SEVERANCE AGREEMENT
This Severance Agreement, which shall be effective as of February 18,
1997 is by and between Xxxxxx X. Xxxx, Xx. ("Xxxx") and OrthoLogic Corp., a
Delaware corporation, ("OrthoLogic").
RECITALS
X. Xxxx is currently employed as the President of OrthoLogic, pursuant
to an Employment Agreement dated as of July 1, 1996 (the "Employment
Agreement").
B. The parties mutually desire to provide for an orderly termination of
Xxxx'x employment by OrthoLogic, all on terms satisfactory to both Xxxx and
OrthoLogic, as further set forth in this Agreement.
AGREEMENTS
In Consideration of the acts, payments, covenants and mutual agreements
contained herein, OrthoLogic and Xxxx agree as follows:
1. Modification of Current Relationship. Effective as of February 18,
1997 (the "Date of Termination"), Xxxx shall resign as the President of
OrthoLogic. From and after the Date of Termination, Xxxx shall have no further
rights or duties as an employee or officer for or on behalf of OrthoLogic. Xxxx
shall continue as a member of the OrthoLogic Board of Directors (the "Board")
until OrthoLogic's Annual Meeting in 1997. It is understood by the parties that
Xxxx'x term expires at the 1997 Annual Meeting, and Xxxx agrees that he will not
seek reelection to the Board at such meeting. During the first six months
following the Date of Termination, Xxxx shall also make himself available for
consulting to OrthoLogic, as may be requested from time to time by OrthoLogic,
at mutually convenient times, at a rate of $2,000 per day, which amount shall be
prorated for periods of less than one full day.
2. Severance Payment. So long as Xxxx continues to comply with all
requirements of this Agreement, (i) OrthoLogic agrees to pay to Xxxx an amount
equal to six months base salary, over a six-month period beginning February 19,
1997, at the times and in the amounts that are presently paid to Xxxx in
accordance with the normal payroll procedures of OrthoLogic; and (ii) Xxxx shall
be entitled to receive a bonus payment, in an amount determined by the Board,
based upon OrthoLogic's performance for the 1996 fiscal year, which shall be
prorated to the extent that Xxxx'x employment during 1996 was for a period of
less than the full year.
3. COBRA. OrthoLogic agrees to pay premiums for medical benefits
(COBRA) for Xxxx and Xxxx'x dependents for coverage similar to those benefits
currently provided by OrthoLogic for 90 days following the Date of Termination.
4. Additional Benefits and Outstanding Loan.
a. The $450.00 per month car allowance shall cease to be paid
after February 1997.
b. OrthoLogic will pay up to $10,000 for costs of outplacement
services for Xxxx which are incurred by Xxxx within 90 days of the Date of
Termination.
c. OrthoLogic will pay the actual cost, but not to exceed
$10,000, for moving personal goods from Xxxx'x Phoenix residence to New Jersey.
d. During 1996, the Company lent $200,000 to Employee, at
prime rate, for use in connection with the purchase by Employee of a new home in
the Phoenix Metropolitan Area. Interest and principal on such loan shall be paid
immediately and in full upon the earlier to occur of (i) the closing of the sale
of Employee's Phoenix home, or (ii) a demand by the Company made at any time
after December 31, 1997.
5. Release and Covenant Not to Xxx. Except as provided in this
Agreement, Xxxx 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 Xxxx'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. 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, 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.
Xxxx 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.
Xxxx acknowledges that the consideration afforded him under this
Agreement, including the payments described in Paragraph 2 above, are in full
and complete satisfaction of any claims Xxxx 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.
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6. Time Period for Considering or Canceling this Agreement. Xxxx
acknowledges that OrthoLogic has encouraged him to consult with an attorney of
his choice with respect to this Agreement. Xxxx 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 Xxxx 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, Xxxx must deliver to
OrthoLogic 0000 Xxxxx 00xx Xxxxxx, Xxxxx 00, Xxxxxxx, Xxxxxxx 00000, Attention:
Chief Executive Officer, written notice stating that Xxxx is canceling or
revoking this Agreement. If this Agreement is canceled or revoked by Xxxx 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 to Xxxx
described in Section 2 or to provide Xxxx with the other benefits described in
this Agreement.
7. Confidentiality of Agreement. Xxxx and OrthoLogic agree to maintain
in confidence the terms and existence of this Agreement and the discussions that
let to its creation and execution, with the exception that OrthoLogic may
disclose this Agreement and its terms to the extent required or appropriate
under applicable securities laws or other laws and that Xxxx may disclose such
matters to any attorney who is providing advice to Xxxx, to any accountant or
federal or state tax agency for purposes of complying with any tax laws, or as
otherwise required by law. Further, Xxxx acknowledges that any duties of
confidentiality imposed upon Xxxx by agreement or by law, including without
limitation those imposed by Paragraphs 7 and 9 of this Agreement, shall survive
the termination of Xxxx'x employment.
8. Reliance. Xxxx 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 an understood all paragraphs of
this Agreement.
9. Confidential Information. Xxxx acknowledges that, during his
employment by OrthoLogic, Xxxx has received and also contributed to the
production of, Confidential Information. For purposes of this Agreement, Xxxx
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 Xxxx
developed or of or to which Xxxx obtained knowledge or access through or as a
result of Xxxx'x relationship with OrthoLogic (including information conceived,
originated, discovered or developed in whole or in part by Xxxx). Xxxx 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.
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9.2 That all notes, memoranda, documentation and records in any
way incorporating or reflecting any Confidential Information
shall belong exclusively to OrthoLogic, and Xxxx agrees
promptly to turn over all copies of such materials in Xxxx'x
control to OrthoLogic.
9.3 That Xxxx 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 Xxxx'x work for OrthoLogic.
9.4 That any ideas in whole or in part conceived of or made by
Xxxx 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 Xxxx for OrthoLogic, belong
exclusively to OrthoLogic and shall be deemed a part of the
Confidential Information for purposes of this Agreement. Xxxx
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. Xxxx
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
Xxxx'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 Xxxx the entire
right and title in and to the Confidential Information.
10. Non-Compete After Employment Term. The parties acknowledge that
Xxxx has acquired much knowledge and information concerning the business of
OrthoLogic and its affiliates as the result of Xxxx'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 Xxxx in
that business would severely injure OrthoLogic. Accordingly, until one year
after the Date of Termination, Xxxx will not:
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;
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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 Xxxx'x employment by the OrthoLogic, or was its
customer or client within two years prior to the date of this
Agreement, provided, however, if Xxxx 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 Xxxx'x
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, including the Employment
Agreement dated as of July 1, 1996, 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.
13. No Admission of Liability. Nothing contained in this Agreement
shall be construed in any manner as an admission by OrthoLogic or Xxxx 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.
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15. Injunctive Relief. Xxxx agrees that it would be difficult to
measure the damage to OrthoLogic from any breach by Xxxx 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, Xxxx agrees that if Xxxx 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 Xxxx
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 Xxxx'x employment.
16. Indemnification. OrthoLogic will provide indemnification to Xxxx in
accordance with the current Certificate and Bylaws of OrthoLogic. These
obligations shall survive the termination of Xxxx'x employment.
17. Testimony. If Xxxx 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. Xxxx 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
Xxxx gives in an such proceedings. Further, it is understood and agreed that
Xxxx will at all times testify fully, truthfully and accurately, whether in
deposition, hearing, trial or otherwise.
18. Publicity. Xxxx agrees that he will not make any announcements or
public statements regarding either this Agreement or the termination of his
employment without OrthoLogic's prior consent. The parties understand that a
mutually acceptable for of press release will be issued promptly after the
execution of this Agreement.
19. No Disparagement. Each party agrees that as part of the
consideration for this Agreement, he or it will not make disparaging or
derogatory remarks, whether oral or written, about the other party or, in the
case of OrthoLogic, about its subsidiaries, affiliates, officers, directors,
employees or agents.
Dated this 7th day of March, 1997.
/s/ XXXXXX X. XXXX, XX.
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XXXXXX X. XXXX, XX.
ORTHOLOGIC CORP.
By: /s/ Xxxxx X. Xxxxxxxxx, Ph.D.
Xxxxx X. Xxxxxxxxx, Ph.D.
Its: Chairman and CEO
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