SEPARATION AGREEMENT AND GENERAL RELEASE
THIS SEPARATION AGREEMENT AND GENERAL
RELEASE (this “Agreement”) is made as of the 29th day of
September, 2009 (the “Effective Date”), by and between Xxxx Xxxxxxx (“Xxxxxxx”)
and NeoStem, Inc. (the “Company”).
WHEREAS, the Company has
employed Xxxxxxx as its President; and
WHEREAS, the Company and
Xxxxxxx executed an employment agreement dated February 6, 2003 between a
predecessor of the Company and Xxxxxxx, as amended on August 12, 2005, June 1,
2006, January 22, 2007, September 28, 2007 and December 21, 2007 (collectively,
the “Employment Agreement”); and
WHEREAS, Xxxxxxx and the
Company entered into an Employee Confidentiality, Invention Assignment and
Non-Compete Agreement on July 10, 2006, a copy of which is attached to this
Agreement as Exhibit A, (the “Restrictive Covenant Agreement”); and
WHEREAS, the Company granted
Xxxxxxx the twenty-three option grants listed on Exhibit B attached to this
Agreement (the “Option Grants”); and
WHEREAS, Xxxxxxx is a party to
a lock up and voting agreement effective November 2, 2008 that, among other
restrictions, prohibits him from selling any shares of the Company’s common
stock until six months after the consummation of the merger of China
Biopharmaceuticals Holding, Inc. into CBH Acquisition, LLC (the “Lock Up
Agreement”); and
WHEREAS, Weinreb’s employment
with the Company is now terminating; and
WHEREAS, Xxxxxxx and the
Company desire to settle fully and finally any differences, rights and duties
arising between them, including, but in no way limited to, any differences,
rights and duties that have arisen or might arise out of or are in any way
related to Weinreb’s employment with the Company and the termination of his
employment;
NOW, THEREFORE, in
consideration of the payment, benefits and other covenants contained in this
Agreement, which Xxxxxxx acknowledges are in excess of any benefits to which
Xxxxxxx would otherwise be entitled, the parties agree as follows:
1.
Termination. Weinreb’s
employment with the Company will terminate effective October 2, 2009 (the
“Termination Date”).
2.
Separation
Payment. Subject to Section 14(a) below, the Company shall pay
Xxxxxxx the following amounts:
(a)
The Company shall continue to pay Weinreb’s regular salary of $17,500 per month
from October 1, 2009 through December 31, 2009, less all applicable
withholdings. The Company will pay these amounts in accordance with
the Company’s normal payroll practices, commencing on the next payroll period
following the eighth day following the date Xxxxxxx executes and returns this
Agreement to the Company.
(b) Provided
Xxxxxxx executes and delivers this Agreement to the Company on or before
September 29, 2009 at 12:00 pm, the Company will pay Xxxxxxx a bonus of $32,500,
less all applicable withholdings, on the Company’s normal October 2, 2009
payroll in lieu of the $7,500 otherwise payable to him.
3.
Stock
Options. Subject to Section 14(a) below, the Company agrees to
the following treatment of Weinreb’s Option Grants and his stock ownership in
the Company.
(a)
In accordance with the terms of the Company’s 2003 Equity
Compensation Plan, all unvested options under any of the Option Grants shall be
forfeited as of the Termination Date, except Xxxxxxx shall not forfeit any
unvested options under: (i) the Option Grant to acquire 10,000 shares
of the Company’s common stock at an exercise price of $4.95 per share, dated
September 27, 2007, (the “Merger Option”); and (ii) the Option Grant to acquire
10,000 shares of the Company’s common stock at an exercise price of $1.63 per
share, dated February 27, 2008, (the “Cash Flow Option”). In
accordance with the terms of each grant, both the Merger Option and the Cash
Flow Option shall fully vest on the consummation of the merger of China
Biopharmaceuticals Holding, Inc. into CBH Acquisition, LLC.
(b)
Provided the Company’s shareholders approve Proposal No. 9 set forth in the Form
S-4 filed by the Company with the Securities and Exchange Commission, which
approves an amendment to the Company’s 2003 Equity Compensation Plan to permit
the Company’s Board of Directors to reprice outstanding options under the plan
and provided the Company’s Board of Directors reprices the exercise price of
outstanding options under the plan to the greater of $.80 and the fair market
value of the Company’s common stock as of the date of the repricing, the
exercise price of all outstanding options under the Option Grants shall be
repriced to the greater of $.80 and the fair market value of the Company’s
common stock as of the date of the repricing.
(c)
The Company hereby amends the terms of each outstanding Option Grant to extend
the period in which Xxxxxxx may exercise vested options following the
Termination Date to the earlier of: (i) the original expiration date
of each Option Grant; (ii) the second anniversary of the Termination Date; and
(iii) the date on which the Company determines, in good faith, that Xxxxxxx has
violated the Restrictive Covenant Agreement, except that the Company does not so
amend the Option Grant to acquire 100,000 shares of the Company’s common stock
at an exercise price of $1.95 per share, dated May 21, 2009, (the “2009 ECP
Option”). The 2009 ECP Option shall remain exercisable through
its original expiration date of May 20, 2019, subject to the conditions of
(iii), above. Any vested options that remain unexercised after the
earliest of the applicable dates above shall be forfeited and cancelled without
any further action by the Company or its Board of Directors.
(d)
Xxxxxxx shall remain subject to the terms of the Lock Up Agreement, except that,
subject to the approval of China Biopharmaceuticals Holding, Inc., commencing on
December 1, 0000, Xxxxxxx may sell up to 30,000 shares of the Company’s common
stock in each calendar month. Notwithstanding the foregoing, any
sales by Xxxxxxx of the Company’s common stock must comply in all respects with
the applicable securities laws.
2
4.
Employee
Benefits. Weinreb’s participation in any Company-sponsored
employee benefit plans will terminate on the Termination
Date. Xxxxxxx will be eligible to continue his health, dental and
visions care coverage pursuant to the provisions of the Consolidated Omnibus
Reconciliation Act of 1985 (“COBRA”) for a period of 18 months commencing
October 1, 2009. If Xxxxxxx elects continued coverage under COBRA,
the Company will pay the monthly premium due in connection with his and his
family’s continued participation in the Company’s employee health plan for
twelve (12) months, through September 30, 2010. Thereafter, Xxxxxxx
will be required to pay the full monthly premium. If Xxxxxxx secures
new employment and becomes eligible for benefits under a new employer’s group
health plan, he must immediately notify the Company of the start date of that
insurance, by letter addressed to Xxxxxxxxx X. Xxxxx, Esq., Vice President and
General Counsel, NeoStem, Inc., 000 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx
Xxxx 00000. Xxxxxxx will receive information about continuing his
health coverage under COBRA in a later mailing, including a form by which he may
elect continued coverage.
5.
Acknowledgement. Xxxxxxx
acknowledges that but for his execution of this Agreement, he would not be
entitled to the payment and benefits described in Sections 2, 3 and 4 of this
Agreement
6.
Expenses. The
Company will reimburse Xxxxxxx for all expenses incurred by him on or prior to
the Termination Date in connection with his duties as President, provided he
submits an expense report and receipts in accordance with the Company’s normal
expense reimbursement policy.
7.
Employee
Release.
(a)
In consideration of the payments, benefits and covenants contained
in this Agreement, Xxxxxxx, for himself and for his children, heirs,
administrators, representatives, executors, successors and assigns, releases and
gives up any and all claims and rights which Xxxxxxx has, may have or hereafter
may have against the Company, its respective owners, members, subsidiaries,
affiliates, predecessors, successors, assigns, officers, directors,
shareholders, employees and agents and all of their predecessors, successors and
assigns (the “Company Releasees”) from the beginning of the world until the date
of the execution of this Agreement, including, but not limited to, any and all
charges, complaints, claims, liabilities, obligations, promises, agreements,
controversies, damages, remedies, actions, causes of action, suits, rights,
demands, costs, losses, debts and expenses (including attorneys’ fees and costs)
of any nature whatsoever, whether known or unknown, whether in law or equity
(collectively, “Claims”), including, but not limited to, any Claims (i) arising
out of or related to Weinreb’s employment with the Company; (ii) arising out of
or related to the termination of his employment with the Company, (iii) arising
out of or related to the Employment Agreement; (iv) based on contract whether
express or implied, written or oral, and (v) arising under or related to the
United States and/or State Constitutions, federal and/or common law, and/or
rights arising out of alleged violations of any federal, state or other
governmental statutes, regulations or ordinances or the laws of any country or
jurisdiction including, without limitation, the National Labor Relations Act,
Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment
Act of 1967, the Older Workers’ Benefit Protection Act of 1990, the Americans
with Disabilities Act of 1990, the Civil Rights Act of 1871, the Civil Rights
Act of 1991, the Equal Pay Act of 1963, the Worker Adjustment and Retraining
Notification Act of 1988, the Employee Retirement Income Security Act of 1974,
the New York Labor Law, the New York State Human Rights Law and the New York
City Human Rights Law, all as amended. This Section releases all
Claims related, but not limited to, the right to the payment of wages, bonuses,
vacation, pension benefits or any other employee benefits, and any other rights
arising under federal, state or local laws prohibiting discrimination and/or
harassment on the basis of race, color, religion, religious creed, sex, sexual
orientation, national origin, ancestry, age, mental retardation, learning
disability or blindness, mental or physical disability, disorder or handicap,
alienage or citizenship status, marital status or domestic partnership status,
genetic information, military status or any other basis prohibited by
law.
3
(b)
This release does not waive or release any Claims that Xxxxxxx may have against
the Company related to: (i) vested benefits under the Company’s
401(k) plan; (ii) events occurring after the date he executes this Agreement; or
(iii) enforcing the terms of this Agreement.
(c)
Xxxxxxx represents that he has not filed against the Company or any of the
Company Releasees or any of their respective affiliates any Claims with any
governmental or administrative agency, arbitral tribunal, administrative
tribunal, self-regulatory body, or any court arising out of or related to his
employment by the Company or any other matter arising on or prior to the date
hereof. Xxxxxxx covenants and agrees that he will not, directly or
indirectly, commence or prosecute, or assist in the filing, commencement or
prosecution in any court any Claim brought either by Xxxxxxx or by any person or
entity, against the Company or any of the Company Releasees, arising out of any
of the matters set forth in this Agreement or based upon any
Claim. Xxxxxxx further waives his right to any monetary recovery in
connection with a local, state or federal governmental agency proceeding and his
right to file a claim seeking monetary damages in any court. This
Agreement does not (i) prohibit or restrict Xxxxxxx from communicating,
providing relevant information to or otherwise cooperating with the EEOC or any
other governmental authority with responsibility for the administration of fair
employment practices laws regarding a possible violation of such laws or
responding to any inquiry from such authority, including an inquiry about the
existence of this Agreement or its underlying facts, or (ii) require Xxxxxxx to
notify the Company of such communications or inquiry.
8.
Company
Release.
(a)
In consideration of the payments, benefits and covenants contained in this
Agreement, the Company, for itself and the Company Releasees, releases and gives
up any Claims which they have, may have or hereafter may have against Xxxxxxx
and his children, heirs, administrators, representatives, executors, successors
and assigns (the “Xxxxxxx Releasees”) from the beginning of the world until the
date of the execution of this Agreement, including, but not limited to, any
Claims (i) arising out of or related to Weinreb’s employment with the Company;
(ii) arising out of or related to the Employment Agreement; (iii) based on
contract whether express or implied, written or oral, and (iv) arising under or
related to the United States and/or State Constitutions, federal and/or common
law, and/or rights arising out of alleged violations of any federal, state or
other governmental statutes, regulations or ordinances or the laws of any
country or jurisdiction.
4
(b) Notwithstanding
the foregoing, this release does not waive or release any Claims that the
Company or the Company Releasees may have against Xxxxxxx related
to: (i) wrongful, illegal or bad faith acts or omissions by Xxxxxxx
during his service as the Company’s President; (ii) events occurring after the
date he executes this Agreement; or (iii) enforcing the terms of this
Agreement.
(c) The
Company represents that it has not filed against Xxxxxxx or any of the Xxxxxxx
Releasees any Claims with any governmental or administrative agency, arbitral
tribunal, administrative tribunal, self-regulatory body, or any court arising
out of or related to Weinreb’s employment by the Company or any other matter
arising on or prior to the date of this Agreement. The Company
covenants and agrees that it will not, directly or indirectly, commence or
prosecute, or assist in the filing, commencement or prosecution in any court any
Claim brought either by the Company or by any person or entity, against Xxxxxxx
or any of the Xxxxxxx Releasees arising out of any of the matters set forth in
this Agreement or based upon any Claim.
9.
Confidentiality
and Intellectual Property. Xxxxxxx acknowledges and agrees
that the Restrictive Covenant Agreement shall survive the execution of this
Agreement and shall remain in full force and effect. Xxxxxxx
certifies that he has fully complied with all of his obligations under the
Restrictive Covenant Agreement as of the Termination Date, including without
limitation, his obligation under Section 2 to return to the Company all
information and documents related to Inventions or Confidential Information (as
those terms are defined in that agreement). Xxxxxxx further certifies
that he has returned, or will return by the Termination Date, all Company
property, including without limitation, office, door and file keys,
identification cards, credit cards, business cards, computer access codes and
instructional manuals. Xxxxxxx represents and covenants that he will
fully comply with his obligations under the Restrictive Covenant Agreement
following the Termination Date. Xxxxxxx may disclose the terms of the
Restrictive Covenant Agreement to others with whom he may enter into a business
relationship.
10. Non-Disparagement.
(a) Xxxxxxx
agrees to not (and shall not encourage or induce others to), in any manner,
directly or indirectly, make or publish any statement (orally or in writing)
that would libel, slander, disparage, denigrate, ridicule or criticize the
Company, any of its affiliates or any of the Company’s or an affiliate’s
respective employees, officers or directors. Xxxxxxx further agrees
that without the Company’s prior, written consent, he will not: (i)
hold himself out as continuing to be affiliated or associated with the Company
or any of its affiliates in any way after the Termination Date (which
prohibition shall not preclude Xxxxxxx from representing his employment with the
Company prior to the Termination Date); or (ii) make any statements concerning
the Company, any of its affiliates or any of the Company’s or an affiliate’s
respective employees, officers or directors in the public domain, including
without limitation statements in, or intended for use in, publications, print,
electronic media, advertising or public presentations.
(b)
Provided Xxxxxxx directs requests for future references to Xxxxxxxxx Xxxxx or to
her designee, the Company agrees to confirm in response to such request only
Weinreb’s last title and dates of employment. The Company will
instruct Xxxxx Xxxxx and Xxxxxxxxx Xxxxx not, in any manner, directly or
indirectly, to make or publish any statement (orally or in writing) that would
libel, slander, disparage, denigrate, ridicule or criticize
Xxxxxxx.
5
(c)
Nothing in this paragraph, however, shall preclude Xxxxxxx, the Company,
Xxxxx or Vaczy from giving truthful testimony under oath in response to a
subpoena or other lawful process and truthful answers in response to questions
from a government investigator.
11.
Cooperation. Xxxxxxx
agrees (upon reasonable notice and within reasonable time commitments) to
cooperate with and assist the Company, its affiliates and its and their legal
counsel and provide information to the Company, its affiliates and its and their
legal counsel as to matters in which Xxxxxxx was involved prior to the
Termination Date, including, without limitation, information needed in
connection with any claim or litigation, investigation, administrative
proceeding, arbitration or enforcement action by or against the Company or any
of its affiliates relating to any matter in which he was involved or about which
he had knowledge, and will testify as a witness in connection with such matters
if requested by the Company or any one of its affiliates. The Company
will reimburse Xxxxxxx for his reasonable out-of-pocket expenses he incurs in
connection with his compliance with this Section, except the Company will not
reimburse Xxxxxxx for any attorneys’ fees he incurs.
12.
No
Admission of Liability. This Agreement does not constitute or
imply an admission of liability or wrongdoing by the Company or any of the
Releasees.
13. Confidentiality. The
terms of this Agreement are CONFIDENTIAL. Xxxxxxx
and the Company each agrees not to tell anyone about this Agreement and not to
disclose any information contained in this Agreement to anyone, other than to
their respective lawyers, financial advisors or Weinreb’s immediate family
members, except as necessary to administer this Agreement, to enforce the terms
of this Agreement or to respond to a valid subpoena or other legal
process. If Xxxxxxx does tell his lawyer, financial advisor or
immediate family members about this Agreement or its contents, he must
immediately tell them that they must keep it confidential as well.
14.
Breach.
(a)
If the Company determines in good faith that Xxxxxxx has breached, is
breaching or threatens to breach the Restrictive Covenant Agreement, in addition
to any other rights to injunctive relief and monetary damages available under
that agreement or at common law, Xxxxxxx shall repay the Continued Salary to the
Company. To the extent that the Company has not yet paid all or any
portion of the Continued Salary under Section 2(a) of this Agreement, the
Company may immediately suspend any further payments to Xxxxxxx under Section
2(a). The prevailing party in any action arising out of or related to
a breach of the Restrictive Covenant Agreement shall be entitled to an award of
reasonable attorneys’ fees and costs in addition to any other legal and
equitable relief.
(b)
Excluding any breach of the Restrictive Covenant Agreement, the
parties may only institute an action for specific enforcement of the terms of
this Agreement and seek damages resulting from such breach. Xxxxxxx
may not institute any proceeding based on claims related to Weinreb’s employment
with the Company or the termination thereof.
6
15.
No
Reliance. Xxxxxxx represents that,
in executing this Agreement, he does not rely and has not relied upon any
representation or statement not set forth in this Agreement that the Company or
any of its members, agents, representatives, or attorneys may have made with
regard to the subject matter, basis or effect of this Agreement. The
Company asserts that they have made no representation or statement that is not
reflected in this Agreement. No other promises, agreements or
modifications shall be binding unless in writing and signed after the Effective
Date.
16.
Governing
Law and Jurisdiction. This Agreement shall be construed in
accordance with the laws of the State of New York without regard to any state’s
conflict of law provisions. Any dispute arising out of or related to
this Agreement shall be submitted to the Xxx Xxxx Xxxxx Xxxxxxx Xxxxx, Xxx Xxxx
Xxxxxx. Xxxxxxx and the Company each consents to the exercise of
personal jurisdiction over him or it for this purpose and waives any objection
to the exercise of jurisdiction based on improper venue or inconvenient
forum. Each of Xxxxxxx and the Company waives any right to resolve
any dispute arising under or related to this Agreement before a
jury.
17.
Severability. If at any time after the
date of the execution of this Agreement, any provision of this Agreement shall
be held in any court or agency of competent jurisdiction to be illegal, void, or
unenforceable, such provision shall be deemed to be restated to reflect, as
nearly as possible, the original intentions of the parties in accordance with
applicable law. The invalidity or unenforceability of any provision
of this Agreement, however, shall not affect the validity or enforceability of
any other provision of this Agreement, the Covenants Agreement or the Assignment
Agreement, all of which shall remain in full force and effect.
18.
Entire
Agreement. This Agreement, the Covenants Agreement and the
Assignment Agreement set forth the entire agreement between the parties with
respect to the subject matter hereof. This Agreement, the Covenants
Agreement and the Assignment Agreement collectively supersede any and all prior
understandings and agreements between the parties, including without limitation
the Offer Letter and if applicable, the Original Offer Letter, and neither party
shall have any obligation toward the other except as set forth in this
Agreement, the Covenants Agreement and the Assignment Agreement. This
Agreement may not be modified except in a writing signed by all
parties.
19.
Enforceability. Xxxxxxx is bound by this
Agreement. Anyone who succeeds to his rights and responsibilities,
such as his heirs or the executors of his estate, is also bound. This
Agreement is made for the Company’s benefit and all who succeed to the Company’s
rights and responsibilities, such as the Company’s successors or
assigns.
20.
Headings.
The headings contained in this Agreement are for the convenience of reference
only and are not intended to define, limit, expand or describe the scope or
intent of any provision of this Agreement.
7
21.
Warranties. By signing this
Agreement, Xxxxxxx acknowledges the following:
(a)
He understands that this Agreement is LEGALLY BINDING and by signing
it he gives up certain rights.
(b)
The Company has given him twenty-one (21) days to consider his rights and
obligations under this Agreement (although he may execute and return this
Agreement at any time).
(c) The
Company advised him to consult with an attorney and/or any other advisors of his
choice before signing this Agreement.
(d)
He has voluntarily chosen to enter into this Agreement and has not been forced
or pressured in any way to sign it.
(e) He
acknowledges and agrees that the payments and benefits set forth in Sections 2,
3 and 4 of this Agreement and the other benefits and covenants contained herein
are contingent on his executing this Agreement and KNOWINGLY AND VOLUNTARILY RELEASING
all Claims against the Company and the other Releasees that he may have,
known or unknown, and that these benefits are in addition to any benefit he
would have otherwise received if he did not sign this Agreement.
(f) This
Agreement shall have no force and effect and he will not be entitled to any of
the payments and benefits or payments described in Section 2, 3 and 4 of this
Agreement, unless he signs and delivers this Agreement on or before twenty one
(21) days after he received it.
(g)
He has seven (7) days after he signs this Agreement to revoke it by
notifying the Company in writing to the attention of the undersigned at NeoStem,
Inc., 000 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx 00000 so that the
revocation notice is received by the Company on or before the end of the seventh
day. The Agreement will not become effective or enforceable until the
seven (7) day revocation period has expired.
(h)
This Agreement includes a WAIVER OF ALL RIGHTS AND
CLAIMS he may have under the Age Discrimination in Employment Act of 1967
(29 U.S.C. §621 et
seq.); and
(i) This
Agreement does not waive any rights or claims that may arise after this
Agreement becomes effective, which is seven (7) days after you sign it, provided
that you do not exercise your right to revoke this Agreement
IN WITNESS WHEREOF, the
parties have executed this Agreement as of the Effective Date.
|
XXXX
XXXXXXX
|
||||
|
By:
|
|
|||
|
Xxxxx
X. Xxxxx
|
||||
|
Chief
Executive Officer
|
||||
8
