Exhibit 10.4
CONFIDENTIAL RETIREMENT AGREEMENT
AND GENERAL RELEASE
THIS CONFIDENTIAL RETIREMENT AGREEMENT AND GENERAL RELEASE (this
"Agreement") is entered into as of August 16, 2002 (the "Effective Date"), by
and between NeoTherapeutics, Inc., a Delaware corporation (the "Company") and
Xxxxx X. Xxxxxx, Ph.D., an individual ("Executive").
RECITALS
WHEREAS, Executive is employed by the Company pursuant to that certain
executive employment agreement dated as of December 1, 2000 (the "Employment
Agreement");
WHEREAS, Executive and the Company (collectively, the "Parties") have
agreed that Executive will retire from his positions as an officer and an
employee of the Company, and will become a consultant to the Company;
WHEREAS, the Parties wish to specify the terms of the retirement and
resolve any outstanding issues between them.
AGREEMENT
NOW THEREFORE, in consideration of the representations and agreements
contained herein, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be bound hereby,
the Company and Executive hereby agree to terminate their employment
relationship on the following basis:
1. Termination of the Employment Agreement. The Employment Agreement and
each Party's rights thereunder are hereby terminated, including, without
limitation, Executive's right to receive any "Base Salary" (as defined in the
Employment Agreement), bonus or other compensation, or any entitlement to
severance or other payments upon termination of employment under the Employment
Agreement.
2. Retirement. Executive hereby retires as Chief Executive Officer, Chief
Science Officer, Chairman of the Board of Directors (the "Board") and an
employee of the Company as of the Effective Date. Executive understands and
agrees that he is giving up any right or claim to future employment with the
Company and any compensation or benefit of such employment, including any
compensation and/or benefits owed to the Executive pursuant to the Employment
Agreement, except for compensation and/or benefits provided for in this
Agreement. Executive acknowledges that he has received all compensation and
benefits due to him through the Effective Date.
3. Compensation. In consideration for Executive's agreement to retire
pursuant to the terms of this Agreement:
(a) In lieu of severance, Executive shall continue to receive payments
equal to $25,000 per month until December 31, 2002, in accordance with the
Company's payroll policies and practices. These payments shall be subject to
withholding in accordance with applicable law. Concurrently with the execution
of this Agreement, Executive shall receive any amount of his Base Salary that
may have been deferred since July 1, 2002, together with any other accrued but
unpaid amounts due under the Employment Agreement as of the Effective Date but
before execution of this Agreement.
(b) Following the Effective Date, the Company shall pay eighty-percent
(80%) of the COBRA premium for Executive and his spouse until December 31, 2002
provided that Executive elects to continue benefits under COBRA and remains
eligible for COBRA throughout that period. In the event that Executive and/or
his spouse cannot continue coverage under COBRA, but is eligible for Medicare,
the Company will reimburse any Medicare Part B premium, and premium for a
Supplemental Plan J to the extent he and/or she can be underwritten for such
coverage. Executive shall be responsible for taking any actions necessary to
obtain coverage under Medicare, Medicare Part B or a Supplemental Plan J, and to
pay any and all premiums required by them, subject to the Company's
reimbursement.
(c) The Company agrees to pay $106,041.51 of the total outstanding
balance of principal and interest as of the Effective Date of $136,041.51 owed
to Executive by the Company under that certain Promissory Note (the "Company
Note") made by the Company dated January 1, 1998 upon execution of this
Agreement.
(d) All stock options previously granted to Executive shall become
fully vested as of the Effective Date, and Executive shall be entitled to
exercise such options in whole or in part from time to time during the one year
period commencing on the Effective Date.
(e) The Company shall continue to make all monthly payments due under
the lease for the automobile provided to Executive by the Company as of the
Effective Date through the expiration of such lease; provided that the Company
shall not be required to exercise any purchase option upon expiration of such
lease, and Executive agrees to return such automobile when and as required under
such lease, unless Executive personally purchases such automobile.
(f) The Company hereby transfers to Executive ownership of the laptop
computer provided to him by the Company as of the Effective Date.
(g) The Company shall reimburse Executive for other amounts actually
expended by Executive in the course of performing his duties as a consultant to
the Company, if such amounts are approved in writing by the Company beforehand
and Executive tenders receipts or other documentation reasonably substantiating
the amounts as required by the Company.
(h) Executive is covered under the liability insurance policies
currently maintained by the Company for its directors and officers, with respect
to events occurring prior to the Effective Date. In the event that the Company
renews, extends or replaces such policies, or purchases "tail" coverage, the
Company will include Executive under the coverage with respect to events
occurring prior to the Effective Date.
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4. Repayment of Executive Loan. Executive hereby agrees to repay the total
outstanding balance of principal and interest as of the Effective Date of
$390,112.02 owed to the Company by Executive under that certain Promissory Note
(the "Executive Note") made by Executive dated July 17, 2000 as follows: (i) by
foregoing any right to receive any Base Salary, bonus or other compensation
otherwise owed to Executive pursuant to the terms of the Employment Agreement
for calendar year 2003, including, without limitation, any obligation that the
Company provide medical, dental or similar benefits or pay all or any portion of
COBRA premiums, except as otherwise specified in this Agreement; (ii) by
forgiving $30,000 of the total outstanding balance of the Company Note; and
(iii) by agreeing to provide consulting services to the Company in the future as
set forth in this Agreement. In consideration of this Agreement, and in
particular clauses (i)-(iii) of the foregoing sentence, the Company shall deem
the Executive Note to be repaid in full as of the Effective Date, and shall
deliver to Executive the original Executive Note marked paid in full and
initialed by a duly authorized representative of the Company concurrently with
the execution of this agreement. The Executive Note shall continue to be deemed
paid in full as of the Effective Date regardless of whether the Company ever
requests that Executive perform any consulting services under Section 6 below.
5. Options. Executive and the Company are parties to certain written
agreements pursuant to which Executive has been granted options to purchase
stock in the Company. Executive acknowledges that although such options might be
identified as incentive stock options, such options may not be qualified for
treatment as incentive stock options, either now or in the future. Executive is
advised to consult with his personal tax advisor to determine whether the
options are qualified for treatment as incentive stock options. Except as set
forth in Section 3(d) and this Section 5, Executive's rights under his existing
option agreements are not intended to be modified by this Agreement in any way.
6. Future Consulting. Executive shall provide consulting services to the
Company as may be reasonably requested by the Company from time to time up to
and through December 31, 2003, such requests to be made on reasonable notice to
Executive and such services to be performed solely during ordinary business
hours. The Company shall compensate Executive for these consulting services as
set forth in Section 3 above. It is the express intent of the parties that
Executive shall provide consulting services to the Company as an independent
contractor pursuant to this Agreement. Executive will not be an employee of the
Company after the Effective Date, and Executive shall not hold himself out to be
an employee of the Company, and shall not have the authority to enter into or
bind the Company to any contract, promise, or obligation under any
circumstances. The Company is interested only in the results to be achieved by
Executive under this Agreement, and the manner and method of performing all
services of Executive under this Agreement, and achieving the desired results,
shall be under the exclusive control of Executive. The Company shall have no
right or authority to direct or control Executive with respect to the
performance of Executive's services under this Agreement, except as otherwise
provided by this Agreement.
7. Return of Company Property. Except as expressly provided for herein,
at the Company's request, the Executive will return to the Company all files,
records, credit cards, keys, equipment, and any other property of the Company or
documents maintained by him for the Company's use or benefit, on or before the
Effective Date.
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8. Confidentiality. The Parties acknowledge that this Agreement and all
matters relating to or leading up to the negotiation and effectuation of this
Agreement are confidential and shall not be disclosed to any third party except
as follows: the Company may disclose the terms of this Agreement to the public
as required by law, including without limitation, the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended; the Company may
disclose the terms of this Agreement to Company employees with a business
purpose for receiving such information; the Parties may disclose the terms of
the Agreement to their respective legal, accounting and tax advisors to the
extent necessary for them to perform services; and the Parties may disclose the
terms of this Agreement to the Internal Revenue Service and the California
Franchise Tax Board as required by law, rule or regulation, or as otherwise
required by law or necessary to enforce the terms of this Agreement. If any
disclosure is made as permitted by this paragraph other than to governmental
authorities as required by law, then such persons or entities shall be cautioned
about the confidentiality obligations imposed by this Agreement.
9. Non-Disclosure, Non-Competition and Non-Solicitation.
(a) Executive agrees that he will not disclose at any time, other than to
an authorized employee, officer, director or agent of the Company, any
information relating to the Company's business, trade, practices, trade secrets
or know-how or proprietary information without the Company's prior express
written consent. Following the Effective Date, Executive shall be permitted to
continue in his usual occupation and shall not be prohibited from competing with
the Company except in the specific industry market segments in which the
Corporation competes while Executive is a consultant to the Company. Executive
agrees that until December 31, 2003, Executive shall not directly or indirectly
solicit, induce, recruit or encourage any of the Company's employees to leave
their employment or take away such employees to leave their employment or take
away such employees or attempts to solicit, induce, recruit, encourage or take
away employees of the Company.
(b) Executive understands and agrees that future payments under this
Agreement may be terminated by the Company if he violates this provision in
addition to any other remedies available under applicable law. In the event the
Company terminates payments pursuant to this Section, Executive may challenge
such termination in accordance with Section 16 below. In the event of any other
breach or violation of this Agreement, the party asserting a breach or violation
of the Agreement may seek remedies otherwise available under applicable law or
another provision of this Agreement in accordance with Section 16 below.
10. General Release by Executive.
(a) Release of Claims. Executive does hereby for himself and his
respective heirs, successors and assigns, release, acquit and forever discharge
the Company, its parents, subsidiaries and affiliates and any of their officers,
directors, managers, employees, representatives, related entities, successors
and assigns, and all persons acting by, through or in concert with them (the
"Company Releasees") of and from any and all claims, actions, charges,
complaints, causes of action, rights, demands, debts, damages, or accountings of
whatever nature, known or unknown which Executive may have against the Company
Releasees, or any of them, based on any actions or events which occurred prior
to the effective date of this
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Agreement, including, but not limited to, those related to, or arising from,
Executive's employment with the Company or the termination thereof, including,
without limitation, any claims under Title VII of the Civil Rights Act of 1964,
the Americans with Disabilities Act and the California Fair Employment and
Housing Act (collectively, the "Claims" or individually, "Claim"); provided,
however, that the release set forth in this Section 10(a) shall not be effective
with respect to any Company Releasee, other than the Company, who commences any
claim, action or proceeding against Executive based on any actions or events
which occurred prior to the effective date of this Agreement.
(b) Release of Unknown Claims. In addition, Executive expressly waives
all rights under Section 1542 of the Civil Code of the State of California,
which reads as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH A CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
(c) No Assignment of Claims. Executive represents and warrants to the
Company Releasees that there has been no assignment or other transfer of any
interest in any Claim which Executive may have against the Company Releasees, or
any of them, and Executive agrees to indemnify and hold the Company Releasees
harmless from any liability, claims, demands, damages, costs, expenses and
attorneys' fees incurred as a result of any person asserting any such assignment
or transfer of any rights or Claims if Executive has made such assignment or
transfer from such party.
(d) No Suits or Actions. Executive represents and warrants to the Company
that there have been no claims, suits, actions, complaints, or charges filed by
him against the Company Releasees, or any of them. Executive agrees that if he
hereafter commences, joins in, or in any manner seeks relief through any suit
arising out of, based upon, or relating to any of the Claims released hereunder,
or in any manner asserts against the Company Releasees, or any of them, any of
the Claims released hereunder, then he will pay to the Company Releasees against
whom such claim(s) is asserted, in addition to any other damages caused thereby,
all attorneys' fees incurred by such Company Releasees in defending or otherwise
responding to said suit or Claim.
(e) No Admission. Executive further understands and agrees that neither
the payment of money nor the execution of this Release shall constitute or be
construed as an admission of any liability whatsoever by the Company Releasees.
11. General Release by the Company.
(a) Release of Claims. The Company does hereby for itself and its
respective successors and assigns, release, acquit and forever discharge
Executive and his heirs, estates, successors and assigns, and all persons acting
by, through or in concert with them (the "Executive Releasees") of and from any
and all claims, actions, charges, complaints, causes of action, rights, demands,
debts, damages, or accountings of whatever nature, known or unknown
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which the Company may have against the Executive Releasees, or any of them,
based on any actions or events which occurred prior to the effective date of
this Agreement, including, but not limited to, those related to, or arising
from, Executive's employment with the Company or the termination thereof
(collectively, the "Claims" or individually, "Claim").
(b) Release of Unknown Claims. In addition, the Company expressly
waives all rights under Section 1542 of the Civil Code of the State of
California, which reads as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH A
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR
AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY
HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH
THE DEBTOR.
(c) No Assignment of Claims. The Company represents and warrants to the
Executive Releasees that there has been no assignment or other transfer of any
interest in any Claim which the Company may have against the Executive
Releasees, or any of them, and the Company agrees to indemnify and hold the
Executive Releasees harmless from any liability, claims, demands, damages,
costs, expenses and attorneys' fees incurred as a result of any person asserting
any such assignment or transfer of any rights or Claims if the Company has made
such assignment or transfer from such party.
(d) No Suits or Actions. The Company agrees that if it hereafter
commences, joins in, or in any manner seeks relief through any suit arising out
of, based upon, or relating to any of the Claims released hereunder, or in any
manner asserts against the Executive Releasees, or any of them, any of the
Claims released hereunder, then it will pay to the Executive Releasees against
whom such claim(s) is asserted, in addition to any other damages caused thereby,
all attorneys' fees incurred by such Executive Releasees in defending or
otherwise responding to said suit or Claim.
(e) No Admission. The Company further understands and agrees that
neither the payment of money nor the execution of this Release shall constitute
or be construed as an admission of any liability whatsoever by the Executive
Releasees.
12. Nondisparagement. The Parties shall not make any disparaging or
derogatory comments, public or otherwise, concerning each other, and Executive
shall refrain from making any disparaging comments, public or otherwise,
concerning any employees, officers or directors of the Company. The Company
shall provide Executive a reasonable opportunity to review and comment in
advance on any press release regarding Executive's retirement from the Company,
and the Company shall not unreasonably disregard any such comments provided by
Executive.
13. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their respective
successors and assigns. Notwithstanding the foregoing, neither this Agreement
nor any rights hereunder may be assigned to any party by the Company or
Executive without the prior written consent of the other party hereto.
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14. Entire Agreement/No Oral Modification. This Agreement contains all of
the terms, promises, representations, and understandings, oral or written, made
between the Company and Executive with respect to the subject matter hereof and
supersedes all prior representations, understandings, or agreements, oral or
written, between the Company and Executive, with respect to such matters, which
the Parties acknowledge have been merged into this Agreement. This Agreement may
not be modified other than with a writing executed by both parties and stating
an intent to modify this agreement.
15. Governing Law. This Agreement shall be governed by the laws of the
State of California, without regard for conflict of law principles.
16. Arbitration; Waiver of Jury Trial. Except for claims for equitable or
injunctive relief which cannot be timely addressed through arbitration (which
claims may be brought in any state or federal court in Orange County,
California), the parties hereby agree to submit any claim or dispute arising out
of the terms of this Agreement, including, without limitation, claims regarding
confidentiality under Section 8 of this Agreement and/or any dispute arising out
of or relating to Executive's employment or consulting relationship with the
Company in any way, to private and confidential arbitration by a single neutral
arbitrator through JAMS. All arbitration proceedings shall be governed by the
then current JAMS rules governing employment disputes, and shall take place in
Orange County, California. The decision of the arbitrator shall be rendered in
writing and shall be final and binding on all parties to this Agreement.
Judgment thereon may be entered in any court having jurisdiction. The Company
shall advance the arbitrator's fee and all costs of services provided by the
arbitrator and arbitration organization; however, all costs of the arbitration
proceeding or litigation to enforce this Agreement, including attorneys' fees
and witness expenses, may be awarded to the prevailing party in addition to such
other relief as the arbitrator may determine. Except for claims for equitable or
injunctive relief which cannot be timely addressed through arbitration (which
claims may be brought in any state or federal court in Orange County,
California), this arbitration procedure is intended to be the exclusive method
of resolving any claim relating to the obligations set forth in this Agreement.
Executive hereby waives any right to a jury trial on any dispute or claim
covered by this paragraph.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same instrument.
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IN WITNESS WHEREOF, this Agreement is executed by the parties set forth
below as of the date first indicated above.
THE COMPANY EXECUTIVE
NEOTHERAPEUTICS, INC. XXXXX X. XXXXXX, PH.D.,
a Delaware corporation an individual
By: /s/ Xxxxxx X. Xxxxxxxxx /s/ Xxxxx X. Xxxxxx
----------------------------- ----------------------------------
Title: Chief Executive Officer
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