CONFIDENTIAL SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS
Exhibit 10.31
AND RELEASE OF ALL CLAIMS
This Confidential Settlement Agreement and Release of All Claims (“Agreement”) is made by and
between Artes Medical, Inc.(the “Company”), a Delaware corporation and Xxxxxxx xxx Xxxxxxx (“Xx.
xxx Xxxxxxx”).
A. The Company terminated Xx. xxx Xxxxxxx’x employment on or about October 26, 2006.
B. On or about November 16, 2006, Xx. xxx Xxxxxxx filed a Demand for Arbitration before the
American Arbitration Association (the “Action”), alleging wrongful termination, breach of contract,
breach of the covenant of good faith and fair dealing and fraud.
C. The Company denies any wrongdoing and disputes the allegations of the Action.
D. The parties desire to avoid the potential inconvenience of litigation by settling all
claims and issues that have been raised, or could have been raised, in relation to Xx. xxx
Xxxxxxx’x employment with the Company, the termination thereof, and arising out of or in any way
related to the acts, transactions or occurrences between Xx. xxx Xxxxxxx and the Company to date,
on the terms set forth below.
THEREFORE, in consideration of the promises and mutual agreements set forth in this Agreement,
it is agreed by and between the undersigned as follows:
1. Settlement Compensation.
1.1 The Company agrees to pay to Xx. xxx Xxxxxxx, 12 months salary totaling One Hundred
Seventy Thousand Dollars ($170,000). Xx. xxx Xxxxxxx will be paid in 26 pay periods as W-2 income.
Xx. xxx Xxxxxxx will receive gross pay each pay period in the amount of $6,538.46, less all
applicable withholdings. The operative date of such payments is October 27, 2006. The Company
will make all payments necessary to bring Xx. xxx Xxxxxxx’x pay current within two weeks of the
effective date of this Agreement as described in paragraph 17 below.
1.2 The Company will pay Xx. xxx Xxxxxxx, as W-2 income, bonus compensation of Fifty-Six
Thousand Dollars ($56,000), less all applicable withholdings, upon the earlier of (i) the date
final bonuses are distributed to all employees and executive officers of the Company; or (ii) March
31, 2007.
1.3 Xx. xxx Xxxxxxx will also be entitled to 12 months of additional stock option vesting.
Xx. xxx Xxxxxxx will have a total of 230,187 stock options which will fully vest on the date the
Agreement is executed by the parties. Xx. xxx Xxxxxxx shall have 12 months after the date the
Agreement is executed by the parties to exercise his options. This 230,187 number of shares is
based on the Company’s pre-IPO (initial public offering) stock option schedule. Thus, such shares
will be subject to the same reverse split identified in the Company’s S-1 registration filing
(1:4.25), and therefore the actual number of shares Xx. xxx Xxxxxxx may be granted will be
less than the 230,187 shares as shown in the schedule, attached as Exhibit A. Pricing of
options is also subject to increase to reflect the reverse split as shown on Exhibit A.
1.4 Xx. xxx Xxxxxxx shall indemnify, hold harmless and defend the Company from any claims, tax
liability, interest, penalties, attorneys’ fees or costs which the Company is required to pay as a
result of Xx. xxx Xxxxxxx’x failure to report the Settlement Compensation described herein to the
proper taxing authorities.
2. Dismissal of the Action. Upon executing this Agreement, Xx. xxx Xxxxxxx agrees to
obtain dismissal of the Action in its entirety, with prejudice, by taking all necessary steps to
secure such dismissal.
3. Release of Claims.
3.1 Xx. xxx Xxxxxxx for himself and his heirs, agents, assigns, executors, successors and each
of them, unconditionally, irrevocably and absolutely, releases and discharges the Company and any
parent and subsidiary corporations, divisions, and affiliated corporations, partnerships or other
affiliated entities of the Company, past and present, as well as the Company’s employees, officers,
directors, agents, successors and assigns (“Releasees”), from all claims related in any way to the
transactions or occurrences between them to date, to the fullest extent permitted by law,
including, but not limited to, Xx. xxx Xxxxxxx’x employment with the Company, the termination of
that employment, and all other losses, liabilities, claims, charges, demands and causes of action,
known or unknown, suspected or unsuspected, arising directly or indirectly out of or in any way
connected with Xx. xxx Xxxxxxx’x employment with the Company. This release is intended to have the
broadest possible application and includes any and all tort, contract, common law, constitutional
or other statutory claims, including, but not limited to, alleged violations of Title VII of the
Civil Rights Act of 1964 and the California Fair Employment and Housing Act, the Americans with
Disabilities Act, and all claims for attorneys’ fees, costs and expenses. However, nothing herein
is intended to affect any vested rights Xx. xxx Xxxxxxx may have obtained during the course of his
employment with the Company, or affect Xx. xxx Xxxxxxx’x obligations to the Company pursuant to
that certain Proprietary Information and Inventions Agreement entered into between Xx. xxx Xxxxxxx
and the Company.
3.2 This release does not extend to claims which, as a matter of law, cannot be waived, such
as a right to indemnification under Labor Code Section 2802.
3.3 Xx. xxx Xxxxxxx and the Company declare and represent that they intend this Agreement to
be complete and not subject to any claim of mistake, and that the release herein expresses a full
and complete release and, regardless of the adequacy or inadequacy of the consideration, intend the
release to be final and complete. Xx. xxx Xxxxxxx executes this release with the full knowledge
that this release covers all possible claims against the Releasees to the fullest extent permitted
by law.
4. California Civil Code Section 1542 Waiver. Xx. xxx Xxxxxxx expressly acknowledges
and agrees that all rights under section 1542 of the California Civil Code are expressly waived.
That statute reads as follows:
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A general release does not extend to claims which the creditor does not know of or
suspect to exist in his or her favor at the time of executing the release, which if
known by him or her must have materially affected his or her settlement with the
debtor.
5. Representation Concerning Filing of Legal Actions. Xx. xxx Xxxxxxx represents
that, as of the date of this Agreement, there are no pending lawsuits, charges, complaints,
petitions, claims or other accusatory pleadings against any of the Releasees in any court or with
any governmental agency, with the exception of the Action. Xx. xxx Xxxxxxx further agrees that, to
the fullest extent permitted by law, he will not prosecute, nor allow to be prosecuted on his
behalf, in any administrative agency, whether state or federal, or in any court, whether state or
federal, any claim or demand of any type related to the matters released herein, it being the
intention of Xx. xxx Xxxxxxx that with the execution of this release, Releasees will be absolutely,
unconditionally and forever discharged of and from all obligations to or on behalf of each other
related in any way to the matters discharged herein. If any action is brought, this Agreement will
constitute an affirmative defense thereto.
6. Nondisparagement. Xx. xxx Xxxxxxx agrees that he will not make any voluntary
statements, written or verbal, or cause or encourage others to make any such statements that
defame, disparage or in any way criticize the reputation, business practices or conduct of the
Company or any of the other Releasees.
7. Referral. The Company shall endeavor to direct all inquiries concerning Xx. xxx
Xxxxxxx to its Human Resources department. In response to inquiries, the Company will only verify
the dates of Xx. xxx Xxxxxxx’x employment and his job title.
8. Reemployment. Xx. xxx Xxxxxxx agrees that he will not apply for employment or
otherwise request to be considered for employment with the Company or its affiliates, either in his
former capacity or in any other position or capacity.
9. Confidentiality.
9.1 The parties agree that the terms and conditions of this Agreement, as well as the
discussions that led to the terms and conditions of this Agreement (collectively referred to as the
“Confidential Settlement Information”) are intended to remain confidential between Xx. xxx Xxxxxxx
and the Company.
9.2 The Company may disclose the amount of the Settlement Compensation, and other terms deemed
in good faith to be strictly necessary for the conduct of its business, subject to a “need to know”
basis.
9.3 Xx. xxx Xxxxxxx agrees that he will not disclose the Confidential Settlement Information
to any other person, except that Xx. xxx Xxxxxxx may disclose such information to his spouse, his
attorney(s) and accountant(s), if any, to the extent needed for legal advice or income tax
reporting purposes. When releasing this information to any such person, Xx. xxx Xxxxxxx shall
advise the person receiving the information of its confidential nature. Neither Mr.
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xxx Xxxxxxx nor anyone to whom the Confidential Settlement Information has been disclosed will
respond to, or in any way participate in or contribute to, any public discussion, notice or other
publicity concerning the Confidential Settlement Information.
9.4 If Xx. xxx Xxxxxxx is asked about the Action by anyone other than those individuals
specifically identified in paragraph 9.3, he may respond only as follows: “The matter has been
resolved.”
10. Liquidated Damages for Violating Confidentiality Provisions. Xx. xxx Xxxxxxx
understands and agrees that the confidentiality provisions of this Agreement, as set forth in
paragraph 9 above, is a material part of this Agreement. Xx. xxx Xxxxxxx agrees to refrain from
violating these provisions. Further, the parties understand and agree that it is difficult to
ascertain the measure of damage to the Company in the event of a breach of this provision by Xx.
xxx Xxxxxxx. For the foregoing reasons, if any of the provisions of paragraph 9 are breached, the
Company shall not be obligated to pay any sums remaining under the terms of this Agreement to Xx.
xxx Xxxxxxx, if any, and Xx. xxx Xxxxxxx will pay, upon proof of breach, to the Company liquidated
damages in the sum of ten thousand dollars ($10,000). In the event of Xx. xxx Xxxxxxx’x breach in
accordance with this provision, all other provisions of this Agreement will remain in full force
and effect.
11. No Admissions. By entering into this Agreement, Xx. xxx Xxxxxxx and the Company
make no admission that they have engaged, or are now engaging, in any unlawful conduct. It is
understood that this Agreement is not an admission of liability, that there has been no trial or
adjudication of any issue of law or fact herein, and that the parties specifically deny liability
and intend merely to avoid expense by entering into this Agreement.
12. Notice. Any notice required or permitted by this Agreement shall be in writing
and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight
delivery service, certified mail with postage prepaid, or confirmed facsimile. Notice should be
delivered to the following addresses:
Notice to Artes Medical, Inc.:
|
Notice to Xxxxxxx xxx Xxxxxxx: | |
Xxxxxx Xxxxxx LLP
|
Xxxxxxx X. Xxxxxxxx, Esq. | |
Xxxxxx X. Xxxxxx, Esq.
|
Xxxxxxxx & XxXxxxx, L.L.P. | |
0000 Xx Xxxxx Xxxxxxx Xxxxx
|
2650 Camino Del Rio North | |
7th Floor
|
Suite 108 | |
San Diego, CA 92122
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Xxx Xxxxx, XX 00000 | |
Fax: (000) 000-0000
|
Fax: (000) 000-0000 |
13. Entire Agreement/Modification. This Agreement is intended to be the entire
agreement between the parties and supersedes and cancels any and all other and prior agreements,
written or oral, between the parties regarding this subject matter. It is agreed that there are no
collateral agreements or representations, written or oral, regarding the settlement of claims
between the parties, other than those set forth in this Agreement. This Agreement may be amended
only by a written instrument executed by all parties hereto.
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14. Severability. In the event any provision of this Agreement shall be found
unenforceable by an arbitrator or a court of competent jurisdiction, the provision shall be deemed
modified to the extent necessary to allow enforceability of the provision as so limited, it being
intended that the Company shall receive the benefits contemplated herein to the fullest extent
permitted by law. If a deemed modification is not satisfactory in the judgment of such arbitrator
or court, the unenforceable provision shall be deemed deleted, and the validity and enforceability
of the remaining provisions shall not be affected thereby.
15. Applicable Law. The validity, interpretation and performance of this Agreement
shall be construed and interpreted according to the laws of the State of California.
16. Full Defense. This Agreement may be pled as a full and complete defense to, and
may be used as a basis for an injunction against, any action, suit or other proceeding that may be
prosecuted, instituted or attempted by Xx. xxx Xxxxxxx in breach hereof. The parties agree that in
the event an action or proceeding is instituted by either party in order to enforce the terms or
provisions of this Agreement, the prevailing party shall be entitled to an award of reasonable
costs and attorneys’ fees incurred in connection with enforcing this Agreement.
17. Older Workers’ Benefit Protection Act. Xx. xxx Xxxxxxx acknowledges that the
Company has advised him to review this Agreement with an attorney before signing it. Xx. xxx
Xxxxxxx has 21 days within which to review and consider this Agreement before signing it. Should
Xx. xxx Xxxxxxx decide not to use the entire 21 days, Xx. xxx Xxxxxxx knowingly and voluntarily
waives any claim that he was not in fact given that period of time or did not use the entire 21
days to consult an attorney and/or consider this Agreement. Xx. xxx Xxxxxxx may revoke the
Agreement for up to seven calendar days after signing it, and this Agreement shall not become
effective or enforceable until the revocation period has passed. Any revocation of this Agreement
must be in writing addressed to and received by Human Resources on behalf of the Company no later
than 5:00 p.m. on the seventh day after Xx. xxx Xxxxxxx signs it. If Xx. xxx Xxxxxxx revokes this
Agreement, he will not receive any of the benefits described in this Agreement. This Agreement
does not waive or release any rights or claims Xx. xxx Xxxxxxx may have under the Age
Discrimination in Employment Act that arise after the execution of this Agreement.
18. Attorneys’ Fees and Costs. Both parties to this Agreement agree that they will
bear their own attorneys’ fees, costs and all other expenses in connection with the matters
released in this Agreement.
19. Good Faith. The parties agree to do all things necessary and to execute all
further documents necessary and appropriate to carry out and effectuate the terms and purposes of
this Agreement.
20. Counterparts. This Agreement may be executed by facsimile signature, and in
separate counterparts, each of which shall be deemed an original and all of which, when taken
together, shall constitute one and the same instrument.
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THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND EACH AND
EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE DATE
SHOWN BELOW.
| Dated: January 9, 2007 | /s/ Xxxxxxx xxx Xxxxxxx | |||||
| Xxxxxxx xxx Xxxxxxx | ||||||
| Dated: January 10, 2007 | Artes Medical, Inc. | |||||
| By: | /s/ Xxxxxxxxxxx X. Xxxxxxxx | |||||
| Xxxxxxxxxxx X. Xxxxxxxx | ||||||
APPROVED AS TO FORM: |
||||||
| Dated: January 9, 2007 | Xxxxxxx X. Xxxxxxxx | |||||
| /s/ Xxxxxxx X. Xxxxxxxx | ||||||
| Xxxxxxx X. Xxxxxxxx | ||||||
| Attorneys for Xxxxxxx xxx Xxxxxxx | ||||||
| Dated: January 9, 2007 | XXXXXX XXXXXX LLP | |||||
| /s/ Xxxxxx X. Xxxxxx | ||||||
| Xxxxxx X. Xxxxxx, Esq. | ||||||
| Attorneys for Artes Medical, Inc. | ||||||
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Exhibit A
(Options Summary)
(Options Summary)
[Intentionally Omitted]
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