have vested
and, except as otherwise expressly provided in this Agreement, the Optionee is
employed by the Corporation. The Option shall vest as provided on Exhibit A
hereto.
3. Exercise Following Termination of Employment. If the Optionee
ceases to be an employee of the Corporation, the outstanding portion of the
Option shall be exercisable only in accordance with the following provisions:
(a) If the Optionee's employment with the Corporation
is terminated for "cause" (as defined below), the outstanding portion of the
Option, whether or not vested, shall terminate at the time notice of
termination is effective. As used herein, "cause" means the Optionee's (i)
commission of an action against or in derogation of the interests of the
Corporation which constitutes an act of fraud, dishonesty or moral turpitude or
which, if proven in a court of law, would constitute a violation of a criminal
code or similar law; (ii) material breach of any material duty or obligation
imposed upon the Optionee by the Corporation; or (iii) divulging the
Corporation's confidential information.
(b) If the Optionee's employment with the Corporation
is terminated for any reason other than for cause (as defined above), death or
disability (as defined below), the outstanding portion of the Option (to the
extent vested prior to such termination) shall remain exercisable until the
first to occur of (i) the expiration date referred to in Section 2, and (ii)
the expiration of three months from the effective date of termination, provided
that if the Optionee ceases to be employed by the Corporation by reason of
death or disability, the period referred to in this clause (ii) shall be one
year following the date the Optionee ceases to be an employee of the
Corporation. If the Optionee dies during such three-month period referred to
in clause (ii), his or her estate may exercise the Option (to the extent such
Option was vested and exercisable prior to death), but not later than the
earlier of one year after the date of death or the expiration of the term of
the Option. As used herein, "disability" means the inability of the Optionee
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or has lasted or can be expected to
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last for a continuous period of not less than 12 months.
4. Acceleration Following Termination Other Than for Cause. In
the event Optionee's employment is terminated other than for cause, any Shares
as to which the Option has not vested on the effective date of termination that
would have vested during the three (3) months after the effective date of
Optionee's termination will be accelerated to, and vest on, the effective date
of Optionee's termination. Any Shares as to which the Option has not vested on
the effective date of termination will be cancelled.
5. Limitation on Exercisability. Notwithstanding any other
provision hereof, including, without limitation, Sections 4, 9 and 10, the
Shares that may be purchased for the first time during any calendar year
pursuant to the Option, together with any other options issued to the Optionee
by the Corporation intended to be incentive stock options (as defined in
Section 422 of the Internal Revenue Code of 1986, as amended from time to time,
or subsequent comparable statute (the "Code")), shall not have a Fair Market
Value (as defined in Section 9 hereof and determined as of the respective Grant
Dates of such options) in excess of $100,000.
6. Exercise. The Option may be exercised by delivering to the
Corporation at its principal offices a written notice, signed by a person
entitled to exercise the Option, of the election to exercise the Option and
stating the number of Shares to be purchased. Such notice shall be accompanied
by the payment of the full exercise price of the Shares to be purchased. Upon
payment in accordance with the Plan and within the time period specified by the
Corporation of the amount, if any, required to be withheld for Federal, state
and local tax purposes on account of the exercise of the Option, the Option
shall be deemed exercised as of the date the Corporation received such notice.
The Corporation may withhold, or allow the Optionee to remit to the
Corporation, any Federal, state or local taxes required by law to be withheld
with respect to any event giving rise to income tax liability with respect to
the Option. In order to satisfy all or any portion of such income tax
liability, the Optionee may elect to surrender Shares previously acquired by
the Optionee or to have the Corporation withhold Shares that would otherwise
have been issued to the Optionee pursuant to the exercise of the Option, the
number of such withheld or surrendered Shares to be sufficient to satisfy all
or a portion of the income tax liability that arises upon the event giving rise
to income tax liability with respect to the Option. Payment of the full
exercise price shall be in the form of cash, shares of capital stock of the
Corporation having a Fair Market Value (as defined in Section 9 hereof) on the
date of exercise equal to the full exercise price, or by any combination of
cash and shares of such capital stock. Upon the proper exercise of the Option,
subject to the other provisions of this Agreement, the Corporation shall issue
in the name of the person exercising the Option, and deliver to such person, a
certificate or certificates for the Shares purchased.
7. Nontransferability of Option. The Option shall not be
transferable by the Optionee except by will or the laws of descent and
distribution. Without limiting the generality of the foregoing, the Option
shall not be sold, transferred except as aforesaid, assigned, pledged or
otherwise encumbered or disposed of, shall not be assignable by operation of
law, and shall not be subject to execution, attachment or similar process. Any
attempted sale, transfer, pledge, assignment or other encumbrance or
disposition of the Option contrary to the provisions hereof,
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or the levy of any execution, attachment or similar process upon the Option,
shall be null and void and without effect. During the lifetime of the
Optionee, the Option may be exercised only by the Optionee or the Optionee's
agent, attorney-in-fact or guardian. Following the death of the Optionee, the
Option may be exercised by the Optionee's beneficiary or estate to the extent
permitted by Section 3.
8. Notice of Transfer of Shares. The Optionee may not transfer or
otherwise dispose of any Shares purchased upon the exercise of the Option
before the expiration of (a) two years from the Grant Date or (b) one year
after the exercise of the Option with respect to such Shares, whichever occurs
later, without first giving written notice to the Secretary of the Corporation.
9. Adjustments Upon Reorganization or Changes in Capitalization.
In the event of a stock split, stock dividend, recapitalization,
reclassification or combination of shares, merger, sale of assets or similar
event, the Compensation Committee of the Board of Directors shall adjust
equitably (a) the number and class of Shares or other securities that are
reserved for issuance under the Option, (b) the number and class of Shares or
other securities that are subject to the Option, and (c) the appropriate Fair
Market Value and other price determinations applicable to the Option. The
Compensation Committee of the Board of Directors shall make all determinations
under this Section 9, and all such determinations shall be conclusive and
binding. As used herein, "Fair Market Value" means the amount determined by
the Compensation Committee of the Board of Directors from time to time, using
such good faith valuation methods as it deems appropriate, except that as long
as the Shares are traded on NASDAQ or a recognized stock exchange, it shall
mean the average of the highest and lowest quoted selling prices for the Shares
on the relevant date, or, if there were no sales on such date, the weighted
average of the means between the highest and the lowest quoted selling prices
on the nearest day before and the nearest day after the relevant date, as
prescribed by Treasury Regulation Section 20.2031-2(b)(2), as reported in The
Wall Street Journal or a similar publication selected by the Compensation
Committee of the Board of Directors.
10. Acceleration of Exercisability. Notwithstanding the provisions
of Section 2, the Option shall immediately vest, and until the expiration date
specified in Section 2 shall remain, exercisable as to all of the Shares
forthwith upon the occurrence of any Change in Control of the Corporation. As
used herein, "Change in Control" means the purchase or other acquisition by any
person, entity or group of persons, within the meaning of Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "Exchange Act") or any
comparable successor provisions, of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either the
outstanding Shares or the combined voting power of the Corporation's then
outstanding voting securities entitled to vote generally; the approval by the
stockholders of the Corporation of a reorganization, merger, or consolidation,
in each case, with respect to which persons who were stockholders of the
Corporation immediately prior to such reorganization, merger or consolidation
do not, immediately thereafter, own more than 30% of the combined voting power
entitled to vote generally in the election of directors of the reorganized,
merged or consolidated Corporation's then outstanding securities; a liquidation
or dissolution of the Corporation; or of the sale of all or substantially all
of the Corporation's assets.
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11. Miscellaneous.
(a) Notices. Any notice hereunder shall be in
writing, and delivered or sent by first-class U.S. mail, postage prepaid,
addressed to:
(i) if to the Corporation, at:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and
(ii) if to Optionee, at:
subject to the right of either party, by written notice hereunder, to designate
at any time hereafter some other address.
(b) Compliance with Law and Regulations. The
Option and the obligation of the Corporation to sell and deliver Shares
hereunder shall be subject to all applicable Federal and state laws, rules and
regulations and to such approvals by any government or regulatory agency as may
be required. Notwithstanding any other provision of this Agreement, the Option
may not be exercised if its exercise, or the receipt of Shares pursuant
thereto, would be contrary to applicable law.
(c) No Rights as Stockholder. The Optionee shall
have no rights as a stockholder with respect to any Shares subject to the
Option prior to the date of issuance to the Optionee of a certificate or
certificates for such Shares.
(d) No Employment Rights. Nothing in the Plan,
this Agreement or the grant of an Option shall confer upon the Optionee any
rights to continued employment with the Corporation or shall interfere with the
right of the Corporation to terminate the Optionee's employment with the
Corporation.
(e) Section 83(b) Election. If the Optionee
elects, in accordance with Section 83(b) of the Code, to recognize ordinary
income in the year in which the Option is granted, the Optionee shall furnish
to the Corporation a copy of a completed and signed election form and shall pay
(or make arrangements satisfactory to the Corporation to pay) to the
Corporation, within sixty (60) days after the Grant Date, any Federal, state
and local taxes required to be withheld with respect to the Option.
(f) Withholding. The Corporation shall, to the
extent permitted by law, have the right to deduct from any payment of any kind
otherwise due to the Optionee any Federal, state and local taxes required by
law to be withheld or collected with respect to the Option.
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(g) Reservation of Shares; Certain Costs. The
Corporation shall keep available sufficient authorized but unissued Shares
needed to satisfy the requirements of this Agreement. The Corporation shall pay
any original issue tax that may be due upon the issuance of Shares pursuant to
the Option and all other costs incurred by the Corporation in issuing such
Shares.
(h) Employment by Affiliates. For the purpose of
this Agreement, employment by a parent or subsidiary of, or a successor to, the
Corporation shall be considered employment by the Corporation. "Parent" and
"subsidiary" as used herein shall have the meaning of "parent" and "subsidiary
corporation," respectively, as defined in Section 424 of the Code.
(i) Plan Governs. The Optionee hereby
acknowledges receipt of a copy of the Plan and agrees to be bound by its terms,
all of which are incorporated herein by reference. The Plan shall govern in the
event of any conflict between this Agreement and the Plan.
(j) Choice of Law. This Agreement shall be
construed in accordance with and be governed by the laws of the State of
Delaware.
(k) Counterparts. This Agreement may be executed
in two counterparts each of which shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
APACHE MEDICAL SYSTEMS, INC.
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By: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Optionee
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EXHIBIT A
Vesting
The Option shall vest with the passage of time and subject to the
Corporation's performance as follows:
1. Six-Month and Annual Vesting. The Option shall vest during the
period of the Optionee's employment with the Corporation commencing six months
after the date Optionee begins employment with the Corporation (the "Start
Date") as follows:
Tranche Number of Shares Vesting Date
------- ---------------- ------------
Six-Month 10,000 Six Months After Start Date (Mar. 14, 1999)
(A) 10,000 1st Anniversary After Start Date (Sept. 14, 1999)
(B) 10,000 2nd Anniversary After Start Date (Sept. 14, 2000)
(C) 10,000 3rd Anniversary After Start Date (Sept. 14, 2001)
(D) 10,000 4th Anniversary After Start Date (Sept. 14, 2002)
2. Accelerated Vesting. At the discretion of the Board of
Directors, vesting of the Tranches referred to below may be accelerated if both
Earnings (defined as earnings before interest and taxes as reported by the
Corporation plus any agreed upon nonrecurring charges or writedowns as long as
these relate to pre-________, 1998 assets or activities) and stock price
performance targets are satisfied, but not necessarily simultaneously, as
follows:
Tranche Earnings Target AND Stock Price Target
------- --------------- ------------------
(A) Any two consecutive Closing price of $6 or
quarters in which the higher for 20 consecutive
Corporation reports trading days
positive Earnings
(B) Any four consecutive Closing price of $9 or
quarters in which the higher for 30 consecutive
Corporation reports trading days
positive Earnings
(C) Earnings greater than Closing price of $12 or
$1.0 million for any four higher for 60 consecutive
consecutive quarters of trading days
Earnings as reported in
the Corporation's Form 10-K
and Forms 10-Q filed with
the Securities and
Exchange Commission
(D) Earnings greater than Closing price of $15 or
$3.0 million for any four higher for 60 consecutive
consecutive quarters of trading days
Earnings as reported in
the Corporation's Form 10-K
and Forms 10-Q filed with
the Securities and
Exchange Commission
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