Exhibit 10.4
SEPARATION AGREEMENT AND GENERAL RELEASE
This Separation Agreement and General Release (this "Agreement") is
made and entered into this 9th day of October, 1998, by and between ▇▇▇▇▇▇▇
▇. ▇▇▇▇ ("Rush"), a resident of the State of Minnesota, and Nutrition
Medical, Inc. (the "Company"), a Minnesota corporation.
WHEREAS, Rush was employed as President and Chief Executive Officer
of the Company from July 1993 through August 31, 1998;
WHEREAS, Rush resigned his employment with the Company effective
August 31, 1998;
WHEREAS, Rush and the Company are currently parties to that certain
Executive Employment Agreement, effective as of October 1, 1996, by and
between the Company and Rush which amended and restated in its entirety that
certain Executive Employment Agreement dated September 18, 1996 by and
between Rush and the Company (as so amended and restated, the "Employment
Agreement");
WHEREAS, pursuant to Section 4.7 of the Employment Agreement, the
parties thereto may terminate the Employment Agreement at any time upon such
terms or conditions as such parties may agree;
WHEREAS, Rush has negotiated with the Company regarding the terms
and conditions of his resignation and separation from the Company;
WHEREAS, Rush and the Company desire to settle all disputes related
directly or indirectly to Rush's employment with the Company, and Rush's
resignation from employment, in accordance with the terms and conditions set
forth in this Agreement; and
WHEREAS, Rush desires to enter into a consulting agreement (the
"Consulting Agreement") with GalaGen, Inc. ("GalaGen") pursuant to which Rush
would disclose to GalaGen certain confidential information related to the
Company's critical care business, subject to the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements set forth in this Agreement and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Rush and the Company agree as follows:
1. TERMINATION OF EMPLOYMENT AGREEMENT. Pursuant to Section 4.7
of the Employment Agreement, the parties hereto hereby terminate the
Employment Agreement upon the terms and conditions set forth in this
Agreement.
2. RESIGNATION OF RUSH. Rush agrees and acknowledges that he
resigned voluntarily as President and Chief Executive Officer of the Company
on August 31, 1998 and, effective as of August 31, 1998, does not serve in
any capacity as an employee of the Company.
3. COMPENSATION TO RUSH. The Company will provide Rush with the
following payments and benefits:
(a) The Company shall pay Rush $7,900 on the date hereof.
(b) The Company shall pay Rush $87,100 on October 26, 1998.
(c) On or prior to October 26, 1998, the Company shall transfer
its beneficiary rights under its key man life insurance policy on Rush
(Northwestern Mutual Life policy no. 13-775-828) to a designee of Rush's
choice.
(d) On or prior to October 26, 1998, and contingent upon Rush
assuming or obtaining a discharge of all of the Company's payment
obligations (such payment obligations being equal to $1,000 per month
from October 1998 through and including December 1998) to ▇▇▇▇▇▇ &
Associates under the International Sales Broker Agreement, dated as of
December 1, 1997, by and between the Company and ▇▇▇▇▇▇, ▇▇▇▇ shall
receive $4,000 of the cash surrender value of the Company's split dollar
life insurance policy on Rush (Northwestern Mutual Life policy no.
14-240-880).
(e) The Company shall pay Rush $17,642 on October 31, 1998.
(f) Rush shall have the option (the "Option") to purchase 25,000
shares of the Company's common stock, $.04 par value, at a per share
exercise price of $14.00, subject to the terms and conditions of the
Company's 1995 Long-Term Incentive and Stock Plan. The Option was
granted to Rush under the terms of the Employment Agreement and was
fully vested as to 12,500 of such shares on April 1, 1998. The Option
as to the remaining 12,500 shares will vest as of the date hereof. The
Option will be canceled on the second anniversary of the date hereof
with respect to shares that have not been purchased by Rush prior to
such date pursuant to the Option.
(g) On or prior to October 26, 1998, the Company shall pay Rush
for all accrued but unpaid vacation pay.
Notwithstanding the foregoing, the Company shall have no obligation to make the
payments required by, or transfer its beneficiary rights pursuant to, paragraphs
3(b), 3(c), 3(d), 3(e) and
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3(g) if Rush exercises his right to rescind or revoke this Agreement as far
as it extends to potential claims under Minn. Stat. Ch. 363 or the Age
Discrimination in Employment Act pursuant to Paragraph 10(a) or 10(c),
respectively.
4. NO LEGAL ENTITLEMENT TO COMPENSATION AND BENEFITS. Rush agrees
and acknowledges that the Company has no legal obligation absent an agreement
between the parties hereto to provide the compensation and benefits described
in Paragraph 3 and that the Company has agreed to provide Rush such
compensation and benefits to reach an expeditious and amicable resolution
regarding the terms and conditions of Rush's resignation. Rush agrees that he
was not entitled to any of the compensation and benefits specified in
Paragraph 3 absent his execution of this Agreement.
5. INCLUSIVE OF ALL INCOME AND OTHER BENEFITS. Rush agrees that
the compensation and benefits described in Paragraph 3 shall take the place
of, and discharge, any obligations of the Company to Rush for compensation or
any other expectations of payment or benefit on the part of Rush, including,
without limitation, all obligations of the Company to Rush under the
Employment Agreement.
6. PROPRIETARY INFORMATION. Rush acknowledges that during his
employment with the Company, he has been exposed to and acquired
confidential, proprietary and trade secret information belonging to the
Company and the Company's customers ("Confidential Information"), including,
without limitation, designs, processes, formulae, plans, devices and
material, directly or indirectly, useful in any aspect of the Company's
business, past, current or anticipated products or services, customer and
supplier lists, development and research work, business strategies, plans and
proposals, financial, employee and personnel data and information and
purchasing, accounting, marketing, selling and services information. Rush
understands and agrees that such Confidential Information has been disclosed
to him in confidence and for the sole benefit of the Company. Rush agrees
that beginning on the date of this Agreement he, Medical Nutrition, Inc. and
any other entity directly or indirectly controlled by Rush will (i)
diligently protect the confidentiality of all Confidential Information; (ii)
not disclose or communicate any Confidential Information to any third party
without the consent of the Company; and (iii) not make use of Confidential
Information on his own behalf or on behalf of any third party. Rush agrees
that any unauthorized disclosure or use of such Confidential Information to
or on behalf of third parties would cause irreparable harm to the
confidential status of such information and to the Company, and, therefore,
the Company shall be entitled to an injunction prohibiting any such
disclosure, use, or threatened disclosure or use. The foregoing obligations
of confidentiality shall not apply to any knowledge or information that is
now or subsequently becomes generally publicly known, other than as a direct
or indirect result of a breach of this Agreement by Rush. Notwithstanding the
foregoing, Rush may disclose to GalaGen, pursuant to the Consulting
Agreement, Confidential Information related to the Company's critical care
business; provided, however, that if the Company does not sell its critical
care business to GalaGen prior to December 31, 1998, Rush may no longer
disclose such information.
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Rush expressly acknowledges that the terms of this Paragraph 6
shall survive the expiration or termination of other agreements or duties in
this Agreement.
7. COMPANY PROPERTY. Rush represents that he has not and will
not remove any Confidential Information or other property from the Company's
premises, including, without limitation, all documents, reports, manuals,
business plans, minutes, memoranda, computer software, computer databases,
computer print-outs, member or customer lists, credit cards, keys,
identification, products, access cards, and all other tangible property
relating in any way to the business of the Company, even if Rush authored,
created or assisted in authoring or creating such property. Rush agrees that
within fifteen (15) days of the date of this Agreement, he will return to the
Company all Confidential Information and other Company property currently in
his possession or under his control.
8. DISCLOSURE AND ASSIGNMENT OF INVENTIONS AND OTHER WORKS. Rush
shall promptly disclose to the Company in writing (i) all ideas, improvement
and discoveries, whether or not such are patentable or copyrightable, and
whether or not in writing or reduced to practice ("Inventions") and (ii) all
writings, drawings, diagrams, charts, tables, databases, software (in object
or source code and recorded on any medium), and any other works of
authorship, whether or not such are copyrightable ("Works of Authorship"),
which are conceived, made, discovered, written or created by Rush alone or
jointly with another person, group or entity, whether during the normal hours
of his employment at the Company or on his own time, during the term of
Rush's employment with the Company and until August 31, 1998. Rush hereby
assigns all rights to all such Inventions and Works of Authorship to the
Company. Rush will give the Company all the assistance it reasonably
requires for the Company to perfect, protect, and use its rights to such
Inventions and Works of Authorship. Rush shall sign all such documents, take
all such actions and supply all such information that the Company considers
necessary or desirable to transfer or record the transfer of Rush's entire
right, title and interest in such Inventions and Works of Authorship and to
enable the Company to obtain exclusive patent, copyright, or other legal
protection for Inventions and Works of Authorship anywhere in the world,
provided the Company shall bear all reasonable expenses of Rush in rendering
such cooperation. Notwithstanding the above, the following shall not be
deemed Inventions or Works of Authorship assigned to the Company by Rush
hereunder: any invention or work of authorship for which no equipment,
supplies, facility or Confidential Information of the Company was used and
which was developed entirely on Rush's own time, and which (a) does not
relate (i) directly to the business of the Company or (ii) to which the
Company's actual or demonstrably anticipated research or development, or (b)
which does not result from any work performed by Rush for the Company.
9. FULL COMPROMISE AND GENERAL RELEASE.
(a) Full Compromise. Rush agrees that the payment and acceptance
of the consideration described in Paragraph 3 is in full, final, and
complete compromise, settlement, and satisfaction of any and all claims
relating directly or indirectly to (i)
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Rush's hiring by the Company, (ii) Rush's employment with the Company,
(iii) Rush's resignation from employment with the Company, and (iv)
claims Rush could have asserted in any litigation against the Company or
any of the "Released Parties" as that term is defined in Paragraph 9(b).
(b) General Release. For the considerations expressed in this
Agreement, Rush, for and on behalf of himself and his heirs,
administrators, executors, successors and assigns, agrees to, and hereby
does, release, acquit, and forever discharge the Company and its
affiliates, subsidiaries, and related companies, and the current and
former directors, officers, members, agents, attorneys, servants,
independent contractors and employees of the Company and all of its
related entities (the "Released Parties"), from any and all claims,
whether direct or indirect, fixed or contingent, known or unknown, which
Rush ever had, has, or may claim to have, for, upon, or by reason of any
matter, act or thing prior to the date of this Agreement, including, but
not limited to, any cause of action Rush could have asserted in any
litigation against any of the Released Parties, any cause of action or
claim relating to Rush's association with or employment by the Company,
and/or any cause of action or claim relating to Rush's decision to
resign. The General Release of this Paragraph 9 specifically
encompasses, but is not limited to, claims that could be brought under
the Minnesota Human Rights Act, Minn. Stat. Section 363.01 et seq.;
Title VII of the Civil Rights Act, 42 U.S.C. Section 2000e, et seq., as
amended by the Civil Rights Act of 1991; the Age Discrimination in
Employment Act, 29 U.S.C. Section 621 et seq. (the "Age Discrimination
in Employment Act"); the Americans With Disabilities Act, 42 U.S.C.
Sections 12101-12213; the Employee Retirement Income Security Act
(ERISA), 29 U.S.C. Section 1001, et seq.; the Fair Labor Standards Act,
29 U.S.C. Section 201, et seq.; the National Labor Relations Act, 29
U.S.C. Section 151, et seq.; the Worker Adjustment Retraining and
Notification Act, 29 U.S.C. Section 2101, et seq.; and any other federal
or state statute, or local ordinance, including any attorneys' fees,
liquidated damages, punitive damages, costs or disbursements that could
be awarded in connection with these or any other statutory claims.
The General Release of this Paragraph 9 also specifically
encompasses any and all claims grounded in contract or tort theories,
including, but not limited to, breach of contract; tortious interference
with contractual relations; promissory estoppel; breach of the implied
covenant of good faith and fair dealing; breach of employee handbooks,
manuals or other policies; wrongful discharge; wrongful discharge in
violation of public policy; assault; battery; fraud; false imprisonment;
invasion of privacy; intentional or negligent misrepresentation;
defamation, including libel and slander, discharge defamation and
self-defamation; intentional or negligent infliction of emotional
distress; negligence; breach of fiduciary duty; negligent hiring,
retention or supervision; whistleblower claims; and/or any other
contract or tort theory based on either intentional or negligent conduct
of any kind, including any attorneys' fees, liquidated damages, punitive
damages, costs or disbursements that could be awarded in connection with
these or any other common law claims. The Company and Rush agree that,
by signing this
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Agreement, Rush does not waive any claims arising after the execution of
this Agreement.
10. RIGHT TO CONSIDER AND RESCIND THIS AGREEMENT.
(a) Right to Rescind or Revoke under Minn. Stat. Ch.
363. Rush has been informed of his right to rescind this Agreement
as far as it extends to potential claims under Minn. Stat. Ch. 363
(prohibiting discrimination in employment) by written notice to the
Company within fifteen (15) calendar days following his execution of
this Agreement. To be effective, such written notice must be
delivered either by hand or by mail, to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (phone
number: ▇▇▇-▇▇▇-▇▇▇▇), within the 15-day period. If a notice of
rescission is delivered by mail, it must be: (i) postmarked within
the 15-day period, (ii) properly addressed to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
at the above address and (iii) sent by certified mail, return
receipt requested.
(b) Right to Consider under the Age Discrimination in Employment
Act. Rush understands that he has twenty-one (21) days to consider
whether he should agree to release his claims, if any, under the Age
Discrimination in Employment Act. Rush further understands, however,
that he is not required to take the entire 21-day period to decide
whether he wishes to release his claims, if any, under the Age
Discrimination in Employment Act, and that he may do so on an
accelerated basis without prejudice to his own or the Company's rights
under this Agreement.
(c) Right to Rescind or Revoke under the Age Discrimination in
Employment Act . Rush understands that he has the right to rescind the
release of his claims, if any, under the Age Discrimination in
Employment Act, for any reason, within seven (7) days after he signs
this Agreement. Rush understands that the release of his claims, if any,
under the Age Discrimination in Employment Act, will not become
effective or enforceable unless and until he executes this Agreement
and the applicable rescission period has expired. Rush understands that
if he wishes to rescind, the rescission must be in writing and must be
hand-delivered or mailed to the Company. To be effective, such written
notice must be delivered either by hand or by mail, to ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (phone number: ▇▇▇-▇▇▇-▇▇▇▇), within the 7-day period. If a
notice of rescission is delivered by mail, it must be: (i) postmarked
within the 7-day period, (ii) properly addressed to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
at the above address and (iii) sent by certified mail, return receipt
requested.
Rush understands that even if he elects to rescind his agreement to
release his claims, if any, under the Age Discrimination in Employment Act or
Minn. Stat. Ch. 363 (prohibiting discrimination in employment), this
rescission shall have no effect or consequence whatsoever on the release of
any other claims Rush released pursuant to this Agreement, as set forth above.
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11. TERMINATION OF RIGHT TO INCUR EXPENSES, OBLIGATIONS OR
LIABILITIES. Rush understands and agrees that effective August 31, 1998, he
was and is no longer authorized to incur any expenses, obligations or
liabilities on behalf of the Company, and, if contacted by suppliers or
customers of the Company, Rush will inform such entities that he is no longer
authorized to act on behalf of the Company.
12. NO ADMISSION OF FAULT. Rush and the Company agree that their
willingness to enter into this Agreement does not constitute and should not
be construed as any admission of liability or fault on the part of Rush or
the Company or any of the Released Parties, and the Company specifically
disclaims any liability to, or wrongful acts against, Rush or any other
person, on the part of itself and the Released Parties.
13. TERMINATION OF THIS AGREEMENT. It is agreed that the
compensation and benefits specified in Paragraph 3 of this Agreement are
subject to immediate termination in the event that Rush takes any action or
engages in any conduct which is injurious to the Company. For the purposes
of this Paragraph 13, conduct by Rush that is injurious to the Company is
defined as (i) deliberate disclosure of Confidential Information; (ii)
deliberate misrepresentation of the affairs, practices, or financial
condition of the Company or its officers, directors or employees; (iii) the
deliberate failure to cooperate in such manner as the Company may reasonably
request in the location and/or transfer of records relating to the Company
which were entrusted to, or in the control of, Rush while employed by the
Company.
14. CONFIDENTIALITY. Rush agrees that it is the intent of the
parties to maintain the complete confidentiality of the terms of this
Agreement and the negotiations leading to this Agreement. Therefore, Rush
agrees that he will not publicize, and will take all prudent steps to ensure
the confidentiality of, this Agreement. The only comment Rush will make about
his resignation from the Company is that he resigned voluntarily and that all
matters relating to his employment with the Company have been resolved to the
mutual satisfaction of the parties. Notwithstanding the terms of this
Paragraph 14, Rush shall be entitled to disclose the terms of this Agreement
to his lawyers, tax advisors, accountants, and immediate family if required
by law or on the condition that those to whom such disclosure is made also
will be bound by the terms of this Paragraph 14.
15. COMPLETE AGREEMENT. This Agreement contains the entire
agreement between the parties. Rush hereby affirms that his rights to
compensation and/or benefits from the Company are specified exclusively and
completely in this Agreement. Any modification of, or addition to, this
Agreement must be in a writing signed by Rush and by an authorized
representative of the Company.
16. SEVERABILITY. Rush and the Company agree that should any
provision of this Agreement be held invalid or illegal, such illegality shall
not invalidate the whole of this Agreement, but rather, the Agreement shall
be construed as if it did not contain the illegal part, and the rights and
obligations of the parties shall be construed accordingly.
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17. EFFECT ON SUCCESSORS. This Agreement is personal to Rush and
may not be assigned by Rush without the written agreement of the Company.
This Agreement shall be binding on the Company, its successors and assigns.
18. GOVERNING LAW. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Minnesota.
19. KNOWING AND VOLUNTARY AGREEMENT. Rush agrees that he has
entered into this Agreement knowingly and voluntarily. Rush further
acknowledges that he has had the opportunity to be represented by counsel in
connection with the negotiation and preparation of this Agreement and have
any terms of this Agreement explained to him. Rush also acknowledges that
the Company has recommended that he consult legal counsel to assist him in
understanding all terms of this Agreement before executing this Agreement.
Rush further affirms that he understands the meaning of the terms of this
Agreement and their effect and agrees that the provisions set forth in the
Agreement, including, but not limited, to Paragraphs 2, 3, 9 and 10 are
written in language understandable to Rush.
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IN WITNESS WHEREOF, the parties have executed this Agreement by
their signatures below.
Dated: October 9, 1998 /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇
NUTRITION MEDICAL, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Its Chief Operating Officer
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