  |
|||
| home > publications/news > by-lines | Careers | Contact Us | Site Map | ||
|
Appendix B for Non-competition Covenants and Protection of Trade Secrets and Other Intellectual Property in Employment Agreementsby Lee Carl Bromberg Drafting Termination Documents © 1996 Lee Carl Bromberg Revised March, 1995 Appendix B Guidelines of Company Principles and Practices Lablaw, Inc. and Subsidiaries (Collectively referred to as "Lablaw") EXCELLENCE LABLAW's reputation as a leader in medical apparatus technology and related scientific fields is based, to a large extent, on the excellence of its technology and products and on the skill and superior performance of its personnel. We shall endeavor to provide our customers with quality products, and, when we are involved in research and development work, we will use our best efforts to achieve the results for which we have been engaged. We shall ensure that our promotional material, proposals, quotations, reports, specifications, scientific and medical publications, application guides, news releases, and other description literature accurately depict our products or developments and are free from exaggeration and misleading information. CONFLICT OF INTEREST The guiding principle of our policy on this matter is that all employees must avoid situations in which their personal interests may conflict, or appear to conflict, with the interests of LABLAW. At the same time, LABLAW does not wish to infringe on the personal lives or affairs of employees. For example, we respect the rights of our employees to manage their own financial affairs and investments. However, an employee assumes certain obligations when joining LABLAW or accepting a position of responsibility in the organization, and LABLAW naturally expects all employees to respect its interests. All of us can recognize clear-cut cases of dishonesty. Conflicts of interest may be more difficult to detect, and sometimes it is only a matter of degree between an acceptable and an unacceptable activity. The responsibility for conduct within the letter and the spirit of this policy must rest with each individual. However, we want to stress that it is important to avoid not only any situation that is an obvious conflict of interest but also a situation that might give the appearance of being one. It is not possible to list every situation that might give rise to conflict of interest, but the following pages shall serve as a guide, pointing out important areas where conflicts may arise: Employees shall select and deal with suppliers, customers, and other persons doing or seeking to do business with LABLAW in a completely impartial manner, without favor or preference based upon any considerations other than the best interests of LABLAW. Employees shall not seek or accept, directly or indirectly, any benefits or other favors of more than nominal value, including any payments, fees, services or loans from any person or entity that does or seeks to do business with, or is in competition with, LABLAW, except where such favors have been disclosed to LABLAW and LABLAW has given specific approval and authorization. This does not prohibit employees from borrowing money from a financial institution at normal and customary interest rates without the approval and authorization of LABLAW. Employees shall not own, directly or indirectly, a significant financial interest in any business entity that does or seeks to do business with, or is in competition with, LABLAW except where such interest has been fully disclosed to LABLAW and a determination has been made that such interest will not influence any decision that such person might be required to make in performing duties for LABLAW. As a guide for the purpose of determining the necessity for disclosure, ownership in such business entity shall be deemed significant if the aggregate interest of the employee and family members represents:
Members of the family include the employee's spouse, children, parents, brothers, and sisters. Employees shall not conduct business on behalf of LABLAW with a relative or a business entity with which the employee or a relative is associated, except where such dealings have been disclosed to LABLAW and LABLAW has given specific approval and authorization. Employees shall not offer consultation or conduct business or offer their professional services for personal interest, or in the interest of family members, to any business entity outside of LABLAW where such professional services are of the same general nature as the employee's professional function at LABLAW. Employees shall not accept a directorship or other managerial position in, or serve as a consultant or employee of, a business entity, organized for profit, that does or seeks to do business with, or is in competition with, or is in competition with, LABLAW, without receiving specific approval from LABLAW. Employees shall not acquire, directly or indirectly, real estate, an interest in any business entity, or any other property that such employee knows, or has reason to believe, may be of acquisition interest to LABLAW. Employees shall have the continuing affirmative duty to report to the Chief Executive Officer of LABLAW any personal ownership interest or other relationship that might affect their ability to exercise impartial, ethical business judgments in the area of their responsibilities. Each situation reported shall be reviewed by LABLAW and a determination shall be made as to whether a conflict of interest exists or may arise from such a situation. All employees shall give LABLAW their fullest cooperation in the correction of any situation in which a conflict of interest exists or may arise. GIFTS AND ENTERTAINMENT In order to avoid even the appearance of impropriety, monetary gifts are strictly prohibited. LABLAW employees shall not seek or accept for themselves or any member of their families from any person or business entity that does, or seeks to do, business with LABLAW, any gifts of money or other equivalent favors. The exchange of nonmonetary gifts of a nominal or minimal value is acceptable, as is legitimate business entertainment, as long as it is not lavish and does not exceed the bounds of common courtesies consistent with ethical and business practices in the United States. CONFIDENTIALITY AND TRADE SECRETS Our position at LABLAW is one of trust and confidence. During the course of employment with LABLAW, employees may have access to, work with or develop inventions, valuable information, and materials relating to LABLAW's business that are not know or available outside LABLAW. These inventions, proprietary information, and materials are broadly called "trade secrets" and are of great importance in our highly competitive business. In order to retain their value, they must be kept confidential within LABLAW. When an individual accepts employment with LABLAW, the employee also accepts a continuing moral and legal obligation not to disclose any LABLAW trade secrets or trade secrets entrusted by others to LABLAW under a confidential obligation. In a similar fashion, if an employee was previously employed by another organization, the employee has an obligation not to disclose his/her previous employer's confidential information. The obligation to protect LABLAW's trade secrets would continue, should the employee leave LABLAW for any reason. Some innovations that LABLAW employees may develop may be patentable inventions. In such cases, employee's obligations to LABLAW include a duty to submit complete details to the Patent Committee for study and review and to cooperate with LABLAW's intellectual property attorneys if patents are to be sought. These ideas and any resulting patents are owned by LABLAW and are part of its closely guarded assets. Not all technical ideas are patentable; some are better retained as trade secrets. However, patenting is an important way of protecting LABLAW's investment in its employees. It is impossible to list all of the many types of trade secrets that exist, but a partial list would include: plans for and results of research and development, new compounds and processes, clinical testing and other evaluation procedures, product formulations, manufacturing methods, identity of special suppliers, applications to government agencies for product clearance, cost figures, construction plans, marketing and advertising studies and plans, customer lists, and special techniques of any kind peculiar to LABLAW's operations. Employees will find trade secrets disclosed or contained in memoranda, notes, laboratory or plant notebooks, reports, charts, drawings, blueprints, pictures, visual aids, samples, etc. These are examples of materials that every LABLAW employee should safeguard carefully during employment with LABLAW and leave behind as LABLAW property in the event the employee goes elsewhere. Accidental disclosure of trade secrets can be as harmful as intentional disclosure. The safest practice is avoid discussing trade secrets with anyone other than those LABLAW employees who need them in the conduct of their business. If you discuss trade secrets with others - even family members or close friends - a burden is imposed on them that they should not be expected to understand or assume. In the normal course of work, it may be necessary to reveal certain trade secrets to persons outside LABLAW - to contractors, vendors, design firms, trade and scientific groups, for example. In such instances, employees should carefully consider whether, to what extent, and to whom the trade secrets can be safely disclosed. Specific supervisory clearance may be necessary. In most cases, a confidentiality agreement approved by the Chief Executive Officer, or the Patent Committee should be executed with the outside party before the disclosure is made. When the trade secret is an invention that may be patentable, approval for release - either orally or publication - must be obtained from the employee's supervisor and the Patent Committee. It is the responsibility of each LABLAW employee to exercise proper care in preparing documents or other materials containing trade secrets, in safeguarding them from unauthorized eyes, and in circulating and storing them in a secure manner. In no event shall an employee use or disclose information of any type when such use or disclosure is in violation of the laws relating to the safeguarding of classified information. DISCLOSURE OF "MATERIAL" INFORMATION The primary objective of the federal securities laws is to ensure that the public has accurate and complete information on which to base investment decisions. These laws are designed to encourage a flow of information to the public. LABLAW's obligations under such laws will be generally met through the means of prospectuses, annual reports to shareholders, proxy statements, and periodic reports filed with the Securities and Exchange Commission. In addition, LABLAW has an obligation to announce to the public, at the proper time, "material" developments concerning its operations. Such an announcement is made through a press release, as this will ensure that accurate information is made available to all members of the investing community on an equal basis. It is not possible to define "material" information to cover every set of circumstances that might arise. We must, therefore, describe it in broad terms. It has been held that information is "material" if there is a substantial likelihood that a reasonable investor would consider it important in determining whether to buy, sell, or hold stock. Material information has also been described as information of sharp and immediate significance. If known, such information could be expected to affect substantially the market price of the stock. Examples of what would generally be considered as being "material" in this context include financial projections, significant new products or discoveries, major contract awards or major contract cancellations, acquisitions, stock splits, major management changes, significant litigation or regulatory proceedings, information about sales of our product and financial results. It is unlawful for employees who have "material" undisclosed information to take personal advantage of that information by trading in LABLAW's stock so long as the information remains undisclosed. This means that an employee in possession of "material" undisclosed information must refrain from trading LABLAW stock until LABLAW determines that the information should be released and makes the proper public disclosure, and the investing public has had a reasonable opportunity to evaluate the information. Also, an employee should not reveal material undisclosed information to outsiders such as friends, relatives, fellow employees, or former employees, who may trade on the basis of it. Such "tipping" may also be a violation of the law. EQUAL EMPLOYMENT OPPORTUNITY One of LABLAW's basic philosophies is to encourage and develop high-quality performance and excellence in all aspects of our operations. An essential ingredient in the implementation of that philosophy is the fostering of those characteristics in our employees. Because our primary focus in employment is the pursuit of excellence, we are unequivocally committed to affording equal employment opportunities to all individuals who share our commitment to excellence regardless of their race, color, religion, sex, national origin, age, or handicap. This commitment applies to all phases of an individual's career, beginning with initial recruitment and hiring and continuing through the ongoing processes of placement, transfer, promotion, and compensation. LABLAW personnel must actively ensure that all decisions affecting those matters further the principles of equal employment opportunity. We recognize our responsibilities to women, minorities, veterans, and the disabled and handicapped, and LABLAW fully supports the remedial programs instituted by the government to assist the members of these groups in achieving their rightful place in our society. LABLAW will endeavor to maintain enlightened personnel policies and practices designed to help in the successful implementation of our equal employment opportunity policy. No employee will be subject to any harassment or discrimination or to any arbitrary or capricious decisions relating to his or her work. We respect the personal privacy of every employee, and we will maintain all personnel records in the strictest confidence. Members of LABLAW's supervisory staff are responsible for the implementation of our policy, but the help and cooperation of all employees are necessary to fulfill LABLAW's commitment. COMPLIANCE WITH ANTITRUST LAWS LABLAW fully supports the principles and philosophy embodied in the antitrust laws, and it is our firm policy to comply with these laws. This brief commentary is not intended to provide employees with answers to antitrust problems. Rather, it is designed to help employees recognize situations that have antitrust aspects so that they will know when to ask for advice. Described in general terms, antitrust laws are designed to prevent unfair, restrictive, or collusive practices and thus, to promote healthy competition in open markets within the free enterprise system and enhance the benefits of product innovation. Since World War II, the European Economic Community and many countries abroad also have adopted antitrust policies. The antitrust laws are general and in some respects vague; their exact interpretation is often uncertain. Therefore, legal advice should be obtained whenever there is any doubt as to the legality of any contemplated course of action or of a proposed transaction. We must, of course, avoid the obvious antitrust violations, such as agreements with competitors to fix prices (including collusive bids), to allocate markets or customers, or to refuse to do business. All of these agreements are flagrant violations of the law. In addition, any cooperative activities in the area of pricing, such as the exchange of current or future price information or marketing plans with competitors, must be avoided. This does not mean that a manufacturer is expected to do business in a vacuum, but rather, that his information about competitor's prices and marketing activities must be obtained in the marketplace. LABLAW generally is not allowed to discriminate in favor of or against any of its customers. Also, since our customers purchase our products and thereby acquire title to them, those customers cannot by agreement or by coercion be subjected to restraints on their resale prices. Nor, as a general proposition can these customers be subjected to restraints upon where, how, or to whom the products are resold by them. Trade Association Meetings It is, of course, our practice for employees to attend trade association meetings. These include associations of customers as well as trade associations of the industries in which LABLAW is involved. However, trade association meetings are almost invariably a favorite area of examination by antitrust enforcement officials. It is important that employees be particularly careful to conduct themselves in a manner that is above suspicion when attending these meetings. The following rules should be obeyed carefully:
Joint activity or joint projects with competitors or others should be closely monitored, with the advice of legal counsel, to ensure the legality of the operation. Review by legal counsel should be obtained at any early date in connection with any such project, and also as it develops. No supplier shall be asked or be expected to buy LABLAW products or the products of affiliated companies as a condition of continuing to be a supplier. LABLAW's purchase of supplies shall not be influenced by a supplier's use of LABLAW products. It cannot be emphasized too strongly that our policy to comply with antitrust laws must be observed strictly and without hesitation. There can be no exceptions to this rule. INDIVIDUAL INVOLVEMENT IN THE POLITICAL PROCESS All employees are encouraged to exercise their right, as citizens, to support or oppose political candidates or public and civic issues as they deem appropriate. We should be careful, however, to keep the individual and personal nature of such activities clearly separate from our positions with LABLAW, and we should particularly avoid any situation from which it might be inferred that such activities have been undertaken on behalf of LABLAW. LABLAW itself may, from time to time, and as permitted by law, take an active position with respect to important public issues. Such activities, however, will only be initiated on the highest corporate level and will not, in any circumstance, indicate any attempt to unduly influence or change the personal and private position of any employee. POLITICAL CONTRIBUTIONS LABLAW is proud of the well deserved reputation for integrity of its employees, at all levels, who have demonstrated the highest standards of business conduct. This conduct must be maintained in each country where we may do business. LABLAW shall strive to be a good corporate citizen of each country and community where it does business, and to obey local laws. In the area of business ethics, LABLAW shall adhere on a worldwide basis to a uniform worldwide standard of conduct to guide our behavior. We are committed to this principle. With respect to political contributions, payments to government officials, and the maintenance of books and records, our policy is that: No political contribution shall be made by LABLAW. "Political contribution" includes a "payment" or the use of LABLAW property, employees, or services for the benefit of any political party or official thereof, political committee or candidate for political office. No payment shall be made by LABLAW to any government official for the purpose of influencing any of his acts or decisions or inducing him to use his influence to affect any governmental act or decision. "Payment means a transfer of money, a gift, or any offer or promise to give anything of value, whether made directly or indirectly, through trade associations, agents, consultants, or others. "Government official" includes any officer or employee or any person acting for or on behalf of a government or unit thereof. ACCOUNTS AND ASSETS All assets must be fully and accurately accounted for an no undisclosed or unrecorded bank accounts, funds, or assets of LABLAW or any subsidiary shall be established for any purpose. No false or artificial entries shall be made in any books or records of LABLAW for any reason, and no employee shall engage in any arrangement that results in such entries being made. No asset of LABLAW shall be disposed of without proper authorization and without a corresponding entry correctly reflecting the disposal. No payment on behalf of LABLAW shall be approved or made with the intention or understanding that a part or all of such payment is to be used for any purpose other than that described by the document supporting the payment. Chief Executive Officer
Return to "Non-Competition Covenants and Protection of Trade Secrets and Other Intellectual Property in Employment Agreements" © 2005 Bromberg & Sunstein LLP |
