SEVERANCE AGREEMENT
This Severance Agreement, which shall be effective as of September 19,
1997 is by and between Xxxxxxxx X. Xxxxx ("Xxxxx") and OrthoLogic Corp., a
Delaware corporation, ("OrthoLogic").
RECITALS
X. Xxxxx is currently employed as a Vice President of OrthoLogic.
B. The parties mutually desire to provide for an orderly termination of
Xxxxx'x employment by OrthoLogic, all on terms satisfactory to both Xxxxx and
OrthoLogic, as further set forth in this Agreement.
AGREEMENTS
In Consideration of the acts, payments, covenants and mutual agreements
contained herein, OrthoLogic and Xxxxx agree as follows:
1. Modification of Current Relationship. Effective as of September 19,
1997 (the "Date of Termination"), Xxxxx shall resign as a Vice President of
OrthoLogic. From and after the Date of Termination, Xxxxx shall have no further
rights or duties as an employee or officer for or on behalf of OrthoLogic. Xxxxx
acknowledges that OrthoLogic has no obligation to recall or reemploy Xxxxx in
the future. Xxxxx acknowledges that OrthoLogic was not obligated to provide the
consideration described in this Agreement and that such consideration
constitutes a benefit that is being provided to Xxxxx in exchange for and in
consideration for his promises, covenants and releases contained in this
Agreement.
2. Severance Payment. So long as Xxxxx continues to comply with all
requirements of this Agreement, and provided Xxxxx does not cancel this
Agreement as provided in Paragraph 6, Xxxxx shall also be entitled to the
benefits described in Paragraphs 2 and 3. OrthoLogic agrees to pay to Xxxxx an
amount equal to 12 months base
salary ($135,000 less applicable withholdings), over a 12-month period beginning
September 19, 1997, at the times and in the amounts that are presently paid to
Xxxxx in accordance with the normal payroll procedures of OrthoLogic.
3. Additional Benefits. OrthoLogic agrees to pay Xxxxx'x standard
premium for health benefits through September 30, 1997 and acknowledges that he
is entitled to be paid for two weeks of accrued vacation. OrthoLogic will
continue to pay the employer portion of Xxxxx'x COBRA premiums for medical and
dental coverage through December 31, 1997. OrthoLogic hereby transfers ownership
to Xxxxx of the used Zaurus 5800 used by him in connection with his employment.
OrthoLogic agrees to pay $9,400 for expenses incurred by Xxxxx in seeking new
employment, $7,500 of which may be paid to an out-placement firm designated by
Xxxxx, and the balance of which shall be reimbursed to Xxxxx upon proper
documentation of such expenses. OrthoLogic shall extend the date on which
Xxxxx'x vested options expire until March 31, 1998; and Xxxxx agrees to consult
with his own advisors concerning the tax effect of such extension and any
exercise of such options and sale of the underlying stock.
4. Release and Covenant Not to Xxx. Except as provided in this
Agreement, Xxxxx hereby releases, acquits and forever discharges OrthoLogic, and
its subsidiaries, affiliates, directors, officers, employees and agents of and
from any and all actions, claims, damages, expenses or costs of whatever nature
arising out of Xxxxx'x employment and the termination of such relationship,
including, but not limited to, any rights or claims to any vacation, sick leave,
severance, medical, dental or any other benefits under the Company's internal
policies, under any federal, state or local statute or regulation, or under
common law. Except as provided in this Agreement, OrthoLogic hereby releases,
acquits and forever discharges Xxxxx and his heirs and successors from any and
all actions, claims, damages, expenses or costs of whatever nature arising out
of Xxxxx'x employment and the termination of such relationship. By way of
example only and without limiting the immediately preceding paragraph, this
release is applicable to any
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cause of action, right, claim or liability under Title VII of the 1964 Civil
Rights Act, Section 1981 of the 1866 Civil Rights Act, the Equal Pay Act of
1963, the Americans with Disabilities Act, the Arizona Civil Rights Act, the Age
Discrimination in Employment Act of 1967, all as amended, and any other equal
employment opportunity law or statute, or of wrongful discharge, breach of
implied or express contract, breach of the covenant of good faith and fair
dealing, intentional or negligent infliction of emotional distress, defamation
and any other claim in contract or tort.
Xxxxx further covenants and agrees not to join in or commence any
action, suit or proceeding, in law or in equity, or before any administrative
agency, or to incite, encourage, or participate in any such action, suit or
proceedings, against OrthoLogic, its subsidiaries, affiliates, directors,
officers, employees or agents in any way pertaining to or arising out of the
termination of his employment by or service as an employee, consultant, officer
or director of OrthoLogic, or any subsidiary of OrthoLogic.
Xxxxx acknowledges that the consideration afforded him under this
Agreement is in full and complete satisfaction of any claims Xxxxx may have, or
may have had, arising out of or relating to the Employment Agreement, his
employment with OrthoLogic (or any subsidiary) or the termination thereof.
5. Time Period for Considering or Canceling this Agreement. Xxxxx
acknowledges that OrthoLogic has encouraged him to consult with an attorney of
his choice with respect to this Agreement. Xxxxx further acknowledges that he
has been offered a period of time of at least 21 days to consider whether to
sign this Agreement, and OrthoLogic agrees that Xxxxx may cancel this Agreement
at any time during the seven days following the date on which this Agreement has
been signed by him. In order to cancel or revoke this Agreement, Xxxxx must
deliver to OrthoLogic 0000 Xxxxx 00xx Xxxxxx, Xxxxx 00, Xxxxxxx, Xxxxxxx 00000,
Attention: Chief Executive Officer, written notice stating that Xxxxx is
canceling or revoking this Agreement. If this Agreement is canceled or
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revoked by Xxxxx within such time period, none of the provisions of this
Agreement shall be effective or enforceable and OrthoLogic shall not be
obligated to make the payments described in this Agreement.
6. Confidentiality of Agreement. Xxxxx agrees to maintain in confidence
the terms and existence of this Agreement and the discussions that led to its
creation and execution, with the exception that Xxxxx may disclose such matters
to any attorney who is providing advice to Xxxxx, to any accountant or federal
or state tax agency for purposes of complying with any tax laws, or as otherwise
required by law or by an order of a court of competent jurisdiction. OrthoLogic
agrees to maintain in confidence the terms and existence of this Agreement and
the discussions that led to its creation and execution, with the exception that
OrthoLogic may disclose such matters to any attorney who is providing advice to
OrthoLogic, to any accountant or federal or state tax agency for purposes of
complying with any tax laws, or as otherwise required by law or by an order of a
court of competent jurisdiction. Further, the parties acknowledge that any
duties of confidentiality imposed by agreement or by law, including without
limitation those imposed by Paragraphs 6, 7 and 9 of this Agreement, shall
survive the termination of Xxxxx'x employment.
7. Reliance. Xxxxx warrants and represents that (i) he has relied on
his own judgment regarding the consideration for and language of this Agreement;
that (ii) OrthoLogic has not in any way coerced or unduly influenced him to
execute this Agreement; and (iii) that this Agreement is written in a manner
that is understandable to him and he has read and understood all paragraphs of
this Agreement.
8. Confidential Information. Xxxxx acknowledges that, during his
employment by OrthoLogic, Xxxxx has received and also contributed to the
production of, Confidential Information. For purposes of this Agreement, Xxxxx
agrees that "Confidential Information" shall mean information or material
proprietary to
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OrthoLogic or designated as Confidential Information by OrthoLogic and not
generally known by non-OrthoLogic personnel, which Xxxxx developed or of or to
which Xxxxx obtained knowledge or access through or as a result of Xxxxx'x
relationship with OrthoLogic (including information conceived, originated,
discovered or developed in whole or in part by Xxxxx). Xxxxx further agrees:
8.1 To furnish OrthoLogic on demand, a complete list of the names
and addresses of all present, former and potential customers
and other contacts gained while an employee of OrthoLogic,
whether or not in the possession or within the knowledge of
OrthoLogic.
8.2 That all notes, memoranda, documentation and records in any
way incorporating or reflecting any Confidential Information
shall belong exclusively to OrthoLogic, and Xxxxx agrees
promptly to turn over all copies of such materials in Xxxxx'x
control to OrthoLogic.
8.3 That Xxxxx will hold in confidence and not directly or
indirectly reveal, report, publish, disclose or transfer any
of the Confidential Information to any person or entity, or
utilize any of the Confidential Information for any purpose,
except in the course of Xxxxx'x work for OrthoLogic.
8.4 That any ideas in whole or in part conceived of or made by
Xxxxx during the term of his employment or relationship with
OrthoLogic which were made through the use of any of the
Confidential Information of OrthoLogic or any of OrthoLogic's
equipment, facilities, trade secrets or time, or which result
from any work performed by Xxxxx for OrthoLogic, belong
exclusively to OrthoLogic and shall be deemed a part of the
Confidential Information for purposes of this Agreement. Xxxxx
hereby assigns and agrees to assign to OrthoLogic all rights
in
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and to such Confidential Information whether for purposes of
obtaining patent or copyright protection or otherwise. Xxxxx
shall acknowledge and deliver to OrthoLogic, without charge to
OrthoLogic (but at its expense) such written instruments and
do such other acts, including giving testimony in support of
Xxxxx'x authorship or inventorship, as the case may be,
necessary in the opinion of OrthoLogic to obtain patents or
copyrights or to otherwise protect or vest in Xxxxx the entire
right and title in and to the Confidential Information.
9. Non-Compete After Employment Term. The parties acknowledge that
Xxxxx has acquired much knowledge and information concerning the business of
OrthoLogic and its affiliates as the result of Xxxxx'x employment. The parties
further acknowledge that the scope of business in which OrthoLogic is engaged as
of the date of execution of this Agreement is world-wide and very competitive
and one in which few companies can successfully compete. Competition by Xxxxx in
that business would severely injure OrthoLogic. Accordingly, until one year
after the Date of Termination, Xxxxx will not:
9.1 Within any jurisdiction or marketing area in which OrthoLogic
or any of its affiliates is doing business or is qualified to
do business, directly or indirectly own, manage, operate,
control, be employed by or participate in the ownership,
management, operation or control of, or be connected in any
manner with, any business of the type and character engaged in
and competitive with that conducted by OrthoLogic or any of
its affiliates in areas of or related to bone-growth
stimulation, external fixation of bones, continuous passive
motion devices, or Hyalgen or any similar product. For these
purposes, ownership of securities of not in excess of 5% of
any class of securities of a public company shall not be
considered to be competition with OrthoLogic or any of its
affiliates;
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9.2 Persuade or attempt to persuade any potential customer or
client to which OrthoLogic or any of its affiliates has made a
proposal or sale, or with which OrthoLogic or any of its
affiliates has been having discussions, not to transact
business with OrthoLogic or such affiliate, or instead to
transact business with another person or organization;
9.3 Solicit the business of any company which is a customer or
client of OrthoLogic or any of its affiliates at any time
during Xxxxx'x employment by the OrthoLogic, provided,
however, if Xxxxx becomes employed by or represents a business
that exclusively sells products that do not compete with
products then marketed or intended to be marketed by
OrthoLogic, such contact shall be permissible; or
9.4 Solicit, endeavor to entice away from OrthoLogic or any of its
affiliates, or otherwise interfere with the relationship of
OrthoLogic or any of its affiliates with, any person who is
employed by or otherwise engaged to perform services for
OrthoLogic or any of its affiliates, whether for Xxxxx'x
account or for the account of any other person or
organization.
10. Common Law of Torts or Trade Secrets. Nothing in this Agreement
shall be construed to limit or negate the common law of torts or trade secrets
where such common law provides OrthoLogic with broader protection than the
protection provided by this Agreement.
11. Nature of the Agreement. This Agreement and all provisions hereof,
including all representations and promises contained herein, are contractual and
not a mere recital and shall continue in permanent force and effect. This
Agreement and all attachments constitute the sole and entire agreement of the
parties
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with respect to the subject matter hereof, superseding all prior agreements and
understandings between the parties, and there are no agreements of any nature
whatsoever between the parties hereto except as expressly stated herein. This
Agreement may not be modified or changed except by means of a written instrument
signed by both parties. If any portion of this Agreement is found to be
unenforceable for any reason whatsoever, the unenforceable provision shall be
considered to be severable, and the remainder of the Agreement shall continue to
be in full force and effect. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Arizona.
12. No Admission of Liability. Nothing contained in this Agreement
shall be construed in any manner as an admission by OrthoLogic or Xxxxx that he
or it has violated any statute, law or regulation, or breached any contract or
agreement.
13. Remedies. Any and all remedies set forth herein are intended to be
nonexclusive and either party may, in addition to such remedies, seek any
additional remedies available either in law or in equity in the event of default
or breach by the other party.
14. Injunctive Relief. Xxxxx agrees that it would be difficult to
measure the damage to OrthoLogic from any breach by Xxxxx of the covenants set
forth herein, that injury to OrthoLogic from any such breach would be impossible
to calculate, and that money damages would therefore be an inadequate remedy for
any such breach. Accordingly, Xxxxx agrees that if Xxxxx should breach any term
of this Agreement, OrthoLogic shall be entitled, in addition to and without
limitation of all other remedies it may have, to offset payments to Xxxxx
required by this Agreement and/or to injunctions or other appropriate orders to
restrain any such breach without showing or proving any actual damage to
OrthoLogic. This paragraph shall survive termination of Xxxxx'x employment.
15. Indemnification. OrthoLogic will provide indemnification
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to Xxxxx in accordance with the Certificate and Bylaws of OrthoLogic in effect
as of the date of this Agreement. These obligations shall survive the
termination of Xxxxx'x employment.
16. Testimony. If Xxxxx has knowledge of or is alleged to have
knowledge of any matters which are the subject of any pending, threatened or
future litigation or proceedings involving OrthoLogic (or any subsidiary), he
will make himself available to testify if and as necessary. Xxxxx will also make
himself available to the attorneys representing OrthoLogic in connection with
any such litigation, dispute or proceedings for such purposes as they may deem
necessary or appropriate, including but not limited to the review of documents,
discussion of the case and preparation for any legal proceedings. This Agreement
is not intended to and shall not be construed so as to in any way limit or
affect the testimony which Xxxxx gives in any such proceedings. Further, it is
understood and agreed that Xxxxx will at all times testify fully, truthfully and
accurately, whether in deposition, hearing, trial or otherwise. To the extent
not prohibited by conflicts between the interests of Xxxxx and OrthoLogic,
OrthoLogic will make its attorneys available to advise Xxxxx in connection with
any such proceedings. If there is a conflict, at the sole discretion of
OrthoLogic, OrthoLogic will pay for separate counsel selected by Xxxxx.
17. No Disparagement. Xxxxx agrees that as part of the consideration
for this Agreement, he will not make disparaging or derogatory remarks, whether
oral or written, about OrthoLogic or about its subsidiaries, affiliates,
officers, directors, employees or agents. OrthoLogic agrees that it will not
make any disparaging or derogatory remarks, whether oral or written, about Xxxxx
and agrees to instruct its officers to behave in the same manner.
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Dated this 31st day of October, 1997.
/s/ Xxxxxxxx X. Xxxxx
XXXXXXXX X. XXXXX
ORTHOLOGIC CORP.
By: /s/ XxxxXxx X. Xxxxxx
XxxxXxx X. Xxxxxx
Its: Vice President,
Human Resources
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