EXHIBIT 10.4
TERMINATION AGREEMENT AND RELEASE
THIS TERMINATION AGREEMENT AND RELEASE is made and entered into this 8th
day of February, 2002 by and between Xxxxxxx X. Xxxxxxxxx ("XXXXXXXXX"), and
Innovative Clinical Solutions, Ltd. ("ICSL").
RECITALS
WHEREAS, Xxxxxxxxx and ICSL entered into an Employment Agreement, dated
September 21, 2000 (the "EMPLOYMENT AGREEMENT"), whereby Xxxxxxxxx was to serve
as the President and Chief Executive Officer of ICSL for a term of three (3)
years; and
WHEREAS, ICSL has entered into an Agreement and Plan of Merger (the
"MERGER AGREEMENT"), by and among ICSL, Clinical Studies, Ltd. ("CSL"),
Comprehensive Neuroscience, Inc. ("CNS") and CNS Acquisition, Inc. ("ACQUISITION
SUB"), pursuant to which Acquisition Sub shall merge with and into CSL, with CSL
becoming a wholly-owned subsidiary of CNS (the "MERGER"); and
WHEREAS, Xxxxxxxxx'x positions as President and Chief Executive Officer
of ICSL shall be terminated upon the execution of the Merger Agreement and
consummation of the Merger (the "TERMINATION DATE"); and
WHEREAS, the parties desire to enter into this Agreement to resolve any
and all issues and settle all of their disputes, and to discharge all claims
Xxxxxxxxx has, may have had, or may have, against ICSL, up to the date of this
Agreement, upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements herein contained and for other good and valuable consideration, the
receipt and sufficiency whereof is hereby acknowledged, the parties hereby agree
as follows:
1. SEVERANCE COMPENSATION. For the performance of duties described in
Section 2 below and in satisfaction of any and all claims, ICSL shall provide to
Xxxxxxxxx:
(a) The remainder of Xxxxxxxxx'x Salary due and owing to Xxxxxxxxx
pursuant to Section 3(a) of the Employment Agreement through the balance of the
Employment Period (as defined in the Employment Agreement) as and to the extent
the ICSL Board of Directors determines, in its sole discretion, that funds are
available therefor, with any such payments to be made in accordance with the
normal payroll policies of the Company, subject to all appropriate withholding
taxes, PROVIDED THAT (i) to the extent that the aggregate amount (including any
amounts withheld for taxes and any other payroll deductions authorized by
Xxxxxxxxx) paid to Xxxxxxxxx by the second anniversary of the Termination Date
("ACTUAL PAYMENTS") is less than $300,000 (the "BASE AMOUNT"), Xxxxxxxxx shall
be entitled to receive, at such time as ICSL distributes CNS common stock to the
ICSL stockholders, and in full satisfaction of ICSL's obligation to pay the Base
Amount, shares of CNS common stock with a value equal to the lesser of (x) the
difference between the Actual Payments and the Base Amount and (y) $200,000; and
(ii) any portion of the Salary due to Xxxxxxxxx in excess of the Base Amount
shall be paid at such time and in such manner as the Board of Directors shall
determine, in its sole discretion, PROVIDED HOWEVER, that such payment shall, in
all instances, be subordinate to the claims of all other creditors of ICSL, but
shall be paid to the extent of assets available therefor prior to any
distribution of cash, securities or other property to ICSL stockholders. For
purposes of clause (i) hereof, CNS common stock shall be valued at the Market
Value thereof as such term is defined in the Merger Agreement.
(b) All health care benefits as specified in Section 3(e) of the
Employment Agreement commencing upon the Termination Date and ending upon the
earlier of (i) September
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21, 2003, or (ii) the date Xxxxxxxxx is provided with comparable health care
benefits from any other source.
The compensation described in paragraphs (a) and (b) of this Section 1
are hereinafter referred to collectively as the "SEVERANCE COMPENSATION". In
addition, so long as Xxxxxxxxx is receiving payments under Section 1(a) of this
Agreement, Xxxxxxxxx shall be entitled to participate in any 401(k) Plan
maintained by ICSL, subject to the eligibility and participation requirements of
such plan, for so long as such plan is made available to ICSL's employees
generally, ICSL being under no obligation to maintain such a plan.
2. DUTIES PRIOR TO AND FOLLOWING TERMINATION.
(a) Xxxxxxxxx shall continue to perform all duties and obligations,
and shall have all rights, under the Employment Agreement until the Termination
Date.
(b) Xxxxxxxxx shall remain a member of the Board of Directors of
ICSL following the Termination Date, PROVIDED that Xxxxxxxxx shall not be
required to continue to serve as a director of ICSL if such continued service
would preclude Xxxxxxxxx from securing future employment, PROVIDED FURTHER that
such future employment is not in violation of Section 9 below.
(c) Upon the Termination Date, Xxxxxxxxx shall become a member of
the Board of Directors of CNS.
3. INDEMNIFICATION. ICSL hereby covenants and agrees to indemnify and
hold Xxxxxxxxx harmless fully, completely and absolutely against and in respect
to any and all actions, suits, proceedings, claims, demands, judgments, costs,
expenses (including reasonable attorney's fees), losses and damages resulting
from Xxxxxxxxx'x good faith performance of his duties and obligations under the
terms of the Employment Agreement. To the extent that ICSL maintains an
insurance policy or policies providing liability insurance for directors,
officers, employees or
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agents of ICSL, Xxxxxxxxx shall be covered by such policy or policies in
accordance with its or their terms to the maximum extent of the coverage
available for any such director, officer, employee or agent under such policy or
policies.
4. CURRENT STOCK OPTIONS. Notwithstanding any agreement to the contrary,
the non-qualified stock options to purchase 357,143 Shares held by Xxxxxxxxx as
of the Termination Date (the "EXISTING OPTIONS") shall be fully vested upon the
Termination Date and shall be exercisable until September 21, 2010, regardless
of Xxxxxxxxx'x continued service and/or employment with ICSL. The Existing
Options shall convert to options to purchase shares of CNS common stock on the
same terms and conditions as options to purchase shares of ICSL Common Stock
held by CSL employees, in accordance with Section 1.5.4 of the Merger Agreement.
5. RELEASE AND DISCHARGE. By signing this Agreement, Xxxxxxxxx completely
releases and forever discharges ICSL, including its respective past, present and
future officers, directors, attorneys, agents, servants, representatives,
employees, partners, subsidiaries, predecessors and successors in interest and
assigns ("ICSL Parties") from any and all claims, including but not limited to
any and all actions brought under or in connection with the Employment
Agreement, and any and all claims of retaliation, demands, obligations, actions,
causes of action, rights, damages, costs, expenses and compensation of any
nature whatsoever, whether based on a tort, contract, statute, or any other
theory of recovery, and whether for compensatory or punitive damages, which he
now has or may have, against any of the ICSL Parties, including, but not limited
to, any claim, demand or cause of action for retaliation, discrimination and/or
harassment based on race, religion, sex, sexual orientation, age, national
origin, color or physical or mental disability under all federal or state laws,
PROVIDED, HOWEVER, that no provision hereof shall prevent or otherwise limit
Xxxxxxxxx'x right to file and prosecute a counterclaim against any of the ICSL
Parties in the event any of the ICSL Parties makes any claim or initiates any
litigation against Xxxxxxxxx.
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This release shall be fully binding and constitute a complete settlement
between the parties and all parties represented by or claiming through any party
hereto.
6. WAIVER OF CHANGE OF CONTROL BONUS. Notwithstanding any agreement to
the contrary, Xxxxxxxxx hereby expressly waives any Supplemental Bonus Payment
to which he may be entitled upon a Change of Control as provided in Section 8 of
the Employment Agreement.
7. GENERAL PROVISION. Xxxxxxxxx hereby expressly waives and assumes the
risk of any and all claims for damages which exist as of this date, but which he
does not know of or suspect to exist, whether through ignorance, oversight,
error, negligence or otherwise, and which, if known, would materially affect his
decision to enter into this Agreement. Xxxxxxxxx further agrees that he has
accepted the Severance Compensation as a complete compromise of matters, known
and unknown, involving disputed issues of law and fact and fully assumes the
risk that the facts or the law may be otherwise than believed or understood.
8. WARRANTY OF CAPACITY TO EXECUTE AGREEMENT. Each party represents and
warrants that no other person or entity has or has had any interest in the
claims, demands, obligations, or causes of action referred to in this Agreement.
Xxxxxxxxx further represents and warrants that he has the sole and exclusive
right to receive the Severance Compensation, and that he has not sold, assigned,
transferred, conveyed or otherwise disposed of any of the claims, demands,
obligations, causes of action or interests referred to in or contemplated by
this Agreement.
9. CONFIDENTIAL INFORMATION, TRADE SECRETS AND NON-COMPETITION.
(a) Xxxxxxxxx acknowledges that he has performed services has
acquired knowledge and proprietary information and certain information, trade
secrets or both, all relating to or useful in the business of ICSL, CSL, CNS or
their respective affiliates (collectively "INFORMATION"), which will directly
affect the business of ICSL, CSL, CNS and/or their
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respective affiliates to be conducted in the United States (the "AREA").
Accordingly, the parties deem it necessary to provide protective non-competition
and non-solicitation provisions in this Agreement.
(b) Xxxxxxxxx agrees with ICSL that:
(i) Xxxxxxxxx shall not in any manner, either directly or
indirectly, divulge, disclose or communicate to any person or firm, except to or
for the benefit of ICSL or CNS (as successor to the business of CSL) as directed
by ICSL or CNS any of the Information which he may have acquired in the course
of or as an incident to his employment by ICSL, the parties agreeing that such
information affects the successful and effective conduct of the business and
goodwill of ICSL, CNS, CSL and/or their respective affiliates, and that any
breach of the terms of this Section 9 is a material breach of this Agreement.
Notwithstanding the foregoing, nothing in this Section 9(b)(i) shall preclude
Xxxxxxxxx from disclosing Information pursuant to judicial order or Information
which has been made properly public through the release or disclosure by persons
other than Xxxxxxxxx.
(ii) All equipment, documents, memoranda, reports, records,
files, materials, samples, books, correspondence, lists, computer software,
other written and graphic records, and the like (collectively, the "MATERIALS"),
affecting or relating to the business of ICSL, which Xxxxxxxxx has prepared,
used, constructed, observed, possessed or controlled, or shall prepare, use,
construct, observe, possess or control, are and shall be and remain ICSL's
exclusive property or in ICSL's exclusive custody, and must not be removed from
the premises of ICSL or given to any person or entity except as directed by ICSL
in writing or as necessary in performing Xxxxxxxxx'x duties hereunder or as
necessary in performing Xxxxxxxxx'x duties as a director of ICSL or as a
director of CNS or, until the Termination Date, under the Employment Agreement.
Promptly upon the Termination Date, the Materials, Information and all copies
thereof in the custody or control of Xxxxxxxxx shall be delivered promptly to
ICSL, unless otherwise authorized by ICSL as necessary in performing Xxxxxxxxx'x
duties as a director of ICSL or as a director of CNS. Xxxxxxxxx acknowledges
that all documents and equipment relating to the business of the
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ICSL and/or its affiliates, in addition to all Information and Materials,
whether prepared by Xxxxxxxxx or otherwise coming into Xxxxxxxxx'x possession,
are owned by and constitute the exclusive property of ICSL or CSL or in ICSL's
exclusive custody, and all such documents and equipment must not be removed from
the premises of ICSL except as directed by ICSL in writing or as necessary in
performing Xxxxxxxxx'x duties as a director of ICSL or as a director of CNS, or
until the Termination Date under the Employment Agreement.
(iii) Xxxxxxxxx shall not, without the prior written consent of
ICSL, which consent shall be within the sole and exclusive discretion of ICSL,
within the Area, either directly or indirectly, perform services or duties, or
engage in the same or similar business as ICSL, CNS, CSL or their respective
affiliates or any company which provides either directly or through a subsidiary
clinical trial site management services in any capacity, whether as an owner,
shareholder, consultant, director, officer, manager, supervisor or employee of
any entity, provided that such company is in direct competition with ICSL, CNS,
CSL or their respective affiliates or any other subsidiary of ICSL performing
similar services, PROVIDED, HOWEVER, that nothing contained herein shall be
construed to prevent Xxxxxxxxx from performing services or duties, or engaging
in business on behalf of a company (including a pharmaceutical or biotechnology
company or contract research organization) which has a division or subsidiary
that is engaged in clinical trials site management, PROVIDED Xxxxxxxxx is not
involved in such activity on behalf of such division or subsidiary; and
(iv) Xxxxxxxxx shall not in any way, either directly or
indirectly, either for himself or for or on behalf of any other person, firm,
corporation, partnership, limited liability company, group, association,
organization or other entity solicit for employment any employee of ICSL, CNS,
CSL or their respective affiliates or any consolidated entity (whether or not
such employment is full-time, part-time, or is pursuant to a written contract)
other than his personal secretary for the purpose of having such employee
perform services for another company located in the Area.
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(c) The covenants of Xxxxxxxxx set forth in this Section 9 shall
commence upon the Termination Date and end on September 21, 2003.
Notwithstanding the foregoing, (1) the covenants of Xxxxxxxxx referred to in
this Section 9 shall be extended for a period of time equal to the period of
time during which Xxxxxxxxx shall be in violation of such covenants and/or the
pendency of any proceedings brought by ICSL to enforce the provisions of such
covenants and (2) the covenants of Xxxxxxxxx referred to in Sections 9(b)(iii)
and (3) shall terminate if ICSL breaches its obligations under Section 1 hereof
and such breach is not cured within fifteen (15) days following written notice
thereof from Xxxxxxxxx.
(d) The covenants of Xxxxxxxxx set forth in this Section 9 are
separate and independent covenants for which valuable consideration has been
paid, the receipt, adequacy and sufficiency of which are acknowledged by
Xxxxxxxxx, and have also been made by Xxxxxxxxx to induce ICSL to enter into
this Agreement. Each of the aforesaid covenants may be availed of, or relied
upon, by ICSL in any court of competent jurisdiction, and shall form the basis
of injunctive relief and damages including expenses of litigation (including but
not limited to reasonable attorney's fees upon trial and appeal) suffered by
ICSL arising out of any breach of the aforesaid covenants by Xxxxxxxxx. The
covenants of Xxxxxxxxx set forth in this Section 9 are cumulative to each other
and to all other covenants of Xxxxxxxxx in favor of ICSL contained in this
Agreement and shall survive the termination of this Agreement for the purposes
intended. Should any covenant, term or condition in this Section 9 become or be
declared invalid or unenforceable by a court of competent jurisdiction, then the
parties request that such court judicially modify such unenforceable provision
consistent with the intent of this Section 9 so that it shall be enforceable as
modified.
10. Upon submission of appropriate statements or documentation, ICSL
agrees to reimburse Xxxxxxxxx for reasonable legal fees actually incurred by him
in connection with the enforcement of the terms of this Agreement, PROVIDED,
HOWEVER, that ICSL shall not be obligated to reimburse Xxxxxxxxx for any legal
fees or expenses incurred by him in connection with ICSL's
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enforcement of the terms of this Agreement or in connection with any arbitration
or litigation in which ICSL is the prevailing party.
11. MERGER CONDITION PRECEDENT. In the event the Merger shall not occur
as contemplated by the Merger Agreement, this Agreement shall be void in its
entirety.
12. SEVERABILITY. If at any time any provisions of this Agreement shall
be held by any court of competent jurisdiction to be illegal, void or
unenforceable, such provision shall be of no force and effect, but the
illegality or unenforceability of such provision shall have no effect upon and
shall not impair the enforceability of any other provision of this Agreement.
13. NOTICES. Any notices and other communications to be given hereunder
shall be in writing and shall be deemed to have been duly given when delivered
by hand or five days after such notice is mailed, by registered or certified
mail, postage prepaid, return receipt requested, addressed to such party as
follows:
If to Xxxxxxxxx: Xxxxxxx X. Xxxxxxxxx
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
If to ICSL: Innovative Clinical Solutions, Ltd.
00 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attn: Board of Directors
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
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15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Rhode Island applicable to agreements
made and to be wholly performed within such State.
16. ASSIGNMENT. This Agreement shall not be assigned by any party hereto
without the consent of the other party hereto.
17. AMENDMENTS. This Agreement may be amended only by a written
instrument duly executed by the parties hereto.
18. HEADINGS. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
19. ENTIRE AGREEMENT AND SUCCESSORS IN INTEREST. This Agreement contains
the entire agreement between the parties with regard to the matters set forth in
it and shall be binding upon and inure to the benefit of the executors,
administrators, personal representatives, heirs, successors and assigns of each.
No supplement, modification, change or waiver of this Agreement or any provision
hereof shall be binding unless executed in writing and signed by the parties to
be bound thereby. No waiver of any of the provisions of this Agreement shall
constitute a waiver of any other provision (whether or not similar), nor shall
such waiver constitute a continuing waiver unless otherwise expressly provided.
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IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date first written above.
/s/ XXXXXXX X. XXXXXXXXX
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Xxxxxxx X. Xxxxxxxxx
INNOVATIVE CLINICAL SOLUTIONS, LTD.
By: /s/ XXXXXXX X. XXXXXXXXX
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Title: BOARD MEMBER
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