EXHIBIT 10.23
SEVERANCE AND NON-COMPETITION
AGREEMENT
This Severance and Non-Competition
Agreement (“ Agreement ”), dated as of
,
2004, is by and between HealthTronics Surgical Services, Inc., a
Georgia corporation (“ HealthTronics ”),
and Martin J. McGahan (“ McGahan
”).
RECITALS
WHEREAS , in connection with the merger of Prime Medical
Services, Inc., a Delaware corporation (“ Prime
”), with and into HealthTronics (the “
Merger ”), McGahan’s employment with
HealthTronics will be terminated;
WHEREAS , McGahan has served as the President, Chief
Operating Officer and Chief Financial Officer of HealthTronics
pursuant to an Employment Agreement dated as of January 1, 2004 (as
amended, the “ Employment Agreement
”);
WHEREAS , HealthTronics and McGahan agree that as part
of the consideration for the Merger, it is in their mutual
interests that, effective on the date the Merger is consummated
(the “Effective Date”), the Employment Agreement be
terminated, and the employment relationship severed, upon the terms
and conditions provided in this Agreement (the “
Severance ”); and
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. Severance of Employment
Agreement and Employment Relationship . Effective as of the Effective Date,
HealthTronics and McGahan terminate the Employment Agreement and
agree that the other shall no longer be bound by, and is released
from, any and all of the terms, obligations and conditions
contained in the Employment Agreement; provided, however, that
McGahan shall be entitled to the rights set forth in Section 9(e)
and (f) of the Employment Agreement as a result of the Merger
(which, for the purpose of Section 9(e) and (f) of the Employment
Agreement, McGahan shall be deemed to have terminated the
Employment Agreement for Good Reason (as defined in the Employment
Agreement) and a Change in Control (as defined in the Employment
Agreement) shall be deemed to have occurred). Effective as of the
Effective Date, McGahan agrees that, as a result of the Severance,
McGahan irrevocably forfeits any rights to receive any future
compensation for McGahan’s 2004 performance (including,
without limitation, salary, incentive compensation and/or stock
options) that McGahan may have been entitled to receive under the
Employment Agreement. Effective as of the Effective Date, McGahan
resigns, and HealthTronics hereby accepts such resignation, from
any and all director, employment and officer positions, relations,
and responsibilities that McGahan 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 ”). Notwithstanding
the foregoing, all stock option agreements between HealthTronics
and McGahan and all obligations of HealthTronics thereunder shall
remain binding and enforceable according to their terms after the
Effective Date.
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2. Severance
Pay . As partial
consideration for the Severance provided in Section 1.1 ,
HealthTronics agrees to pay to McGahan $310,000 (the “
Severance Pay ”) on the Effective Date. The
Severance Pay shall be tendered by HealthTronics in a lump sum, in
immediately available funds or other payment form acceptable to
McGahan, on the Effective Date. McGahan agrees that HealthTronics
may, in HealthTronics’ sole reasonable discretion, withhold
from the Severance Pay any applicable taxes in amounts consistent
with the requirements under applicable law that are or may become
owed by McGahan for payments required under this Agreement. Except
as provided in Section 11(h) , McGahan agrees to pay, and
hold HealthTronics harmless from, any tax obligations of McGahan
which are not satisfied by any amounts HealthTronics elects to
withhold.
3.
Payment/Benefits .
In consideration for McGahan’s covenants and agreements
contained herein, HealthTronics agrees to pay McGahan (a) $390,000,
payable in immediately available funds or other payment form
acceptable to McGahan, on the Effective Date and (b) $8,334 per
calendar month (prorated for partial months), from the Effective
Date until the third anniversary of the Effective Date.
Notwithstanding anything in this Agreement to the contrary,
HealthTronics shall have no obligation to make any payment under
this Agreement if McGahan is in material breach of a material term
of this Agreement.
4.
Noncompetition .
Subject to the other terms and conditions of this Agreement, for
the period from the date hereof until three (3) years after the
Effective Date (the “ Non-Competition Period
”), in consideration for the payments detailed in Section
2 and Section 3 , Prime’s consummation of the
Merger, and the agreement by HealthTronics to provide McGahan with
access to Confidential Information (as defined below) of the
Affiliated Entities from time to time, McGahan 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, member, employee
(engaging in the same or substantially the same services he
previously provided to HealthTronics for any Restricted Business),
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);
(b) directly or indirectly, alone or
as a partner, joint venturer, officer, director, 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 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
entity;
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(c) directly or indirectly, alone or
as a partner, joint venturer, officer, director, 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 as of the
date hereof, any client, account or location of an Affiliated
Entity; or
(d) directly or indirectly, alone or
as a partner, joint venturer, officer, director, 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
