Exhibit 99.2
CONSULTING AND NON-COMPETITION
AGREEMENT
This Consulting and Non-Competition
Agreement (“ Agreement ”), dated as of
September 21, 2005 (the “ Effective Date
”), is by and between HealthTronics, Inc., a Georgia
corporation (“ HealthTronics ”), and Brad
A. Hummel (“ Hummel ”).
RECITALS
WHEREAS , Hummel has served as the President and Chief
Executive Officer of HealthTronics pursuant to the terms of an
Employment Agreement dated as of April 1, 2002 (as amended,
the “ Employment Agreement ”);
WHEREAS , on the date hereof, Hummel has resigned,
effective October 15, 2005 (the “ Termination
Date ”), from all of his officer and director
positions with HealthTronics and its subsidiaries;
WHEREAS , HealthTronics and Hummel agree that it is in
their mutual interests that the Employment Agreement and their
employment relationship be terminated upon the terms and conditions
provided in this Agreement (the “ Termination
”); and
WHEREAS, HealthTronics desires to engage the services of
Hummel as a consultant and Hummel desires to accept such engagement
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE
, in consideration of the foregoing
premises and the mutual covenants herein contained, and intending
to be legally bound hereby, the parties hereto agree as
follows:
1. Termination of Employment
Agreement and Employment Relationship . HealthTronics and Hummel hereby terminate the
Employment Agreement and agree that the other shall no longer be
bound by, and is hereby released from, any and all of the terms,
obligations and conditions contained in the Employment Agreement;
provided, that Hummel shall be entitled to be paid, based on his
current salary, for the period from the Effective Date to the
Termination Date in accordance with HealthTronics’ regular
payroll practices. Hummel agrees that, except as set forth in the
proviso in the previous sentence, Hummel irrevocably forfeits any
rights to receive any future compensation for Hummel’s prior
performance (including, without limitation, salary, incentive
compensation and/or stock options) that Hummel may have been
entitled to receive under the Employment Agreement. Hummel hereby
irrevocably resigns effective as of October 15, 2005, and
HealthTronics hereby accepts such resignation, from any and all
director, manager, employment and officer positions, relations, and
responsibilities that Hummel may hold or claim to hold with
HealthTronics and any of HealthTronics’ subsidiaries and/or
affiliates (collectively, including HealthTronics, the “
Affiliated Entities ,” and individually, an
“ Affiliated Entity ”).
2. Stock
Options .
HealthTronics and Hummel acknowledge and agree that (a)
Schedule 1 hereto sets forth the outstanding stock options
to acquire HealthTronics common stock owned by Hummel immediately
following the execution of this Agreement (the “ Stock
Options ”) and (b) other than the Stock Options,
Hummel holds no options, warrants, convertible
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securities, phantom or other rights to acquire
HealthTronics common stock. Hummel agrees that any stock options
not listed on Schedule 1 hereto that would otherwise be
effective are canceled. HealthTronics and Hummel agree that the
Stock Options shall continue in full force and effect under the
terms of the stock option plan(s) and agreement(s) governing such
Stock Options.
3. Consulting
Services . From
October 15, 2005 until March 31, 2006 (the “
Consulting Services Period ”), Hummel shall
render consulting services (the “ Services
”) to the Affiliated Entities as may be requested by
HealthTronics from time to time, including but not limited to
advising HealthTronics in respect of and participating in
communications with HealthTronics analysts and investors,
participating in the evaluation of candidates for the chief
executive officer position, and assisting HealthTronics in
responding to any litigation-related matters. Hummel shall not
incur any travel or other expenses in performing the Services
unless approved in advance by the Chief Financial Officer of the
Company. Hummel may engage in other services, employment or
occupation during the term of this Agreement as long as such
services, employment or occupation are not contrary to the
provisions of this Agreement.
4.
Payment/Benefits .
In consideration for the provision of the Services by Hummel,
HealthTronics agrees to pay Hummel $206,250, payable in equal
semi-monthly installments of $18,750 on or around the first day and
the fifteenth day of each month during the Consulting Services
Period. In addition, the Company shall reimburse Hummel for the
cost of the premiums for his insurance coverage under the
Company’s existing employee medical and health plans during
the Consulting Services Period based on Hummel’s coverage
elections in effect on August 1, 2005, provided that the
continued participation of Hummel and/or his family is possible
under the general terms and provisions of such plans.
Notwithstanding anything in this Agreement to the contrary,
HealthTronics shall have no obligation to make any payment under
this Agreement if Hummel is in material breach of any material term
of this Agreement.
If Hummel dies during the Consulting
Services Period, Hummel shall not be entitled to any payments under
this Section 4 after the date of death.
5.
Noncompetition .
Subject to the other terms and conditions of this Agreement, for a
period from the date hereof until the third anniversary of the
Effective Date (the “Non-Competition Period”), in
consideration for a payment of $500,000 by HealthTronics to Hummel
on the date hereof and the agreement by HealthTronics to provide
Hummel with access to Confidential Information (as defined below)
of the Affiliated Entities from time to time, Hummel will not
(unless authorized in writing by HealthTronics’ Board of
Directors (the “ Board ”)):
(a) directly or indirectly, alone or
as a partner, joint venturer, officer, director, manager, member,
employee, consultant, agent, or independent contractor of, or
lender to, any person or business, engage in any Restricted
Business (as defined below) anywhere in the United States or Europe
(provided that the passive ownership of less than 5% of the
ownership interests of an entity having a class of securities that
is traded on a national securities exchange or over-the-counter
market is not a violation of this paragraph);
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(b) directly or indirectly, alone or
as a partner, joint venturer, officer, director, manager, member,
employee, consultant, agent, or independent contractor of, or
lender to, any person or business, request or advise any patient,
physician, customer or any other person, firm, vendor, contractor,
lessor, hospital, surgery center, corporation or other entity
having a business relationship with any Affiliated Entity, to
withdraw, curtail, or cancel its business with such Affiliated
Entity or engage in any other activity that could reasonably be
expected to have an adverse affect on the relationship such person
or entity has with such Affiliated Entity;
(c) directly or indirectly, alone or
as a partner, joint venturer, officer, director, manager, member,
employee, consultant, agent, or independent contractor of, or
lender to, any person or business, solicit business from, divert
business from, or attempt to convert to other methods of using the
same or similar products or services as provided by an Affiliated
Entity, any client, account or location of an Affiliated Entity;
or
(d) directly or indirectly, alone or
as a partner, joint venturer, officer, director, manager, member,
employee, consultant, agent, or independent contractor of, or
lender to, any person or business, solicit for employment, or
engagement as an independent contractor, or for any other similar
purpose, any person who was in the twelve month period preceding
the solicitation or is at the time of the solicitation, an employee
of any Affiliated Entity, or any entity related to any of
them.
As used in this Agreement, the term
“Restricted Business” means the business engaged in by
HealthTronics as of the date hereof.
6. Confidentiality of
Information .
HealthTronics agrees to disclose to Hummel from time to time trade
secrets and other Confidential Information which may be necessary
for Hummel to perform under this Agreement. In consideration for
HealthTronics’ foregoing agreement to disclose Confidential
Information, unless authorized by the Board in writing or as
otherwise required to perform his responsibilities, Hummel will not
directly or indirectly, acting alone or in conjunction with others,
disclose to any person or other entity any Confidential
Information. “ Confidential Information ”
shall include all confidential and proprietary information of the
Affiliated Entities, including, without limitation, all trade,
technic
