December 2, 2005 Larry J. Strauss Dear Larry:
Exhibit 10.12
December 2, 2005
Xxxxx X. Xxxxxxx
Dear Xxxxx:
This letter sets forth the terms of the separation agreement (the “Agreement”) that Xxxxxx Medical,
Inc. (the “Company”) is offering to you to aid in your employment transition.
1. Separation Date. Your employment termination date will be December 2, 2005 (the
“Separation Date”).
2. Accrued Salary and Vacation Pay. On the Separation Date, the Company will pay you all
accrued salary and all accrued and unused vacation (if any) earned by you through the Separation
Date, less standard payroll deductions and withholdings. You are entitled to these payments by
law.
3. Severance Pay. Although the Company is not otherwise obligated to do so, if you sign and
return this Agreement to the Company the Company will pay you as severance $168,750 (the “Severance
Amount”), which is equivalent to nine (9) months of your base salary in effect as of the Separation
Date. The Severance Amount will be paid to you in a lump sum between January 2, 2006 and January
6, 2006 or as soon thereafter as the Effective Date occurs and it will be subject to standard
payroll deductions and withholdings. The net amount of the payment will be $118,471.04.
4. Health Insurance. You will continue to receive health insurance benefits under the
Company’s group plans, as currently enrolled (medical, dental and vision), through December 31,
2005. After this date, and 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 group 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. You will be provided with a separate notice describing your rights and obligations under
the applicable state and/or federal insurance laws. As an additional severance benefit, if you
enter into this Agreement and timely elect continued coverage, then the Company will, for nine (9)
months after December 31, 2005 (the “COBRA Reimbursement Period”), reimburse you for premium
payments including administrative costs, if any, charged by the Company sufficient to continue your
group health insurance coverage at the level in effect as of the Separation Date (including
dependent coverage, if any); provided, however, that your right to such payments shall cease on the
date that you become eligible for group health insurance benefits through a new employer. You
agree to promptly notify the Company’s Chief Executive Officer (“CEO”) in writing or via email if
you become eligible for group health insurance coverage through a new employer during the
reimbursement period. In the event the group health insurance benefits through a new employer
exclude any pre-existing condition of you or your
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dependents, the Company will continue reimbursements for the duration of the COBRA
Reimbursement Period or until the exclusion has been removed.
5. Stock Option. Pursuant to the terms of your stock option agreement (the “Option”) and the
Company’s 2002 Stock Plan (the “Plan”), your Option shares will cease vesting as of the Separation
Date, and your Option on all shares unvested as of that date will terminate. However, as an
additional severance benefit, if you enter into this Agreement, the Company will accelerate vesting
of the Option shares such that 50,000 shares of your initial stock option grant will become fully
vested and exercisable effective as of the Separation Date. Your rights to exercise any vested
Option shares shall be governed by the terms and conditions of your Option and the Plan.
6. No Other Compensation or Benefits. You acknowledge that, except as expressly provided in
this Agreement, you have not earned and will not receive from the Company any additional
compensation, severance, or benefits relating to or arising from your employment with the Company,
after the Separation Date, with the exception of any vested right you may have under the express
terms of a written ERISA-qualified benefit plan (e.g., 401(k) account). By way of example, you
acknowledge that you are not owed any bonus, incentive compensation, or commissions, except as may
be expressly provided herein.
7. Expense Reimbursement. You agree that, within thirty (30) days of the Effective Date of
this Agreement, you will submit your final documented expense reimbursement statement reflecting
all business expenses you incurred through the Separation Date, for which you seek reimbursement.
The Company will reimburse you for such expenses pursuant to its regular business practice.
8. Return of Company Property. Within five (5) days of the Effective Date of this Agreement,
you agree to return to the Company all Company documents (and all copies thereof) and other Company
property in your possession or control, including, but not limited to, Company files, notes,
correspondence, memoranda, notebooks, drawings, records, reports, lists, compilations of data,
proposals, agreements, drafts, minutes, studies, plans, forecasts, purchase orders, business cards
and stationery, financial and operational information, technical and training information, research
and development information, customer information and contact lists, sales and marketing
information, personnel information, vendor information, promotional literature and instructions,
product and manufacturing information, computer-recorded information, electronic information
(including e-mail and correspondence), other tangible property and equipment (including, but not
limited to, computer equipment and facsimile machines), 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 in whole or in part). You
agree that you will make a diligent search to locate any such documents, property and information.
In addition, if you have used any personal computer, server, or e-mail system to receive, store,
prepare or transmit any Company confidential or proprietary data, materials or information that is
in addition to Company confidential or proprietary data, materials or information also stored on
Company servers, you agree to immediately provide the Company with a computer-useable copy of all
such information, and in any event you agree to permanently delete and expunge such Company
confidential or proprietary information from those systems; and you agree to provide the
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Company access to your system as reasonably requested to verify that the necessary copying
and/or deletion is completed. Your timely return of all such Company documents and other property
is a precondition to your receipt of the Severance Amount and other benefits provided under this
Agreement. Notwithstanding anything in this paragraph, the Company agrees that you may retain your
Company cell phone, provided that you immediately arrange to change the billing responsibility for
the cell phone to yourself personally (rather than to Company).
9. Proprietary Information Obligations. You acknowledge your continuing obligations under
your Proprietary Information and Inventions Agreement (the “Proprietary Information Agreement”), a
copy of which is attached hereto as Exhibit A.
10. 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 in confidence 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 terms of this Agreement to any current or former Company employee.
11. Nondisparagement. You agree not to disparage the Company and its officers, directors,
employees, shareholders and agents, in any manner likely to be harmful to them or their business,
business reputation or personal reputation; and the Company (through its officers and directors)
agrees not to disparage you in any manner likely to be harmful to you or your business, business
reputation or personal reputation; provided that you and the Company may respond accurately and
fully to any inquiry or request for information when required by legal process.
12. No Voluntary Adverse Action. You agree that you will not voluntarily (except in response
to legal compulsion) assist any third party in bringing or pursuing any proposed or pending
litigation, arbitration, administrative claim or other formal proceeding against the Company, its
parent or subsidiary entities, affiliates, officers, directors, employees or agents.
13. Cooperation. You agree to cooperate fully with the Company in connection with its actual
or contemplated defense, prosecution, or investigation of any claims or demands by or against third
parties, or other matters, arising from events, acts, or failures to act that occurred during the
period of your employment by the Company. Such cooperation includes, without limitation, making
yourself available to the Company upon reasonable notice, without subpoena, to provide complete,
truthful, and accurate information in witness interviews and deposition and trial testimony. The
Company will pay you $200 per hour for the time spent and reimburse you for reasonable
out-of-pocket expenses you incur in connection with any such cooperation (excluding forgone wages
or other compensation) and will make reasonable efforts to accommodate your scheduling needs. In
addition, you agree to execute all documents (if any) necessary to carry out the terms of this
Agreement.
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14. No Admissions. Nothing contained in this Agreement shall be construed as an admission by
you or the Company of any liability, obligation, wrongdoing or violation of law.
15. Your Release of Claims. In exchange for the consideration under this Agreement to which
you would not otherwise be entitled, including but not limited to the Severance Amount, payment of
health insurance continuation premiums, outplacement assistance, and accelerated stock option
vesting, you hereby generally and completely release, acquit and forever discharge the Company and
its parent or subsidiary entities, successors, predecessors and affiliates, and its and their
directors, officers, employees, shareholders, agents, attorneys, insurers, affiliates and assigns,
from any and all claims, liabilities and obligations, both known and unknown, that arise from or
are in any way related to events, acts, conduct, or omissions occurring at any time prior to and
including the date you sign this Agreement. This general release includes, but is not limited to:
(a) all claims arising out of or in any way related to your employment with the Company or the
termination of that employment; (b) all claims related to your compensation or benefits from the
Company, including salary, bonuses, commissions, vacation pay, expense reimbursements, severance
payments, fringe benefits, stock, stock options, or any other ownership or equity interests in the
Company; (c) all claims for breach of contract, wrongful termination, and breach of the implied
covenant of good faith and fair dealing; (d) all tort claims, including but not limited to claims
for fraud, defamation, emotional distress, and discharge in violation of public policy; and (e) all
federal, state, and local statutory claims, including but not limited to claims for discrimination,
harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights
Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990 (as amended), the
federal Age Discrimination in Employment Act of 1967 (as amended) (the “ADEA”), the California
Labor Code, and the California Fair Employment and Housing Act. Notwithstanding the foregoing, you
are not hereby releasing the Company from any obligation it may otherwise have to indemnify you for
your acts within the course and scope of your employment with the Company, pursuant to the articles
and bylaws of the Company, any fully executed written agreement with the Company, or applicable
law. Additionally, the company hereby agrees to indemnify you to the fullest extent permitted by
California law with regard to any claims or actions that may be brought against you by third
parties for actions in the course and scope of your employment. You represent that you have no
lawsuits, claims or actions pending in your name, or on behalf of any other person or entity,
against the Company or any other person or entity subject to the release granted in this paragraph.
In addition, you covenant not to xxx, initiate, or continue any legal or administrative proceeding
with regard to any or all claims you have released herein.
16. Company Release of Claims. The Company, on behalf of itself and all of its subsidiaries,
hereby generally and completely releases, acquits and forever discharges you from any and all
claims, liabilities and obligations, both known and unknown, that arise from or are in any way
related to events, acts, conduct, or omissions within the course and scope of your employment with
the Company at any time prior to and including the date the Company signs this Agreement. The
Company hereby represents that it has no lawsuits, claims or actions pending in its name, or on
behalf of any other person or entity, against you or any other person or entity subject to the
release granted in this paragraph. In addition, the Company covenants not to xxx, initiate, or
continue any legal or administrative proceeding with regard to any or all claims it has released
herein.
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17. ADEA Waiver. You hereby acknowledge that you are knowingly and
voluntarily waiving and releasing any rights you may have under the ADEA and that the consideration
given for the waiver and release in the preceding paragraph 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 you sign this Agreement; (b) you should consult with an attorney prior
to executing this Agreement (although you may voluntarily decide not to do so); (c) you have
twenty-one (21) days within which to consider this Agreement (although you may choose to
voluntarily execute this Agreement earlier); (d) you have seven (7) days following the execution of
this Agreement to revoke this Agreement (in a written revocation sent to the Company’s CEO); and
(e) this Agreement will not be effective until the eighth day after this Agreement has been signed
both by you and by the Company (the “Effective Date”).
18. Section 1542 Waiver. In giving the releases set forth in this Agreement, which include
claims which may be unknown to you at present, you acknowledge that you have read and understand
Section 1542 of the California Civil Code 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 hereby expressly waive and relinquish all rights and benefits under that section and
any law or legal principle of similar effect in any jurisdiction with respect to the releases
granted herein, including but not limited to the release of unknown and unsuspected claims granted
in this Agreement.
19. Dispute Resolution. To aid in the rapid and economical resolution of any disputes which
may arise under this Agreement, you and the Company agree that any and all claims, disputes or
controversies of any nature whatsoever arising from or regarding the interpretation, performance,
negotiation, execution, enforcement or breach of this Agreement shall be resolved by confidential,
final and binding arbitration conducted before a single arbitrator with Judicial Arbitration and
Mediation Services, Inc. (“JAMS”) in San Francisco, California, under JAMS’ then-applicable
arbitration rules. The parties acknowledge that, by agreeing to this arbitration procedure, they
waive the right to resolve any such dispute through a trial by jury, judge or administrative
proceeding. You will have the right to be represented by legal counsel at any arbitration
proceeding. The arbitrator shall: (a) have the authority to compel adequate discovery for the
resolution of the dispute and to award such relief as would otherwise be available under applicable
law in a court proceeding; and (b) issue a written statement signed by the arbitrator regarding the
disposition of each claim and the relief, if any, awarded as to each claim, the reasons for the
award, and the arbitrator’s essential findings and conclusions on which the award is based. The
Company shall bear the arbitration association’s arbitration fees and administrative costs.
Nothing in this Agreement shall prevent either you or the Company from obtaining injunctive relief
in court to prevent irreparable harm pending the conclusion of any such arbitration. Any awards or
orders in such arbitrations may be entered and enforced as judgments in the federal and state
courts of any competent jurisdiction. The arbitrator, and not a court, shall be authorized to
determine whether the provisions of this paragraph apply to a dispute, controversy or claim sought
to be resolved in accordance with these arbitration procedures.
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20. Miscellaneous. This Agreement constitutes the complete, final and exclusive embodiment of
the entire agreement between you and the Company with regard to its 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. By way
of example (and without limitation), this Agreement supersedes your employment offer letter, dated
March 23, 2005, and the accompanying Vesting Acceleration and Severance Agreement. 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 will bind the heirs, personal representatives, successors and
assigns of both you and the Company, and inure 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 so as to be rendered enforceable in a
manner consistent with the intent of the parties insofar as possible under applicable law. This
Agreement shall be deemed to have been entered into, and construed and enforced in accordance with,
the laws of the State of California without regard to conflicts of law principles. Any ambiguity
in this Agreement shall not be construed against either party as the drafter. Any waiver of a
breach of this Agreement, or rights hereunder, shall be in writing and shall not be deemed to be a
waiver of any successive breach or rights hereunder. This Agreement may be executed in
counterparts which shall be deemed to be part of one original, and facsimile signatures will
suffice as original signatures.
If this Agreement is acceptable to you, please sign below and return the original to me.
Sincerely,
Xxxxxx Medical, Inc.
| By: | /s/ Xx. Xxxxxxxx X. Xxxx | |||
| Xx. Xxxxxxxx X. Xxxx | ||||
| Founder and CEO | ||||
Understood and Agreed:
| /s/ Xxxxx X. Xxxxxxx | ||||
| Xxxxx X. Xxxxxxx | ||||
Date: 12-18-05
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Exhibit A
Proprietary Information and Inventions Agreement
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