NON-COMPETITION, RELEASE AND SEVERANCE AGREEMENT
This Non-Competition, Release and Severance Agreement (this
"Agreement"), dated as of December 29, 2000, is by and between Prime Medical
Services, Inc., a Delaware corporation (the "Company"), and Xxxxxx Xxxxxxx,
M.D., an individual ("Employee").
PRELIMINARY STATEMENTS
WHEREAS, the Company has employed Employee as an executive officer of
the Company, most recently pursuant to a certain written Employment Agreement
(as amended to date, the "Employment Agreement"); and
WHEREAS, the Company and Employee have agreed to terminate the
employment relationship and the Employment Agreement, for each to provide
certain releases of liability to the other (the "Releases") and for Employee to
be paid certain fees in consideration for entering into and performing this
Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good, valuable and binding consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
X. XXXXXXXXX OF RELATIONSHIP
Employee hereby resigns from any and all offices, positions, and
responsibilities with the Company and any of the Company's subsidiaries and
affiliates (collectively, including the Company and any future subsidiaries and
affiliates of the Company created, acquired or otherwise existing during the
term hereof, the "Affiliated Entities"), including, but not limited to,
Employee's position as Vice Chairman of the Company and all positions as agent,
employee, director or officer of any Affiliated Entity, which Employee may hold
or claim to hold, and the Company accepts such resignation. Notwithstanding the
foregoing, Employee does not resign his position as a member of the Company's
Board of Directors, though Employee and the Company agree that Employee has no
contractual right or obligation to remain on such Board and may resign, or be
removed or replaced, in accordance with the Company's organizational documents.
Employee and the Company further acknowledge and agree that Employee's
relationship with each of the Affiliated Entities is hereby terminated for all
purposes. The parties agree that the Employment Agreement is hereby terminated
in all respects and that no further payments to Employee shall be due
thereunder. Employee agrees, however, subject to his reasonable availability, to
assist the Company in completing an orderly transition of Employee's
responsibilities and duties following termination of employment, including,
without limitation, (a) assisting the Company with any litigation or similar
proceedings involving the Company or an Affiliated Entity, (b) promptly making
any introductions requested by the Company or any of its officers to any
individual (or the principals, representatives or agents of any entity) that
Employee dealt with in marketing or developing business opportunities for the
Company, any Affiliated Entity or the products and services of either of the
foregoing. Employee agrees to undertake the responsibilities described in the
preceding sentence in good faith with the best interests of the Company in mind.
The parties agree that, except as may otherwise be agreed upon in writing
between them, the foregoing transitional support by Employee will, except with
respect to litigation or similar proceedings, require no more than ninety (90)
days after the date hereof to complete. With respect to litigation and similar
proceedings, Employee agrees to assist the Company with respect to the South
Carolina II litigation, the Xxxxxx/Ash litigation, the Driber litigation and any
future litigation in which the Employee's knowledge of relevant facts and
circumstances can reasonably be expected to be helpful to the Company, subject
to Employee's reasonable availability. The Company agrees to pay or reimburse
Employee's reasonable travel, lodging and other out-of-pocket expenses incurred
in assisting the Company in these transitional and litigation related services;
provided the Company must approve all such expenses that exceed $1,000 in
advance of their incurrence. As used herein, the term "reasonable availability"
contemplates that the Employee's time, energy, and attention will be
substantially reduced ninety (90) days after the date hereof, and that his
availability thereafter will be influenced by his pursuit of other business or
personal activities, making his availability by telephone, facsimile or other
electronic means more necessary. The parties acknowledge and agree that the
Company has certain indemnity obligations to Employee under and pursuant to a
certain Indemnity Agreement dated June 12, 1996, which shall survive this
Agreement as part of the Surviving Contracts (as hereinafter defined).
Furthermore, for so long as Employee remains a member of the Board of Directors
of the Company, he will be entitled to compensation and expense reimbursement as
is accorded all non-employee members of the Company's Board pursuant to the
Company's policy as in effective from time to time. As necessary to assist
Employee in fulfilling these responsibilities, the Company agrees to make
available Confidential Information (as defined below) that has not been
previously been made available to Employee.
II. SEVERANCE PAY AND RESTRICTIVE COVENANTS
2.1 Severance Pay. As partial consideration for the covenants and
agreements by Employee contained herein, the Company agrees to pay Employee
$500,000 (the "Severance Pay"). The Severance Pay shall be paid in equal
quarterly installments over the four (4) calendar years beginning January 1,
2001. Payments shall be made on or before the forty-fifth (45th) day of each
calendar quarter and, accordingly, the first installment shall be payable on
February 15, 2001. The parties acknowledge and agree that the Severance Pay is
not compensation in the form of wages or salary and, accordingly, the Company
shall have no obligation whatsoever to withhold taxes or other amounts from any
installment of the Severance Pay. Employee agrees to pay all taxes and other
levies of any kind that may be due with respect to the Severance Pay and to
indemnify and hold the Company harmless with respect thereto. Furthermore,
Employee acknowledges and agrees that he shall not be entitled to any fringe
benefits of any kind from the Company or any of the other Affiliated Entities.
Employee acknowledges that Employee's execution of this Agreement serves as a
material inducement to the Company's payment of the Severance Pay, and Employee
agrees that the Company will be entitled to cease paying any further
installments of Severance Pay upon any breach (or any other act in contravention
of) this Agreement by Employee which is not cured within fifteen (15) days after
the Company provides written notice thereof, by certified mail, to Employee,
which notice references specific facts constituting such breach or other act in
contravention of this Agreement. This right of non-payment shall be in addition
to any other remedies, including, without limitation, injunctive or other
equitable remedies, which the Company may have available on account of such
breach.
In the event the Company fails to pay any installment of Severance Pay
which is then due and owing under the terms of this Agreement, and such default
remains uncured for fifteen (15) days' after written notice, by certified mail,
from Employee, then Employee, in addition to whatever other remedies may be
available to him, shall be entitled to accelerate and declare the entire
remaining balance of Severance Pay provided hereunder then due and owing in
full, together with interest thereon at the rate of ten percent (10%) per annum,
or the maximum lawful rate of non-usurious interest, whichever is less, from the
date any such amounts are due until paid.
2.2 Work Product. Employee agrees that all management or marketing
materials, marketing strategies, studies or techniques, computer software,
inventions, processes and techniques, and intellectual property, including
improvements thereto and derivatives thereof (collectively the "Work Product")
made, developed or conceived by Employee during any period of employment with
any Affiliated Entity and which relate to any of the Company's current business
activities, or by any Affiliated Entity, either by agents or employees of that
Affiliated Entity or in cooperation with others (including Employee), during
Employee's association with that Affiliated Entity, shall be deemed to be
works-made-for-hire and Employee shall have no rights whatsoever therein;
provided further, that if any judicial body should determine otherwise, Employee
hereby transfers any and all of Employee's rights in or to such Work Product to
the Company. If, and to the extent, requested from time-to-time by the Company,
Employee agrees to execute such documents of title, transfer and conveyance as
may be requested by the Company to evidence the sole and exclusive ownership by
the Affiliated Entities of any and all Work Product.
2.3 Non-Disparagement Covenant. Employee hereby covenants and agrees
that Employee shall, at all times hereafter, refrain from making or implying any
derogatory or negative references, statements or allusions concerning any of the
Affiliated Entities, their officers, agents and employees, or their respective
businesses or business activities; provided, the foregoing is not intended to
prevent Employee from (i) giving truthful responses to requests for information
made via subpoena, in trial or through other judicial or regulatory process, or
(ii) being candid and xxxxx in meetings of the Company's Board of Directors or
its committees, so long as Employee is a member thereof.
2.4 Non-disclosure of Confidential Information. For purposes of this
Agreement, the term "Confidential Information" includes, without limitation, any
and all documents and information pertaining to any Affiliated Entity's
technologies, products or services in development, the identity of its clients
and suppliers, the identity of key client or supplier personnel with whom any
Affiliated Entity interacts to conduct business, innovations, computer programs
and data, ideas, plans, strategies, trade secrets (including, without
limitation, all forms of business, scientific, economic and engineering
information that any Affiliated Entity takes reasonable steps to keep secret,
that derives value from not being known to the public, and that is not readily
ascertainable by the public through proper means), proprietary information,
advertising strategies, sales methods and systems, sales and profit figures,
accounting methods and information, customer and client information, customer
and client lists, legal affairs, finances, personnel records and data, personnel
policies, and any other documents or information of any Affiliated Entity, the
unauthorized use or disclosure of which may tend to harm the interests of that
Affiliated Entity.
Employee recognizes and acknowledges that Employee had in the past,
currently has, and in the future may possibly have, access to Confidential
Information and that such information is valuable, special and unique. Employee
agrees that Employee will not disclose Confidential Information to any person,
firm, company, association or other entity for any purpose or reason whatsoever,
unless (i) such information becomes available to or known by the public
generally through no fault of Employee or (ii) disclosure is required by law or
the order of any governmental authority under color of law, including subpoena,
provided, that prior to disclosing any information pursuant to this clause (ii),
Employee shall, if possible, give prior written notice thereof to the Company,
and provide the Company with the opportunity to contest such disclosure.
Employee agrees to return to the Company (concurrently with its
execution of this Agreement) all tangible Confidential Information and physical
or personal property of any Affiliated Entity, including, without limitation,
all reports, files, memoranda and records, door and file keys, cardkey passes,
computer access codes and software; provided that unless otherwise requested in
writing by the Company, Employee may retain any of such items as are necessary
for Employee to fulfill his transitional responsibilities hereunder or his
duties as a director of the Company.
2.5 Non-Competition and Non-Solicitation. Employee hereby agrees that,
until January 1, 2005, Employee will not, directly or indirectly, either through
any kind of ownership (other than ownership of securities of the Company or of
another publicly held entity of which it owns less than five percent (5%) of any
class of outstanding securities), or as a principal, shareholder, agent,
employer, employee, advisor, consultant, partner or in any individual or
representative capacity whatsoever, whether for his own benefit or for the
benefit of any other person, corporation or other entity, commit any of the
following acts, which acts shall be considered violations of this covenant not
to compete:
(a) Directly or indirectly, anywhere within the United States of
America, engage in or provide, any competitive services related to any
of the businesses in which any of the Affiliated Entities is engaged as
of the date hereof (collectively, and including, without limitation,
urinary tract or biliary lithotripsy ("Lithotripsy"), lithotripsy
database collection and management, organizing, directing or otherwise
leveraging the purchasing power or purchasing efforts of the physician
investors in the Affiliated Entities, transurethral microwave
thermotherapy ("TUMT"), manufacturing, installation, refurbishment and
repair of major medical equipment for mobile medical services
providers, and refractive vision correction, the "Prohibited
Activities"), or provide any management services or consulting services
related to any Prohibited Activities;
(b) Directly or indirectly provide, anywhere with the United States of
America, (i) facilities, equipment and non-physician personnel for the
performance by physicians of Lithotripsy, TUMT or refractive vision
correction, or any of the other Prohibited Activities described in
clause (a) above, (ii) the marketing, scheduling or management of
Lithotripsy, TUMT or refractive vision correction, (iii) the scheduling
of physicians to perform Lithotripsy, TUMT or refractive vision
correction procedures, or (iv) the billing, collecting or accounting
for the use of any such facilities, equipment or non-physician
personnel;
(c) Directly or indirectly request or advise any person, firm,
physician, corporation or other entity having a business relationship
with any of the Affiliated Entities to withdraw, curtail or cancel its
business with any Affiliated Entity; or
(d) Directly or indirectly hire any employee of any Affiliated Entity,
or induce or attempt to influence any employee of any Affiliated Entity
to terminate its employment with such entity; however, this restriction
shall not apply to any person at a time when such person has (i) not
been in the employ of any Affiliated Entity for a period of at least
six (6) months or (ii) been terminated as an employee of an Affiliated
Entity and is not then employed with any other Affiliated Entity.
Notwithstanding the foregoing, nothing contained in subsections (a) or
(b) or this Section 2.5 is intended to prohibit Employee from (i) working for
the American Lithotripsy Society, whether in a volunteer or compensated
capacity, or (ii) training urologists in the use of Lithotripsy or TUMT;
provided, however, in each case Employee must remain in compliance with the
other provisions of this Agreement.
Employee acknowledges and recognizes that the enforcement of any of the
non-competition, non-solicitation or other provisions in this Agreement will not
materially interfere with his ability to pursue a proper livelihood, and that
Employee is capable of pursuing a career to earn a proper livelihood. Employee
recognizes and agrees that the enforcement of this Agreement is necessary to
insure the preservation and continuity of the business and goodwill of the
Affiliated Entities, and that due to the nature of the Affiliated Entities'
business and the specialized training and knowledge that Employee received, and
the Severance Pay provided for herein, the non-competition and other
restrictions set forth in this Agreement are reasonable as to activities, time
and geographic area.
2.6 Waiver Requests. Employee shall be entitled to request a waiver of
any of the provisions of Section 2.5 orally, provided such oral request is made
through direct communication (in person or telephonically, but not via voice
mail or other recorded message) to the Chairman or chief executive officer of
the Company, or if such titles are held by one person, then such person or the
next most senior officer of the Company; provided any waiver granted in response
to such request must be in writing to be binding on the Company. Alternatively,
Employee may request a waiver in writing, but such request must be by receipted
overnight mail service or mailed (with all postage and charges prepaid)
certified or registered mail, return receipt requested, addressed to the Company
at its principal executive office address to the attention of one of the two
officers of the Company to which oral waiver requests may be made. Complying
oral or written waiver requests (other than those related to Biliary Lithotripsy
Services, as provided below) shall be accepted or denied within five (5) days
after actual receipt of the request by one of the two officers of the Company
described above. The Company shall respond to written requests in writing by
mail or overnight delivery and requests shall be deemed timely if postmarked or
deposited with the overnight delivery service within the five (5) day period. If
the Company fails to timely respond to a proper waiver request made in
compliance with this Section 2.6, then such request shall be deemed accepted.
Furthermore, notwithstanding the preceding paragraph, if Employee
desires a waiver to engage in any activities involving the use of lithotripters
to disintegrate biliary stones ("Biliary Lithotripsy Services"), Employee hereby
agrees to request such waiver in writing in accordance with the preceding
paragraph, and the Company shall accept or deny the request within thirty (30)
days and otherwise in accordance with the preceding paragraph.
III. RELEASE BY EMPLOYEE
3.1 Released Parties. The parties being released by Employee by virtue
of this Agreement, all of whom are collectively referred to herein as the
"Company Released Parties," are the Affiliated Entities, their principals,
shareholders, partners, members, directors, officers, agents, employees,
spouses, children, servants, insurers, employee welfare benefit plans, pension
and/or deferred compensation plans, administrators and other fiduciaries, parent
companies, affiliated entities, subsidiaries, successors and assigns, and each
of them, individually and collectively.
3.2 Release by Employee. Employee hereby releases and discharges the
Company Released Parties (the "Release by Employee"), individually and
collectively, of and from any and all claims, causes of action, suits, debts,
contracts, agreements, promises, liability, demands, damages, and other expenses
of any nature whatsoever, at law or in equity, known or unknown, fixed or
contingent, contemplated or uncontemplated, whether asserted or assertable,
arising out of any matter whatsoever which has occurred from the beginning of
time up through and including the date hereof. Without limiting the generality
of the foregoing, Employee hereby acknowledges and agrees that the Release by
Employee is intended to waive and discharge any and all actions, claims, demands
and causes of action arising out of or in any way related to the Employment
Agreement or Employee's employment by, or service as an officer or director of,
any Affiliated Entity. However, the foregoing provisions do not, and should not
be construed so as to, alter, amend or negate the enforceability of this
Agreement, any stock options previously granted to Employee by the Company, that
certain Indemnity Agreement between the Company and Employee, or any
partnership, purchase or similar agreement pursuant to which Employee acquired
any ownership interests in any of the subsidiaries or affiliates of the Company
(collectively, the "Surviving Contracts").
3.3 Construction. The Release by Employee is intended to be and should
be construed as a general, complete and final waiver and release of all claims.
The Release by Employee is being made and executed by Employee individually and
on behalf of Employee's heirs, successors, assigns, agents, all persons
subrogated to Employee's rights or to whom Employee's rights are secondary or
derivative, and all other persons on behalf of whom Employee is authorized to
act.
IV. RELEASE BY THE COMPANY
4.1 Release by the Company. The Company hereby releases and discharges
Employee (the "Release by the Company") of and from any and all claims, causes
of action, suits, debts, contracts, agreements, promises, liability, demands,
damages, and other expenses of any nature whatsoever, at law or in equity, know
or unknown, fixed or contingent, contemplated or uncontemplated, whether
asserted or assertable, arising out of any matter whatsoever which has occurred
from the beginning of time up through and including the date hereof. Without
limiting the generality of the foregoing, the Company hereby acknowledges and
agrees that the Release by the Company is intended to waive and discharge any
and all actions, claims, demands and causes of action arising out of or in any
way related to the Employment Agreement or Employee's employment by, or service
as an officer or director of, any Affiliated Entity. However, the foregoing
provisions do not, and should not be construed so as to, alter, amend or negate
the enforceability of this Agreement or the rights of any Affiliated Entity
under the Surviving Contracts.
4.2 Construction. The Release by the Company is intended to be and
should be construed as a general, complete and final waiver and release of all
claims. The Release by the Company is being made and executed by the Company on
its own behalf and on behalf of its successors, assigns, affiliates, agents, all
persons subrogated to the Company's rights or to whom the Company's rights are
secondary or derivative, and all other persons on behalf of whom the Company is
authorized to act.
V. MISCELLANEOUS PROVISIONS
5.1 Acknowledgments and Integration. Employee hereby warrants,
represents, acknowledges and agrees that Employee has fully and completely read
this Agreement and has had adequate opportunity to consider and seek counsel
regarding its terms and effect, that this Agreement, including the Releases
contained herein, is being executed voluntarily, with full knowledge and
understanding of its terms and effects, and that there are no agreements,
statements or representations except those expressly set forth herein which
constitute a part hereof. This Agreement, including the Releases contained
herein, shall not be subject to attack on the grounds that any factual or legal
assumptions leading to its execution were wrong or invalid in any respect.
5.2 No Admissions. It is expressly understood and agreed that neither
this Agreement, the Releases contained herein, nor the furnishing of
consideration for this Agreement or such Releases, shall be deemed or construed
at any time for any purpose as an admission by anyone of wrongdoing or liability
of any kind, all such wrongdoing and liability being expressly denied.
5.3 Knowledge of Claims. Each of the Company and Employee expressly
warrants and stipulates that it intends for the Releases contained herein to
release any and all claims that each may now have against the other, regardless
of whether such claims have been asserted and regardless of whether such claims
arise out of or are related in any way to any facts in existence on or before
the date of this Agreement.
5.4 Governing Law and Construction. This Agreement is performable in
Xxxxxx County, Texas, and is governed by the laws of Texas. The parties agree
that Xxxxxx County, Texas, is proper venue for all actions related to this
Agreement, including, without limitation, actions related to construction,
validity, enforcement and performance. This Agreement may not be modified,
altered or amended except in writing duly signed by each of the parties hereto.
If any provision of this Agreement is rendered or declared illegal or
unenforceable by reason of any existing or subsequently enacted statute, rule or
regulation, or by order of or judgment of a court, any and all other terms and
provisions hereof shall remain in full force and effect as stated and set forth
herein.
5.5 Binding Nature. All of the covenants and agreements contained herein
shall extend to and be binding upon the heirs, executors, administrators,
successors and assigns of the parties hereto.
5.6 Remedies. Each party agrees that a violation on its part of any
applicable covenant contained in this Agreement will cause the other party
irreparable damage for which remedies at law may be insufficient and, for that
reason, it agrees that the other party shall be entitled as a matter of right to
equitable remedies, including specific performance and injunctive relief,
therefor, without any requirement of posting bond or other form of surety. The
right to specific performance and injunctive relief shall be cumulative and in
addition to whatever other remedies, at law or in equity, that the parties may
have, including, specifically, recovery of additional damages. In addition, the
prevailing party in an action to enforce any provision of this Agreement shall
be entitled to recover reimbursement of reasonable legal fees and costs of
counsel incurred in connection therewith.
[Signature page follows]
S-1
SIGNATURE PAGE
FOR
NON-COMPETITION, RELEASE AND SEVERANCE AGREEMENT
BETWEEN
PRIME MEDICAL SERVICES, INC. AND XXXXXX XXXXXXX, M.D.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered on the day and year first above written.
COMPANY: PRIME MEDICAL SERVICES, INC.
By:
Print Name:
Title:
EMPLOYEE:
Xxxxxx Xxxxxxx, M.D.
