EXHIBIT 10.31
CONFIDENTIAL
SEPARATION AGREEMENT
This Confidential Separation Agreement (the "Agreement") is entered
into between Lynx Therapeutics, Inc. (the "Company") and Xxxxx X. Xxxxxx, Xx.
("Xx. Xxxxxx").
1. SEPARATION. Xx. Xxxxxx'x last day of work with the Company was
November 1, 1996 (the "Separation Date"). Effective as of the Separation Date,
Xx. Xxxxxx hereby resigns from any and all of his positions as an officer or
director of the Company and its subsidiaries, including Spectragen, Inc.
2. ACCRUED SALARY AND PAID TIME OFF. The Company has paid Xx. Xxxxxx
all accrued salary, and all accrued and unused vacation earned through the
Separation Date, subject to standard payroll deductions and withholding, and Xx.
Xxxxxx acknowledges receipt of such payment.
3. SEVERANCE. In lieu of the severance benefits provided for In Xx.
Xxxxxx'x Employment Agreement dated as of April 3, 1995 (the "Employment
Agreement"), the Company agrees to provide Xx. Xxxxxx with the severance
benefits described below:
a. The Company will continue to pay Xx. Xxxxxx at the annual
base salary rate of $200,000 in semi-monthly installments for twelve (12) months
from the Separation Date. On or prior to the tenth day of each month, Xx. Xxxxxx
shall provide the Company with a written statement of any income that has been
earned by him from other sources of employment (but excluding for this purpose
director fees paid to Xx. Xxxxxx in respect of directorships he currently
holds), and fifty percent (50%) of any such earnings shall be applied to a
reduction of payments due to Xx. Xxxxxx under this subparagraph.
b. The Company will advance $17,333 to Xx. Xxxxxx within five
(5) days of execution of this Separation Agreement pursuant to the Loan
Agreement dated as of May 1, 1995, in order to bring the outstanding principal
balance of such loan to $150,000. Such advance will be applied to the reduction
of debt to the company as stated in Paragraph 5 below. No further advances will
be made under such agreement, and the Company agrees to forgive the principal,
and accrued interest, effective January 1, 1997 (an aggregate of $157,861.58).
c. Because the Company believes, on the advice of its counsel,
that the severance payment and the forgiven Promissory Note balance (as
described in 3.b. above) may be treated as taxable income to Xx. Xxxxxx under
current state and federal income tax statutes and regulations, the Company may
deduct taxes from its cash payments due to Xx. Xxxxxx hereunder.
4. HEALTH INSURANCE. To the extent permitted by the federal COBRA law
and by the Company's current group health insurance policies, Xx. Xxxxxx will be
eligible to continue his medical and dental insurance benefits. Xx. Xxxxxx will
be provided with a separate notice of his COBRA rights. If Xx. Xxxxxx elects
continued coverage under COBRA, Xx. Xxxxxx will be responsible for the payment
of the COBRA premiums.
5. EQUITY; PROMISSORY NOTE. In connection with the exercise of stock
options granted to him, Xx. Xxxxxx and the Company entered into a Stock Purchase
Agreement dated as of May 1, 1995 (the "Stock Purchase Agreement") pursuant to
which Xx. Xxxxxx purchased 250,000 shares of Common Stock with a Promissory Note
in the principal amount of $450,000. Together with accrued interest, the amount
outstanding under such note was $498,060 at the Separation Date. Under the terms
of the Stock Purchase Agreement 157,500 shares are currently unvested and
subject to a repurchase option in favor of the Company at an aggregate price of
$329,273. The Company hereby exercises its option, and the exercise price shall
be applied to payment of the Promissory Note (reducing the balance to $168,787).
The advance of $17,333 described in Paragraph 3.b above will also be applied to
payment of the Promissory Note (reducing the balance to $151,454). Xx. Xxxxxx
agrees to pay the remaining balance in full on or before November 30, 1996, and
acknowledges and agrees that the Company can and will exercise its rights as a
secured creditor (including execution of a sale of collateral in the market) if
such balance is not paid when due. Upon payment in full of the Promissory Note,
the Company agrees to cancel the Promissory Note and to deliver to Xx. Xxxxxx a
stock certificate representing the balance of the Common Stock currently held in
escrow pursuant to the Stock Purchase Agreement as soon as it can be processed
by the Company's transfer agent.
6. OTHER COMPENSATION OR BENEFITS. Xx. Xxxxxx acknowledges that, except
for the closing costs to which he is entitled per the April 1995 agreement and
as expressly provided in this Agreement, he will not receive any additional
compensation, severance or benefits after the Separation Date.
7. EXPENSE REIMBURSEMENTS. Xx. Xxxxxx agrees that, prior to November
30, 1996, he will submit his final documented expense reimbursement statement
reflecting all business expenses he incurred through the Separation Date, if
any, for which he seeks reimbursement. The Company will reimburse Xx. Xxxxxx for
these expenses pursuant to its regular business practice.
8. RETURN OF COMPANY PROPERTY. By the date of execution of this
Agreement, Xx. Xxxxxx agrees to return to the Company all Company documents (and
all copies thereof) and other Company property which he has had in his
possession at any time, including, but not limited to, Company files, notes and
notebooks, drawings, records, business plans and forecasts, financial
information, specifications, computer-recorded information, tangible property
(including, but not limited to, computers), credit cards, entry cards,
identification badges and keys; and, any materials of any kind which contain or
embody any proprietary or confidential information of the Company (and all
reproductions thereof). Xx. Xxxxxx has two notebooks in his possession in which
he has maintained a diary of activities for the Company and otherwise. Xx.
Xxxxxx will make
these notebooks available to the Company for copying but may retain them,
subject to his continuing obligations regarding confidentiality.
9. PROPRIETARY INFORMATION OBLIGATIONS. Xx. Xxxxxx acknowledges his
continuing obligations, both during and after his employment, under his Employee
Invention Agreement to disclose covered inventions and not to use or disclose
any confidential or proprietary information of the Company without prior written
authorization from a duly authorized representative of the Company.
10. SOLICITATION. Xx. Xxxxxx agrees that for one year following the
Separation Date, he will not, either directly or through others, solicit or
attempt to solicit any employee, consultant or independent contractor of the
Company to terminate his or her relationship with the Company in order to become
an employee, consultant or independent contractor to or for any other person or
business entity. Xx. Xxxxxx agrees not to initiate any dialogue with any
employee or consultant of the Company concerning the Company's management or
business affairs.
11. CONFIDENTIALITY. The provisions of this Agreement shall be held in
strictest confidence by Xx. Xxxxxx and the Company and shall not be publicized
or disclosed in any manner whatsoever; provided, however, that: (a) the parties
may disclose this Agreement in confidence to their respective attorneys,
accountants, auditors, tax preparers, and financial advisors; (b) the Company
may disclose this Agreement as necessary to fulfill standard or legally required
corporate reporting or disclosure requirements; and (c) the parties may disclose
this Agreement insofar as such disclosure may be necessary to enforce its terms
or as otherwise required by law. The Company will, and Xx. Xxxxxx may, disclose
that Xx. Xxxxxx has resigned as a result of differences over future corporate
development priorities and management style. Xx. Xxxxxx agrees not to make any
disclosure inconsistent with the foregoing. All inquiries from third parties
regarding references for Xx. Xxxxxx shall be referred to Xxxxx San Roman (Human
Resources), who shall respond only by stating that it is company policy to state
no more then already disclosed and giving Xx. Xxxxxx'x dates of employment, that
his last position held was President and Chief Executive Officer, and his last
salary.
12. DISPUTE RESOLUTION. Xx. Xxxxxx and the Company agree that all
disputes, claims, and causes of action, in law or equity, arising from or
relating to this Agreement or its enforcement, performance, breach, or
interpretation shall be resolved solely and exclusively by confidential final
and binding arbitration through Judicial Arbitration & Mediation
Services/Endispute, Inc. ("JAMS"), in San Francisco, California, under the
then-existing JAMS arbitration rules. However, nothing in this section is
intended to prevent either party from obtaining injunctive relief in court to
prevent irreparable harm pending the conclusion of any such arbitration.
13. RELEASE. In exchange for the payments and other consideration under
this Agreement to which he would not otherwise be entitled, Xx. Xxxxxx agrees to
execute the Employee Agreement and Release attached hereto as Exhibit A.
14. MISCELLANEOUS. This Agreement, including Exhibit A, constitutes the
complete, final and exclusive embodiment of the entire agreement between Xx.
Xxxxxx and the Company with regard to this subject matter and expressly
supersedes the Employment Agreement (but not Xx. Xxxxxx'x Proprietary
Information Agreement, which remains in full force and effect). It is entered
into without reliance on any promise or representation, written or oral, other
than those expressly contained herein, and it supersedes any other such
promises, warranties or representations. This Agreement may not be modified or
amended except in a writing signed by both Xx. Xxxxxx and a duly authorized
officer of the Company. This Agreement shall bind the heirs, personal
representatives, successors and assigns of both Xx. Xxxxxx and the Company, and
inure to the benefit of both parties, their heirs, successors and assigns. If
any provision of this Agreement is determined to be invalid or unenforceable, in
whole or in part, this determination will not affect any other provision of this
Agreement and the provision in question shall be modified by the court so as to
be rendered enforceable. Both parties acknowledge that they have had the
opportunity to seek advice regarding this Agreement from their respective
counsel. This Agreement shall be deemed to have been entered into and shall be
construed and enforced in accordance with the laws of the State of California as
applied to contracts made and to be performed entirely within California.
LYNX THERAPEUTICS, INC.
Dated: November 11, 1996 By: /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
Chief Financial Officer
Dated: November 11, 1996 /s/ Xxxxx X. Xxxxxx, Xx.
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Xxxxx X. Xxxxxx, Xx.
Exhibit A - Employee Agreement and Release
EXHIBIT A
EMPLOYEE AGREEMENT AND RELEASE
Except as otherwise set forth in this Agreement, I hereby release,
acquit and forever discharge Lynx Therapeutics, Inc. (the "Company"), its
parents and subsidiaries, and their officers, directors, agents, servants,
employees, attorneys, shareholders, successors, assigns and affiliates, of and
from any and all claims, liabilities, demands, causes of action, and damages, in
law, equity, or otherwise, arising out of or in any way related to events, acts
or conduct at any time prior to and including the date this Agreement is signed
or the Separation Date, whichever is later, and which arise out of or are in any
way connected with wrongful termination of my employment with the Company or any
compensatory damages therefor; claims or demands related to stock, stock
options, or expense reimbursements (except as set forth in this agreement); and
claims pursuant to any federal, state or local anti-discrimination law, statute
or cause of action including, but not limited to, the federal Civil Rights Act
of 1964, as amended; the Age Discrimination in Employment Act of 1967, as
amended ("ADEA"); the federal Americans with Disabilities Act of 1990, and the
California Fair Employment and Housing Act, as amended. Not withstanding
anything in this Agreement or this Exhibit A, the parties agree that this
Agreement and Exhibit A shall not constitute a release of any rights or claims
by me, whether pursuant to statute or insurance or otherwise, to indemnity and
defense, and attorneys fees and costs of defense in connection with any claims
regarding any acts or omissions within the course and scope of my employment
and/or directorship with the Company, nor shall this Agreement or its Exhibit A
constitute a release of any claim for breach of this Agreement
By: /s/ Xxxxx X. Xxxxxx, Xx.
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Xxxxx X. Xxxxxx, Xx.
Date: November 14, 1996
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