September 22, 1997
Xxxxxxx Xxxxxxx
c/o Connetics Corporation
0000 Xxxx Xxxxxxxx Xxxx
Xxxx Xxxx, XX 00000
Dear Xxxxx:
This letter sets forth the substance of the separation agreement (the
"Agreement") that Connetics Corporation (the "Company") is offering to you.
1. Separation. You have tendered, and the Company has accepted, your
resignation as an employee and officer of the Company effective September 17,
1997 (the "Separation Date").
2. Accrued Salary and Paid Time Off. Within 5 business days of the
Effective Date, the Company will pay you all accrued salary, and all accrued and
unused vacation earned through the Separation Date, subject to standard payroll
deductions and withholdings. You are entitled to these payments regardless of
whether or not you sign this Agreement.
3. Severance Benefits. Although the Company has no policy or procedure
for providing severance benefits, the Company will pay you, as severance, 6
months of your base salary in effect on the Separation Date, subject to standard
payroll deductions and withholdings ("Severance Payment"). This amount will be
paid in one lump sum within 10 business days of the Effective Date (as defined
in paragraph 17).
4. Consulting Agreement. You will serve as a consultant to the Company
under the terms specified below. The consulting relationship commences on the
Separation Date and continues through March 17, 1998 ("Consulting Period").
a. Consulting Fees and Services.
i. Consulting Services. You agree to provide consulting
services to the Company in any area of your expertise consistent with your prior
duties with the Company upon request by a duly authorized officer of the
Company. You agree to exercise the highest degree of professionalism and utilize
your expertise and creative talents in performing these services. You agree to
make yourself available to perform such consulting services throughout the
Consulting Period, up to a maximum of 10 hours per month.
ii. Consulting Fees. During the Consulting Period, you will
receive $15,000 per month (prorated for any partial month) as consulting fees
("Consulting Fees"). The Company will pay the Consulting Fees on the first and
fifteenth of each month after the Effective Date, regardless of whether any
consulting services are, in fact, requested by the Company.
iii. Taxes and Withholding. As a consultant, the Company will
not withhold from the Consulting Fees any amount for taxes, social security or
other payroll deductions. The Company will issue you a 1099 form with respect to
your Consulting Fees. You acknowledge that you will be entirely responsible for
payment of any such taxes, and you hereby indemnify and hold harmless the
Company from any liability for any taxes, penalties or interest that may be
assessed by any taxing authority with respect to your failure to pay these
taxes, with the exception of the employer's share of social security, if any.
b. Limitations on Authority. You have no responsibilities or authority
as a consultant to the Company other than as provided for above. You agree not
to represent or purport to represent the Company in any manner whatsoever to any
third party unless authorized by the Company, in writing, to do so.
b. Other Work Activities. During the Consulting Period, you will notify
the Company, in writing, before you obtain full time or substantially full time
employment, perform work for any business entity on a full time or substantially
full time basis (including consulting), or engage in any other work activity on
a full time or substantially full time basis. In the event that you subsequently
engage in such full time or substantially full time work, the Company's
obligation to pay you consulting fees under paragraph 4 will cease immediately,
your Options under paragraph 8 will cease vesting immediately, and the
Consulting Period will end immediately. For the purposes of this Agreement,
"full time or substantially full time" means the lesser of (1) 40 hours per
week, or (2) the number of hours required for full time status as defined by the
employer or business entity for whom you are performing work.
5. Health Insurance. To the extent provided by the federal COBRA law
or, if applicable, state insurance laws, and by the Company's current group
health insurance policies, you will be eligible to continue your health
insurance benefits at your own expense; later, you may be able to convert to an
individual policy through the provider of the Company's health insurance, if you
wish. If you choose to continue coverage under COBRA, as part of this Agreement,
the Company will pay your COBRA health insurance premiums through March 30,
1998. If you become eligible for other health insurance benefits at the expense
of a new employer, however, the Company's obligation to make these payments will
cease immediately. You agree to notify a duly authorized officer of the Company,
in writing, immediately upon your acceptance of any employment that provides
health insurance benefits.
6. Outplacement Assistance. The Company will pay all reasonable and
actual expenses incurred with Right/Corporate Resource Group in an amount not to
exceed $15,000 for outplacement assistance provided to you.
7. Other Compensation or Benefits. You acknowledge that, except as
expressly provided in this Agreement, you will not receive any additional
compensation, severance or benefits from the Company after the Separation Date.
8. Expense Reimbursements. You agree that, within 10 business days of
the Effective Date, you will submit your final documented expense reimbursement
statement reflecting all business expenses you incurred through the Separation
Date, if any, for which you seek reimbursement. The Company will reimburse you
for these expenses pursuant to its regular business practice.
9. Stock Options. The Company and you each acknowledge that, pursuant
to the terms of your outstanding stock options (the "Options"), the Options will
cease vesting and terminate in accordance with their terms at the end of the
Consulting Period. You will have 6 months after the end of the Consulting Period
to exercise your vested nonqualified option shares, if any, in accordance with
the applicable stock option plan. You will have 3 months after the end of the
Consulting Period to exercise your vested incentive stock option shares, if any,
in accordance with the applicable stock option plan.
10. Return of Property. By the Effective Date, you agree to return to
the Company all Company documents (and all copies thereof) and other Company
property that you have had in your possession at any time, including, but not
limited to, Company files, notes, drawings, records, business plans and
forecasts, financial information, specifications, computer-recorded information,
tangible property (including, but not limited to, computers), credit cards,
entry cards, identification badges and keys; and, any materials of any kind that
contain or embody any proprietary or confidential information of the Company
(and all reproductions thereof).
11. Proprietary Information Obligations. Both during and after your
employment, and both during and after the Consulting Period, you acknowledge
your continuing obligations under your Proprietary Information and Inventions
Agreement, including but not limited to your obligation not to use or disclose
any confidential or proprietary information of the Company without prior written
authorization from a duly authorized representative of the Company. A copy of
your Proprietary Information and Inventions Agreement is attached as Exhibit A.
12. Indemnification. The Company acknowledges that its indemnification
obligations, if any, will continue in accordance with the terms of the
applicable directors and officers indemnification agreement.
13. Confidentiality. The provisions of this Agreement will be held in
strictest confidence by you and the Company and will not be publicized or
disclosed in any manner whatsoever; provided, however, that: (a) you may
disclose this Agreement to your immediate family; (b) the parties may disclose
this Agreement in confidence to their respective attorneys, accountants,
auditors, tax preparers, and financial advisors; (c) the Company may disclose
this Agreement as necessary to fulfill standard or legally required corporate
reporting or disclosure requirements; and (d) the parties may disclose this
Agreement insofar as such disclosure may be necessary to enforce its terms or as
otherwise required by law. In particular, and without limitation, you agree not
to disclose the provisions of this Agreement to any current or former Company
employee or other personnel.
14. Nondisparagement. Both you and the Company agree not to disparage
the other party, and the other party's officers, directors, managers, employees,
shareholders and agents, in any manner likely to be harmful to them or their
business, business reputation or personal reputation; provided that both you and
the Company will respond accurately and fully to any question, inquiry or
request for information when required by legal process.
15. Employment References. The Company agrees to direct all inquiries
for employment references to the Company's Human Resources Department. The
Company will provide no other information other than Xx. Xxxxxxx'x dates of
employment, her title as Chief Financial Officer and Vice President, Finance and
Administration, her salary of $181,000, and a statement that it is the Company's
policy not to provide performance evaluation references.
16. Release by You. In exchange for the payments and other
consideration under this Agreement to which you would not otherwise be entitled,
with the exception of any claim arising out of the Company's obligations under
this Agreement, you hereby release, acquit and forever discharge the Company,
its parents and subsidiaries, and their officers, directors, agents, employees,
attorneys, shareholders, successors, assigns and affiliates, of and from any and
all claims, liabilities, demands, causes of action, costs, expenses, attorneys
fees, damages, indemnities and obligations of every kind and nature, in law,
equity, or otherwise, known and unknown, suspected and unsuspected, disclosed
and undisclosed, arising out of or in any way related to agreements, events,
acts or conduct at any time prior to and including the execution date of this
Agreement, including but not limited to: all such claims and demands directly or
indirectly arising out of or in any way connected with my employment with the
Company or the termination of that employment; claims or demands related to
salary, bonuses, commissions, stock, stock options, or any other ownership
interests in the Company, vacation pay, fringe benefits, expense reimbursements,
severance pay, or any other form of compensation; claims pursuant to any
federal, state or local law, statute, or cause of action including, but not
limited to, the federal Civil Rights Act of 1964, as amended; the federal
Americans with Disabilities Act of 1990; the federal Age Discrimination in
Employment Act of 1967, as amended ("ADEA"); the California Fair Employment and
Housing Act, as amended; tort law; contract law; wrongful
discharge; discrimination; harassment; fraud; defamation; emotional distress;
and breach of the implied covenant of good faith and fair dealing.
17. ADEA Waiver. You acknowledge that you are knowingly and voluntarily
waiving and releasing any rights you may have under the ADEA, as amended. You
also acknowledge that the consideration given for the waiver and release in the
preceding paragraph hereof is in addition to anything of value to which you were
already entitled. You further acknowledge that you have been advised by this
writing, as required by the ADEA, that: (a) your waiver and release do not apply
to any rights or claims that may arise after the execution date of this
Agreement; (b) you have the right to consult with an attorney prior to executing
this Agreement; (c) you have 21 days to consider this Agreement (although you
may choose to voluntarily execute this Agreement earlier); (d) you have 7 days
following the execution of this Agreement by the parties to revoke the
Agreement; and (e) this Agreement will not be effective until the date upon
which the revocation period has expired, which will be the eighth day after this
Agreement is executed by you, provided that the Company has also executed this
Agreement by that date ("Effective Date").
18. Release By The Company. The Company hereby releases, acquits and
forever discharges you and your agents, successors, assigns and affiliates from
any and all claims, liabilities, demands, causes of action, costs, expenses,
attorneys fees, damages, indemnities, and obligations of every kind and nature,
in law, equity, or otherwise, known and unknown, suspected and unsuspected,
disclosed and undisclosed arising out of or in any way related to agreements,
events, acts or conduct at any time prior to and including the date the Company
executes this Agreement, relating to any act or omission by you within the
authorized course and scope of your employment with the Company, with the
exception of any claim arising out of your obligations under this Agreement.
19. Section 1542 Waiver. In granting the releases herein, you and the
Company acknowledge that each has read and understands California Civil Code
section 1542, which reads as follows:
A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor.
You and the Company expressly waive and relinquish all rights and benefits under
that section and any law of any jurisdiction of similar effect with respect to
the release of any unknown or unsuspected claims contained in this Agreement.
20. Miscellaneous. This Agreement, including Exhibit A, constitutes the
complete, final and exclusive embodiment of the entire agreement between you and
the Company with regard to this subject matter. It is entered into without
reliance on any promise or representation,
written or oral, other than those expressly contained herein, and it supersedes
any other such promises, warranties or representations. This Agreement may not
be modified or amended except in a writing signed by both you and a duly
authorized officer of the Company. This Agreement binds the heirs, personal
representatives, successors and assigns of both you and the Company, and inures
to the benefit of both you and the Company, their heirs, successors and assigns.
If any provision of this Agreement is determined to be invalid or unenforceable,
in whole or in part, this determination will not affect any other provision of
this Agreement and the provision in question will be modified by the court so as
to be rendered both enforceable and consistent with the general intent of the
parties. This Agreement is deemed to have been entered into and will be
construed and enforced in accordance with the laws of the State of California as
applied to contracts made and to be performed entirely within California.
If this Agreement is acceptable to you, please sign below, and return the
originals of both to me.
I wish you luck in your future endeavors.
Sincerely,
CONNETICS CORPORATION
By: /s/Xxxxxx Xxxxxxx
----------------------------------
Xxxxxx Xxxxxxx
Chief Executive Officer
Exhibit A - Proprietary Information and Inventions Agreement
AGREED:
/s/Xxxxxxx Xxxxxxx
----------------------------------
Xxxxxxx Xxxxxxx
