SEVERANCE AGREEMENT
This Severance Agreement, which shall be effective as of May 21, 1997
is by and between Xxxxx X. Xxxxxxxx ("Derminio") and OrthoLogic Corp., a
Delaware corporation, ("OrthoLogic").
RECITALS
X. Xxxxxxxx is currently employed as a Vice President of OrthoLogic.
B. The parties mutually desire to provide for an orderly termination of
Derminio's employment by OrthoLogic, all on terms satisfactory to both Derminio
and OrthoLogic, as further set forth in this Agreement.
AGREEMENTS
In Consideration of the acts, payments, covenants and mutual agreements
contained herein, OrthoLogic and Derminio agree as follows:
1. Modification of Current Relationship. Effective as of May 21, 1997
(the "Date of Termination"), Derminio shall resign as a Vice President of
OrthoLogic. From and after the Date of Termination, Derminio shall have no
further rights or duties as an employee or officer for or on behalf of
OrthoLogic. Derminio acknowledges that OrthoLogic has no obligation to recall or
reemploy Derminio in the future. Derminio acknowledges that OrthoLogic was not
obligated to provide all consideration described in this Agreement and that a
portion of such consideration constitutes an additional benefit that is being
provided to Derminio in exchange for and in consideration for his promises,
covenants and releases contained in this Agreement.
2. Severance Payment. OrthoLogic agrees to pay to Derminio an amount
equal to 12 months base salary, over a 12-month period beginning May 21, 1997,
at the times and in the amounts that are presently paid to Derminio in
accordance with the normal payroll procedures of OrthoLogic.
3. Additional Benefits. So long as Derminio continues to comply with
all requirements of this Agreement, and provided Derminio does not cancel this
Agreement as provided in Xxxxxxxxx 0, Xxxxxxxx shall also be entitled to the
benefits described in Paragraphs 3.1 through 3.6.
3.1 If Derminio elects continued coverage under COBRA, OrthoLogic
agrees to pay an amount equal to Derminio's current medical
insurance premiums for medical benefits, after the Date of
Termination, until the earlier to occur of 12 months
following the Date of Termination or the time when other
coverage becomes available to Derminio in connection with
other employment.
3.2 OrthoLogic agrees to pay up to $10,000 for out-placement
counseling and assistance provided by a mutually acceptable
out-placement firm; provided that such payment will only be
available if such service is engaged within 90 days of the
Date of Termination.
3.3 OrthoLogic will provide a single lump-sum payment in the gross
amount of $18,953.57 in lieu of club dues (which had
previously been paid monthly).
3.4 OrthoLogic will provide a mutually acceptable letter of
reference.
3.5 OrthoLogic will accelerate the vesting of options to acquire a
total of 10,000 shares of OrthoLogic's common stock, which
would not otherwise vest, so that such options will be
exercisable on the Date of Termination.
3.6 OrthoLogic will extend the time in which Derminio can exercise
all options that have vested as of the Date of Termination
until November 30, 1997.
4. Car Phone Payments. OrthoLogic will only pay Derminio charges for
the mobile telephone in his automobile through May 31, 1997.
5. Release and Covenant Not to Xxx. Except as provided in this
Agreement, Derminio hereby releases, acquits and forever discharges OrthoLogic,
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 Derminio's 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. By way of example only and without limiting the immediately
preceding paragraph, this release is applicable to any 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.
Derminio 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
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of his employment by or service as an employee, consultant, officer or director
of OrthoLogic, or any subsidiary of OrthoLogic.
Derminio acknowledges that the consideration afforded him under this
Agreement is in full and complete satisfaction of any claims Derminio 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.
6. Time Period for Considering or Canceling this Agreement. Derminio
acknowledges that OrthoLogic has encouraged him to consult with an attorney of
his choice with respect to this Agreement. Derminio 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 Derminio 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,
Derminio must deliver to OrthoLogic 0000 Xxxxx 00xx Xxxxxx, Xxxxx 00, Xxxxxxx,
Xxxxxxx 00000, Attention: Chief Executive Officer, written notice stating that
Derminio is canceling or revoking this Agreement. If this Agreement is canceled
or revoked by Derminio 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 except as may be
required by any other agreement.
7. Confidentiality of Agreement. Derminio 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 Derminio may disclose
such matters to any attorney who is providing advice to Derminio, to any
accountant or federal or state tax agency for purposes of complying with any tax
laws, or as otherwise required by law. Further, Derminio acknowledges that any
duties of confidentiality imposed upon Derminio by agreement or by law,
including without limitation those imposed by Paragraphs 7 and 9 of this
Agreement, shall survive the termination of Derminio's employment.
8. Reliance. Derminio 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.
9. Confidential Information. Derminio acknowledges that, during his
employment by OrthoLogic, Derminio has received and also contributed to the
production of, Confidential Information. For purposes of this Agreement,
Derminio agrees that "Confidential Information" shall mean information or
material proprietary to OrthoLogic or designated as Confidential Information by
OrthoLogic and not generally known by non-OrthoLogic personnel, which Derminio
developed or to which Derminio obtained knowledge or access through or as a
result
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of Derminio's relationship with OrthoLogic (including information conceived,
originated, discovered or developed in whole or in part by Derminio). Derminio
further agrees:
9.1 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.
9.2 That all notes, memoranda, documentation and records in any
way incorporating or reflecting any Confidential Information
shall belong exclusively to OrthoLogic, and Derminio agrees
promptly to turn over all copies of such materials in
Derminio's control to OrthoLogic.
9.3 That Derminio 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 Derminio's work for OrthoLogic.
9.4 That any ideas in whole or in part conceived of or made by
Derminio 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 Derminio for OrthoLogic, belong
exclusively to OrthoLogic and shall be deemed a part of the
Confidential Information for purposes of this Agreement.
Derminio hereby assigns and agrees to assign to OrthoLogic all
rights in and to such Confidential Information whether for
purposes of obtaining patent or copyright protection or
otherwise. Derminio 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 Derminio's 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 Derminio the entire right and title in and
to the Confidential Information.
10. Non-Compete After Employment Term. The parties acknowledge that
Derminio has acquired much knowledge and information concerning the business of
OrthoLogic and its affiliates as the result of Derminio's 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 Derminio in that business would severely injure OrthoLogic. Accordingly,
until one year after the Date of Termination, Derminio will not:
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10.1 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. For these purposes, ownership of securities of
not in excess of 1% of any class of securities of a public
company shall not be considered to be competition with
OrthoLogic or any of its affiliates;
10.2 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;
10.3 Solicit the business of any company which is a customer or
client of OrthoLogic or any of its affiliates at any time
during Derminio's employment by the OrthoLogic, provided,
however, if Derminio 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
10.4 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 Derminio's
account or for the account of any other person or
organization.
11. 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.
12. 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 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
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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.
13. No Admission of Liability. Nothing contained in this Agreement
shall be construed in any manner as an admission by OrthoLogic or Derminio that
he or it has violated any statute, law or regulation, or breached any contract
or agreement.
14. 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.
15. Injunctive Relief. Derminio agrees that it would be difficult to
measure the damage to OrthoLogic from any breach by Derminio 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, Derminio agrees that if Derminio 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
Derminio 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 Derminio's
employment.
16. Indemnification. OrthoLogic will provide indemnification to
Derminio in accordance with the current Certificate and Bylaws of OrthoLogic.
These obligations shall survive the termination of Derminio's employment.
17. Testimony. If Derminio has knowledge of or is alleged to have
knowledge of any matters which are the subject of any pending, threatened or
future litigation involving OrthoLogic (or any subsidiary), he will make himself
available to testify if and as necessary. Derminio will also make himself
available to the attorneys representing OrthoLogic in connection with any such
litigation or dispute 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 Derminio gives in any such proceedings. Further, it is
understood and agreed that Derminio will at all times testify fully, truthfully
and accurately, whether in deposition, hearing, trial or otherwise.
18. Publicity. Derminio agrees that he will not, without the prior
consent of OrthoLogic, either (i) make any announcements or public statements
regarding this Agreement or the termination of his employment; or (ii) mention
or discuss this Agreement or the termination of his employment to or with any
past or present employee or consultant of OrthoLogic, or any other person
whatsoever. The parties understand that a form of press release acceptable to
OrthoLogic was issued on or about May 21, 1997.
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19. No Disparagement. Derminio 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
Derminio and agrees to instruct its officers to behave in the same manner.
Dated this ___ day of May, 1997.
/s/ Xxxxx X. Xxxxxxxx
XXXXX X. XXXXXXXX
ORTHOLOGIC CORP.
By: /s/ Xxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxxxx, Ph.D.
Its: Chairman and CEO
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