EXHIBIT 99.2
SETTLEMENT AND MUTUAL RELEASE AGREEMENT
This SETTLEMENT AND MUTUAL RELEASE AGREEMENT ("Agreement") is made and
entered into by and between Xxxxxxxxx Limited, a corporation duly organized and
existing under the laws of Belize ("Xxxxxxxxx"), Edenland, Inc., a corporation
duly organized and existing under the laws of Belize ("Edenland"), and Xxxxxxx
X. Xxxxxxxxxxx ("Xxxxxxxxxxx") on the one hand, and Xxxxxx-Xxxx Pharmaceuticals,
Inc. (the "Company") on the other (collectively, Xxxxxxxxx, Edenland,
Xxxxxxxxxxx and the Company are referred to herein as the "Parties"). This
Agreement is entered into and effective as of January 20, 2000.
RECITALS
WHEREAS, a dispute has arisen between the parties in regard to their
respective rights, duties and obligations under: (1) the May 18, 1994 License
Agreement entered into between Xxxxxxxxx and Xxxxxxx X. Xxxxxxxxxxx on the one
hand, and Holmedco Pharmaceuticals Corporation (the predecessor-in-interest to
Xxxxxx-Xxxx Pharmaceuticals, Inc.) on the other (the "Xxxxxxxxx Agreement",
attached hereto as Exhibit A); (2) the August 25, 1994 License Agreement entered
into between Edenland, Inc. and Xxxxxxx X. Xxxxxxxxxxx on the one hand, and
Holmedco Pharmaceuticals Corporation on the other (the "Edenland Agreement",
attached hereto as Exhibit B); and (3) the August 25, 1994 Research, Development
and Option Agreement entered into between Edenland, Inc. and Xxxxxxx X.
Xxxxxxxxxxx on the one hand, and Holmedco Pharmaceuticals Corporation on the
other (the "RDO Agreement", attached hereto as Exhibit C) (collectively, the
Xxxxxxxxx Agreement, the Edenland Agreement and the RDO Agreement shall be
referred to herein as the "Prior Agreements").
WHEREAS, Xxxxxx-Xxxx filed on November 5, 1999 filed two separate
complaints and demands for arbitration with the American Arbitration Association
entitled Xxxxxx-Xxxx Pharmaceuticals, Inc. v. Xxxxxxx X. Xxxxxxxxxxx and
Xxxxxxxxx Limited (Matter Xx. 00 X 000 00000 00) xxx Xxxxxx-Xxxx Pharmaceuticals
v. Xxxxxxx X. Xxxxxxxxxxx and Edenland, Inc. (Matter Xx. 00 X 000 00000 99)
(collectively, the "Actions") alleging breach of the Prior Agreements and other
non-contractual claims;
WHEREAS, Xxxxxxxxxxx and Xxxxxxxxx served on November 15, 1999 a Notice of
Termination of the Xxxxxxxxx Agreement; and on November 16, 1999, the Company
filed with the American Arbitration Association a first amended complaint in the
action entitled Xxxxxx-Xxxx Pharmaceuticals, Inc. v. Xxxxxxx X. Xxxxxxxxxxx and
Xxxxxxxxx Limited (Matter Xx. 00 X 000 00000 99), including in its declaratory
relief action a determination of the validity of Respondents' Notice of
Termination;
WHEREAS, Xxxxxxxxxxx, Edenland, and Xxxxxxxxx (collectively, "Respondents")
filed on December 1, 1999 counterclaims in the Actions alleging breach of the
Prior Agreements and other non-contractual claims against the Company;
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WHEREAS, the Parties agree that this Agreement shall supercede and replace
any previous agreements between the Parties, including the Prior Agreements and
all amendments thereto; and
WHEREAS, the Parties desire to settle and discharge any and all actual or
potential claims and controversies between them, known or unknown, and further
desire to effectuate the terms of the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants,
waivers and releases contained herein, it is agreed by and between the Parties
hereto as follows:
1. Technology Assignment Agreement. Concurrently with the execution of
the Agreement, the Company and Respondents shall enter the Technology Assignment
Agreement attached hereto as Exhibit D.
2. Stock Issuance Agreement. Also concurrently with the execution of
this Agreement, the Company and Respondents shall enter into the Common Stock
and Warrant Agreement attached hereto as Exhibit E.
3. Sponsored Research and License Agreement. Also concurrently with the
execution of this Agreement, the Company and Respondents shall enter into the
Sponsored Research and License Agreement attached hereto as Exhibit F.
4. Support Of Management. For so long as Respondents or their agents,
subsidiaries, representatives or affiliates own shares of Company Common Stock
(or securities exercisable into shares of Company Common Stock), Xxxxxxxxxxx,
Xxxxxxxxx and Edenland agree that they shall, and shall cause their agents,
subsidiaries, representatives, affiliates and family members of Xxxxxxxxxxx who
are stockholders of the Company to (i) support, and vote all of his, her or its
shares of Common Stock in favor of, any management or board of director
proposals subject to a stockholder vote; (ii) not submit a proposal for
stockholder approval not previously approved in writing by the Company's board
of directors (the "Board"); (iii) not vote his, her or its shares of Common
Stock in favor of proposals that are expressly opposed by Company management or
Board; and (iv) not make any short sale or maintain any short position, or
establish or maintain a "put equivalent position" (within the meaning of Rule
16a-1(h) under the Securities Exchange Act of 1934, as amended) with respect to
the Company's Common Stock. The obligations of Respondents in clauses (i), (ii)
and (iii) of the forgoing sentence shall be applicable only during such time as
Xxxxxxx X. Xxxxxx is either the Chairman or the Chief Executive Officer of the
Company, unless the reason for his failure to be either the Chairman or the
Chief Executive Officer is due to his death or disability. For purposes of this
Agreement, "affiliate" shall mean any company or entity controlled by,
controlling, or under common control with a party hereto and shall include any
company fifty percent (50%) or more of whose voting stock or participating
profit interest is owned or controlled, directly or indirectly, by a party, and
any company which owns or controls, directly or indirectly, fifty percent (50%)
or more of the voting stock of a party.
5. Stockholder Communications. Respondents further agree that they shall
not, with respect to any communication with any actual or potential stockholder
of the Company, and
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shall cause their agents, subsidiaries, affiliates, representatives and family
members who are stockholders of the Company not to (i) make any disparaging
statements regarding the Company, its management, Board members, employees or
affiliates, (ii) disclose any confidential information regarding the Company or
any aspect of its business and (iii) for so long as Respondents or their
employees, agents, directors, subsidiaries affiliates own shares of Company
Common Stock, encourage any such stockholder or potential stockholder to (a)
vote against any management or Board proposal subject to stockholder vote or (b)
submit a proposal for stockholder approval not previously approved in writing by
the Board or (c) vote in favor of proposals that are expressly opposed by
Company management the Board. Respondents shall not be deemed in breach of
clause (iii) of the foregoing sentence unless the Company demonstrates to
Respondents the occurrence of such breach by a preponderance of the evidence.
Further, the obligations of Respondents in clause (iii) above shall be
applicable only during such time as Xxxxxxx X. Xxxxxx is either the Chairman or
the Chief Executive Officer of the Company, unless the reason for the his
failure to be either the Chairman or the Chief Executive Officer is due to his
death or disability.
6. Market Standoff Agreement. Respondents further agree, so long as
Respondents, collectively, hold at least one percent (1%) of the Company's
outstanding Common Stock and upon request of the underwriters managing an
underwritten public offering of the Company's securities, not to sell, make any
short sale of, loan, grant any option for the purchase of, or otherwise dispose
of any shares of Common Stock without the prior written consent of such
underwriters, for such period of time (not to exceed 180 days) from the
effective date of the registration statement relating to such underwritten
public offering as may be requested by the underwriters; provided that the
executive officers and directors of the Company who own stock of the Company
also agree to such restrictions.
7. Confidentiality and Publicity. The provisions of this Agreement, the
Technology Assignment Agreement, the Sponsored Research and License Agreement
and the Common Stock and Warrant Agreement (collectively, the "New Agreements")
shall be held in strictest confidence by the Parties and shall not be publicized
or disclosed in any manner whatsoever other than pursuant to the press release
to be issued by the Company on or soon after the date hereof, a copy of which is
attached hereto as Exhibit G (the "Press Release"). Notwithstanding the
prohibition in the preceding sentence: (a) the Parties may disclose the New
Agreements in confidence to their respective attorneys, accountants, auditors,
tax preparers, and financial advisors (and, in the case of Xxxxxxxxxxx, to
members of his immediate family); (b) the Company may disclose the New
Agreements as legally required corporate reporting or disclosure requirements;
and (c) the Parties may disclose the New Agreements insofar as such disclosure
may be necessary to enforce the terms of any of these agreements or as otherwise
required by law.
8. Termination of Prior Agreements. Subject to the execution of the New
Agreements, the Prior Agreements are hereby terminated and are of no further
force and effect. The Parties will retain no rights, duties or obligations
under any of the Prior Agreements.
9. Release of Claims by Respondents. Except as otherwise set forth in
this Agreement, Xxxxxxxxxxx, Xxxxxxxxx and Edenland, on their behalf and on
behalf of their directors,
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successors, assigns agents, employees, subsidiaries, representatives and
affiliates, hereby release, acquit and forever discharge the Company, its
officers, directors, agents, attorneys, servants, employees, stockholders,
successors, assigns and affiliates, of and from any and all claims, liabilities,
demands, causes of action, costs, expenses, attorneys' fees, damages and
obligations of every kind and nature, in law, equity, or otherwise, known and
unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or
in any way related to agreements, events, acts or conduct at any time prior to
and including the execution date hereof, including but not limited to: any and
all such claims and demands directly or indirectly arising out of or in any way
connected with the Actions, the Prior Agreements; claims or demands related to
fees, royalties, stock, stock options, or any other ownership interests in the
Company, expense reimbursements or any other form of compensation; claims
pursuant to any federal, state or local law or cause of action including, but
not limited to, tort law, contract law, discrimination, fraud, defamation,
emotional distress, and breach of the implied covenant of good faith and fair
dealing. Notwithstanding the foregoing, this release shall not include any
claims based on obligations created by or reaffirmed in New Agreements.
10. Release of Claims by the Company. Except as otherwise set forth in
this Agreement, the Company, on its behalf and on behalf of its directors,
successors, assigns, agents, employees, subsidiaries, representatives and
affiliates, hereby releases, acquits and forever discharges Xxxxxxxxx, Edenland,
their officers, directors, agents, attorneys, servants, employees, stockholders,
successors, subsidiaries, assigns and affiliates, and Xxxxxxxxxxx, his heirs,
legatees, successors and assigns of and from any and all claims, liabilities,
demands, causes of action, costs, expenses, attorneys' fees, damages and
obligations of every kind and nature, in law, equity, or otherwise, known and
unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or
in any way related to agreements, events, acts or conduct at any time prior to
and including the execution date hereof, including but not limited to: any and
all such claims and demands directly or indirectly arising out of or in any way
connected with the Actions, the Prior Agreements; claims or demands related to
fees, royalties, stock, stock options, or any other ownership interests in the
Company, expense reimbursements or any other form of compensation; claims
pursuant to any federal, state or local law or cause of action including, but
not limited to, tort law, contract law, discrimination, fraud, defamation,
emotional distress, and breach of the implied covenant of good faith and fair
dealing. Notwithstanding the foregoing, this release (i) shall not include any
claims based on obligations created by or reaffirmed in the New Agreements and
(ii) is not intended to release any indemnification rights that the Company may
have in connection with any third party action or claim against the Company.
11. Section 1542 Waiver. The Parties acknowledge that they have read and
understand Section 1542 of the Civil Code of the State of California, which
reads as follows:
A general release does not extend to claims which the 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.
The Parties hereby expressly waive and relinquish all rights and benefits under
that section and any law or legal principle of similar effect in any
jurisdiction with respect to the release granted in this Agreement.
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It is understood by the Parties that the facts may turn out to be other than
or different from, the facts now believed by the parties to be true. Each party
expressly assumes the risk of the facts turning out to be different that he or
it believes them to be, and each party agrees that the Agreement shall in all
respects be effective and not subject to termination or rescission because of
any such mistake in belief.
12. No Admissions. It is understood and agreed by the Parties that this
Agreement represents a compromise settlement of various matters, and that the
promises and payments in consideration of this Agreement shall not be construed
to be an admission of any liability or obligation by either Party to the other
Party or to any other person.
13. Notices. All notices, instructions and other communications given
hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (a) by registered or certified
mail, return receipt requested, postage prepaid, or (b) via a reputable
international express courier service, in each case to the address set forth
below. Any such notice, instruction or communication shall be deemed to have
been delivered three business days after it is mailed, by certified mail,
postage prepaid, return receipt requested, or one business day after it is sent
via a reputable international express courier service.
If to the Company: Xxxxxx-Xxxx Pharmaceuticals, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Chief Executive Officer
With a copy to: Xxxxxxx X. Xxxxxx, Esq.
Xxxxxx Godward LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
If to Xxxxxxxxxxx
Xxxxxxxxx, or
Edenland: Xxxxxxx X. Xxxxxxxxxxx
c/o Colthurst Limited and Edenland, Inc.
Baybush, Straffan
County Kildare
Ireland
With a copy to: Xxxxx. X. Xxxxxxx, Esq.
Akin, Gump, Strauss, Xxxxx & Xxxx LLP
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Any Party may give any notice, instruction or communication in connection with
this Agreement using any other means (including personal delivery, telecopy or
ordinary mail), but no such notice, instruction or communication shall be deemed
to have been delivered unless and until it is actually received by the Party to
whom it was sent. Any Party may change the address to which
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notices, instructions or communications are to be delivered by giving the other
Party to this Agreement notice thereof in the manner set forth in this paragraph
13.
14. Entire Agreement. This Agreement, including, Exhibits D-G hereto,
constitute the complete, final and exclusive embodiment of the entire agreement
between Respondents and the Company with regard to the subject matter hereof,
and supersedes the Prior Agreements. It is entered into without reliance on any
promise or representation, written or oral, other than those expressly contained
herein. It may not be modified except in a writing signed by Xxxxxxxxxxx and a
duly authorized officer of the Company. Each Party has carefully read this
Agreement, has been afforded the opportunity to be advised of its meaning and
consequences by his or its respective attorneys, and signed the same of his or
its own free will.
15. Successors and Assigns. This Agreement shall bind the heirs, personal
representatives, successors, assigns, executors, and administrators of each
Party, and inure to the benefit of each Party, its heirs, successors and
assigns.
16. Applicable Law. 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.
17. Severability. If a court of competent jurisdiction determines that
any term or provision of this Agreement is invalid or unenforceable, in whole or
in part, then the remaining terms and provisions hereof shall be unimpaired.
Such court will have the authority to modify or replace the invalid or
unenforceable term or provision with a valid and enforceable term or provision
that most accurately represents the Parties' intention with respect to the
invalid or unenforceable term or provision.
18. Arbitration. To ensure rapid and economical resolution of any
disputes which may arise under this Agreement, the Technology Assignment
Agreement, the Sponsored Research and License Agreement or the Common Stock and
Warrant Agreement, the Parties agree that any and all disputes or controversies
of any nature whatsoever, arising from or regarding the interpretation,
performance, enforcement or breach of this Agreement, the Technology Assignment
Agreement, the Sponsored Research and License Agreement or the Common Stock and
Warrant Agreement shall be resolved by confidential, final and binding
arbitration (rather than trial by jury or court or resolution in some other
forum) to the fullest extent permitted by law. Any arbitration proceeding
pursuant to this Agreement shall be conducted by the American Arbitration
Association ("AAA") in San Diego, under the then existing AAA commercial
arbitration rules. All costs of arbitration, including reasonable attorneys'
fees, shall be paid by the parties as ordered by the final decision of the
arbitrator. Notwithstanding anything to the contrary contained herein, any
party may apply to a court of competent jurisdiction for equitable relief for
any breach or threatened breach of this Agreement, including but not limited to
restraining orders and affirmative injunctive relief, and for ancillary orders
in aid of the arbitration panel. Xxxxxxxxx, Edenland, Xxxxxxxxxxx and the
Company agree to the jurisdiction and venue in the federal and state courts
located in San Diego, California with respect to any such equitable relief.
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If for any reason all or part of this arbitration provision is held to
be invalid, illegal, or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability will
not effect any other portion of this arbitration provision or any other
jurisdiction, but this provision will be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable part or parts of
this provision had never been contained herein, consistent with the general
intent of the Parties insofar as possible.
19. Mutual Drafting. The parties acknowledge that each of the parties
participate in the drafting and negotiation of this Agreement. For purposes of
interpreting this Agreement, each provision, paragraph, sentence and word herein
shall be deemed to have been mutually drafted by the parties. The parties
intend for this Agreement to be construed and interpreted mutually in accordance
with the plain meaning of the language contained herein, and are presumptively
construed against any actual or purported draft or of any specific language
contained herein.
20. Further Steps. Each party shall promptly take whatever reasonable
other and further steps may be necessary to effectuate the intent of this
Agreement.
21. Authority. Each of the parties and its signatory represents that the
signatory is either a party or a business representative or assignee of a party,
and is fully authorized to execute this Agreement on behalf of the party for
whom he signs.
22. Section 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.
23. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed an original, all of which together shall
constitute one and the same instrument. Including signature pages, this
Agreement consists of eight (8) pages.
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IN WITNESS WHEREOF, the Parties have duly authorized and caused this Agreement
to be executed as follows:
XXXXXXX X. XXXXXXXXXXX, XXXXXX-XXXX PHARMACEUTICALS, INC.
an individual
/s/ Xxxxxxx X. Xxxxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------ -----------------------------
Xxxxxxx X. Xxxxxxxxxxx Xxxxxxx X. Xxxxxx
XXXXXXXXX LIMITED EDENLAND, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxxx
--------------------------- --------------------------------
Xxxxxxx X. Xxxxxxxxxxx Xxxxxxx X. Xxxxxxxxxxx
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