EXHIBIT 10.59
Release And Settlement Agreement
THIS AGREEMENT (the "Agreement") is made as of June 29, 2001, among
Advanced Nutraceuticals, Inc., a Texas corporation ("ANI"), Bactolac
Pharmaceutical Inc., a Delaware corporation ("Bactolac"), Xxxxx X. Xxxxxx ("Xx
Xxxxxx") and Xxxx Xxxxxx (Xx Xxxxxx and Xxxx Xxxxxx are referred to collectively
as the "Sirkins"). Each of ANI, Bactolac, Xx Xxxxxx, and Xxxx Xxxxxx is
sometimes referred to as a "Party" and may be collectively referred to as the
"Parties."
RECITALS
1. The Sirkins entered into an Agreement and Plan of Merger, dated October
25, 1999 with various affiliates of ANI which was amended pursuant to the
Amendment to Agreement and Plan of Merger, dated November 24, 1999 (the
Agreement and Plan of Merger and Amendment to Agreement and Plan of Merger are
referred to collectively as the "Merger Agreement"); and
2. Pursuant to the Merger Agreement, Ash Corp merged into Bactolac
Pharmaceutical Inc., an affiliate of ANI (the "Merger"); and
3. Prior to the Merger, the Sirkins owned an aggregate of 80% of the stock
of Ash Corp; and
4. In exchange for all of the stock of Ash Corp, the then shareholders of
Ash Corp received from ANI: (i) ANI stock; (ii) $750,000 in cash; (iii)
subordinated promissory notes in the aggregate principal amount of $500,000 (the
"Notes"); and (iv) the right to possibly receive additional shares of ANI stock
as set forth in an Earnout Agreement dated November 30, 1999 (the "Earnout
Agreement"); and
5. The Closing of the Merger of Ash Corp into Bactolac was held on or
about November 30, 1999, and, in connection with the Merger, ANI issued its
stock to the then shareholders of Ash Corp, paid to the then shareholders of Ash
Corp $750,000 in cash, issued the Notes in the principal amount of $155,000 to
Xxxx Xxxxxx and in the principal amount of $345,000 to Xx Xxxxxx, entered into
an Earnout Agreement with Xx Xxxxxx, Xxxx Xxxxxx and the two other persons who
were then shareholders of Ash Corp, Bactolac entered into an Employment
Agreement with Xx Xxxxxx and Bactolac entered into an Employment Agreement with
Xxxx Xxxxxx; and
WHEREAS certain disagreements have developed among ANI, Bactolac and the
Sirkins regarding compliance with certain provisions of the Merger Agreement and
the Employment Agreements, but the Parties believe it is mutually desirable to
resolve these disagreements in the manner set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, and intending to be legally bound, the Parties resolve and
agree as follows:
1. Payment of the Agreement Notes. At the Closing (as hereinafter
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defined), (a) Xx Xxxxxx will deliver to ANI the promissory note in the principal
amount of $345,000 payable to Xx Xxxxxx signed PAID by Xx Xxxxxx, (b) Xxxx
Xxxxxx shall deliver to ANI the promissory note in the principal amount of
$155,000 payable to him signed PAID by Xxxx Xxxxxx, and (c) ANI shall make a
wire transfer to an account designated by the Sirkins of the amount of $435,000.
2. Closing. The Closing will be held at 0000 00/xx/ Xxxxxx, Xxxxxxxx,
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Mississippi at 11:00 a.m. on July ___, 2001 unless the Parties agree to a
different place, time and date.
3. Earnout Agreement. At the Closing, the Sirkins shall deliver to ANI a
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document satisfactory to ANI confirming that the Sirkins no longer have any
right, title and interest in and to any earnout payments or other benefits
pursuant to the Earnout Agreement and assigning to ANI any and all earnout
payments or other benefits which might accrue or might have accrued to them
pursuant to the Earnout Agreement.
4. Termination of Employment Relationship of Xx Xxxxxx. Bactolac and Al
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Xxxxxx have agreed upon Xx Xxxxxx'x termination from his positions as an Xx
Xxxxxx of Bactolac and in any other capacity with Bactolac and ANI, such
termination to become effective July 31, 2001 (the "Employment Termination
Date"). The Employment Agreement, dated November 30, 1999, between Bactolac and
Xx Xxxxxx is terminated.
5. Payments and Other Arrangements with Xx Xxxxxx. Until the Employment
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Termination Date, Xx Xxxxxx shall remain an employee of Bactolac, and will
assist in transition activities reasonably requested by Bactolac. Xx Xxxxxx
will receive his regular salary payments during the month of July, 2001 for his
services through the Employment Termination Date. If possible, Bactolac will
continue to maintain Xx Xxxxxx'x wife, Xxxx Xxxxxx, as a participant in the
Bactolac's medical health insurance program and will pay the premiums of $315.97
per month attributable to her medical insurance from the Employment Termination
Date through August 31, 2002. To the extent that such policy cannot be
maintained, Bactolac will pay to Xxxx Xxxxxx $315.97 per month through August
31, 2002. Xx Xxxxxx'x medical insurance benefits will be terminated as of the
Employment Termination Date, unless Xx Xxxxxx exercises his right to participate
in Bactolac's medical insurance program under the provisions generally known as
COBRA at Xx Xxxxxx'x expense. During the months of August, 2001 through August
2002, Bactolac shall pay to Xx Xxxxxx $315.97 per month for Xx Xxxxxx'x use for
medical insurance or other medical related payments. It is understood between
the parties that Xx Xxxxxx will be seeking a supplemental health insurance
policy (supplemental to Medicare) which if it is available will be paid for by
ANI (so long as its cost does not exceed $315.97). In the event that the cost
is less than the agreed to $315.97, ANI will pay to Xx Xxxxxx the difference on
a monthly basis from August 1, 2001 through August 31, 2002.
6. Release by Xx Xxxxxx. Xx Xxxxxx releases and waives all claims for
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loss, damage or injury arising from or in any way relating to the following
("Claims"):
(a) The employment of Xx Xxxxxx with Bactolac, including his
positions, if any, as an officer of Bactolac, and his termination from
employment and his positions with Bactolac, ANI and any of their affiliates.
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(b) Discrimination on the basis of age, sex, race, religion, national
origin or any other basis, including claims under the Age Discrimination in
Employment Act.
(c) Other violations of federal, state or local statutes, ordinances,
regulations, rules, decisions or laws.
(d) Failure of Bactolac, ANI or any of their affiliates to act in good
faith and deal fairly.
(e) Injuries, illness or disabilities of Xx Xxxxxx.
(f) Exposure of Xx Xxxxxx to toxic or hazardous materials.
(g) Stress, anxiety or mental anguish.
(h) Sexual harassment.
(i) Defamation based on statements to Xx Xxxxxx or others.
(j) Breach of an express or implied employment contract, change in
control contract or other agreement.
(k) Compensation or reimbursement of Xx Xxxxxx.
(l) Unfair employment practices.
(m) Any act or omission by or on behalf of Bactolac, ANI or any of
their affiliates.
7. Claims Included. The Claims released and waived by Xx Xxxxxx include
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claims:
(a) Arising before the date of this Agreement.
(b) Arising on or after the date of this Agreement that relate to Xx
Xxxxxx'x employment by Bactolac.
(c) That are presently known, suspected, unknown or unsuspected by Xx
Xxxxxx.
(d) For reinstatement or future employment;.
(e) For actual, consequential, punitive or special damages.
(f) For attorneys' fees, costs, experts' fees and other expenses of
investigating, litigating or settling Claims.
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(g) Against ANI, Bactolac and their respective affiliates, employees,
officers, directors, agents, attorneys and contractors.
8. Agreement Not To Xxx of Xx Xxxxxx. Xx Xxxxxx waives any right to file
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suit for any Claim. Xx Xxxxxx will not xxx Bactolac, ANI or any of their
affiliates for any Claim. Xx Xxxxxx will not initiate or proceed with any other
action or proceeding against Bactolac, ANI or any of their affiliates that
relates to something that could give rise to a Claim.
9. Agreement Not To Xxx of ANI. ANI waives any right to file suit for
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any Claim. ANI will not xxx Xx Xxxxxx for any Claim. ANI will not initiate or
proceed with any other action or proceeding against Xx Xxxxxx that relates to
something that could give rise to a Claim.
10. Mutual Releases.
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(a) ANI and Bactolac release the Sirkins from any and all claims,
demands, causes of action, liabilities, debts and obligations, not embodied in
this Agreement, against the Sirkins, whether known, unknown, actual, contingent,
or of any nature whatsoever, that exist or could exist as of the date of this
Agreement, related to the Merger Agreement or the Merger, the Earnout Agreement,
the Notes or any other matter related to the Merger, except for the Employment
Agreement between Bactolac and Xxxx Xxxxxx.
(b) Xx Xxxxxx and Xxxx Xxxxxx release ANI, Bactolac, Nutrition For
Life International, Inc. ("NFLI") and the respective officers, directors,
shareholders, employees, affiliates, agents, representatives, attorneys,
successors and assigns of ANI, Bactolac and NFLI from any and all claims,
demands, causes of action, liabilities, debts and obligations, not embodied in
this Agreement, against ANI and Bactolac, whether known, unknown, actual,
contingent, or of any nature whatsoever, that exist or could exist as of the
date of this Agreement, related to the Merger Agreement or the Merger, the
Earnout Agreement, the Notes, or any other matter related to the Merger, with
the exception of the Employment Agreement between Bactolac and Xxxx Xxxxxx.
(c) Notwithstanding the foregoing mutual releases or any other
provisions in this Agreement, nothing shall preclude ANI, Bactolac or any of
their affiliates from commencing or proceeding against Xxxxxxx Xxxxxx and Xxxx
Xxxxxxxxx, Trustee who are former shareholders of Ash Corp and who have received
ANI stock and cash at the closing of the Merger and who were parties to the
Earnout Agreement.
11. Confidences. Xx Xxxxxx will maintain the confidentiality of all of
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the trade secrets, proprietary information, insider information, security
procedures and other confidences of Bactolac and ANI that came into Xx Xxxxxx'x
possession or knowledge during employment by Bactolac. Xx Xxxxxx will not use
such information concerning Bactolac's business prospects or practices to profit
Xx Xxxxxx or others.
12. Property. Xx Xxxxxx represents that all property pertaining to his
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employment by or work with Bactolac, including keys and credit cards, will be
returned to Bactolac at or prior to the Closing.
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13. Entire Agreement; Amendments. This is the entire agreement concerning
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the termination of Xx Xxxxxx'x employment with Bactolac and ANI. Xx Xxxxxx is
not entitled to rely on any other written or oral offer or agreement with
Bactolac and ANI. This Agreement can be modified only by a document signed by
all of the Parties. Xx Xxxxxx acknowledges that the only promises made to cause
Xx Xxxxxx to sign this Agreement are those stated in this Agreement.
14. Successors. This Agreement benefits and binds the parties' heirs,
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representatives and successors.
15. Governing Law and Severability of Power. This Agreement will be
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interpreted in accordance with the laws of the State of Delaware. If any
portion of this Agreement is unenforceable, the remaining portions of the
Agreement will remain enforceable.
16. Fees and Costs. If litigation is commenced concerning Xx Xxxxxx'x
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employment or this Agreement, the prevailing party shall be entitled to an award
of reasonable attorneys' fees and expenses, court costs, experts' fees and
expenses, and all other expenses of litigation.
17. Counterparts. This Agreement may be executed in counterparts, and
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each counterpart, when executed, shall have the efficacy of a signed original.
Photographic copies of such signed counterparts may be used in lieu of the
originals for any purpose.
18. Revocability. Either Xx Xxxxxx or Bactolac may revoke this Agreement
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in its entirety during the seven days following execution of the Agreement by Xx
Xxxxxx. Any revocation of the Agreement must be in writing and hand-delivered
during the revocation period. This Agreement will become enforceable seven days
following execution by Xx Xxxxxx, unless it is revoked during the seven-day
period.
19. Employee Acknowledgements. Xx Xxxxxx understands that this Agreement
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is a final and binding waiver of any claims against Bactolac and ANI, and their
respective affiliates, officers, directors, Al Sirkins, agents, attorneys and
contractors. Xx Xxxxxx acknowledges that he understands that he was given 21
days to consider this Agreement and that he chose to sign this Agreement prior
to the expiration of the 21 day period. Xx Xxxxxx acknowledges that he has been
told to consult with an attorney regarding signing this Agreement and represents
the he has done so.
XXXXX X. XXXXXX ADVANCED NUTRACEUTICALS, INC.
____________________________ By: ___________________________________
Date: July ___, 2001 Date: July ____, 2001
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XXXX XXXXXX BACTOLAC PHARMACEUTICAL INC.
____________________________ By: ___________________________________
Date: July ___, 2001 Date: July ____, 2001
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